| CMBS defaults rose sharply in March after February's numbers showed delinquencies beginning to moderate. (Don't you love when the economy makes sense?) Though, while CMBS lending is beginning to rise, about $14B in loans have been modified in the past six months, 1st Service Solutions prez Ann Hambly tells us. | |
| Ann, with Hart Advisors Group CEO Tanya Little, isn't playing tic-tac-toe, but showing the LUV recovery speculation. Some people think there will be an L flat-lining once the bottom is reached, while others think the V will bring a big rebound once we hit bottom. Ann's theory: it will be a loooong U:. “I've seen many restructures, but I think we'll have another three years of solid pain. This is a five- to seven-year U, and we're 18 months in.” (Pain killer, anyone?). There is $3.5T worth of CRE debt and CMBS loans make up 25% of it. She tells us 80% of her business is restructures. | |
| As an asset manager, Tanya sees leasing activity increasing slowly, but also more dark spaces and tenant bankruptcies than last year. “I tell my borrowers to consider DPOs (discounted payoffs) if possible, as some of the best deals are being done if you can take out the lender,” she says. Tanya tells us while many are waiting for the maturing loans, she sees plenty of non-maturing loan restructures. There's no refinancing to bail then out either, Ann adds;cash buyers are the norm. She believes the ‘extend and pretend' days are gone. “First there was a denial phase—no one believed it was this bad. But by mid-'09 people realized it wasn't getting better. By the end of '09, special servicers were willing to make DPO deals.” | |
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