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Metechi Blog

Top 21 CRE and NPL Market Leaders to Follow in 2021

As a professional in the ever-changing CRE NPL market, it is vitally important to stay up-to-date on the latest trends and shifts in the industry. While reports, newsletters, and news media can be beneficial, one of the best ways to stay plugged in is by following the leaders in the industry. This people-based focus helps you stay informed and understand the actual community, not just the numbers, behind the CRE and NPL market. These executives, bloggers, and CEOs are our top picks to follow

1. Trisha Connolly

Trisha Connolly joined Ackman-Ziff, the industry’s preeminent boutique real estate advisory firm, in March as a managing director. With over 15 years of experience in both Chicago and New York (recently at B6 Real Estate Advisors), she has a mastery of national CRE financing. Andrea Jang, COO of Akman Ziff said that Connolly “Not only [is] a force in the capital markets, but she is also an inspiration to women pursuing a career in commercial real estate finance.” Connolly’s specialties include loan restructuring, term financing, syndicated credit facility, and construction financing—and has an impressive average transaction size of $40 million – $65 million which she hopes to build on in her new role. Ms. Connolly is already an impressive force and absolutely someone to follow as her exciting career continues.

Connect with Trisha Connolly on LinkedIn

2. Ian Coutts

Ian Coutts serves as the Managing Director, National Note Sales at Edge Capital Markets, and is an expert generalist when it comes to CRE loans. His specialties include Non-Performing (NPLs), Performing, and Re-Performing loans, and he works within all geographic regions within the US, in all asset classes. He has worked with a variety of institutions, from private debt funds to banks to special services, which gives him insight and familiarity with multiple client-needs and workflows. In addition to his in-depth mastery of the loan workout process, his $1.3B of note sales & acquisitions make him a formidable asset and someone to follow.

Connect with Ian Coutts on LinkedIn

3. Elana Tsyganko

Elana Tsyganko is the Head of Real Estate Investment at Cooper Horowitz Inc. She is an expert in New York markets, and a key player in the region, with her focus on New York and the outer boroughs. She worked across all asset classes (from commercial to residential to hospitality and beyond) and many transactions and projects she has managed have been in excess of $100M. Her career began in residential rentals and moved through sales, property management, and now real estate investment, giving her a birds-eye-view across each section of the industry, which makes her even more successful in her transactions with many of the most respected names in commercial real estate.  

Connect with Elana Tsyganko on LinkedIn.

4. Adam Horowitz

Adam Horowitz is the Founder and Principal at Lever Capital Partners, which has a capital base of over 1000 sources including pension fund advisors, CMBS lenders, banks, and more. He brings an interesting skillset to the table, with a current focus on programmatic transactions for established sponsors working within markets with which they are familiar to expand their presence. He is also an expert on large one-off deals, for example, his  $150MM hi-rise development and $125MM healthcare development deals, focusing on large institutional sponsors. With an innovative approach and impeccable track-record, Horowitz is certainly one of the most interesting leaders in the space.

Connect with Adam Horowitz on LinkedIn

5. Brock Cannon

Brock Cannon serves as the head of national loan sales with the Newmark Loan Sale Advisory Group. When it comes to debt sales, Cannon is one of the biggest names in the space. While based in New York, Cannon works on nationwide secondary debt transactions. He has become one of the top loan sale advisors in the nation, with loan sale experience including financing origination, restructuring, and modifications. As an expert in selling sub-debt, across the country, Cannon is a key influencer who continues to impress.  

Connect with Brock Cannon on LinkedIn.

6. Colin Mitchell

Colin Mitchell is Real Estate Associate at CCRE Advisors. As an auditor and advisor with a wide range of clients, he has a different perspective on the CRE and CPACE space. This unique expertise and in-depth experience with his client base as an auditor and advisor makes him someone to follow in 2021.

