Fidelity Investments - Wed, 09/25/2024 - 22:15

Emerging Opportunities in Real Estate Debt

Commercial real estate fundamentals look healthy outside of the office sector while sentiment has been improving.

Key Takeaways

Investor sentiment towards commercial real estate (CRE) has improved markedly since reaching a multiyear low in 2022, overcoming several investor concerns and setting the stage for potential investment opportunities in 2024 and 2025.
Industry fundamentals outside of the office sector may be stronger than many market participants appreciate, supported by historically high occupancy rates and still above-average cash flow growth in most segments.
Commercial mortgage origination volume declined by roughly 50% in 2023 at a time of looming loan maturities.
Banks represent roughly half of CRE debt outstanding and office loan exposure appears largely manageable for most of these institutions, which could help mitigate some of the contagion risk of spillover into other CRE sectors.

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About Fidelity Investments

Fidelity Institutional offers investment insights, strategies, and solutions as well as trading and prime brokerage services, to a wide range of wealth management firms, asset managers, and institutional investors. Fidelity’s mission is to strengthen the financial well-being of our customers and deliver better outcomes for the clients and businesses we serve. With an AUA of $11.5 trillion, including discretionary assets of $4.4 trillion as of September 30, 2023, we focus on meeting the unique needs of a diverse set of customers. Privately held for 77 years, Fidelity employs 73,000+ associates who are focused on the long-term success of our customers.

William Johnson
Head of Institutional Large Market Sales
William.R.Johnson@fmr.com
773-454-4100

900 Salem Street
Smithfield, RI 02917

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Emerging Opportunities in Real Estate Debt

Commercial real estate fundamentals look healthy outside of the office sector while sentiment has been improving.

Key Takeaways

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