Goooood Morning Everyone!

Starting off hot with the first iteration of PropMemo today. Top headline is Evergrande filing for Chapter 15 Bankruptcy in the U.S. in hopes of shielding its assets while they undergo restructuring. A sharp decrease in Chinese home sales and increasing interest rate have put intense pressure on Chinese homebuilders. Multiple Chinese homebuilders have defaulted since the start of the country’s debt crisis in mid-2021. Meanwhile in the U.S., Buffet has taken the opposite approach and invested heavily in homebuilders despite interest rates continuing to hit new highs. In NYC, Mayor Adams revealed a push to streamline office-to-residential conversions and Fortress announced a $1bn deal to acquire debt backed by office assets from Capital One.

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Capital Markets

Market News

• 10-year treasury yield hits 15-year high (Wolf Street)

• Treasury market returns are negative again (MarketWatch)

• Atlanta Fed forecasts U.S. GDP growing at 5.8% in Q3 (Morningstar)

• Mortgage rates surpassed 7%, highest since April 2002 (Yahoo)

• Deflation could further impact CRE values (Yahoo)

CRE Headlines

• U.S. Homebuilder stocks defy higher interest rates, Buffet buys in (FT)

• New home sales in China drop by a third from a year ago prompting urge to for policy intervention (CNBC)

• Chinese developer Evergrande files for Chapter 15 bankruptcy (Reuters)

• CBRE reduces U.S. Hotel RevPar forecast for 2023 after weaker summer demand (hospitalitynet)

• NYC Mayor announces plans to streamline office-to-multifamily conversions (Gothamist)

• Reports from FDIC and MBA show total CRE loans total over $3tn (GlobeSt)

Deals

Sales / Development

• DHS and GSA will use $288mm in Inflation Reduction Act funding for two new HQ buildings in Washington D.C. (Federal News Network)

• JV between Canyon Partners Real Estate, Tavros, and Charney Companies secures $184mm to fund 260-unit multifamily asset in Brooklyn, NY (GlobeSt)

• NextPoint Residential Trust (NYSE: NXRT) is under contract to sell 2 multifamily assets in Texas for 5.12% and 4.55% cap rate (NXRT)

• InvestCorp buys 10-building office portfolio in San Antonio, TX from Omninet Capital (TheRealDeal)

Debt

• Fortress buys $1bn NYC office portfolio from Capital One (Yahoo)

• Eagle Rock Properties secures $200mm loan from Capital One for a 1,300-unit portfolio in New Jersey and New York (TheRealDeal)

• KBS contemplates surrendering the office asset with $125mm loan at 201 Spear St in San Francisco, CA to lender (TheRealDeal)

Capital Raising

• Cannabis real estate firm, Silver Therapeutics, gets $35mm investment from Big Plan Holdings (Bisnow)

Leasing

• Thor Equities signs Innovative Cellular Therapeutics to 11,924sf R&D space (Yahoo)

• CommonWealth Partners lures Sprinklr to a 23,623sf space at it’s office building 441 Ninth Avenue in New York, NY (Yahoo)