Doubleline sees opportunity in the current travails in commercial real estate.

DoubleLine Capital LP, a $92 billion asset manager, sees opportunities in the commercial real estate market despite concerns over the industry’s outlook. According to Morris Chen, who manages the recently launched DoubleLine Commercial Real Estate exchange-traded fund (NYSEARCA: DCMB), the current negative sentiment has created an attractive entry point for higher-quality credit.

Notably, office vacancies have increased due to remote work, and those seeking to refinance in the next year face higher borrowing costs, leading to a bleak outlook for commercial real estate.

“While most ETFs tend to get launched after a run-up in the strategy or asset class, it can be actually be better to launch after a rough patch as it gives the ETF room to run down the road,” said Bloomberg Intelligence senior ETF analyst Eric Balchunas at the time of the launch.

The DCMB ETF invests in short duration debt that ranks highly in the capital structure, and it charges 39 basis points. Although office properties are risky, industrial and multi-family properties, as well as retail properties like shopping centers, have held up well. (Bloomberg)

Last week, DoubleLine also launched the DoubleLine Mortgage ETF (NYSEARCA: DMBS), which invests in investment-grade residential mortgage-backed securities, and charges 49 basis points.

Despite concerns over the nearly $1.5 trillion of debt due for repayment before the end of 2025, investors such as GMO and Sun Life’s institutional asset management arm believe that the volatility in the commercial mortgage-backed securities (CMBS) market is overdone, and there are bargains to be found among higher quality debt.

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