Distressed investors see one of the best opportunities in a generation to buy troubled U.S. real estate assets as the commercial property crash continues to roil the market.
Buildings in the Manhattan skyline in New York, U.S., on Thursday June 17, 2021. --
“Compared with the Savings & Loans crisis and 2008, we’re still in the first or second innings” when it comes to troubled assets, said Rebel Cole, a finance professor at Florida Atlantic University who also advises Oaktree Capital Management. “There’s a tsunami coming and the waters are pulling out from the beach.”
The opportunity in the U.S. is being driven by lenders pulling away from commercial real estate after borrowing costs rose and values plunged. Asset manager PGIM estimates a gap of almost $150 billion between the volume of loans coming due and new credit availability this year. Barry Sternlicht, chairman of real estate investor Starwood Capital Group, has also indicated that he sees more problems ahead for lenders.
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