More Distressed Funds Pop Up as Loan Delinquencies Climb

Cottonwood has closed a $1 billion real estate “special situations” fund aimed at buying troubled commercial properties at a time when distress is spreading. Delinquency rates in commercial mortgage backed securities have climbed past seven percent this year, with office loans nearing eleven percent. The combination of refinancing challenges and weaker demand is creating the kind of market Cottonwood was waiting for.

The broader trend is clear. Rising defaults are not just confined to office but are also hitting retail and lodging, sectors still struggling to regain pre-pandemic footing. Each uptick in delinquency expands the pool of assets likely to be re-priced, giving opportunistic capital new targets...

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RSK: If these delinquent loans are going to forec;osure, there will be opportunity for all that cash investors are holding on to.