저자: BillAckman · 외국인
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Ackman는 경기가 약화되고 있으며 고금리로 인해 상업용 부동산 대출(약 1.5조 달러)과 기업 부채(2024~2026년 약 2.6조 달러) 만기 리파이낸싱 부담이 커져 좀비기업 중심의 파산 물결과 부동산 급락 위험이 있다고 주장. 연준이 금리를 인하해야 하며, 시장은 내년 중반 인하를 기대하지만 1분기에도 가능하다고 봄. 하드랜딩은 확정이 아니라고 언급.
다듬은 글
I think the economy is weakening, and I have some concerns. Billionaire investor Bill Aman has just issued an alarming warning about the future of the housing market and the economy. Aman is the founder and CEO of Pershing Square, one of the most respected firms on Wall Street, which is why it caught my attention when Aman warned that a wave of real estate bankruptcies is very likely to hit.
These bankruptcies could represent hundreds of billions of dollars and cause major disruptions in the economy. Let's hear what Aman has to say. There's a general consensus in the United States, in certain circles, that we've probably avoided a recession for the time being and that we're going to have a soft landing.
That's the consensus. Is that your view as well? I think it's really hard to predict. I think the economy is weakening. We're seeing evidence of that in some of our companies. You see, I have some concerns. There's been a huge subsidy in terms of low interest rates, and most companies have locked in their rates or their Debt at very low rates is also the case for real estate investors, and it works until it doesn't.
So I think what's going to be interesting is seeing what happens when people have to renegotiate their debts, and I think it can have a cliff effect. You certainly see this in real estate. Unlike most residential mortgages, interest rates on commercial real estate loans don't stay the same for the entire term of the loan.
In the United States, when an individual or family buys a house, most of the time that purchase is financed with a 30-year fixed-rate mortgage. With a fixed-rate mortgage, the interest rate on the loan is fixed; that is, it doesn't change for the entire term of the loan. This concept is incredibly important to understand and helps put Aman's warning into context.
Since the interest rate never changes, the homeowner knows that their mortgage payment will remain exactly the same as long as they own the house, or of course, until they... Repaying the loan in full, homeowners with fixed-rate mortgages don't have to worry about their mortgage payments doubling or even tripling due to rising interest rates.
This is a big reason why mortgage foreclosures were so rare in 2021; only a mere 1% of homes in the United States were foreclosed upon. Even during the worst period of the Great Recession, this number was only 2%, just a fraction of the default rate of other loans such as credit cards and auto loans.
American homeowners are truly fortunate that fixed-rate mortgages exist. Commercial property owners are not as fortunate. Unlike residential mortgages, commercial real estate loans are not fixed for the entire term of the loan. Instead, the interest rate on commercial loans resets every few years. Although this may not seem like a big deal, the impacts of interest rate resets can be truly devastating.
Here's an example to illustrate: Meet John. John saved his income for years and John finally decided to buy a small apartment building as an investment. Let's say this building costs one million dollars. Like most property owners, John didn't have the full purchase price of the property in cash, just sitting in his bank account.
Consequently, John had to take out a loan to finance the purchase. He put $200,000 aside and borrowed the remaining $800,000 from the bank. The ultimate success of this investment for John depends on many things, but one of the most important is the interest rate on the loan. In this example, let's say John got a loan with an interest rate of only 3 %.
This means that each year John, as the owner, is responsible for paying 3% of the total loan amount in interest to the bank. Think of this as the equivalent of a mortgage payment for a homeowner at this 3% interest rate. The annual debt payment to the bank is $24,000. If debt payments are covered by the property's net operating income, or "nuts" for short (think of " nuts" as the property's profit excluding debt payments), the calculation is super simple: just take the rent the property generates and subtract all expenses associated with ownership, maintenance, and building management.
Let's say in our example that this property generates $50,000 in net operating income per year. As we can see, this property has more than enough " nuts" to cover the annual debt payment of $24,000. However, let's see what happens when the interest rate increases. If we increase the interest rate in this example from 3% to 6%, the annual debt payment increases to John's $48,000 building rent still covers the debt payment, but things are definitely more precarious.
If we raise our interest rate to 9 %, the property suddenly loses money. The annual interest payment is now $72,000, well above the $50,000 the building generates in income. The owner, John, has one of two options: he can either find the money to pay the difference, or if he is unable to do so, the bank will take possession of the property through foreclosure, often at a massive loss for both John and the bank.
Although this example is, of course, simplified, it is symbolic of the massive challenge facing the housing market. There is $1.5 trillion of commercial real estate maturing between now and 2025. This is the hypothetical cliff toward which the housing market is heading, the one Aman refers to. For your information, Bill Aman runs one of the world's most prestigious hedge funds, Pershing Square.
