IAT - IAT: Charge-Offs Up Office Real Estate Continuous Concern
2024-07-22 05:39:27 ET
Summary
- iShares U.S. Regional Banks ETF is heavily exposed to commercial real estate loans, leading to potential losses ahead of a huge CRE maturity wall.
- A lot of that debt is office real estate, which is the source of the problems.
- Profligacy in the years leading up to now means security is pretty low, and while NII is turning around as loan growth continues, dividends are being cut and charge-offs rising.
- While the P/E is low of the ETF, reflecting the market already taking such a discount, there is a systematic tendency to underestimate networked risks, so we stay away.
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IAT: Charge-Offs Up, Office Real Estate Continuous Concern