Distress in the Wall: Troubled Assets and What to Do With Them (Part 1)

There continues to be much talk about the CMBS wall of maturities and what is still left to be refinanced in 2017. There’s a lot of concern that all the good ones are gone – likely no Class A properties left, much multifamily has already been refinanced by agency lenders – and that what is left are assets that may have a little hair on them.  So this raises two main questions:

1. 1. What exactly is left?  What kind of assets and issues are you likely to find?  How should you approach due diligence for these presumably troubled assets?

1. Who will take these on?  Who has the risk appetite?  How can they minimize risk during rehab/repurposing?

I’ll tackle both questions in this 2-part series. As for the first part…let’s define what “a little hair” might look like…

What is Left?

Well, your guess is as good as ours. But the industry speculation is that there are a lot of secondary market office, retail, and certain types of industrial assets left. With each of these classes, there are concerns over vacancies, how well the current asset is being maintained, and what can be done to stabilize, repurpose or otherwise make the asset more attractive.

If that assumption is true, then what are some of the physical asset issues to be on the lookout for as these refi’s come up?

Continue reading the GlobeSt blog here.