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Lenders begin going after commercial properties

As forbearance periods expire, more lenders are going after properties or demanding additional capital in exchange for extending relief. The slumping travel and restaurant industries, as well as store closures, have made hotels, retail properties, and shopping malls the most immediately vulnerable. Across the U.S., 278 properties backing securitized mortgages were in foreclosure as of last week, WSJ reported.

  • The longer the crisis, the more likely a surge: Banks, which are getting plenty of leeway from regulators, have been more willing to grant long forbearance periods and extend them if necessary. Many nonbank lenders are more eager to foreclose
  • Moratorium on foreclosures contributes to inactivity… There were just 21 commercial real estate transactions in Manhattan in the third quarter of 2020, which is the lowest number of deals recorded since the third quarter of 2009, according to an Avison Young research report. Sales volume declined to $1.1 billion, a 74 percent decrease from the previous year.
  • Sales data presents a rosier picture than reality: The majority of investment sales was actually put into contract before the pandemic: Savanna’s acquisition of 1375 Broadway for $435 million, and RFR Realty’s purchase of 522 Fifth Avenue for $350 million. 
  • Heard on the Street: Attorney Jay Neveloff told the NYTimes: “Behind the scenes, more lenders are starting negotiations to take over properties from their borrowers.” [NYTimes+WSJ+Bisnow]

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