Commercial Real Estate at a Crossroads: A Measured Look Separating Market Reality from Media Alarmism

We can safely say that society has been full of hyperbole lately.

hy·per·bo·le

/hīˈpərbəlē/

noun

1. exaggerated statements or claims not meant to be taken literally.

So many of us respond to hyperbole and often take it literally, that it has become a calling card for our social media, virtual media, mainstream media, and politics of course. 

Now that the election has passed, let’s hope our national discord can stabilize.

I mention hyperbole because there’s one area in which I have had a tendency to use it myself recently and that is in conversations about the state of our commercial real estate sector.

I’m currently writing my second book, focused on illustrating a brewing STORM at the intersection of rising insurance costs, rising interest rates, and little cost of living adjustments.

The more immediate situation lies centered on that shift in interest rates over the past two years. Huge numbers of commercial property owners, large and small, took loans based on cash flow that no longer exists and at cap rates that we may never see again.

Over a trillion dollars in commercial real estate mortgage loans will mature over the next 18 months.

The following whitepaper (being reposted here with the permission of the author) I share today was created by my friend, Ron McMahan, CEO of Foundation Specialty Finance, and a legend in my field of resolving distressed mortgage debt.

To be honest, many would call Ron’s company and First Lien competitors. And we do share many of the same core competencies. I prefer to see that as an opportunity to collaborate in the future.

What most impacts me about Ron is his passion for working assets, the art of the deal, and his thrill at making a decent return while trying to help borrowers along the way.

Ron has recently refocused his talents away from residential NPL to strictly focus on commercial real estate.  In my opinion, the timing could not be better.

There is a Tsunami on the horizon.

Enjoy!

ORIGINAL WHITEPAPER PUBLISHED September 2024
Tsunami Warning:
How To Profit from the Massive Wave of CRE Defaults and Historic Decline in Values

A Whitepaper Addressing Market Challenges and Positioning Foundation Specialty Finance as the Solution

By Ron McMahan

Introduction
The commercial real estate (CRE) market is undergoing a period of significant transformation. With post-pandemic market dislocations, rising interest rates, and distressed asset portfolios, lenders and investors face mounting challenges. Foundation Specialty Finance (“FSF”) is uniquely positioned to provide solutions via its technology-driven platform, designed to fully integrate and streamline loan origination, special servicing, and asset management platform. By integrating advanced data analytics and AI-enabled fraud detection and process automation with our state-of-the art LOS and CRM, FSF addresses market inefficiencies and provides lenders, borrowers, and investors significantly improved outcomes.

Tsunami Warning
A tsunami of CRE defaults and maturities is about to come ashore in the CRE Market:

READ THE FULL WHITEPAPER HERE

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