3 Clever Strategies To Capitalize on the Commercial Property Crisis

There is a ticking time-bomb that just ignited in the banking sector.

Over $1 trillion in commercial real estate loans are set to mature by the end of this year.

No one truly knows what these empty office buildings are worth.

Brokers have begun discounting Blackstone Manhattan commercial property debt by almost 50%.

Since most commercial loans are interest-only, banks and real estate investment trusts (REITs) carry the entire principal on their books.

That means they have to cover any losses when they sell the property.

Recently, New York Community Bank, one of the supposed “winners” from last year’s regional banking crisis, saw its stock chopped in half.

The bank shocked investors regarding how much money they set aside to cover potential losses.

Most folks don’t want to go anywhere near these problems, especially with their retirement portfolios.

However, we’re going to reveal three clever strategies to capitalize on this crisis while managing risk.

Strategy #1 – Exchange-Traded Funds (ETFs) Instead of Stocks

Regional banks hold 70% of all commercial real estate loans.

New York Community Bank (NYCB) was a particularly interesting case.

Over half of its multi-family loan portfolio is in New York, which is subject to rent control.

While rent-stabilized housing defaults are typically low, like 0.32%, they skyrocketed last year to 4.93%.

But this stock doubled off its lows, while Western Alliance Bancorp (WAL) quintupled.

Now, chances are you don’t own NYCB in your retirement portfolio.

And you probably don’t hold stocks like Vornado Realty Trust (VNO)…

… a REIT that owns over 19 million square feet of office space in Manhattan, San Francisco and Chicago — three places where crime is up, jobs are down and people are fleeing…

… but also more than doubled off its 2023 high.

However, it would be nice to catch a piece of the action, wouldn’t it?

Although there are plenty of juicy stocks prime for the picking, the average investor isn’t going to take the time to peer through a bank’s books.

And unless you’re skilled in that area, we wouldn’t suggest you try.

However, ETFs can limit your exposure to individual bank problems while riding.

Consider this….

Silicon Valley Bank’s failure was the second largest in history, only behind Washington Mutual in 2008.

SVB’s stock went to zero.

Western Alliance’s stock plunged 90% at its worst.

The KRE Regional Bank ETF plunged over 40% once the crisis hit in March 2023.

Within four months, it had cut those losses in half.

The overall S&P largely shrugged off the problem.

The broader financial sector dropped almost 16%, while the VNQ REIT ETF dropped about 13%. Both recovered all they lost within four months.

Industry and sector-based ETFs help reduce drawdown risk while providing exposure to rebounds.

And if you’re smart with how you approach the position, keeping your size small and dollar cost averaging into it, you can earn some nice gains on others’ pains.

Strategy #2 – Try Some Options

One of our favorite option strategies is what’s known as a put credit spread.

And with a clever adjustment, you can create a straightforward bet that can return 50-100% on your investment.

Here’s the mechanics of how it works:

• Pick an ETF like the KRE
• Wait for the ETF to drop a large amount, like 20-40%, as the KRE did.
• Select an expiration cycle about nine-12 months out.
• Sell an at-the-money put credit spread

This bet makes money so long as the KRE is higher within the next year, with the maximum gain at expiration.

A year might seem like a long time to wait.

But you’re betting the broader industry will recover within a year.

Short of a total systemic collapse in the banking system like 2008, that shouldn’t happen, especially with the Fed willing and able to step in and save the market.

Plus, if the KRE rebounds quickly, you can always take the trade off for a partial profit.

Now, there’s one strategy we saved for last that blows these other two away.

Strategy #3 – Get the Money You Are Owed

Most Americans don’t realize how much money is out there just waiting for them to claim.

For example, have you ever looked at unclaimed assets held by the states you’ve lived in?

Any leftover paychecks, refunds or similar items that never find their way to you are held in state accounts, waiting for you to claim them.

We’re talking billions of dollars.

And it’s not just your assets. You may have claims for your parents as well.

This is one of the most obvious places to collect the money you’re owed.

But did you know there are 11 guaranteed streams of lifetime income 96% of Americans are missing entirely?

It sounds crazy, we know.

Bob Carlson explains how you can recapture this lost wealth in his latest Retirement Watch update RIGHT HERE.