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Profimex Market Review Update – March 2, 2021

2.3.2021

CRE lender’s growing fear: Office workers won’t come back

Real estate investors, together with the banks who provide debt to the transactions have either already been hit or became increasingly worried about their retail and hospitality investments over the past year. Now, their worries also merged over to the office sector, which is experiencing more unoccupied space, greater loan delinquencies, and surging borrowing costs. With banks reconsidering their financing of office projects, the office outlook remains open to debate. “Everybody thought that office, even though people are clearing out and working from home, that the leases are still in place and that market would hold up,” said Matt Anderson, a managing director at the data analytics firm Trepp. “Now, there have been some cracks in that theory.”

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Private Equity Has $300 Billion for Pandemic-Hit Real Estate

According to Preqin data, private equity giants, such as Blackstone, Lone Star, and KKR, accumulated over $300 billion in dry power. The pandemic has essentially evaporated income streams from hotels, leisure parks and malls and pushed commercial real estate, worth $146 billion into distress. Private equity players are not looking for cheap buying opportunities to repair those income streams when global economies reopen.

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