Happy Wednesday!

2024 is expected to see 670K multifamily units delivered, a 52% increase from 2023's 36-year high. Office CMBS loans face a wave of lease expiration in 2024 and 2025. Adam Neumann’s apartment startup is having cash flow issues. And NYC puts in place a program to help facilitate office-to-resi conversions. The U.S. government is once again racing to avoid a shutdown, air freight costs could spike due to escalating conflict in the middle east, airlines get hit with delays/cancellations thanks to winter storms, and RBI acquires its largest Burger King Franchisee

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Capital Markets

Market News

• Short-Term Government Funding Extension Advances in Senate

  New year, same spending issues. The U.S. Senate voted to advance a short-term funding extension (68-13) on Tuesday evening, a key step toward averting a partial government shutdown on Friday. the short-term extension will create two new deadlines on March 1 and March 8. The extension will provide more time for full-year appropriations bills to be negotiated

• Air Freight Rates Could Spike Due To Red Sea Attacks

  Houthi attacks in the Red Sea could drive up air freights costs, as global trade gets increasingly disrupted. Delays to maritime trade may prompt some retailers to switch to air freight, as companies seek to ensure faster delivery. Air freight carriers are seeing an increase in inquiries but have yet to see a meaningful increase in conversions from sea to air freight

• 2.200 Flights Cancelled Following Winter Storm

  On Tuesday afternoon airlines had cancelled over 2,200 U.S. flights, while roughly 6,800 flights were delayed. Freezing temperatures, snow, and strong winds impacted much of travel this weekend. Southwest Airlines was most impacted with 400 canceled flights. The flight troubles come as airlines were already suffering with the grounding of Boeing 737 Max 9 jets

• RBI to Acquire Largest Burger King Franchisee

  Restaurant Brands International (NYSE: QSR), the owner of Burger King, announced they entered into a merger agreement with Carrols Restaurant Group, the largest Burger King Franchisee, to acquire all remaining shares of Carrols for $9.55 per share, a 13.4% premium to its January 12 closing price. The deal represents an enterprise value of $1B and will see all 1,022 Burger Kings and 60 Popeyes become owned by RBI. The definitive merger agreement includes a 30-day "go shop" period that will allow the Company to affirmatively solicit alternative proposals from interested parties

CRE Headlines

• Multifamily Market To See 670,000 Units Delivered In 2024

  2023 was a record year for multifamily, with 440,000 units delivered across the U.S., a 36-year high. For 2024 completions are expected to total 670,000 units thanks to a surge in permitting activity in 2021 and 2022. Texas is emerging as a leader, with Dallas, Austin, and Houston each adding over 20,000 units. Major cities like New York, Atlanta, and Los Angeles all are poised for a sharp increase in supply

  U.S. Multifamily Supply Forecast

  

• 217M SF Of Office Leases Set To Expire Across CMBS Office Loans

  Data from CRED IQ shows 217M sf of office leases are set to expire over the next two years. This is particularly concerning for CMBS assets fully leased to a single tenant, which makes up around 30M sf of the expiring leases. New York is expected to see 32M sf of office leases expire in 2024 and 2025 and 173M sf through 2028. The data is concerning as office vacancies hit new highs across markets, and companies look to downsize their physical footprint

  CMBS Office Lease Expirations

  

• NYC’s Plan To Convert 46 Office Buildings To Apartments

  46 buildings are enrolled in NYC's Office Conversion Accelerator, a program to expedite complex office-to-housing conversion projects. Of those enrolled, four have already begun the conversion process, and are expected to create more than 2,100 housing units. The program includes representatives from several city agencies and assists with in identifying and addressing barriers to conversion along with obtaining necessary permits. Additional proposed changes include increasing the age of eligibility for buildings to 1990, increasing the district areas for conversions, and removing parking requirements

• Adam Neumann’s Flow facing Cash Flow Problems

  Adam Nuemann, founder of now bankrupt WeWork, is having cash flow issues with his new apartment startup, Flow. Yieldstreet opened two funds on its crowdfunding platform to raise money for interest rate caps and operating costs at Flow-owned properties "experiencing a cash flow deficit to meet its obligations," Yieldstreet is a stakeholder in the buildings

Deals Deals Deals

Sales

• Industrial: Tishman Speyer and Mitsui Fudosan America acquire a shovel-ready 32-acre development site for $146M from FivePoint Holdings in Irvine, CA. The site will host four distribution facilities totaling 600K sf

• Multifamily: CityView acquired a six-apartment portfolio across Los Angeles, CA from Blackstone for $63M

• Multifamily: Passco Companies sells Pearce at Pavilion, a 250-unit multifamily community in Tampa, FL. The buyer assumed the existing loan with a 4.13% interest rate

• Student Housing: The Bascom Group, LLC acquired a 204-bed student housing community next to the University of Texas at Austin. Bridge Investment Group provided the debt financing for the acquisition

Debt

• Industrial: Seagis Property Group LP, secures a five-year, fixed-rate $122M loan for a 13-property industrial portfolio spanning Northern New Jersey, New York City and South Florida

• Multifamily: Bayshore Properties secures a $40M Freddie Mac Optigo loan to refinance a 432-unit multifamily asset in Crown Point, IN. The non-recourse loan carries a 10-year term and fixed rate

• Office: Kaufman Organization secures a $33M loan from Citigroup to refinance 111 West 19th Street in New York, NY

• Multifamily: GE Property secures a $32M construction loan from Calmwater Capital to finish developing an 81-unit multifamily complex in Los Angeles, CA

• Multifamily: The Millennia Companies, secures a $30M loan from Citigroup to refinance two Michigan multifamily assets totaling 152 and 407 units

• Multifamily: Conserve Holdings secures a $29M acquisition loan from KeyBank for the $41M acquisition of Cottage Trails Apartments, a 183-unit multifamily asset in Chesapeake, VA, from Independence Realty Trust

Developments

• Mixed-Use: Evans Properties to break ground on Wyld Oaks, a $1.2B, 215-acre, mixed-use development in northwest Orlando, FL. The development will feature 200K sf of retail, 11 outparcels, two hotels, up to 4,000 multifamily units, up to 200K sf of office, and an outdoor entertainment venue

• Multifamily: Jomax Residences LLC completes The Livano Deer Valley, a 242-unit multifamily community in Phoenix, AZ

• Senior Housing: Housing Trust Group and Elite Equity Development break ground on Naranja Grand, a $44M 120-unit affordable senior housing community south of Miami, FL

• Office/Life Sciences: Ryan Companies secures a $145M financing package with Associated Bank, First National Bank of Omaha, Alerus Financial and Johnson Bank for a 400K sf office and life sciences built-to-suit in Minneapolis, MN

Leasing

• Office: Bank of America signs a 15-year, 550K sf lease at BGO’s Newport Tower in Jersey City, NJ

• Office: Fox Sports’ United Football League signs a 20K sf lease at SkyWalker Property Partners’ 3301 Airport Freeway in the Dallas-Fort Worth, TX area

Meme Summary

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