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May 1 | Read Online​

I spent some time speaking with Bisnow reporter, Jarred Schenke, earlier this week about a story he is writing about what is going on in the real estate syndication world and he asked if I'd make some introductions.

He's looking to speak to either sponsors (GP's) or investors (LPs) who are experiencing 'challenges' with their investments and will speak either on the record (so you can be quoted), off the record (so he'd have to find other sources to cover what you talk about) or on background (where he can report on what you tell him but without quoting you as a source).

At least I think I got those definitions right. Check with him to be sure.

Either way, if you're interested in getting your name in an article from a reputable news publication - or at least would like to share your story even if only anonymously - please reach out directly to Jarred at the following coordinates.

Jarred Schenke, Reporter
jarred@bisnow.com
​(c): (678) 848-3950

Adam

News and updates follow.

story of the week

​JLL on how AI will affect commercial real estate (CoStar)

The news: Artificial intelligence technology will disrupt an estimated to disrupt up to 80% of jobs – and that includes jobs in commercial real estate.

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The nuance: Generative AI quickly produces content. This emerging technology has yet to reach its full potential, but it's possible AI will affect CRE in two ways – AI companies as real estate users, and large language models and other AI tools as productivity enhancers for the the industry.

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The outlook: “AI is more of an enhancement than a disruptor,” said Raj Singh, managing partner at JLL Spark, an investment arm of the brokerage focused on real estate tech innovation.

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What’s next: Brokerage companies use AI algorithms for matchmaking and recommending properties based on detailed client requirements. They also use AI to streamline client communications

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Related: Embrace AI disruption in commercial real estate investing (Forbes)

📰the week's highlights

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​High interest rates will continue to dampen deals, Frost Bank CEO says (San Antonio Business Journal)

"If the Fed continues to hold rates at this level for longer — and I think they will — it will continue to dampen real estate activity," Phil Green says.

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​Real-estate stocks are climbing, despite debt woes in commercial real estate (MarketWatch)

The hard-hit office sector faces issues as the Federal Reserve warns that it may need to keep interest rates higher for longer

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​Office-Loan Defaults Near Historic Levels With Billions on the Line (WSJ)

More than $38 billion of U.S. office buildings are threatened by defaults, foreclosures or other forms of distress, the highest amount since the fourth quarter of 2012.

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​Fears of Ravaged Commercial Real Estate Market Have Eased, DoubleLine Says (Bloomberg)

As markets dial back the likelihood of calamity, investors need to “sharpen their pencils” in search of promising deals.

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​Q1 2024 GDP Details on Residential and Commercial Real Estate (Calculated Risk)

Investment in offices rose slightly and was up 4.1% year-over-year – but it declined slightly as a percent of GDP.

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​How a Fed rate cut delay is impacting commercial real estate (Yahoo Finance)

Commercial real estate valuations are directly tied to sentiment around Federal Reserve policy.

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​On the watchlist: The office sector in commercial real estate (Deloitte)

Hybrid work models and rising vacancies have increased scrutiny on how commercial real estate is valued—especially office buildings.
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​Commercial Real Estate Debt Is Back With 170% Jump in Sales (Bloomberg Law)

Investors have snapped up about $24.6 billion of new commercial mortgage backed securities so far in 2024.

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​How to invest in real estate right now (Bloomberg)

Investment ideas include student housing, publicly traded office REITs and funds that invest in multifamily properties.
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​Retail CMBS Distress Continues to Improve (GlobeSt)

The overall delinquency rate declined 4 basis points to 4.67%.

📈Chart of the week

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​Average Apartment Cap Rate Vs. 10-Year Treasury (Andrew Cushman on LinkedIn)

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What it shows: In the past three decades, the gap between apartment capitalization rates and 10-year Treasury yields have ranged from a high of 470 basis points to a low of 120 basis points. As of late 2023, the spread was just 160 basis points. It’s likely at a historic low of 90 basis points now.

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What it means: Deals are hard to do when risk-free returns are so close to the returns on risk capital. It’s the sort of environment that makes deals tough to justify. The next step in a higher-for-longer world is that multifamily valuations will need to come down.

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What’s next: There would seem to be two possibilities: Either investors decide to accept low cap rates, or there’s some sort of reversion to the mean in terms of spreads.

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Other commentary: “I am very bullish on cap rate decompression and discount buying,” wrote Kenneth Minors of Minors Real Estate Advisors of Cushman’s LinkedIn post. Added Jeremy Dawson of Northmarq: “With so much capital chasing CRE today compared to 20 years ago, (especially MF) investors are willing to accept a lower return.”
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​Read the full post with comments here.​

▶️ This week's podcast

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Guest: Joe Fulvio and Will Mucker, CamaPlan

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Background: Today's episode is the next in my series covering some of the key tax benefits of investing in real estate and my guests are the CamaPlan duo of Joe Fulvio and Will Mucker. CamaPlan is a company that specializes in self-directed IRAs (SDIRAs) and Joe and Will share their insights into how to create SDIRAs, the regulations around them, and how they can be used by real estate investors.

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Highlights: We begin by defining SDIRAs and exploring how they differ from traditional IRAs and 401(k)s and then we focus on how investors can use these accounts to invest in real estate syndications to generate tax deferred (or tax free) returns.

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A significant portion of our discussion covers the tax implications of using an SDIRA and the push back you may have heard from your accountant – as I did when I first researched this type of retirement planning. We cover the concepts of UBIT (Unrelated Business Income Tax) and UDFI (Unrelated Debt-Financed Income), which can trigger taxes within the SDIRA under certain circumstances and is what led to my accountant advising (erroneously it turns out) against using these instruments.

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Why you should watch/listen: You’ll learn two main things from today’s podcast; one, you should definitely investigate setting up and SDIRA if you have not already done so, and two, to ask your accountant for more information. These things are not as easy as they appear at first glance so working with someone knowledgeable is going to be important.

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​Watch or listen to the full episode here.​

📰Social and multi-media

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​Fundrise secures $770M credit facility from J.P. Morgan to expand build-for-rent strategy (Fundrise)(4/10/2024)
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​The Unfulfilled Potential of Fractional Real Estate Investment Platforms (PropModo)(4/24/2024)
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​CRE Analyst asks: What’s Next for Tides Equities? (CRE Analyst)(4/30/2024)
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​Lawrence Yun on Home Prices Setting Record Highs (Lawrence Yun)(4/30/2024)
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​Peak home buying season is here (Lawrence Yun) 4/29/2024)
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​Brandon Roth on Mill Creek’s Take on the BTR Market (Brandon Roth)(4/24/2024)
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​Can you really convert office to multifamily? (Reid Bennett)(4/24/2024)
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​Dave Wald on Office Disruption and Real Estate Vulnerability (Dave Wald)(4/30/2024)
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​Cap Ex: The Office Sector’s Achilles Heel (CRE Analyst)(4/29/2024)
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​Jay Parsons on Rent Growth in Markets Dominated By Hedge Funds? (Jay Parsons)(4/25/2024)
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​Carl Whitaker on the 2024 Interface Student Housing Conference (Carl Whitaker)(4/29/2024)
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​How To Use Regulation Crowdfunding To Advertise For Investors (Raise Private Money Legally)(4/25/2024)