Hotel woes, opportunity zone investing, CMBS delinquencies, the payroll tax deferral kicks in, and a look at two apartment REITs.
In Today's News
Six Months Into COVID-19 Sees the Hotel Trade in Shambles
Four out of 10 hotel workers are not working, two-thirds of all hotels are running at or below 50% occupancy, and urban hotels are doing even worse.
Why it matters: The collapse of travel due to the pandemic has put the hospitality industry in a bad place, one that the American Hotel and Lodging Association (AHLA) says will only get worse without a sharp reversal and/or substantial government assistance. Hospitality real estate investment trust (REIT) investors, take note.
Opportunity Funds List Tops $12 Billion in Investments
The Novogradac consultancy says nearly $2 billion has flowed into the qualified opportunity funds (QOFs) it's able to track in the past four months, pushing the total to more than $12 billion. Meanwhile, the number of QOFs grew from 621 to 811 in the same time period.
Why it matters: Novogradac notes that both presidential candidates have expressed enthusiasm for the ability of such tax-advantaged private investments to help spur economic recovery in those areas that can really use it. The investments coming in seem to validate that view as well as confidence that recovery is indeed happening or imminent.
CMBS Delinquency Rate Continues Retreat from Near All-Time High
Trepp says that the delinquency rate for the loans in the commercial mortgage-backed securities (commercial mortgage-backed securities (CMBS)) it follows continue to fall from record highs earlier this summer.
Why it matters: The data firm says about $6.5 billion in such loans were "cured" in August, but the patient is still not well: The percentage of loans 90 or more days delinquent rose to 4.02% in August from 2.65% in July. Trepp says part of the problem is the pandemic's effect in the past several weeks on areas that had been fairly free from it prior.
Today on Millionacres
Will Trump's New Payroll Tax Break Prevent Small Business Closures?
The president's Social Security payroll tax holiday -- for now just a deferral -- is intended to put more money in the pockets of consumers and thus into the businesses they support. Millionacres' Maurie Backman shares her insight on whether this will help.
Why it matters: Small businesses are big business for commercial real estate owners and investors, and their fortunes go a long way toward determining the fortunes of their landlords.
Better Buy: Equity Residential vs. AvalonBay Communities
While occupancy and rent payments have held up well for REITs in the apartment sector during the pandemic, there are some concerns going forward. Here's a look at what's going on with two of them.
Why it matters: Both of these REITs have a lot at stake in higher-cost urban areas, keeping their stock prices down over concerns about the future of those markets… and creating a buying opportunity that Millionacres' Matt Frankel is here to help you suss out.