Happy Friday!

Ethan Penner, credited with creating the CMBS market in the 1990s, and Chad Carpenter, plan to launch a mortgage REIT targeting office assets. San Diego’s industrial market sees vacancy rise beyond 5%. A Japanese home manufacturer acquires a U.S. homebuilder, becoming the fifth largest U.S. homebuilder. And Brookfield forecloses on 62 multifamily assets in San Francisco making it one of the largest landlords in the market. Jobless claims fell below economist expectations, Macy’s looks to make major job cuts, mortgage rates drop, and Congress approves a bill to fund the government through March

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Capital Markets

Market News

• Jobless Claims Fall To Lowest Since September 2022

  Americans making first-time claims for jobless benefits dropped to 187,000 for the week ending January 13, down by 16,000 from the week before, and below economist estimates of 205,000. Some economists caution that the number could be revised upward from potential disruptions from harsh winter weather last week. A separate reported noted CEO turnover increased by 55% in 2023, with 1,914 CEO changes

• Macy’s To Cut 2,350 Jobs And Close 5 Stores

  The U.S. department store is expected to layoff 3.5% of its workforce and close five stores in an effort to streamline operations. The incoming CEO is also focused on cutting promotions in an effort to improve margins

• 30-Year Mortgage Rates Fall To Lowest Since May 2023

  According to Freddie Mac, the 30-year mortgage rate fell to 6.60% on Thursday, down from 6.60% last week, The rate is the lowest since May 2023. A separate report from Investopedia, reported the interest rate on a 30-year mortgage without any teaser rates, was 7.24%

  30-Year Mortgage Rates

  

• Congress Approves Funding To Avoid Government Shutdown (Again)

  The U.S. House of Representatives approved a stopgap bill to fund the federal government through early March and avoid a partial government shutdown. The bill was approved 314-108, with 106 Republicans and 2 Democrats opposing it. The bill was sent to the President for final approval. The bill was accelerated because of an incoming snowstorm that could impact travel on Friday

CRE Headlines

• Sekisui House To Acquire M.D.C. Holdings, Inc. For $4.9B

  Sekisui House a Japanese house manufacturer and M.D.C. Holdings, Inc. (NYSE: MDC), a U.S. homebuilder announced Sekisui House will acquire MDC in an all-cash transaction with an equity value of $4.9B. MDC shareholders will receive 63.00 per share in cash, an approximately 19% premium to MDC's closing stock price on January 17. Upon closing, Sekisui House will become the fifth largest homebuilder in the U.S. (based on 2022 numbers), helping Sekisui House to achieve its target of supplying 10,000 homes outside of Japan by FY2025

• Creator of CMBS Plans To Launch An Office Mortgage REIT

  Ethan Penner, credited with creating the CMBS market in the 1990s, and Chad Carpenter, have formed Reven Office REIT to finance office assets. The new mortgage REIT is seeking $100M from a lead investor and $900M through a “blind pool” IPO. Given the acceleration of office defaults and foreclosures along with discounted notes and asset sales, the Company expects capitalize on these market dislocations by investing in Class A office across the country’s top 25 MSAs

• San Diego’s Industrial Vacancy Rises Above 5%

  Vacancy rose to 5.43% in Q4 of 2023 in San Diego. The highest in three years. New construction in Q4 outpaced leasing activity resulting in negative net absorption. Total negative absorption for 2023 was 2.35M sf. Vacancy was highest for flex space, at ~8%, thanks to unoccupied life sciences space. The market was also skewed after a 1M sf distribution warehouse was delivered 78% vacant in Q4

  San Diego Demand

  

  Source: Colliers

• Brookfield Forecloses on Veritas Multifamily Portfolio In SF

  On Thursday Veritas’ San Francisco 62-property multifamily portfolio went to auction without any bidders emerging. Ballast and Brookfield will now take control of the 2,165-unit apartment portfolio after having previously acquired the debt, which was once valued at $915M

Deals Deals Deals

Sales

• Multifamily: An affiliate of Equus Capital Partners acquired a six-property, 1,249-unit, garden-style multifamily portfolio across Atlanta, Philadelphia, Raleigh and St. Louis for $220M

• Multifamily: Equity Residential sold Regency Palms, a 310-unit multifamily community in Los Angeles, CA for $127M

• Multifamily: Universe Holdings acquired Pearce at Pavilion, a 250-unit multifamily asset in Tampa, FL for $66M. The acquisition included a Fannie Mae loan assumption with a 4.13% interest, several years of term remaining, and 47% LTV

• Medical Office: Hammes Partners acquires a 160K sf medical office asset outside Minneapolis, MN. The seller of the property has previously taken out a $43M construction loan in 2022 when developing the outpatient center

• Senior Housing: Great Expectations, LLC acquired a 108-unit assisted living and memory care community in Seattle, WA for $17M

• Industrial: Sterling Investors LP acquired a 43K sf distribution facility in Los Angeles, CA for $11M from Zurich Alternative Asset Management

• Office: BH Properties acquires Parkway Centre IV, a 153K sf office building in Plano, TX from Goldman Sachs Asset Management

Debt

• Multifamily: Canoe Brook Development secures a five-year, fixed-rate $150M loan through The Northwestern Mutual Life Insurance Company for a 426-unit luxury apartment building in West New York, NJ. The property is expected to be completed in Q4 2026

• Multifamily: Related Group lands a $100M construction loan from Santander Bank for the development of a 382-unit multifamily asset with 668 parking spots and 9K sf of retail

• Multifamily: Space Craft and Swinerton raise $35M in equity from a Japanese investor and secure a $98M construction loan for a 389-unit multifamily development in Charlotte, NC

• Industrial: Capital Development Partners secured $23 million in construction financing to build a 39-acre industrial facility in Summerville, SC. Southern States Bank provided a three-year, nonrecourse construction loan with 65% LTC

• Multifamily: Adellco secures a $22M inventory loan from Lancewood Capital for its new condo development in New York, NY’s Upper East Side neighborhood

Developments

• Multifamily: Related Midwest breaks ground on the 72-story, 635-unit North Tower of its Streeterville development in Chicago, IL. Phase I is expected to be completed in early 2027

• Industrial: Tempus Realty Partners completes a 530K sf industrial asset in Conway, AR. The asset will be fully leased by Westrock Coffee

Capital Raising

• Diversified: Rockpoint has raised $5.1B including the close of Rockpoint Real Estate Fund VII with $2.7B in total equity capital and an additional $2.4B in commitments for two single-investor funds and one single-asset continuation vehicle. Fund VII will target opportunities in the U.S. across industrial, multifamily, single-family rental, hospitality and select office investments

• Life Sciences: Trinity Capital Advisors, has partnered with Foundation Capital Ventures to establish Foundation a new Trinity Capital portfolio company focused on real estate solutions that support the growth of the life science, technology and innovation sectors across the U.S.

Leasing

• Industrial: TriColor Auto Group, an auto sales and financing company, preleased BlueScope Properties Group 258K sf industrial project in Surprise, AZ

• Office: Deloitte signs a long-term 100K sf lease at Granite Properties and Highwoods Properties’ new 626K sf office development in Dallas, TX

Meme Summary

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