CMBS Bondholders Left In The Dark As Valuations Tumble
“Special servicers have been very, very aggressive about not giving into the reality of the situation,” Terra Strategies Managing Partner Shlomo Chopp said.
“If you're a huge bondholder with multiple trusts, you can imply power. If you're a controlling class of a trust, you can actually say, ‘No, I want this, that and the other,’” Chopp said. “If you're just another guy that owns a $500K piece in a $500M trust, you really don't have any power whatsoever. The guy may not even take your call.”
But servicing fees are just a routine part of the CMBS universe, Chopp said, adding that any potential conflicts of interest are routinely outlined in loan prospectuses.
“It’s not news,” Chopp said. “Anyone that complains about it is basically saying, ‘Oh, I don't like socialism, but I like socialism when it helps me. I like capitalism, but I don't like it when it hurts me.’”