Connect with Colin Mitchell on LinkedIn

7. Ben Sabraw

Benjamin (Ben) Sabraw is the Managing Director of Business Development with SMS Financial, LLC. With over 19 years of experience and over a billion dollars in past transactions, he leads his firm’s whole loan purchasing activities. He has assisted financial institutions of all sizes increase their loan portfolio profitability, and his impressive track record has made him a trusted player in the whole loan arena.

Connect with Benjamin Sabraw on LinkedIn

8. Jonathan Schultz

Jonathan Schultz is a real estate and CRE-tech investor, and Co-Founder and Managing Principal at Onyx Equities. As a visionary in the space, Jon has helped Onyx become one of the Tri-State area’s leading real estate investment, management, and property service organizations. As a tech startup investor, and as a blogger and speaker, Schultz has made a name for himself as a thought leader and pioneer. The CRE space can be slow to adapt, and Shultz is someone to follow for the most innovative ideas in CRE tech. 

Connect with Jonathan Schultz on LinkedIn

9. Jason Bordenick

Jason Bordenick is a Managing Director and a Co-Portfolio Manager at Maxim Capital Group. In senior investment positions he has invested over four billion dollars in CRE debt and equity over his 14+ years of experience. His multiple senior roles at Seven Valleys Capital (SVC), NorthStar, and Natixis Real Estate Capital have given him key insights into the CRE debt space and proven his decisive and effective leadership skills. He is a leader, in every sense of the word, in the CRE debt market, and definitely worth following.

Connect with Jason Bordenick on LinkedIn

10. Matthew Prosseda

Matthew Prosseda is a leader in The Kafian Group’s Management Advisory, Process/ Profit Improvement and Strategy practice, brings objectivity to help bankers improve outcomes for stakeholders. For 35 years, Prosseda has been a community banker and has worked in operations, sales, and management. Based on this community experience, and his term as president and CEO of a high-performing Pennsylfanian community bank, he has a wonderful, people-focused approach to finance. 

Connect with Matthew Prosseda on LinkedIn

11. Minjia Yan

Minjia Yan is an associate of Millennium Commercial Properties, a development and brokerage firm in Las Vegas. However, she is also the founder of CREative Media, a social media content creation agency that specializes in CRE. This makes her a key mouthpiece in the market and the face of a new generation of CRE professionals. 

Connect with Minjia Yan on LinkedIn

12. Cathy Cunningham

Cathy Canningham is a Finance Editor in Commercial Observer, making her a particularly insightful and vocal influencer in the space. She leads CRE finance coverage for Commercial Observer, which puts her at the center of CRE news nationwide. Her reporting extends past print and web and into live interviews in Commercial Observer’s ‘Power Briefing’ webinar series. She is a key voice in the CRE finance space, and one of the most “plugged-in” influencers on this list.

Connect with Cathy Canningham on LinkedIn

13. Gary Bechtel

Gary Bechtel is the CEO of Red Oak Capital Holding, LLC. Bechtel is another expert in all aspects of the CRE finance industry across his 34-year career. He has been involved in origination, underwriting, structuring, placement, closing and disposition of over $10 Billion in transactions. He has worked with myriad sources, from life companies to commercial banks, mezzanine and equity funds, and he has assisted in construction loans from $1M to $250M. His expertise and established career make him a top-notch real estate executive to follow in 2021.

Connect with Gary Bechtel on LinkedIn

14. Kristin Rick

Kristin Rick is Senior Vice President, Originations at Pender Capital. Rick is a seasoned executive with over 14 years of experience in every facet of business development, commercial real estate finance to investment and marketing experience. She has served as a wide variety of roles at CommerceWest Bank and Strong Capital Management in addition to her Originations Vice President roles at Farmers & Merchant bank and Pender Capital. She is a key commercial real estate player and an inspirational leader in business development and originations.

Connect with Kristin Rick on LinkedIn

15. Brad Lyons

Brad Lyons is the Managing Director of Stabilis. He not only brings a wide range of expertise across all real estate sectors (hospitals, restaurants, auto dealerships, gas stations, and more) but also expertise with specialty finance, including receivables and equipment financing, energy assets, and beyond. He’s a seasoned executive and has been active in capitalizing the acquisition of dozens of assets, and worked with development projects nationwide, certainly making him someone to follow in the real estate structured finance space.

