February 1st – Prophecy

What I’m Reading

Prophecy: Starting back in the summer of 2020, whenever people ask me what I think will end the market mania, my (somewhat tongue in cheek) answer has been that the market top will occur once WeWork is taken public via a special purpose acquisition company (SPAC) merger.  Well folks, guess what: the Wall Street Journal is now reporting that WeWork is in talks to merge with a SPAC in order to do just that. Can’t make this shit up. (h/t Michael Deermount)  Wall Street Journal

High Demand: Investors love class C multifamily, in part because its impossible to build new and offers opportunities to add value through revenue enhancing capex.  Its also increasingly difficult to find as sellers want top dollar and capital continues to pour into the space.  Globe Street

Mixed Signals: While multi-family valuations continue to rise, oversupply is becoming a concern for class A product in some urban core markets where rents are falling.  This is mostly due to the fact that the vast majority of new units are Class A construction out of necessity due to high construction and land costs.  Class B and C properties, especially in the suburbs and Sun Belt/Mountain West markets are fairing better from a rent growth perspective which is also why those assets are difficult to buy (see above).  Fannie Mae

Catalyst: After a slow 2020, 1031 exchange volume is heating up again as investors flee coastal markets for the Sun Belt in an attempt to get out in front of any potential tax changes.  Bisnow

Throwing in the Towel: When Brookfield bought GGP’s mall portfolio it had plans to “future proof” most of those malls, turning moribund properties into mixed-use “mini cities” by adding residential and office space.  Then COVID happened and an already bad mall situation became much, much worse. With deteriorating fundamentals, 10 Brookfield malls are at risk of being handed over to their lenders, according to a Real Deal analysis of mortgage data from Trepp and rating agency Fitch.  The Real Deal

Chart of the Day

Green Street calling bullshit on mall appraisals. 

Source: Green Street Advisors

WTF

That Sucks:  Not sure which of you degenerates needs to hear this but a new scientific research paper concluded that masturbating with a vacuum cleaner is actually quite dangerous.  RealClear Science

Dogeing A Bullet: Traders who were shut out of volatile stocks like GME and AMC are turning their attention to pumping Dogecoin, a crypto currency based on a shiba inu meme that was started as a joke because YOLO.  Business Insider

Basis Points – A candid look at the economy, real estate, and other things sometimes related.

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