– Michael Cohen, Brighton Capital Advisors
Commercial Observer’s ninth annual Fall Finance Commercial Real Estate Forum on Nov. 20 kicked off the same way and in the same place as it did in 2023, with an opening keynote interview from Blackstone’s Michael Wiebolt, but with a far different outlook. Wiebolt, global co-chief investment officer at Blackstone Real Estate Debt Strategies, reflected that when he first grabbed the mic at The Metropolitan Club of New York during last year’s forum on Nov. 2, 10-year Treasury yields were similar to today, but with many more unknowns in the air.
“We were just on the very cusp of beginning the recovery from the cycle that was catalyzed by high rates, office challenges, regional bank challenges, and we have sort of moved through that cycle,” said Wiebolt during the discussion moderated by CO Executive Editor Cathy Cunningham. “We are progressing along the recovery.”
The improved credit conditions in the CRE debt markets have created a far more “robust” deal pipeline for Blackstone, according to Wiebolt, who said it reflects momentum across the industry. Wiebolt noted that commercial mortgage-backed securities (CMBS) volume is on track to end 2024 four times higher than 2023, with private lending also seeing an uptick.
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The next panel, “Market Distress Giving Way to New Investment Opportunities & Opening Doors for New Entrants,” explored how a number of troubled loans that have been in limbo amid higher interest rates and valuation declines are set to now make their way through the system to generate increased transaction activity.
Michael Cohen, managing partner at CMBS workout specialist Brighton Capital Advisors, said many borrowers he advises have been unable to make deals work with their lenders, which presents opportunities for other CRE market players to step up. He described CMBS lenders as “pawn shops” with no relationships, which has resulted in many borrowers unable to make deals with their special servicers, who often threaten foreclosure.
“We have certain borrowers that cash out on their loan finance, there’s certain borrowers that have tax implications that can’t give the keys back, and then we have certain borrowers that are sticking their heads in the sand,” Cohen said. “All these people on the panel around me are perfect because they’re the ones who want to unlock this, fill in the gap equity and fill in the debt in order to make these transactions.”…
