Good Morning to All!

Boston Properties (NYSE: BXP) has entered into an agreement to sell a 45% interest in two life sciences properties to Norges Bank Investment Management. WeWork is paying out retention bonuses. Global real estate volume continues to fall while investors turn to alternative real estate investments like data centers. Distressed office loans continue to plague Los Angeles. And a wave of corporate debt maturities might slow down industrial leasing. In broader markets, retail sales were down for October, inflation seems to be cooling off, the Holiday shopping season might be good for bargain retailers.

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Capital Markets

Market News

• Retail sales fall less than expected, reiterating a strong American consumer persists despite higher interest rates. Monthly retail sales declined by 0.1% in October, less than the 0.3% decline projected by Bloomberg Economists (Yahoo)

  Monthly Retail Sales

  

• U.S. producer prices fell by 0.5% in October, the most in 3.5 years. Economists polled by Reuters had expected a 0.1% increase for October. The cooling inflation data, along with slowing job and wage growth has reinforced expectations that the U.S. central bank is done with monetary tightening policy (Reuters)

• TJX Companies raised guidance, saying it expects shoppers to hunt for bargains during the holiday season (CNBC)

• JPMorgan CEO says its too soon to declare victory over inflation, the warning comes after CPI showed October inflation unchanged YoY but down 0.4% from last month. The report shows gas prices dropping 5% this month and 5.3% over last year, but consumers spending more on things like groceries, clothing and housing, and restaurant meals (Pymnts)

• Citigroup to begin layoffs on Wednesday, with additional layoffs throughout next week. The layoffs have been code named “Project Bora Bora” with a target of at least a 10% reduction in labor force across several businesses (CNBC)

CRE Headlines

• European investors are increasingly seeking out alternative real estate investments such as solar farms, electric vehicle charging units, battery storage facilities, data centers, and heath care assets over traditional real estate sectors. A report published by ULI and PwC noted the growth in alternative sectors from nine in 2004 to 26 now (Bisnow)

• Global real estate Investment volume fell by 51% YoY in Q3 to $142bn. The U.S. saw a 53% drop to $86mm in Q3 2023, down from $183mm in Q3 2022. Tighter lending standards, rising interest rates, and expectations of an economic slowdown have all been leading factors for reduced investment. Multifamily lead all sectors with $30bn in investment and is expected to remain resilient as higher rates force would-be homebuyers to rent (CBRE)

  Quarterly Global Real Estate Investment Volume 

  

• WeWork to hand out $3.5mm in bonuses to prevent discouraged employees from leaving during bankruptcy (Crain’s)

• Volume of distressed loans in Los Angeles grew by 15% in Q3 to $4.7bn. Potentially distressed loans grew to $8.7bn in Q3 over Q2’s $7.3bn. Roughly two third’s of the distressed loans are due to office properties, which is in line with national trends. MSCI estimated the bid-ask spread for office assets on the market at 12.5% which implies a large price adjustment in order for deals to close (Bisnow)

• A wave of corporate debt maturities is impacting industrial tenant’s real estate decisions. In 2023 companies are expected to have boosted capital spending by 6.0%, while the increase in 2022 was 20%. Companies with attractive debt terms, especially if sourced in 2020, might focus their capital on paying down debt/repurchasing stock rather than real estate expansions. The volume of speculative grade loans maturing in the next three years is $1tn, with the industrial sector making up 12% of leveraged debt due before 2024 (NMRK)

Deals Deals Deals

Sales

• Life Sciences: Boston Properties (NYSE: BXP) has entered into an agreement to sell a 45% interest, $746mm stake, in two life sciences properties totaling 810k sf in Cambridge, MA to Norges Bank Investment Management. The total valuation for the assets was $1.66bn (BusinessWire)

• Retail: Tanger Outlets acquires a 382k sf open-air shopping center in Asheville, NC from New England Development for $70mm. The center was 95% leased at sale (commercialsearch)

• Industrial: Westcore Properties acquires a 632k sf distribution warehouse for $83mm from Washington Capital Management outside of Reno, NV. The asset was 100% leased to Panasonic, Thrive Market, and Tesla (commercialsearch)

• Cold Storage: Ti Cold completes construction of a 300k sf cold storage facility outside of Phoenix, AZ. The asset is fully occupied by Arcadia Cold Storage and Logistics (REBusinessOnline)

• Multifamily: Four Corners Development Group acquires a 180-unit multifamily community in suburban Detroit, MI (REBusinessOnline)

Debt

• Multifamily: Tower Companies secures a $188mm, 10-year, fixed-rate, loan to refinance a five-property multifamily portfolio in Silver Spring, MD (CommercialObserver)

• Hospitality: Comstock Development, Wine Country Holdings, and HVH Investment secure a $63mm C-PACE loan to finance a 108-key hotel development in Healdsburg, CA (REBusinessOnline)

Developments

• Industrial: NorthPoint Development and Elegran Capital break ground on an $111mm, 841k sf, two-property Industrial development in Hampton, VA. The buildings are expected to be delivered in Q3 and Q4 of 2024 (commercialsearch)

• Multifamily: Pedcor is planning to develop a $70mm, 240-unit, affordable housing project in San Antonio, TX. If approved, the project could recieve $27mm in tax credits over a 10-year period (connectcre)

• Data Centers: DataBank acquires 85 acres in Culpeper, VA to develop a 1.4mm sf, 192MW, three-building data center campus (DCD)

• Industrial: Midwest Industrial Funds breaks ground on a 577k sf, cross-docked industrial warehouse in suburban Chicago, IL. The shell is expected to be completed by summer 2024 (connectcre)

• Hospitality: Hard Rock International and Steinhauer Properties announce plans plans to develop a 427-key full-service hotel in Long Beach, CA with plans to begin operations in 2027 (PRNewswire)

• Student Housing: Landmark has assembled 20 adjacent parcels in Tallahassee, FL to develop a 859-bed luxury student housing project near FSU campus (connectcre)

• Multifamily: Wingspan Development Group opens a 231-unit luxury multifamily asset in Milwaukee, WI. The asset was nearly 30% leased at opening (connectcre)

Capital Raising

• Diversified: Castle Lanterra launches a debt platform focused on mezzanine and preferred equity with plans to deploy $500mm in equity over the next 12 months (PRNewswire)

• Multifamily: Ease Capital and Taconic Capital Advisors enter a $450mm partnership to provide bridge and bridge-to-permanent multifamily loans in the $5mm to $35mm range (BusinessWire)

On the Market

• Office: Aimco is looking to sell a waterfront office building and apartment building in Miami, FL’s Brickell neighborhood (CommercialObserver)

Meme Summary

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