Per Bloomberg
US Commercial Real Estate Investors Withdrawal Requests Pile Up to $20 Billion, Second Largest Since Great Recession
1/23/2023
Some of the largest investors in commercial real estate are filing massive withdrawal requests in fear of a potential slide back in property value. Despite the slowdown of the Fed rate hike, wealthy individuals and retail investors are pulling out from real estate.
Blackstone Inc. noticed an outflux of retail investors and wealthy individuals in real estate amid volatile markets. The IDR Investment Management reported a massive $20 billion withdrawal request from a group of institutional investors' property funds.
Pacific Investment Management Co., head of global private commercial real estate, gave a statement regarding his thoughts on the market. Murray likened it to a nightclub, sharing how it would shut down once everybody leaves.
Murray: “It’s like the nightclub where everybody lines up to get in and then lines up to leave when it closes,”
People familiar with the situation said that institutional investors are trying to avoid exposure even to some of the biggest fund managers in the industry. This means they are staying away from even the likes of Morgan Stanley.
Morgan Stanley recently reported that it had $3.4 billion in loans lent to Twitter. Recently the bank reported a writedown of $356 million.
An example of investors that are trying to pull out their funds in real estate is the UBS Trumbull Property Fund, which has a withdrawal queue of $7.8 billion, which is 40% of its value. This information came from Callan, a pension consultant's December presentation.
In 2021, only 8.7% of institutional investors with $11 trillion in total assets considered that they had a real estate overallocation budget. Last year, the number increased to 32%.
Murray gave a statement regarding the withdrawal requests' effect and how they affect commercial real estate. This comes at a time when commercial real estate markets like San Francisco shot up in vacancies to 27.2%
Murray: “(Redemptions are) prompting many core funds to attempt to sell their most liquid assets, like industrial and multifamily assets, which implies a headwind for even the most relatively resilient sectors (of commercial real estate)”
See flow at unusualwhales.com/flow.
Other News:
- Morgan Stanley Reports $356 Million Writedown, Which Includes Its $3.4 Billion Loan Lent to Twitter
- San Francisco Commercial Real Estate Vacancies at 27.2% After 12 Quarters of Continuous Increase
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