One of the more surprising results of the credit crisis to date has been the lack of distressed sales activities. The fundamentals of commercial markets have generally remained in tact, and sellers have been stubborn about getting their price - per their appraisals of 6 months or a year ago.
There is good reason to believe that with the end of Lehman will also come a narrowing of bid ask spreads. Lehman’s commercial debt, securities, and property portfolio was marked to market at $40 billion as of May. Now with the liquidation of this portfolio, price pressure is turning downwards.
The Wall Street Journal | Lingling Wei and Michael Corkery | September 17, 2008
“As a result of Lehman’s bankruptcy, other financial institutions will feel more pressure to sell assets at deeper discounts sought by investors,” said Spencer Garfield, a managing director of Hudson Realty Capital, a New York-based real-estate fund manager.
Goldman Sachs Group Inc. on Tuesday said it had reduced its portfolio of commercial mortgages and securities by about $2 billion to $14.7 billion as of the end of its third quarter, which ended Aug. 29, taking a $325 million loss.
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