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12 Must Reads for Real Estate Investors (May 1, 2023)

The race to implement AI technologies is producing another burst of activity in the data center sector, reports Bisnow. Forbes examines the implications of Vornado choosing to suspend its dividend. These are among the must reads from around the real estate investment world to kick off the new week.

  1. JPMorgan Chase Returns to a Familiar Role: Bank Rescuer “Regulators seized the embattled lender overnight and sold it to JPMorgan Chase. What is now America’s second-biggest bank failure, after the 2008 collapse of Washington Mutual, means that 84 bank branches that closed as First Republic locations on Friday will reopen on Monday as Chase branches.” (The New York Times)
  2. Nuveen’s Jason Hernandez On ‘Broken Assets’ and the Finance Climate Now “The agave plant is rarely thanked for furthering one’s career. But for Jason Hernandez, who leads Nuveen’s U.S. debt business, its nectar has been present — and, dare we say, a key participant— at several pivotal points in his work life.” (Commercial Observer)
  3. What Does Vornado Realty Trust’s Dividend Suspension Say About The Real Estate Economy? “But investing in real estate is not the same as investing in bonds: real estate is an equity asset—meaning the investor not only gets income but also participates in any appreciation that comes from owning the property.” (Forbes)
  4. Large-Property Prices Decline As Values of Smaller Properties Gain “Institutional investors drove prices lower for big assets last month in large U.S. markets in response to higher interest rates, according to CoStar Group’s latest repeat-sales indices report.” (CoStar)
  5. C-PACE’s Moment Arrives: Credit Disruption Boosts Green Financing “Now, amid a higher interest rate environment and difficulties from the pandemic lockdown still lingering, C-PACE professionals have a timely and arguably more appealing pitch: For recently completed buildings facing a delay in stabilization and potential loss in value, the financing is a competitive alternative to bridge loans to recapitalize eligible green improvements and mitigate the risk of distress.” (Commercial Property Executive)
  6. Fix the CRE CLO, Mr. Market: Tear Down This Wall! “The CRE CLO was, and will again be, the best match term, non-marked to market leverage technology in the CRE space and simultaneously represents the best alignment of interests between deal sponsor and investor. It just doesn’t, as currently configured, work right now.” (Dechert LLP)
  7. AI Arms Race Reaches 'Point Of Inflection' As Tech Giants Pour Billions Into Data Centers “It may be the early days of the AI economy, but these companies — by far the largest users of data centers already — are ramping up spending on the facilities needed to support both their own AI products and AI cloud infrastructure for customers.” (Bisnow)
  8. Vacant US office buildings are getting residential upgrades to make up for pandemic shift to remote work “Cities like Boston and Seattle are welcoming the conversions, offering contests for the best designs. And, cities like New York and Pittsburgh are offering major tax breaks and re-zoning areas that have only allowed offices to now include housing.” (Fox Business)
  9. Commercial real estate deal landscape has become 'asset type specific': Reporter “Commercial Observer Finance Editor Cathy Cunningham spoke with Yahoo Finance's Diane King Hall to discuss the impact of the Covid-19 pandemic on the real estate industry, commercial real estate trends, and what lies ahead for investors.” (Yahoo Finance)
  10. Senior Housing Industry Mounts A Comeback As Baby Boomers Age In And New Construction Stalls Out “The pace of new builds has slowed to a drip, with units under construction cooling to 5.1% of existing inventory in the biggest metros compared to a peak of 7.8% in late 2019, according to the NIC. Construction now takes 62.5% longer than it did in 2012, with the median cycle in 2022 totaling seven to nine quarters depending on the size of the property.” (Bisnow)
  11. New York State Budget Looks Like a Dud for Commercial Real Estate “Gov. Kathy Hochul announced Thursday night that state leaders reached a tentative $229 billion budget deal nearly one month after it was due and without a plan to address the state’s affordable housing crisis.” (Commercial Observer)
  12. New York to Ban Natural Gas, Including Stoves, in New Buildings “The proposal, revealed on Thursday night, has been a priority for environmental groups, who see it as a critical step in reducing New York’s dependence on fossil fuels and helping it meet its emission reduction goals. But it was opposed by the oil and gas industry and treated skeptically by some consumers.” (The New York Times)
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