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10 Midweek Must Reads for Real Estate Investors (Oct. 4, 2023)

U.S. life insurers are likely to avoid fallout from their exposure to the commercial real estate sector, according to a new Fitch Ratings report. Investor requests for withdrawals from Blackstone Real Estate Income Trust have slowed down in recent months, reported Bloomberg. These are among today’s must reads from around the commercial real estate industry.

  1. The Apartment Market Is Hitting a Construction Lull “Many of the cranes crowding skylines from Phoenix to Denver and Dallas will soon come down. They are likely to stay down for a long time. The number of new apartments starting development has fallen dramatically this year, a consequence of higher interest rates, declining rents and what in some places looks like overbuilding. Apartment building starts fell to a seasonally adjusted annual rate of 334,000 units in August, marking a 41% decline from the pace seen the same month a year prior, according to the Census Bureau. An annual decline of this magnitude has happened only one other time since the subprime housing crisis, real-estate data firm Bright MLS said.” (The Wall Street Journal)
  2. U.S. Life Insurers to Withstand Commercial Real Estate Deterioration “Ratings of U.S. life insurers are not currently at risk from commercial real estate (CRE) exposure, given stable investment portfolios comprised of high-quality, diversified exposures, conservative underwriting, strong liquidity and effective asset-liability management (ALM), Fitch Ratings says. We expect any CRE losses to remain within ratings sensitivities, given the strength of diversified portfolios, despite our expectation for monetary policy to lead to a mild recession in 1H24. U.S. life insurers’ CRE exposure is largely comprised of commercial mortgages, with commercial mortgage backed securities (CMBS) representing less than 5% of cash and invested assets and non-meaningful allocation to equity real estate.” (Fitch Ratings)
  3. Blackstone’s $67 Billion Real Estate Fund Sees Withdrawal Requests Decline “Investor requests to pull money out of Blackstone Inc.’s $67 billion real estate trust eased to the lowest in almost a year. Blackstone Real Estate Income Trust is making some headway in resolving its backlog. In September, investors sought to pull out $2.1 billion, or 28% less than what they requested to withdraw in August, according to a letter Monday. Withdrawal requests were the lowest since October 2022.” (Bloomberg)
  4. Tougher Return-to-Office Policies Are No Remedy for Half-Empty Buildings “First, the good news for office landlords: A post-Labor Day bump nudged return-to-office rates in mid-September to their highest level since the onset of the pandemic. Now the bad: Office attendance in big cities is still barely half of what it was in 2019, and company get-tough measures are proving largely ineffective at boosting that rate much higher. Indeed, a number of forces—from the prospect of more Covid-19 cases in the fall to a weakening economy—could push the return rate into reverse, property owners and city officials say.” (The Wall Street Journal)
  5. Brookfield Raises $12 Billion for Flagship Private Equity Fund “Brookfield Asset Management Ltd. has raised $12 billion for its largest ever private equity fund, boosting its financial firepower after a period of heavy spending. The Canadian investment firm has committed $3.5 billion of its own money to the BCP VI vehicle, according to a statement on Tuesday, with the remainder coming from investors including pension plans, sovereign wealth funds and family offices.” (Bloomberg)
  6. WeWork’s Landlords: Choosing the Best of Bad Options “Ever since WeWork mentioned the potential of bankruptcy and CEO David Tolley’s desire to ‘renegotiate nearly all our leases,’ landlords have likely been sweating and for good reason, according to lawyers who have spoken with The options range from unappetizing to bad. The mention of bankruptcy ‘is one of the primary debtor tenant negotiating tactics,’ says John Sparacino, a principal with McKool Smith’s Bankruptcy Litigation practice area.” (
  7. Colleges Snap Up Empty Office Space in a Slumping Market “At some colleges and universities these days, back to school means back to office buildings. Dozens of institutions of higher education across the United States have bought office buildings since 2018, including 49 four-year private schools and 16 four-year public institutions, according to data from JLL, a real estate services company. Some of the country’s best-known schools have made purchases this year, including the University of California, Los Angeles, which bought an Art Deco landmark in downtown Los Angeles.” (The New York Times)
  8. Supreme Court Rejects Legal Challenge to New York’s Rent Stabilization Law “A legal challenge to New York’s Rent Stabilization Law was thrown out by the U.S. Supreme Court Monday morning. The Supreme Court justices said the court would not hear the Community Housing Improvement Program’s (CHIP) case filed in 2019 to dismantle the state’s decades-old tenant protections, Bloomberg first reported.” (Commercial Observer)
  9. WeWork Skips $95 Million in Interest Payments “Global flexible workplace provider WeWork has missed interest payments totaling about $95 million in what the money-losing company said is a deliberate attempt to help start conversations with some lenders as it's already doing with landlords. WeWork has a 30-day grace period to make the interest payments of $37.3 million and $57.9 million each before such nonpayment constitutes an “event of default,” the New York-based firm said in a regulatory filing late Monday. Both payments were payable on Monday originally. The company said it has the liquidity to make the interest payments and may still decide to do so.” (CoStar News)
  10. Property Company Ordered to Repay Troops Charged Illegal Fees “A national property management company accused of charging nine service members illegal rental fees has agreed to compensate the aggrieved parties and settle the case, the Justice Department announced Monday. In a complaint filed Sept. 29, federal attorneys claimed that JAG Management Company, over a span of approximately two years, attempted to extract thousands in lease termination fines from troops forced to move because of military orders. The Virginia-based firm settled the case the same day, agreeing to pay $41,581 to the service members and a $20,000 civil penalty to the government.” (Military Times)


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