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Investor Redemptions Causing Buildings to Have to Be Sold

In this video, I'll look at a new trend of investor withdrawals from property funds and the likely impact on the market.

Unless you live under a rock, you've ascertained that we may be in for a correction in the commercial real estate market, especially for portfolios with a significant amount of office holdings.

Right now, we are seeing a surging trend of investors looking to mitigate their exposure to declines in the real estate market by pulling their investments out of commercial real estate funds, creating a run-on-the-bank scenario as the cash required to satisfy the investor is running out. Several non-publicly-traded REITs have hit their embedded withdrawal limits, leaving investors sitting on their hands waiting. We are at a point where these funds may be required to sell buildings to meet investor redemptions, which would likely exacerbate the run on the bank that has already started. This trend is continuing to develop and could have significant implications on not just the fund values but the underlying building values themselves.

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