(Knoxville, TN) – Where others see turmoil, Steven K. Maddox of Maddox Companies sees opportunity in the so-called "Wall of Maturities" looming over the US Commercial Real Estate market in 2016. The term refers to the over $600 billion in CMBS loans orignated between 2005 and 2007, most of which have 10 year maturities. It is expected that anywhere from 20 percent to 50 percent of maturing loans will face difficulties.
"Many of these loans are secured by properties for positive cash flows and appreciation. Our firm has the track record to reposition these assets to lease. We have the relationships to get deals done, and the experience and resources for effective due diligence and asset management." said Maddox.
Experts predict a multitude of consequences on the horizion as servicers work through the foreclosure process on defaulting loans. While some borrowers may be on the hook due to violation of loan covenants, the opportunities lie with the large number of borrowers holding non-recourse debt at levels that are excessively overlevered based on current asset values. This flood of distressed notes is expected to open up opportunities to buy at distressed prices and reposotion properties for positive cash flow and appreciation. Additionally, traditional capital sources are expected to have limited capacity for the refinance or acqusition of these assets, and will likely have more challenging LTV requirements for borrowers, further compounding the opportunities available to well capitalized buyers.
With these factors in mind, Maddox is positioning his firm to prosper as troubled loans and assets become acquisition targets.
"Our firm is making strategic investments in the resources and relationships needed to underwrite and acquire fundamentally strong properties in winning locations over the next 36 months." said Maddox.