A reporter once asked the renowned billionaire J. Paul Getty how he had become so rich; Getty’s reply, “I buy my straw hats in the wintertime”.
It is wintertime in capital markets serving the commercial real estate (CRE) sector. WINPRO was a recent participant at CRE Capital Market conference held at the University of Denver. The Conference’s basic takeaways were: 1) Institutional lenders are all but ceasing to originate CRE credit facilities, 2) Due to the higher interest rate environment, cap rate contraction has reduced CRE valuations, 3) Existing CRE credits with nearing reset provisions and/or nearing maturities will result in higher cost of capital reset at higher rates, 4) Loans that are near maturity will need to either pay-off, refinance elsewhere, or be liquidated. To be sure, not all CRE asset types, or credits, are similarly stressed. But the message being sent by the capital markets is clear – rates are higher, valuations are down, institutional funding is largely unavailable, and many institutional credits are being called –possibly liquidated. So, where is the owner/investor of CRE to go? The answer: the private capital market.
It has never been a better time for investors to participate in Private Capital. Due to higher interest rates, and the paucity of institutional funding, investors are well positioned to accrue out-sized risk-adjusted returns. Moreover, due to CRE credit liquidations, CRE debt investors may additionally benefit from loan acquisitions – often at discounts to par. Due to the collateralization of hard CRE assets that secure these loans, these credit facilities offer bond-like security with equity type returns. WINPRO offers investors the opportunity to invest in private capital debt funds. WINPRO offers investors:
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Stan Wood – 303-917-2580 – firstname.lastname@example.org
Tony Hemminger – 720-344-1174 – email@example.com