The issue is that a lot of these loans can’t cover debt service since their rates are variable and have gone up from maybe 4% a year to 8% a year. So if they were covering at a 1.2 debt service ratio it’s now a 0.6 with no optimism in sight. This lets the lenders rebalance you for a whole year of debt service, and a lot of guarantors don’t want to do that.
persian_mamba t1_j9ubiya wrote
Reply to Pimco-Owned Office Landlord Defaults on $1.7 Billion Mortgage by downboat
The issue is that a lot of these loans can’t cover debt service since their rates are variable and have gone up from maybe 4% a year to 8% a year. So if they were covering at a 1.2 debt service ratio it’s now a 0.6 with no optimism in sight. This lets the lenders rebalance you for a whole year of debt service, and a lot of guarantors don’t want to do that.