"Buy when others are fearful!" Goldman Sachs bottoms out US commercial real estate securities
Goldman Sachs' investment director Lindsay Rosner stated that despite high vacancy rates and capital cost issues in the US commercial real estate sector, the overall asset class has not encountered problems. Goldman Sachs is optimistic about Commercial Mortgage-Backed Securities (CMBS) and sees many investment opportunities in this area. Despite market tensions, CMBS has outperformed investment-grade corporate bonds. Rosner is optimistic about the credit market outlook, believing that the possibility of a US economic recession is only 15% to 20%
Amidst multiple pressures such as high debt, financing difficulties, and plummeting property prices, the US commercial real estate market is full of uncertainties, causing concern among investors and banks.
However, Goldman Sachs is bucking the trend, expressing optimism towards commercial real estate bonds. Lindsay Rosner, Managing Director of Investments in multiple departments at Goldman Sachs, stated:
"Just because there are some issues with high vacancy properties and capital or debt costs, doesn't mean the entire asset class is in trouble. What we can do is find many opportunities in Commercial Mortgage-Backed Securities (CMBS)."
CMBS is described as a "nervous market," with Rosner focusing on "very specific, highly attractive" real estate. She mentioned that Goldman Sachs also sees value in industrial warehouse bonds used for logistics, and stated that compared to corporate bonds, Goldman Sachs prefers CMBS.
Despite various pessimistic predictions that the pandemic would lead to building vacancies and a large number of defaults, the performance of commercial real estate bonds this year has exceeded that of investment-grade corporate bonds.
Rosner pointed out:
"There is indeed relative value in CMBS, it is an important part of our portfolio, and we believe it can generate significant arbitrage."
Overall, Rosner is optimistic about the outlook of the credit market. Despite the current slowdown in the US economy, she believes that "there are still returns available in the market," and the likelihood of a US economic recession is only around 15% to 20%