Good Morning!

Mostly positive headlines in the CRE space today for once. Developers are moving forward with a 900k sf sports entertainment district outside of Amway Center in Orlando, FL that will feature hotel, office, retail, and live music venue space. In 2023, office owners are increasingly handing the keys vs. fighting foreclosure. Vegas hotels had a positive F1 weekend with weekly increases to ADR and RevPAR. Canadian lenders expect to lend more in 2024. And Law firm leasing activity is set to have its best year since the onset of the pandemic. In broader markets U.S. treasury yields dropped on Monday as the market prices in possible rate cuts earlier in 2024 based on slowing economic data.

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Merch Spotlight

Capital Markets

Market News

• Regional Banks Comerica, Zions, and First Horizon at Risk of Being Taken Over by Competitors

  According to KBW, banks with $80bn to $120bn in assets are in a tough spot as they face the lowest returns, amongst banks with more than $10bn in assets, and need to grow in order to pay for coming banking regulations proposed by regulators following the collapse of three banks earlier this year. Of the eight banks in the mentioned asset range, Comerica, Zions, and First Horizon might be acquired by more profitable peers in the same group

• E-Commerce Stocks Rally Following Record Online Sales on Black Friday

  With Black Friday sales reaching a record $98bn last week, many e-commerce companies saw their stocks close higher on Monday. Etsy, Shopify, and Wayfair all closed up by about 3%, 5% and 7%

• U.S. Treasury Yields Fall on Monday After Housing Data Comes in Below Estimates

  U.S. Treasury yields were lower on Monday after monthly home sales data came in at 679k units for October vs. the 723k units expected. September home sales data was also revised down from 759k units to 719k units. Softening economic data has fueled expectations the Fed will hold rates at current levels and potentially lower rates early in 2024

• Deutsche Bank Analysts Predict a Mild Recession in H1 2024 Will Trigger 175bps of Rate Cuts

  DB analysts predict the Fed will cut rates more aggressively than what markets have priced in currently. Traders are currently pricing in a Fed Funds rate of 4.48% by December of 2024, while DB predicts the rate will be in the 3.5-3.75% range. DB analysts expect that a mild recession will drive down inflation

CRE Headlines

• Office Buildings Accounted for 43% of All Deed-In-Lieu-Of-Foreclosure in Q2 2023

  Building owners are increasingly giving the keys back to lenders instead of fighting foreclosure. The share of office buildings voluntarily surrendered rose from 20% in 2022 to 43% in 2023. The rate could accelerate in the coming months, as owners with CMBS loans have indicated they’d walk away from 21 office buildings totaling 2.6mm sf

• Las Vegas Grand Prix Drives RevPAR and ADR for Week of Nov 12-18

  The Formula 1 Grand Prix boosted Las Vegas ADR by 82% to $351 and RevPAR by 59% to $249 for the weak of Nov 12-18. Despite the event, occupancy dropped by 13% to 71% in the same week. Total U.S. hotel performance for the same week showed ADR rise by 7% to $156, RevPAR rise 6% to $98, and occupancy drop to 62%

• Canadian Lenders Plan to Lend More in 2024

  According to a new CBRE report, 79% of Canadian lenders intend expand their CRE loan books and add 16% of net new capital into the real estate market in 2024. The top three concerns for 2024 consisted of elevated interest rates, uncertainty in property valuations, and availability/tightening of capital

  Surveyed Canadian Lender Debt Spreads

  

• Law Firm Leasing Activity on Track for Best Year Since Start of Pandemic

  U.S. law firms with leases over 20k sf have leased ~1.6mm sf in both Q1 and Q2 and totaled 1.7m sf in Q3 which could lead to the best year since the onset of the pandemic. Of the new leases signed in 2023 YTD, 31.7% of them have been for relocations, in 2022 66.1% of new leases were for relocations. Tenants are increasing staying put as the number of newer building options dwindles, tenant improvement costs soar, and landlords face difficulty in securing capital for improvements

  U.S. Quarterly Leasing Volume

  

