TPG Real Estate Finance delays dividend as cash crunch hits nonbank lenders

Nonbank commercial property lenders risk running out of money: report

National /
Mar.March 25, 2020 01:30 PM
Nonbank commercial property lenders risk running out of money as banks demand more collateral (Credit: iStock)

Nonbank commercial property lenders risk running out of money as banks demand more collateral (Credit: iStock)

TPG Real Estate Finance Trust is one of several nonbank property lenders feeling the squeeze as markets fall.

Real estate investment trusts, hedge funds and private equity firms that have issued billions in construction loans, mortgages and bonds backed by property debt are now facing a cash crunch, the Wall Street Journal reports.

TPG is delaying its first-quarter dividend payments in preparation for needing additional cash collateral, but the company noted in a statement that there’s “no certainty” it can continue paying, according to the Journal.

The Angelo, Gordon & Co.-managed AG Mortgage Investment Trust said last Friday that it had “received an unusually high number of margin calls from financing counterparties” and admitted to missing some of the deadlines.

Nonbank lenders stepped into the commercial real estate space after banks withdrew following the 2008 crash, but many funded deals using bank debt facilities secured by corporate guarantees, loans and bond holdings.

With those holdings’ values having been sunk by the coronavirus pandemic crashing the economy, banks are asking these lenders to put up more collateral. For some, that’s causing a liquidity crunch.

For banks, an analysis by data firm Trepp said the institutions’ commercial real estate loans would in the worst-case scenario see a 2.7 percent loss rate, less than what banks saw following the 2008 financial crisis. Trepp pegged the peak default rate between 2008 and 2011 at 4.4 percent. [WSJ] — Erin Hudson


Related Articles

arrow_forward_ios
Auckland, New Zealand and Shenzhen, China (iStock)
Global luxury home sale prices nudged up in 2020
Global luxury home sale prices nudged up in 2020
(iStock/Illustration by Alexis Manrodt for The Real Deal)
Manhattan job losses in Q3 worst of any large county in the US
Manhattan job losses in Q3 worst of any large county in the US
R&B Realty's Aron Rosenberg and Maverick's David Aviram of Maverick with 28 West 36th Street and 32 West 39th Street (Google Maps)
Midtown landlord sues to stop foreclosure by Maverick
Midtown landlord sues to stop foreclosure by Maverick
HSBC COO John Hinshaw (Getty, iStock)
HSBC to shrink its office footprint amid shift to WFH
HSBC to shrink its office footprint amid shift to WFH
New Yorkers can enjoy going to the movies again on March 5. (iStock)
Showtime: NYC movie theaters to reopen
Showtime: NYC movie theaters to reopen
666 Greenwich Avenue and David Koraca (Photo via StreetEasy, Goldman Sachs, Facebook)
Convicted fraudster illegally occupied posh West Village rental: lawsuit
Convicted fraudster illegally occupied posh West Village rental: lawsuit
Restaurants can have more guests starting February 16. (Getty)
Indoor dining capacity upped to 35% in New York City
Indoor dining capacity upped to 35% in New York City
Yelp is expected to sublease some of their current offices. (Yelp, Getty)
Yelp employees may work remotely forever
Yelp employees may work remotely forever
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...