MSCI Real Assets Newsletter

A few week to go until the end of the year and we still observe a decline in deals volume. Usually, Q4 is the busiest quarter of the year when it comes to transaction. Returns remain negative in all regions for the fourth quarter.?

Blog?: Assessing the Health of US Real Estate’s Loan Collateral

How impactful will the coming wave of U.S. property-loan refinancing be? In our latest blog post, Fritz Louw points to two significant shifts that have characterized the real-estate debt market over the past 18 months: a drop in property values and a corresponding change in the availability of debt financing.?

Highlights:?

• The price of 81.5% of loan collateral dropped in the last 12 months, but only 40% is estimated to have decreased in value since origination, thanks to price growth over loans' lifespan prior to recent corrections.?
• Nearly half, 44.3%, encountered price corrections that potentially pushed their current estimated loan-to-value ratios into the danger zone, where refinancing appetite might be restricted, notably exceeding 60%.?
• Among this subgroup, 58% face loan maturities within the next five years and 37% within three years, warranting particular attention and monitoring.?

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The piece uses growth in hedonic price indexes at a property type/city level to estimate the current value and LTVs of properties with loan information within the US Mortgage Debt Intelligence product. From there, we comment on the proportion of loan collateral that may struggle with refinancing in the coming years.? The post is designed to show off the potential of our MDI database when combined with current value estimates.? Financing markets are relevant to broad pricing dynamics in the market so the analysis should have broad appeal, but it will be particularly interesting to investors, borrowers and lenders either looking at sources of market risk or in search of potential opportunities to provide rescue capital whether through new debt or equity.?

Mortgage Debt Intelligence in a nutshell:?? ??

• A linked, searchable database of properties, loans, and their borrowers and lenders??
• Helps you understand the risk associated with an owner’s or lender’s complete commercial real estate exposure??
• Helps you find loans with near-term maturities covering both securitised and private loans??

Read the blog post

US & UK Registered properties?

Our new registered properties dataset offers a coverage to all commercial properties?in the U.S., in England and Wales including niche property types, untraded and off-market assets, and those below the traditional $2.5MM floor for the US and $5MM for England and Wales. The added coverage powers clients to uncover new opportunities, gain a deeper understanding of the market, and make better data-driven decisions.?

Learn more ?

Podcast – Real Estate Investors?: stuck in the middle with you:??

Richard Hill of Cohen & Steers joins MSCI’s Jim Costello to discuss the changing perceptions of the commercial-property market, from dull and boring to dynamic and complex — and the current set risks and potential opportunities.?

Listen to the podcast

PAN European Property Fund Index:

As we move towards the end of the year, we will explore the effects prolonged interest rate rises and inflation has had on real estate performance.??

We will profile the levered and unlevered performance of the unlisted Pan-European property funds, exploring the drivers of returns in the sub regions and sectors and percentile spreads, while also reconciling from the fund to asset level.?

Register to the webinar?

How asset owners are preparing for the new era of investing?

Key insights from the recent MSCI Institutional Investor Forum highlight how forces of disruption are driving asset owners to evolve their assessment of risks and how developments in AI can further blend quantitative and qualitative investment analysis.?

Read the Blog Post

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