Good Morning!

Wholesale inflation comes in hot, Blackstone is all in on data centers (we knew this already), Equity Commonwealth faces investor pressure to liquidate, Los Angeles get $900M in federal funding for infrastructure, Dollar Tree to close nearly 1,000 Family Dollar stores, and return fraud rings are costing retailers over $100B a year

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Capital Markets

Headlines

• Wholesale Inflation Rises In February

  The U.S. Labor Department reported its producer price index, which tracks inflation before it reaches consumers, rose 0.6% in February, up from a 0.3% increase in January. Year-over-year, producer prices rose by 1.6% in February, the most since September. Higher wholesale gas prices, which rose 6.8% from January to February, drove much of last February's increase. Wholesale grocery costs also posted a large gain, rising 1%

• Billion Dollar Refund Fraud Rings Promoted On Social Media

  Fraud groups are taking advantage of retailers’ lenient return policies, which is cost retailers over $101B in 2023. Fraud groups recruit employees at large retailers to mark items as returned, while not returning anything. The recruits get a share of the cut and the group has money returned. Groups on Telegram and other social media apps create lists of retailers and successful fraud schemes or offer “fraud services” and “how-to” guides to members in the group

• Los Angeles Secures Nearly $900M In Infrastructure Funding

  The current administration awarded L.A. nearly $900M for public transportation and infrastructure improvements ahead of the 2028 Summer Olympics. LA Metro will receive roughly $710M through the Bipartisan Infrastructure Law and the United States Department of Transportation’s 2024 budget. The L.A. region has also been chosen to receive $160M to improve street and transit infrastructure, traffic safety and connectivity between neighborhoods

• Dollar Tree To Close Nearly 1,000 Stores

  After reporting a surprise Q4 loss, Dollar Tree plans to close about 600 Family Dollar stores in the first half of 2024, and 370 Family Dollar and 30 Dollar Tree stores over the next several years. Family Dollar will spend more than $594M closing or rebranding stores, essentially erasing profits from the holiday season

• Land & Buildings Calls On Equity Commonwealth To Liquidate Remaining Office Assets

  Land & Buildings Investment Management, LLC, a 3% shareholder of Equity Commonwealth (NYSE: EQC), released a letter to the Company’s Board which argued it was in the best interest of shareholders to liquidate its four properties and return cash to the share holders. The letter states the company is holding onto $2B in cash which represents 85% of its assets. The REIT has underperformed the broader index over the last 10-years and has $37M in G&A expenses to manage a four office asset portfolio

• Blackstone Sees Data Centers As The Next Hot Sector

  In 2021, Blackstone ramped up its activity in data centers with the $10B purchase of developer and operator QTS. Since the acquisition, Blackstone has grown the company’s development pipeline from deals ranging from $1B to over $18B in the U.S. and Europe. Recently, Blackstone formed a $7B JV with Digital Realty to build four hyperscale data centers and is in talks to buy Irish data center developer Winthrop Technologies for about $875M. The company believes the sector has benefitted not only from AI but also from companies moving business data processing and storage, as well as digital transaction activity from on-site locations into the cloud

Deals Deals Deals

Sales

• Hospitality: Crowne Partners bought the 335-key Crowne Plaza JFK Airport hotel in Queens, NY for $79M from GFI Capital Resources Group

• Student Housing: Champion Real Estate Company acquires Salisbury Campus Apartments, a five-building, 290-bed student housing community near Purdue University in West Lafayette, IN from Muinzer

Debt

• Hospitality/Residential: Cain International secures a $2B construction financing package to develop One Beverly Hills in Los Angeles, CA. The 17.5 acre resort will feature two residential towers, a hotel, and a 10-acre garden oasis

• Data Centers: Aligned Data Centers secures a $600M senior secured credit facility from Blackstone Credit & Insurance for the development of an 80MW build-to-suit data center in Salt Lake City, UT

• Retail: Pacific Equity Properties secured a five-year $135M loan from Torchlight Investors to refinance a 122K sf retail and office campus in Malibu, CA

• Office/Multifamily: American Real Estate Partners secured an $88M million debt package for an office-to-residential conversion project in Alexandria, VA. Bank OZK provided a $62M construction loan

• Multifamily: Volta Global secures $46M in construction financing from Keystone National to build a multifamily community in Southern Pines, NC

• Hospitality: Contender Development secures a $36M construction loan to develop a 137 extended-stay oceanfront Residence Inn by Marriott property in Ormond Beach, FL

Developments

• Multifamily: KTGY and Alliance Residential complete Broadstone Edition, a 264-unit multifamily community in Irvine, CA

• Life Sciences: Drawbridge Realty completed 16705 Via Del Campo Court, a speculative 81K sf office and R&D property in northern San Diego, CA

Distress

• Hospitality: Midas Hospitality purchased the nearly completed hotel at 291 Livingston Street in Brooklyn, NY from Hello Living and Abraham Leifer’s Aview Equities. The bankrupt 100-key hotel development was acquired for $35M. Acres Capital and Cingulate Group sued over defaulted loans totaling $34M last year

• Office: Woodside Capital Partners acquires a three-building, 200K sf, office park for $14M from The Atlanta Property Group in Atlanta, GA. The asset was acquired in 2017 for $22M

Leasing

• Industrial: Qcells, a solar panel manufacturer, signs a 843K sf lease at MDH Partners and CF Real Estate Investments’ 1.2M sf distribution center in Cartersville, GA, outside of Atlanta

Meme Summary

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