For Those Who Must Sell, Doing So Sooner May Help Preserve Equity

I’ve long said Interest New Zealand has the best comments on the internet:

‘Median prices down, already bloated inventory still getting force fed. Indications are this long overdue adjustment will endure for some time to come. The adjustment looks even more stark when adjusted for inflation too. Personally, for reasons that have been well trodden upon here, I think this is fantastic news.’

‘March: The housing market recovery has arrived!’

‘It just exposes the ugly reality that increased sales equals increased commissions, what you get paid as a vendor doesn’t matter as long as sales are up! Its a recovery in RE agents commissions that the industry is crowing about. They have been trying to signal that there are buyers waiting for ages, seems like vendors now waking up to what it takes to get a sale i.e. meet the market. Funny they where telling buyers that during the boom. Anyone who understands markets can see how this unfolds into summer.’

‘Wow only 1 sold for every 2 new listings in April. (842 sales, 1578 new listings). Vendors need to lower their expectations and asking prices or they won’t sell.’

‘Amidst new uncertainties about the world economy and plentiful evidence of high numbers of properties for sale, buyers have stepped back from the market, feeling strongly that time and negotiating power are both on their side. FOMO has returned to levels before monetary policy began easing and on average agents feel house prices are falling around the country. There are now more agents seeing declining numbers attending Open Homes and auctions than report they are seeing more people.’

‘It sounds like there’s another bottom on the horizon 🍑.’

‘The only headline you need is: “April’s median selling price was $934,000, down by $36,000 compared to March (-3.7%) and down by $73,500 (-7.3%) compared to April last year. That was the lowest median selling price in the month of April since 2020. The average selling price was $1,110,689 in April, down by $34,356 (-3.0%) compared to March and down by $102,139 (-8.4%) compared to April last year.” Given such strong sales numbers the price moves are not outliers. The recovery is here!’

‘This masthead revealed that there are 8000 completed apartments in metropolitan Melbourne – or 17 per cent of units completed between 2020 and 2024 – that developers have been unable to sell’

So the frenzy of minor respiratory illness may have been overstated?

Billions In Cannabis Debt Loom, But One Lender Sees Plenty Of Green Ahead

For cannabis companies looking for financing in 2025, debt is increasingly their drug of choice.

A cannabis real estate sector formerly loaded with equity capital has made an about-face toward debt as legal uncertainty and tighter margins sent equity investors heading for the hills.

Debt financing eclipsed equity as the industry’s favored source of capital in 2022, and the moves have led to upcoming loan maturities that could see up to $6B come due by the end of 2026, mirroring the impending maturity wave in the broader CRE market.

How that plays out has some bracing for a bust in an industry that has so far failed to make weed a reliable income stream. But one lender is confident in the bets it has made to date even in this uncertain environment.

Chicago Atlantic Real Estate Finance, which represents roughly 20% of the current U.S. cannabis debt market share, counted $2.3B of closed cannabis loans as of the end of 2024, nearly all of them secured by retail or industrial properties.

The commercial real estate finance company and publicly traded REIT made its bets knowing that many borrowers in the space have little access to credit, whether from bank financing or the private credit industry, and that it is one of the few big players in a market facing a dearth of options.

“As the markets evolved, it’s become a lot clearer where some of the ways of capital deployments have proven to be more resilient and more conservative,” Chicago Atlantic Real Estate Finance co-CEO Peter Sack said. “Our debt strategies certainly show that.”

Yet federal laws still limit banking services for the industry, and cannabis companies currently don’t have access to bankruptcy courts. This reduces protections for borrowers compared to more traditional asset classes while increasing risk for lenders.

Private debt has swooped in as its savior in the same way it has for asset classes like multifamily, increasingly filling the financing gap.

Currently, cannabis companies operate under a tax rule that doesn’t allow them to deduct most of their overhead operating expenses. This means cannabis companies effectively pay tax on gross profit rather than pre-tax net income, Sack said. If cannabis were to be rescheduled to a Schedule III substance, then cannabis companies would pay tax on their pre-tax net income just like any other corporation, increasing cash flows significantly.

Yet the wave of debt maturities remains a worry. In 2022, more than 42% of operators reported making a profit, according to a new report on cannabis delinquency by Whitney Economics. By 2023, that number had dropped to about 24%.

Report authors called delinquencies “an existential threat for the U.S. cannabis industry.” Delinquencies from large corporations and multistate operators are a particular worry, accounting for $1.4B or 36.4% of total delinquencies in 2023, according to Whitney.

