CRE Analyst Quick Hits (5/3/24)
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...
A Simple but Seismic Issue for Office Buildings
Real estate types talk a lot about cap rates. Pre-COVID per CBRE:
What's wrong with this picture?
Cap rates, as we've discussed at length in our posts and classes, are relatively arbitrary and, importantly, have a very loose relationship with cash flow. ...especially with office properties.
We pulled 10 years of capex history on the biggest office REIT, and found some disturbing takeaways for office owners.
Full post here .
Can Tides Equities weather the storm?
Everyone is tired of hearing about syndicators, but their problems may be just starting.
We recently analyzed how the poster child for aggressive syndicators (Tides Equities) could face loan maturities, and the wave is just beginning.
After three years of following the path of least resistance, then two years of rising rates, discovery, and constant speculation in the media, it looks like Tides is headed toward a tipping point in mid-2024. See our analysis here.
CRE Performance in Rising Rate Environments
Chilton Capital Management LLC recently looked at 30 years of interest rate changes and REIT performance. They concluded that REIT performance is tied to stable interest rates, not necessarily falling rates.
"Our research suggests that investors that have been brave enough to buy REITs when the rate outlook was at its worst have been handsomely rewarded.? In addition, a decline in rates is not needed to achieve double digit annual total returns for REITs – rates merely need to stop rising.? Though we cannot predict the peak of interest rates for this cycle, we believe that REITs are on the cusp of a multi-year bull market driven by better-than-expected economic growth, muted new construction, competitive advantages, and the stabilization (and potential decline!) of interest rates."
"In summary, we believe anyone that is hoping (praying) for lower interest rates anytime soon could be setting themselves up for disappointment.? However, if interest rates can stabilize, albeit at a higher level than the past 15 years, REITs in general can do quite well.? And, we believe Chilton is positioned to outperform in such a scenario."
See the Chilton report here .
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Announcements
Upcoming Class: Valuation and ARGUS
Only one week left to enroll in the upcoming Valuation in Argus cohort. This is a game changer for motivated, early-career professionals. Apply here.
Upcoming Class: FastTrack
Today is the final day to enroll for the summer FastTrack cohort. Class starts on May 8. We had a great kick-off happy hour last night, and will be announcing this cohort's team leaders and guest speakers soon. Very excited about this group! Apply here .
Note: All of our classes are backed by a money-back guarantee.
Capital Markets Fellowship
Six days ago we announced a Capital Markets Fellowship to put a wind at the backs of a handful of exceptional college and graduate students. We'll provide these Fellows with fundamentals training, valuation/ARGUS training, and unique research opportunities.
We received 500+ applications over the last week, and the quality of candidates is off the charts. We wish we had more spots, but look forward to working with this incredible group.
Stay tuned for introductions!
Alumni Grapevine
Jack Campbell , FastTrack alumnus and a key member of our teaching team, Nuveen, a TIAA company 's industrial acquisitions team this week. Congrats Jack! PS: Excited for your wedding this weekend, double congrats!
Ryan Beadle , Carolinas leader for Jackson-Shaw Company and FastTrack alumnus, spent the last two years assembling a land site, which culminated in a big groundbreaking this week. Read more about Ryan's 1.3 million square foot development here . Congrats Ryan!
FastTrack alumna Katherine Pool recently got married! Congrats Katherine!
Congrats to Finn Hilberts , a FastTrack alumnus, on joining the Debt Originations team at PIMCO Prime Real Estate as an analyst!
Job of the Week
Newmark's industrial investment sales team in Dallas is looking for an analyst. Email us if you're interested.
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