Rhett Bennett CFA

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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Investors led by Starwood Capital Group are exploring a potential buyout of ESR Group, a major Asian warehouse developer, sources familiar with the matter revealed. Talks are underway with minority shareholders to assess interest in a take-private deal, with the possibility of some investors retaining stakes. However, decisions are pending, and an official announcement is yet to be made. This move reflects a trend of increasing take-private transactions in Hong Kong, injecting vitality into the region's dealmaking landscape. Notably, ESR's significant presence in logistics and data centers aligns with Starwood Capital's strategic focus on these growth sectors. While both companies have refrained from commenting, discussions indicate the potential for significant developments in the near future. #Buyout #Growth #Investment #Warehouse #RealEstate #HongKong I Bloomberg News I Dong Cao I Pei L. I Manuel Baigorri I Low De Wei (Dexter)

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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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SRS' Matthew Mousavi, MBA recently spoke with PERE News about the state of the retail net lease market and the driving forces behind the slowdown of deal volume across all net lease asset types. "Occupancy rates are healthy, but the valuations are out of whack," says Mousavi. "Because we don't have a lot of distress, you don't see valuations going down, even though rates have gone up considerably. The market is inefficient now because it's frozen." Click the article to read more about the state of the retail net lease market ➡️ https://lnkd.in/gaxqvmCS #RetailInvestor #NNN #InvestmentSales #SRSCapitalMarkets #CapitalMarkets 

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U.S. REITs raised $17.6 billion from secondary debt and equity offerings in the first quarter of 2024, according to Nareit. That’s up nearly 20% from $14.9 billion in the same timeframe last year, although well short of the quarterly totals seen in 2021. #cre #finance

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While much of the office sector news continues to focus on high vacancies and less usage, a recent Placer.ai report noted that some office properties aren’t just being used – they’re in out-performing territory, complete with higher occupancies. To delve further, Placer.ai analysts studied four office buildings in major metropolitan areas – Chicago, Dallas-Fort Worth, New York and San Francisco – to discover why utilization recovery was so strong. R. J. Hottovy, CFA #cre #office

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NEPI Rockcastle has reported double digit growth in net operating income (NOI), up 9.4% on a like-for-like basis, with tenant sales having increased by 10% during Q1 2024 versus Q1 2023. All product categories recorded higher sales, except ‘Sporting Goods’ (-2.3%) with the best performing categories ‘Health & Beauty’ (+19%) and ‘Services’ (+18%). Fashion, the largest segment, saw sales increase by 9%: https://bit.ly/3UFjiMx #nepirockcastle #commercialrealestate #europe #realestateinvestment #propertyfund #realestatenews #propertydevelopment #propertyowners #landlords #retailrealestate #assetmanagement #shareholders #investorrelations #propertynews #poland #listedcompanies #JSE

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U.S. Homebuilder sentiment holding at 51 in April amidst strong earnings results, despite continued constraints on the housing sector. As existing home sales continue to see weak performance due to mortgage rates creeping back, we expect land transactions to pick up to support the need for new home construction to meet demand. Always great to be featured on Bloomberg Businessweek with hosts Tim Stenovec and Carol Massar to speak about the state of the housing market. Click the link below to tune in! #USHousingMarket #LandInvesting #RealEstateInvesting #NewHomeBuilding

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So how many of you/us Real Estate Developer types can continue doing business after a $1B default much a $1M default. This is the classic double standard, different strokes for different folks. https://lnkd.in/gTrfGPyn

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With limited construction and a widening supply gap, rent prices are basically "guaranteed" to increase according to Barry Sternlicht, CEO of Starwood Capital.Rent growth outpaced wage growth by about 10% during the years of 2019-2023 as prices skyrocketed and interest rates climbed.Crunched inventory and high rates creates challenges for investors, but the right locations can offer great opportunities. College towns, Midwestern cities, and many suburbs across the Sunbelt are great targets.https://https://lnkd.in/g95ySqHs)

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Thank you to Institutional Real Estate, Inc. for the insightful discussion on the evolving dynamics in the multifamily sector. As we observe asset values adjusting, DB Capital Management is strategically positioned to leverage the emerging opportunities. I'm excited about what the future holds and appreciate the chance to share our perspective. https://lnkd.in/gH6HtDtX #multifamily #multifamilyrealestate #multifamilyinvesting #DBCapital

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When evaluating a real estate deal, focus on the GP first and their track record. Net Operating Income (NOI) growth is a critical metric to evaluate if a GP a good operator or not on currently owned or full cycle deals. Some GPs have great looking track record (IRR and Equity Multiple) but aren’t good operators and instead their returns were just lifted up by the rising market. Watch this video for a great example.