That goes back to its strategy to focus on states with limited licenses for operation, Sack said.

“The cannabis market as a whole is seeing some challenges,” he said. “It varies by market … You see some markets that don’t have a particularly limited license structure, those markets become more competitive. You see wholesale prices declining in a product which eats into earnings profiles, which eats into companies’ ability to service indebtedness.”

https://www.bisnow.com/chicago/news/cannabis/billions-in-cannabis-debt-loom-but-one-lender-sees-plenty-of-green-left-to-reap-129229

As Carney visits Trump to discuss trade-security deal, diplomatic and business leaders warn of potential consequences

Prime Minister Mark Carney will kick off talks with Donald Trump Tuesday in a bid for a comprehensive deal on trade and security, but top business and diplomatic voices are warning that linking the two issues in a single pact will only make it easier for the U.S. President to punish Canada with tariffs if he’s unhappy with its military or border spending.

Mr. Trump, for his part, adopted a nonchalant air about Mr. Carney’s visit, professing ignorance about what is driving the leader of one of the United States’ biggest trading partners to seek an audience with him.

“I don’t know. He’s coming to see me. I’m not sure what he wants to see me about, but I guess he wants to make a deal. Everybody does,” he said Monday in the Oval Office when asked what he expected from the meeting. “They all want to make a deal because we have something that they all want.”

Goldy Hyder, president of the Business Council of Canada, said the two countries should be “keeping separate things that are separate.” Canada’s economic record with the U.S. is solid while its laggardly spending on defence is a legitimate cause for concern among allies, he noted.

Louise Blais, who was Canada’s No. 2 diplomat at the United Nations during Mr. Trump’s first term, warned that tying defence, critical minerals or other matters to trade in what she termed “one big deal” with Mr. Trump could be potentially dangerous for Ottawa.

Such an agreement, she said, could make it easier for the U.S. to use the economy, and the threat of inflicting financial pain, as a bargaining chip to push Canada on other unrelated disputes.

“It accepts the President’s view that tariffs can be used as a tool to punish allies for failings in other areas than trade. We should avoid this exposure at all costs,” she wrote in an e-mail.

Instead, she contended, Canada would be better off aiming for a side agreement with the U.S. on defence and border security that would keep these matters separate from USMCA.

Any such security pact should also contain language that explicitly recognizes both countries’ territorial integrity in a bid to shut down Mr. Trump’s repeated threats to annex Canada and make it the U.S.’s 51st state, Ms. Blais said. “We are in a rightful position to demand that our sovereignty no longer be put into question.”

Mr. Hyder also cautioned against any deal with Mr. Trump that would more closely integrate Canada with the U.S., saying that Canadians need to shift trade dependency away from the Americans. “Are we going to sell them all our critical minerals, all our oil, natural gas, potash and uranium? Not a good idea,” he said. “That’s how we’re in this mess.”

He said Canada needs to be careful when talking about a comprehensive deal because the worst outcome would be getting further drawn into the U.S. economy.

Comprehensive is “a word that means different things to different people. We need to be clear what it is we’re talking about because last thing we want is to end up with the very thing we’re trying to avoid, which is overreliance on a single market.”

“What is most needed is to reduce uncertainty on trade and tariffs.”

He has also repeatedly called for Canada to become the U.S.’s “51st state,” a prospect roundly rejected by Mr. Carney and Canadian voters. In a weekend interview with NBC, Mr. Trump did not categorically rule out achieving this by military invasion, saying only that “I think we’re not going to ever get to that point” and “it’s highly unlikely.”

U.S. Commerce Secretary Howard Lutnick accused Canada Monday of leeching off the U.S. and said he wasn’t sure if a deal was possible.

“They have basically been feeding off of us for decades upon decades upon decades, right. They have their socialist regime and it’s basically feeding off of America,” Mr. Lutnick said in an appearance on Fox Business. “I just don’t see how it works out so perfectly.”

Mr. Lutnick said Mr. Trump frequently complains: “‘Why do we make cars in Canada? Why do we do our films in Canada?’ Come on.”

At a White House event Monday, held to announce that the National Football League would hold its 2027 draft in Washington, Mr. Trump referenced a provision in the U.S.-Mexico-Canada Agreement negotiated in his first term that allowed the NFL to ignore a Canadian regulatory decision on the airing of Super Bowl ads.

“Canada does not like me much. They gave a great American company a lot of money that you deserved, frankly,” he told NFL commissioner Roger Goodell.

https://www.theglobeandmail.com/politics/article-donald-trump-mark-carney-meeting-trade-deal/