Charlie Munger, who never flinched from Violet, has his own ideas about the commercial real estate market, and none of them are particularly good.
“A lot of real estate isn’t that great anymore,” says Munger, the 99-year-old vice chairman of Berkshire Hathaway. In an interview with the Financial Times, he said“We have a lot of distressed office buildings, a lot of distressed shopping centers, a lot of other properties that are troubled. There’s a lot of pain out there.”
He told the media that banks were saddled with bad loans as interest rates rose and property values fell. Munger’s comments come as Silicon Valley Bank and Signature Bank both collapsed last month, while the FDIC is looking for a buyer for San Francisco-based First Republic Bank, leading some to believe commercial real estate collapse is imminent.
“It’s not as bad as it was in 2008,” he told the New York Times. “But there are troubles in banking, just like troubles anywhere else. In good times, you get bad habits. … When the hard times come, they lose so much .
He noted that banks have tightened commercial real estate lending, especially over the past six months. The Times noted that Berkshire Hathaway is not stepping into the current banking competition as it has been during other turbulent times.
“Berkshire has made some bank investments that have worked very well for us,” Munger told the New York Times. “We’ve also been disappointed with the banks. It’s not easy to run a bank intelligently, and there are many temptations to do the wrong thing.”
Munger, who is worth more than $2 billion, doesn’t hide his opinion on many things, if any. In an interview with Time magazine, Munger said, “I don’t think we can assume that American democracy will flourish forever.”
An amateur architect, the Omaha native sparked some controversy last year with his $200 million design for a “mega-dorm” at UC Santa Barbara.
Nearly all of the dorm rooms Munger designed for the 11-story residence hall have no windows. Munger believes this is necessary to allow for separate bedrooms and better communal spaces.
In December, a group of UCSB faculty, staff and community members released a report critical of the residence halls.
“It’s all bullshit,” Munger said real deal then. “It’s ridiculous.”
— Ted Glazer
