This is a sponsored advertorial from Franklin Templeton.

Market headwinds won’t hold back commercial real estate’s potential for yield and long-term growth. What opportunities lie ahead?

How bad was it? How did we do? And what’s next? Michael Comparato, head of commercial real estate at Benefit Street Partners (“BSP”) (a Franklin Templeton company) discusses where things stand, the robust opportunity set that remains, and what to expect after the storm moves on for real.

Download our paper to see: How accurate was BSP’s 2023 “hurricane” forecast for CRE?

Let’s look back at what we said in 2023, and discover which predictions hit the mark — and which ones were simply early calls.

• Office sector collapse or slow bleed? See the data behind 50–80% value declines and why the worst may still be ahead.
• CRE debt vs. equity: Who’s winning? Learn why debt continues to outperform equity—and why that trend may persist for years.
• The “extend and pretend” dilemma. Understand how lenders have delayed the pain and why reality may soon catch up.
• Multifamily: The resilient outperformer. Explore why newer-vintage multifamily assets in strong markets are leading the recovery.
• Opportunities in the eye of the storm. Get insights on where disciplined investors are finding equity-like returns in CRE debt — even as the second wave looms.

 

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WHAT ARE THE RISKS?

Past performance does not guarantee future results. All investments involve risks, including possible loss of principal.

Risks of investing in real estate investments include but are not limited to fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by local, state, national or international economic conditions. Such conditions may be impacted by the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, and environmental laws. Furthermore, investments in real estate are also impacted by market disruptions caused by regional concerns, political upheaval, sovereign debt crises, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars). Investments in real estate related securities, such as asset-backed or mortgage-backed securities are subject to prepayment and extension risks.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

Equity securities are subject to price fluctuation and possible loss of principal.

An investment in private securities (such as private equity or private credit) or vehicles which invest in them, should be viewed as illiquid and may require a long-term commitment with no certainty of return. The value of and return on such investments will vary due to, among other things, changes in market rates of interest, general economic conditions, economic conditions in particular industries, the condition of financial markets and the financial condition of the issuers of the investments. There also can be no assurance that companies will list their securities on a securities exchange, as such, the lack of an established, liquid secondary market for some investments may have an adverse effect on the market value of those investments and on an investor’s ability to dispose of them at a favorable time or price.

Diversification does not guarantee a profit or protect against a loss.

IMPORTANT INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy.  This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice.  Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.  Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data.  Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice.

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This is a sponsored advertorial from Franklin Templeton.