Pockets of commercial real estate, such as the area east of Third Avenue in Manhattan, are likely to come under stress as landlords continue to struggle to refill towers in the aftermath of Covid-19, Citigroup Inc. Chief Executive Officer Jane Fraser said.
(Bloomberg) — Pockets of commercial real estate, such as the area east of Third Avenue in Manhattan, are likely to come under stress as landlords continue to struggle to refill towers in the aftermath of Covid-19, Citigroup Inc. Chief Executive Officer Jane Fraser said.
For her part, Fraser said she’s most worried about real estate with debt that’s been packaged into lower-rated commercial mortgage-backed securities.
“It’s the return-to-office phenomenon that’s driving it,” Fraser said Monday during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California. “We’re not talking about the local doctors’ office, we’re not talking about all of the office space either.”
The pandemic ushered in a new era of remote work, cutting into office occupancies and fueling concern that commercial-property landlords may fall behind on their mortgage payments. New York-based Citigroup is a relatively small player in the space, with just $55 billion in commercial real estate lending exposure as of the first quarter.
–With assistance from Sonali Basak.
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