Today’s low interest rate environment is inducing many buyers to pay significantly more for properties than they should and poses the single biggest risk to the commercial real estate industry, warns Dean Adler, co-founder and CEO of Philadelphia-based Lubert Adler Partners LP, a real estate equity firm with $16 billion of assets under management.
“There are a lot of asset allocators out there that are paying way too much for real estate because of cheap interest rates, and they will get whipsawed,” predicts Adler. “It’s fine to raise money today, but they will get whipsawed in four and five years as interest rates rise. Real estate still has the same amount of [operating] risk and obstacles as it had two, three, four, five, six years ago. I could make an argument that there is greater risk.”
Read more...Are Real Estate Investors Too Dependent on ‘Cheap Interest Rates’? via REBusinessOnline.com
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