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Real Estate Roundup 3.27.20

Tel Aviv Stock Exchange (Credit: Bloomberg)

Real Estate Roundup:

  • Ratings agency Fitch has warned that non-bank lenders in particular could be in trouble if mortgage forbearance becomes widespread: “The pressure on the non-bank mortgage sector is particularly acute at present and could be exacerbated further as an unintended consequence of the government’s mortgage forbearance program. There is some indication that the $2 trillion stimulus bill could provide the Fed and/or Treasury with the flexibility to provide liquidity support to the non-bank mortgage sector, but failure to act could lead to meaningful disruption in the mortgage industry.” (Fitch)
  • The Cheesecake Factory, one of the most popular sit-down restaurant chains in the country, says it will not be able to make upcoming rent payments for any of its storefronts on April 1 because of significant loss of income due to the coronavirus crisis. (Eater)
  • The Israeli bond market got a shock earlier this week when a Related subsidiary, Related Commercial Portfolio, warned that it could default on a roughly $200 million bond payment due in September. The bond issuer faces a $207 million payment on September 30 when its Series A bonds mature. On Monday, we will review the performance of bonds issued by Wharton Properties, Extell, All Year Management, Silverstein Properties, Starwood, and Lightstone Group. (CO)
  • A $154.6 million loan for a Brooklyn development site owned by RedSky Capital has fallen into default, according to Apollo Commercial Real Estate Finance. The lender made the disclosure in a recent public filing, stating that the borrower stopped paying interest at the beginning of March, and the property is now for sale. (Crain’s)

The volume of new loans and demand for commercial mortgage securities in the secondary market have fallen sharply. The spread between the most highly rated securities and Treasury bonds widened to 3.29 percentage points late last week, from 0.86 percentage point at the end of January. That was the widest level since the 2008 global financial crisis.

  • Be Smart: The upshot is that new issues can’t be sold without the underwriters taking unacceptable losses.The sale of new securities backed by other types of commercial property “ground to a halt” last week. Owners with properties that have gone dark during the nationwide economic shutdown, such as hotels and malls, are almost completely cut off from debt. (WSJ)

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