Business mogul Ben Mallah is selling his whole US real estate portfolio — why he says banks are a big reason why

Real estate mogul and YouTube personality Ben Mallah is unwinding his vast portfolio of commercial real estate in anticipation of a correction in the market.

“I talk to bankers all the time,” Mallah told fellow real estate investor Graham Stephen on a recent episode of “Iced Coffee Hour.” “We were playing the game ‘pretend and extend.’ Now that period is over, they have moved to ‘pray and delay.’ What happens after you pray and delay? The s—’s going to hit the fan.”

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Publicly available data suggests Mallah has already started offloading some of his prized assets. Last year, he reportedly sold a 12,000 square-foot home in Belleair for $8.7 million, a Sheraton-branded hotel in Fort Lauderdale for $28 million, and a handful of shopping centers across Florida.

Mallah’s concerns about commercial real estate are shared by other experts and experienced investors in this segment of the market.

Commercial real estate bust

According to estimates by Goldman Sachs reported by the Financial Times, commercial loans worth $270 billion that were due in 2023 have been extended until 2024. This is the “pretend and extend” game Mallah referenced.

However, by extending these loans, banks have effectively just kicked the can down the road. As of 2024, troubled commercial loans are collectively worth $1.3 trillion and roughly half of these loans are due within two years, according to advisory firm Newmark.

“Shark Tank” star Kevin O’Leary suggests commercial landlords and banks will eventually have to stop pretending and recognize these losses. “These banks are going to fail because up to 40% of their portfolio is in commercial real estate,” he told Larry Kudlow of Fox Business last year.

Mallah may have already experienced some of that fallout. He told the podcast hosts he lost roughly $1 million on his preferred equity stake in Silicon Valley Bank when it collapsed last year. While there could be more failures ahead, he sees some silver linings in these dark clouds.

“I believe that the market is turning or will be turning soon,” he said. “It has to eventually and there’s going to be some serious opportunities out there.”

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Indeed, some segments of the commercial real estate market are already seeing robust growth.

Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Overlooked opportunities

Strong tailwinds could support some sectors of the commercial real estate market over others. Data centers, for example, have already experienced a strong boom fueled by the ongoing race to develop artificial intelligence products. Nvidia CEO Jensen Huang predicts companies will deploy upwards of $1 trillion into data center infrastructure over the next “four to five years.”

Investors can gain exposure to this expanding market through Digital Realty (DLR), a real estate investment trust that owns and manages 300-plus data centers across the world.

Multifamily real estate is another strong segment of the commercial property market. JPMorgan analysts have placed a “largely positive outlook” for the asset class based on a shortage of housing supply and steadily rising rents.

Investors looking for exposure to residential multifamily units can add Mid-America Apartment Communities (MAA) to their watchlist. The stock is already up 19% year-to-date and it offers an attractive 3.6% dividend yield.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.