Financial Turbulence: JER Investors Trust Joins the Chapter 11 Wave
This episode of the Commercial Real Estate Daily podcast is brought to you by CRE Launch Pro. If you’re looking to take your investing skills to the next level with online courses, group coaching calls, and a community of other investors, head on over to www.CreLaunchPro.com
Episode Transcript:
In a surprising turn of events, JER Investors Trust, a Mortgage REIT, has taken a hit and filed for Chapter 11 bankruptcy. This move adds to the growing list of real estate companies facing financial challenges in the evolving landscape of 2023's interest rate environment.
JER Investors, positioning itself as a specialty finance company managing a diverse portfolio of commercial real estate structured finance products, such as mezzanine notes, mortgage loans, and commercial mortgage-backed securities, finds itself at a financial crossroads. The company reports owing over $100 million to creditors, while its assets fall short, totaling less than $50 million.
Notable among the creditors is The Bank of New York Mellon Trust Co., with JER Investors having a significant debt of nearly $94 million. Another entity in the mix is C-III Capital Partners, a CRE servicing company and owner of over 8% of JER Investors, to which the REIT owes almost $20 million.
The current bankruptcy filing echoes a broader trend in the real estate sector, where several firms have succumbed to financial pressure, fueled by the escalating cost of borrowing. In December alone, Pennsylvania Real Estate Investment Trust entered Chapter 11 bankruptcy for the second time in three years, joining the ranks of Houston-based Silver Star Properties REIT, which filed for Chapter 11 in September.
The reverberations even reached the co-working giant WeWork, filing for Chapter 11 in November, casting a shadow of uncertainty over office owners nationwide.
This is Tyler Cauble Signing off