Borrowers may be feeling the pinch from higher interest rates, but investors such as MetLife Investment Management (MIM) continue to see attractive investment opportunities in the estimated $5.2 trillion U.S. commercial mortgage market.

MIM recently published a report on Investment Opportunities in Private Commercial Mortgage Investments that highlighted key benefits mortgages can offer multi-asset class portfolios that include diversification, the potential for favorable risk-adjusted returns and characteristics that make them attractive for liability-driven investing.

WMRE spoke with William Pattison, MIM’s Head of Real Estate Research & Strategy, to hear more about the firm’s current commercial real estate debt and equity investing strategies.

You can read the full interview with Pattison here.

Publicly-traded REITs have been caught up in Wall Street’s wild ride over the past several months. Following a stellar performance in 2021 when the FTSE Nareit All REITs Index generated total returns of 41.3 percent, the sector has struggled with year-to-date returns that have fallen nearly 30 percent.

Yet some investors continue to see buying opportunities. While REITs have been swept up in the broader stock market sell-off, the fundamentals driving commercial real estate itself have remained strong. This has resulting in many REIT stocks trading below net asset values (NAV).

WMRE recently talked with David Rosenberg, managing director and senior portfolio manager at Harbor Group International (HGI) Capital Management to hear about the firm’s listed real estate strategy and his views of challenges and opportunities in the current market.

A full Q&A with Rosenberg is available here.

Norridge Commons is situated in the heart of a 1.5-million-sq.-ft. retail corridor, directly across from Harlem Irving Plaza, one of the highest volume malls in Chicagoland. AmCap acquired the center for $75.65 million on behalf of one of its institutional investors with an eye toward re-claiming and re-tenanting the Kmart space.

“We purchased Norridge, knowing it was great dirt and that we could get much better credit and rent for that space,” says Jake Bisenius, president, chief investment officer and managing principal of AmCap.

WMRE recently spoke to Bisenius about its core investment base, how it’s raising capital for new acquisitions and the firm’s plans for the next few years.

According to Invesco, real estate has generally remained a top performer from a total return perspective during cycles of Fed tightening when compared with stock and bonds.

WMRE spoke with Bert Crouch, Invesco Real Estate’s Head of North America and Portfolio Manager, to hear more about Invesco’s outlook on challenges and opportunities in the commercial real estate investment market.

Here's a full transcript of WMRE's conversation with Crouch.

The executives at Campus Apartments believe today is a great time to be both buying and selling student housing—despite rising interest rates.

In fact, Campus Apartments has carefully positioned itself to use recently rising interest rates as a competitive advantage—both when it buys student housing properties for newer real estate funds and sells properties from older real estate funds.

“We've been preparing for this,” says Daniel Bernstein, president and chief investment officer for Campus Apartments. “We think this is an amazing time for student housing. We believe there is a great risk-adjusted return based on the types of investments that we're making.”

WMRE asked Bernstein how Campus Apartments is well-positioned to handle interest rates that had to rise eventually—and are now rising through the roof.

For Woodland Hills, Calif.-based Investors Management Group (IMG), its recent acquisition of The Whitley Apartments in the Greenville, S.C. metro area is a perfect example of its “IPA” investment strategy. The acronym stands for: Intrinsic Value (I), Price Per Pound (P); and Affordability (A).

Intrinsic value is about evaluating the property beyond its current valuation and considering its location, building features and other intrinsic attributes.

Digging into price per pound allows the firm to fully understand the competitive landscape and determine whether the property price is attractive.

And understanding the level of affordability for each property aids IMG in determining whether it is a good fit for the firm’s portfolio.

WMRE recently spoke to the firm’s executives about their strategy and plans for the future.

With limited supply and tremendous demand from tenants, last-mile distribution facilities in dense, urban markets can provide investors with out-sized rent growth and returns. As a result, these assets are popular among all types of buyers, including institutional investors.   

But it’s difficult for institutional investors, who need to place large sums of capital, to acquire these assets on a one-off basis. Individually they represent small deals for buildings that are often 50 years old and contain just 50,000 sq. ft. of space or less.

Faropoint, a real estate investment management firm focused on last-mile properties in markets with high population growth, solves this challenge by aggregating many small last-mile industrial assets into larger portfolios, enabling institutional investors to efficiently access this asset class.

WMRE recently spoke with Adir Levitas, founder and CEO of Faropoint, and Idan Tzur, CFO, to discuss the firm’s strategy, investor base and recent financing transactions.

Traditionally, Brookfield’s perpetual income strategies have predominantly focused on investing in real estate equity positions. However, the needle is towards credit investments as the firm sees more opportunities in real estate debt positions ahead. On a normalized basis, Brookfield’s income strategies typically are 10 percent invested in real estate debt and 90 percent in equity. That could shift to north of 20 percent, according to Zach Vaughan, a managing partner in Brookfield’s Real Estate Group and the Global Head of Core Plus and Perpetual Real Estate Funds.

“We’re seeing a meaningful increase in the amount we’re investing in credit, but these are not mortgage REITs by any means,” says Vaughan. “We think it’s a good time to protect yourself on the downside and earn some great income in these strategies, but ultimately, these are equity strategies where we want long-term appreciation and cash flow growth as well.”

WMRE recently talked with Vaughan to hear more about how the firm views opportunities and challenges in credit in the current rate environment.