Distress is certainly out there, but it’s isolated, according to Carhart. “The longer we’re in this environment, where fed funds hold at current levels, more of it will come to the surface,” she says. However, she notes that industry fundamentals are strong and lenders are willing to work with borrowers to figure out a solution as long as they operate well as an owner and manager. Flynn says Lument has seen isolated instances of distress but doesn’t expect it to emerge as a significant issue. “On the whole, the vast majority of owners are hanging in there. Those with pending maturities are turning to loan extensions, recapitalizations, and, in some cases, asset sales to manage their portfolios.” Scott reminds today’s challenges are different than what was seen during the GFC. “Most of today’s stress is related to higher-leverage, floating-rate bridge debt,” he notes. “Within the industry we have witnessed several factors contributing to the distress certain borrowers are facing, including insufficient hedges and failure to hit underwritten rent growth levels, as well as higher operating expenses, including insurance, payroll, and repairs.” Brickman says, in terms of distress, it will probably be the less-experienced, more thinly capitalized, and smaller-scale operators that will take the biggest hit, as well as Class C properties that are the hardest to finance." https://lnkd.in/gBX2zRFa