A recent feature in PERE Credit examines how lenders are redefining distress in commercial real estate as they work to extend loan runway and resolve troubled situations. The article surveys the current market dynamics, from maturity walls and elevated rates to the restructuring and rescue capital strategies that have emerged to address them.
Axonic’s Partner and Head of Commercial Real Estate, James Jordan, contributed perspective:
“The pockets of distress we are seeing are just a continuation of some of the themes we have seen over the past two years, which is tied to the impact of valuations resetting to a new normal and a higher interest rate regime that we believe will be here for a longer time.”
Jordan noted that the current rate regime has created specific capital needs. With interest rates that were near zero in 2020 and 2021 now substantially higher, capital needs to come in to right-size structures and de-lever loans. Axonic has responded by providing rescue capital alongside sponsors in the multifamily sector and acquiring non- and sub-performing loans from banks, debt funds and mortgage REITs to restructure with existing borrowers or take ownership with new operators. The firm is also watching a rise in M&A activity, as larger, well-capitalized managers acquire smaller managers that have had difficulty raising capital.
Read the full story in PERE Credit, here.