Green Street

U.S. Cannabis Sector Primer

Cannabis real estate is an emerging commercial real estate sector that has followed the rapid growth of state-level legalization of cannabis across the U.S. Cannabis REITs own highly sophisticated indoor cultivation and manufacturing facilities to both established and new cannabis operators. The sector’s long net lease terms and high yields create an interesting opportunity for both landlords and REIT investors. The largest US Cannabis REIT, Innovative Industrial Properties, engaged Green Street’s Advisory Services Group to craft an educational sector primer that highlights basics, considerations, yields, and nuances of this niche sector for potential and interested investors.

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Property Insights: Roller Coaster

With bond yields on a rollercoaster and mostly rising fervently in recent weeks, asset values of all stripes have been negatively affected. Real yields have risen while future inflation expectations remain surprisingly well anchored. Even with a rally, albeit bumpy, to begin October, equities (including REITs) and bonds have been hit hard by the dual bear markets in these key asset classes.    

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Heard on the Beach: Will the Cure Be Worse Than the Disease?

Rising real rates do damage to values, while higher inflation is benign. That this year’s rate spike has been primarily a function of higher real rates explains the weak start to the year. Seldom has the range of economic possibilities been as varied as it is today. Recession odds are up even as interest rates have jumped in reaction to the release of the inflation genie. The spike in yields has clobbered REIT share prices this year, and property prices have begun to drift lower. Today’s investment professionals lack experience to help assess the impact that stubborn inflation might have on real estate, but lessons from past interest rate/inflation scares offer insight.  

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Heard on the Beach: Herd Community

Pandemic-era uncertainty surrounding remote work, fiscal health, and politics suggest a wide range of potential outcomes for big cities. These factors may upend the long running megatrend toward urbanization, which carries implications for Sun Belt versus gateway market dynamics and the urban-suburban balance within metros. Recent market-level employment trends are tightly-linked with WFH utilization rates. And a tail risk worth exploring is the potential for San Francisco or NYC to follow Detroit’s path.

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Real Estate Alert: May Special Issue

Non-performing commercial real estate debt on the biggest banks’ balance sheets doubled last year, but remains a sliver of total holdings – dashing hopes of   a buying spree for opportunistic investors. The level of troubled debt is expected to tick higher, stoking optimism that more distressed opportunities could shake loose down the road.  

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Commercial Mortgage Alert: Featured Issue

Commercial Mortgage Alert, one of Green Street’s four weekly News publications, conveys the earliest look at today’s commercial MBS and traditional real estate debt markets. Highlights from this issue include REIT-Bond Volume Reaches Historic Highs, CMBS Pros Sharply Split on Spread Outlook, Crisis Complicates BofA Syndication Effort, RANKINGS: Risk-Retention Holders, REIT Bookrunners.

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