The Real Estate Reality Show

At GowerCrowd, we take a realistic view of commercial real estate investing, providing pragmatic insights for passive investors who are looking for sponsors they can trust and opportunities they can invest in. You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype. Real estate investing for passive (accredited) investors is turning messy with vast swathes of loan maturities approaching which is going to send many sponsors into default causing their investors to lose capital. While this is nothing to be celebrated, it will also bring in a period of wealth transfer and opportunistic investments. We’re here to guide you by looking at the harsh realities of real estate investing, examining the risks and the rewards in conversations with some of the world’s top experts so you can make informed decisions. You’ll learn how to build your wealth while protecting your capital investing as a limited partner in commercial real estate investments, even and especially during an economic downturn. Each week we add new episodes that provide you with access to the foremost specialists in commercial real estate investing with a focus on discounted distressed real estate and the associated market dynamics. We provide interviews and explainer videos that dive deep into the trends driving today's real estate industry, how the economy impacts returns, how to access and invest in distressed real estate deals, and how to protect your capital by mitigating downside risks. There’s no doubt that it is a very challenging time right now for the average investor. With the impact of COVID still being felt and the era of record low interest rates behind us, commercial real estate is experiencing severe headwinds. This creates financial distress for many CRE owners who did not include contingencies in their original business plans and who now face dramatically increased debt costs, increased construction and maintenance costs due to inflation, and reduced revenues from rents as the economy slows down. Is the commercial real estate world on the cusp of a major correction? Is it 2007 or 1989 all over again? Will passive investors (limited partners) who have invested in syndications (through crowdfunding or otherwise) see losses they had not predicted? How can you access discounted real estate opportunities this time around that were only available to a select few during prior downturns? Let us help you prepare your real estate portfolio no matter what the future holds, whether it be business as usual for real estate investors or a period of wealth transfer where those less prudent during the good times, lose their assets to those who have sat on the sidelines, patiently waiting for a correction. Be among the first to know of discounted investment opportunities as the market cycle plays out by subscribing to the GowerCrowd newsletter at https://gowercrowd.com/subscribe Subscribe to our YouTube channel: ⁠⁠⁠ https://www.youtube.com/gowercrowd?sub_confirmation=1 Follow Adam on Twitter: ⁠⁠⁠ https://twitter.com/GowerCrowd Join the conversation on LinkedIn: https://www.linkedin.com/in/gowercrowd/ Follow us on Facebook: ⁠⁠⁠ https://www.facebook.com/GowerCrowd/ *** IMPORTANT NOTICE: This audio/video content is for informational purposes only and should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any security. Any investment information contained herein is strictly for educational purposes and GowerCrowd makes no representations or warranties as to the accuracy of such information and accepts no liability therefor. Real estate syndication investment opportunities are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. Past performance is not necessarily indicative of future results. GowerCrowd is not a registered broker-dealer, investment adviser or crowdfunding portal. We recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. Unless otherwise indicated, all images, content, designs, and recordings © 2023 GowerCrowd. All rights reserved.

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Categories

Now displaying: July, 2023

Weekly News Update - July 28, 2023 - Fed's latest rate hike, accelerating CRE distress, why home prices are tanking 0

Jul 28, 2023

Tune in to hear updates and commentary from Adam Gower Ph.D., GowerCrowd, and David Saxe, Calvera Partners, about the major news stories his past week (week ending July 28, 2023) in the commercial real estate industry:

More rate hikes - is this the new normal?
CRE distress is increasing with no let up in sight.
Why single family home values aren't tanking.

Stories we cover today:

https://commercialobserver.com/2023/07/cre-loan-distress-up-70-of-largest-metro-areas-in-june/

https://fortune.com/2023/07/24/housing-market-robert-shiller-home-price-prediction-outlook/

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Why source of capital and alignment of interests are paramount in real estate syndications 0

Jul 25, 2023

"It's not the most upbeat environment right now even though there is a lot of capital out there."

As a consequence of ongoing real estate distress and related tightening of capital markets, many sponsors are facing refinancing hurdles, especially if their initial plans lacked sufficient reserves to weather economic storms. Alarmingly, by the end of 2025, we're looking at a maturing commercial mortgage debt of approximately $1.3 trillion. From 2025 to 2027, another almost $1.2 trillion is on the horizon, with half being multifamily.

But there's hope. Focusing on projects with solid foundations can offer a buffer against these market shifts which means banking solely on rent growth and other uncontrollable factors is a gamble.

My guest today on The Real Estate Reality Show is Scott Larson, Managing Principal at Pangea Mortgage Capital. Scott sheds light on the broader economic landscape and capital movements. He is optimistic, emphasizing that while challenges are real, dedicated stakeholders can carve out paths to success.

There will be distress and sell-offs in multifamily presenting opportunities to investors, but Scott does not anticipate not a catastrophic drop in values.

In this sea of challenges, the silver lining is the vast capital reservoir available – but while it remains standing on the sidelines distress property values will continue to decline. Hear more from seasoned professional lender, Scott Larson in this episode of The Real Estate Reality Show.

In this brand new podcast series at GowerCrowd, The Real Estate Reality Show, we take a realistic view of commercial real estate investing, providing pragmatic insights for passive investors who are looking for sponsors they can trust and distressed opportunities they can invest in.

You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

You’ll learn how to build your wealth while protecting your capital investing as a limited partner in commercial real estate investments, even and especially during an economic downturn.

Subscribe to our YouTube channel here.

