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JP Morgan Chase First Republic OLIVIER DOULIERY/AFP via Getty Images

12 Midweek Must Reads for Real Estate Investors (May 3, 2023)

The Real Deal looks at what JPMorgan’s takeover of First Republic Bank means for the real estate industry. ULI predicts a slowdown until 2025. These are among today’s must reads from around the commercial real estate industry.

  1. What First Republic’s Sale to JPMorgan Means for Real Estate “In a new video, The Real Deal’s Hiten Samtani breaks down First Republic’s seizure by the FDIC and assets sale to JPMorgan Chase.” (The Real Deal)
  2. BREIT Fulfills 29% of April Withdrawal Requests, Limits Redemptions for Sixth Months Straight “Blackstone Real Estate Investment Trust received $4.5B worth of withdrawal requests for the second consecutive month in April, leading it to restrict redemptions from the $70B nontraded REIT for the sixth month in a row.” (Bisnow)
  3. Property Owners May Soon Get a New Reason to Sell “The eye-watering price of interest-rate hedges could push more property owners to put up a “For Sale” sign. Lenders in the U.S. commercial mortgage-backed securities (CMBS) market and banks usually require borrowers to hedge their interest-rate risk when they take out a variable-rate loan. If a landlord buys an interest-rate cap with a 3% strike rate, they receive a payment whenever benchmark rates—often the secured overnight financing rate, or SOFR—rise above that level.” (The Wall Street Journal)
  4. Non-Bank Lenders Step into the Limelight Once Again “Even prior to the regional banking crisis of March 2023, the U.S. banking system was already experiencing a tightening of credit. The steady roar of inflation had combined with multiple Federal Reserve interest rate hikes in just 11 short months to stymie real estate development projects and create a capital markets environment that made both loans and liquidity increasingly hard to come by.” (Commercial Observer)
  5. Life Sciences Property Sector Cools After Multiyear Winning Streak “The sector became an investor favorite during the pandemic as companies raced to develop a Covid-19 vaccine. Unlike traditional office space, life-sciences buildings are less vulnerable to the remote-work movement. Lab work usually requires specialized equipment and mechanical systems that can’t be replicated at home. But a deluge of new supply is putting pressure on some of the largest industry hubs in the country including San Diego, south San Francisco and the Boston-Cambridge region, causing vacancies to rise, according to commercial real-estate-services firm CBRE Group.” (The Wall Street Journal)
  6. 2023 Midyear Commercial Real Estate Outlook “Economic uncertainty remains high for commercial real estate through the rest of 2023. There are plenty of big questions—including the interest rate environment and the future of office space. But there are also positives: Multifamily and industrial continue to perform well, and the industry may have underestimated the strength of neighborhood retail. Keep an eye on these commercial real estate trends and opportunities.” (JPMorgan Chase)
  7. ULI Forecast Shows Economic and Slowdown Likely in the Near Term with Recovery Expected in 2025 “The Real Estate Economic Forecast, produced by the ULI Center for Real Estate Economics and Capital Markets, is based on a survey conducted in April 2023 of 41 economists and analysts at 37 leading real estate organizations. According to the survey, the U.S. economy will slow in 2023 and 2024, with recovery expected to begin in 2025.  The real estate market will follow suit, with flat to negative results over the next two years, followed by mostly positive news in 2025.” (Urban Land Institute)
  8. Tight Supply Fuels Demand for Newly Built Homes “Home builders are enjoying stronger-than-expected business this spring, capitalizing on the recent fall in mortgage rates and the shortage of existing homes for sale. Last year’s rapid rise in mortgage rates made home purchasing far more expensive for most buyers, slowing home sales and pressuring the home-building industry. Home builders pulled back on land acquisition and new construction.” (The Wall Street Journal)
  9. PIMCO Prime Real Estate: Leveraging Market Momentum “To be able to copy & paste content to share with others please contact us at [email protected] to upgrade your subscription to the appropriate license.” (PERE News)
  10. Pressure Is On for Property Managers Tasked with Challenge of Maintaining Profits “Multifamily owners, after years of rent increases and record-breaking demand, have come face to face with a new reality in recent months, and as revenue cuts get deeper, the industry is going through a transition as it looks to balance cost-cutting through automation with supporting employees doing tasks that only humans can perform.” (Bisnow)
  11. 2022: A Year Like No Other in Commercial Real Estate “Last year started off with a bang. Little did we know, a fox in the form of the Federal Reserve was fast approaching the hen house.” (Commercial Observer)
  12. Subway Shed More Stores Ahead of Potential $10 Billion Sale: Document “Subway, which is exploring a potential $10 billion sale, further shrank last year in the United States as franchisees closed 2.7% of the brand's sandwich shops, squeezing its royalties and fees. The chain shed another net 571 locations in 2022 after even steeper closings in previous years in the United States, its largest global market, according to the latest disclosure document it provides to franchisees who are interested in buying locations.” (Reuters)
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