THE STATE OF DISTRESS, A SNAPSHOT REPORT December 2021
- LightBox’s Snapshot Report on the State of Distressed Real Estate provides perspectives on CRE distress and the opportunities it is creating and expected to create. Key findings of the report, based on a review of data from leading and trusted economic and sector sources as well as interviews with industry experts, include:
- The tsunami of distressed assets hasn’t materialized, although distress among certain owner types and asset classes can’t be downplayed.
- Shadow Distress – assets, businesses and investors that have been propped up by relief efforts and/or relaxed regulations—will intensify the pain in 2022. In short, we’re far from “out of the woods”.
- A LightBox analysis of special servicer activity points to increasing potential distress moving forward, with nearly half to occur into 2023 and later.
- Today’s focus is on office assets as companies plot the potential land mines of the post-pandemic work environment; some hotel and retail properties remain tenuous because fundamental issues haven’t been addressed.
- The marketing of loans/notes is heating up, especially for banks trying to clean up balance sheets but less for special services whose protocols are more rigid.
- Distressed/opportunistic funds are flush with record levels of cash, but short on ideal target opportunities.