so there's research from short seller fund that is verifying inside of the lender book "Arbor Realty" (ticker ABR) that's showing their lending book has 50% loan going into delinquent status. The average weighted DSCR in that lender was like 1.4x just in 2021 but now it's 0.61x....wow this is shocking. I still thought before it was only like 0.9x. How could lender survive in this environment ? anyone also read their research ?
I heard a podcast that said Arbor Realty Collateralized Loan (CLO) portfolio with over 300 loans is showing a weighted average debt service coverage ratio of just 0.63. It is basically a disaster and a guy named Gabe Bernarde is co-founder of Viceroy Research and has written a report called “Slumlord Millionaires”, that covers a well-known bridge lender who has been doing a lot of lending to multifamily sponsors. The report reveals an entire portfolio of multifamily loans that appear to be underwater and that are wrapped up in CLOs. In theory, CLOs are bullet proof because the lender who owns/manages them can swap out poorly performing loans for better performing ones, protecting the integrity of the entire portfolio. What Gabe's research concludes is that this structure is fine until all the loans in a portfolio, or a substantial majority of them, are bad. Then you have nothing good to replace the bad.
@Carlos Ptriawan Not sure what you are going after again. If I recall correctly, ABR is a mREIT. Its a totally different investing structure. Just about all the mREITs have been doing poorly in one way shape or form in the past year...
With what you've been posting, you should know your way around the public markets. Why not just look up company's report yourself?
@Carlos Ptriawan Not sure what you are going after again. If I recall correctly, ABR is a mREIT. Its a totally different investing structure. Just about all the mREITs have been doing poorly in one way shape or form in the past year...
With what you've been posting, you should know your way around the public markets. Why not just look up company's report yourself?
Not sure why you keep always annoying me David. I was just surprised reading lender's loan book is running at 0.61x DSCR.
I heard a podcast that said Arbor Realty Collateralized Loan (CLO) portfolio with over 300 loans is showing a weighted average debt service coverage ratio of just 0.63. It is basically a disaster and a guy named Gabe Bernarde is co-founder of Viceroy Research and has written a report called “Slumlord Millionaires”, that covers a well-known bridge lender who has been doing a lot of lending to multifamily sponsors. The report reveals an entire portfolio of multifamily loans that appear to be underwater and that are wrapped up in CLOs. In theory, CLOs are bullet proof because the lender who owns/manages them can swap out poorly performing loans for better performing ones, protecting the integrity of the entire portfolio. What Gabe's research concludes is that this structure is fine until all the loans in a portfolio, or a substantial majority of them, are bad. Then you have nothing good to replace the bad.
what's scary is actually if the DSCR of 0.6-0.8 is the default running operation these days.... too bad there's not much intel on this aspect.
also if lender was comfortable loaning for DSCR 1.4 for their UW, I think for us investor we have to make sure we find project that yield DSCR 1.6-1.8 then to even minimize the risk.