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Alphabet spent $1.8B exiting leases early in 2023, Starwood CEO predicts big drops in values for office, Walmart to open 150+ new locations, and trade route disruption could be good for industrial real estate. Fed signals interest rates might stay high through May, New York Community Bancorp reports higher than expected losses after acquiring Signature Bank assets last year, Chinese hackers used old routers from home offices to hack into U.S. infrastructure, and a partnership with Amazon will now offer up to $10M loans to help Amazon sellers grow

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Capital Markets

Market News

• Fed Signals A March Rate Cut Is Unlikely

  Stocks fell Wednesday afternoon after the Fed Chair said the FOMC would likely not be comfortable with the path of inflation to begin cutting rates by the next meeting in March. The PCE index, the Fed’s choice for measuring inflation, will be updated only once before the March meeting, placing more emphasis on the May meeting which will allow for more inflation data

• New York Community Bancorp Facing Turmoil After Purchasing Signature Bank Assets in 2023

  NYCB stock plummeted nearly 50% on Wednesday after reporting a $252M net loss in Q4 and cutting its dividend. By acquiring billions in loans from Signature Bank last year the NYCB broke the $100B asset threshold subjecting it to higher loan loss provisions, which require it to set aside more capital in the event of loan defaults. NYCB is largely a commercial real estate lender, which has prompted concerns due to the drop in office values. The bank’s net charge-offs rose to $185M from $1M the year prior, largely due to the drop in value of one office loan and one co-op loan

• State-Sponsored Chinese Hackers Used U.S. Home Offices To Hack Infrastructure

  Hundreds of U.S.-based small office/home office routers were hijacked by People’s Republic of China (PRC) state-sponsored hackers, known as “Volt Typhoon,”. The routers were infected with malware which was part of a campaign to target U.S. critical infrastructure. The vast majority of routers that were infected with malware were old Cisco and NetGear routers that were vulnerable because they were no longer supported through their manufacturer’s security patches or other software updates. The network was disrupted in December as part of court-authorized operation

• SellersFi And Amazon Team Up To Offer $10M Credit Lines

  SellersFi will provide eligible Amazon sellers with access to credit lines of up to $10 million through Amazon Lending. The credit lines will target larger sellers with revenues of $4M (or more) per year that are looking to scale up

CRE Headlines

• Google Parent Company Spent $1.8B Exiting Leases in 2023

  Alphabet paid $1.8B in 2023 to terminated leases early, incurring $269M in accelerated rent and depreciation. The company paid $1.2B to terminate office leases early in Q4 alone. The company has also halted an 84 acre development in San Jose, CA last year

• Starwood CEO Predicts $1 Trillion Loss In Office Values

  Barry Sternlicht expects a $1T in losses in the office market. According to Sternlicht there are $1.2T in losses that are unaccounted for. The CEO noted that banks have stayed away from CRE lending which has opened up opportunities for debt funds which “are having a field day”

• Walmart Planning To Open Over 150 New Locations

  Walmart is planning to open or convert over 150 large-format stores over the next five years. Some location will be expanded into a Supercenter format, which includes groceries. The company is also planning to more than 30 new Sam’s Clubs across the U.S. Details on the locations were not revealed

• Trade Route Disruption Could Boost Industrial Demand

  Houthi attacks are prompting container ships bound for the Suez Canal to be diverted around South Africa’s Cape of Good Hope adding extra days to transit times. The attacks impact roughly 12% of global trade routes. On the other end of the world the Panama Canal has seen reduced traffic due to drought conditions causing low water levels and preventing cargo ships from crossing. The Panama Canal accounts for 5% of global trade, but facilitates 72% of U.S. transit. The result of the trade disruption has been a spike in shipping costs. This level of trade route unpredictability could lead to companies leasing more space in an effort to diversify their port of access into and from the U.S. SoCal industrial could also stand to gain as the trade routes to Shanghai are clear

  Overall Global Shipping Costs (Freight Baltic Index)

  

Deals Deals Deals

Sales

• Retail: Sterling Organization acquires a 204K sf shopping center outside Dallas, TX from SITE Centers Corp for $42M

• Office: Syndicated Equities acquires Carhartt’s Global Design and Corporate HQ in Dearborn, MI, a 59K sf office asset, for $10M from Net Lease Office Properties 

Debt

• Multifamily: Terra and New Valley secured a $127M loan from MF1 Capital to refinance an existing $65M construction loan on a 460-unit multifamily community in Miami, FL

• Industrial: Portman Industrial secures a $29M construction loan from BMO Harris Bank for phase I of its 1.1M sf industrial business park in Taunton, MA

Developments

• Office: Brookfield Properties opens Two Manhattan West, a 58-story, 2M sf, office tower in New York, NY

• Office: Crescent and Nuveen complete the $30M renovation of One Independence in Charlotte, NC, a 552K sf office tower, after acquiring the asset in 2019 for $132M

• Multifamily: JPI breaks ground on a 222-unit transit-oriented community in Los Angeles, CA. The project is expected to be delivered in 2023

• Multifamily: BH3 Management acquired a 3-acre waterfront site in Miami, FL’s Watson Island for $25M with plans to develop a large residential condo project

• Industrial: Patrinely and Realterm break ground on a 439K sf, four-building industrial project in Austin, TX

Distress

• Office: Dreyfuss Holdings acquired 1616 N. Fort Myer Drive in Rosslyn, VA, a 150K sf office building in the D.C. market, for $25M from TIAA. The asset last traded for $145M in 2011

Capital Raising

• Industrial: Cabot Properties closes on Value Fund VII with $1.6B in equity commitment targeting acquiring, developing and redeveloping high-quality infill industrial assets across the U.S., Europe, and Asia Pacific. The fund will target investments mainly in multi-tenant buildings between 50K and 250K sf, with the majority of capital being deployed in

Leasing

• Industrial: NORKOL signs a 331K sf lease at CenterPoint Properties’ 900 Knell Road in Montgomery outside of Chicago, IL

• Industrial: Seaboard Corp. signs two lease renewal totaling 308K sf for two of its subsidiaries at Prologis’ Palmetto Tradeport in Medley, FL

Meme Summary

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