Good Morning/Afternoon All!

Massive news as Healthpeak Properties (NYSE: PEAK) and Physicians Realty Trust (NYSE: DOC) announce a $21bn merger to start the week. Demand for big box industrial is slowing at the national level. CBRE plans $150mm in cost cutting measures aimed at its brokerage business. Whitestone rejects a buyout offer from Fortress. Charles Cohen has a problem with his NYC office portfolio. And a the proposal for a casino in NYC now includes affordable housing. Look for additional data from the Treasury today at 3pm with regards to the auction size of T-bills going forward.

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Capital Markets

Market News

• U.S. Treasury expected to boost auction size for bills, notes, and bonds in Q4 to help finance a worsening budget deficit. The recent rise in Treasury yields has partly been tied to concerns over the U.S. fiscal deficit and has investors waiting for the Treasury’s release of its quarterly borrowing requirements on Monday at 3pm ET (Reuters)

• Buy-to-rent investors in the UK have paid down roughly £1.2bn in mortgage debt as the fixed-rate interest on their loans expires and higher rates kick in. Landlords are facing issues with meeting their debt yield and DSCR stress tests when refinancing (Telegraph)

• Florida is facing an insurance crisis as home insurance costs rise and insurers pull out of the state. Homeowners with mortgages that have home insurance requirements are finding reinsuring their homes difficult as companies start to crack down on prior claims history of each home (Yahoo)

• Consumers spending rises by 0.7% in September, but economists deem it unsustainable as the personal savings rate drops to 3.4% in September, down from 4% in August. Economists are concerned with households dipping into savings to support spending since they must now deal with higher costs and interest rates (Morningstar)

• United Auto Workers’ union leaders reach tentative agreement with Ford on Sunday that includes $8.1bn in plant investments, $5k ratification bonuses, 25% compounded wage increases, and other gains for workers. The UAW union also reached a tentative agreement with Stellantis on Saturday, but has yet to reach any agreement with GM (CNBC)

CRE Headlines

• Healthpeak Properties (NYSE:PEAK) and Physicians Realty Trust (NYSE: DOC) announce they have entered into a merger agreement valued at $21bn. Under the agreement each common share of PEAK will be converted to 0.674 shares of DOC. The combined portfolio will result in 52mm sf of healthcare properties (DOC)

• Demand for big-box industrial is slowing as tenants become more cautious with large corporate capex spending (including signing a lease) in today’s environment. Major industrial REITs expect rent growth to slow for big box space, spaces over 200k sf, but have optimism for spaces under 150k sf. With 455mm sf of industrial under construction in the US, developers could find the lease-up time slower than estimated depending on market (Bisnow)

• CBRE plans to cut $150mm in costs with a focus on its brokerage business. The firm had hoped for a faster recovery, but with transaction activity slowing down due to high interest rates and economic uncertainty the firm is pushing cost cutting measures. The firm’s third quarter revenue, after adjusting for subcontractor work, dropped by 4.2% in Q3 (CoStar)

• Whitestone REIT rejects takeover offer from Fortress Investment Group. The retail REIT had a market cap of roughly $460mm last week with shares jumping slightly on news. Whitestone is currently in a legal battle with Pillarstone REIT and its former CEO. Pillarstone REIT received a default notice on one of its Dallas office assets in September (Bisnow)

• Billionaire Charles Cohen reaches $600mm in delinquencies at five office assets in New York City. The five troubled assets are 805 Third Ave, 3 Park Ave, 222 East 59th St, 750 Lexington Ave, and the Decoration & Design building at 979 Third Ave (TheRealDeal)

• Soloviev Group proposes building 513 units of affordable housing as part of its bid for a casino license in Manhattan. The current proposal would include 1,325 units for multifamily and condos, a 1,200 key hotel, retail spaces, and 4.7 acres of waterfront green space open to the public (Urbanize)

Deals Deals Deals

Sales

• Hospitality: Sunstone Hotel Investors announces the sale of a 1,060-key hotel in Boston, MA for $370mm. The sale price represented a 12.1x multiple on hotel adjusted EBITDAre and 7.1% cap rate on hotel NOI based on the trailing twelve months as of end of Q2 (Yahoo)

• Industrial: Rexford Industrial Realty announces the $120mm acquisition of a 993k sf industrial asset in Los Angeles, CA. Rexford also provided a five-year, 8.0% fixed-rate, $125mm construction loan to the undisclosed seller for the adjacent 150-acre industrial site. The loan has a right-of-first-offer on the site (PRNewswire)

• Industrial: AIC Industrial sells a two-building, 140k sf industrial portfolio for $20mm outside of Washington D.C. The company acquired the asset for $13mm in 2016 (CommercialObserver)

• Multifamily: Trion Properties acquires a 471-unit garden-style multifamily community in outside of Dallas, TX from Ambo Properties. Trion took out a $40mm acquisition loan from First-Citizens Bank & Trust Co. (MHN)

• Multifamily: Morgan Properties acquires a 470-unit multifamily community in Indianapolis, IN (connectcre)

• Office: National India Hub Foundation acquires a 106k sf suburban Chicago, IL suburban office asset from Somoha LLC for $3.5mm. The buyer intends to convert the property into a community center (REBusinessOnline)

Debt

• Office: RXR obtains a loan extension/modification on the $1.2mm loan for the 1.8mm sf office asset at 1285 Sixth Ave in New York, NY with lenders Morgan Stanley and AIG (TheRealDeal)

• Industrial: JLL secures $869mm refinancing for an undisclosed borrower’s 25-property, 11.4mm sf national industrial portfolio. The fixed-rate loans were provided from Northwestern Mutual and PGIM Real Estate (connectcre)

• Multifamily: Rosso Development secures a $45mm construction loan from Bank of OZK for a 228-unit condo development project in Miami, FL (CommercialObserver)

• Hospitality: Excel Group obtains a $26mm refinancing for a dual-branded, 221-key hotel in Jacksonville, FL (REBusinessOnline)

• Multifamily: Tryko Partners secures a $22mm, nonrecourse, fixed-rate, 35-year amortization, 7-year Interest-only Fannie Mae loan to refinance a 101-unit multifamily community in Carteret, NJ (REBusinessOnline)

Developments

• Life Sciences: Georgetown Company and Beacon Capital Partners announce plans for a seven-story, 185k sf life science building in New York City’s Hell’s Kitchen neighborhood between 50th and 51st streets (NewYorkYIMBY)

• Multifamily: Crescent Communities opens a 400-unit luxury multifamily community in South Jordan, UT. MAA provided Crescent with a $60mm construction loan in 2021 (MHN)

• Industrial: Stotan Industrial begins work on 100k sf warehouse project in suburban Chicago, IL (connectcre)

• Industrial: Cervenka Development Partners secures JV equity from Monocle Group to develop a 119k sf industrial facility in Morris County, NJ (NJBiz)

• Self-Storage: Basis Industrial opens a 111k sf self-storage facility managed by Public Storage in Plymouth, MA (MHN)

Distress

• Multifamily: TA Partners defaults on $197mm in loans tied to two Los Angeles, CA projects. Mack Real Estate Credit Strategies provided two senior loans in 2022 (TheRealDeal)

Capital Raising

• Diversified: Highline Real Estate Capital launches $350mm Fund I for value-add and distressed opportunities across the Southeast. $175mm will be used for debt opportunities, $100mm for JVs, and $75mm for discretionary capital commitments (RECapitalUSA)

Meme Summary

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