NPL/REO/highly distressed Buyers?
Anybody have any data on who the largest buyers of non performing loans or highly distressed assets/portfolios are or who the largest buyers of REO? Appreciate the help.
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NPL buyers left the space but all of the large debt funds will gear up to buy NPLs. A lot of funds will partner with a sponsor who can service and handle asset management.
I know the space very well as I work at a fund that has been an active NPL buyer.
REOs will get a larger pool of buyers.
Any shot you could toss out some names of the biggest players in the REO space? Or if I could send you a dm?
I can give a better answer for NPLs. Once a property is REO the pool of buyer can be the entire world (generally value-add or opportunistic investors).
Under the assumption that there will be a sharp increase in the distressed asset space, which is not crazy under the circumstances, you can expect many if not most REPE shops and other liquid investors to shift strategy and target such deals. That is what happened in '08, and lots of hedge funds who never bought real estate beforesuddenly joined the fray.
At the time, it felt like there was $10 of money for $1 of distressed deals out there in the '09-'11 time frame. So many lenders (often at the insistence of the regulators) decided to go with "pretend and extend" that the flood of distressed assets didn't really materialize the way they thought it would. Banks and regulators really did learn the lesson of the Resolution Trust Company following the late 80's savings and loan crisis.
This time the Fed has near unlimited power to buy and stabilize assets, so the name of the game will likely be asset management for many "bad" loans.
You may want to look up "special servicers" as they will manage the defaults and special situations for the CMBS loans, I think LNR is the biggest player in that industry (they were after '08).
Thanks this is helpful
Entitled private equity people thought that lenders should immediately slash the book value of their loans and sell them at large discounts. They then would not work out forebearance and restructures and would rather just take the asset.
Regulators required that assets be marked down according to a process. That process was appraisals. Apprasails are partially based on market comps, which are by nature backwards looking. Yeah it didn't really work in a down-market or when there are no sales.
The point is, the system worked. Banks didn't fail (not all anyway). It wasn't an RTC fire-sale that needlessly enriched the few. I did workouts during the past crisis. It sucked. One of the most frustrated aspects was old dudes with an RTC mindset who thought I should just give them loans at a discount so that they could steal the underlying assets. Back away vultures!!
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