The TreppWire Podcast: A Commercial Real Estate Show 321. Be Cool: Talking Tariff Reversals & CRE Implications, Special Servicing, Industrial Transactions, & More
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Apr 11, 2025 Explore the recent turbulence in financial markets driven by changing tariff policies and economic data. Discover insights into how these tariffs may impact various property sectors and consumer prices. Gain clarity on the slow recovery of apartment rent growth and the recent significant multifamily transactions. Delve into major industrial real estate deals, including noteworthy acquisitions by Blackstone. Finally, hear about the complexities of loan defaults in the multifamily market and updates on exciting upcoming events.
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Basis Trade Explained
- The basis trade involves buying one asset and selling another to profit from price convergence or divergence.
- Traders exploit pricing inefficiencies between cash instruments and futures contracts.
LTCM Collapse
- Long-Term Capital Management, a highly leveraged hedge fund run by Nobel Prize-winning economists, collapsed in the late 90s.
- Market disruptions and high leverage are a toxic mix, even for the smartest people.
Real Estate Leverage
- Real estate basis trades, with 98-99% LTV, resemble gambling more than investing.
- Such high leverage in volatile markets creates immense risk.