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Nine Must Reads for Real Estate Investors Today (April 7, 2023)

Prices on CMBS bonds have dropped to pandemic-era lows, reports The Wall Street Journal. Investors in single-family rentals continue to enjoy a favorable market environment, reported Commercial Observer. These are among today’s must reads from around the commercial real estate industry.

  1. Investors Retreat from Commercial Real Estate Bonds “Prices of bonds backed by commercial mortgages have recently dropped to levels not seen since the early days of the pandemic, pointing to a growing economic threat stemming from office vacancies and rising interest rates. A small corner of the U.S. bond market, so-called commercial-mortgage-backed securities, or CMBS, have taken a beating for over a year owing to fears that owners of business parks, high-rises and other office properties could default on loans extended at a time of different work habits and lower financing costs.” (The Wall Street Journal)
  2. Concerns Grow as Tighter Lending Threatens Commercial Real Estate “The turmoil that drove Silicon Valley Bank and Signature Bank out of business last month, rocking the wider banking sector, has analysts bracing for the next possible crisis: the $20 trillion commercial real estate market. The bank failures brought new scrutiny to other regional banks, which provide the bulk of commercial real estate loans. Those loans are then repackaged into complex financial products for investors in wider markets. And the outlook for the industry appears stark, market watchers say.” (The New York Times)
  3. Private CRE Lenders Forecast Cloudy Future Amid Morgan Stanley Report “As various storm clouds and negative headlines surround the future of commercial real estate, private lenders remain optimistic that the industry won’t face the same reckoning as it did 15 years ago. ‘There’s just so much more money now in real estate than there was during the Global Financial Crisis (GFC),’ said David Perlman, managing director of Thorofare Capital, a CRE debt fund. ‘I do think prices will come down and commercial real estate will be hit hard, but I also think there are ways to make money in this cycle. People are still making investments and bidding on loans for good deals.’” (Commercial Observer)
  4. Lenders Prepare for Increase in Bad Real Estate Loans “Commercial real estate lenders foresee an increasing number of bad loans in their portfolios, which could limit their ability to provide financing at a time when borrowers are already having trouble getting it. Banks and commercial mortgage REITs have in recent quarters been adding to their best-faith estimates of future bad loans. Blackstone Group’s commercial mortgage arm, for example, jacked up its estimate from about $125 million at the end of 2021 to $326 million last year. Bank OZK’s expected loan losses rose more than 25 percent during that time, from $289 million to $365 million.” (The Real Deal)
  5. Single-Family Rental Owners Haven’t Had It This Good in Years “While the for-sale housing market teeters and multifamily rental growth hits a wall, the single-family rental business is doing just fine. That’s according to a new report from real estate data firm Attom. In fact, it’s doing better than last year.” (Commercial Observer)
  6. ReSeed Partners Launches Accelerator for Real Estate Investing “ReSeed Partners will provide up-and-coming operators with the cash and support to find deals and close on them, and will source investor funds for the deals.” (The Real Deal)
  7. Related Group Strikes Deal to Develop Over Remains of Ancient Civilization “Related Group can move forward with its plans to build a luxury apartment tower on the site where the remains of an ancient civilization that archaeologists say dates back 7,000 years were found. The developer struck a deal with the Miami Historic & Environmental Preservation Board, which voted unanimously Tuesday night to withdraw its proposed protected landmark designation of 77 Southeast Fifth St., where a team of archaeologists has spent the past 18 months carefully extracting artifacts that are the remains of a settlement from the Tequesta tribe near the mouth of the Miami River, the Miami Herald reports.” (Bisnow)
  8. Record EV Battery Plant Breaks Ground in Washington “Silicon battery manufacturer Group14 Technologies has begun constructing its second commercial-scale factory in Moses Lake, Wash. The 1 million-square-foot U.S. Battery Active Materials factor, known as BAM-2, will produce silicon batteries for electric vehicles. The company expects the site’s initial annual output to be 20 GW of battery capacity. In a statement, Group14 called the facility the world’s largest factory for advanced EV silicon battery materials.” (Commercial Property Executive)
  9. Clarence Thomas Secretly Accepted Luxury Trips from Major GOP Donor “IN LATE JUNE 2019, right after the U.S. Supreme Court released its final opinion of the term, Justice Clarence Thomas boarded a large private jet headed to Indonesia. He and his wife were going on vacation: nine days of island-hopping in a volcanic archipelago on a superyacht staffed by a coterie of attendants and a private chef. If Thomas had chartered the plane and the 162-foot yacht himself, the total cost of the trip could have exceeded $500,000. Fortunately for him, that wasn’t necessary: He was on vacation with real estate magnate and Republican megadonor Harlan Crow, who owned the jet — and the yacht, too.” (ProPublica)
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