Connect with Brad Lyons on LinkedIn

16. Shahid Jafri

Shahid Jafri is the Founder of Jafri Capital. Before founding Jafri Capital, he helped close over a billion dollars in real estate investments and specialized in equity and debt placement. 

As a relatively new face in the market with impressive transactions to date, Jafri is poised for even more success and brings a fresh look at CRE debt structures.

Connect with Shahid Jafri on LinkedIn

17. Kenneth Karkmolinski

Kenneth Karmolinksi is the CEO/Managing Director at Divergent Capital. His background spans a diverse range of real estate and finance areas over 25 years. The combination of his experience in real estate finance & sales, and securities, venture capital, insurance, and receivable financing, make him a real estate influencer with an especially keen financial mind.

Connect with  Kenneth Karmolinski on LinkedIn and Twitter.

18. Kurt Altvater

Kurt Altvater is a Senior Vice President at CBRE. He brings the wisdom of 30 years in the space combined with the expertise that comes from over $20 billion in loan sales. He is a force in the West and throughout the US, with his main focus on selling and marketing commercial mortgage loans on the secondary market. His track record and history in the industry make him a must-follow in 2021.

Connect with Kurt Altvater on LinkedIn

19. Peter Beauchamp

Peter Beauchamp is a Senior Vice President at Kidder Matthews. As an expert strategist, it’s no wonder that he is regularly referred by leading institutions and attorneys. He uses a masterful understanding of capital markets to optimize value on real estate and CRE debt. A natural leader, his teams not only develop and execute sale marketing plans, but also consult on behalf of institutions in the western region.

Connect with Peter Beauchamp on LinkedIn.

20. Rick George

Rick George is a Senior Hospitality Broker at Avison Young. George is a 25-year veteran of the hospitality business, and a leader in national hospitality asset transactions. He has focused on single asset and portfolio transactions since opening the Chicago office for Keith Thompson and Hotel Assets Group, and he is an expert on every element of the hospitality real estate process, not only in the financial end (valuation, acquisition, financing) but also in other areas including branding and land development. 

Connect with Rick George on LinkedIn.

21. Scott Tami

Scott Tami is a Real Estate Capital Advisor at Estreich & Co. From Alexandria, VA, Tami has over 14 years of industry experience under his belt. Tami joins Estreich after spending nine years at URS Capital, where he focused on originating debt and equity financing solutions nationwide for middle market commercial real estate.

Connect with Scott Tami on LinkedIn.

Wrapping it all up

Remember, knowing all the numbers, facts, and figures is only one element of success in the CRE financing industry—personal connections and being plugged in to the community is just as important. With centuries of combined experience and some of the most innovative minds in the field, we hope that you found this list helpful. 

For a better, safer, and faster way to sell your NPLs, try Metechi today. 

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Metechi Blog

The Distressed Debt Wave: 5 CRE Experts Discuss Trading Nonperforming Loans in 2021 and Beyond

We entered January 2020 with unprecedented momentum. A strong economic outlook called for a year of tremendous growth after nearly a decade of global economic expansion. While all the indicators of growth and success presented themselves, the global pandemic put the era of growth to a screeching halt; leading to a year of tremendous loss and uncertainty, changing the world as we know it.

A year later, with the vaccine rollout in full swing and the end to election uncertainty, we anticipate 2021 will be a strong year for the capital gains market. We are seeing a positive market outlook that boasts low interest rates, banks and investors flush with cash, and an S&P 500 index that’s up 3.8% YTD.

While we anticipate a strong year of recovery, we gathered the latest research and interviewed the most influential CRE experts to expand on our predictions. Here is what they have to say.

Distressed commercial real estate loans and discounted asset sales will continue to rise 

The Fool reports 20 large real estate firms have filed for bankruptcy by the end of 2020, including two with more than $50 million in assets. In the next five years, CoStar Group predicts there will be a more than $126 billion flash sale of distressed commercial real estate, equating to $321 billion in sales by 2025.

