Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Wednesday, 15 January 2020

The Next Big Thing in Real Estate: Blockchain?

The likely benefits of the commercial real estate industry adopting blockchain - a decentralized, irrefutable ledger - would be cost reduction and time savings, as well as cleaner and more standardized data.

By Manus Clancy, Trepp LLC

Almost two decades ago, the global economy saw the bursting of the dot-com bubble. The tech-heavy Nasdaq stock index, which hit an all-time high of 5,046 on March 9, 2000, plunged by almost 80 percent over the following 18 months. It wouldn't climb back to its peak until 15 years later.

Investors usually associate that bubble era with online retail disasters. One of the most disastrous was Pets.com. The hysteria around the pet-food supplier allowed it to raise enough money to run a Super Bowl ad in 1999 and sponsor a balloon in the Macy's Thanksgiving Day parade. The company had its initial public offering near the end of that period of e-commerce mania, but it, along with its ubiquitous sock-puppet mascot were gone within two years.

The stories were the same for other e-commerce companies, including eToys, Garden.com and FogDog.

Many of the biggest failures of the era have been recreated in one form or another. Pets.com has been replaced conceptually by Chewy.com. WebVan has been reincarnated in the grocery delivery space by Fresh Direct, Peapod and Amazon.com. In 1999, you could get your football game-day snacks from Kozmo.com. Today, you'd call Uber Eats or DoorDash. Kozmo also would deliver CDs and VCR tapes - two other items whose time has come and gone.

Commercial real estate had plenty of its own dot.com stories. Those included Commercial Real Estate Online, or comro.com, which marketed and leased properties online; Zethus Inc., an online leasing platform that was backed by Goldman Sachs; property data company RealtyIQ.com; and a host of software providers to the lending sector, including Redbricks.com, MortgageSelector and CapitalThinking.

Perhaps the most talked about of the bunch was The Realm, which was designed as a business-to-business hub for the industry. The company, backed by some $140 million ponied up by blue-chip investors including Hicks, Muse, Tate & Furst Inc., TH Lee Putnam Internet Partners, CMGI Inc. and Gleacher Capital Partners, had planned to launch a number of products, including an online lending platform, a research and information portal and whole-loan and CMBS trading platform. It even had acquired Argus Financial Software and operated it as Realm Business Solutions.

Past is Prologue or Something Else?

That backdrop seems fitting for today as many investors look at the latest generation of disruptors like WeWork, Uber, Airbnb and Grubhub for signs of the next big thing or the next big bust.

The most intriguing and least understood of the potential disruptors is blockchain. To be sure, blockchain is not a product unto itself. Just as companies use the Internet as the backbone on which to build businesses, companies in dozens of...





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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

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  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
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