Inna Khidekel, CFA

In the world of #CRE, many of us are trying to navigate where the markets are in the cycle now. GlobeSt.com published an article that offers perspectives from three different real estate executives, including Empire State Realty Trust Chair and CEO Anthony E. Malkin, Kathleen McCarthy Baldwin, global co-head of real estate at Blackstone, and Starwood Capital Group Chairman Barry Sternlicht. After better understanding their perspectives, I agree with Malkin and Sternlicht that we are still in the early stages of capital markets disruption resulting from maturing CRE debt. Despite more proactive Fed efforts to help banks manage their balance sheets, we will see more bank failures/mergers before this debt repricing cycle ends three years from now. However, I disagree with Malkin that this is a 'generational buying opportunity' as there is too much opportunistic dry powder waiting in the wings, which will keep pricing tight, making this more like a 'once in a decade' opportunity. Additionally, the #multifamily sector will be hit hard, especially since that asset class tends to have the highest leverage, and certain markets are also experiencing a wave of new supply coming online. However, long-term #fundamentals for apartments remain strong, with nearly a 4 million unit housing deficit across the U.S. To read the full article, visit: https://lnkd.in/gPFE5mCw

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I'm genuinely thrilled by the strides Hines U.S. Property Partners, our core-plus, open-ended U.S. real estate fund, has made in cultivating an exceptional portfolio. Over the past year, the fund has strategically allocated nearly $800 million across a diverse array of sectors, including industrial, grocery-anchored retail, medical offices, build-to-rent, and select development projects. The recent acquisition of Blu South marks a significant milestone, augmenting the fund's investment in alternative assets—a pivotal strategic objective. Our unwavering confidence in the build-to-rent sector remains resolute, particularly in light of anticipated higher-for-longer rates, which are poised to moderate home purchasing. Build-to-rent offerings are intended to provide meticulously crafted, pedestrian-friendly living environments as an alternative to traditional homeownership. Read more about HUSPP’s progress: https://lnkd.in/eE2m5jxw #MarketingCommunication

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The CMBS market has made a remarkable comeback in the first five months of 2024, with U.S. private-label CMBS issuance skyrocketing to $32.2 billion, up from $13 billion during the same period in 2023. This resurgence highlights the critical role of CMBS in commercial real estate (CRE) lending, now accounting for 14% of all U.S. CRE lending. Despite rising defaults, CMBS is effectively bridging the liquidity gap left by commercial banks. Major players like Goldman Sachs, Bank of America, and Blackstone are driving this growth, leveraging their substantial balance sheets to meet the increasing demand for securitized loans. With narrowing spreads and a favorable interest rate environment, CMBS continues to be a crucial source of capital for CRE borrowers and investors, offering a reliable alternative in a challenging market landscape. As the market adapts to changing economic conditions, CMBS stands out as a resilient and indispensable component of the CRE financing ecosystem. #CMBS #RealEstate #Finance #CRE #Investment #MarketTrends #EconomicRecovery #CapitalMarkets #CommercialRealEstate https://lnkd.in/eNYvb9Xv

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Kudos to Becci Curry, MAI, MRICS Curry, our Head of QRM for the Americas, for her insightful contributions on assessing climate risk in commercial real estate at the LightBox PRISM 2024 conference. By shedding light on the challenges faced by the #CRE industry and emphasizing the opportunities for investors to mitigate property risk, Becci showcased her expertise and dedication to driving positive change. She also emphasized the need for standardized data in climate risk assessment methodologies, particularly in property appraisals and valuations. #CBREVAS #CRE #ClimateRisk #IndustryInsights

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Appraisers in the U.S. need better tools that allow them to use more judgement in valuing assets. My colleague Willem Vlaming has been developing work showing that in parts of the world with low market liquidity and few comparable sales, that appraisal teams have been better able to capture the decline in asset values. http://ms.spr.ly/6040Yw5ts MSCI Real Assets #CRE

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Escalating interest rates drive investors to seek higher yields, prompting a stark reality: in the face of soaring vacancy rates and absence of long-term tenants, devaluing real estate emerges as the only strategy to retain investor confidence. The vicious cycle unfolds. As real estate is devalued to appease investors, debt ratios skyrocket. Meanwhile, record-high interest expenses leave real estate funds struggling to stay afloat. Extend loan maturities and pretend [inflating real estate valuations] might delay but not resolve, this crisis. #realestate #finance Source : Financial Times

