Commercial Mortgage REITs: Less Risk, Same Reward?

A new crop of commercial mortgage REITs emerging today may be less risky investments compared to the legacy commercial mortgage REITs that operated during the most recent real estate boom, argue some industry experts.

A new crop of commercial mortgage REITs emerging today may be less risky investments compared to the legacy commercial mortgage REITs that operated during the most recent real estate boom, argue some industry experts.

According to backers, the newer commercial mortgage REITs operate more prudently than their predecessors and boast improved transparency, making it easier for investors to understand the fundamentals of the business.

Newer mortgage REITs—those that have conducted IPOs since 2008—have some marked differences from those that existed prior to the debt crisis. Most importantly, they operate with lower leverage, eschew cross collateralization and lend to lower loan-to-values.

Read the full article on National Real Estate Investor.

 

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