Morris Chen, leader of DoubleLine’s Commercial Mortgage-Backed Securities/Commercial Real Estate Debt team, on Feb. 20, 2025, joins Bloomberg Television’s Katie Greifeld and Vonnie Quinn to discuss the state of commercial real estate, opportunities in CRE debt investing and his team’s preferred property types. Regarding the latter, Mr. Chen, who also is portfolio manager of DoubleLine Commercial Real Estate ETF (ticker DCRE), describes industrial, retail and multi-family housing as falling in the “middle of the fairway” for his team. He is “not shying away” from office space, finding opportunities in securitized credit backed by “higher quality, newer vintage buildings,” while steering clear of “Class B, older” properties. In terms of relative valuations within the fixed income universe, Mr. Chen notes that CMBS offers a pickup in yield spread relative corporate credit at comparable credit ratings. Asked about data centers and their AI-driven buildout, Mr. Chen notes that he’s “staying on the sidelines at this juncture.” Data-center properties, he says, do not offer to his eye a compelling case as collateral underlying CRE debt in the event of default. He wants to see wider spreads commensurate with the “the unknown risks of this new property type.”
00:00 – IntroductionMs. Quinn introduces Mr. Chen and the context of the discussion, highlighting the impact of COVID-19 on CRE valuations.
00:23 – ETF Performance and StrategyMs. Greifeld discusses the performance of the DCRE ETF and asks Mr. Chen about his investment strategy in the current CRE landscape.
00:50 – Opportunities in CMBSMr. Chen highlights opportunities in the CMBS market, focusing on seasoned commercial mortgage-backed bonds and an improved refinancing picture.
01:37 – Office Space SentimentMr. Chen addresses the office space submarket, noting the improved sentiment for higher-quality, newer buildings amid ongoing challenges for older properties.
02:39 – Tight Spreads and Relative ValueDiscussion on the challenges of tight spreads and the relative value of commercial mortgage bonds compared to corporate bonds.
03:47 – Potential Impact of Fannie Mae ConservatorshipMr. Chen briefly touches on the potential implications of Fannie Mae coming out of conservatorship.
04:04 – Data Centers and AI DemandMs. Greifeld asks about the opportunities in data centers, with Mr. Chen explaining the value of a cautious approach due to tight spreads and unknown risks associated with this newer property type.
05:33 – Risks and AI ImpactMr. Chen discusses the risks introduced by AI and the potential impact on the demand for data centers.
Link to the DoubleLine Commercial Real Estate ETF prospectus: https://pex.broadridge.com/summary.asp?doctype=spro&cid=dbline&fid=25861R303
DoubleLine ETFs are distributed by Foreside Fund Services, LLC.
Mr. Chen joined DoubleLine at its inception in 2009. He is a Portfolio Manager leading the CMBS/CRE Debt Investment team and CRE New Investment Review Group, and is responsible for the oversight and management of all CRE Debt related investments at DoubleLine. Mr. Chen is a permanent member of the Fixed Income Asset Allocation and Structured Products Committees providing valued insight into the CMBS sector. He is also an active participant and speaker at CREFC events. Prior to DoubleLine, Mr. Chen was a Vice President at TCW where he was responsible for CMBS credit analysis and trading from 2004-2009. He holds a BS in Business Administration with concentrations in Business Development and Finance from the University of California, Riverside.
