Some US commercial real estate assets may need recapitalising, BofA’s Mensah says

By Thomson Reuters Feb 12, 2024 | 3:55 AM

(Reuters) – Some assets in the U.S. commercial real estate sector may need recapitalising or restructuring but the market is efficient, Bank of America President Bernard Mensah said on Monday.

“The U.S. real estate sector is actually pretty sophisticated,” Mensah said at the World Government Summit in Dubai. “It’s had its booms and busts. I suspect some of those assets will need recapitalisation, or they may need restructuring. But the market is pretty efficient.”

“I don’t see anything systemic – famous last words – in that sector,” he added.

A sell-off in regional U.S. bank stocks triggered by New York Community Bancorp this month has brought exposure to commercial real estate in focus for analysts and investors.

The industry has grappled with looming losses on commercial real estate loan books since early 2023, as the sector faced financing difficulties amid high interest rates and lower office occupancy due to widespread adoption of remote work.

U.S. Treasury Secretary Janet Yellen said last week she was concerned about looming commercial real estate stresses on banks and property owners, adding that she believed the situation is manageable with assistance from bank regulators.

(Reporting by Tom Wilson in London; Editing by Amanda Cooper, William Maclean)