“The market for commercial real estate mortgage loans in the United States stands on the brink of collapse,” says Colony Capital (NYSE:CLNY) Chairman Tom Barrack, with banks, mortgage REITs and other non-bank lenders now “at a precarious juncture.”
“If these institutions are not permitted to
maintain the flexibility and patience needed to undertake the loan
restructuring efforts that will be critical to weathering the COVID-19
crisis, loan repayment demands are likely to escalate on a systemic
level, triggering a domino effect of borrower defaults … A market
collapse of this magnitude would have catastrophic follow-on effects
across the American economy.”
He’s calling for immediate measures to avoid a rush of margin calls and other “mark-to-market” measures for a period of time.
“Doing so will enable the mortgage REITs and debt
funds to restructure the mortgage loans with their borrowers, which, in
turn, will give their borrowers the breathing room they need to operate
their businesses and align their residential and commercial leases with
the current climate to allow companies to preserve millions of jobs.”
Tickers of interest include: Annaly Capital (NYSE:NLY), AGNC Investment (NASDAQ:AGNC), Two Harbors (NYSE:TWO), Western Asset (NYSE:WMC), MFA Financial (NYSE:MFA), Arlington Asset (NYSE:AI), Ellington Financial (NYSE:EFC), Starwood Property (NYSE:STWD), Blackstone Mortgage (NYSE:BXMT), Ladder Capital (NYSE:LADR), Apollo Commercial (NYSE:ARI), Granite Point (NYSE:GPMT).
https://seekingalpha.com/news/3554055-tom-barrack-warns-on-collapse-of-commercial-mortgage-market
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