Flat Growth Expected for Commercial Real Estate in 2016

    Citing a worrying dynamic between lenders and property values, Morgan Stanley analysts are predicting flat growth for U.S. commercial real estate prices in 2016, Bloomberg Business reports. This replaces the firm’s previous forecast of 5 percent growth over the course of the year. Although values for office buildings, hotels, and shopping malls have appreciated rapidly in recent years, higher financing costs and economic headwinds could pose hurdles for CRE investors, who typically target a specific levered return profile when buying into the asset class. Morgan Stanley’s analysis shows that a 10 percentage point decline in the loan-to-value ratio (from 70 percent to 60 percent) requires 2.25 percent annual net operating income growth to offset the lower leverage. Read more here.

    Advertisement
    Previous articleIHG to Pay Shareholders $1.5 Billion Following Hotel Sales
    Next articleSharing Economy Background Checks Questioned