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Private Equity Has $300 Billion for Pandemic-Hit Real Estate – Yahoo Canada Finance

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(Bloomberg) — Real-estate bosses at Blackstone Group Inc. quietly smiled when Britain’s biggest-selling tabloid unwittingly endorsed their largest European real estate deal since the pandemic.

The Sun’s front page teased readers that foreign travel curbs meant they’d be splashing their cash at the much-maligned seaside town of Bognor Regis this year. Less than two weeks earlier, it had emerged Blackstone was in talks to spend about 900 million pounds ($1.3 billion) on a majority stake in the owner of Butlins, which has run a popular holiday park in the south-England town for 60 years.

The private equity giant is leading cash-rich peers including Lone Star and KKR & Co. in preparing for a world beyond the pandemic as the rollout of vaccines hints at commercial properties stirring back to life. Buyout firms’ global real estate funds are now sitting on more than $300 billion of unspent cash, according to Preqin data.

“There is a lot of money on the sidelines looking for yield and you have a market that will rebound quite considerably,” said Keith Breslauer, founder of London-based real estate private equity firm Patron Capital Advisers LLP. “That’s why 2021 is interesting.”

More than a decade on from the last financial crisis when buying at the bottom was a one-way bet, the dynamics are a bit different this time. Back then rent was still coming in and much of the distress was debt related, meaning those with money could buy cheap and ride the recovery as interest rates collapsed and asset values rose.

This time, hotels, leisure parks and malls have seen their incomes evaporate as the world essentially shut down. Lockdowns pushed about $146 billion of commercial real estate into distress, serious risk of bankruptcy or default at the end of last year, concentrated in hotels and retail, according to Real Capital Analytics, a commercial property data firm.

Read More: ‘Purgatory’ Grips $146 Billion of Distressed Commercial Property

Buyout firms seeking to repair those income streams as economies reopen expect to be richly rewarded when they sell them on to pension funds that are now even hungrier for yield in a world of negligible interest rates.

“This year you will see some of the foundations of real success being laid by some of the smartest investors,” said Alex Price, chief executive officer of Fiera Capital Corp.’s U.K. real estate unit. “Post-financial crisis all you needed was the cash to buy assets and a rising market made everyone look like heroes. This time you are going to need to be much more selective and have the skill set to execute highly transitional assets strategies.”

Filling the Pipeline

Blackstone’s real estate deal pipeline has swollen in the past two months as lockdowns pile pressure on struggling landlords and operating companies, according to people with knowledge of the money manager’s plans who asked not to be identified discussing internal information. British lender Natwest Group Plc appointed PricewaterhouseCoopers to help sell a portfolio of loans secured against U.K. malls with a face value of about 550 million pounds, people familiar with the process said. The instruction was first reported by React News.

“We are increasingly seeing owners who are losing interest, losing money or losing hope, and are now considering transacting,” said Bill Benjamin, head of real estate at Ares Management Corp. “There will be some very exciting cyclical opportunities to buy assets at deep values.”

Pimco teamed up with mall landlord NewRiver REIT Plc to buy a mall in the center of Sheffield, England, at a “significant discount,” according to a Feb. 19 statement. The site can accommodate 1,100 rental apartments and dorms for 300 students. Deals for European hotels will rebound in the second half of this year, according to a report published Monday by broker Cushman & Wakefield Plc, which said investors have raised “notable capital” for when opportunities emerge.

The potential rewards for private equity firms are underpinned by the growing allocations to real estate among pension funds and insurance companies. Investors’ target allocation for real estate reached 10.6% in 2020, according to an annual survey of 212 institutions managing about $12.6 trillion conducted by Hodes Weill & Associates LP and Cornell University. That’s the highest since the series began in 2013.“There is a near-insatiable appetite for income and duration, so if we can re-manufacture risk for something that looks like income and duration we are going to get well paid for it,” Ric Lewis, chief investment officer and co-founder of London-based private equity firm Tristan Capital Partners, said at an event hosted by law firm Goodwin.

Wait For It

Widespread state and central bank support, coupled with a more conservative approach to borrowing by real estate investors in the run-up to the outbreak, has held off fire sales so far. Commercial real estate prices also adjust to economic shocks at a glacial pace, as valuations are based on comparable transactions that all but dried up in the pandemic.Buyout funds initially turned to publicly traded property companies to bag discounted deals after share prices plunged in the early stages of the pandemic. Hammerson Plc, the U.K.’s largest retail-focused listed landlord, trades at a discount of about 95% to the reported value of its net assets. Derwent London Plc, the biggest London office landlord, trades at a discount of about 15%.

