According to Colliers (a leading diversified professional services and investment management company) citing MSCI (Morgan Stanley Capital International – an investment research firm) data, sales of distressed commercial real estate assets will soon spike.
MSCI estimates put the dollar volume of these assets at $2T + of debt maturities due by 2027. Refinancing is no longer the easy and cheap option that it was.
Interest rates are high and the Fed will not be cutting interest rates to provide easing any time soon.
The sudden bank failures in March, 2023 have caused banks to tighten lending standards.
A record of non bank, alternative private lenders with debt capital are waiting in the wings ready to take advantage of what will be a record amount of future distressed commercial real estate assets.
There are a lot of loans that Chase, HSBC and Wells Fargo just won't do.
According to Colliers research director of U.S. Capital markets, Aaron Jodka “distressed sales are likely to trend toward office properties in the near term and numerous properties are facing elevated vacancies and that makes it more difficult for owners to meet their debt service covenants.”
Multi Family assets which drove nearly half of all transactions volume in the last few quarters will also be an area of distress.
By dollar volume, distressed sales last peaked in 2011 at $36.2B.
To be continued...
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