What I’m Reading
So It Begins: Despite the economic recovery, Q4 bank loan CRE data showed an uptick in distress, especially in hospitality assets. To be sure, this is still much lower than many anticipated but supports the thesis that reopening is a moment of truth for struggling properties.
Those that were simply impacted by COVID will bounce back and debt will be restructured. Those that have more fundamental issues will lose the COVID crutch and lenders will be forced to act. I still don’t see this as the sort of opportunity where prices drop massively because the amount of capital on the sidelines targeting distressed real estate far exceeds the addressable market. Trepp
Rise of the Machines: Kroger, the nation’s largest tradition US supermarket chain, is making huge investments in robotics to battle Amazon and Walmart in the eCommerce grocery delivery space. Bloomberg
Slow Out of the Gate: The NMHC’s latest Quarterly Survey of Apartment Market Conditions was largely optimistic, showing the best conditions since 2019 nationwide. However, approximately 25% of all respondents to the NHMC survey indicated they hadn’t received any rent relief funds included as part of the federal Emergency Rental Assistance Program.
This seems to be par for the course these days. From PPP implementation, to vaccination efforts programs have typically started up slowly and been roundly criticized only to pick up steam and become more efficient as time goes on. Hopefully federal rent relief will play out the same way. NMHC
Way Off: Last week I posted a story about how the housing supply shortage in the US continues to widen. As expected, this issue is far worse at the lower end. In 2020, only 65,000 entry-level homes were completed while 2.38 million first-time homebuyers entered the market. Contrast that number with figures from the late 1970s, when construction of entry-level homes averaged 418,000 units per year. Globe Street
Shot in the Arm: Fitness concepts and gyms are beginning to see their clientele return as the vaccine rollout in the U.S. gathers steam, and that is starting to translate into real estate interest, according to retail landlords, brokers and tenants. Bisnow
Chart of the Day
When it comes to mortgage lending, the government is increasingly the only game in town.
Source: @RickPalaciosJr
WTF
Apparently we are now at the stage of the economic cycle where the WTF section goes from Florida to finance.
To The Moon: Dogecoin, a crypto currency that was explicitly created as a joke has become the world’s best performing investment in recent weeks because LOL nothing matters. CNBC
Gold Mine: A single New Jersey deli doing $35,000 in sales in the past two years combined is valued at $100MM in the stock market, trading on the pink sheets. Can someone please explain to me what stage of the market cycle this is? CNBC
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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