“A culling of the weaker assets”: Where hedge funds are investing

Retail, hotels and office properties have been hit hard by the pandemic

National /
Dec.December 14, 2020 06:30 PM
(iStock)

(iStock)

It’s a loan buyer’s market and hedge funds are ready to make a deal.

Companies are looking to provide loans or invest in recently restructured commercial real estate bonds, according to Bloomberg. And malls, hotels and offices — some of the property types hit hardest by the pandemic — are ripe for the picking.

Leo Huang, senior portfolio manager and head of commercial real estate debt at Ellington Management Group, said that the pandemic has served as an excuse for businesses’ poor performance, but once the vaccine comes, some property types may not recover.

“In retail, I think there is real pain, a culling of the weaker assets,” Huang told the publication. “Properties that are well located and sponsors with deep pockets and the right demographic zone might be able to survive or reinvent themselves. Otherwise, properties may be turned over to the lender as a deed-in-lieu.”

Meanwhile, other asset classes have seen a boon as a result of the pandemic. The industrial sector, which includes warehouses and cold-storage units, have been thriving as consumers are increasingly shopping online. The life-sciences sector is also booming, as working from home is not an option for many lab employees.

While property valuations have largely fallen, Arena Investors’ CEO Dan Zwirn said that there is opportunity in restructuring. His firm has been participating in that field “terms of hard money lending, bridge funding, and buying whole loans off of the banks.”

Huang says that his firm — an active buyer of B-pieces, the most subordinate debt and therefore most risky bond investments — expects to make a play for distressed loans next year. [Bloomberg] — Akiko Matsuda


Related Articles

arrow_forward_ios
A photo illustration of 17 Ridge Avenue in Spring Valley (Google Maps, iStock)
Rockland County apartments deemed unsafe in enforcement crackdown
Rockland County apartments deemed unsafe in enforcement crackdown
Schenectady City Council president Marion Porterfield (Facebook, iStock)
Destructive tenants driving upstate landlords to despair
Destructive tenants driving upstate landlords to despair
331 Elmora Avenue and 103 Ryan Street (Kislak Realty)
Tri-state deal roundup: Multifamily, industrial still hot
Tri-state deal roundup: Multifamily, industrial still hot
DoorDash's Tony Xu with 51 Eads Street and 6133 Jericho Turnpike
Startup plans LI convenience stores that shoppers can’t enter
Startup plans LI convenience stores that shoppers can’t enter
7 Madison Avenue in Park Ridge, Bergen County with Veris Residential CEO Mahbod Nia and James Gandolfini (LinkedIn, Realtor.com, Getty)
Veris buys “Sopranos”-themed North Jersey apartments for $130M
Veris buys “Sopranos”-themed North Jersey apartments for $130M
North American Properties' Tim Perry; Nuveen's Nadir Settles; Taconic Partners' Chris Balestra and Ridge Hill at Yonkers (Flickr, iStock, NAP, Nuveen, Taconic Partners)
Developers snatch up Yonkers shopping center for $220M
Developers snatch up Yonkers shopping center for $220M
Jersey Mike's CEO Peter Cancro in front of 1500 Smithtown Avenue in Bohemia, Long Island (Jersey Mike's, Google Maps, iStock)
Sandwiches, side of spirits: Jersey Mike’s opening in shuttered Long Island inn
Sandwiches, side of spirits: Jersey Mike’s opening in shuttered Long Island inn
Don Ghermezian, CEO, Triple Five Group, in front of the American Dream Mall in East Rutherford (Triple Five Group, American Dream Mall, iStock)
American Dream lost $60M in 2021
American Dream lost $60M in 2021
arrow_forward_ios

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

Loading...