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11 Must Reads for Real Estate Investors (Aug. 21, 2023)

The Wall Street Journal looked at how the retail real estate sector has bounced back from some of the troubles it experienced the past decade. The cost of backing WeWork’s IPO may come back to hurt some other big real estate firms, reports Bisnow. These are among the must reads from around the real estate investment kick off the new week.

  1. A Bright Spot in Commercial Real Estate: Retail Shops “Retail’s strength is largely the result of a sharp drop in retail construction since the 2008-09 financial crisis, which allowed the oversupplied sector to digest its existing real estate. Retailers, meanwhile, started using online sales data and analytics technology to pinpoint locations for successful stores.” (The Wall Street Journal)
  2. Cost Of Backing WeWork's IPO Is Adding Up For Big Real Estate Firms “Starwood Capital and Cushman & Wakefield were among the firms that invested hundreds of millions of dollars in WeWork when the company went public in September 2021. The company listed at $10 a share, giving it a value of about $8B.” (Bisnow)
  3. CNBC: Marcus & Millichap CEO Sees Media Overblowing Distress in Commercial Real Estate Sector “Hessam Nadji, President and CEO of Marcus & Millichap, discusses commercial real estate amid ongoing concerns around rising rates and credit.” (The Registry)
  4. Amazon Leads U.S. in Building Multistory Warehouses “This type of building is slowly gaining traction, with 30% of projects under construction leased to other companies, compared to only 8% of existing supply. This is still a significant market share for Amazon, although it is less, indicating other companies, primarily third-party logistics, are buying into the concept.” (Collies Knowledge Leader)
  5. Commercial Real Estate is in Trouble. Climate Change Is Part of the Problem “The growth in the cost of insurance for multifamily properties, for example, has tracked closely with the frequency of $1 billion natural disasters in the U.S. And properties in high-risk climate zones, particularly those at risk of hurricanes, face the highest insurance rates.” (Time)
  6. Janus Henderson Prefers Public REITs to Private Ones — Not for the Reason You Think “Publicly traded real estate investment trusts continue to trade at much lower valuations compared to private ones. But beyond their relative prices, there are other reasons to favor public REITs, according to Janus Henderson Investors.” (Institutional Investor)
  7. No Room At The Dorm: As College Begins, Some Students Are Scrambling For Housing “First, off-campus rents have gone through the roof—nationally, they’re averaging $2,062 a month, up 28% from $1,614 at the start of 2021, according to rental data from Zillow. That raises both demand for on-campus housing and the difficulties students face when they can’t get it. Second, some colleges are seeing enrollment tick up after a pandemic-induced decline during which many students opted to take a year off or delay the start of their college educations.” (Forbes)
  8. After Shrinking Of Publicly Traded Data Center Universe, New IPOs May Be On The Horizon “Some industry veterans say the next round of data center IPOs is just around the corner. While some remain skeptical, a growing chorus of voices is pointing to Wall Street as the best option for certain providers as their ballooning scale and value tests the limits of the private market’s ability to fund growth.” (Bisnow)
  9. Cracks Deepen for America’s Biggest Hospital Landlord: Struggling Tenants, a Bailout on Hold “MPT played a crucial role in private-equity firms’ push into healthcare facilities. It used cheap, plentiful financing to buy more than 400 hospitals, in some cases enriching private-equity firms that sold to MPT at high prices and paid themselves large dividends. Now some of the deals have soured. Hospital chains that are MPT’s tenants have closed facilities and cut services, reducing healthcare options in some communities.” (The Wall Street Journal)
  10. Thank You For Not Smoking: The Effort to Smoke-Proof Medical Facilities “When emergency room physician Mirtha Macri was getting off an overnight shift one weekday morning in early June, she noticed a rise in patients coming to Lenox Health Greenwich Village with asthma symptoms, chest pains, and difficulty breathing.” (Commercial Observer)
  11. China Evergrande, Giant Real Estate Firm, Files for U.S. Bankruptcy “Evergrande’s bankruptcy petition, filed in the United States bankruptcy court in the Southern District of New York, comes as the company continues to try to settle staggering levels of debt. As of the end of last year, Evergrande reported liabilities totaling $335 billion.” (The New York Times)
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