Additionally, data from the Federal Reserve shows commercial property debt increased to a record of $3.06 trillion for the first time during the third quarter of last year, up from $2.2 trillion in the third quarter of 2012, which was a 10-year low.


Brock Cannon, Head of National Loan Sales at Newmark believes the distress created as a result of COVID will last beyond our predicted 5-year growth period. He says, “my team is still working on sales that originated in 2007 and 2008, thirteen years later. We will be working through this distress for at least ten years to come.”

Bid-Ask Spread to Lessen 

Distressed deals in 2020 were also challenged with a large bid-ask spread, a leading indicator of illiquidity of the market. We anticipate that the spread shrinks in 2021, due to lenders having more realistic expectations of below-par sales and increased available capital.

Chris Skinner, author, speaker and expert on banking says the lasting impact will stretch beyond 2021 saying, “it’s not just in the CRE space but in all aspects of society. Most people had exposures to loss in 2020 and they will pass those losses onto the banks. Expect a major downturn and increasing NPLs through to 2025.”

Hotel and Retail Will Struggle to Recover; Office Recovery Uncertain

FitchRatings reports that hotel and retail delinquencies rose to $2.0 billion in December 2020 from $1.5 billion in November. New delinquencies were largely made up of $1.2 billion in hotel loans and $582 million in retail loans. The delinquency report from Moody’s Analytics paints the same picture.

Adam Horowitz, Principal at Lever Capital Partners, shares a different perspective. “Every time there is a downturn in the market, funds are raised with the anticipation of a flood of NPLS hitting the market,” he says.

Research from Real Capital Analytics indicates that CMBS had the highest leverage and market share during the last crisis. This time around, we are seeing higher leverage with direct lenders and banks. However, CMBS is more concentrated in the hotel and retail areas, which will be reflected in deeper discounts on CMBS distressed sales.

Marco Santarelli, Founder and CEO of Norada Real Estate Investments points out that while the commercial space is suffering, residential real estate remains strong. He says “the brick and mortar retail space has suffered the most, but demand for homes, logistics and storage have increased.”

Unanimous Uncertainty and Novel Ideas Around Office Recovery

CBRE predicts that the office sector will recover the slowest from pre-pandemic investment volumes. The cloud of uncertainty around the future of work and office spaces are widely shared across the board, with a general consensus that evolving trends that include remote and flexible working are here to stay.

New York Times editor, Matthew Haag, suggests NYC’s real estate can be positively transformed if office spaces are converted to residential spaces. Data shows that job growth in New York City has tremendously outpaced housing growth, leading to a massive housing shortage. While this would require zoning and density rules to change by the City Council and State Legislature, this is one of many novel ideas presented due to the uncertainty around a return plan to corporate offices.

The report states that only 10% of Manhattans’ 1 million office workers are physically reporting to the office, and filings to erect new buildings dropped by 22% in 2020, the lowest number since 2010.

AI and Technology Will Transform the Way CRE NPLs Are Sold Forever

“The real estate industry as a whole has been very slow to adopt new technology,” Santarelli states. His sentiments are widely shared amongst experts interviewed, confirming a need for broader capabilities of technology platforms to fully meet the increasing demand to manage CRE deals.

The success of lenders, brokers, and CRE firms in a post-COVID world depends on the extent to which their people can perform in remote work environments. Deloitte reports that most CRE companies are unprepared to meet the demand in this wave of distressed debt.

Jim Berry, Vice Chairman and US real estate leader at Deloitte states, “While the pandemic was an eye-opener, we see it as an accelerant of existing trends. It is telling that 56% of CRE respondents to our 2021 CRE Outlook survey said that the pandemic exposed shortcomings in their organizations’ digital capabilities. Only 40% of respondents said their company has a defined digital transformation roadmap.”

It’s clear that digital adoption is not enough – a digital transformation is necessary for firms, brokers, and sellers to keep up with demand and operate efficiently.