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Driftwood Capital plays up and down the cap stack (Equity & Mezz Debt / Pref Equity), horizontally across constructs (Acquistion, Development, & Lending), hence true vertical integration with Driftwood Hospitality Management: https://lnkd.in/gWZJypBn

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Unlocking Investment Opportunities with Tango CRE Join Tango CRE as they share high-performance strategies and insights into their investment ventures, including storage, multifamily, medical office, and land development. Learn how to connect with Tango CRE to explore exciting opportunities and build valuable relationships. #InvestmentOpportunities #TangoCRE #RealEstateInvestment #Multifamily #Storage #MedicalOffice #LandDevelopment

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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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This is the best article I have seen on post "retail apocalypse" supply and demand of shopping center space. It illustrates how little supply has been added since and that with demolition and decommissioning of space, the supply has been flat or even shrinking. This bodes well for owners and developers of well located retail space. Enjoy the read!

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The April MSCI sales update from Colliers reveals the weakest sales month in 2024, influenced by a rise in the 10-year Treasury. Multifamily remains the top asset class, while hospitality saw a 98% year-over-year volume surge. Office and industrial sectors experienced declines, and retail showed signs of stabilization despite an 11% drop from last year.

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There have been a lot of headlines on the liquidity issues faced by non-publicly traded REITs, particularly Blackstone’s B-REIT and Starwood's S-REIT. Both firms have been facing major liquidity squeezes... but is panic warranted? My two cents: things are going to be OK. Given the number of questions I’ve received on the issue, I wanted to lay out the facts and offer my perspective: 🤔 What's a Non-Traded REIT? Unlike publicly traded REITs with readily available stock market liquidity, non-traded REITs (NTRs) offer limited redemption windows, creating a structural challenge. 🤷 The Problem? A recent NAREIT study shows a 22% increase in NTR redemption requests, highlighting the difficulty NTRs face in meeting redemption demands without sufficient cash flow. ⏰ Why Now? CBRE revealed a 15% drop in office occupancy rates, highlighting negative real estate sentiment and potentially driving the 22% surge in NTR redemption requests. So, what does this mean? 🔎 BREIT faced significant redemption requests throughout 2023 and in 2024, but successfully fulfilled all requests in February, March and April of 2024. 🧐 SREIT's liquidity reserves dropped significantly, reaching a low of $752 million in April 2024, forcing them to tap a $1.3 billion unsecured credit line with limited remaining funds ($225 million). 💡Non-traded structures have created a liquidity mismatch - investors hold quarterly redemption options, but the underlying assets and sluggish CRE market make it difficult for firms to liquidate properties fast enough to meet demands. Reality or Market Jitters? BREIT and SREIT’s respective office exposures are a mere 3% and 7%, representing a miniscule amount of the PE giant’s NTR’s gross exposures. Likewise, both BREIT and SREIT boast 95% occupancy across all sectors - further highlighting the quality of the minimal office product within each firm's NTR vehicles. Recent liquidity challenges highlight a negative sentiment on commercial real estate, which has led to a bank-run-like panic from retail investors seeking to pull cash out. This sentiment mostly stems from higher interest rates and office woes: declining demand due to remote work trends, lower rents, rising vacancies, and refinancing difficulties for office owners with maturing loans on lower-quality properties. Redemptions more than likely stem from these negative headlines and a level of retail investor unsophistication of what they actually own. TLDR: BREIT and SREIT's minimal and strong performing office exposure positively positions them to navigate these challenges, although there are some lessons learned by the industry about this structure and the consequences of retail participation. While this issue likely won’t go away in the near term, I don’t see this issue mushrooming into a bigger catastrophe. While Blackstone’s Jon Gray may be biased, I agree with his quote from a recent interview: “the market has reached its nadir, and now is the opportune moment to buy.”

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