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Stranger than the movie 2020 – The Real Estate industry post coronavirus

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Ralph Zucker

May 25, 2020

2020 has been strange. Stranger than the movie 2020 – and that was pretty strange. As the
world grapples with the short and long term effects of the novel coronavirus, investors (and
non-investors alike) are panicking about what the future holds. I highly doubt that there is
anyone that wasn’t affected by this virus in some way or another – and while some are hurting
more than others, no one is suffering like the millions of people that lost loved ones – friends,
family, and everything in between.
The stock market has never been more volatile. The once booming aerospace industry has
come to a halt, wiping out close to 70% of the leading airplane manufacturers’ market cap. As
the global economy continues to tumble, every industry is feeling the pressure – but there is one
that has remained much safer than anything besides gold. Tech stocks have recovered more
than any other industry, and as we all work from home, we all use technologies that weren’t
around 10 short years ago.
Everyone knows that the people – especially investors – that doubted the internet and
technology in the early 2000s have already paid the price. In 2018, investors witnessed a selloff
of technology stocks because of worries about being overvalued. Some panicked, others stayed
calm. They believed that technology is here to stay – and will only continue to grow as humans
think of creative ways to utilize it.
As companies needed to have employees work from home, companies like ​EnerJoy​,
Salesforce, and others in the space are being utilized like never before. Even Microsoft, with
businesses in literally every sector using its platform and software, is experiencing
unprecedented volumes of activity – and upgrading their technology to meet the increasing
demand. Even if all miraculously recovered tomorrow, and everyone was able to go back to
work, the technology that we have all come to rely on would not be lost. These last couple of
months have made us feel that scarcity that has forced us to be creative – and the benefits of it
will benefit us in the short and long term future.
Some industries are experiencing more scarcity than others – both financially and timewise, and
these industries have an opportunity to use this time to restructure and to become something
that plays a part in the future. One specific industry that I can’t help but hear a lot of
differentiating thoughts about, is the real estate industry – especially commercial. Even as
millions of Americans default on their mortgage, rent and credit card bills, businesses (especially
retail) have had almost revenue last month in order to make rent this month. REITs have
plunged and investors are panicking about what the future holds. There is no doubt that the
Coronavirus pandemic will forever change the way Americans shop, work and socialize. What
that means for the CRE industry with offices, malls and attractions built all over it, remains
unclear. One thing is clear though… Technology is capable of helping us accomplish whatever
we are creative enough to utilize it for.
After reading her ​article​, I spoke with Yael Tamar about real estate investments through this
pandemic. There is newly exposed potential in her SolidBlock solution. CRE developers arecutting dividends and piling up whatever cash they can, as they wait for the world of the
unknown to unfold and stabilize. Yael had a great opportunity to allow them to raise capital – not
only to protect themselves and their assets during this trying time, but to allow them to take
advantage of the dropping prices in this pandemic. By digitizing a real estate asset, local and
foreign investors can buy ‘fractional shares’ of the asset, allowing them to invest in projects that
have only been available for an elite few. At the same time, developers can increase liquidity,
raise capital, and ride out the storm before either choosing to buy back some shares or to use
the capital they earned to invest in a new (below market value) property, creating a win-win like
never before in the CRE space.
It’s impossible to know if this will be the step that CRE developers have to take as a way to
survive the pandemic – but for the few that are able to utilise technology to find solutions, there
is an opportunity that can be an underlying factor for success.

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