What I’m Reading
Dead End? Distressed debt hedge funds raised billions to take advantage of COVID opportunities. However, the capital markets have largely recovered and junk yields have plunged, leaving them with few opportunities to deploy their dry powder. This is totally reminiscent of the Great Recession when capital raised to invest in distressed real estate substantially exceeded the addressable market. Its going to be interesting to see what these folks buy and how they justify it to their LPs. Bloomberg
Rip Cord: In yet another example of office market bloodletting, Yelp’s entire San Francisco headquarters is now listed for lease after the online review company decided to significantly downsize its physical footprint. San Francisco Business Times
Metamorphosis: Some real estate developers are starting distressed hotels for bargain prices and converting them to more lucrative and much-needed affordable housing, which is impossible to build without subsidies at today’s land and construction prices. CNBC
Driving Force: Private equity and institutional investors have started to return to the hotel market, a trend that began in the second half of 2020. According to research from JLL, private equity and institutional investors were responsible for 54% of total hotel transactions last year and they are likely to remain active in the market this year, driving investment activity. Globe Street
Positive Sign: Continuing jobless claims are not rising as much as one would have expected given the pandemic. The Bonddad Blog
Chart of the Day
Refi’s are on an absolute heater. Hard to overstate how simulative the savings (and in some cases cash out) are to the economy.
Source: AEI
WTF
Should Have Checked it Instead: A passenger was busted trying to board a plane with 22 lbs of meth because Florida. These carry on restrictions have gotten out of hand. Click Orlando
Fake it ‘Till You Make It: After her fake ID was seized at a bar, an 18-year-old Oklahoman called police for help in getting the illegal item returned, according to cops who instead arrested her. The Smoking Gun
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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