Fortress Co-CEO Sees Commercial Real Estate Stress Leading to More Bank Failures

Pack sees a $1 trillion opportunity emerging for investors
About half of maturing CMBS loans are troubled, he said

Low interest rates sent money pouring into real estate, transforming cities around the world. But pandemic lockdowns emptied out business districts and tenants have been slow to return. Now commercial real estate is in trouble, and the consequences may extend across the global economy.Source: Bloomberg

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By Lisa Lee (News) and James Crombie

February 23, 2024 at 1:08 PM UTC

This article is for subscribers only.

More US banks will fail as the commercial real estate crash begins to work its way through to lenders’ balance sheets, according to Joshua Pack, co-chief executive officer at Fortress Investment Group LLC.

Fortress has already acquired about $1.5 billion of performing office loans from financial institutions at prices ranging from 50 cents to 69 cents on the dollar, he said in an interview with Bloomberg’s Credit Edge podcast. Lenders are selling at those levels because they fear values have further to fall and want to take the hit now, he said, adding that regulators will merge some banks as they look for solutions to the problem.