Editors’ Weekly News Roundup, Mar 20th – 24th
Two articles related to commercial real estate debt, a pair of California items and one on a sales trend comprised the past week’s top five stories. Leading the week for Connect CRE reader interest was Anticipating the Debt Maturity Onslaught, a Weekender story that marked the beginning of a series.
Finance experts told Connect CRE’s Amy Sorter that while this year’s maturities are enough of a headache, there’s also the matter of what’s coming due in 2024 and beyond. Part two of the series appears in the latest edition of Weekender, along with plenty of other compelling content.
On the subject of finances heading in the opposite direction of what anyone would like, the week’s second most-read article was about single-family home prices in the Golden State. The news wasn’t good, as the headline, California Home Prices Plunge 18% in 10 Months, made clear.
There was a silver lining in the report, though: thanks to softening interest rates, February home sales saw an uptick, albeit at a lower median price than sellers would have been able to achieve last spring.
For a sales increase that wasn’t driven by negative market conditions—unless you count an attractive cost basis relative to other investments—the sale-leaseback reached a new peak in 2022. Actually, it achieved two new peaks, as reported in the past week’s third most-read story, U.S. Sale-Leaseback Volume Sets New Records.
It’s far too early in 2023 to say whether this year will prove to be another one for the record books as far as sale-leasebacks are concerned. However, when you consider that investors are looking to place capital and owner-occupiers may be looking to bolster their balance sheets, it’s safe to assume that 2023 will be another active year.
Earlier this year, we reported that a coalition of organizations wrote to California Gov. Gavin Newsom requesting a moratorium on industrial real estate development in the Inland Empire. That story definitely drew the attention of Connect CRE readers, and so it follows that our coverage of legislation to limit development would also rank among this week’s best-read stories.
Sure enough, that was the case with New California Bill Aims for 1,000-foot Warehouse Buffer, which ranked fourth for the week. The majority leader in the California Assembly, Eloise Gómez Reyes, plans to reintroduce a bill that would apply to warehouse projects of 100,000 square feet or more. Opponents of the bill say it would cost jobs and curtail development of critically needed facilities, especially in the Inland Empire.
If the week’s fourth-ranked story concerned government intervention that not everyone would agree was necessary, then the fifth most-read story was about a call for government intervention. The Real Estate Roundtable is asking federal bank regulators—including the heads of the Federal Reserve and FDIC—to establish a program similar to ones they put in place during the Great Recession and the pandemic.
Real Estate Roundtable Asks Feds to Implement Troubled Debt Restructuring for CRE spells out the rationale for a program that encourages lenders to work with borrowers troubled commercial real estate debt. The Roundtable’s letter, over the signature of president and CEO Jeffrey DeBoer, makes it clear that this would be a near-term measure, not a vehicle for “long-term relief from value examination.”
Among the stress factors DeBoer cited for commercial real estate debt was interest rates that are considerably higher than they were when most of these loans were originated. In a story that didn’t quite reach the top five, we reported that the Fed would enact still another rate increase, although the central bank hinted that we may soon see an end to further hikes in the federal funds rate.
We followed up our reporting of the Fed’s quarter-point increase with insights from finance experts and economists. Their takes on the central bank’s latest move ranged from optimism that the Fed would take a breather on more rate hikes to pointing out that the series of increases over the past year was a factor in the recent issues hampering the banking sector.