- Alternatives ‘Essential’ for 2024: JPMorgan “JPMorgan issued its 28th annual Long-Term Capital Markets Assumptions report, which provides long-term forecasts for various asset classes in addition to detailing risks and upside catalysts. One of the recommendations in its report is to add a 25% position to alternative investments which it believes will increase returns by 60 basis points on an annual basis while also reducing volatility.” (Nasdaq.com)
- Private Equity in the U.S. Regulatory Firing Line “Perhaps nowhere in the world is the impact of private equity (PE) felt more keenly than in the US. Private funds reported holding $20.4 trillion in gross assets by the end of 2022, versus $8 trillion about a decade earlier, according to the US Securities and Exchange Commission (SEC). Today, PE deals account for more than one-third of all M&A activity in the US. Dealmaking is especially prevalent in the technology, healthcare, consumer, and financial services sectors. Though 2023 saw dealmaking, exit and fundraising activity fall amid spiking interest rates, PE firms remain active in the US, with many transactions benefitting from favourable tax policies.” (Worldwide Financier)
- Why the Pool of Accredited Investors Keep Growing “The number of ‘accredited investors’ able to participate in private securities offerings has grown 16-fold since the criteria were developed 40 years ago, according to a just-released review of the defintion by the Securities and Exchange Commission. In 1983, 1.51 million households met the accredited investor criteria. By 2022, 24.3 million households qualified, according to the agency’s report. This is ‘largely due to the fact that the natural person accredited investor thresholds have not been adjusted to reflect inflation,’ the report stated.” (ThinkAdvisor.com)
- 2024 Trends to Watch in Real Assets “The year 2023 was an especially tough one for real estate. Declines in asset valuations, which had begun in the second half of 2022 in many markets, proliferated across a broader range of markets through the rest of 2023. Transaction volume also continued to fall through the year, with dealmaking often paralyzed by the standoff between potential buyers and sellers on pricing. Investors will be hoping for a better 2024, where we find a floor in pricing that will return the market to more-normal levels of activity. When and how that happens remain to be seen. It may be through increased distress forcing sellers onto the market.” (MSCI)
- Commercial Real Estate a Top Threat to Financial System in 2024, U.S. Regulators Say “The Financial Stability Oversight Council issued its annual report Thursday, and listed commercial real estate as the first in its list of financial risks.” (MarketWatch)
- REIT Portfolio Managers See Sector Attracting Increased Investor Interest in 2024 “REITs have operated in a challenging environment throughout 2023, yet well-honed strategies of balance sheet discipline and transparency have enabled the sector to end the year on an optimistic note, with signs that 2024 may usher in interest rate stability and increased opportunity for REITs to boost external growth. REIT.com recently spoke with Brian Jones at Neuberger Berman, Kristin Kuney at Goldman Sachs, Raj Rehan at BlackRock, and Jason Yablon at Cohen & Steers, to discover the opportunities and challenges that they see ahead.” (Nareit)
- Six Years of Opportunity Zone Progress and Controversy “Overseen by the Treasury Department, the Opportunity Zone Program went into effect at the start of 2018 and was immediately a hot topic in the commercial real estate industry. But ever since it was created, the program has been plagued with criticism over whether it is working the way it was intended to work: to lift up and revitalize disinvested communities through new development projects. Reforms have been proposed by public officials recently, which could make a big difference if enacted. Still, six years after the program began, what kind of impact has it actually made?” (Propmodo)
- Meet America’s Newest Mega-Landlords: Google, Facebook and Elon Musk “Across the country, corporations are using their considerable sway and resources to build modern company towns — mini-cities that will feature all the trappings of traditional civic life, including housing, shops, and public spaces. These new projects won't have corporate logos on every building, and many of the units will be available to the general public, not just employees. But in the grand scheme of real estate, they're distinct: After years of running up against housing shortages in their backyards, companies like Google, Meta, and Disney — not exactly known for building new homes — are taking matters into their own hands.” (Insider)
- Morgan Stanley Hunts for Deals in Commercial Property Upheaval “Morgan Stanley is seeking out real estate opportunities that arise as pain ripples across the global commercial-property market. The firm’s real estate investing platform is actively looking for deals on everything from apartments to industrial properties, according to Lauren Hochfelder, co-chief executive officer of Morgan Stanley Real Estate Investing. The company could employ a variety of investment strategies, such as providing traditional credit or preferred equity depending on the situation, she said.” (Bloomberg)
- How College Football Is Clobbering Housing Markets Across the Country “Life in Athens, a city of about 127,000 residents, is centered around its largest employer: the flagship campus of the University of Georgia, which enrolls more than 40,000 students and employs about 10,000 people. Like many U.S. cities, it has seen rents rise over the past few years, even as developers have added new units to the market. Much of the construction is luxury off-campus housing for the growing student population.” (The New York Times)
- The Great American Warehouse Building Boom Is Over “During the pandemic, developers plastered cities and suburbs with logistics facilities to profit from surging rents and seemingly insatiable demand from Amazon.com and other e-commerce companies. Now, many large investors are cutting back. Industrial property construction starts tumbled 48% in the first nine months of the year compared with the same period in 2022, according to data company CoStar. That was the largest drop for that period since 2009.” (The Wall Street Journal)
- Real Estate Firms Want FL Ban on Chinese Investment Lifted “The Real Estate Roundtable, a lobbying group that also represents Blackstone, Citigroup and Wells Fargo, is pressing lawmakers to relax restrictions included in the Foreign Countries of Concern law, Bloomberg Law reported. The legislation bans nearly all purchases by Chinese nationals and China-based companies, and restricts real estate investment from buyers hailing from other “countries of concern,” including Venezuela. Gov. Ron DeSantis signed Senate Bill 264 into law in May, and it went into effect July 1. It also restricts landowners from using Chinese capital to fund projects in the state, even if they are non-controlling minority stakes in real estate deals.” (The Real Deal)
- Bob Diamond’s Atlas Is Looking to Invest in U.S. Regional Banks “Bob Diamond’s Atlas Merchant Capital is seeking to raise more than $500 million to invest in US regional banks, according to people with knowledge of the matter. The firm is approaching the effort with a flexible mandate, and aims to make equity or debt bets in both publicly traded and closely held banks, said the people, all of whom asked not to be identified discussing confidential information.” (Bloomberg)
- Investor Appetite for Retail Real Estate Is Heating Up Again “Big investment firms that have shunned retail real estate for years are giving the sector a fresh look, the latest sign that this long beleaguered property type is on the mend. Institutional buyers are snapping up grocery stores, pharmacies and other recession-resilient stores. Retail’s strong performance in recent years has also increased the sector’s appeal as remote work depresses demand for office buildings. ‘We think there’s going to be probably a lot more money that’s going to look at retail,’ said Steve Plenge, chief executive of Pacific Retail Capital Partners, which buys, develops and manages retail properties.” (The Wall Street Journal)
- D.C. Real Estate Leaders Say Losing Capitals, Wizards ‘Would Take Years to Recover From’ “Virginia lawmakers passed a plan to lure the NBA and NHL teams across the river, and industry leaders say D.C. must fight to keep the teams downtown.” (Bisnow)
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