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The current state of the commercial real estate market
Summary
In the aftermath of the pandemic and the troubles faced by several regional banks last year, investors are on edge concerning unexpected losses on property loans, as well as a major step-up in provisioning in the commercial real estate (CRE) book for New York Community Bank (NYCB).
In this episode of The Navigator podcast, Andrzej Skiba and John Guarnera discuss our view on the recent trouble spots within the US CRE sector and how we’re dealing with the turbulence.
Key Points:- It’s been an eventful start of the year and investors are concerned with the dynamics of the commercial real estate (CRE) sector.
- Occupancy is down and debt service is more expensive due to rising rates.
- Larger banks have been quick to address any asset deterioration, but smaller banks own 69% of the CRE debt.
- Periods of dislocation, in our judgement, can create the most interesting opportunities for fixed income investors, however careful credit selection is of paramount importance.
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By RBC Global Asset Management (U.S.) Inc.Summary
In the aftermath of the pandemic and the troubles faced by several regional banks last year, investors are on edge concerning unexpected losses on property loans, as well as a major step-up in provisioning in the commercial real estate (CRE) book for New York Community Bank (NYCB).
In this episode of The Navigator podcast, Andrzej Skiba and John Guarnera discuss our view on the recent trouble spots within the US CRE sector and how we’re dealing with the turbulence.
Key Points:- It’s been an eventful start of the year and investors are concerned with the dynamics of the commercial real estate (CRE) sector.
- Occupancy is down and debt service is more expensive due to rising rates.
- Larger banks have been quick to address any asset deterioration, but smaller banks own 69% of the CRE debt.
- Periods of dislocation, in our judgement, can create the most interesting opportunities for fixed income investors, however careful credit selection is of paramount importance.