Paul Fiorilla -Director of US Research, Yardi Matrix

Distress in commercial real estate: how worried should we be?

Paul Fiorilla - In the current chilly climate of the commercial real estate market, it's not just about distress but also about understanding the nuances of the market.

In this episode, I sit down with Yardi Matrix's Research Editorial Director Paul Fiorilla to discuss the impact of various factors on the market, particularly in the realm of distressed assets.

A brief look at some of the insights you can expect in this week's episode:

  1. Current concerns are largely driven by the rising interest rates and maturing loans, making it challenging for real estate sponsors, especially those who lack experience in managing through difficult times.
  2. This behavior is causing a slowdown in the market, affecting future growth and investment, and leading to distress for some sponsors - but also opening up opportunities for others.
  3. Paul predicts a brighter outlook by 2025, with expected interest rate reductions throughout 2024 that will benefit the market. This could potentially trigger a resurgence in investment activity and a more stable market environment.
  4. Despite the challenges in obtaining equity, there are still opportunities to be found. Paul highlights the potential in distressed assets, such as mid-construction projects that have stalled due to lack of funding, and real estate holdings of executives from failed banks needing liquidity.
  5. There are also opportunities in the form of assets being sold out of bankruptcy to fund cash-flowing shortfalls. These distressed opportunities require a different approach compared to buying marketed properties during an upmarket.
  6. Paul also discusses the nuances of the market, highlighting that the discussion around distress is more complex than a simple good or bad dichotomy. He emphasizes that different commercial property types have different drivers and performance.

This conversation is your roadmap to a better understanding where the commercial real estate market is headed.

Join us in this episode with Paul Fiorilla to get all the insights you need to get you through these tough times in commercial real estate.

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