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If you know me, you know how much I've loved reports and data over the years. Grateful that @Marketproof makes life much easier and we can finally rely on a credible resource for NYC. Link below May New Development Report for NYC. Feel free to reach out with any quetions. NYC New Development: May 2024 Report by Marketproof, Inc. INSIGHTS: *Citywide, all key metrics showed moderate but positive gains, signaling stability as we head into summer *Deal volume rose 1% from April and 10% compared to the pre-pandemic period of 2015-2019 *Dollar volume increased 18% month-over-month, indicating demand for a more premium product *The luxury market saw a 17% month-over-month increase in deal volume, maintaining elevated demand *Despite higher mortgage rates, the new development market continues to normalize to pre-pandemic levels Across NYC, the new development market remained steady month-over-month with modest gains in key metrics. Contracts increased by 1%, from 248 in April to 251 in May. Demand improved in Manhattan and Brooklyn, while Queens saw a decline. Total dollar volume rose 18%, from $693M to $816M. The median price per square foot (PPSF) increased 7%, from $1,637 to $1,747, and the median price rose 3%, from $1.8M to $1.9M. May's deal volume showed a 10% increase over the pre-pandemic May average from 2015 to 2019, indicating continued normalization in the new development market. Of the 251 deals citywide, 140 (+9%) were in Manhattan, 93 (+3%) were in Brooklyn, and 18 (-38%) were in Queens. For the full Marketproof Report click here: https://lnkd.in/g76VJKpC

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As summertime is heating up and many families are getting ready to vacation at their vacation homes, many clients are wondering: how can their family navigate the drama of shared properties? In a recent ThinkAdvisor article, our exclusive provider Insights Squared Consulting Group (Insights²), discusses managing emotional ties, financial planning, and legal compliance. Learn strategies to keep family harmony intact while preserving valuable assets.   #FamilyWealth #SharedProperties #FamilyDynamics

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Here is the article on non-traded REITs. A look into how Starwood's SREIT actually determines its NAV. If you're invested in a NTR like SREIT or BREIT, this is worth a read. Don't overpay for NAV or fees to the Advisor. https://lnkd.in/eDrmspVq

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Park Avenue’s current availability rate of 8.9% not only compares favorably to Midtown’s overall 17.6%, but with Park Avenue vacancies in the prehistoric, pre-pandemic fourth quarter of 2019 — when it was 11%. Park Avenue’s fortunes were bolstered by recent large deals we reported first, such as for Stonepeak Partners’ new lease at SL Green’s 245 Park, PJT Partners’ expansion at SL Green and Vornado’s 280 Park, and Sumitomo Corporation’s new lease at the Stahl Organization’s 277 Park.

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Thanks to Paula Campbell Roberts from KKR for joining us this month on our How Should I be Positioned podcast. We great conversation about the current state of the US economy, as well as the outlook for inflation, growth, interest rates, and market volatility over the next five years. One thing that we agree on is that the US economy is in a new macro regime. This has implications for strategic asset allocation decisions, which we also discuss. Listen to the podcast for all the details. #shareubs https://lnkd.in/eJasj_EZ  

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🏆 Hoya Capital on Winners Of REIT Earnings Season 🏆 Summary: Over 200 U.S. REITs and homebuilders have reported first-quarter earnings results over the past six weeks, providing critical information on the state of the commercial and residential real estate industry. Despite the challenges posed by interest rate movements, the sector saw a relatively solid earnings season. Raise Rate: 41% of REITs raised their full-year FFO outlook, 48% maintained, and 10% lowered their guidance - a "raise rate" slightly above historical averages. Winners: Apartment and Healthcare REITs performed well, showing resilience in rents, occupancy, and operator health. Losers: Industrial and Hotel REITs faced challenges due to softness in the "goods economy" and moderation in leisure travel. Highlights 🌟 Apartment REITs: Rents are rising despite ample multifamily supply. Coastal-focused REITs like Essex and AvalonBay showed strong performance. Healthcare REITs: Solid results with improving operator health. Senior housing REITs, including Welltower and Ventas, posted impressive gains. Cannabis REITs: Among the best-performing REITs due to potential Federal legalization of marijuana, benefiting operators' financial health. Net Lease REITs: Rebounded with an uptick in acquisition cap rates, showing optimism on the interest rate front. Residential mREITs: Showed resilience despite interest rate pressures. Companies like Annaly Capital and AGNC Investment reported solid results. Farmland REITs: Saw marginal improvement, with Farmland Partners raising its full-year FFO outlook. Billboard REITs: Reported solid results driven by local advertising spending, with Lamar and Outfront showing strength. Office REITs: Decent performance with a pickup in leasing activity, especially in coastal markets like NYC and LA. Conclusion 📈 Despite headwinds, several REIT sectors showed resilience and even growth in key metrics. Understanding these winners can provide insights for investors navigating the real estate market. https://lnkd.in/gyBYQx93

