INCANS Risk INSIGHT
INCANS Risk Insight Publication: Quantifying the Risk of Tenant Failure
The growing popularity of commercial real estate as an investment is hardly surprising given the prevailing central bank policy of a zero-interest rate environment. Under such conditions government and corporate bond yields no longer deliver the required returns so investors have been forced to look elsewhere for a stable and recurring revenue stream.
In this brave new world where income is king, real estate is increasingly viewed as a good bond proxy by many in the broader financial community. However, real estate valuers, brokers, investors and lenders have no standard quantifiable measures of tenant default risk and this presents a barrier to entry for many investors who don’t feel they can accurately underwrite direct real estate investments or loans.
This is not a new problem for the sector. Indeed, the inability of investors to accurately assess tenant income default in the collateralised mortgage-backed security markets (CMBS) in 2007/8 played a central role in precipitating the Great Financial Crisis. However, despite the near-death experience felt by many in the real estate investment markets at that time very little has changed.
Read the full insight here: Quantifying the Risk of Tenant Failure
INCANS Risk Insight Publication: Unlocking Real Estate’s Data Potential
In this quarter’s INCANS Risk Insight, the overall theme is how data will be crucial for allowing us in real estate to make better informed decisions.
INCANS Risk Insight Publication: Capital Values Exit the Building, Analysis of Income Enters
For decades there have been calls for a re-think on CRE valuations. Now with the perfect storm of a data revolution, shorter leases, more operating expenses, ESG and Covid, this is the time the property valuation community could finally accept that analysis of the income is more important than capital values.
INCANS Risk Insight Publication: How Well Do You Know Your Tenant’s Income Risk?
2021 will see commercial real estate tenants will pay rent of more than US$1,400bn. In a low capital growth market commercial real estate becomes a fixed income style investment with a floating capital opportunity attached. But, in the current pandemic, it’s important to understand the occupier, their business environment, along with specific requirements.