March 30th – Game Over

What I’m Reading

Game Over: Massive crowdfunding sinkhole Prodigy Network has filed for Chapter 7 bankruptcy.  The company, which had raised a reported $690MM from investors was overleveraged and besieged by lawsuits when its founder died suddenly in May and investor communication ceased.  This is a tragic reminder of the consequences of massive syndications with few if any LP controls to hold GPs accountable.  The Real Deal

Don’t Look Now: The hospitality debt market is thawing and debt funds are leading the way.  For the best assets, debt funds are pushing leverage to 75% or 80%. Leverage has increased by 5% to 10% since last Fall, while spreads have dropped 25 to 75 basis points in the same timeframe.  Banks are getting more aggressive as well but aren’t hitting anything close to debt fund leverage points.  As written here dozens of times – liquidity > everything else, when it comes to distress.  This ain’t 2008.  Globe Street See Also: Real estate investors raised $250 billion last year to buy up distressed opportunities when COVID hit.  Now that distress hasn’t materialized and the window to invest funds is running out.  Wealthmanagement.com 

Fire Sale: CoStar is predicting that $28 billion in distressed retail properties could hit the market in the next 24 months as fundamentals continue to deteriorate.  Unlike hospitality, this is not strictly a COVID story.  Nor is there as much capital available to refinance and reposition as the prevailing capital market view is of a product type in secular decline.  WealthManagement.com

Don’t Call It A Comeback: After years of decline, golf course homes are back in high demand again.  Will be interesting to see how this plays out in a post pandemic environment.  Interest in golf had been declining but got a boost during COVID.  Now that we are reopening, it will be interesting to see if it sticks.  New York Times

Top of the Class: The past year has been a great one for the for-sale housing industry.  However, the Mountain West region in general, and Boise in particular stand out.  Corelogic

Chart of the Day

Mean reversion is real, y’all.  Will be very interesting to see where this goes from here.  

Source: Apartment List

WTF

Yuck: Peeps-flavored Pepsi is now a thing because no one ever failed to turn a profit betting against the good taste of the American Eater. (h/t Elizabeth DeWitt) NY Post

Ballers: Top-paid lifeguards in Los Angeles made as much as $392k a year in 2019.  And then we wonder why this state is such a fiscal trash fire.  Forbes

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

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