Me, Willi, etc what is your take on GE?

[Me]

That is the point re the mark to market (i am not suggesting they use it). People do not know the real exposure. GE is saying they are holding to maturity. That doesn't mean you are going to get the value you are expecting. As a result investors simply do not know.

[Plush]

Do you realize that holding a property to maturity means that you'll recover 100% of your money....It would mean that you hold it until you depreciate it to zero. You'll get all the tax benefits at depreciation and sell it at a residual value...usually will be up when you're talking about Real Estate.
for the Real Estate portfolio, it's not holding to maturity but holding for the long term to harvest..say 10 years. As I said earlier, the real question is whether or not GE will be force to liquidate in the next two years. If GE can hold it's properties at least for the next 3-5 years without being forced to sell, it will make a profit on these properties...Another metric is this...Majority of our loan portfolio was established with Loat to value of at least 70%. This means that the property would have to loose more than 30% in value for us to be in the red

[Karl]

You can defend you company all you want, but at the end of the day this is the reality.


"We recognize that we have made statements both about not raising equity and not cutting the dividend and we have had to backtrack on those," Mr. Sherin said. "We have to earn that trust back."


And lastly, unlike the banks, GE is not using mark to market, so we really do not know how bad the impact of some of their real estate exposure is going to be on the company. If you say well that gives them something tangible, just ask Fannie Mae about the cost problem they are having because of their increased inventory levels.

The regular business of the company is solid and has good long term value. GE Capital, people just don't know. Look forward to that session when they say they are going to really go deep into GE Capital and discuss it with the investors.

Wah yuh seh the GE of the future will be a su-mal-lah, lean-a sinting?

Willi: You called 'it' well...but not even you could tell us about the 'big do...-..." we now see unfolding! What has Obama been saying, "It will get worse, before it gets better"? When will we hit bottom...groan ...before an uptick?

...yet I still keep the faith as I am still convinced the US shall....once more...re-invent herself!

...mmmm? How many of us can hang on without having to fall...then having to pick ourselves up and start all over again?

[Willi]

Preach it!

Any company that can beat estimates by a penny everytime...means manipulation is going on.

[Willi]

What???

I called it WORSE than what you are now seeing. i am praying I am wrong there.

Memory failing yuh?

[Me]

Obviously if it is held till maturity you recover. The point is that when defaults occur it is not held till maturity. Once you claim the asset there is the cash holding cost of the illiquid asset. You keep telling me about the best case scenario and what I am saying is that the market is worrying about the worst case scenario and that is that the Commercial market and CMBS market hasn't even become to feel the full effects yet.

In this market saying the majority of the portfolio is 70% LTV does not mean anything. There is a reason why Commercial lenders started going down to 40% LTV.

[Plush]

I wonder if you realize that there is rental income-cashflows on most commercial foreclosed assets. The tenants and the Borrower are different and most of the time it's multiple tenants. The thing that put's us in a loss position is the depreciation drag. Majority of the time we are positve if we focus on cashflows.

By the way, We have less than $50MM of CMBS on our books....it's peanuts

[Me]

I fully understand the structure. Once again you are telling me about things under a regular scenario, just as GE's leadership was talking to the world under a regular scenario and realized how wrong they were. CMBS holding might be peanuts, overall GE RE exposure is significant.

At the end of the day, you can't trust people who don't tell the truth.

Don't get me wrong, i don't think GE is going to collapse, I might actually buy some stock in a while after looking a little closer at the company's overall portfolio of businesses.

[Plush]

Nice that's the way to go...Seriously though, as I said before, i do agree with you that there is exposure at GE capital including Real Estate. The ripple effects hasn't fully gone through the systme with comapnies, downsizing, currting production, cancelling events, conferences etc. Vacancy will go up, rents will decrease and our top line will suffer for a period of time. This doesn't mean that we will need to write off assets especcially hwne we don't need to sell...Key is we can fund the business, even with losses over the next few years