Rising interest rates are shaking up commercial real estate (CRE). Guest host Alina Trigub had the pleasure of speaking to Mike Zlotnik (TF Management Group), they explored the challenges and strategies needed to thrive in this environment
Mike offers insights into the impact of rising interest rates on commercial real estate, urging caution as transactions slow in 2023. With banks reducing loans, there's a shift towards equity investments and alternative financing like mezzanine debt, essential for troubled projects. Investors must assess risks carefully. Heading into 2024, the focus remains on cautious investment, high-rate lending, and the potential for valuable buys later in the year.
Key Takeaways:
- Market cautious in 2023: Fewer deals due to uncertainty.
- Debt down, equity up: Banks are lending less, so explore private credit solutions.
- Rescue capital emerges: Mezzanine financing & preferred equity can save struggling projects. (Investors: Do your due diligence!)
- 2024: Cautious optimism: Expect higher lending rates and opportunities in mezzanine financing.
- Deep value buys possible later in 2024: Attractive for investors seeking value and tax benefits (bonus depreciation).
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