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Mortgage Investor JER Files for Bankruptcy, Is Latest Property Firm to Crash

Mortgage Investor JER Files for Bankruptcy, Is Latest Property Firm to Crash

(Bloomberg) — JER Investors Trust Inc., a mortgage REIT, filed for bankruptcy following the latest sign of distress in commercial real estate.

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The real estate investment trust — which counts private equity firm C-III Capital Partners among its largest shareholders — owes more than $100 million to creditors, but has less than $50 million in assets, according to a motion Chapter 11 filing filed Friday in Wilmington, Delaware. . Businesses are using Chapter 11 of the U.S. Bankruptcy Code to temporarily suspend most debt payments while they try to develop a plan to stay in business.

JER Investors manages a portfolio of mortgage-backed securities and other types of debt related to the commercial real estate market, according to the company’s website. As interest rates have climbed this year, commercial properties have come under pressure, particularly businesses that lost tenants during the pandemic as office building workers stayed home.

Earlier this month, mall owner Pennsylvania Real Estate Investment Trust filed for bankruptcy for the second time in three years. In November, coworking giant WeWork Inc. filed for bankruptcy with plans to pare down a vast real estate portfolio that spanned 39 countries.

C-III Capital owns at least 8.4% of JER Investors, according to court documents. JER also owes C-III nearly $20 million, according to the bankruptcy filing. The Bank of New York Mellon Trust owes $93.9 million, according to the chapter 11 petition.

The case is JER Investors Trust Inc., 23-12109, US Bankruptcy Court, District of Delaware (Wilmington)

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