Happy Friday All!

Lots of deals below. Brookfield enters an asset purchase agreement with Cyxtera to acquire 7 data centers for $775mm. Shopping centers emerge as a winner in 2023 with shoppers showing their interest in physical locations despite the growth of online sales. Across the pond, M&G decides to wind down its open-ended property fund amid a wave of investor pullback. Inland fails to raise its target funding amount for Inland Residential Properties trust but pushes forward with its $1.25bn capital raise for IPC Alternative REIT. The Austin multifamily market seems to be cooling off, but only because of record deliveries. Residential brokerages brace for the fallout of the NAR lawsuit. In broader markets, the jobs report comes with new jobs added below forecasts signaling the Fed might continue to hold rates at current levels.

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Capital Markets

Market News

• The Labor Department reported U.S. payrolls increasing by 150k in October, less than the 170k forecasted amount, and a steep decrease from September’s 297k increase. The unemployment rate rose to 3.9%, the highest since January 2022. The more encompassing jobless rate rose to 7.2%, and labor force participation decreased to 62.7%. Manufacturing posted a decline, largely due to the auto strikes (CNBC)

• 30-year mortgage rates drop to a 3-week low of 8.13% (Investopedia)

  30-Year Mortgage Rate

  

• Sam Bankman-Fried, founder of now-bankrupt FTX crypto exchange, found guilty of defrauding FTX customers of billions. The jury in the Manhattan federal court found SBF guilty on seven counts of wire fraud and conspiracy to launder money (TheGuardian)

CRE Headlines

• Shopping centers are a surprise winner in 2023. According to PWC and ULI’s Emerging Trends in Real Estate 2024 report demand for retail shot up in the past 18 months, with 35mm sf of new product across all types of shopping centers. With warmer weather and more affordable housing options, households continue to migrate to Sun Belt cities, leading to 15 of the top 20 markets for retail being in the region. The top five markets were Nashville, TN, Phoenix, AZ, Dallas-Ft. Worth, TX, Atlanta, Ga, and Austin, TX (REBusinessOnline)

• Inland Real Estate Group is liquidating Inland Residential Properties Trust after raising only $50mm of its $1bn fundraising goal launched three years ago (Crain’s)

• M&G Real Estate says it is shutting down its open-ended property fund for individual investors following consistent cash outflows as investors ask for their money back. The fund will look to sell off its assets, primarily based in the UK, in the next 18 months (Bisnow)

• Shares of Douglas Elliman, Compass, and eXp World Holdings fall after being sued following the the Jury finding the National Association of Realtors and other residential real estate brokerages liable for conspiring to artificially inflate commissions from home sales. Home sellers complained that by having sellers pay the buyer’s agent’s commission they suppressed competition (Reuters)

• Austin's multifamily sector sees ~16.5k units added in the year ending Q3, a record number for the market. The high level of new supply saw occupancy drop 93% and asking rents drop by 5.6% in Q3. With an additional 32.7k units coming to market in the coming year, the multifamily market is likely to further soften as new supply is leased (RealPage)

Deals Deals Deals

Sales

• Data Center: Brookfield enters an asset purchase agreement to acquire seven data center assets from Cyxtera for $775mm. The deal is expected to close in Q1 of 2024 with sites across the U.S. (DataCenterFrontier)

• Retail: Continental Realty acquires a 292k sf retail center in Orange County, CA for $110mm from Burnham Ward Properties and Rockwood Capital (CommercialObserver)

• Multifamily: IMT Residential acquires a 280-unit multifamily asset in Los Angeles, CA for $107mm from Equity Residential (CommercialObserver)

• Multifamily: DRA Advisors and Marquette Cos. sell a 730-unit apartment community in suburban Chicago, IL for $95mm to an undisclosed buyer (YieldPro)

• Office: Rubicon acquires a 137k sf office asset in San Francisco, CA for $72mm from CBRE Investment Management. The asset last traded in 2020 for $133mm (commecialsearch)

• Multifamily: JSB Capital Group acquires a 36-unit, 54-slip apartment/marina complex in West Palm Beach, FL for $59mm from Nationwide Realty Investors (connectcre)

• Retail: DRA Advisors and IRC Retail Centers sell a 226k sf shopping center in suburban Chicago, IL to Viking Partners for $31mm (ShoppingCenterBusiness, commercialsearch)

• Retail: Space Investment Partners acquire a 60k sf retail center in north of San Diego, CA for $26mm. The buyers are planning major improvements to the property (REBusinessOnline)

• Retail: DRA Advisors and KPR sell a 120k sf grocery-anchored retail center in Wilmington, DE to First National Realty Properties (ShoppingCenterBusiness)

Debt

• Hospitality: A JV between Highwood Properties and The Bromley Cos. secured a $45mm loan for New York Life Insurance Co. for a eight-story office building in Tampa, FL. The 152k sf asset was fully leased to Prudential, Prime, and Nestle (REBusinessOnline)

• Multifamily: Lument provides a $79mm loan via HUD’s 223(f) program for a 590-unit apartment community in Bowling Green, KY (REBusinessOnline)

• Multifamily: A JV between AEW Capital Management and ZOM Living secure a $75mm, fixed-rate loan from PGIM Real Estate to refinance a 338-unit multifamily asset outside of Miami, FL (connectcre)

• Student Housing: Eastman Residential secures a $19mm loan for a 480-bed student housing community acquisition near Coastal Caroline University in South Carolina. The five-year, fixed-rate, Freddie Mac loan will be serviced by JLL Real Estate Capital (JLL)

Developments

• Mixed-Use: The University of California San Diego breaks ground on a $428mm, 400k sf university building project which will include event space, an alumni center, parking, and retail spaces (connectcre)

• Hospitality: Cogswell Realty and Erol Stapleton propose a 143-key, 14-story hotel in Chicago, IL’s Fulton District (connectcre)

• Multifamily: McShane Construction completes a 175-unit affordable housing community in Sun Prairie, WI (REBusinessOnline)

• Industrial: Prologis acquires a 50-acre land parcel from May Riegler Companies outside of Washington D.C. Prologis plans to build a 340k sf industrial facility (connectcre)

Capital Raising

• Diversified: Inland Real Estate Investment Corp. is seeking to raise $1.25bn for a new non-traded, perpetual-life REIT, IPC Alternative REIT. The new REIT will target stabilized assets across self-storage, student housing, and healthcare-related assets. They will also keep the door open for other higher-yielding strategies (TheDIWire, CRENews)

• Mixed-Use: MidCity District, a $2.2bn mixed-use development in Huntsville, AL, received an equity investment from Benson Capital Partners (REBusinesOnline)

Leasing

• Life Sciences: Illinois Institute of Technology to lease 35k sf of lab space in 400 N Aberdeen St. in Chicago, IL (Crain’s)

• Office: Kensington Vanguard National Land Services signs a 13k sf lease at Rudin’s 41 Madison Ave Manhattan, NY office (commercialsearch) 

Meme Summary

Merch Spotlight