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Analyst Cites Single-Asset Plays In CMBS

Michael Cox, real estate strategist at The Royal Bank of Scotland, said that investors are looking for distressed and opportunistic acquisitions caused by mispricing, particularly among troubled super senior and junior tranches in deals backed by large single assets. He spoke on a panel at Information Management Network’s ninth annual European Real Estate Opportunity & Private Fund Investing Forum.

"There's a big difference between the values and what you can sell a portfolio for," Cox said. One challenge in working out troubled deals is that there are varying investor interests. "There are so many different interests as the loans have been sliced up so many times," he said. "If it was me, I'd try and take the decision that would be in the best interests of the loan, rather than any one investor."

Scott Goedken, chief investment officer at LNR Partners, noted the importance of due diligence. "You need to look at the governing documents. But those vary from deal-to-deal--some give consideration to the A notes, others to the A and B stuff. Generally if you think that you have an asset that's going to perform even though it's in breach of its LTV, perhaps the best thing is not to sell it into a distressed market."

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