Axonic Capital LLC, LibreMax Capital LLC and Saba Capital Management LP are among firms positioning to provide loans as more than $1 trillion in commercial real-estate debt originated before the property crash comes due over the next three years, aiming to bridge the gap for borrowers needing more cash than banks are willing to lend, Bloomberg News reported today. Funds that buy corporate debt or mortgage-backed securities that package dozens of loans are targeting individual buildings, drawn by yields as high as 15 percent after returns elsewhere in credit markets shrunk. The firms are wagering commercial property values will continue to rebound after recouping 75 percent of their decline since 2009 even with the record wave of maturing loans. About $350 billion in commercial real estate debt comes due every year through 2017 after a borrowing binge last decade, according to Morgan Stanley. The firms are aiming to provide mezzanine loans, which are repaid after traditional commercial mortgages if a borrower defaults, making them a riskier bet in exchange for higher yields.
