CRE Analyst Quick Hits (4/19/24)
Welcome to Quick Hits, a weekly roundup of commercial real estate news and CRE Analyst updates for our alumni and network...
Contents
Headlines
The trends and stories we've been following...
RealPage: Cartel mastermind?
A chorus of pundits, politicians, and attorneys general is accusing RealPage of artificially driving up rents via price-fixing.
From the AZ Attorney General's recent suit:
RealPage promises that by joining up, participants can continually outpace the market in good times and bad. 'Outpace' is code for charging higher prices than what would be charged in a market untainted by collusion. This is price fixing, and it is illegal.
We zoomed into a neighborhood to see if RealPage's properties outperformed non-RealPage properties. The results surprised us. Flip through our presentation .
Some surprising distress trends
The share of distressed property sales increased from an average of 6% in 2023 to 6.7% in the first quarter, according to CoStar data. The share of multifamily distress in 1Q more than doubled YoY, and retail also saw a sharp increase, from 4.1% for all of last year, to 6.3% in 1Q.
Maturity Wall myth?
Charts like this one get a lot of attention. The implication is obvious: A wave of maturities will implode the real estate market.
But sometimes details matter. These loans have contractual extensions, and when you consider those rights, the "maturity wall" looks a lot different.
No question, mortgage credit quality has eroded and default rates will continue picking up as the high interest rate dominos fall. ...but maybe the talk has reached an unrealistic fever pitch? More detail .
Prop tech example: SmartRent
Could there be a more straightforward example of technology improving real estate than smart door locks and climate control for apartments?
We stumbled on a VC pitch deck from 2020 on SmartRent, which eventually went public on the strength of its customer demand and easy-money SPAC capital.
SmartRent's user growth remained strong (3x revenue growth), although below original expectations, but--four years later--profitability continues to be elusive and the stock price is 74% below its IPO.
SmartRent's CEO:
SmartRent's purpose-built technologies are used by 15 of the top 20 largest rental housing operators. And at year end, we had nearly 600 customers collectively managing over 7 million rental units. With more than 44 million managed rental units in the US, we believe the greenfield opportunity continues to be immense.
It's not all bad news for SmartRent. The firm has a broad user base and recently got out of the red on "adjusted" EBITDA. Wouldn't call it profit but headed in the right direction.
领英推荐
Preview: Q&A with Ryan Severino
Here's a quick preview of our recent interview with BentallGreenOak's chief economist and adjunct professor at Columbia University and New York University.
On hype around distress...
I feel like during every down cycle people get really excited about distress, but what actually happens almost always falls short of grand proclamations.
On AI's evolving role in real estate...
...data science is a train that is leaving the station. If you aren’t on this train you are going to find yourself underneath it.
On key research skills...
Everyone on our team writes code, knows higher-order mathematics, and works with the industry’s leading data science team. We don’t just sit around making charts and graphs and repackaging narratives from data providers.
On advice for early-career professionals...
...get a broad perspective. Work for different firms in different parts of the industry. The more you know, the better positioned you’ll be to succeed in an uncertain, ever-changing world.
Stay tuned to our LinkedIn page for the full interview.
Announcements
Recap: Debating Distress Webinar
We hosted a panel discussion about emerging loan distress earlier this week. A borrower (portfolio manager), a lender (debt fund manager), and an attorney talked through key issues and sample deals.
A few takeaways...
If you want to see a replay, send an email to [email protected] .
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Job of the Week
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SVP - Senior Analytics Strategist at LaSalle Investment Management
7 个月CRE Analyst the link to RealPage presentation directs to your LinkedIn page. Could you fix it? The impact of RP on rents is an interesting topic that I remember was also in the news during the pandemic for the NYC market
Start your CRE investment business now ?? Multifamily and hotel owner since 2011 ?? Training CRE Pros to launch their own business since 2016 ?? Helping you invest passively in multifamily and hotel assets.
7 个月Something interesting about the distress article. A big reason so many people piled into MF in the last cycle was the perception that "multifamily does well in a recession." This was never true. The graphs you posted show substantial distress during the GFC. My property manager, who was on the national board of the NAA and had been in business for 30 years, scoffed when I put the proposition to him. So why the perception that multifamily does well in a recession? Because people conflated the GFC with its aftermath. During the GFC, as those charts show, there was substantial distress as vacancies spiked in response to mass unemployment. But, several years after the GFC, the foreclosure crisis hit and former homeowners flooded into rentals, pushing occupancies past their historical averages. Most syndicators entered this business in the next couple of years, with this idea that Multifamily "did well" in recessions baked into their mindset. They had no fear of a downturn, overpaid and used risky debt structures accordingly, and we've seen the results.