Distressed CRE Buyers Seek `Exceptional Bargains'
The most read story on the Bloomberg terminal today is my dive into the distressed opportunities emerging in the US and the implications for the rest of the world. Private equity, which snaps up most of the troubled real estate assets in a downturn, has the highest percentage of dry powder targeting North America in 20 years, according to Preqin. That suggests the rest of the world may struggle to find buyers for soured debt and defaulted properties, especially given Europe in particular is slow to recognize losses.
You can read more here: https://www.bloomberg.com/news/articles/2024-07-10/us-commercial-property-crash-is-set-to-deepen-the-pain-elsewhere?sref=cOxs4CFp
John Brady, global head of real estate at Oaktree, wrote a note recently saying that when it comes to the US “few asset classes are as unloved as commercial real estate and thus we believe there are few better places to find exceptional bargains.”
In Europe, meanwhile, the amount of CRE debt with a loan to value ratio of more than 100% nears €160 billion ($173 billion), according to the region’s banking supervisor. The situation is likely to get worse, with a further increase in non-performing loans, European Banking Authority Chair Jose Manuel Campa told Bloomberg Television. “This is a trend that’s not going to be short term.”?