On today’s show we are looking at the results of one of the most anticipated real estate auctions this year. Signature bank failed in the Spring of this year, shortly after the failure of Silicon Valley Bank. 

The loan portfolio was finally put to auction and it looks like a joint venture of two nonprofits and Related Fund Management is poised to win an auction for billions of dollars of Signature Bank loans backed by New York apartments, 

Signature failed in March following a run on its deposits, the fourth largest bank failure in U.S. history. While the failure had little to do with its real-estate portfolio, it was one of the biggest commercial property lenders in the New York region.

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Host: Victor Menasce

email: [email protected]

 On today’s show, we are talking about four ways to liquidate debt. Our entire economy is driven by access to credit. Credit facilities of all types are essentially a claim on future earnings. I don’t have the money today, but I will in the future if you lend me some of that excess money that you are not using right now, I’ll give it back to you with extra in exchange for letting me use those funds today. It doesn’t matter cause weather the borrower is an individual, corporation, charitable, organization, or the government of a sovereign nation.

There are four ways to liquidate a debt obligation.

1. You can repay the debt to future earnings and rely upon your week to week months to months, cash flow to service that debt and repay both interest and principal over the life of the loan.

2. You can rely upon a capital transaction to provide a source of funds to repay the loan.

3 You can wipe out the debt through an active insolvency by seeking bankruptcy protection.

4. You can inflate away the debt.

Shannon Robnett is based in Boise Idaho where he develops multi-family apartments. On today's show we are talking about how to navigate the current market environment with all of its challenges. There are a few nuggets in today's show that you will definitely want to pay attention to. To connect or to learn more, visit https://shannonrobnett.com/

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Host: Victor Menasce

email: [email protected]

On today’s show, we are taking a look at why interest rates for commercial real estate are actually falling despite the hawkish rhetoric this past week from Federal Reserve chairman Jerome Powell. Since the middle of the summer we have seen rising yields on the 10 year treasury. The rate peaked on the 19th of October at 4.99%. This benchmark rate has a much larger impact on Real Estate Investors Than the federal reserves short term, federal funds rate. Rates went up over the summer and into the early fall, because the US treasury has been printing vast sums of money and issuing new debt in addition to the rollover of existing debt that has matured.

We have seen the 10 year yield fall to 4.43% since the middle of October. That’s more than 0.5% drop in less than a month, even though the Fed is holding short term rates steady.

This is one of those stories where bad news is good news. The thinking is that if the economy is weak and we enter a deflationary recession, or a disinflationary recession, the Fed will pivot from their hawkish stance and lower interest rates. The mainstream media including the Wall Street Journal is pushing a narrative that the lower CPI numbers are the reason we need to celebrate that interest rates have peaked and are heading down from here. I think the story is more complex and more nuanced than that. 

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Host: Victor Menasce

email: [email protected]

Jeff Love has been helping commercial clients with their real estate legal needs for more than 15 years. On today's show we are talking about distress in the current market. To connect with Jeff, visit

gibbsgidden.com

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Host: Victor Menasce

email: [email protected]

On today’s show we’re talking about the forecast flood of distressed deals in the marketplace. We’ve been hearing about how distress is coming and how deals will be available. 

I’m here to tell you that the future is now. We are starting to see a regular flow of large assets and portfolios of projects coming to the market. 

I’m getting phone calls from brokers on a nearly daily basis. Many of these so-called deals are frankly located in a areas that are far from our criteria. The team therefore needs to be incredibly selective to only allow projects into the pipeline that are truly exceptional in the context of today’s degraded market conditions. A random piece of land somewhere is not going to meet that criteria. 

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Host: Victor Menasce

email: [email protected]

On today’s show we are talking about deal structure. Some of the financing vehicles that are increasingly common in real estate had their roots on Wall Street. Others had their roots in the tech environment of Silicon Valley. 

When investors want to participate in a startup business that will certainly evolve over time, how do you decide what is fair to both the investor and the management team? What is the monetary value of the investment, pre-money, and post money? How do you know what percentage of the business to sell to investors? 

The value created by the business has several elements. The seed capital is part of it. But so too is the creativity and resourcefulness of the team. You won’t achieve business success, or any investment returns without both. 

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Host: Victor Menasce

email: [email protected]

Prices in real estate are not determined by the broad market. Instead they’re often set by transactions at the margins of the market, by a tiny percentage of properties that transact, and not the majority of the market that is just staying put.  On today’s show I’m going out on a limb to predict that we have just experienced several bellwether events that are signalling to the market the contagion of financial distress. 

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Host: Victor Menasce

email: [email protected]

Matt Picheny is based in NYC where he acquires and manages multi-family apartment assets across the southern US. Matt is also partnered with Y Street Capital on two projects. On today's show we are talking about asset management. To connect with Matt and to learn more, visit picheny.com

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Host: Victor Menasce

email: [email protected]

Paul Winterowd is based in Salt Lake City where he specializes in helping sponsors capitalize commercial real estate projects. On today's show we're talking about the difficulties being faced by borrowers in the current environment. To connect with Paul, visit paulwinterowd.com

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Host: Victor Menasce

email: [email protected]