Happy Tuesday to All!

A JV between Blackstone and Rialto Capital are the likely winners of the $17bn Signature Bank CRE loans being auctioned by the FDIC. Workforce housing will be exempt from 2024 lending volume limits placed on Freddie Mac and Fannie Mae. Suburban rent growth has largely outpaced urban rent growth since 2008. The central Florida industrial market sees new supply outpace net absorption, a trend that is becoming common across industrial markets. Americans are increasingly tapping into their retirement accounts. Mortgage rates remain lower than a few weeks ago, but still hover above 7%. And some good news, as gas prices are expected to continue to fall during Thanksgiving weekend.

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Capital Markets

Market News

• More Americans are tapping into their retirement savings with balances on their 401(k) accounts down. Between July and September 2.3% of workers tapped into their account for hardship, up from 1.8% in the same period last year. The percent of workers with an outstanding loan against their 401(k) increased to 17.6%, from 17.2% last quarter. Primary reasons for the loan included avoiding foreclosure, eviction, or medical expenses (Yahoo)

• OpenAI, the Artificial Intelligence startup behind ChatGPT, investors are still trying to lure former CEO and Co-Founder, Sam Altman, back to the company after the Board ousted him on Friday sparking a coup from OpenAI employees. Nearly all 700+ employees have said they are willing to follow Altman to Mircrosoft if he’s not reinstated, and the current board fired (Yahoo, WashingtonPost)

• Mortgage rates remain near their two-month low at 7.67%(Investopedia)

  30-Year Mortgage Rate Average

  

• Gas prices are falling and could fall to $3.25/gallon on Thanksgiving, the lowest since 2020. Gas has dropped below $3/gallon in 11 states, primarily across the south. Gas prices could continue to fall but will depend largely on OPEC’s production decision on November 26 (CNBC)

• Citigroup layoffs 300 senior manager roles, nearly 10% of total senior management, as part of the CEO’s efforts to simplify the bulge bracket bank (Bloomberg)

• Global corporate defaults creeped up to 138 for the year, 1.8x higher than in 2022 during the same period. S&P Global ratings expects speculative-grade default rate to increase to 5.00% for the U.S. by September 2024 (SPGlobal)

CRE Headlines

• Update: A JV between Blackstone and Rialto Capital are the likely winners of the $17bn Signature Bank CRE loans being auctioned by the FDIC. The rent-stabilized loans are expected to go to a JV between Related Fund Management, Preservation Corp, and Neighborhood Restore, which bid less than 70 cents on the dollar for the loan’s face value (BankingDive)

• Industrial leasing activity was down by roughly 33% YTD in Orlando through Q3. New Supply continues to outpace net absorption driving an increase in vacancy. Overall vacancy crept up to 5.1% in Q3, up from 3.5% in Q2, after nearly 2.9mm sf of new supply were delivered, with only 820k sf of net absorption (Colliers)

  Orlando Leasing Activity Through Q3

  

• Suburban multifamily rent growth has outpaced urban rent growth, when looking back at data since 2008. With developers adding vast amounts of urban supply from 2013-2020 urban rent growth was kept largely below its suburban counterpart that had a much more modest inventory growth (CBRE)

  Urban vs. Suburban Rent Growth Indexed to 2008

  

• Workforce housing exempt from $70bn lending limit on Fannie Mae and Freddie Mac multifamily loans for 2024. The exemption comes as a response to rapid rent growth in recent years. The 2024 limit is $10bn less than in 2023 (Bisnow)

• San Francisco faces challenges for investors and business owners due to high-crime and a drug image. A recent report noted that 90% of the city’s property crimes take place in Union Square, SoMa, Fisherman’s Wharf and Japantown with 65% of businesses reporting stagnant growth or losses in those areas. Its estimated convention hotel nights booked in 2023 will be 665k, far below the 968k in 2019. The estimate for convention hotel night is expected to fall to 427k in 2024 as other cities have lured away conventions. In response, some major hotel owners have opted to default on their loans as a recovery that was expected to take 1 to 3 years looks poised to take 5 to 7 years (HotelManagement)

Deals Deals Deals

Sales

• Retail: Marquee Capital acquires a 207k sf shopping center in suburban Cleveland, OH for $32mm. The asset was anchored by Giant Eagle, Ross Dress for Less, Big Lots, and Michaels

• Industrial: Taurus Investment Holdings acquires a 100%-leased, 339k sf five-building, New Jersey-based industrial portfolio from Endurance Real Estate Group LLC and PCCP LLC 

• Industrial: Chick-fil-A Supply, acquires a 129k sf distribution warehouse from Stonemont Financial Group and Fortius Capital Partners outside of Charlotte, NC

Debt

• Multifamily: Cronin Development obtains a $240mm loan from Cottonwood Group for its luxury multifamily development, the St. Regis Residences, in Boston, MA

• Land/Diversified: Tejon Ranch Company obtains a $160mm unsecured revolving credit facility from AgWest Farm Credit to fund construction projects, farming and ranch operations, and pay for general corporate expenses

• Medical Office: Harrison Street secures a $126mm loan from Thorofare Capital for the acquisition of a eight-property 705k sf medical office portfolio in the D.C. region

• Multifamily: Codina Partners secures a $115mm construction loan from Goldman Sachs for a 122-unit, $190mm luxury apartment development in Coral Gables, FL

• Industrial: A JV between Phelan Development and LaSalle Investment Management obtain a $42mm loan from PCCP, LLC to refinance a 610k sf distribution warehouse outside of San Francisco, CA

• Life Sciences: Grubb Properties secured a $25mm loan from Thorofare Capital for the lease-up of a mixed-use life sciences asset across from University of North Carolina-Chapel Hill

Developments

• Multifamily: Shoreham Capital, Bridge Investment Group, and Wynkoop Financial break ground on a $120mm, 412-unit multifamily development in Cape Coral, FL. The development is being financed with a $66mm construction loan

• Office: JPMorgan tops out its new Manhattan Global HQ at 270 Park Ave. The office tower will span 2.5mm sf across 60 stories and will open by end of 2025

• Data Centers: Skybox Datacenters begins the development of a 300MW data center campus in Dallas, TX. The 115-acre campus will support up to 1mm sf of data center space

• Industrial: Stonemont Financial Group and Fortius Capital Partners complete a three-building, 702k sf industrial campus outside of Charlotte, NC

• Industrial: Constellation Real Estate Partners and Northwestern Mutual plan to develop a four-building, 546k sf industrial campus north of Fort Worth, TX

Capital Raising

• Diversified: Japan’s Government Pension Investment Fund is investing $500mm into Brookfield Strategic Real Estate Partners V and another $500mm into Blackstone Real Estate Partners X

Leasing

• Industrial: KidsTale Playgrounds, a supplier of playground equipment, signs a 163k sf lease at Triten Real Estate Partners’ Faribanks Northwest Distribution Center in Houston, TX

• Office: BBVA, a Spanish global financial services firm, is relocating to Brookfield’s Two Manhattan West in NYC’s Hudson Yards. The company signed a lease for 74k sf

• Office: Scott+Scott, a law firm, has signed a 15-year, 21k sf lease at RXR’s 230 Park Avenue in NYC

• Office: IMA Financial Group, an insurance and financial services company, signed a 10-year, 10k sf lease at The Durst Organization’s 1155 Avenue of the Americas building in NYC’s Midtown

Meme Summary

Merch Spotlight