Worried Lenders Pounce on Landlords Unable to Pay Their Loans

[Zorro]

Some hedge funds and private equity firms that lent money to property owners are now suing them for falling behind on interest payments

Five months into the pandemic, hotel rooms remain largely unreserved, office space sits empty and hardly anyone is venturing into malls. Commercial tenants are struggling to pay their rents, and property owners are struggling to make payments on the loans they took out to finance the buildings.

Some real estate investors, including the hedge funds and private equity firms that hold those loans, have had enough. Unwilling to risk any more missed interest payments, they are taking property owners and developers to court, hoping to foreclose on their interests in the properties and minimize their financial losses.

Already, there are a few high-profile battles, including one involving a retail complex in Times Square that is owned by the family of Jared Kushner, President Trump’s son-in-law. The operators of the Mark Hotel, one of Manhattan’s most luxurious hotels, with Art Deco-inspired rooms and a suite that can cost $10,000 a night, recently beat back a foreclosure attempt in court.

These cases have been initiated by a type of lender that is driven largely by narrow financial interests, but real estate lawyers and lenders expect foreclosure proceedings to become more widespread the longer commercial tenants fail to keep up with the monthly rent checks. Given that a full economic recovery from the pandemic is probably years in the making, things could get much uglier in the commercial real estate market before they improve.

https://www.nytimes.com/2020/08/13/business/commercial-landlord-loan-foreclosure.html

[Frustratedlady]

1. I wondered how long it would take the Kushner name to pop up. Aren't they slumlords?

I doubt Jared would have much sympathy for renters. It's been said he doesn't make repairs...the people just have to live with the problems. They repair when a new tenant is moving in.

[brush]

3. And he's probably behind on 666 5th Avenue in NY too, the building MBS helped bail him out on.

[czarjak]

2. It's a club and we ain't in it?

[erronis]

4. This pandemic gives the vultures a great opportunity to buy billions of properties for only pennies

on the dollar.

Expect to see the percentage of Americans who own their homes (even with mortgages) to decline precipitously.

We'll all be renters. Or beggars. Or, please their lord, dead.

[underpants]

5. So these are loans primarily for operations

No real asset other than furniture and equity in the business.

Damn, someone messed up loaning money to Jared? Who could have seen that coming.

[SWBTATTReg]

6. Just going to make things worse for themselves. Hedge funds and PEF (private equity firms) are...

going to find out that expected monies to be recovered by undertaking such actions as foreclosures on commercial properties is going to flood the markets with a flood of such commercial properties, making commercial properties worth even less in any recovery efforts that they undertake.

This is exactly what happened in the real estate markets in 2008+, where a flood of personal real estate mortgages were foreclosed on and the banks/lenders were left holding a whole slew of basically worthless personal real estate properties (there were so many of them), and thus, banks and/or other lenders had to write off literally trillions of dollars in mortgages, collapsing the stock and real estate markets.

This is exactly why banks and other institutions quit relying so much on lending via mortgages in personal real estate, so they wouldn't have such a high exposure to delinquent mortgages should the Housing/Real Estate market go under again. Ironically they have equal or more exposure in the commercial real estate markets (where these banks and/or lenders went and invested their monies into,
instead.

Idiots still are going to get bit, and get bit big time, and it's going to be the big boys that are going to get hurt this time around, because of their bad loans/commercial mortgages. And, by the way, if they foreclosed on such commercial properties by the thousands, closing or making huge rental complexes unavailable for rental purposes, where are they going to find new replacement tenants?

I expect that the idiot PINO is going to be negatively impacted hugely by these developments, and if so, serves the lying POS right. I hope he loses everything but I suspect he's going to try and salvage the commercial real estate markets w/ some kind of idiotic and ill thought out executive orders, just wait...