The Real Estate Credit Shock

Today’s interview is a deep-dive into commercial real estate (CRE), an asset class which includes office, multifamily housing (apartments), hotels, data centers, malls, and more. Jack welcomes John Toohig, Head of Whole Loan Trading at Raymond James, Thomas LaSalvia, Head of Commercial Real Estate Economics at Moody's Analytics, and Victor Calanog, Manulife’s Managing Director & Global Head of Research and Strategy, Real Estate Private Markets, for a wide-ranging discussions on the challenges and opportunities within CRE, with a focus on how the recent interest rate shock has impacted property values, cash flows, interest expense, and other key metrics in the CRE world. Filmed on August 30, 2023.

Today’s interview is sponsored by Blockfills, a crypto trading solutions and financial technology firm. To begin your onboarding process, visit https://blockfills.com/open

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Moody’s CRE piece on CMBS Office Loan Maturity: https://cre.moodysanalytics.com/insights/cre-news/ma-cre-office-loan-maturity-monitor-office-payoffs-significantly-lag-other-property-types/
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Timecodes:
00:00 Introduction
08:15 Payment Shock For Real Estate Funded With Debt Before The Fed Raised Rates
11:02 Maturity Defaults Are On The Rise
13:25 Office Sector Is By Far Facing The Biggest Challenges Vs. Other CRE Compenents
19:22 Who Owns The Equity In These CRE Deals?
22:25 Gap Between Private Valuations and Public Valuations
25:51 Higher For Longer Is Exponentially Increasing Debt Costs For Real Estate
30:03 State Of The Secondary Market For Real Estate Loans
35:14 Cash Flows Matter More Than "Loan-To-Value"
40:08 There's A Hesitation Right Now For Institutions To Take Losses
42:27 Odds Of A True Recessions vs. A "Slow-Cession" (and Soft Landing & No Landing)
45:35 How Common Is Interest Rate Hedging Among Leveraged Real Estate Investors?
48:01 Slowdown In New Originations For CRE Loans
52:46 Fundamnetals Of Multifamily (Apartment Buildings)
01:01:05 Negative Leverage In The MultiFamily Market
01:07:31 Insurance Costs Are Skyrocketing
01:10:54 Retail (example: Malls) And Hospitality (example: Hotels)
01:16:45 China
01:20:28 Closing Thoughts On U.S. Banking System
01:22:52 Conclusion
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.


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https://trendinginrealestate.com/real-estate-trends/chinas-catastrophic-economic-crisis-is-the-bubble-about-to-burst