If you are a landlord, the past year has been an immense challenge. Office and retail spaces, restaurants and hotels have had to face a reality in which no one is using this real estate. Uncertainty in the market has made it hard to get financing, even for properties that are fundamentally sound and likely to be utilized once the pandemic recedes.
Although that uncertainty continues, there are signs that the real estate investment market is turning around. Partly due to low interest rates, investors are getting eager to jump back into a market that could soon be performing again.
For one thing, collateralized loan obligations are increased 46% over this time last year, according to JPMorgan research. And, commercial mortgage-backed securities were down around 8%, according to the New York Times.
When investors buy collateralized loan obligations, it makes money available for real estate owners to borrow. And, now may be a terrific time to borrow in order to refurbish or upgrade your properties. After all, many of these spaces are currently empty and ready for construction.
The Times also found evidence that direct investment in real estate projects is rising again, especially for projects that need short-term financing of about three years. Indeed, Aflac Global Investments announced recently that it plans to lend $1.5 billion, in partnership with Sound Point Capital Management, on such projects.
The transitional real estate market, with loans that last two to three years, is heating up. A spokesperson for Aflac said that the company believes the economy is poised to come roaring back, with great opportunity available in the real estate market.
“The commercial real estate credit market hasn’t been buoyed as much as the corporate credit market,” said a spokesperson for Sound Point. “When you look at other things that we could invest in, this is extremely attractive on a relative basis.”
Funding your real estate business during a pandemic can be challenging, but the opportunity for a relatively low-interest loan with a big medium-term payout is real. Talk to your business law attorney about how to position your properties to take advantage of the opportunity.