“There will be selective distressed opportunities that come up, but at the moment we don’t see anyone needing to fire sale because the banks have generally been cordial in managing things through,” said James O’Neil, a senior director at CBRE Group Inc. in London. “So those people that bought at discounted share prices may look very shrewd in their timing.”

Lone Star agreed to buy U.K. senior housing specialist McCarthy & Stone Plc in February. KKR and Brookfield Asset Management Inc. have both bought stakes in London office landlords, with the latter also bidding to take its New York-listed real estate unit private.

As the vaccine rollout gathers steam, attention is now turning to what happens when government support and bank forbearance expires. For private equity firms looking for real estate bargains, it should mean opportunity, according to Breslauer at Patron Capital, which finished raising its latest fund in January.

“Banks have basically deferred decisions until the third quarter of this year because by then we’ll know where we stand” with vaccinations, he said. “There is definitely more distress coming, if it happens it’ll be over the next six to nine months.”

(Updates with hotel investment report in 11th paragraph)

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Hot real estate market sparks warnings to potential buyers as complaints to regulator double

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As home sales in the province continue on a dizzying trajectory, the province’s real estate watchdog and regulator are warning buyers to be wary of what they may be getting into.

The Real Estate Council of B.C. (RECBC) and the Office of the Superintendent of Real Estate said that in the first three months of 2021, they have seen an increase in inquiries and complaints.

Calls to the regulator were up 42 per cent over the previous year, while complaints, such as how offers were made and accepted, were double the number received in the same period in 2020.

“Buying a home is one of life’s biggest financial decisions. There are potential risks at the best of times, but with the added pressure and stress of the current market conditions, those risks are amplified,” Micheal Noseworthy, superintendent of real estate, said in a statement.

 

 

The Real Estate Board of Greater Vancouver says sales in the region have continued at a record-setting pace.

Residential home sales covered by the board totalled 5,708 in March 2021, up 126.1 per cent from March 2020, when the COVID-19 pandemic hit, and up 53.2 per cent from February of this year.

Rural and suburban areas have experienced the biggest spikes.

For the past two weeks, Jay Park has been in the middle of the buying frenzy.

He and his partner are trying to upgrade from their one-bedroom apartment to a two-bedroom condo or townhouse in Vancouver.

“I wish we had done this a month or two ago,” he said.

 

A condo tower under construction is pictured in downtown Vancouver in February 2020. (THE CANADIAN PRESS/Darryl Dyck)

 

Park put an offer on a $1-million condo, $4,000 above asking price.

“To entice the [seller], we put in a subject-free offer, but it wasn’t successful,” he said. “They accepted $110,000 over asking price that was also subject-free.”

The hot market has led to bidding wars. Some would-be buyers have even lined up outside for days to try to get a jump on a property.

Erin Seeley, the CEO of the council, is warning buyers to do their research and be aware of risks before making an offer.

“It’s really important that buyers have engaged with their lender before they’re making offers so they know how to stay within a reasonable budget,” she said.

Seeley said some of the complaints the council has heard from buyers is that they weren’t aware the seller has a right to take an early offer.

“And the seller was really in the driver’s seat about setting the pricing,” she said.

 

Demand continues to outstrip supply for housing in cities like Vancouver. (Rafferty Baker/CBC)

 

Aaron Jasper, a Vancouver realtor, advises clients to avoid cash offers and to include finance clauses even if it may mean they lose a deal.

“There’s a lot of frustration among buyers, feeling pressure to take some risk,” he said.

“You’re better to be delayed perhaps a year getting into the market as opposed to being completely financially ruined.”

Jasper also says realtors are limited in the advice they can give to clients on legal matters, home inspections, potential deficiencies with homes, and financing.

‘Caught up in the craziness’

Other tips from the council include seeking professional advice before making a subject-free offer or proceeding without a home inspection, and speaking to a professional to determine how market conditions may be affecting prices.

Meantime, people like Jay Park say they are still keen to buy. Park has more viewings scheduled and is optimistic.

