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10 Must Reads for Real Estate Investors (Oct. 20, 2023)

Despite their reputation as a safe haven, medical office investments carry some level of risk, reports CoStar. In quarterly earnings banks have been reporting some strain due to commercial real estate loans. These are among the must reads from the real estate investment world to wrap up the week.

  1. Despite Appeal for Risk-Adverse Investors, Medical Offices Also Come With Risks “Over more than two decades, medical offices were frequently bought by third-party investors as a hedge against recessions. Over the past 10 years, though, that trend has largely abated for multitenanted medical office sales transactions, only gaining traction within the single tenant occupancy, or STO, property type.” (CoStar)
  2. Banks report continued pain on commercial real estate loans “Borrowers have struggled to refinance their CRE loans as property values have declined and interest costs have risen. Some $20 billion of office commercial mortgage-backed securities, which bundle together individual loans, mature in 2023, according to real estate data provider Trepp.” (Reuters)
  3. Global alternatives market set to reach $24.5T, private credit AUM to double “According to the forecast from industry analysts Preqin, the global alternative assets market will grow at an annualized growth rate of 8% between 2022-2028.” (Investment News)
  4. Opportunities in Real Estate Investing “To explain, the reason inflation benefits real estate is because it increases construction costs, which in turn causes the supply-and-demand balance of real estate to favor investors. So, during 2022 and 2023, when inflation and construction costs were rising, new project starts began declining.” (Chief Investment Officer)
  5. Pimco Surrenders 20-Hotel Portfolio “The hotels were initially valued at $326M when the loan was originated in 2017, but by December, the values had dropped 16% to $272.8M, Bloomberg reported. The CMBS loan was transferred to a special servicer in August 2022, according to CRED iQ.” (Bisnow)
  6. AIA/Deltek Architecture Billings Index Reports New Decline in Business Condition “Only one sector, firms with an institutional specialization, remained flat while all other sectors reported declining billings. Firms with a multifamily residential specialization saw more decline, a continuation of month over month declines since August 2022.” (AIA)
  7. The Complexities of CRE’s Transaction Paralysis “The general sentiment that the increase in borrowing costs is temporary is driving CRE owners/seller to demand lower cap rates than what buyers are willing to pay is creating a large bid-ask spread.” (Commercial Property Executive)
  8. How 100,000 Apartments in New York City Disappeared “Through apartment combinations like Mr. Malloy’s, and conversions of buildings with several units into single-family homes, the city has lost more than 100,000 apartments since 1950, according to a new analysis of building records shared with The New York Times.” (The New York Times)
  9. A New York City Law May Punish Commercial Landlords Who Behave Badly “A pending New York City litigation suggests that a landlord can’t act quite as unreasonably as a lease might seem to allow. In that litigation, the lease said the landlord could disapprove plan changes in its sole and absolute discretion.” (Forbes)
  10. Barnes & Noble Sets Itself Free “Barnes & Noble has introduced the new look at several dozen of its nearly 600 locations, including the Upper West Side of Manhattan and the Grove shopping mall in Los Angeles, and at the 20 new stores that have opened in 2023.” (The New York Times)
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