Editors’ Weekly News Roundup, March 27th – 31st

The volume of multifamily debt is two times the size of the commercial market and four times the size of the industrial segment.Brian Good, CEO of iBorrow

Distressed commercial real estate debt was the overarching theme of four of this past week’s five most-read stories, with one focusing on the conundrum of perception vs. reality. Leading the rankings was a story out of the Bay Area, with the campus of Holy Names University going up for sale. 

The 155-year-old school in Oakland, CA had already announced that it would close at the end of the current academic year, but now CBRE has the listing for its real estate. Holy Names University For Sale After Loan Default explains what brought the school to this point and the possible outcomes for its campus after a buyer is found. 

Although Connect CRE has occasionally reported on the real estate sale of a failed academic institution, as a category of distressed properties it’s a rarity. For an examination of what classes of commercial property are at higher risk of defaulting on loans, the week’s second best-read story, Debt Maturity: What’s Actually in Trouble?, turns to experts in CRE finance. 

The office sector is currently the poster child for CRE distress, and the article explains why. However, the risk extends to other property types as well as loan types. 

That being said, the Mortgage Bankers Association (MBA) would take exception to some of the news reporting on CRE distress for conveying the perception that the problem is more widespread than it actually is. MBA’s Broeksmit: Media Coverage of CRE and Financial Stress Doesn’t Capture “the Complete Picture” reports MBA president and CEO Bob Broeksmit’s concerns that some of the analysis and reporting “can lead to perceptions that do not capture the complete picture and exacerbate anxieties during these uncertain times.” Connect CRE’s readers made this the past week’s third best-read story. 

One of the recent developments contributing to the perception that banks are on shaky ground, with CRE exposure bearing a share of responsibility, was the high-profile collapses—within days of one another–of Silicon Valley Bank on the West Coast and Signature Bank in the East. The latter was especially active in CRE lending, although its tens of billions in outstanding commercial property loans haven’t been implicated in the bank’s failure. 

Even so, anyone acquiring these or any other Signature loans can expect to pay distressed prices for them. The FDIC has moved to put this debt on the market, and a breaking news story from this past week, FDIC Taps Newmark to Sell $60B of Signature Bank Loans, was the fourth most-read story on Connect CRE.  

It’s not immediately clear how much of that $60 billion is tied to commercial real estate, nor how much of the loan pool is itself distressed. Regardless, a CRE service firm getting the assignment to market the loans is a pretty good indication that real estate figures prominently in the package of loans that are now looking for buyers. 

After all these stories of distress, the week’s top five is rounded out by an 87-year-old survivor’s comeback. The subject of this story came through military service in the Second World War, a potentially catastrophic ocean crossing during a violent storm, waning public interest and the prospect of simply rusting away. It’s the RMS Queen Mary, once a monarch among ocean liners and now a tourist attraction in Long Beach, CA. 

Queen Mary to Reopen to the Public on April 1 brought readers up to date on the ship’s status since being shut down during the pandemic. The story caught the attention of readers both in California and nationally. 

In response to the failures of SVB and Signature, the Biden administration last Thursday recommended a set of reforms intended to safeguard the banking system, which the President said could be implemented without the need for new legislation. We ran a story in advance of these recommendations being made public, based on reporting in the Wall Street Journal

Two weeks prior, the President laid blame for the collapses on banking executives for “mismanagement and excessive risk-taking.” For their part, Republican lawmakers have pointed the finger at regulators who they said were “asleep at the wheel,” as Rep. Patrick McHenry of North Carolina put it. Regardless, the stability of the nation’s financial system isn’t a subject that will be vanishing from radar screens any time soon, and we’ll keep you informed about the implications for the CRE industry. 

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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 GlobeSt.com 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).