NEW YORK CITY-While the long-hoped tidal wave of opportunities in distress has so far been a trickle, “there’s some evidence that next year will be a different story,” said Michael Buckley, director of the asset repositioning and turnaround strategies certificate program at the University of Texas at Arlington. Buckley and other experts convened for a GlobeSt.com webinar Thursday made the point that we ain’t seen nothin’ yet.
“The real downturn hasn’t yet occurred,” observed John D’Amico, president-elect of the Commercial Real Estate Finance Council. Approximately $1.2 trillion in commercial real estate loans will come due in the next few years amid a still-shaky recovery in fundamentals. “That tells me that we still have a huge hump to get over” and assets will become available, he added.
It’s not certain that the availability will manifest itself in a way familiar to veterans of the early 1990s downturn, though. Unlike the RTC-driven bulk sales of last time, “a tremendous amount of resolution is taking place at the asset level,” commented Stacey Berger, EVP at Midland Loan Services.
And while Marathon Asset Management’s Ron Bernstein recalled that previously “we were of the belief that there would be more deal flow,” he charted the opportunities his company has been finding across the distressed landscape. Marathon has been originating new loans by buying old ones and refinancing them, as well as buying distressed notes with the ultimate goal of control, said Bernstein, senior managing director and portfolio manager.
Other topics in the hour-long discussion included the challenges of restructuring and the kinds of opportunities that FDIC’s bank closings will present. Sule Aygoren Carranza, editor in chief of Real Estate Forum and multifamily editor for GlobeSt.com, moderated the webinar, titled “So You Still Want to Play in Distress?”
To listen to a replay of the July 22 event, available through Oct. 22, click here.