Horowitz shares how technology is helping his firm today by saying, “Technology helps with the two main components of our business; who needs capital and where to find it. There are various ways to determine whose loans are coming due, what projects are on the docket for future development, and what assets are currently in default.

On the capital side, technology is helping us determine capital availability, making sure we connect with the right person at that firm, then create a process using technology to close the deal in the most efficient way.”

Technology platforms driven with AI, like Metechi, help fill in the gap to meet this increasing demand. Increasing analytical capabilities coupled with security and transparency will transform the way the market will operate. To find out how you can buy and sell CRE NPLs at scale, schedule a free demo with Metechi today.


About Our Contributors

Brock Cannon serves as the head of national loan sales with the Newmark Loan Sale Advisory Group. Based in the firm’s New York headquarters, Brock focuses on secondary debt transactions on a national basis. Brock’s experience with loan sales is extensive and includes the origination of debt and equity financings, restructuring and modifications of distressed loans, loan servicing, loan sales and investment sales. For more information on how to get on the investor list, speak with Brock here.

Chris Skinner is an author, expert and speaker on banking, finance and fintech. He is the author of the The Finanser blog and chairs the Financial Services Club. He defines purpose-driven banking as more than sustainability or ESGs. He likes to pose the key question: if your company doesn’t stand for something then it will fall for everything. What does your company stand for? 

Trisha Connolly is a Senior Managing Director at B6 Real Estate Advisors focusing on equity and debt transactions for the capital advisory team with clients across the country and a focus on the lower Manhattan territory. Ms. Connolly specializes in commercial real estate financing with over 15 years of experience including loan restructure, term financing, syndicated credit facility, construction financing, acquisition financing and advisory and joint venture equity structures.

Adam Horowitz is the Founder and Principal at Lever Capital Partners. Lever focuses on two types of transactions; large one-off deals for institutional sponsors ($50MM+) and programmatic equity investments for established owners looking to build out a niche platform ($10MM+).


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Breaking: We raised $5M to empower brokers to sell more NPLs at scale

We’re excited to announce our $5M seed round for our AI-powered debt trading platform that facilitates the buying, selling, origination, and syndication of commercial loans at scale.

Our network of over 1,000 US banks, institutional investors, and brokers is expanding faster than ever. Our funding facilitates our growing success as we leverage the challenges of today’s market.

The pandemic has catalyzed a wave of distressed debt opportunities, particularly for distressed commercial real estate. 

With increasing loan delinquencies, we’re meeting the rapidly growing demand for a technology-driven commercial lenders marketplace.

While the largest institutions enjoy the benefits of economies of scale, we level the playing field by using technology to streamline deal flows for banks, brokers, and financial institutions. This round of funding is a game-changer for us.

This is why we can reduce our buyers’ fees from an industry-rate of 5% to only 2% while remaining free for brokers and sellers.

We’re excited to continue to build a product that empowers brokers to sell more NPLs with much less effort. 

With our proprietary technology, we empower brokers to sell more NPLs with much less effort. 

If you’re a CRE broker, start selling NPLs for free here.

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New Origination Opportunity: $42.4 Billion of Performing CRE Loans in Maturity Default

Summer 2020 has shown conflicting economic signals.  The S&P 500 is at an all time high as have both unemployment and bank loan loss reserves.  Commercial real estate has seen origination volume drop drastically and the bucket of loan maturities in need of financing is growing.

Decreases in new mortgage volume from banks and insurance companies is opening opportunities for non-bank, especially bridge lenders.  Extrapolating CMBS data, there is an estimated $42 billion of performing loans past their maturity date in need of refinancing.  

Origination Volumes
According to the Mortgage Bankers Association recent report, new origination for CRE mortgages fell 48% for Q2 2020 compared to Q2 2019 and fell 31% to Q1 2020. Comparing decreases by lender in Q2 2020 and Q2 2019, originations for insurance companies decreased 49%; commercial banks 55% and CMBS 95%. Changes in volume by property type is detailed below.

