Recent sector news does not necessarily mean doom for all corners of the retail real estate market, at least to investors like Brad Friedlander, portfolio manager for Atlanta-based Angel Oak Capital Advisors.
The interest rates offered by CMBS lenders to apartment properties are not much better than they were a year ago, when the bond markets were hit by a spell of volatility.
By the end of the second quarter, investors can expect to see $30 billion in issuance, according to Manus Clancy, senior managing director at research firm Trepp.
The prevailing theory is that failing brick-and-mortar retailers will mean higher vacancies and bankruptcies for mall operators, with losses inflicted on CMBS holders.
As delinquencies on loans rise, some ratings firms are walking back their grades on bonds tied to properties like shopping malls and office towers, just a few years after assigning them.
Most of the stable legacy loans securitized circa 2007 have already been refinanced or defeased early, whereas much of what is left are the “dregs,” or loans that have very high leverage or vacancy and values.
The rate is the highest the firm recorded in 18 months.