Real estate markets move in cycles, and understanding history is the key to navigating today’s opportunities. As a seasoned investor with 30+ years in the industry, I take a historically informed, risk-averse approach—where capital preservation is the priority. You'll get market insights and investment strategies tailored to both passive investors and capital raisers, with a particular focus on raising private capital. Occasionally, I also share best practices in digital lead generation on LinkedIn and using AI to optimize lead generation. I also introduce my latest podcast and YouTube series, where you'll hear from capital allocators, unpacking trends, strategies, and the future of real estate capital formation. For those looking to invest smarter, raise capital more effectively, and stay ahead of market shifts, The GowerCrowd Newsletter offers a concise yet detailed perspective on the forces shaping our industry.
Our event scheduled for April 3, 2024 at 9am Pacific, A lawyer, an accountant, and a real estate investor walk into a bar: The legal, tax, and ethical implications of losing investor capital is now live for registration and I have a question for you about the agenda for our discussion.
Question: Is it appropriate to name names or better to just speak in general terms?
Here's what I mean and, by saying this, I make no judgment call at all; strictly just asking the question...
...when you see news articles like this, 'Rise48’s watchlisted debt tops $250M' where investors are presumably facing distribution pauses and capital calls plus the possibility of complete loss, alongside Facebook ads like this, what questions does this beg about the contradictory messaging we are seeing in the syndication industry?
To be clear, Rise48 is not the only company working hard as they face the challenges of today's market conditions and, perhaps, behind the veil everything is humming along as originally planned, but what are best practices for sponsors to right their ships during the current storm, and how should investors at the receiving end of bad news on the one hand, react when they see exuberance in marketing on the other?
That is, in part, the topic I hope to address in our April 3, 2024 at 9am pacific time event.
I’ve always stayed away from saying what I really think about this topic out of fear there maybe someone I fail to offend so, on April 3, I ask you, should we stay neutral and non-controversial or, like the emperors new clothes, should we be among the few who stand up and ask the tough questions?
A default shock: After a jump in late payments by commercial real estate borrowers, tanking loans are sapping loss reserves at the biggest U.S. banks. Average reserves at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley have fallen from $1.60 to 90 cents for every dollar of commercial real estate debt on which a borrower is at least 30 days late, according to filings to the Federal Deposit Insurance Corp.
Concerned regulators: Michael Barr, who oversees bank supervision at the Federal Reserve, said regulators are scrutinizing big banks’ CRE portfolios. “There are banks that may have looked fine six months ago, that are going to look not so good next quarter,” one analyst said.
Rising risk: Bank of America said in December that the megabank had identified just $5 billion in commercial property debt tied to collateral whose prices had dropped – a rounding error for a bank with $3.2 trillion in assets. However, the situation is worsening. Banks could lose as much as $60 billion on soured commercial real estate loans in the next five years, according to one estimate.
Another warning sign: The volume of commercial mortgages at least 30 days late on payment has eclipsed total reserves held by the largest U.S. banks last year.
Big-name managers such as Blackstone, Brookfield Asset Management, Ares, and Starwood are among those that have completed or are actively raising mega-funds targeting opportunistic strategies. The brutal reality of plunging office values is here (Crain’s)(2/20/2024)
Demand outpaces supply of retail and industrial properties in Springfield, Massachusetts.
For investors
Enroll in this free email series to learn the 8 key financial terms you need to know when evaluating a commercial real estate investment during any phase of the economic cycle.
The attention-grabber: In 12 U.S. markets, Class C rents are falling at least 6% year-over-year. The Florida metro areas of Fort Myers, Sarasota and Daytona Beach lead the way, all with rent cuts of 9.7% or more.
The impetus: Too much supply. All 12 of the markets with cheap Class C space have supply expansion rates that tops the national average. By contrast, cities such as Cincinnati and Chicago have experienced little new supply – and their Class C rates rose.
The “filtering” effect in action: Why is Class C space struggling when there’s little new competition in Class C space? Economists call the phenomenon filtering. There are so many new Class A units in those markets that Class A landlords have cut rents to lure some tenants out of Class B space. The Class B landlords then lower their rents to compete. There’s not much below Class C, so it’s hard for those owners to compete in any way other than generous price cuts.
