Billionaire investor Howard Marks sounds the alarm on commercial real estate – warning of a wave of mortgage defaults
Billionaire investor Howard Marks rang the alarm on commercial real estate in what he labels as"one of the biggest worries" US banks face today. , the Oaktree Capital Management co-founder warned of a wave of mortgage defaults that could add stress to the US banking sector.
"Developments along these lines certainly have the potential to add to whatever additional distress materializes in the months ahead," he added. has become investors' newest concern thanks to higher interest rates, tighter lending standards – part of the fallout from the turmoil that hit banks in March – and work-from-home trends. That's a problem for smaller and mid-sized US banks which have high commercial property exposure.
"Higher interest rates call for higher demanded capitalization rates , which will cause most real estate prices to fall," Marks said."The possibility of a recession bodes ill for rental rates and occupancy, and thus for landlords' income," he added.
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