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• the relative importance of commercial real estate,
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Commercial Real Estate Won't Be Our Undoing
Posted at 1:20 a.m. EDT, Aug. 10, 2009

If the banks are in trouble, they can do deals. If the REITs are in trouble, they can do deals. There's that much money around and there's that much good feeling associated with both. And this applies to the announcement just now that State Street (STT Quote) is under-reserved.

What do I mean by "good feeling"? Look at Boston Properties (BXP Quote), which should be ground zero for commercial real estate worries, right? Tons of property in Boston, New York and San Francisco -- the last being among the worst in the country after Orange County. It did a huge secondary 10 points ago! Everyone has made money. Gigantic. Just gigantic. If BXP wanted to do another deal for money to have down payments on distressed commercial real estate, it could do it in a heartbeat.

Or consider some of the banks that are totally linked to commercial real estate, especially Key (KEY Quote), Huntington (HBAN Quote), Regions Financial (RF Quote), SunTrust (STI Quote), U.S. Bancorp and BB&T (BBT Quote). These all have a ton of commercial real estate exposure. But consider at what prices they did their stress test secondaries, and where they are now -- Key: $4.87 /$6.72; HBAN: $3.60/$4.81; RF: $4/$5.06; STI: $13/$22; USB: $18/$23; BBT: $20/$26.

If any of these banks wanted to take advantage of FDIC closures of other banks or even actual projects and buildings that come up for sale, they can do it, and they can do it in a fashion that will make investors' mouths water, because the bankruptcy risk is now off the table.

I know that many of you are happy to miss this move, in part because you think that commercial real estate will be our undoing. This move is one of the most despised moves I have ever seen. I am simply trying to lay out the case that you shouldn't be fearful based on this issue alone.

It is not a canard. It is simply dealable because of the appetite by investors for more equity in these big names. We should know soon ... if I were State Street, I would do a secondary right here to get fully reserved. I am sure the market would love it!

At the time of publication, Cramer had no positions in the stocks mentioned.