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Wednesday, 25 March 2020

Barry Sternlicht Urges Suspension of Mark-to-Market Rules

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Commercial Real Estate Direct Staff Report

Barry Sternlicht, co-founder and chairman of Starwood Capital Group, said mark-to-market rules, which have a cascading affect on asset values, ought to be suspended.

In an interview on CNBC's Squawk Box program yesterday, he said margin calls, which are triggered when assets securing certain credit facilities fall in value, have resulted in "people scrambling to come up with liquidity."

"What you need is a freeze on mark-to-market in real estate markets," he said.

At least four mortgage REITs - TPG Real Estate Finance Trust Inc.Invesco Mortgage Capital Inc., AG Mortgage Investment Trust and New York Mortgage Trust - each announced that they were hit with margin calls and struggled to meet them.

Each relied on repurchase credit facilities to finance investments in real state securities, including private-label...

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