Commercial Real Estate Distress Starts As A Trickle, Will The Torrent Be Ahead Of Us?
Two commercial real estate stories caught my eye in the January 12th, 2023 Bisnow daily newsletter. I think they are just warning signs of what might be coming throughout 2023 and beyond. A few weeks ago I blogged that a number of major banks were unloading at a discount office building loans, and that in many regions it is getting more and more challenging to obtain a new loan on an office building purchase. I hadn’t heard of hardships in the apartment investment market, but if you are running only 76% occupied a negative cash flow might become unbearable. “New York landlord Chetrit Group is looking to sell more than 8,000 residential units it acquired across 10 states in 2019 as it faces default on a $481M loan it used to finance the acquisition, The Real Deal reports, citing a report by Trepp. The CMBS loan, originated by JPMorgan Chase, was used to acquire 8,671 units New York, Illinois, Indiana, Ohio and several Sun Belt states, but despite strong nationwide demand for apartments in nearly four years since the acquisition, the portfolio had an occupancy of just 76% in the year leading up to March 2022, per Trepp. Chicago-based Glenstar Properties and partner Oaktree Capital Management relinquished control of the 44-story Chicago Board of Trade Building in late December, handing over the keys to Apollo Capital Management and its Athene fund rather than facing a likely foreclosure lawsuit, CoStar reports.” What do you think is ahead of us?
