Commercial real estate (CRE) loan portfolios are turning out to a good investment for buyers attracted to the current appraisals on these assets.
Buyers looking at sales based on today’s lower valuations might be making a good investment, especially given the returns on other asset classes.
This week Mission Capital Adivisors had over $800 million is CRE loans on sale, giving bidders the opportunity to acquire performing, sub- and non-performing assets secured by a variety of collateral types, including multifamily, office, student housing, condominiums, marina, industrial, residential and commercial land, medical office, bank stocks, among others, throughout the U.S. Many of the loans have recent appraisals.
"The sale is an ideal opportunity for equity buyers looking to enter the market by purchasing one or several of the individual loans," said Stephen Emery, managing director of sales and trading at Mission Capital.
But if you purchased a loan or property at the old inflated price, you may be facing losses, said Malay Bansal, head of portfolio management and advisory for CRE & CMBS at NewOak Capital.
"There is a dichotomy in commercial real estate at present," he said. "On one hand, there are worries about commercial real estate, with Standard & Poor's downgrading three insurance companies – Principal Financial, National Life and Pacific Life - a week ago citing expected losses on commercial mortgages and CMBS. On the other hand, every property we have looked at, has had 30 to 50 offers from possible buyers already. Portfolios of loans, especially better quality ones, have attracted a lot of buyers too.”