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Americans hurt by the coronavirus pandemic are skipping home-loan payments, and the trusts that own the mortgages are feeling the pain.
Opportunistic funds have noticed. Among the investors in talks to buy discounted assets in the distressed real estate investment trusts are Paul Singer’sElliott Management Corp. andAppaloosa Management, run by David Tepper, according to people involved in the deals who asked not to be identified discussing private transactions.Apollo Global Management Inc. and Howard Marks’sOaktree Capital Group are also among interested investors, the people said.
Wall Street is on the hunt for bargains on assets that will probably gain in value once the pandemic eases. Some cash-hungry REITs have already sold mortgage portfolios at steep discounts and talks have heated up over similar deals or even equity stakes in the companies themselves, the people said. In those discussions, hedge funds and private equity firms are seeking returns of more than 20%, and in some cases more than 30%, the people said. The aggressive terms come after publicly traded mortgage REITs lost more than $50 billion of market value this year.
“There’s blood in the water,” said Daniel Alpert, founding managing partner of Westwood Capital. “They’re selling everything they can to raise cash.”
29,542 in U.S.Most new cases today
-22% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23
-0.9776 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23