According to Bloomberg, Morgan Stanley analyst Richard Hill has claimed to have found something interesting with the commercial mortgage-backed securities.
Morgan Stanley has claimed to have found out that three loans worth $71 million collectively, which were made to real estate investment firm Colony Hills Capital and underpin two CMBS deals, have been included in special servicing. Bloomberg also reported that Morgan Stanley has said, commentary from the servicer "indicates that the transfers were due to a pledge of interest to a restricted party."
The bank has also stated that the loans have been secured by five multi-family properties in Mobile, Alabama. But most interestingly, Stanley is saying that the properties consists of a portfolio that has become the receiving end of a sum of $12 million crowdfunded through EarlyShares.com.
He has also claimed that the ad of the said portfolio can still be seen online, where it even says, "Diversified portfolio of 5 high-performing multifamily communities in a fast growing real estate market" and the said webpage also contains a detailed information about the portfolio including the team that is behind it. The webpage even has a banner that announces that the project has reached its funding target.
Having said that, real estate has been dubbed as the next target for crowdfunding with backers including Michael Burry, the hedge fund manager of Big Short fame. Hill reportedly puts it as "crowdfunding is an untested ownership structure in CMBS," which makes the future of these three Colony Hill loans something to watch.
Bloomberg quotes was Richard Hill has said in a recent interview, "The question becomes, how many of these are showing up in CMBS and, more importantly, what happens when these things go bad? I really don't know."
