Major Bank Firesale - Dumping real estate holdings : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Royal Bank of Canada is selling a major portion of its real estate portfolio including 24 office buildings in major cities & 9 processing centers (but not its branches). Interesting article & comments.

Could there be a Y2K connection? Hmmm

Here's a comment from a friend of mine who's an ex-banking lobbyist ...

This was the part that re: the Royal Bank that confused me...

"The bank is looking for a deal that lets it lease back the properties it now occupies." (they want to maintain a physical presence and unload that pesky real estate?)

"The bank also wants the buyer to offer jobs to bank employees affected by the sale." (a greatly reduced physical presence and they unload most of those pesky employees with all their pesky needs like a paycheck and a retirement plan?)

They want to find a sucker? (and soon before y2k?)

Or you could look at it this way...

"Royal Bank of Canada has put up for sale the largest real estate portfolio ever to be offered on the market in Canada -- including the prized, gold-tinted Royal Bank Plaza in downtown Toronto -- in a move expected to trigger similar selloffs by Canada's other major banks.

Banks do a "bank run" on each other? First one to dump the bricks and mortar (not to mention a substantial number of the employees) wins?

-- Cheryl (, May 29, 1999


The Royal bank pounded it's chest for the last year about being ahead, I think it's far ahead enough to understand the true nature of their exposure. Cheryl, you seem to have hit the nail on the head.

-- Will (, May 29, 1999.

The Y2K "end game" has begun...

-- Kevin (, May 29, 1999.

Here's a link to an article about the Royal Bank of Canada: 19990527&qt=royal+bank&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486

-- Kevin (, May 29, 1999.

Oh God, this is too soon ...

-- Ashton & Leska in Cascadia (, May 29, 1999.

Here's a link to an article on the Royal Bank and e-commerce: 19990527&qt=royal+bank&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486

-- Kevin (, May 29, 1999.

Cheryl - spot on!

Doing the same myself, my beloved Porsche 911 is now a pile of gold and silver eagles. My Rolex is greenbacks in 1's, 5's and 20's. Getting rid of unnescessary "stuff" - replacing it with prep. items.

410k in a safe place. Cashing out REAL soon. taking Freddie the freeloaders advice...

And if I'm wrong in March 2000???

I'll be as happy as a sandboy :)

-- Andy (, May 29, 1999.


The bank presently assumes the same risk as every real estate owner that has a mortage remaining on the property. Every morning, before your feet hit the cold floor, you have assumed the financial risk that the value of the property at least exceeds the balance of the mortgage.

By selling the property and leasing it back, the bank, or anyone, has eliminated their exposure to a downturn in the market value of real estate.

In the US we saw this after the tax code was changed in 1986 with the result of increased tax liability for commercial real estate investments. This caused the value of real estate to fall, many times to a level less than the balance of the mortage.

Many forclosures, hence the RTC, were the result.

I worked in a building that cost the developer one hundred fifty dollars per square foot to build, went to forclosure and was purchaced for forty five dollars per squrare foot about four years later.

Re: employee transfers, in commercial sales that probabley pertains to the staff that operates and maintains the building(s). This is not unusual, and is an act of kindness on the sellers part. It also holds an advantage for the buyer, people already experienced with the systems.

I believe you have raised a valid point re: year 2000. I would speculate the bank has reason to believe the property is worth more today than it will be tomorrow. It seems to me, however, the commercial real estate market is running out of "greater fools" in reference to year 2000, and the bank may have a problem putting a deal together at a favorable price.

If they do arrange a sale, just hope it isn't to your pension fund.

They have some clueless people trying to place mega bucks.

-- Tom Beckner (, May 30, 1999.

Link :

Chevron to sell HQ buildings in cost-cutting

Chevron Corp. plans to sell its headquarters buildings in San Francisco's Financial District and move the majority of the employees there to the East Bay as part of a plan to cut costs by $500 million this year, the company said late Wednesday.

The fourth-largest U.S. oil company said it will sell its two buildings at 575 and 555 Market St. and move about two-thirds of the 1,400 employees to the lower-cost East Bay, where they'll join 6,600 other Chevron workers. Its headquarters will remain in leased space at 575 Market St., where fewer than 500 executives and support staff will work. Chevron is trying to cut costs to recover from low oil prices, which reduced first-quarter profit by 36 percent. Most of the employees that move will go to Chevron's offices in San Ramon and Concord.

-- (, May 30, 1999.

Chevron Corp SEC form 10-Q

-- (, May 31, 1999.

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