It’s Always Darkest Before the Dawn
Throughout 2023, the Fed’s higher rate path added incremental stress to a CRE market already battling several headwinds, including higher borrowing costs, tightening lending standards and slowing transaction activity. After a significant rally in interest rates in the year’s final weeks, CMBS investors finally have reason to model less-punitive loan maturity outcomes. The timing is opportune, as only approximately 75% of non-defeased conduit loans (by count) successfully paid off at maturity in 2023.[1] Meanwhile, receding uncertainty in the path of interest rates might help jumpstart anemic CRE transaction activity. With markets increasingly confident interest rates have peaked, CMBS debt markets marked a relative thawing toward the end of 2023 amid the lowest issuance year by volume since 2012.[2] Overall, the macroeconomic and technical setup heading into 2024 provides a constructive environment to start the new year.
[1] Morgan Stanley Research
[2] J.P. Morgan Research
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.
