David Nasatir Discusses the Commercial Real Estate Market Amidst Potential Lack of Fed Interest Rate Cuts in 2024 in Commercial Observer

March 06, 2024

Obermayer Chair David Nasatir was interviewed by Commercial Observer on March 6, 2024, discussing the potential impact of no Fed interest rate cuts in 2024 on commercial real estate. In the article titled “What If the Fed Doesn’t Cut Interest Rates in 2024?”, David, who also co-chairs the firm’s Distressed Commercial Real Estate Group, mentioned that many deals are currently on hold due to expectations of interest rate reductions. However, he sees no evidence supporting this expectation, pointing to inflationary trends. Instead, clients with loans maturing soon are seeking to extend them for six months to a year. Some are also trying to assure lenders by either putting in more equity or increasing reserves.

David predicts that if interest rates are not reduced this year, it will accelerate a trend seen over the past year: sponsors will add collateral from other projects as mortgage debt in exchange for an extension on a distressed property. David also notes that lenders are generally open to creative solutions to avoid having to take back the keys on assets and prevent distressed sales.

“I think there’s a very strong tendency among lenders to try and negotiate an extension to find a compromise that works for them and their borrower because they do not want to take the property back,” David said. “Banks are not in the real estate brokering business, so they’d much prefer to keep assets going and keep them attractive to a potential buyer that might also cause the loan to get paid off.”

Read the full article here