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11 Must Reads for Real Estate Investors for the Weekend (April 28, 2023)

Some investment pros have started to push back on the idea that commercial real estate as a whole is at risk. Some real estate developers are turning to AI to help with complex projects, reports Commercial Observer. These are among the must reads from around the real estate investment world to end the week.

  1. Commercial Real Estate Is Being Earmarked as the Next Domino to Fall. Is This Fair? “CRE is very idiosyncratic, and for many sub-sectors the fundamentals remain solid. Even the story behind offices is complex. Continued income growth may allow the fabled ‘extend and pretend’ to pay off, especially if inflation follows the path of least resistance and interest rates continue to fall.” (CoStar)
  2. The story around commercial real estate isn't what people think, says CBRE CEO Bob Sulentic “Bob Sulentic, CBRE president and CEO, joins 'Squawk on the Street' to discuss what's happening in Sulentic's business, what Sulentic is seeing in U.S. capital markets and the long-term implications of declining values in commercial real estate properties.” (CNBC)
  3. Distressed Commercial Real Estate Offers Actionable Opportunity “Commercial real estate markets, already stressed going into 2023, have suffered additional repercussions from the recent banking turmoil. Find out how current challenges may create opportunities for investors.” (PIMCO)
  4. CBRE Execs: Billions In M&A Pipeline Could Transform Company “The firm intends to invest just over $2B on M&A and stock buybacks over the next 12 months, but could go as high as $5.5B while maintaining leverage that is twice the level of its earnings before interest, taxes, depreciation and amortization.” (Bisnow)
  5. Private Investors Looking to Capitalize on Nearshoring Trends Turn to Mexico “The supply-chain rethink is generating investment opportunities in Mexico for private investment firms as well as growth opportunities for portfolio companies. Along the way, however, investors must navigate their share of hurdles, including a complex regulatory environment.” (The Wall Street Journal)
  6. Stress Builds as Office Building Owners and Lenders Haggle Over Debt “Banks’ unwillingness to lend and building owners’ desperation for credit have created a standoff. Lenders want to extend loans and make new ones only if they can get better terms. Many landlords are pushing back, and some are threatening to default, effectively betting that banks and investors stand to lose more in a foreclosure.” (The New York Times)
  7. Nontraded REIT Portfolios Shrink As Redemptions Rise “Some of the largest nontraded real estate investment trusts expanded their commercial property portfolios by $49.4 billion in the first two-thirds of 2022, but they haven’t reported completing a significantly large purchase in more than seven months.” (CoStar)
  8. Bank Turmoil Exposes Commercial Real Estate Vulnerability “The reduction of commercial real estate exposure among the banks has the potential to disrupt parts of the market that are already fundamentally challenged, like office and retail situated in downtown business districts. Additionally, projects that were funded over the last two or three years with low-rate financing and a high loan-to-value ratio could have difficulty refinancing without an equity infusion. The disruption could create opportunities for agile investors, but we don’t anticipate a seismic shift in commercial real estate.” (Cresset)
  9. SF office foot traffic still worst in the nation, but slowly improving “The report, which uses cell phone data to track office foot traffic in 800 buildings across 11 urban markets, also points out that San Francisco’s office attendance has been slowly inching upwards since the pandemic dropped office attendance to an all-time low of about 90 percent below the end of 2019 figures. Every quarter since has improved, according to the report.” (The Real Deal)
  10. Why Developers Are Turning to AI to Deliver Complex Projects “These technologies enable development teams to receive real-time insight into spend forecasting and budget impacts, early warnings on critical potential incoming project risks across hundreds of data points, and a digital-assist on automatically compiling comprehensive lender and financial partner reporting.” (Commercial Observer)
  11. Retail visits fell nationwide In March — but one region outperforms the others “The Northeast seems to be seeing higher overall visit numbers: In March, seven of the 10 best-performing states were in the Northeast, Placer.ai. found. (The seven states were Massachusetts, Rhode Island, Pennsylvania, New Jersey, Connecticut, New York, and Vermont.). Other states in the top 10 included Colorado and Hawaii. Washington, D.C. also was a top performer.” (Chain Store Age)
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