You'll need to be old enough to remember Joy Division for that title to mean anything to you, but I just couldn't resist it. (Fittingly, Modus were Manchester-based too. Tidy.)
Anyway, far from the last of many in the commercial real-estate sector, I'm quite positive, Modus Ventures have filed for bankruptcy.
Leverage was great on the way up — all these real estate companies looked like super-slick masters of the universe, and they certainly made out like bandits. Everyone wanted to get a bit of commercial property in their pension portfolio. But look what a difference a measley 26.4% haircut makes (and to me a 26.4% haircut really does seem measley, since that sort of action is commonplace in the resources sector that I am more fascinated by). If any of these companies actually OWNED the underlying properties, they could just sit tight and tough it out until values recovered eventually. But when you have virtually no skin in the game on a property, just a massive mortgage debt, and the environment turns chill like now, things turn against you very quickly and very very nastily.
So, look forward to a lot more commercial mortgage failure news in the future. This will have serious adverse repercussions, not least for banks (again) who can ill afford it.
My opinion is that you can look forward to more of a haircut in this sector too. The falls are not done with on the underlying asset values, which will feedback into even more bankruptcies.
I wouldn't touch real estate, commercial or residential, with a bargepole. Not for some time (I've been saying it for some time, and I also mean that I will continue to be saying it for some time). I still maintain its not just a risky sector, its a positively radioactive one.
Green shoots, schmeen shoots. Economic recovery this year is a pipe dream. Maybe 2012.