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The Mortgage Bankers Association expects 2022 volume for commercial and multifamily mortgages to be comparable to last year

Money Managers Focus on Distressed CMBS in Hunt for Bargains

A pair of money managers have taken a page from the 2009 playbook with a focus on distressed CMBS debt. Bloomberg News reported that hedge fund Axonic Capital and startup Metamorphosis Hotel Capital Partners are picking apart CMBS as they hunt for bargains, according to people with knowledge of the funds’ strategies. 

Although the two money managers have different plans for how to gain possession of the underlying assets, their end goals are similar: to take control of, fix and flip ailing properties for significant profit.

In the current environment, the thinking is that bank-financed properties may continue to receive time from their lenders to meet interest obligations, but buildings with securitized mortgages likely have less flexibility to avoid being sold off should they miss looming payment deadlines. That creates an opportunity for savvy firms to pounce, Bloomberg reported.

“This is an interesting strategy that’s proven successful in other asset classes,” Paul Norris at asset management firm Conning & Co. told Bloomberg. “We expect to see more hedge funds do this,” although he added that he’s not pursuing the strategy himself.


Inside The Story

Coning & Co.’s Norris

About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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