Renowned Texas billionaire and real estate investor John Goff has made a bold prediction, suggesting that a wave of attractive real estate properties will soon become available as increasing interest rates compel some investors to sell. Goff’s insights come amidst growing anticipation of a looming “debt wall” in the real estate market, offering promising prospects for astute buyers.
In an interview on Bloomberg Television’s “Wall Street Week with David Westin,” Goff articulated his perspective: “We’re entering a period here where there are going to be great properties that will hit a debt wall. We’ll be able to acquire some very attractive properties at compelling pricing.”
Goff’s sentiments resonate with other prominent real estate investors who are eyeing opportunities to capitalize on a potential surge in defaults and restructurings within the commercial real estate sector. Earlier this year, Barry Sternlicht, the head of Starwood Capital Group, expressed his readiness to seize opportunities stemming from higher interest rates and decreasing demand that may place pressure on property owners. Similarly, Armen Panossian, one of Oaktree Capital Management’s incoming co-chief executive officers, shared his anticipation of opportunities in the office sector, albeit recognizing that the ideal timing may not have arrived yet.
The commercial real estate market is currently grappling with challenges, including high vacancies and a rapid increase in interest rates. This has led to distress in the market, particularly for firms facing the need to refinance their existing obligations. According to the Mortgage Bankers Association’s estimate earlier this year, approximately $1.4 trillion of U.S. commercial property loans are due for maturity within the coming year. Additionally, Green Street, a real estate analytics firm, reported a 21% decrease in the value of U.S. office properties in October compared to the previous year.
Goff acknowledged that while property pricing is expected to become more appealing for potential buyers, he doesn’t foresee discounts as substantial as those witnessed earlier in his career. He noted, “There are definitely discounts available, but it’s not to the extreme that we saw in the nineties.”
John Goff, aged 68, serves as the chairman of Crescent Real Estate, a firm with a diversified portfolio encompassing office, multifamily, and hospitality properties. Notably, the company is launching a new development, “The Crescent,” in Fort Worth, Texas, which includes a hotel, office spaces, residences, and the luxury spa Canyon Ranch. Crescent Real Estate also owns the iconic “Crescent” in Dallas, an office tower and hotel situated in the trendy Uptown neighborhood, catering to law firms and asset managers.
In addition to his real estate ventures, Goff holds interests in the oil and gas sector. He serves on the board of Crescent Energy, a Houston-based company engaged in the acquisition, development, and operation of oil and natural gas properties. Goff expressed his belief that the global economy is inadequately invested in oil and gas, criticizing the rush to eliminate hydrocarbons as “misguided.” He emphasized the need for a transition but cautioned against hastily dismissing oil and gas as the cornerstone of the energy sector, labeling such a move as “naïve, if not, dangerous.”