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Podcast drop! Just in time for a long weekend drive to the beach. Enjoyed sitting down with James Crombie and Tolu Alamutu discussing markets, potential opportunities in a tough commercial real estate market, and how AI and technology is improving credit trading. Hope you can listen in! #invescoigfixedincome #bloombergintelligence

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Office-to-resi conversions may be a hot topic, but they’re hardly a new idea. This recent article from The New Yorker interviews Nathan Berman of Metro Loft Management in New York— a firm that has been converting office buildings to apartments since 1997. What used to be a niche business model is now highly sought after by some of the largest real estate investors in the nation. As someone at the forefront of office-to-resi conversions in #Seattle, a few things stood out to me in this article: - By utilizing existing structures, developers can often create more livable space than if they were to develop a new building, due to current zoning restrictions. - Dependent on cost basis in the existing structure, the lesser cost of repurposing an old building can allow rental prices to be set lower than they would be in a new one. - These projects are good for the planet. According to a recent paper by the National Bureau of Economic Research, converting an office building into apartments can increase its energy efficiency by as much as 80%. What do you think of conversions as a concept? What will the ripple effects be thru our economy and society if we don’t start to convert? https://lnkd.in/dSdJR3Yg #officetoresi #CRE #sustainability #conversion #adaptivereuse

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Family Offices Are Boosting Allocations to Alternative Investments (Private Equity, Private Credit, Real Estate) 1) In 2024, KKR’s survey of 75 family offices, 52 percent of their portfolios were to be invested in alts, up from 42 percent in 2022. The expansion is coming at the expense of all or most other asset classes. 2) Family offices, like other alts investors, think 2024 will be a standout vintage year. Interest rates remain higher and are expected to force distressed assets / companies to sell or recapitalize, even as the economic outlook improves. 3) “They understand the benefits the illiquidity premium plays in compounding capital in a tax efficient manner to build wealth for future generations,” Henry McVey, the head of global macro and asset allocation at KKR and the CIO of the firm’s $39 billion balance sheet. Read the full article here -> https://lnkd.in/gYbTjf8H #familyoffice #wealthadvisor #wealthmanagement #capitalallocation #alternativeinvestments #realestate #privateequity #privatecredit

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💼 Surge in Monthly Redemption Requests Across Top NAV #REITs 📈 Background: 🏢 Since May 2024, Starwood Real Estate Income Trust Inc. (SREIT) reduced its share repurchase plan capacity, triggering a significant increase in redemption requests among top NAV REITs. 📉 SREIT limited monthly redemptions to 0.33% of NAV and quarterly to 1%, down from previous limits of 2% and 5% respectively. Impact on Industry: 📊 Average 65% surge in monthly redemption requests reported across top NAV REITs following SREIT's announcement. 💵 Estimated redemption requests totaled $1 billion, reflecting heightened investor activity. Key Players Affected: 🏢 REITs affected include Ares Industrial, Blackstone Real Estate, Brookfield Real Estate, and others in Robert A. Stanger & Co., Inc.'s coverage. Market Response: 🔄 Despite increased requests, most top NAV REITs managed to fulfill redemption obligations in May, sometimes surpassing capacity limits set by their programs. Future Outlook: 📅 SREIT anticipates the stricter redemption limits to remain for 6 to 12 months, suggesting a temporary measure amidst current market conditions. https://lnkd.in/eRcPBPKm

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Listed REITs rose for the 3rd week in a row at +1.9%, as 16 out of 18 subsectors were positive. Real estate was the 6th best of the 11 S&P 500 as every sector was positive week-over-week. Post-FOMC dovishness continued as unemployment claims were weaker than expected. Listed REITs are now +5.4% since their recent lows in mid-April pushing YTD returns higher to -5.2% and +18.5% since the trough in October '23. Here's your pretty picture.

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"Real estate’s top lenders warned of bank failures and bad CRE bets". It's not only the banks, but it's also the banks. Some other "it's" looming over #cre: 1. At least 3 regional conflicts that can escalate at any time or the same time. 2. Unmanageable debts for an increasingly debt burdened consumer, and the 🇺🇸. 3. One of the most consequential elections in 🇺🇸 history. 4. Stagflation has entered the chat, and increasingly appears possible to become entrenched. 5. In exchange for various handouts and political and cultural preferences, the 🇺🇸 has seeded significant control to bureaucrats, elected and otherwise. 6. Possibly too much financial engineering and not enough blocking and tackling old school real estate. 7. Others? Duncan Bergman Mandell #duncanbergmanmandell #blackacreadvisors #nonperformingloans #pinkacre #texasratio #inflationreductionact #fdic #cmbs #valuevaporization #stagflation #economy

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Thanks for sharing your insights into stranded assets and what constitutes a desirable real estate property.

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