Commercial mortgage debt 'is investment opportunity'

18 August 2011

Written by Gavin Elley

Maturing commercial mortgage debt provides financial opportunities for investors, a white paper from BNY Mellon Asset Management real estate specialists Urdang claimed.

Overleveraged sellers may be willing to offload properties to investors on attractive terms, which might give acquirers "the ability to offer lower rental rates than comparable properties with greater debt burdens", Urdang Capital Management portfolio management managing director and report co-author David Blum said.

The "significant amount of commercial real estate debt that is scheduled to mature over the next four years" is what has made this opportunity so good, he continued.

Declining or static rental rates have not impinged on the ability for individuals to increase the value of these assets, the report stated.

The value of commercial real estate has generally stayed below the levels seen between 2005 and 2007, enhancing this investment opportunity.

Many financial institutions are trying to rid themselves of their exposure to commercial mortgage loans, including Lloyds and the Royal Bank of Scotland.

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