EDWARD ALOE

Southern California's real estate market is on fire!

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San Diego High Rise Commercial Real Estate; Mid-Year 2024 Report The commercial real estate high-rise market in San Diego County continues to navigate a challenging landscape shaped by economic shifts, technological advancements, and evolving tenant preferences. San Diego's commercial real estate high-rise market has shown resilience in the face of significant challenges. The market continues to adapt to new demands, with a focus on flexibility and technological integration. However, the landscape remains challenging, particularly for older office buildings struggling to compete with newer, more adaptable spaces. The information contained in this Higgins Capital communication is provided for information purposes and is not a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. Past performance does not guarantee future results. #realestate #higginscapital #commercialrealestate #propertydevelopment #mixeduse #sustainability,

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Banks are getting squeezed on CRE loans right now. Despite only marking ~1% as non-performing loans (NPLs) on their call reports actual defaults are 2x-3x higher than their balance sheets indicate due to 'Extend & Pretend'. The 300% Red Zone rule on bank CRE lending isn't as much a concern as the CRE collateral backing the loans, which is nearly impossible to determine at scale prior to banks filing NOD in court. Larger cities typically have more expensive CRE, hence the higher CRE to TRBC ratios- it's not a big deal. The bigger issue here is the roughly 4,000 'too small to bail' banks (<$5B AUM) with relatively small CRE loans that have already lost 50% to 100% of their value. Extend & Pretend only works if interest rates decrease more than the risk premiums and cap rates increase. It's not going to happen for office for at least 5 years or more. Multifamily will have some too. New loan originations and participations that boost net interest income, managed write-downs, workouts and loan sales is the best way for banks to avoid M&A and potential regulatory closure. We're set to have roughly $2 Trillion in matured/extend & pretend loans in the next 12 months. You're first loss is your best loss. #loansales #distresseddebt #officeapocalypse https://lnkd.in/gVRBBhMy

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