Origination Volume Q2 2020 compared to Q2 2019

Property Type Change
Hotel-91%
Retail-74%
Office-71%
Industrial-44%
Multifamily-24%


Source:  Mortgage Bankers Association

Matured Loans 
August data reported by Trepp cites a CMBS delinquency rate of 10.3%, or $51.4 billion for the almost $500 billion of CMBS debt outstanding.  That figure includes loans that have continued to pay their debt service and would be marked as performing, except that they have passed their maturity date and not paid off the loan.  These loans are referred to as performing maturity default or performing maturity balloon.  As of August 21, CMBS has approximately $5.67 billion of performing maturity balloon loans.  Hotel and retail make up 87% of these loans with the full property type breakdown is below. 

Share of CMBS Performing Maturity Default by Property Type

Source:  Data from Trepp

CMBS represents approximately 13% of the total $3.7 trillion market of commercial real estate debt.  Assuming the same ratio across the CRE mortgage universe, there is approximately $42.4 billion of performing loans in maturity default looking for refinance.  

Types of Default
Default generally falls into 3 categories – maturity default, term default or technical default.  Loans with maturity default have passed their loan due date without repayment.  Loans could be performing maturity default meaning they remained current (continue to pay debt service) but not paid the outstanding balloon amount at maturity.  This can be due to different reasons, including new loans taking longer to close or an asset sale falling through. It can also be due to their traditional lenders reducing their lending capacity or a perceived decline in the property’s value to support the amount of debt.  Loan to value is a good indicator of potential maturity defaults.  

When referring to term default, it is generally a non-payment of debt service or a financial default that happens prior to the maturity date.  Debt service coverage is a good indicator of potential term defaults.

Technical default is the borrower violating a non-financial term of the loan agreement. For example,  not maintaining a certain level of insurance or a zoning issue could be a technical default.  Technical default does generally happen during the term.

Conclusion
CRE lenders have always been savvy and kept an eye open for opportunity.  Many are now watching and waiting patiently for the wave of non-performing loans that will inevitably come as a result of the crisis.  In the meantime, lenders should take advantage of market need for origination on the estimated $42 billion of loans needing refinance.   

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Sellers’ Market

It is going to be a sellers’ market.

Banks are currently preparing to sell their Non-Performing-Loans (NPLs) dealing with questions like when and where to sell. Based on the 2008 experience, the answer to the when question is really simple. The Longer You Wait the Deeper is the Discount.

And as to the where question.
Banks believe that in order to generate enough demand for their NPLs in competitive bidding they should do what they did in 2008. And also keep paying a 5% fee.

But this crisis is different.
This crisis will result in $400B NPLs that banks will need to sell. It is also reported that the Distressed Debt Funds already raised $1T to buy these NPLs.

Clearly, it is going to be a sellers’ market with many more buyers and lower expected discounts than the 2008 crisis.

Banks can choose newer platforms with confidence that the high demand will follow their NPLs wherever they are. 


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Metechi Blog

The coming wave of non-performing loans is right on track

In the early stages of COVID-19 many banks were focused on a short to medium term downturn, triaging only the most affected / impacted sectors.  Then the PPP program came and went, effectively buying time for many businesses and allowing the clock to be “reset”.

As little progress has been made containing COVID-19, the realization is starting to set in that we are yet to see the worst of the economic damage.  Many banks are now bracing for a much more protracted downturn, in which most, if not all sectors will see significant credit deterioration.

Following news that the four largest US banks have effectively doubled loan loss reserves – regional banks are starting to follow suit.  In addition to increased provisioning, many are just beginning to determine a broader balance sheet strategy.  Continuing on the “wave” reference, the “crest” has not yet appeared.

Many banks are still trying to support their customers as best they can – and the likely second wave of financial stimulus will supplement this effort and reset the clock again.  Despite the warning signs, it is simply too early in the COVID-19 cycle for the determination to be made which customers will have to be cut or scaled back.

