Industry Influencers: Berkadia In Leadership Role with Rise of Delinquent CMBS Loans

September 3, 2020

Industry Influencers: Berkadia In Leadership Role with Rise of Delinquent CMBS Loans

September 3, 2020

As one of the leading loan servicing companies in the commercial real estate industry Berkadia continues to navigate the pervasive impacts of COVID-19. The ever-evolving impacts of the virus are numerous and range from a rise in delinquent commercial mortgage-backed security (CMBS) loans to major changes in the perceptions of foreign investors.

For instance, Noam Franklin, a member of Berkadia’s JV equity and structured finance group, told Commercial Observer that COVID-19 is having a significant influence on capital flow into once-popular secondary markets. “There will be a pushback now in the office market,” he said, “a pause in office investments in major markets until [they] figure out how it plays out.”

This month’s Industry Influencers highlights how Berkadia is in a unique position to support the stabilization of the national economy as well as provide salient insights to our clients about the future of multifamily real estate.

Berkadia Spotlighted as Leading Master Servicer of CMBS Loans

One of the most significant impacts of the economic recession caused by COVID-19 has been a 7% year-over-year shift of CMBS loans to special servicing through July 2020; nearly 85% of those CMBS loans were transferred during the second quarter due to financial hardships caused by the virus.

Analysis by Fitch Ratings indicated that among the four largest master servicers, including Berkadia Commercial Mortgage, outstanding advances for CMBS loans increased to $1.5 billion. Berkadia has responded to the unique challenges posed by COVID-19 by working with borrowers to identify creative opportunities for restructuring loans and extending forbearance. Fitch Ratings also predicted a wave of extensions of maturing loans, especially for properties dependent on industries that have no realistic short-term path back to normal revenue generation.

Industry News Outlets Recognize 2020 Mid-Year Powerhouse Poll

Berkadia advises clients in metros across the country including Dallas, Miami, Scottsdale, Milwaukee, and Boston.

Many of the top real estate news media highlighted Berkadia’s 2020 Mid-Year Powerhouse Poll in the first week of August. The proprietary poll combined analysis and insights from nearly 150 Berkadia investment sales advisors and mortgage banking specialists from over 60 offices nationwide.

Globe St., REJournals, and REBusinessOnline each highlighted the same key takeaway: 55% of Berkadia professionals expressed that current market activity is beating expectations, given the extent to which COVID-19 has ravaged the economy.

A second major theme highlighted by all three journals was the industry’s growing need to solve problems revolving around the supply of affordable housing. In addition to concerns about the long-term logistical impacts of income inequality, more industry insiders are taking a closer look at the business upside to affordable housing.

“A renewed focus on affordable housing could be a silver lining of this challenging time. This pandemic has demonstrated how vital safe, reliable housing is for the stability and well-being of our communities,” said Ernie Katai, Berkadia’s Executive Vice President and Head of Production, to REJournal. “While the affordable housing market has been impacted by COVID-19, it has performed better than other asset classes and is comparatively well positioned for recovery.”

Get in touch with our multifamily advisors and mortgage banking specialists to learn more about how Berkadia is helping our clients adjust their investment strategies to account for the unexpected.