Good Morning!

Stocks plummeted to end the week after the consumer sentiment index came in lower than expected, a report points to Microsoft ending data center leases, GSA is looking to cut 50% of its square footage, and Data Center development is facing a power constraint limiting growth

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Capital Markets

Headlines

• Report Says Microsoft Canceling Data Center Leases

  According to a report from TD Cowen, Microsoft has begun canceling a couple hundred megawatts of capacity. The report points to potential cuts in international leasing redirected into the U.S. On Friday, Microsoft reiterated its plans to spend $80bn in infrastructure

• Stocks Plunge Along With Consumer Sentiment

  Stocks fell to end the week after the University of Michigan released a report showing the consumer sentiment index was at 64.7 for February, far below the January reading of 71.7. The index is at its lowest since hitting 61.3 in November of 2023. Long-run inflation expectations also rose to 3.5% in February from 3.2% in January

• 50% of GSA Leases Up For Termination

  In January, the commissioner of the Public Buildings Service within the GSA said he hoped to cut the government's footprint by up to 50%. With over 7,500 leases making up nearly 150mm SF, the impact of ending those leases could result in large ramifications as landlords and lenders typically assume GSA leases will run beyond their term. GSA leases typically have a rolling termination option that can be in effect 60 months prior to expiration, making them fairly easy to terminate

• Power Expected To Meet 50% Of Data Center Needs

  As data center development ramps up, projected power demands from existing and planned U.S. data centers will exceed what utilities are set to supply by around 50%. This gap is pushing data center users and developers to explore alternative solutions like natural gas-fired power plants and small nuclear reactors

  U.S. Data Center Development Pipeline & Private Construction Spending

  

Deals Deals Deals

Sales

• Multifamily: The Inland Real Estate Group of Cos.Inc. acuired Summit Court, a 393-unit multifamily property in Union, NJ, from Fidelco Realty Group and Diversified Properties for $132mm

• Medical Office: A JV between Altera Fund and TPG Angelo Gordon acquired a 10-asset, 300K SF medical office portfolio for $108mm from NHP. The properties span across Arizona, Illinois, Massachusetts, Texas and Tennessee. Capital One Bank provided acquisition financing

• Retail: Red Mountain Group Inc. acquired Century Square, a 416K SF shopping center in West Mifflin, PA. The price and seller were undisclosed

• Student Housing: CAPREIT acquired Coastal Village, a 200-home, 800-bed student housing community in south Fort Myers, FL serving Florida Gulf Coast University

• Hospitality: Liberty One Group acquires the 201-key Holiday Inn in Queens, NY near JFK airport for $42mm form McSam Hotel Group 

• Multifamily: Hamilton Zanze announced it sponsored the purchase of Arnada Pointe, a 200-home garden-style apartment community in Vancouver, WA. The price and seller were undisclosed

Debt

• Office: RFR recapitalized 475 Fifth Ave in New York. The company secured a three-year, $160mm loan from Citibank and JPMorganChase, plus an equity investment from an undisclosed source

• Industrial: A JV between InLight Real Estate Partners and Ares Management Real Estate secured an $82mm construction loan from Affinius Capital to develop Eastport Logistics Park, an industrial project in Jacksonville, FL

• Multifamily: Baldwin and Sons, LLC secure a $81mm floating-rate loan from Walker & Dunlop Investment Partners to refinance Enclave Heritage Flats, a 312-unit apartment complex in Chula Vista, CA

Developments

• Hospitality: Pendry planning a 180-key hotel and 160-unit condo development in Nashville, TN. The project is projected to cost $364mm and deliver by end of 2027

• Multifamily: Housing Trust Group closed on financing and commenced construction on The Rushmore, a $34mm 101-unit affordable housing community located in Houston, TX’s energy corridor

Distress

• Hospitality: RECP Sydell Wilshire defaulted on a $100mm loan tied to the The Line LA hotel, a 384-key hotel in Los Angeles, CA’s Koreatown. The lender, Corten Real Estate Partners, could put the property up for sale in 90 days

• Medical Office: Echo Real Estate Capital Inc. acquired Rampart Medical Campus, a two-building, 71K SF medical asset in Denver, CO, from Healthcare Realty Trust for $9mm. The asset last traded in 2019 for $19mm

Capital Raising

• Multifamily: NexMetro recapitalizes a 1,061-unit, eight-asset portfolio of build-to-rent homes with Stockbridge investing $66mm of preferred equity along existing assumable agency financing of $206mm

• Multifamily: Middle Street Partners completed a $69mm recapitalization with Inceptiv Management. The company plans to use the funds to target $1bn in developments and acquisitions over the next two-to-three years

Meme Summary

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