What are the biggest risks to real
estate in the next 12–24 months?
Obviously, there is the overarching concern of whether
there will be a recession and, if so, how significant will it
be. Generally, our view is that a mild recession remains
likely over the next two years. We are also increasingly
focused on rising construction costs driven by rising
labor costs and the impact of tariffs.
USAARE does commercial real
estate lending. What is the profile
of your “ideal” borrower?
Our ideal lending opportunity for senior financing is to a
mid-size operator with a portfolio worth $30-$50 million,
looking for a fixed rate loan with a term of 5 to 10 years.
We generally will look at any property type in any major
US market.
We also offer construction lending, stretch-first mortgage
lending on value-add properties and mezzanine lending
through our Square Mile affiliate.
Do you currently own any property
in the San Francisco Bay Area?
What is your view of the expensive
bubble we are in?
valuations and the challenges of affordability in residential,
particularly in San Francisco, but we enjoy attractive basis
in our portfolio as compared to today’s replacement cost.
As a result of our concerns over current values and to
reduce our last dollar exposure, we have recently been far
more active in our debt strategies.
Any final thoughts?
It is now our view that interest rates will remain low for
the short and medium term. The industry has exercised
a greater level of caution and discipline than in previous
cycles. As a result, supply and demand remain generally
in balance and leverage has been constrained. So, we
do not anticipate another series of events similar to
2007-2008.
Finally, the diversity of our strategies enables us to remain
nimble and, since we invest a significant amount of our
capital in all strategies, we approach every investment
from the perspective of an investor. n
Greg Dresdow is a Senior Tax Advisor in the Real
Estate Industry Group at BPM. Contact Greg at
[email protected] or call 925-296-1088.
We are pleased to own office, multifamily and industrial
assets in the Bay Area. We are concerned by today’s high
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