Presently, there is an imbalance of capital looking to acquire distressed assets and loans. Capital is currently chasing quality loans and REO assets—to the point that there is approximately twice as much available capital as there is product to buy. So says John Strockis, executive managing director of asset services of Voit Real Estate Services, who spoke to GlobeSt.com regarding last week’s poll, "What impact will unloaded distressed assets and loans have?"
The GlobeSt.com poll, with more than 200 votes cast, suggests that half of GlobeSt.com readers believe that the impact of those unloaded distressed assets and loans will set prices based on values for the assets when sold. Approximately a third of readers say it depends on the strength of the banks' and receivers' strategies, and 18% say it will be a thundering crash.
The imbalance, Strockis says, "is expected to continue through 2010 until new supply is brought to market by financial institutions, banks, special servicers and the FDIC.
Well-capitalized banks that are surviving this downturn have now staffed up work-out and REO departments and are accelerating loan modification discussions with ailing borrowers, note sales and foreclosures. Under-capitalized banks will look to ‘pretend and extend’ bypassing the opportunity to take advantage of the ‘scarcity premium’ being paid by current investors.
Alternatively, lenders will foreclose and hire an asset management platform...to add value back into the properties and sell the asset over a two- to four-year hold period when debt markets have more fully repaired and higher prices begin to return."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