Pershing Square manages a whopping $10 billion of investor money. likely generating hundreds of millions of dollars in management fees for Aman as the owner. The management fees are used to pay for expensive subscriptions to research platforms such as Bloomberg or FA7. We talked earlier about how Aman is worried the housing market is heading for a cliff.
However, whether the housing market falls off that cliff depends primarily on one thing, according to Aman. Let's hear him explain: markets make assumptions, and markets aren't always right, but markets are assuming there will be a Fed discount rate cut sometime next year. And as we're talking now, just at the end of November, it's not clear what the Fed will do.
But some people say that if the Fed were to cut interest rates next year, it would help the Democrats and would therefore be seen as very political. On the other hand, some people say the Fed can't wait until after the election because the economy might need a stimulus. Do you have an opinion on the actions the Fed is likely to take?
I think they're going to cut the rates, and I think they're going to lower rates sooner than people think because what's happening is that the real interest rate, which is what impacts the economy, keeps rising as inflation falls. So if the Fed keeps rates in the middle of 5 and inflation is below 3%, or you know, that's a very high real interest rate, and I think that has a lagging effect on the economy.
And then, of course, again, many businesses and certainly many individuals have fixed-rate debt, and that fixed-rate debt, certainly for businesses and for commercial real estate, is starting to mature. So I think there's a risk of a hard landing if the Fed doesn't start cutting rates soon. So you know, I think the market is expecting it sometime in the middle of next year.
I think it's more likely as early as the first quarter. In the US, interest rates have spent the better part of the last 15 years at or near 0 %. Meanwhile, businesses and real estate investors have taken on cheap debt—debt that is now maturing. We've already discussed the more than $1.5 trillion in commercial real estate loans maturing in the coming years.
However, this only tells part of the story. The world's largest companies face a similar challenge. According to Morgan Stanley, there is nearly $2.6 trillion of corporate debt maturing over the next three years, broken down into $770 billion in 2024 and $ 900 billion in 2025 and 2026. Okay, you might be wondering why this matters.
Surely the world's largest companies have the capacity to repay their debts when they mature? Well, believe it or not, the vast majority of the time, that's not actually the case. I'll let you in on a little secret: when large companies have debt maturing, they rarely have the means to repay it in cash.
Instead, they simply issue a new loan and use the money from that new loan to repay the existing one. When debt matures, it's a concept called debt refinancing, and it wasn't really a problem when interest rates remained low. However, now the situation is massively different. Companies will replace old debt with incredibly low interest rates with new debt that has a significantly higher interest rate.
Although this may seem like just a small inconvenience, the impacts of this debt repositioning will surely send shockwaves through the economy. Take the example of the iconic company Coca-Cola. At its last earnings release, Coca-Cola had $34 billion of outstanding long-term debt. To show why higher interest rates are important, let's do a simple thought experiment just for the sake of argument.
Let's say Coca-Cola has an interest rate of 3% on this $34 billion of debt. This means that each year Coca-Cola has to pay about $1 billion in interest. Now, again just for the sake of argument, let's see what happens if we increase this interest rate to 8%. The annual interest expense now rises to $2.7 billion, a staggering increase of approximately $1.7 billion.
This higher interest expense comes directly from Coca-Cola's net income, making them less profitable. It's more than just Coca-Cola shareholders who are impacted in our example here. Coca-Cola now has $1.7 billion less available that can be used for things that would grow the company. Think of actions such as hiring new employees, developing new products, and spending more money on advertising.
Coca-Cola reducing its expenses would obviously have a negative impact on the economy. Coca-Cola is a stable, top-tier company. I think it's safe to say that Coca-Cola will do very well in the long run. However, many other companies are not so fortunate. It is estimated that about 10% of publicly traded companies in the United States are what are called zombie companies.
These are heavily indebted companies that barely survive, earning just enough money to cover their debts, but that's about it. A zombie company doesn't They simply cannot afford to see their interest payments increase at all, let alone double or even triple. If interest rates remain high and these companies are forced to refinance their debt, there will likely be a tsunami of business bankruptcies, obviously with devastating effects on the economy.
That's why, according to Aman, the Fed has no choice but to lower interest rates if it wants to avoid a painful recession. If interest rates remain high, it's only a matter of time before the housing market and the economy fall off the proverbial cliff. However, it's not all doom and gloom. This hard landing is far from guaranteed.
There's a very real possibility that interest rates will start to fall soon and that real estate investors and businesses will be able to avoid having to refinance debt at these high interest rates. Only time will tell, but one thing is certain: we are living in truly unprecedented times. So, be sure to subscribe to the channel because my goal is to make you a better investor by studying the world's greatest investors. See you soon!
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