What's your take on the latest news Banks are selling a small portion of the roughly $2.5 trillion in commercial real estate loans as high interest rates and low occupancy take hold? Some Wall Street banks, worried that landlords of vacant and struggling office buildings won't be able to pay off their mortgages, have begun offloading their portfolios of commercial real estate loans hoping to cut their losses
I think we are in the early innings of this trend and will see more of this type of activity through the 2nd half of 2024 and into 2025. For many reasons, banks are neither in a position, nor want to take the keys back on these assets that require significant CapEx and risk capital held against them on their balance sheets. Loan sales are a much cleaner way of obtaining liquidity than selling in a distressed and poorly functioning capital markets. In many cases, collateral values are well below outstanding principal balances. Having identified the opportunity, there has also been significant capital raised to be able to acquire these notes at heavy discounts from the banks.
Thanks for sharing. Really enjoyed the focus on interest rates !
Thanks for watching & the comments Ron!
Great video Chad
Thank you Joe!
🎉 thanks
Thanks for watching!
What's your take on the latest news Banks are selling a small portion of the roughly $2.5 trillion in commercial real estate loans as high interest rates and low occupancy take hold? Some Wall Street banks, worried that landlords of vacant and struggling office buildings won't be able to pay off their mortgages, have begun offloading their portfolios of commercial real estate loans hoping to cut their losses
I think we are in the early innings of this trend and will see more of this type of activity through the 2nd half of 2024 and into 2025. For many reasons, banks are neither in a position, nor want to take the keys back on these assets that require significant CapEx and risk capital held against them on their balance sheets. Loan sales are a much cleaner way of obtaining liquidity than selling in a distressed and poorly functioning capital markets. In many cases, collateral values are well below outstanding principal balances.
Having identified the opportunity, there has also been significant capital raised to be able to acquire these notes at heavy discounts from the banks.