That said, this difficult decision process will come sooner than expected.  Banks will need to be prepared with a pre-conceived strategy to effectively navigate this crisis.  For many, this will be shrinking balance sheets while for others this will be adopting new strategies and technologies that were never needed before.  When this wave does crash, one thing will be for sure – the “winners” will be those who acted early to best position themselves ahead of their competitors.

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Metechi Blog

The $384 Billion Question of Distressed CRE Debt

The year 2020 started off strong followed by a roller coaster of economic events in Q1 and Q2.  A pandemic left offices, hotels, malls and streets vacant as America stayed home. Unemployment reached unprecedented highs. The economy slowed but didn’t stop with the aid of government stimulus. The stock market experienced volatility, though generally showed buoyancy. Overall, companies have experienced unforeseen stress to their bottom line putting pressure on credit metrics and affecting the lending market.  

Lenders, both banks and non-banks, generally put a halt on writing loans to reevaluate their strategy and shift into loan surveillance.  Some borrowers were granted forbearance or other temporary modifications to their loans, typically for a period of three months. Now July, many borrowers are reaching the end of that period. More defaults are expected for borrowers that are still experiencing stress. Similarly, some loans that may have been in a payment grace period are starting to fall out of grace as they haven’t been able to cure their loans. Many of these distressed loans will be sold by the end of 2020 with some NPL’s coming to market now.

Tracking CRE mortgage distress, public data from CMBS gives us a window into loan defaults. The graph below shows the upward trajectory of June delinquency data reported by Trepp.

  

As of Q1 2020, the outstanding CMBS universe was $516 billion and the outstanding commercial mortgage universe was $3.72 trillion as reported by the Mortgage Bankers Association. Assuming the CMBS default rate is consistent with the outstanding commercial mortgage universe, there is $384 billion of delinquent commercial mortgage loans.  

Breaking down the June 2020 delinquency rate, the table below details the rate by property type.  Hotel and retail loans have shown the greatest distress so far with expectations of increased delinquency for office loans.




Hotels have the highest delinquency rate due to the lockdown on travel.  Having the shortest lease term being priced daily, hotels revenue effects are immediate.  STR expects occupancy to return to the long term average by 2023 with hotels discounting price for market share.  STR’s 2020 hotel demand projections are -35.6%.  Continued defaults in hotel mortgages are expected as hotels struggle to survive.  

The retail sector has been hard hit due to forced store closures and changes in retail behavior.  Sales have increased for online retail, supermarkets, and drugstores during the shut down.  However, that isn’t the norm for retail tenants.  According to Datex Property Solutions, 68% of national chain retailers paid their June rent.  More retail distress is expected with continued announcements of bankruptcies which will negatively impact mortgages on retail properties. 

Multifamily has been affected as well due to job losses and consumer financial strain.  According to the National Housing Council, 77% of households made a partial or full rent payment.  Delinquencies remain relatively low by comparison.  

The future of the office sector is in question with the effectiveness of work from home and the concerns of social distancing while at work.  Some argue that companies will remain remote, while others argue the loss of culture and productivity require companies work out of the office.  Similarly, tenant footprints are argued to decrease with fewer people in the office or increase giving more space per employee.  There is stress on the sector, and despite the longer lease terms some borrowers will face tenant vacancies, renegotiated lease terms and increased expenses due to the pandemic.  More distress is expected to be seen in office loans and defaults. 

The industrial sector has been less affected by the pandemic and is expected to remain stable.  The changes in the retail dynamic and online sectors have helped lessoned the stress of industrial tenants.  A stable level of default is expected for industrial loans. 

All in all, with approximately $400 billion of defaulted CRE loan outstanding and continued stress in the commercial mortgage sector, the coming months expect to bring increased loan defaults and increased opportunities for distressed debt buyers.  Lending and capital markets are showing signs of opening.  Workout specialists are busy and NPL’s are coming to market.  

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Metechi Blog

Our Vision

Hi, I’m Keren. Co-Founder of Metechi.

After relocating to the U.S in 2014, we decided to build a platform that will change the way banks and financial institutions are selling and buying debt.

