PR Real Estate Fund Managers Grapple with Lower Yields

Private equity real estate funds have been enjoying robust fundraising in recent years that has resulted in record high levels of assets under management. Yet fund managers are bracing for more challenges ahead that could cause them to lower target yields. Globally, the private equity real estate industry reached $900 billion in assets under management as of June 2018, with …

The Cap Rate Series: The Answer Is No Longer 9%

Author’s note: Brad Thomas is a Wall Street writer, and that means he’s not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free, and the sole reasons for writing it is to assist with research and provide a forum for second-level thinking. A …

How to Use the Value-Add Strategy Effectively at Apartment Buildings

Turns out value-add investment strategies, in which developers renovate older apartment buildings, can make apartments too expensive for many lower-income renters, according to industry experts. Firms like Avanath take a different approach. They try to renovate apartments in ways that modestly increase rents and also repair deferred maintenance problems like leaky roofs and pealed paint. That can help keep the …

Preqin Survey Shows CRE Investment May Slow Down

Private equity real estate investment activity may slow down in the next 12 months, according to a recent report from London-based research firm Preqin. That’s largely because a significant number of the investors surveyed by Preqin—33 percent—believe the sector will perform worse in 2019 than it did in 2018, which was a record year for both the number and value …

When Will We See Cap Rate Movement in the Four Core CRE Types?

With late 2018 jitters gone and investor optimism returning, the commercial real estate market should experience mostly steady cap rates through the first half of 2019, although there are particular market segments and geographies that could experience some bumps. “On the interest rate side, I think everybody has dismissed, at least for the time being, the inflation threat so that …

Volatility in Construction Materials Costs Strains Developers

Overall, materials prices keep rising faster than inflation. But what’s worse is that prices for individual construction materials are unpredictable from month to month. The price of lumber and diesel fuel has fallen sharply, for now. But new policies from the U.S. government continue to jolt the markets, from possible sanctions on oil producing countries like Venezuela to government tariffs …

Three Ways Investors Can Increase Agility In Uncertain Commercial Real Estate Markets

Over the last few months, news channels have been filled with stories about movements that are directly affecting the U.S. economy and real estate investments. Headlines discussing rising interest rates, the government shutdown and trade wars dominated the airways and have increased business uncertainty. In addition, the speed of advancing technology is continually shifting the commercial real estate landscape. Shopping …

What Will Be the Fate of Vacant Sears and Kmart Boxes?

While Chairman Eddie Lampert and his hedge fund ESL Investment managed to buy Sears out of bankruptcy and avoid liquidation—saving about 400 Sears stores—the looming question is what will happen to the hundreds of other shuttered Sears and Kmart locations around the country. Sears Holdings Corp., which owns Sears and Kmart stores, filed for chapter 11 bankruptcy protection last October …

Competitors building large facilities face ‘distress’

Sometimes it doesn’t pay to follow the leader. From the viewpoint of Public Storage CEO Joe Russell, bigger isn’t always better when it comes to the size of new facilities being run by rival self-storage operators. During the self-storage REIT’s Feb. 27 earnings call, Russell said that among new facilities that came online in 2017 and 2018 — roughly $9 …

Self-Storage REITs Release Financial Results Q4 2018

The five largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Life Storage Inc., National Storage Affiliates Trust and Public Storage Inc.—have released financial statements for the quarter that ended Dec. 31. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI). Occupancy figures tended to …