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Eight Must Reads for the CRE Industry Today (May 4, 2020)

Apollo is raising $20 billion in the coming year in a bid to capitalize on the wave of distressed investment opportunities that will emerge, reports the Wall Street Journal. Based on the experiences of the past month many companies are considering more permanent work-from-home positions, according to CNBC. Stan Johnson spoke to GlobeSt.com about the developing buyer’s market. These are among today’s must reads from around the commercial real estate industry.

  1. Apollo Plans to Raise $20 Billion, Shift to Distressed Strategies “New York-based Apollo expects to raise $20 billion over the coming year, emphasizing credit strategies designed to take advantage of economic dislocation from the virus. It is increasing the target size of some funds, accelerating its fundraising plans for others and launching new strategies. The firm expects to raise the $20 billion across ‘many, many credit strategies, everything from capital solutions [and] hybrid value to market-dislocation strategies,’ said Joshua Harris, a senior managing director at Apollo, on a call with analysts about the firm’s first-quarter results.” (Wall Street Journal)
  2. More big employers are talking about permanent work-from-home positions “Companies have been forced to embrace remote working amid stay-at-home orders for all nonessential positions and businesses. In the process, corporations are seeing proof that productivity does not suffer, and employees may not need to return to offices in order to be productive and accomplish their work tasks. It also may be part of required cost-cutting as companies plan for what could be a prolonged global economic slump” (CNBC)
  3. It’s a Buyer’s Market. Stan Johnson Tells Us What Comes Next. “Without a doubt, conditions have shifted to a buyer’s market overnight, which will present buyers with tremendous opportunities across many real estate asset classes. Structurally speaking, the long-term investment horizon still looks bright, so don’t be afraid to invest confidently.” (Globest.com)
  4. Institutional Investors Eye CRE Valuations As Market Whipsaws Continue “Institutional investors' appetite for CRE leads to trillions of dollars of investment in the sector each year. In 2018, for instance, the 500 or so largest institutional investors allocated $2.53 trillion to real estate, according to data from Preqin.   This year, a date many are looking to is June 30, according to RCLCO Senior Managing Director Taylor Mammen, who serves as the firm’s director of institutional advisory services.” (Bisnow)
  5. Multifamily Borrowers Benefit from New HUD Lending Policies “Government agency programs such as Freddie Mac or Fannie Mae programs will likely continue to capture the majority of multifamily financings, but borrowers must become aware that of all the agencies, HUD programs will always offer the most proceeds, the most leverage and the longest loan term.   By accessing the HUD programs referred to as 221(d)(4) and 223(f), borrowers can access 35- to 40-year fully amortizing loans, avoiding future interest rate risk as well as term/balloon risk in a down market.” (Commercial Observer)
  6. Great American Real Estate Bargains Of The Century “REITs enter into this period of economic uncertainty with strong operation performance, the lowest leverage ratios in more than 20 years, long debt maturities, and high interest coverage ratios.” (Seeking Alpha)
  7. Trump's Virginia winery, hotels, real estate eligible for bailout in virus relief law “President Donald Trump’s Virginia vineyard could be eligible for a federal bailout under the $2.2 trillion coronavirus stimulus he signed into law last month, despite provisions in the bill that Democrats said were intended to prevent him and his family from personally benefiting.” (Associated Press)
  8. Mainland Chinese buyers disappear from Hong Kong real estate “No commercial property transactions in the first quarter involved a buyer from mainland China, the first time that's happened since 2009, according to CBRE Group Inc., which tracks deals over HK$77 million ($10 million). It's in stark contrast to a few years ago when Chinese investors were snapping up offices and retail space for eye-popping prices.” (Bloomberg)
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