Good Morning!

Investors seeking to shutdown CrowdStreet after Nightingale fiasco, Class A multifamily rents drop by lower amounts than their Class B/C counterparts in high supply markets, nearly 7% of CMBS was entered special servicing in 2023, and new German investment in U.S. CRE dropped considerably over the last six quarters. In broader news, the U.S. added nearly double the estimated jobs in January, California is battered by rain, and Jerome reiterates his expectation that rate cuts are unlikely to come in March

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Capital Markets

Market News

• U.S. Adds 353,000 Jobs In January, Nearly Double The Amount Estimated

  Nonfarm payrolls grew by 353,000 in January, beating the Dow Jones estimate of 185,000. The unemployment rate remained at 3.7%, against the estimate for 3.8%. Professional and business services with led the way with 74,000 new jobs, followed by health care with 70,000, retail trade: 45,000, government: 36,000, social assistance: 30,000, and manufacturing: 23,000

  Monthly Job Creation

  

• 800,000 Without Power In California, Due to Weekend Storm

  Central and Southern California are being impacted by severe rain with many area’s expected to receive a month’s worth of rain, roughly 3 to 6 inches. Communities in Santa Barbara, San José, Los Angeles and Ventura County received evacuation orders, while San Francisco issued a hurricane force wind warning with winds expected to reach 40 to 60 mph, and gusts of up to 95 mph. The worst of the storm was expected to fall between Sunday and Tuesday

• Fed Chairman Expects Rate Cuts To Come Beyond March

  In an interview with CBS, Jerome Powell said the central bank would look for more data to support inflation is headed down to 2% before cutting rates. He also mentioned the FOMC would be unlikely to reach a level of confidence by the March 19-20 meeting to cut rates then. Powell suggested rates were more likely to happen in the middle of the year

CRE Headlines

• Investors Looking To Shutdown CrowdStreet

  A group of investors who lost money on Nightingale Properties offerings via CrowdStreet have filed an arbitration claim with FINRA seeking $3M in damages and an injunction that could effectively stop it from operating. Attorney’s are arguing the crowdfunding platform acted as an unlicensed broker-dealer and didn't conduct the proper due diligence when evaluating the deals Nightingale brought to the platform

• Class A Apartment Rents Less Impacted By Rent Cuts

  Data from a six markets with a high increases in supply shows Class A luxury rents were less impacted by rent cuts in 2023 compared to other tiers. These same markets are expected to receive nearly double the supply they received in 2023, in 2024. These market will continue to see their inventory grow by at least 6% this year

  Rent Cuts In High Supply Growth Markets

  

• 6.84% of CMBS Universe in Special Servicing

  6.84% of the $600.45 billion CMBS universe was entered special servicing in 2023. Office lead the way with $14.8B worth of loans, followed by retail with $11.2B, and Hotels with $6.4B. Rialto Capital Advisors was the top special servicer with $8.6B in loans, representing over 20% of the market

  CMBS Special Servicers

  

  Source: Trepp

• German Capital Investments In U.S. CRE Slows Down

  German institutional investment in the six quarters leading up to Q4 2023 invested only $1.2B in U.S. real estate. In the six quarters before that $8B had been invested, marking an 85% decline. Higher interest rates caused a reassessment of the market

Deals Deals Deals

Sales

• Retail: Kempner Properties acquires Oakbrook Station, a 138K sf grocery-anchored center outside of Charleston, SC, from LBX Investments for $29M. The asset last traded for $22M in 2019

• Multifamily: Waterton acquires 15 Bank, a 501-unit multifamily community in White Plains, NY

Debt

• Hospitality: EKN Development and Garn Development secure $67M in construction financing for the development of a dual-branded, 215-key hotel in Monterey, CA. HALL Structured Finance provided a $39M first mortgage loan and Nuveen Green Capital provided a $28M C-PACE loan

• Multifamily: Apollo Global Management and Liberty Base Investment secure a $56M loan from Israel Discount Bank to develop a 278-unit multifamily high rise in Fort Lauderdale, FL

• Multifamily: Trion Properties secures a $37M Fannie Mae loan to acquire a 344-unit multifamily community in Orlando, FL. Terra Capital sold the asset

• Multifamily: Bela Flor Communities secures a $35M construction loan for a 112-unit, 16-property multifamily community in suburban Phoenix, AZ. The loan term consisted of 80% LTC, full-term interest-only, with no recourse, and an initial 30-month term

• Hospitality: First Choice Investments and The Chetrit Group secure a $8M bridge loan from Avatar Financial Group for a 460-key Hilton-branded hotel in Pittsburgh, PA. The loan carries a 24-month term and ~26.5% LTV

Developments

• Industrial: Related planning to swap uses at its $8B Related Santa Clara development in San Jose, CA. The office uses will be replaced with industrial and manufacturing use

• Industrial: Prologis acquires 2731 West 12th Street, a 16-acre site, in Brooklyn, NY for $51M from National Grid. The lot is zoned M3-1 and will most likely be redeveloped into an industrial facility

• Industrial: Hines to develop a 1.2M sf industrial facility in Fort Worth, TX for Grainger Industrial Supply

• Multifamily: Palladium completes a $55M, 270-unit multifamily community in Dallas, TX. 243 units are reserved for households earning between 40% to 80% of median area income

• Multifamily: The NHP Foundation, Capital A Housing and the Austin Housing Finance Corp. break ground on Seabrook Square, a 204-unit affordable housing project in Austin, TX

Distress

• Office: Slater Family Holdings acquires an eight-story. 76K sf office asset in Boston, MA for $15M. The asset was foreclosed on by M&T Bank after Aegean Capital was unable to pay off the loan which had an outstanding balance of $28M

Capital Raising

• Multifamily: American Landmark Apartments closes American Landmark Fund IV with $1B in capital commitments which will seek to make value-add investments in the sunbelt region

• Diversified: Town Lane seeking to raise $1B for warehouses, hotels and multifamily buildings in Sun Belt cities. The firm has closed on $750M in capital commitments YTD

• Industrial: Bridge Investment Group launches an industrial net-lease vehicle

Meme Summary

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