Ellington Management Group

As the Federal Reserve delays rate cuts, investors are revisiting distressed-debt strategies within real estate, writes MarketWatch’s Joy Wiltermuth.   Ellington Management Group’s Head of Commercial Real Estate Debt Leo Huang emphasizes the expected shifts in the commercial real estate sector: "I think there are hundreds of billions of dollars of debt that will change hands, a lot in office, but not all of it.”   Read the full story here (subscription may be required): https://lnkd.in/gzTKv8sF    #CommercialRealEstate #FinancialMarkets #MarketInsights

In 2024, owners of big U.S. office buildings will struggle to refinance $117 billion of commercial mortgages, many of which were taken out a decade ago when interest rates were lower, writes the Financial Times’ Stephen Gandel.   Ellington Management Group’s Head of Commercial Real Estate Debt, Leo Huang, spoke with the Financial Times about the wall of debt facing office owners in the U.S., and specifically how office loans on bank balance sheets could cause problems for the regional banks holding them.   Read the full article about the state of the commercial real estate market here (subscription may be required): https://lnkd.in/d4AwPVJ7   #CommercialRealEstate #Mortgages #FinancialMarkets #MarketInsights

Higher interest rates, economic uncertainty, and the ongoing trend of remote work are exerting pressure on property owners, who face mounting challenges as delinquent commercial real estate loans at US banks hit a 10-year high, reaching $17.7 billion in the last quarter, writes the Financial Times’ Stephen Gandel and Joshua Franklin.   In an interview for the story Ellington Management Group Head of Commercial Real Estate Debt, Leo Huang, emphasizes that this trend is not just a temporary setback. “It’s not a hiccup — it’s not Covid and then recover,” he says. “Property prices are going to come down and loan delinquencies are going to keep going up.”    Read the full article here (subscription may be required): https://lnkd.in/eKbZQbyM   #CommercialRealEstate #CRE #Investing #IndustryInsight

Amid higher interest rates and economic uncertainty, Michael Vranos, Founder and Chief Investment Officer of Ellington Management Group, recently spoke with Christine Williamson, Senior Reporter at Pensions & Investments, to discuss where Ellington is finding opportunities to invest in structured credit today, the parallels between the present trading environment and when Ellington launched in 1994, and why insurers are increasingly interested in allocating to the sector.    "This is one of the best yield-buying opportunities we've seen within the markets in which we have invested [for] decades…We are seeing greater demand for our strategies from our clients, the vast majority of which are institutional, because of higher rates and higher spreads for fundamentally sound assets," Vranos says.    We invite you to read the full article, “Ellington Management sees insurers gaining interest in credit strategies”, here: (subscription may be required): https://lnkd.in/gU-C77Sf 

Speaking with The Wall Street Journal’s Gina Heeb and Ben Eisen, Ellington’s Mark Tecotzky explains that with interest rates climbing, investors can now earn higher yields, “You’re starting off at the 50-yard line…There’s a lot more yield in the market,” he says.   To read the full story, click here: https://lnkd.in/gsEY2nvU   #Credit #MBS #Mortgages #Investing #FinancialMarkets

Ellington Management Group is proud to have published our latest white paper, “Insurers Pursuing Mortgages and Structured Products Eye Bank Assets,” which was recently covered by Institutional Investor’s Michael Thrasher.     The report’s five key takeaways include:   1. Recent stress in the banking system is accelerating the Dodd-Frank era trend of traditional bank assets moving to nonbank balance sheets. Corporate lending has already overwhelmingly shifted outside of the banking system, with only 20% of corporate credit held on bank balance sheets today.   2. Seeking to capture the illiquidity premium created by the bank lending void, the life insurance industry has grown into one of the largest private debt investors in the world. Insurers have partnered with asset managers, who, in turn, have accumulated access to low-cost, long-term annuity capital.   3. Large private equity-backed life insurers initially used long-term annuity capital to fund corporate lending. Private opportunities of comparable scale are also present in residential and commercial debt, however. As such, in recent years, several large life insurers have increasingly boosted their allocations to mortgages, specifically non-QM residential whole loans.   4. Compared to the overall industry, private equity-backed life insurers have achieved higher returns by increasing their allocations to structured products. Shifting structured products to insurers with stable, long-term capital should dampen price volatility in tail scenarios, as well as fuel demand.   5. The rest of the industry will likely follow suit by increasing their allocations to mortgage loans and structured products as they develop partnerships with experienced managers.   Learn more by reading the full report here: https://lnkd.in/gBM89ynr   #Whitepaper #ResidentialMortgages #FinancialMarkets #MortgageMarket