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The follow up to KKR’s 2017 fund will continue to focus on junior tranches of commercial mortgages.
The rating agency’s analysis of office-backed CMBS transactions shows AAA- and AA-rated tranches can withstand higher vacancy rates, while lower-rated tranches are more vulnerable.
Retail icons are being toppled, spelling major trouble for US shopping malls as a cascade of defaults looms.
Distressed hotel deals are now visible, but access to many would-be discounted transactions in the sector looks restricted.
Ratings agency S&P expects the delinquency rate to climb higher for June, although European CMBS are so far weathering the storm.
The economic fallout from covid-19 has stoked fears of a liquidity crisis in US commercial property lending.
Syndication is slow and capital value forecasts are bleak, but CMBS transactions remain liquid and real estate is expected to retain relative value.
Last month’s real estate debt fire sales at the outset of the covid-19 outbreak in the US were just the tip of the iceberg for private real estate.
Coronavirus shutdowns have pushed nearly $25bn of US CMBS loans to the brink of delinquency, and the worst is yet to come.
Lenders are facing calls to grant interest payment holidays, force majeure is on people's minds, and operational property is expected to be hardest hit.
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