“It’s a very exciting time for us, but I also don’t want to get caught up in the craziness and make a purchase that’s above our means.”

Source: – CBC.ca

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Black Press Media introduces one of Western Canada's best real estate platforms helping home buyers Find. Love. Live. that new home – Aldergrove Star

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Need an agent who knows the community?

Or, is it time to look for a new place to live, but you don’t know what’s on the market?

Whatever the real estate need is for residents in the communities of British Columbia, Yukon & Alberta, there’s a new way to do that one-stop shopping – by visiting Today’s Home.

The slogan for the site is “Find. Love. Live.”

“We want people to find their dream home, love it, and live in it,” said group publisher Lisa Farquharson.

Building on the success of Black Press Media’s niche digital platforms – Today’s Home brings the same wealth of knowledge and local expertise to the search for a home, be it buying, selling, or even just daydreaming about what changes you can make in the future.

Search hundreds of listings that local real estate agents have available.

The listings cover properties around the region, from a one-bedroom, one-bath condo for $339,900 to million-dollar acreages throughout the province of BC, Yukon, Central Alberta and beyond.

Click on a listing, and see not only the realtor handling the property sale, but links to his or her other listings and social media feeds. With the click of a mouse, take a virtual tour of the property, find the property’s walking score, and learn about nearby amenities.

There are links available to schedule a showing, or send the agent a comment or question.

Want to share a listing? When you click on the share button, you’ll actually send an attractive digital flyer of the prospective property, not just a link.

There’s even a button to help determine how much you have to spend, courtesy of the convenient mortgage calculator.

Plus, scroll down the page on Today’s Home and find a list of expert local real estate professionals who can answer questions or help with that home sale, Farquharson explained.

Today’s Home offers the advantage of the massive reach that Black Press Media has built throughout Western Canada with its network of community newspapers and online products. That allows the public to tailor real estate searches based on location, price, and other key factors while allowing real estate professionals to gain unprecedented audience reach with their listings.

Today’s Home will dovetail into the media company’s existing print real estate publications.

“Black Press Media has real estate solutions in print and now we can add in the digital component,” Farquharson said.

Watch for expansion of the Today’s Home platform in the near future, she added. That will come as Black Press Media adds a new component – the development community. Developers will be able to reach a huge audience when their projects are ready for presentation.

For information on Today’s Home, contact group publisher Lisa Farquharson at 604-994-1020 or via email.

Happy house hunting!

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PGIM Real Estate, Revera Affiliate Target UK Market in Newly Formed JV

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Real Estate Sales In September

PGIM Real Estate has been active in recent months providing capital to facilitate blockbuster senior housing acquisitions. Now the firm is looking to capitalize on demand for senior housing in the United Kingdom.

The Madison, New Jersey-based real estate investor and lender announced this week it is entering into a joint venture with Signature Senior Lifestyle, an affiliate of Revera, to develop and operate senior housing communities around greater London

Mississauga, Ontario-based Revera serves 20,000 older adults in long-term care homes and retirement residences in Canada. It is also the majority shareholder of Sunrise Senior Living, one of the largest senior housing providers in the U.S. The company operates a portfolio of 12 communities in the U.K. under the Signature Senior Lifestyle brand, with one community in development that is slated to open in autumn 2021.

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The JV has one development underway — a senior housing community, or “prime care” home, in southwest London. PGIM worked with Elevation Partners, a London-based investor and asset manager in U.K. health care real estate, in sourcing, structuring and executing the venture. Additionally, PGIM will retain the firm to leverage its expertise.

PGIM and Revera did not respond to requests for comment from Senior Housing News regarding details about its development pipeline.

London is emerging as a future hotbed of senior housing development, spurred by favorable demographic growth trends and a lack of available supply, and the PGIM-Revera venture will find competition.

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Maplewood Senior Living CEO Gregory Smith told SHN last month that demand for U.K. senior housing is comparable to major U.S. markets such as New York and San Francisco, where supply has historically been constrained.

Maplewood and its investment partner, Omega Healthcare Investors (NYSE: OHI) are looking to expand its luxury Inspir brand to the U.K., and identified five suburban markets around London with high barriers to entry that are favorable for the brand’s growth.

Revera CEO Tom Wellner sees similar untapped upside potential for senior housing in the U.K.

Source: – Senior Housing News

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