The Fort #315 - Dean Adler - Co-Founder @ Lubert-Adler Partners - Current Market Conditions, Private Credit, Pref Equity for the Win, Office, and Their Best Deal of All Time
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Oct 17, 2023 Dean Adler, CEO and Co-Founder of Lubert-Adler Partners, discusses analyzing the current market, vetting folks for private credit, thoughts on the office asset class, accidentally building a grocery empire, and dying asset classes in today's market.
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Real Estate Market Disarray
- The real estate industry faces a negative arbitrage situation due to high-interest rates exceeding yields from property purchases or developments.
- This is compounded by refinancing challenges, as older low-interest loans mature into a much higher rate environment.
Similarities and Differences with 2008
- The current market shares similarities with 2008 in terms of capital market illiquidity, impacting lending availability.
- However, it differs because current real estate fundamentals are relatively stable outside the office sector.
Navigating Loan Renewals
- Borrowers should prioritize extending existing loans to delay refinancing at higher rates.
- Seek preferred equity or mezzanine financing to bridge the gap until market conditions improve.