Good Day to All!

The overall distress rate for CMBS rose to 7.57% in October. Freddie Mac launches an investigation on Meridian Capital and Fannie Mae is reviewing all agency-backed loans involving brokers. TPG dives into the short-term rental market and WeWork looks to terminate 69 leases. Strikes continue for the actors guild and a teacher’s strike in Portland has school cancelled. Credit card and auto debt delinquencies are on the rise, while banks sit on large unrealized losses in the wake of falling bond prices. The market waits for the Fed’s remarks today for hopes of future guidance on rate policy.

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Capital Markets

Market News

• The market awaits the Fed’s comments on interest rates today. Chairman Powell, NY Fed President, Bank of England Governor, and officials from the ECB will speak today. Experts expect the Fed to continue to focus on its 2% inflation target, with Fed Bank of Minneapolis President saying they will consider more tightening to combat inflation (Yahoo)

• Large banks are sitting on $650bn of unrealized losses due to crashing bond prices. As Treasury yields have soared above 5%, bond prices have collapsed. As an example, BlackRock’s iShares 20+ Year Treasury Fund has fallen 48% since April 2020. Banks that have not sold. now sit on large unrealized losses in their bond holdings (Yahoo)

• Portland Public Schools remain closed for a third day as teachers remain on strike against the district. Main issues halting an agreement between the teachers union and the district include cost-of-living wage increase and class size caps (KGW)

• The actors strike continues as SAG-AFTRA and studios fail to reach on deal on Tuesday. The actors guild is seeking protections for its members’ compensation and rights to their likeness stemming from the rise of Artificial Intelligence in the industry (Deadline)

• US consumer credit card and auto debt 30+ days past due sits at its highest since 2011 and 2013, with Americans now owing $1.08tn on their credit cards according to the NY Fed. Credit card balances increased by $154bn over the last year (CNBC, Reuters)

  % of Debt Delinquent (30+ Days) as of Q3

  

   

CRE Headlines

• Texas billionaire, John Goff, is predicting a number of attractive properties will hit the market as wall of debt maturities forces owners to sell. Starwood’s Barry Sternlicht echoed Goff’s sentiment, noting his firm is ready to seize on potential distress (Yahoo)

• WeWork to terminate 69 leases across the US and Canada as part of bankruptcy filings. 35 of its 47 NYC locations will be shut down. Pending a court approval, WeWork will relinquish its space and leave landlords to file claims for damages (abc7NY, CommercialObserver)

  WeWork NYC Locations to Close

  

• TPG dives into short-term rentals with the purchase of homes in Florida. The firm is testing buying homes in popular destination spots (Pompano Beach and Ft. Lauderdale) in hopes of commanding rental premiums over hotels and individual Airbnb hosts (Bisnow)

• On Tuesday, reports surfaced of Freddie Mac investigating Meridian Capital after a loan brokered on behalf of the government-sponsored entity was called into question. Meridian is barred from further deals as a placement agent through Freddie Mac seller-servicers during the investigation (CommercialObserver)

• Fannie Mae has alerted lenders that all broker-involved agency-backed loans are now subject to pre-review (CommercialOberserver)

• Overall distress rate for CMBS rose to 7.57% in October. With the exception of retail and office, the delinquency and or special servicing rate rose for every asset class (CREDiQ)

  Overall Distress Rates by Property Type

  

Deals Deals Deals

Sales

• Multifamily: Blackstone, via Sage Homes and Leaf Living, acquires an £819mm build-to-rent portfolio from homebuilder Vistry Group in the UK. The portfolio consists of 2,915 yet-to-be-built homes (Bisnow)

• Retail: Publix acquires two Florida shopping centers for $63mm from SITE Centers (connectcre)

• Industrial: MIG Real Estate acquires a $33mm, six-building industrial park in Orange County, CA from Los Angeles County Employees Retirement Association (CommercialObserver)

• Medical Office: Virginia Hospital Center acquires a 145k sf medical office building in Alexandria, VA for $22mm from Monday Properties. The asset previously sold for $38mm in 2018 (CommercialObserver)

• Office: Perkins Fund LP acquires a 108k sf office asset in Charlotte, NC from AEW Capital Management for $15mm. The asset had previously traded for $35mm in 2016 (commercialsearch)

• Manufactured Housing: Capstone Cos. sells a 10k-unit, 46-community manufactured housing portfolio across the Midwest (MHN)

• Industrial: Phoenix Investors acquires a 465k sf manufacturing and warehouse asset roughly 80 miles north of Pittsburgh, PA. The asset was previously owned and operated by the seller, Joy Global (commercialsearch)

• Industrial: Stonemont Financial Group sells a 218k sf industrial asset in Fort Worth, TX to Dot Foods. OmniCable, acquired by Dot Foods, will occupy the asset (REJournals)

• Office: Logos Missions Inc. acquires a 192k sf office asset in Los Angeles, CA from The Koll Co. The asset previously traded for $31mm in 2015 (commercialsearch)

Debt

• Cold Storage: Bank OZK and PGIM Real Estate lend $76mm in construction financing to BG Capital for the construction of a 282k sf cold storage facility in Houston, TX (REBusinessOnline)

• Medical Office: A JV between Sendero Capital and Angelo Gordon, obtains a $75mm credit facility for the acquisition of up to $300mm in medical office properties. The facility was seeded with four assets totaling 201k sf (commercialsearch)

• Industrial: Westcore Properties secures a $25mm loan for a 301k sf distribution center outside Dallas, TX from a private investment manager (commercialsearch)

Developments

• Mixed-Use: NY Mets Owner, Steve Cohen, unveils plans for a 50-acre, $8bn sports and entertainment project outside of Mets Stadium in New York, NY. The project, named Metropolitan Park, is still subject to state development approvals and a casino license approval (NYPost, Empire)

  

• Office: Schnitzer West and Brue Baukol Capital Partners commence construction on a 140k sf office buildings in Denver, CO. The buildings is expected to achieve a LEED Gold certification and be delivered in Q3 of 2025 (commercialsearch)

Capital Raising

• Multifamily: Boston Financial closes a $164mm LIHTC fund, ITC 59. The fund secured commitments from seven institutional investors to deploy capital across 14 affordable housing developers (REJournals)

Leasing

• Industrial: Nap Queen signs 131k sf lease at Johnson Development’s 249k sf Cravens Logistics Center in Missouri City, TX (REBusinessOnline)

• Industrial: Giti Tire USA signs a 267k sf lease at Stonemont Financial Group’s Building 1 warehouse located at 2201 Stonemont Way in Fort Worth, TX (REJournals)

• Industrial: Mullen Automotive signs a 121k sf lease with Link Industrial in Fullerton, CA (REBusinessOnline)

Meme Summary