Happy Wednesday!

The California Attorney General announced a settlement with Invitation Homes over allegations of violations of the California Tenant Protection Act (TPA) and California’s price-gouging law. The multifamily sector is looking to ride out 2025 as new supply, high interest rates, and debt maturities create choppy waters. The hotel industry is branching out and creating new partnerships in an effort to obtain new travelers. And data center demand in the DFW market explodes over the last three years. The SEC claim’s its Bitcoin ETF approval tweet on X (can they still be called tweets or just posts?) was a result of an account hack, banks expect earnings to be down for Q4 2023, retailers increase their sales’ outlooks after a strong holiday season, and BlackRock announces global layoffs

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Capital Markets

Market News

• Bitcoin ETFs Not Yet Approved, SEC’s X Account Hacked

  The SEC said someone hacked their X (formerly Twitter) account and posted a message saying bitcoin ETFs had been approved. The SEC clarified the ETFs have not been approved and will work to investigate who had gained control

• U.S. Bank Profits Expected to Shrink For Q4

  With the higher interest rates the number of troubled loans has risen causing banks to increase their loan loss reserves and while paying out more interest on deposits. The result of these higher costs is expected to impact U.S. Banks net interest income significantly. Q4 earnings are expected to slide as much as 25% YoY for some major banks

• Retailers Are Increasing Their Sales Estimates

  Major apparel retailers have been adjusting their sales estimates upward after a strong Holiday season. A slowdown in food inflation and gas prices has them thinking consumers will use the extra funds to treat themselves. Retailers also noted that the discounts offered in 2023 were lower than those for 2022

• BlackRock to Layoff 600 Employees

  On Tuesday, BlackRock announced it would layoff 3% of its global staff. Despite the layoffs the asset manager expects to end 2024 with more employees as it reallocates resources. BlackRock also laid off 2.5% (500 people) employees last January. The company reported clients pulling $13B from long-term investments in Q3 2023

CRE Headlines

• Inland Real Estate To Buy A Majority Interest In a Self Storage Operator

  The Inland Real Estate Group of Companies, Inc. announced an agreement for Inland to purchase a majority interest in the business of Devon Self Storage Holdings LLC. Devon currently manages 202 properties and approximately 109,000 units nationally

• Invitation Homes To Pay Nearly $4M In Fees And Refunds Over Unlawful Rent Increases

  California Attorney General announced a settlement with Invitation Homes over allegations of violations of the California Tenant Protection Act (TPA) and California’s price-gouging law. The TPA prohibits landlords from raising rent annually by the lesser of; 5% plus the percentage change in the annual cost of living, or 10% total. California’s price-gouging law, prohibits landlords from increasing the price of rental housing by more than 10% during and in the aftermath of a state of emergency. As part of the settlement, Invitation Homes will pay $2.04M in civil penalties along with additional compliance measures. Invitation Homes also refunded or credited tenants the amount it collected in excess of state rent caps, plus 5% interest, totaling over $1.68M

• Multifamily Sector: Survive Until 2025

  High interest rates continue to hinder deal making, with many multifamily investors looking at pending loan maturities that will see them have to refinance at much higher rates. There are buyer pools who are waiting for opportunistic deals but the pricing currently is too far off from seller expectations. Rents are also projected to grow slowly over the next few years which will dampen projections, and in turn pricing. The Urban Land Institute expects rents to grow by 2% in 2023, thanks to vast amounts of new assets being delivered. The result is current owners shifting to an asset management strategy and stabilizing rent rolls vs. increasing rents

• Increased Competition In The Hotel Industry Leads to New Partnerships

  As customer acquisition costs rise in the hotel industry new partnerships are being made with nontraditional partners such as food delivery apps, cruise lines, social clubs, and health clubs. Increased competition from short-term rentals, glamping, and other lodging has caused RevPAR to slow down relative to inflation

• Data Center Demand Remains Strong In Dallas-Fort Worth

  The DFW market ended 2023 with 386MW of total absorption, a sharp increase from prior years. Vacancy ended at 3.7%, an all-time low, while the construction pipeline remains strong with 225MW (1.4M sf) under construction with the vast majority of 2024/2025 deliveries already pre-leased

  DFW Annual Total Data Center Absorption

  

  Source: Cushman & Wakefield

Deals Deals Deals

Sales

• Multifamily: Quarterra sold a 171-unit apartment asset in suburban Denver, CO for $57M to Green Leaf Partners 

• Student Housing: Inland Group acquires Epoch Clemson, a 994-bed student housing community in Clemson, SC, from Harrison Street

• Industrial: Prologis acquires a 240K sf industrial asset in Los Angeles, CA from The Gehr Group for $50M

• Industrial: Staley Point Capital and Bain Capital Real Estate sold a 91K sf industrial asset in Los Angeles, CA for $38M to an undisclosed buyer

• Industrial: CapRock Partners acquires a 160K sf industrial property in Woodinville, WA for $34M from Ares Management

• Retail: Regal Ventures acquires a 38K sf retail asset in Los Angeles, CA’s Sunset Blvd. for $30M from CIM Group 

Debt

• Multifamily: Lightstone secures a $166M Freddie Mac loan to refinance a 430-unit multifamily asset in Brooklyn, NY

• Student Housing: Landmark Properties secures a $140M, 5-year loan from Helaba Bank for The Mark Athens, a 1,364-bed student housing community in Athens, GA

• Multifamily: Starfield Companies secures a $80M construction loan from Unity Capital to finance a 226-unit multifamily development in Asbury, NJ. An additional $21M in equity was raised via CrowdStreet

Developments

• Multifamily: Hillwood opens The Casey, a 300-unit luxury multifamily community outside of Dallas, TX

• Retail: NewQuest Asia-Pacific Retail to break ground next month on the redevelopment of a former grocery-anchored shopping center in Naperville, IL

• Retail: Clara Homes acquires a 17K sf retail site in Miami, FL’s Wynwood neighborhood for $8M to redevelop the asset

• Hospitality: Rentyl Resorts plans to develop a 44-unit boutique hotel at 2814 Collins Ave. in Miami, FL. The project is a partnership between Rentyl, DaVinci Hospitality Group and Ferrari Group

Distress

• Office: First Citizens Bank and Trust acquires 1540 Second Street, a 77K sf office asset in Santa Monica, CA, for $87M from Realty Bancorp Equities after the seller defaulted on $109M in loans tied to the asset

Meme Summary

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