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China’s Evergrande ordered to enter liquidation, Medical Properties Trust’s largest tenant in financial trouble endangering the REITs portfolio, the hotel construction pipeline is hot for 2024, and Mercedes enter the luxury condo market in Dubai. This week the Fed will release guidance on interest rates and employment data will come out at the end of the week, California hotel staff continue to ask for higher wages, oil futures jump following continued turmoil in the middle east, and earned wage access (modern payday loans) programs see an uptick in use by workers for everyday bills

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Capital Markets

Market News

• Lookout For The Fed Meeting And Jobs Report This Week

  On Wednesday afternoon, the Fed will release its latest policy decision with investors expecting interest rates to remain unchanged at 5.25% - 5.50%. On Friday, the January jobs report will be released with economists expecting 175,000 jobs added and unemployment to grow to 3.8%, up from 3.7% in December

• California Hotel Workers Still Seeking New Union Contracts

  Thousands of hotel workers in southern California have gone on strike multiple times since last summer in hopes of negotiating higher pay, benefits, and protections. Unite Here Local 11 has represented workers that continue to hold picket protests and strikes. Workers argue that workloads have increased as hotels have cut down on staff and frequency of room cleanings, all while cost of living has risen

• Oil Futures Jump Following Attacks On U.S. Troops

  Oil futures for March WTI and Brent Crude jumped by 1.4% and 1.3% on Sunday evening, after a drone attack on U.S. service members in northern Jordan. WTI remains below its 2023 peak

• Workers Paying To Get Paychecks Early

  Earned wage access (EWA) programs, which allow workers to access a portion of their paychecks before payday for a fee, grew to $9.5B in wages accessed early in 2020. The programs offer business-to-business models, which access employer’s time-sheets and records, and direct-to-consumer models, which issue funds based on historical earnings from prior paychecks. The programs are essentially a modern tech-version of payday loans. According to Harvard research, 40% of people with employer-sponsored EWA access use the service at least once a week, and more than 75% used money for regular bills instead of emergency expenses

CRE Headlines

• China’s Evergrande Ordered To Liquidate

  The second largest Chinese property developer, with $240B in assets, has been ordered by a Honk Kong court to enter liquidation. The developer has over $300B in liabilities and triggered a crisis in China’s property sector when it defaulted in 2021. Alvarez & Marsal has been appointed as the liquidator

  China Property Sector Snapshot

  

   

• Medical Properties Trust’s Largest Tenant Hires Restructuring Specialist

  Steward Health Care has hired law firm Weil Gotshal & Manages and turnaround consulting firm AlixPartners to evaluate options for its business. Steward lost $800M between 2017 and 2020, and risks shutting down some of the 33 hospitals it operates. According to Q3 2023 filings, Steward accounted for roughly 20% of Medical Properties Trust’s revenues and leases 36 out of the 441 properties in the REIT’s portfolio. The REIT has recorded $350M of write-downs associated with Steward, loaned it $60M, and is deferring some of the hospital operator's rent for this year

• U.S. Hotel Construction Pipeline Hits Record-High In Project Counts in Q4

  According to the 2023 year-end U.S. Construction Pipeline Trend Report from Lodging Econometrics, the hotel construction pipeline ended Q4 with 5,964 projects representing nearly 694K rooms, a 7% YoY room increase. Nearly 142K rooms were under construction at the end of Q4, with another 262K rooms scheduled to start in the next 12 months. The upper midscale segment had the highest project count of all chain scales in the total U.S. construction pipeline at Q4 close, reaching a radiant all-time high of 2,245 projects/218,112 rooms

• Mercedes Enters Dubai Luxury Condo Market

  Mercedes-Benz, together with Emirati developer Binghatti, debuted a $1B residential luxury tower development in Dubai, where apartments are expected to cost between $2.7M and $10M. The 65-story, 150-unit building is expected to rise approximately 1,118 feet is expected to be completed in Q4 of 2026

  Mercedez-Benz Places Rendering

  

Deals Deals Deals

Sales

• Life Sciences: Bain Capital Real Estate and Phase 3 Real Estate Partners acquire 640 Memorial Drive in Cambridge, MA, a 242K sf life science asset, from Alexandria Real Estate Equities, Inc.

• Industrial: Purina acquires its warehouse and manufacturing facilities in Atlanta, GA from Clarion Partners for $108M. The two-building, 672K sf portfolio sits on 38 acres and had been leased to Purina

• Multifamily: Can-Am acquires a 214-unit garden-style apartment community in Phoenix, AZ from Vedura Residential for $67M

• Multifamily: Related Fund Management sells a 237-unit rent-stabilized multifamily building in the Bronx, NY for $26M

• Retail: Lumer Real Estate acquires a 45K sf LA Fitness gym in Miami, FL for $15M

Debt

• Mixed-Use: Terra and Grass River scored $245M loan from JPMorgan Chase for Grove Central, a mixed-use development in Miami, FL. The development will feature 402 residential units, 1,250 parking spaces, and a 170K sf retail space

• Retail: Berta Management secured a five-year, fixed-rate, $19M loan for the refinancing of Delray Corner, an 86K sf shopping center located in Delray Beach, FL

• Multifamily: Venterra Realty secured a $46M floating-rate loan from Natxis to acquire Cendana District West, a 349-unit multifamily asset in Houston, TX

Developments

• Industrial: Brookfield Properties breaks ground on Park 290, a four-building, 792K sf industrial development in Austin, TX

• Industrial: Capstar Real Estate Advisors has formed a JV to develop a 757K sf distribution center in Dallas, TX. The asset is already preleased to Canadian Solar with completion expected in early 2025

• Industrial: Terreno Realty Corp begins work on the $64M redevelopment of 1855 W. 139th St, in Los Angeles, CA. The developer will demolish the existing assets to build three buildings totaling 228K sf by 2027

Distress

• Retail: Seven properties in the Point Ruston mixed-use development up for sale after being placed into receivership last year. The lender, TerraCotta Real Estate Services, sued to recover $74M in debt. The value from the sale is expected to be $38M

• Multifamily: Barings sells a 141-unit residential tower in Chicago, IL for $42M, taking a 26% loss on the sale

Leasing

• Office: Skanska catches a massive new tenant for its mixed-use development, The Eight, outside Seattle, WA. Pokémon Company International signed a 527K sf lease which is scheduled to begin in January 2025, after the asset is completed in spring 2024

• Industrial: Bosch Rexroth signs a 235K sf lease at Beacon Partners’ Carolina Logistics Park south of Charlotte, NC

• Industrial: Axcelis signs a 96K sf lease at 105 Sam Fonzo Drive outside Salem, MA

• Office: M&T sings a 39K sf lease at Millennium Partners’ Winthrop Center in Boston, MA

Meme Summary

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