Distressed real estate investors still have about a three-year window to snap up discounted commercial real estate in the US and Europe, said three executives in the sector speaking at a conference last week in New York.
“Europe is certainly going to have a lot of opportunity,” said Timothy Johnson, a principal at Blackstone Real Estate Debt Strategies, a unit of the Blackstone Group with USD 4bn under management.
Johnson was speaking on a panel titled “Troubled Asset Investment Opportunity” at CapRate Events’ Distressed Real Estate Debrief conference.
BREDS, established in 2008 to target distressed bank assets, has been an active buyer of European bank assets, Johnson said. Even so, he echoed other investors’ frustration at a lack of European bank sales.
Johnson expects a slow trickle of deals rather than a flood over the next few years.
Ron D’Vari, CEO at New Oak Capital, also expects more selling from foreign banks due to new capital rules, but said the Bank of England and other regulators are keen to keep assets where they are now.
In the US, distressed investment opportunities in small-balance NPLs will likely last another 18 to 24 months before drying up, said Jason Carney, partner at Palatine Capital Partners, a New York-based private equity firm that buys NPLs in the USD 2m – USD 10m range.
“CMBS maturities will add a wrinkle,” he said, referring to small balance opportunities. “But it’s still a good market to continue to invest.”
Low interest rates will keep small balance loans attractive, said James Ross, managing member at RossRock, a firm that buys distressed NPLs. “Find niches where you are more competitive than the next guy,” he said.
Salman Khan, founder of Stabilis Capital Management and a Goldman Sachs distressed loan acquisitions veteran, said that despite his hopes of culling distressed real estate loans from special servicers, REMIC rules have mostly thwarted that line of action.
“That has had little success,” he said.
— by Joy Wiltermuth Source: Debtwire