The Problem
We researched debt market access among banks and financial institutions in the United States and around the world. Our research showed the main problem in the market is access to deal flow, since the financial industry is relying heavily on relationships.

The Solution
After raising seed money from angel investors and from D.E.Shaw in early 2018, we started building the Metechi marketplace. We are passionate about creating new relationships between vetted participants to enable greater deal-flow for banks and financial institutions.

We believe that true value lies in the robust relationships we establish with others. That’s why we are facilitating connection-building for new business opportunities.

Metechi is fully inclusive: we bring CRE debt buyers and sellers together to enable you to build relationships with other lenders. To date, Hundreds of lenders selling and buying CRE, C&I, and distressed debt have already signed up to Metechi, and are enjoying the platform.

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Metechi Blog

What is Metechi?

What is Metechi?

Metechi is The Commercial Lenders Marketplace providing lenders instant access to CRE, NPLs and C&I loans originated by banks and institutional investors. Buying, Selling, Participating, and Syndicating Loans Powered by AI Match between Lenders and Loans.

Agents

Take the driver seat with complete control of the sale process. Sell or syndicate all types of loans (CRE, C&I, NPL). Get premier access to our qualified institutional lenders, expand your relationships and run confidential competitive bidding.

Institutional Investors & Participating Banks

Get a premier deal-flow to buy or participate in CRE, C&I and NPL debt opportunities originated by banks & institutional investors. Build a diversified portfolio that excites by going beyond your reach. Connect directly with the sellers.

The Market

The CRE, C&I and NPL syndication market is dominated by personal relationships and governed by big banks. Metechi introduces AI Match of Lenders and Deals to this enormous financial market to facilitate broad access, efficient execution, and deep liquidity.

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Metechi Blog

Welcome to Metechi

Metechi is The Commercial Lenders Marketplace using AI to match between Lenders and Loans. Agents/sellers get direct access to pre-screened universe of commercial lenders, and participants/buyers get a premier deal-flow of all types of loans originated by banks and institutional investors.

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Banks need to decide today what to do with their NPLs

The crisis we are experiencing presents a major dilemma for banks. Many of their borrowers are facing difficulties in paying their loans on time. These borrowers are asking banks for forbearance on current due payments. Given the government 90 days forbearance programs, banks routinely grant such requests. Absent the government programs, such forbearance will lead to reclassification of a loan as a Non-Performing-Loan (NPL), thereby requiring an increase in the reserve set aside for potential losses. Indeed, the trend in the upcoming NPLs is clearly shown through the data coming out of the CMBS market. Moreover, even during the government programs, JPMorgan’s most recent financial reports show a massive increase in reserves.

Without government forbearance programs, banks need to decide what to do today.

If banks believes, as many do, that even with government help we are heading into a recession that can last at least a year, banks will need to act now. In the coming months, there will be a surge in the number of NPLs. Many banks will want to sell them. And with high supply the discount on these loans will increase.

Indeed, an important lesson from the 2008 crisis, the longer a bank waited the deeper was the discount on the loans sold.

Currently, there are more buyers looking for NPLs than sellers. To take advantage of this higher demand banks need to sell now some of their potential NPLs. Depending on the type of business—such as hospitality, retail, or multifamily—and the strength of the client’s balance sheet, it is possible to estimate the likelihood of a recovery or the soundness of a foreclosure. Selling now the loans with the higher likelihood to fail, will hedge the risk of the banks against the deeper discount expected in the future.

However, although selling the NPLs in the near future is inevitable, banks prefer to postpone this action because of potential reputation effects vis-s-vis clients, peers, and investors. Waiting and selling loans, even at deep discounts, together with many other banks does not carry the same reputation risk.

But banks need to be creative. Instead of accepting deep discounts to avoid the reputation risk, they can conduct a confidential competitive sale process. The selling bank can run an anonymous auction among the potential buyers, and reveal its identity subject to signing NDA only to the winning buyer. This process can be done even for banks who wish to sell only part of an NPL, due to a commitment to the borrower not to sell the whole loan.