OPI - Charlie Munger sounds warning on U.S. commercial property market

2023-05-01 03:48:08 ET

Storm clouds are brewing for the U.S. commercial property market, according to Berkshire Hathaway ( NYSE: BRK.A ) ( NYSE: BRK.B ) Vice Chairman Charlie Munger, who warned of a potential crash amid trouble in the U.S. financial system.

"It's not nearly as bad as it was in 2008," he told the Financial Times . "But trouble happens to banking just like trouble happens everywhere else. In the good times you get into bad habits. When bad times come they lose too much."

While Berkshire ( BRK.A ) ( BRK.B ) has a history of supporting American banks through cycles of financial instability - such as investing $5B in Bank of America in 2011 and coming to the aid of Goldman Sachs in 2008 - but things are different this time around given banks' vast portfolios of "bad" commercial property loans.

"A lot of real estate isn't so good any more," Munger added. "We have a lot of troubled office buildings, a lot of troubled shopping centers, a lot of troubled other properties. There's a lot of agony out there."

Mall and shopping center players: CBL , SPG , MAC , KIM

Office REITs: BXP , ARE , SLG , OFC , CIO , VNO , KRC , DEI , CUZ , HIW , JBGS , HPP , BDN , PGRE , PDM , AAT , ESRT , EQC , DEA , OPI , ALX , AHH , FSP , CMCT

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• U.S. Commercial Real Estate Outlook: Seeking Calmer Waters In Quality

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