According to analysis by S&P Global Market Intelligence, U.S. equity REITs have little direct exposure to Silicon Valley Bank, which had the second-largest bank failure in U.S. history. Office REIT Cousins Properties Inc. reported Silicon Valley Bank as its ninth-largest tenant by annualized rent as of 2022 year-end at just over $8.4 million, or roughly 1.2% of the REIT's total rental portfolio. The REIT leases 204,751 square feet of office space to the bank at its Hayden Ferry property in Tempe, Arizona. Boston Properties Inc. houses Silicon Valley Bank's Seattle office in its recently acquired Madison Centre property. In addition, Paramount Group Inc. leases office space to SVB Securities LLC, an entity under the SVB Financial Group umbrella, at 1301 Avenue of the Americas in Manhattan, N.Y. Alexandria Real Estate Equities Inc. reported in a March 13th news release that it has one lease with an affiliate of Silicon Valley Bank in the Greater Boston area market totaling 32,152 rentable square feet. The lease's annual rental revenue as of Dec. 31st, 2022, was $1.7 million, or 0.08% of the REIT's total annual rental revenue.
Finsum:According to S&P Global Market Intelligence, U.S. REITs had limited exposure to Silicon Valley Bank, with some REITS reporting that SVB made up a small percentage of their rental portfolios.
Technology-driven real estate investment manager Cadre recently announced the launch of an individual retirement account (IRA) solution, allowing investors to allocate their IRA funds into commercial real estate (CRE) through the Cadre platform. The firm expects the new investment option to continue to expand access to CRE, which is a tax-advantaged asset class with longer investment periods and attractive risk-adjusted returns relative to equities. The new product provides a solution for IRA investors who just experienced a challenging year in the market. CRE typically features more stability and longer holding periods than traditional IRA investments like equities. For instance, during recent market drawdowns like the Great Financial Crisis and Dot-Com recession, equities lost an average of 36% in value, while private real estate averaged a 31.86% gain over the same periods. According to the firm, this makes it a fit for investors hoping to harvest returns for retirement. Ryan Williams, Founder and Executive Chairman of Cadre stated, “I founded Cadre to provide more individuals with a tax-efficient tool that institutions and ultra-high-net-worth investors have traditionally used to build wealth.” By equipping investors with the ability to invest their IRA dollars, we aim to expand access to diversified, robust retirement portfolios – and by extension, generational wealth.”
Finsum:With investors experiencing deep drawdowns in their equity funds during market downturns, real estate investment manager Cadre has launched an IRA option for investors to access commercial real estate, which typically features more stability.
While housing prices have recently fallen, don’t expect a market crash like in 2008. That is according to Jack Macdowell, co-founder, and chief investment officer at alternative asset manager Palisades Group. In a January note, Goldman Sachs strategists predicted that national home prices would fall by at least 10% peak-to-trough this year, but Macdowell disagrees. He stated, "People may be concerned that we're entering into another global financial crisis-type event, where we'll see a ton of distressed inventory on the market putting downward pressure on home values. I would argue that I don't think that's the case." To back up his point, Macdowell noted that today's lenders have become smarter about loan origination than they were in the past, which helps mitigate overall default risk in the market. He also said that the ratio of mortgage debt service payments versus disposable income is currently at historically low levels, versus its peak in 2007. According to him, both of these factors lead to the unlikeliness of a "2008-esque housing" crash. In addition, Macdowell points out that in comparison to historical levels, current mortgage rates are still considered to be fairly low and while demand has fallen across the nation, Macdowell believes a low housing supply is a reason to buy the dip in existing homes sales.
Finsum:Real estate CIO Jack Macdowell doesn’t expect a 2008-style housing crash as lenders have become much smarter about loan origination and the ratio of mortgage debt service payments versus disposable income is at historically low levels.
Realized Financial recently announced a series of enhancements to its real estate solutions. The company provides real estate wealth solutions to individuals and families that own legacy investment properties and other appreciated financial and capital assets. The new features, which include predictive statistical analysis, rely on expanded levels of commercial-grade data and technology to help create more informed decisions when constructing customized portfolios of commercial real estate (CRE) investments. While alternative investments such as commercial real estate are projected to reach $23 trillion by 2026, technology has been slow to provide the transparency or customization. The new platform enhancements include customizable portfolio inputs like property types, location, or deal length, a partnership structure that can help investors’ accounts actively reflect their ongoing portfolio goals and objectives, a Confidence Score that provides an analysis of the likelihood a Sponsor will reach the projected income distributions outlined in their Private Placement Memorandum (PPM), and White Labeled Investment Plans and Investor Portals that allow advisors to apply their unique information and company branding to both Realized investment plans and the client portal. As part of the announcement, Stephanie Elliott, president at Realized Financial, stated, "Our guiding principle is enabling individuals and their advisors to manage investment property wealth with the same discipline as other traditional asset classes. These latest enhancements seek to deliver new levels of insight, control, and assurance when constructing and managing passive CRE investments."
Finsum:Realized Financial, which provides real estate wealth solutions to individuals and families recently announced a series of enhancements amid increased demand for alternative investments.
Parcl recently announced the launch of the real estate investment platform Parcl Protocol, allowing users to trade the price movements of real estate markets around the world. Its users can now invest in or trade specific geographical markets, which can be used for directional investment and hedging strategies in a traditionally opaque and walled-off asset class. Parcl is a digital real estate protocol built on Solana, a blockchain specifically designed to host decentralized and scalable applications. Through the Parcl Protocol and leveraging data provided by Parcl Labs, Parcl facilitates real estate investment. It provides exposure to cities in the United States such as New York City, Miami, Phoenix, and Los Angeles, while international cities such as Paris, London, and Singapore will be coming later this year. Users can browse global real estate markets, gain detailed insights, and have the opportunity to either buy or short real estate markets based on whether they think the real-world property values will increase or decrease. The platform is also built differently than other real estate platforms such as Yieldstreet, RealT, or Fundrise as it takes a new approach to increase liquidity and improve scale by using derivatives. The derivatives can improve diversification and add stability to a portfolio.
Finsum:Parcl launched the real estate investment platform Parcl Protocol, which allows users to trade the price movements of real estate markets around the world.
According to Nareit, an organization that represents the REIT industry, REITs posted their best monthly returns since January 2019 and outperformed the broader markets. The FTSE Nareit All Equity REITs index jumped 10.1% while the FTSE Nareit Equity REITs index rose 10.7%. Those figures compare favorably to the 7.0% gain of the Dow Jones U.S. Total Stock Market and the 6.7% gain for the Russell 1000. The strong returns came as a result of investor optimism stemming from the widely expected belief that the Federal Reserve will pivot from its rate hiking cycle as inflation slows. In addition, REIT operational performance continues to be strong. For instance, REITs reported a new all-time high of $19.9 billion in funds from operations in the third quarter of 2022 according to Nareit’s T-Tracker. During January, all property sectors had a positive performance. The top sectors include lodging/resorts with a 17.1% gain, industrials which rose 13.7%, and data centers at 13.2%. Even the laggard sectors were positive, with retail rising 7.4% and infrastructure gaining 6.8%. Global real estate markets also performed strongly with the FTSE EPRA Nareit Developed index gaining 9.0% compared to a 7.3% gain for the FTSE Global All Cap. In terms of regions, Developed Europe led with a return of 10.8%, followed by North America at 10.7%, and Developed Asia at 3.7%.
Finsum:REITs posted the strongest monthly performance since January 2019 as investors remain optimistic that the Fed will slow its rate hiking policy and REIT operational performance remains robust.