EquityMultiple Evaluates Potential for Real Estate Performance During a Predicted Recession

NEW YORK, July 18, 2023 (VSNewsNetwork.com) - In light of recent survey data showing that a majority of Americans anticipate a recession by year's end, fintech firm EquityMultiple examines the possible impact of such an event on real estate capital markets and investors. The firm, known for its unique private-market real estate investing platform, notes that while recession indicators are present, opportunities may also arise from potential changes in lending and interest rates.

Despite robust employment and income growth, industrial production and manufacturing activities are reportedly in decline. Furthermore, short-term yields on Treasury bonds are outpacing long-term yields, a well-established precursor to a recession. Nevertheless, EquityMultiple suggests that a recession could still facilitate growth for investors in traditionally resilient investment vehicles.

Soren Godbersen, Chief Growth Officer at EquityMultiple, opined, "Private-market real estate investing may be particularly adaptable during uncertain times. If a recession were to occur, it could catalyze opportunities across the capital stack. As always, our goal is to identify a range of timely opportunities for our investors."

Godbersen pointed out the potentially advantageous situation arising from the simultaneous performance of the banking and real estate sectors. The former is retrenching in response to the Federal Reserve's aggressive interest rate hikes and the subsequent impact on the economy, while traditional lenders are tightening their balance sheets due to the collapse of Silicon Valley Bank and a general apprehension of hidden weaknesses in the financial system. This situation could lead to fewer financing options for real estate sponsors and operators, driving many potential buyers out of the market.

Despite these challenges, Godbersen suggested that most commercial real estate sectors could still benefit from strong underlying demand drivers such as demographic shifts and supply constraints. The perceived value of real estate, often upheld during recessions due to scarcity and the value of specific property classes outpacing inflation, could be another advantage.

EquityMultiple, acting as a private lender for real estate operators and offering debt investments to individual investors, identifies opportunities in rising interest rates and short-term value declines. The firm sees potential in specific asset classes during a recession, including multifamily, self-storage, medical office buildings, and last-mile industrial.

"In essence, the withdrawal of major lenders from commercial real estate debt markets has created a supply-demand imbalance. This creates an opportunity for private CRE lenders," Godbersen explained.

EquityMultiple continues to focus on the middle market for commercial real estate transactions, offering a unique opportunity for private credit solutions and strong, diversified, risk-adjusted returns for its investors.

To learn more, visit https://www.equitymultiple.com.

Source: EquityMultiple via Newswire