Luxury construction as a fix for the affordability crisis? It never fails: When a developer gets approval for a Class A project, critics say the developer is failing to address the needs of affordability-challenged tenants. In fact, this chart shows that high-end development trickles down to lower rents in Class C properties.
Capital Calls & Rescue Capital
New eBook: A guide to thriving during the coming real estate crash for real estate syndicators and accredited investors. gowercrowd.com/rescue
Background: This episode, next in our series on the tax benefits and implications of investing in real estate, covers a handful of advanced tax strategies and asset protection for real estate investors with a focus on Private Foundations.
Highlights: Mark likens the services his company provides as being like "fractionalized family office," providing high-level tax and legal strategies not just for the ultra-wealthy but for anyone earning over $150,000.
You’ll learn about the underutilized potential of private foundations, a strategy often misconceived as only for billionaires and how they can offer substantial tax benefits and charitable opportunities.
Why you should watch: Mark also covers how they set up entities for clients to strategically enhance deductions, protect investments from legal threats, and optimize tax efficiency.
We also cover some lesser known and utilized tax strategies like the Augusta Rule, employing short-term rentals for tax advantages, and the concept of paying family members for legitimate business tasks to reduce taxable income.
Not tax advice, none of these shows offers that, but fodder for conversations with your accountant as you plan for the coming year.
Please note that I am not an investment advisor or attorney and do not make investment recommendations of any kind. Please seek advice from your financial advisor, accountant, attorney, and any other professional in assessing the risks associated with any investment opportunity, as every opportunity has risks that could result in a substantial loss.
If you no longer wish to receive any of our emails [gasp], please click this link: Unsubscribe or here to Update your profile | Dr. Adam Gower Dr. Adam Gower 324 S Beverly Drive, Suite 501, Beverly Hills, CA 90212
The GowerCrowd Newsletter
The only real estate investing and syndication newsletter you need.
Real estate markets move in cycles, and understanding history is the key to navigating today’s opportunities. As a seasoned investor with 30+ years in the industry, I take a historically informed, risk-averse approach—where capital preservation is the priority. You'll get market insights and investment strategies tailored to both passive investors and capital raisers, with a particular focus on raising private capital. Occasionally, I also share best practices in digital lead generation on LinkedIn and using AI to optimize lead generation. I also introduce my latest podcast and YouTube series, where you'll hear from capital allocators, unpacking trends, strategies, and the future of real estate capital formation. For those looking to invest smarter, raise capital more effectively, and stay ahead of market shifts, The GowerCrowd Newsletter offers a concise yet detailed perspective on the forces shaping our industry.
First time seeing? Sign up here July 22, 2025 | Read Online Morning, Before I get into this week’s update, a quick reminder: I’m hosting a live training on July 30 at noon Pacific on How to Raise Capital in Uncertain Markets. We’ll cover advanced strategies you can use immediately, especially with more maturity defaults headed our way and the passing of the tax bill creating new incentives. Register here. Let me know if you have any questions. Best,Adam Register now *** [Podcast] Guest:...
First time seeing? Sign up here July 15, 2025 | Read Online Morning, Before we get into today’s update (a deep dive into CRE insurance), I want to invite you to a special session I’m hosting on July 30 at noon Pacific: How to Raise Capital in Uncertain Markets. You’ll walk away with actionable tools to boost your capital-raising now - just in time to take advantage of looming debt maturities and new tax incentives. For more info and to register, click here. Please let me know if you have any...
First time seeing? Sign up here July 2, 2025 | Read Online [Podcast] Chris Nebenzahl, Housing Economist, John Burns Research and ConsultingA Data-Centric View on U.S. Housing Locked-In America: The Housing Market’s Great StallThe U.S. housing market isn’t just tight, it’s inert. As Chris Nebenzahl, Housing Economist at John Burns Research and Consulting, puts it, America is experiencing a “lock-in effect” where millions of homeowners, beneficiaries of sub-3% mortgages from a prior era, have...