The era of “extend-pretend” may be coming to an end for maturing commercial mortgages that cannot make their payments, a
Market participants are increasingly “looking to resolve bad situations” rather than modifying and extending terms for maturing loans in this circumstance, said Bruce Batkin, president and CEO, Terra Capital Partners.
A relatively large number of commercial mortgages from the securitized market remain in special servicing, and values are still down from their peak outside New York and other select markets, but “overall, things are looking better” for commercial real estate, said Batkin.
In response to a question-and-answer session led by commercial real estate attorney Joshua Stein about the outlook for various property types, Batkin said the outlook for multifamily in particular continues to be relatively strong with the exception of supply-demand imbalances in some markets. Batkin also noted that the rise of business done online may affect supply and demand in some property sectors such as retail.
The mezzanine financing executive said he watches market trends carefully, and as a result was able to see signs of a bubble in property values back in 2007, early enough to sell his entire portfolio at an opportune time.
“I saw the writing on the wall,” he said, noting that as a result his current lending business is not burdened with any problematic legacy real estate assets.
