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Five Must Reads for the CRE Industry Today (March 16, 2020)

COVID-19’s spread is rocking the global economy. GlobeSt.com examines the potential toll of job losses for the CRE industry. Bisnow looked at what the near zero interest rates will mean for the sector. Meanwhile famed investor Carl Icahn revealed to CNBC that he is shorting commercial real estate securities. These are among today’s must reads from around the commercial real estate industry.

  1. Job Losses Are Here. How Will CRE Fare? “Commercial real estate is grappling with this data and trying to come to some conclusions about how its own industry will fare. Job losses, obviously, can have an across-the-board effect on CRE’s food groups. The only question is, where will they be and how severe.” (GlobeSt.com)
  2. CRE Could Benefit From The Fed Cutting Interest Rates To Near-Zero Levels — If Things Reopen “‘The Fed cutting its rate to near zero is a major ‘gift’ to owners of commercial real estate,’ O’Connor Capital Partners President Joel Bayer said via email. ‘This will result in rates on real estate loans being lowered to interest rate levels which we have never seen in our lifetimes. Every existing loan that can be refinanced at a lower rate will be processed as soon as possible. This will translate into lower interest rate expenses and more net cash flow to the asset owner.’” (Bisnow)
  3. Icahn is shorting the commercial real estate market, which he says is going to ‘blow up’ “Icahn’s short is specific to credit default swaps, or ‘CDS,’ which are assets that back mortgages of corporate offices and shopping malls. Icahn said the housing market bubble of 2008 has ‘happened all over again’ due to loans made in 2012 to shopping malls and more. ‘You have a bunch of mortgages ... so the banks went out and loaned money against a lot of shopping malls, office buildings, hotels and retail,’ Icahn said. ‘It’s all credible institutions doing it again.’” (CNBC)
  4. These retailers are closing stores to slow coronavirus outbreak “Major retailers across the U.S. are shutting down their stores or reducing hours in response to the coronavirus pandemic. The decisions, while smart for customers, workers and the community at large, will no doubt weigh heavily on the already-stressed retail industry.’” (CNBC)
  5. Airbnb further expands its coronavirus response as hosts cope with lost income “As coronavirus spreads across the globe, the vacation rental company Airbnb expanded its extenuating circumstances policy Saturday, allowing almost all travelers to cancel their reservations penalty-free. Now, most travelers who booked with the company will qualify for penalty-free refunds for bookings, and thousands of travelers are canceling their reservations and choosing to stay home.” (KTLA5)
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