Download this Episode

Weekly News Update - July 21, 2023 - CrowdStreet, banking regulations, eviction/rent moratoriums 0

Jul 21, 2023

Tune in to hear updates and commentary from Adam Gower Ph.D., GowerCrowd, and David Saxe, Calvera Partners, about the major news stories his past week (week ending July 21, 2023) in the commercial real estate industry:

latest news on the CrowdStreet/Nightingale story and the lessons learned for investors.
The real agenda behind regulators' continued encouragement to banks that they accommodate struggling borrowers with loan extensions and other means of prolonging their credit.
How eviction and rent moratoriums across California hurt the little guy the most.

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How Origin Investments predicts rent growth trends with 95% certainty 0

Jul 18, 2023

In this episode of The Real Estate Reality Show, I sit down with David Scherer, Co-Founder and Co-CEO at Origin Investments to discuss the company’s rent trend predictive tool, Multilytics.

Multilytics is a machine learning game changer for Origin because it gives them accurate (with 95% confidence) down-to-the-building rent trend predictions.

Nothing with the same degree of reliability exists in the industry and David shares the story of why Origin built it, how they built it, and how it is used to maximize their investors’ returns while mitigating risk.

Here's a quick recap of Multilytics latest predictions:

In 2023, multifamily real estate is facing a reckoning.
The year will see negative rent growth overall nationwide that will persist into 2024.
The Southeast and West will suffer the worst; the Midwest will fare the best.
Focus on Colorado Springs and stay away from Vegas!

David discusses why Origin has not acquired any multifamily assets in the last three and a half years, discusses the importance of management on building performance, and shares his views about where the multifamily market is headed over the next 18-months.

David has also provided access the latest report from Multilytics to viewers/listeners to this episode. Just go to the bottom of the podcast page for this episode at GowerCrowd.com.

Join me in this conversation with David Scherer, one of the multifamily industry’s leading voices, and learn more about how data-analytics are changing the playing field for sponsors.

You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

Download this Episode

Weekly news update: July 14, 2023 0

Jul 15, 2023

Join me, your host Adam Gower, and Dave Saxe of Calvera Partners as we discuss the week's news for week ending July 14, 2023.

Main highlights are:

Impact of regulators letting banks know they are greenlit to 'extend and pretend'.
What's going on with inflation? Is the fight over?!
Why it might not be a good idea for a multifamily sponsor to getting into a p*ssing match with The Real Deal.

The Real Deal Article we refer to is here.

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How receivers solve problems between CRE lenders and their borrowers 0

Jul 11, 2023

During times of distress in commercial real estate markets, one sector of the industry grows as values tumble: The receivers.

My guest today, Mitch Vanneman, Vice President at Hilco Real Estate, is a professional receiver and in today’s discussion he explains what receivers are, what they do, and how they help bridge the gap between lenders and borrowers when deals go bad.

Key insights from this episode include:

The impact of loan maturities: These are set to cause significant issues for many lenders and borrowers, leading to a slow roll of capitulation.
The rise of distressed assets: The market is bracing for an increase in distressed assets as values continue to decline.
The role of consensual receiverships: More owners are willing to give the asset back to the lender, leading to an increase in consensual receiverships.
The future outlook: By the end of 2023, there will be more distressed assets in the market, and by mid-2024, banks’ special assets officers and receivers nationwide will be a lot busier than they are today.
Asset classes: The discussion also explores the different asset classes that are beginning to show signs of distress.

Join us in this episode to gain a deeper understanding of these insights and learn how to navigate the current real estate market landscape through the eyes of my guest tasked, as he is, with finding solutions for assets neither borrowers nor lenders can afford to hold on to.

***

You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

Download this Episode

Public vs Private CRE Markets: Understanding the valuation gap 0

Jul 5, 2023

"Higher interest rates beget higher capitalization rates. As cap rates go up, property values necessarily decline."

This quote encapsulates the current state of the real estate market and is a consistent theme in my conversation with Orest Mandzy, Managing Editor at Commercial Real Estate Direct. It's a simple yet profound statement that underlines the interconnectedness of interest rates, capitalization rates, and property values. When interest rates rise, it leads to an increase in capitalization rates, which in turn causes a decrease in property values.

The big idea here is the cyclical nature of the real estate market and how it's being influenced by external factors such as interest rates and operational costs.

The problem at hand is the significant drop in property pricing, particularly in the office sector. Offices are expected to see a 35% decline in value from peak to trough due to increased vacancy rates, cap rate increases, and a drop in Net Operating Income (NOI). This is causing distress for some property owners but also opening up opportunities for others.

The solution lies in understanding and navigating these market conditions. Over the next 18 months, there are about $60 billion of loans that mature. More than $22 billion would not be able to refinance at a 7% coupon, the prevailing rate right now. This situation could potentially trigger a resurgence in investment activity and a more stable market environment.

Insights in this episode:

The interconnectedness of interest rates, capitalization rates, and property values.
The impact of rising interest rates and operational costs on the real estate market.
The expected 35% decline in office property values from peak to trough.
The opportunities that arise from these market conditions, such as raising mezzanine debt, preferred equity, or selling a joint venture stake.
The potential resurgence in investment activity and a more stable market environment due to the maturing loans.
The impact of these factors is no limited to just the office sector.

Tune in to this week's episode of The Real Estate Reality Show with Orest Mandzy, Managing Editor at Commercial Real Estate Direct, to gain a deeper understanding of these insights and how to navigate the current real estate market.

***

You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

Download this Episode