Health Crisis Shines New Light on Market Migration, Signaling Potential Changes for Commercial Real Estate
Discounting similar to the global financial crisis not anticipated.
The prospects of acquiring real estate at deeply reduced prices has buyers lining up capital in preparation of a wave of distressed assets becoming available. However, investors may be disappointed by the volume of distress this cycle. For properties not financed through CMBS, most financial institutions are committed to delaying foreclosure, following a trend established during the global financial crisis. CMBS may also take longer to become available as Congress considers legislation to prevent automatic foreclosure triggers that tie the hands of the loan servicers when considering forbearance. Furthermore, prompt action by the Fed and Congress could dampen this downturn, limiting the amount of distress that comes to market as a result.