Arena Investors is ramping up creation of joint ventures to acquire non-performing or discounted commercial mortgages now and into 2022. The credit-focused asset management firm believes that as pandemic-related forbearance for borrowers ends and foreclosures escalate, distress will markedly rise.
Donald Moses, Arena’s managing director for real estate, told Real Estate Capital USA that in areas like retail, hospitality, and urban office space, the loss of Covid-linked legal protections—a trend that has already started—will create opportunities to acquire investments from banks and debt funds “that are not as well-equipped to handle a non-performing loan or workout as we are. We don’t mind rolling up our sleeves and doing the hard work in challenging situations.”
Arena buys non-performing loans of $5 million to $20 million in primary and secondary markets across the country and is known for joining with partners, typically smaller private lenders and investors, who may have “good access to investment opportunities,” Moses said, “but not as much capital.”
Commercial mortgages are familiar territory for Arena, and in fact the firm has a stable income real estate strategy focused on commercial mortgages for borrowers across the US seeking financing for properties. Although focused on solid properties with in-place cash flow, this program can span property types ranging from multifamily and industrial to office, hospitality, retail, self storage, assisted living, manufactured housing and others. Arena is targeting more than $200 million in new commercial property originations in 2022.