Commercial real estate isn't for the faint of heart. It has been battered, specifically the office sector, over the recent times. The fallout might not end there. Multi-family has been a stable force in the economy over the long-run, however there are some storms in play including:
1. falling property values
2. high debt loads
3. a pullback in available debt capital
4. a loan maturity wall
5. unique supply issues over the next two years
We love this report by KKR, summarizing many of the key trends taking shape on commercial real estate (link below):
market-review-real-estate-april-2024_KKR
Where there is fear, there is opportunity (Warren Buffet once said, "buy fear, sell greed"). For would-be investors, there will be inventory to pick-up for distressed owners who are not able to easily refinance. For lenders, there might be some forced write-down/write-offs; but with reasonable negotiations & open discussions with sponsors, there might be a soft landing on some of the challenged loans & property in the mid-term. For those looking to partner with sponsors of existing multi-family property, there could be a chance to refinance in a win-win scenario, as NOI & rents will recover in the coming years.
For existing owners & investors, finding the right capital partner for debt will be key; but isn't easy ... we are here to help. Please reach out to discuss. loans@everestcapitalcre.com