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Good Morning!

To all the L.A. peeps, hope you are staying safe. Fires remain out of control in L.A. with damage estimates between $52=$57bn, insurers are on the hot seat for cutting homeowners insurance to parts of California last summer, Ally to end new originations after borrowers stop paying due to high interest rates, and QSR & discount retailers look to be the tenants of the future in retail

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Capital Markets

Headlines

• Los Angeles Fires Damage Estimated at $52bn

  AccuWeather placed the damage estimate between $52bn - $57bn from the fires that have spread over 17,000 acres from the Palisades Fire and 10,000 acres from the Eaton Fire. CAL FIRE reported the fires were 0% contained as of Thursday morning

• Insurers Canceled Insurance Last Summer To Home Owners in Pacific Palisades

  State Farm, among others, previously canceled various homeowners policies in high-risk areas in California. Insurers have limited their policies in the state due to high risk of wildfires and state regulations that limit how much they can charge stating the premiums do not match the growing risk

• Ally to End Mortgage Originations

  Ally Financial Inc. to layoff less than 5% of staff, end originations, and consider strategic alternatives for its credit-card business. The group reported credit challenges across divisions as consumers struggle to pay back debt

• Retail Store Expansions Expected to Outweigh Closures

  While tenants like CVS, Walgreens, Big Lots, and Party City are facing store closures, retailers like Ollie’s, Barnes & Noble, Burlington, and Michaels have been quick to identify and backfill attractive locations. The quick service restaurant and convenience store sectors are expected to grow the fastest in the coming years, followed by discount retailers. Northmarq has compiled a list of the Top 100 tenant expansion trends

Deals Deals Deals

Sales

• Industrial: Norges Bank Investment Management acquires a 45% stake in a $3.27bn industrial portfolio from Canada Pension Plan Investment Baord’s. Norges paid $1.07bn. The majority of the 48 assets are in southern California

• Multifamily: Pembroke acquired the 267-unit Fitzroy in Arlington, VA for $158mm from Trammell Crow Residential (source #2)

• Retail: Armada Hoffler sold Nexton Square in Summerville, SC and Market at The Mill Creek in Mount Pleasant, SC for a combined $82mm to InvenTrust Properties. The blended cap rate was reported to be in the low 6’s

• Multifamily: Waterton acquires a 347-unit multifamily building in Los Angeles, CA

• Multifamily: 3650 Capital and Reap Capital acquire a 167-unit apartment asset in Plano, TX for $30mm

• Multifamily: Pathfinder Partners acquires a 105-unit apartment community in Seattle, WA for $28mm from SEB, Inc.

• Retail: Younger Partners Investments (YPI) bought two Texas retail centers from Weber & Co. The centers were 380 Towne Crossing, a 137K SF center, and Longview Towne Crossing, a 151K SF center

Debt

• Multifamily: Rockpoint Group secures a $123mm loan from KKR to refi the 214-unit Wimbledon in New York, NY

• Hospitality: Brookfield Asset Management secured a $90mm loan from CIM Group to refinance its Downright Austin, a 367-key Renaissance Hotel in Austin, TX

• Multifamily: The Annex Group secured an $88mm financing package for a 192-unit affordable multifamily community in Council Bluffs, IA. The financing was a mix of a $25mm Fannie Mae Forward MBS Tax-Exempt Bond (M.TEB) permanent loan, $22.5mm LIHTC equity, and a $41.5mm construction loan from Merchants Bank

• Multifamily: Fiera Capital provides a $56mm construction loan to a 184-unit multifamily development in New York, NY

• Multifamily: JLL Income Property Trust originated a $32mm senior secured, floating rate loan at SOFR+3% with a three-year term. The loan was secured by a 231-unit apartment building outside of Houston, TX developed by Ascendant Development (source #2)

Developments

• Office: BXP acquired a 300K SF office asset in D.C. from Hines for $34mm and is now planning to demo and redevelop it into a 320K SF office. Delivery is estimated for late 2028

• Multifamily: Legacy Partners and DWS Group to break ground on a 346-unit multifamily community in Ontario, CA

• Multifamily: Southeastern ready to break ground on a 321-unit multifamily development in Atlanta, GA

• Hospitality: Noble Investment Group to develop a four-story, 55K SF StudioRes by Marriott, an affordable extended-stay hotel with 124 keys in Jacksonville, FL. The project is expected to cost just under $10mm

Distress

• Multifamily: S2 Capital acquires a five-property 1,768-unit portfolio from GVA Real Estate Investments and Middle Farms Capital. S2 secured a $170mm senior loan from ACORE. Trinity investors was previously an LP in 4 of the 5 properties and was part of the new deal. The properties had been facing foreclosure

• Office: The Katan Group and Kohan Retail Investment Group acquire 345, 341, 343 Seventh Ave and 167 W 29th St in New York, NY for $85mm from Namdar and Empire Capital. Benefit Street Partners, the lender for Namdar and Empire, had previously filed foreclosure proceedings, the sale was not reported as an auction sale. The portfolio previously traded for $107mm in 2021

Leasing

• Office: EY is looking for 125K SF of office space in Atlanta, GA. Seeking to expand out of Lone Star Funds’ 55 Allen Plaza

Meme Summary

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