Banks.
Reserves.
"No Issues".
A thread 🧵to better explain what I see from my side as a note buyer chasing bank loans.
#CRE #RealEstate #Lending
CleanTo2ndLien
2,271 posts
- Had coffee yesterday with the CEO of a large multifamily owner / operator + 3rd party manager. He mentioned they can barely keep up with the inbounds from debt funds and banks looking for operational solutions / exits. He specifically harped on Texas and mentioned that a
- Replying to @CleanTo2ndLienSummary If I didn't make it clear above, I do not think banks have adequate reserves for the real underlying issues. I'm also not saying banks should mark to market their books. We are in a not-so-funny downward spiral where there is a mountain of performing to sub performing
- A colleague in the industry shared a CRE CLO market report with me last week. There was a chart in there that really stuck out to me. I trimmed down several columns so it could easily fit here. This is sorted by highest balance and in billions. Short 🧵: Data Sauce: Barclays
- Office/retail asset in NYC just traded. 2015: Acquired for 89mm, loan 59mm 2024: Sold for 26mm For the finger counters out there (me): - 29% of last purchase price - 44% of loan amount Saw this one in many iterations the last few years.
- Headed to Miami tomorrow for IMN Distressed Debt Conference. Oddly, one of my favorite things about these conferences… I get to walk straight up to people that don’t take my calls 😂 (the Clean special). Talk about addresses on their book, or market in general all while
- Let's elaborate on something I said yesterday, a 🧵: What's becoming more clear is not having to sell (debt funds) vs can't sell (banks). But who lends to the debt funds 😎? #CRE #RealEstate #Lending
- Replying to @CleanTo2ndLienSo they want to sell a loan, now what? Banks will send us a loan they want to sell. We'll value the property and factor in what we can pay for the loan based on several items: default rate, foreclosure time, $$$ to stabilize the property, time to stabilize the property, earn
- With 15-25% deposit requirements**My contact at a very good regional bank says after 1.5 years, they are going to lend in CRE starting in Q2.
- Notes from the shadows 👻 Just finished up lunch with an executive of a large NYC based owner/operator - very nice guy, super sharp. Office commentary: He was telling stories he heard of banks/debt funds restructuring loans and subordinating pieces of their positions to
- Background on what Kyle is saying here: - A defaulted loan has implications on the balance sheet for many lenders - examples: --> banks (regulators) --> debt funds using warehouse lines that are recourse/mark to market, aka margin call --> and other private credit lenders that
GIF
The loan can’t default if we lend them the interest - Some good calls/meetings booked after this one. The most unique and personally a first - a Bank Examiner A regulator reached out to me to discuss the post and gave permission to share these takeaways, which (un)surprisingly is inline w/ the issues presented in the quotedBanks. Reserves. "No Issues". A thread 🧵to better explain what I see from my side as a note buyer chasing bank loans. #CRE #RealEstate #Lending
- Replying to @CleanTo2ndLienWhat happens now? Banks have been taking things quarter by quarter because it's really the only thing they can do. In my opinion there will be more shock as time goes because what will appear as "sudden increase in loss reserves" really should be no surprise. But until then,
- This is not meant to be a doom post. But odd activity on the note sale side of things. Received another 75mm+ in NPLs today. That’s now 175mm in last two days. The principals of our firm also got a call yesterday/today on more deals. 4 years in and this has never happened.
