Real Estate Mogul Foresees ‘Debt Wall’

John Goff
John Goff | Image by Crescent Real Estate

A local real estate mogul has predicted that some property gems will soon be on the market at attractive listing prices.

John Goff, a Fort Worth billionaire and chairman of Crescent Real Estate, appeared on Bloomberg Television’s Wall Street Week with David Westin this week and told viewers there was a silver lining to the commercial real estate market’s current woes.

Looming defaults amid rising interest rates and high office vacancies are going to force restructuring and make investors eager to sell assets, he predicted.

“We’re entering a period here where there are going to be great properties that will hit a debt wall,” Goff said. “We’ll be able to acquire some very attractive properties at compelling pricing.”

Commercial loan defaults are starting to make the news, with metroplex office towers such as The Colonnade in Addison and Uptown Tower in Dallas, formerly known as Amberton Tower, recently being flagged for failed debt payments, as previously reported by The Dallas Express.

The Mortgage Bankers Association estimated earlier this year that $1.4 trillion in commercial property loans nationwide will be due by the end of 2024. Of the loans maturing in 2023, hotels have accounted for the largest share at 34%, followed by offices at 25%.

Meanwhile, Bob Sulentic, the CEO of real estate brokerage CBRE Group Inc., said at a recent panel discussion hosted by the Dallas Regional Chamber that the values of commercial real estate properties are dropping rapidly.

“We thought values may come down 15%, 20%. We now think that may be another 10%,” Sulentic explained, according to Fortune.

In light of this, Goff and other leading figures in the real estate investment sector, such as Barry Sternlicht of Starwood Capital Group and Armen Panossian of Oaktree Capital Management, expect to be able to capitalize on the opportunities that might arise as distressed investors put their holdings up for sale.

However, Goff told Bloomberg that while he believes that attractive pricing is on the horizon, the discounts won’t be as steep as those he encountered in the 1990s.

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