In TLP’s fourth solocast, we are with our very ownThe Limited Partner PodcastHost,Jake Wiley.He is a podcaster, author, entrepreneur, CPA, former CFO, and head core client relationships for Private Equity Real Estate and Alternative Investments. Today’s podcast episode is focused on Jake’s key takeaways and market insights from the MIPIM 2023 conference.
How Large Institutions Play the Game
Jake shared his insights on the real estate market and the strategies of large asset owners. He was surprised to hear one asset owner's willingness to accept a 10% discount on assets in their portfolio to buy replacements at a 30% discount. This opened Wiley's mind to the idea that some asset owners are considering liquidating assets at a loss to free up liquidity and bring in assets at an even greater discount. This strategy is in contrast to the typical perception that asset owners would be circling the wagons on their existing assets to protect their value. Overall, the sentiment at the conference was that the debt markets would start to firm up as we reach the top of the hill.
Elephant in the Room: Office Spaces
In the MIPIM 2023 conference, the return to the office was a key topic of discussion. While the return has been strong in Europe and the rest of the world, American businesses are still hesitant. The lease rates for offices are still artificially high due to leases signed before and during the early days of the pandemic. Additionally, there was talk about repurposing office spaces, but no one addressed the how. The only way this would work is if the acquisition price of the asset is low enough to support the capital improvements for conversion, which could be less than the land value of the office. The conversation also brought up the possibility of banks becoming the owners of office buildings, which could result in a run on the bank if the valuation erodes the equity in the asset.
Failing Banks Everywhere!
The markets need a glimpse of certainty to settle down and bring down borrowing costs, but the Fed's recent statement indicates that interest rate increases may be longer and more frequent than expected due to inflation concerns. The recent failures of Silicon Valley Bank and Credit Suisse have disappointed industry leaders, and the idea that the fallout was contained has been challenged. With indications that the Fed and Treasury will not let banks fail, the next few weeks and months will be crucial for the industry.
Who is Jake Wiley?
Jake is a podcaster, author, entrepreneur, CPA, former CFO, and head core client relationships for Private Equity Real Estate and Alternative Investments.
With nearly two decades of professional experience building businesses, solving problems, and implementing solutions, Jake has the ability to serve his clients from the perspective of having sat in their seats.
He founded a Louisiana-based Residential Solar Finance and Installation Company, which was later acquired by Palmetto where he led strategic initiatives until late 2018 and then moved on to be a Chief Financial Officer and Chief Compliance Officer at an RIA fund focused on commercial solar.
He has been investing both passively and actively in Real Estate for more than 16 years, raising private funds for strategic value-add investments and long-term holds. This is a true passion of his, so much so that he has a Podcast, The Limited Partner Podcast, where he gets to interview and talk to some of the best of the best in the space to learn how they are making it happen.
His diverse industry experience in both corporate and startup companies, as well as layered work experience as an executive, founder, and advisor, allow for unique, well-rounded, and informed perspectives that he is always happy to talk about.
If you'd like to say hello, you can find Jake at @JJakeWiley on Instagram and Twitter, and on LinkedIn.
You will hear quite a bit of real estate terminology in every episode. We've aggregated the most common questions for you in the link below!