“Commercial real estate (CRE) professionals are in the midst of the holiday season and while some may reminisce about the glory days of the Sears and JCPenney holiday catalogs, others are closing deals for now-vacant Sears and JCPenney retail boxes,” wrote Marc McDevitt, a senior managing director at CRED iQ. “CRED iQ welcomes the CRE community in finding their next gift (opportunity) with an examination of commercial real estate properties that are real estate-owned (REO) within the commercial mortgage-backed securities (CMBS) realm.
“As of October 2021, there were approximately 350 properties in CMBS transactions that are REO. Unpaid balances for these properties total approximately $5.2 billion. However, distressed assets typically have additional amounts due in terms of property protection and debt service advances by servicers, which in this case total about $584 million — for a total exposure of approximately $5.8 billion. These REO assets have a finite holding period and will be sold to the market at some point in the future. Special servicers, on behalf of CMBS trusts, are generally required to sell REO assets by the end of the third year following a title transfer but may be granted extensions under certain conditions. Circumstance provides opportunity for distressed investors, especially with a notable increase in volume of distressed CRE opportunity funds that have seeded in 2021.
source: commercialobserver.com / 2021/12/reo-cred-iq-cmbs-2021/