Happy Monday to All!!!

Former Co-CEO of ROCO Real Estate pleads guilty to falsifying financial records and "The Cash Flow King" podcast host is charged with running a Ponzi scheme. The build-to-rent space is getting all the SFR attention right now, while developers turn to non-traditional sources of capital to finance deals. The US avoided a government shutdown at the last minute but is still facing a number concerning issues that could signal a downturn. UAW continues its strike but spares Mack Trucks after an agreement was reached over the weekend.

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Capital Markets

Market News

• United Auto Workers enter 3rd week of strike with GM, Ford, and Stellantis. Over the weekend, an agreement was reached with Volvo-owned Mack Trucks to “deliver significantly increased wages and continue first-class benefits” the UAW and Mack President announced (Reuters)

• A Government shutdown was avoided late Saturday after the President signed a temporary funding bill after Congress approved a bipartisan deal. The bill dropped aid to Ukraine and increased federal disaster assistance by $16tn. The bill funds the government until November 17 (AP)

• Key indicators are flashing signs of a downturn. Households on average have less savings now than at the start of the pandemic, credit delinquencies are starting to climb, and tightening lending standards are all flashing early signals seen at the start of a downturn (Bloomberg)

• FTX customers burned by the company’s bankruptcy are still optimistic on the crypto industry and pouring money back in (CNBC)

• California proposes bill aimed to address race and gender in venture capital funding by requiring VC firms to disclose the race and gender of founders for companies they fund. The bill is largely opposed by the business community and supported by civil rights groups (TheGuardian)

• Travel website, Booking.com, has not paid many hotel operators and partners across the world since July. The travel company has in some cases taken payment upfront for future reservations with passing payment along to the operators (TheGuardian)

• Only 10% of the $1.5tn junk-bond market has seen rates reset, with many companies still benefiting from low pandemic borrowing rates. An “iceberg” could be waiting for corporations if rates remain elevated (MSN)

CRE Headlines

• According to a Bloomberg survey, two-thirds of the 919 respondents believe the office market won’t hit bottom until the second half of 2024 or later. With about $1.5tn in CRE loans due before 2025, refinancing will prove challenging for the 25% of property that is office (Yahoo)

• SFR Investors are pivoting to the build-to-rent space and buying up from builders. Finding one-off properties to invest in has become difficult as supply has dried up amid rising rates. With many potential homeowners priced out of the market, the demand for rentals has grown as these buyers are forced to remain renters (Bisnow)

• Tyler Ross, former Co-CEO of ROCO Real Estate, a CRE firm that invests and manages multifamily assets in the Midwest, pleaded guilty to falsifying financial records to deceive lenders (Justice.gov)

• SEC charges “The Cash Flow King” podcast host, Matthew Motil, with fraudulently raising $11mm from over 50 investors in a Ponzi scheme involving notes backed by residential properties. The complaint alleges Motil sold multiple notes backed by the same property to multiple investors and rather than renovate properties, would use investor money to make payments to to previous investors while funding his lavish lifestyle (SEC.gov)

• Developers turn to life insurance companies and family offices to fund projects as banks tighten lending standards and restrictions. With banks requiring a lower LTV, developers need to raise more equity or use contingency funds to bridge the financing gap. This has lead to tapping into more non-traditional financing sources (Bisnow)

Deals Deals Deals

Sales

• Medical Office: Sila Realty Trust acquires a 105k sf medical office building in suburban Chicago, IL for $60mm. The seller Healthcare Realty had purchased the asset from Duke Realty in 2017 (commercialsearch)

• Industrial: A private family office acquired a 200k sf distribution center leased to Fedex Ground for $48mm in suburban Bozeman, MN (REBusinessOnline)

• Hotel: Stockdale Capital Partners acquired the InterContinental in Houston, TX. The 354-key hotel was developed in 2019 by Medistar Corp in partnership with TRC Capital Partners (RealtyNewsReport)

• Retail: Bucksbaum Properties acquires a 111k sf shopping center, Plaza La Mer, in Juno Beach, FL (PRNewswire)

Debt

• Office: Namdar and Empire Capital secure $111mm loan from Reznik Paz Nevo Trusts to fund the acquisition of 529 Fifth Ave and 587 Fifth Ave in New York City. 529 Fifth Ave had been under contract since June. Silverstein is the seller of 529 Fifth Ave (Bisnow)

• Multifamily: Stellar Management and Karten Organization secure a $64mm construction loan to build a 197-unit multifamily building the Bronx in NYC (CommercialObserver)

• Hotel: Driftwood Capital refinances 150-key hotel in West Palm Beach, FL. Bank of America provided a $47mm loan to refinance the Canopy by Hilton-flagged hotel (CommercialObserver)

• Multifamily: Kingsdel Real Estate secured a $34mm construction loan for a two-building multifamily project in Brooklyn, NY. The loan was provided by Urban Standard Capital (CommercialObserver)

• Multifamily: MG Developer and Baron Property Group secure $18mm loan for a 663-unit multifamily development in Hialeah, FL (YieldPro)

• Senior-Housing: Lument provided a $13mm Fannie Mae loan to refinance a 137-unit senior housing community in Houston, TX. The fixed-rate loan was on a 10-year term, with 4 years interest-only, and a 30-year amort (REBusinessOnline)

Developments

• Mixed-Use: SJC Ventures breaks ground on 54-acre Montgomery Township, NJ mixed-use development. The development will feature 293k sf of retail space and 34 single-family homes. Whole Foods will anchor the retail space (REBusinessOnline)

• Mixed-Use: Golub & Co. and Formativ break ground on 17-acre Denver mixed-use development. The development will feature office, retail, condos, and entertainment space (Bisnow)

• Industrial: Cascade Civil Development acquires a 150-acre industrial site north of Portland, OR. The site has the potential to accommodate nearly 2mm sf of industrial assets. Weyerhaeuser was the seller (REBusinessOnline)

 Distress

• Office: Pendulum Property Partners sold 394k sf One Pacific Plaza in southeast Los Angeles, CA for $42mm. The office building traded for $125mm five years ago (Commercial Observer)

• Multifamily: Brookfield is partnering with Ballast Investments to acquire Veritas’ loan portfolio backed by 95-apartment buildings in San Francisco, CA for $800mm (GlobeSt)

Leasing

• Office: Tower Street Insurance and Fieldwork sign a 19k sf lease and a 14k sf lease at KBS’ Providence Towers in Dallas, TX (REJournals)

• Office: Ramp, a fintech startup, subleases 66k sf from Microsoft at 28-40 West 23rd St in Manhattan. Williams Equities said a long-term lease will go into effect once Microsoft’s deal ends in 2024 (Yahoo)

Meme Summary