- Wall Street Is Ready to Scoop Up Commercial Real Estate on the Cheap “Wall Street firms are raising new funds to acquire office buildings, apartments and other troubled commercial real estate, looking to scoop up properties at a fraction of the price investors paid a few years ago. Cohen & Steers, Goldman Sachs, EQT Exeter and BGO, formerly known as BentallGreenOak, are among the prominent names raising billions of dollars for funds to target distressed assets and other real estate with slumping values, according to regulatory filings.” (The Wall Street Journal)
- No, Small Banks Aren’t Holding the Bag on Half-Empty Towers “Happily, this factoid isn’t true. That is, small banks — defined as those not among the country’s 25 largest — do in fact hold 69% of the commercial real estate loans on the balance sheets of domestically chartered commercial banks, up from 60% five years ago, according to the Federal Reserve’s weekly reports on bank assets and liabilities. But most US commercial real estate debt is owed to lenders other than domestically chartered commercial banks.” (Bloomberg)
- Reading the Real Estate Market: Tracking Active Managers’ Allocations Over Time “Nareit is tracking quarterly investment holdings for the 28 largest actively managed real estate investment funds focusing on REIT investment. Following actively managed portfolio allocations to different REITs and sectors gives insight into how dedicated real estate investors view the market. The analysis covers quarterly holdings by the funds starting in 2010 and ending in the first quarter of 2023. The funds have $44 billion in combined assets under management as of the first quarter of 2023, and 96.6% of assets were in REITs.” (reit.com)
- Sluggish CRE Lending Persists: CBRE “In the face of market uncertainty, CRE lending slowed in the second quarter, according to CBRE. The company’s Lending Momentum Index fell from 204 in the first quarter to 193 in the second quarter, representing declines of 5.4 percent from the first quarter and 52.2 percent year-over-year. The CBRE Lending Momentum Index tracks the pace of CBRE-originated commercial loan closings in the United States.” (Commercial Property Executive)
- Amid CRE Default Concerns, Bank Capital Rules to Change “As property owners try to handle the fallout of higher interest rates, the industry faces another debt market hurdle: regulatory changes for large banks that could make financing more expensive. Federal banking regulators have proposed revamping bank capital standards that would increase the amount of reserve capital large banks set aside for some types of commercial mortgages while lowering charges for others.” (Commercial Property Executive)
- Non-Listed BDCs Reached $47.2 Billion in Q2 “Non-listed business development companies grew to a combined aggregate net asset value of $47.2 billion as of the end of the second quarter of 2023, according to the latest data reported by investment bank Robert A. Stanger & Co. Inc. The Stanger NL BDC Total Return Index, which measures the performance of non-listed business development companies on a quarterly basis, increased by 2.73% during Q2 2023, the eleventh quarterly increase during the past twelve fiscal quarters following the onset of the COVID-19 pandemic.” (The DI Wire)
- Blackstone Names Harper BREIT President While Agarwal Goes on Leave “Blackstone Inc.’s $68 billion real estate trust said its president A.J. Agarwal will go on a sabbatical for nine months and Rob Harper will fill that role. Agarwal will be on a continuing education sabbatical starting Sept. 15 and will serve as an observer of the board throughout that time, according to a filing Tuesday from Blackstone Real Estate Income Trust. Harper, who joined the private equity firm in 2002, is currently BREIT’s head of asset management. Blackstone built BREIT into a massive player in the real estate industry, but the trust’s growth streak has come under pressure in recent months as investors sought to pull money when rising interest rates prompted a global flight for cash.” (Bloomberg)
- Yieldstreet Nears a Deal to Buy Real Estate Tech Startup Cadre “Asset manager Yieldstreet is near a deal to buy Cadre, a once-promising real estate investment firm whose value has fallen sharply in recent years, said people familiar with the situation. If the two sides finalize an agreement, it would be the latest sign that mergers and acquisitions activity among troubled startups is beginning to pick up as founders accept that valuations are not likely to recover. Cadre shareholders are expected to get stock in Yieldstreet. The valuation of Cadre could be around $100 million, one person close to the situation estimated, which would be a sharp discount from Cadre’s peak valuation of $800 million set six years ago.” (The Information)
- Luxury Apartment Demand Steady Amid Overall Multifamily Pressures: Report “Luxury apartment assets have proved resilient, due largely to rising housing prices and mortgage rates — and despite market pressures confronting the overall multifamily sector. Vacancy rates for Class A rentals jumped 30 basis points (bps) from the end of 2022 through the midpoint of 2023, compared with a jump of 40 to 80 bps for Class B and C apartments, according to a new report from Marcus & Millichap (MMI)’s Institutional Property Advisors (IPA) division, released Monday morning.” (Commercial Observer)
- Retail Openings Have Eclipsed Closings So Far This Year “Shopkeepers appear to be brushing aside the gloomy scenario of the past few years with a more cheerful outlook on the future. “Retail tenant move-ins (openings) eclipsed move-outs (closings) by 21 million square feet during the first half of the year. Demand for space has now increased for 10 consecutive quarters,” according to the CoStar Group Real Estate Data Update for August 2023. Malls are a major exception to this pattern, as demand for space in malls continues to drop, particularly for Class B and C properties. But for the fourth consecutive quarter, there was rising demand for space in single-tenant properties as well as strip, power, and neighborhood centers, CoStar reported.” (GlobeSt.com)
- Coliving Landlords Turned $800 Rent-Stabilized Apartments into $7,000 Suites. Now Tenants Are Pushing Back. “The ‘coliving’ company Outpost Club lures would-be residents to its properties with a dreamy vision of NYC living coveted by young transplants. In some of the city’s trendiest neighborhoods, you can enjoy luxury amenities with a global “community” of professionals, all while taking advantage of special ‘rental financing solutions’ and speedy move-ins for as little as one month into rooms with shared common areas.” (The City)
- Return-to-Office Mandates Now Cover Nearly 2 Million Workers. Occupancy Has Barely Budged. “2023 is officially the year of the return-to-office mandate, with nearly 3 million workers already under, or expected to be subject to, a new in-person work requirement in the coming months. The jury is still out on whether it will also be the year office workers actually return to their desks in force. The mandates that have taken effect so far, including from some of the country's biggest employers, have had minimal effect on actual office usage, tracking data shows.” (Bisnow)
- Southeast L.A. County Cities Enact Rent Control to Keep Residents Housed “The hiked-up rents that have swept over so much of the region are now hitting once-affordable neighborhoods in Southeast Los Angeles County. The combination of higher prices, job losses and economic hits from the pandemic is sending some longtime residents to cheaper areas like the Inland Empire and high desert, or to different states altogether. And local officials are scrambling to keep people in their homes. In February, Maywood issued a 60-day rent freeze, then extended it through September. On July 26, the City Council approved a rent stabilization ordinance to take effect when the rent freeze ends, limiting annual rent increases on all units to 4%.” (Los Angeles Times)
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