  Source: Savills

Deals Deals Deals

Sales

• Retail: CTO Realty Growth sold a 130k sf retail center outside of Las Vegas, NV for $18mm to an undisclosed buyer. CTO plans to use proceeds from the sale in a 1031 exchange transaction

• Hospitality:

• Multifamily: MG Properties acquires a 324-unit multifamily property in Tempe, AZ for $100mm from Devco, Inc. The acquisition was financed with a $65mm, seven-year interest-only, agency loan

• Multifamily: Antheus Capital acquires 24-story, 275-unit multifamily asset in Chicago, IL’s South Loop for $59mm from Draper & Kramer

• Industrial: Harbor Associates and Evergreen Equity buy a four-property portfolio of adjacent sites totaling 7.5 acres in Los Angeles, CA for $55mm

• Multifamily: Green Forest Capital acquires a 144-unit, garden-style townhouse community in Atlanta, GA from Pacific West Land for $14mm

• Multifamily: Trilogy Investment Co. acquired Park Ridge, a 122-unit, build-to-rent project in Myrtle Beach, SC. The transaction was a forward sale of to-be-completed units

• Industrial: Hines acquires a 1.1m sf, two-building, industrial portfolio in suburban Chicago, IL. The buildings are 100% leased to three tenants

Debt

• Retail: Simon Property Group secures a $294mm loan from Barclays Capital. Bank of America, and Bank of Montreal against the 2m+ sf shopping center, Woodfield Mall, in suburban Chicago, IL

• Industrial: A JV between Atlas Capital Partners and OakPoint land a five-year, fixed-rate, $12mm construction loan for a 60k sf industrial build-to-suit in Gilbert, AZ. Frito-Lay signed a 10-year lease, and Core Bank provided the loan

Developments

• Mixed-Use: SED Development, JMA Ventures, and Machete Group to develop a sports entertainment district adjacent to Amway Center in Orlando, FL. The development will sit on an 8.5 acre site and consist of 900k sf. The development will feature a 260-key hotel, a 3,500-person music venue, 200k sf of office space, and 100k sf of retail space

• Multifamily: Samuels & Associates proposes a $450mm, 850-unit multifamily project along Lynn Waterfront in Boston, MA. The project is awaiting city council approval for a 20-year tax break valued at $45mm

• Multifamily: Thompson Thrift breaks ground on The Pullman, a 276-unit multifamily asset in Atlanta, GA. The asset is expected to be completed in Spring 2025

• Senior Housing: Swenson wins approval to develop a 125-unit senior housing facility in San Jose, CA. The project will consists of 18 memory care units and 107 assisted living units

• Multifamily: Related Group breaks ground on Tower II of the Ritz-Carlton Residences in Tampa, FL. The 30-story luxury condo tower will feature 94 units with prices starting a $1.7mm

• Industrial: VanTrust Real Estate begins construction on a 330k sf industrial project outside of Kansas City, MO. The asset is part of a larger development, New Century Commerce Center, with a Phase I consisting of up to 1.5mm sf

Distress

• Office: Greenlaw Partners and Walton Street Capital are 30-days delinquent on a $63mm loan with 1 City Boulevard West. The loan backed by City Plaza Tower in Orange, CA (Los Angeles metro) has been sent to special servicing

Capital Raising

• Infrastructure: DigitalBridge announces total commitments of $1.1bn for digital infrastructure credit fund

Leasing

• Industrial: Plastic Express, a logistics company, fully leases a 983k sf logistics warehouse in Savannah, GA from Capital Development Partners. The building is scheduled for delivery in June 2024

• Office: Quinn Emanuel Urquhart & Sullivan, a law firm, sign a 132k sf lease at 295 Fifth Avenue in New York, NY. Tribeca Investment Group, PGIM Real Estate, and Meadow Partners own the asset

• Office: Payoneer, a fintech company, signed a 10-year lease for 42k sf at 195 Broadway in New York, NY

• Office: RXR lands a 21k sf lease at 230 Park Ave in New York, NY. Law Firm, Scott + Scott LLP, will relocate from subleased space within the building

Meme Summary

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