CMBS - WTF
In the large format retail space, there are a shit ton of deals to be had by the way of loan maturities. Ideally, you have a performing - matured loan, which in turn would cause an asset to be taken to market.
What we are seeing are loans that matured two or three years ago, but the lenders/bond holders do not care since the properties are cash flowing and excess cash flow is being swept. If you were to take these assets to market, several write downs would have to occur and certain tranches of the capital stack would be wiped. When will a basis reset occur? Will lenders let a basis reset occur? Will regulatory interference need to occur?
I could just be dumb. Need monkey input-thx
Not sure what you expect from lenders, special servicers or the borrowers here. If you’ve got a maturity coming up and the property can’t be sold or refi’d then sometimes the best course of action for all parties is to extend and hope that capital markets turn rather than wipe out equity and lower tranches of bond holders.
There already is capitulation on deals where there’s no saving the business plan but I don’t think you’ll see it happen with sound properties. I also don’t see regulators stepping in at any point here on the CMBS front. There really isn’t any reason for government intervention as there’s no wrongdoing or illegality in what’s going on right now.
I'm saying specifically properties that can be taken to market and undergo a successful process. For a market to come back down to earth I feel like these are necessary evils, but the lenders are holding it up because they refuse to write off x amount.
Lenders are holding on because there’s a very real possibility that capital markets can rebound. Lower interest rates = lower cap rates which puts some of the stakeholders back in the money. It’s not simply that they refuse to write off the loan, they’re stewarding their capital in the most responsible way.
On enclosed malls specifically dropping from an 18 cap to a 15 cap wont bridge the gap imo
You want them write off a portion of their debt so that it pencils for an equity owner to buy the property and make money? They are capitalists, why would they do that?
Could there not be a more favorable position with new capital coming into play?
Why won’t people take losses so I can buy at the bottom?
If a loan is three years past maturity and youre never getting back to the outstanding balance - new capital needs to come in
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