Good Morning to All!

The CMBS special servicing rate dropped by 7bps in October, corporate HQ relocations have slowed in 2023, WeWork lease terminations are impacting nearly $1.9bn CMBS loans, and lenders issue a large number of foreclosure notices on mezz debt. In broader market news, gas prices fall, major retailers report earnings this week, Stellantis looks to cut cost via reduction in its white-collar workers, and government shutdown could be triggered just before the holidays.

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Capital Markets

Market News

• Stellantis offers buyouts to nearly half its U.S. white-collar workers to reduce headcount and cut costs. The voluntary separation packages will be offered to 6,400 employees and marks the second round of salaried buyouts this year. This comes weeks after the announced UAW deal (CNBC)

• 11 states now average gas below $3 per gallon. The decline comes from lower seasonal demand and use of cheaper winter-grade gas. States near the gulf coast saw some of the lowest gas prices

  Average Regular Gas Price Per Gallon 

  

• The culinary union reaches a deal with MGM Resorts International avoiding a strike that would have impacted 25,400 members beginning on Friday. The strike would have come at a terrible time as this weekend Las Vegas is hosting its first F1 Grand Prix (CNN)

• A Government shutdown could hit the U.S. on Saturday which would impact travel just before Thanksgiving and the Holidays. A shutdown would bring federally-run museums and parks to a close and would force 3.5mm federal workers to go without pay but would require those whose jobs are considered crucial to national security (including airport security and air traffic controllers) to still come into work (abcNews)

• Major retailers will report earnings this week. Walmart, Target, Home Depot, Macy’s, TJX Companies, and others will report which will help markets analyze consumer spending and trends in the wake of higher interest rates and student loan repayments (Yahoo)

CRE Headlines

• Lenders have issued at least 62 foreclosure notices on mezzanine debt and other high-risk loans YTD. This is more than double what was issued all last year. Because mezz debt is not disclosed on property records determining the total amount was not possible (Bisnow)

• The CMBS special servicing rate dropped by 7bps in October, with office and mixed-use assets both increasing to 8.55% and 7.70%. The top two loan to enter special servicing in October were 1440 Broadway, backed by a 741k sf Manhattan office asset that was 41% leased to WeWork at securitization, and the Brookwood Office Portfolio, a loan backed by 26-office portfolio (Trepp)

  Special Servicing Rate by Property Type

  

• The 69 leases WeWork wants to terminate as a part of its Chapter 11 Bankruptcy are tied to $1.85bn in CMBS loans. The largest is a $785mm loan tied to One SoHo Square at 233 Sprint St. in Manahattan, NY. Total CMBS loans impacted by WeWork leases totals $8.2bn, meaning there could be further impact from the bankruptcy (Bisnow)

• Major corporate relocations fell by more than 25% YoY in the first half of 2023. In Q3 there were 11 HQ relocations with over half relocating to Florida, Dallas, or Charlotte (JLL)

  Q3 Announced HQ Relocations

  

Deals Deals Deals

Sales

• Retail: Nassimi Realty buys a 326k sf retail center in suburban Chicago from DRA Advisors for $21mm (commercialsearch)

• Retail: Brandywine Realty Trust sells an 18k sf shopping center in suburban Philadelphia, PA for $14mm to and undisclosed New York-buyer (REBusinessOnline)

• Office: Logos Missions acquires a 192k sf office asset from The Koll Company and Rialto Capital Management in Los Angeles, CA (CommercialOberver)

• Self Storage: Larkspur Storage sells two self storage assets totaling 160k sf in IL and AL (MHN)

Debt

• Multifamily: Malas Development secures a $74mm, three-year, interest-only construction loan with 75% LTC from Bank of America to develop a 256-unit multifamily asset in Teaneck, NJ (MHN)

• Multifamily: Embrey Development Company obtained a $58mm, floating-rate loan from MetLife Investment Management to refinance a multifamily asset in Orlando, FL (CommercialObserver)

• Multifamily: Osborne Investments secures a $39mm construction loan from Forman Capital for a 97-unit luxury condo development in Miramar Beach, FL (CommercialObserver)

• Multifamily: A partnership between Pelican Communities and Brooks Street obtained a $29mm senior bridge loan from Lightstone Capital to renovate a 52-unit multifamily asset (connectcre)

Developments

• Life Sciences: Edgemoor Infrastructure & Real Estate, together with Harrison Street, top out a $178mm, 345k sf research facility in Arlington, VA (commercialsearch)

• Multifamily: NewPoint Real Estate Capital provided a $58mm, fixed-rate, five-year, interest-only Freddie Mac loan to refinance a 400-unit asset in Raleigh, NC (REBusinessOnline)

• Office: A partnership between KDC and Pacific Elm Properties breaks ground on a 500k sf office development in Dallas, TX. Bank of America has signed on to be the anchor tenant with a 238k sf lease (REBusinessOnline)

• Office: Morning Calm Management plans a 181k sf office asset in downtown West Palm, FL (CRENews)

• Multifamily: JV between Cantor Fitzgerald and Silverstein Properties opens a 334-unit luxury multifamily community in Las Vegas, NV (MHN)

• Multifamily: Mill Creek Residential breaks ground on a 304-unit multifamily community in Tampa, FL. Move-ins are expected in 2025 (REBusinessOnline)

• Multifamily: Greenlight Communities breaks ground on a 159-unit affordable housing community in Phoenix, AZ. Leasing is set to begin in October of 2024 (REBusinessOnline)

• Hospitality: Noble Investment Group breaks ground on a 153-key, Tempo by Hilton Savannah-branded, hotel in Savannah, GA (HotelManagement)

Distress

• Office: $123mm CMBS Loan on 40 Wall Street in New York, NY sent to special servicing. The 1.2mm sf office asset’s loan was sent to Rialto Capital (Bisnow)

Leasing

• Industrial: Daikin, an HVAC systems manufacturer, signs a 501k sf lease at Pagewood’s The Great 290 Distribution Center in Houston, TX (RNR)

• Industrial: Paramount Transportation signs a 65k sf lease at EastGroup Properties’ World Houston International Business Center in Houston, TX (REBusinessOnline)

• Office: Fay Servicing signs a 48k sf lease in Browning Place I, a 183k sf office asset in Dallas, TX (REBusinessOnline)

On the Market

• Multifamily: Crescent Heights hires CBRE to market Nema Chicago, a 800-unit multifamily asset in Chicago, IL (Bisnow)

Meme Summary

Merch Spotlight