Happy Thursday!

Moody’s downgraded Vornado Realty Trust’s (NYSE: VNO) senior debt and preferred stock rating down to below investment grade on Monday. Blackstone made headlines with redemptions being down for BREIT, but was then confronted with a hedge fund publicly revealing a short position on its mortgage REIT (NYSE: BMXT) causing shares to drop by nearly 10% on Wednesday. Corporate leaders continue to favor a return to office with a new survey showing the disconnect between employee attendance expectations and actual attendance. Oil prices continued to fall, private payrolls came in below expectations, the BOE warns of caution for A.I. in the finance world, and McDonald’s revealed plans for an additional 10,000 locations globally by 2027.

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Merch Spotlight

Capital Markets

Market News

• Private Payrolls Increased by 103,000 in November

  ADP reported private payrolls increasing by 103,000 in November, below the 106,000 in October and below the Dow Jones estimate of 128,000. Job pay increased by 5.6% annually, with job changers seeing wages increase by 8.3%. The increase in job pay was the lowest since September 2021, while the increase for job changers was the lowest in three years. Trade, transportation, and utilities saw the largest increase with 55,000 jobs added education, health services followed with 44,000, and the leisure and hospitality sector saw job losses of 7,000

• Bank of England Warns AI Could Pose Threat to Financial Stability

  The Bank of England warned rapid developments in A.I. and machine learning could pose risks to financial stability despite being used by financials firms for nearly a decade. In the past firms used machine learning to detect fraud and money laundering but now lower computing costs have spread the use across the financial sector. The BOE warns that greater adoption could mean greater herding behavior where a concentration of firms makes similar decisions that skews the market. The Bank’s governor did recognize A.I. could boost economic growth but urged caution

• Oil Prices Fell Nearly 4% on Wednesday

  Brent Crude futures settled down 3.8% at $74.30 a barrel, while U.S. WTI crude futures fell by 4.1% to $69.38 a barrel. U.S. data showed larger-than-expected rise in gas inventories, with worries global demand is trending lower. China’s lower economic outlook weighed on prices, while U.S. gasoline stock lagged the 10-year seasonal average by 2.55 last week

• McDonald’s Plans to Open 10,000 New Stores

  McDonald’s in planning to open 10,000 restaurants globally by 2027. The company also revealed plans to increase its loyalty program user base from 150mm to 250mm by 2027. Of the new locations 7,000 will be in international markets, with nearly half planned in China

CRE Headlines

• Corporate Expectations of Employee Office Attendance Out of Sync

  A Survey by CBRE and CoreNet Global revealed expectations for in-person office attendance by corporate leaders don’t match with employee behavior. On average corporate leaders want employees in office 3.4 days a week while the actual attendance rate is 2.8 days. The survey also revealed 92% of leaders believe office attendance is critical for success, with 50% saying its critical for all teams and functions

  Office Attendance: Expectation vs. Practice

  

• Blackstone Redemption Requests Down

  Redemption requests from BREIT investors are down to $1.8bn in November, an 18% drop from October and 66% drop since January. Of the requests received in November, Blackstone fulfilled 675 of them

• Vornado’s Debt and Preferred Stock Plunge To Junk Status

  Moody’s downgraded Vornado Realty Trust’s (NYSE: VNO) senior debt and preferred stock rating down to below investment grade on Monday citing the company’s declining ability to cover its debt payments and other fixed charges. The company’s earnings have fallen in proportion to its fixed charges, reaching a 2.3 coverage ratio at the end of Q3

• Hedge Fund Shorts Blackstone Mortgage Trust REIT

  Hedge fund Muddy Waters revealed a short position in Blackstone’s Mortgage Trust (NYSE: BXMT) causing an 8% drop in share price on Wednesday. The CEO of Muddy Water told attendees at the Sohn Conference in London that BXMT’s portfolio carried a lot of loans with borrowers in danger of being unable to make payments. He predicts BXMT will be forced to cut their dividend payment as at risk of a liquidity crisis. In a statement BXMT said: “This report is highly misleading and represents a fundamental misunderstanding of our senior secured lending business”

Deals Deals Deals

Sales

• Multifamily: Weinstein Properties acquires a 342-unit multifamily asset outside of Nashville, TN for $115mm from ShopCore Properties. The buyer secured a $68mm loan from Western-Southern Life Assurance Company. The asset last traded for $105mm in 2020

• Multifamily: Afton Properties acquires Azure, a 318-unit multifamily community in Santa Maria, CA from MBK Rental Living for $114mm

• Hospitality: Ohana Real Estate Investors acquire Brooklyn Hilton Hotel and three retail condo for $110mm

• Retail: Sperry Equities acquires a suburban Chicago, IL 126k sf shopping center from IRC Retail Centers, owned by funds managed by DRA Advisors for $9mm. The asset was financed with a $7mm loan

Debt

• Multifamily: Naftali Group secures $236mm in construction financing from JPMorgan and Starwood for its 62-condo unit tower a 255 East 77th St in New York, NY

• Multifamily: Eaton Vance Management acquires Presley Uptown, a 230-unit multifamily asset in Charlotte, NC from JLL Income Property Trust for over $65mm

Developments

• Mixed-Use: The Davis Companies acquires a 100-acre former Exxon Mobile fuel tank storage yard for $73mm in Boston, MA. As part of the closing site will undergo an estimated $100mm remediation and cleanup program. The company plans a large scale redevelopment project

• Multifamily: Atlantic American Partners, Township Capital, and Vista Residential Partners break ground on a 348-unit Atlanta, GA mixed-use project. The project will also deliver 40k sf of retail space and common-area amenities

• Data Centers: Update: Meta revealed as the company behind the 1,000-acre planned data center development in El Paso, TX. The company disclosed it was the company behind WurldWide LLC which is seeking to acquire the land for $8.5mm and obtain property tax abatements of over $100mm

• Data Centers: Amazon seeking to obtain zoning approval for a data center on 193-acre parcel in Austin, TX it had previously acquire to develop a $250 distribution center in 2021

Capital Raising

• PropTech: Marcus & Millichap announces an equity investment in EquityMultiple, a real estate crowdfunding platform that allows sponsors to give accredited investors streamlined access to real estate equity and credit opportunities

• Industrial: JLL Income Property Trust fully subscribed JLLX Louisville Logistics, DST, a $88mm industrial asset in Louisville, KY. The asset was leased to a global logistics provider on a 10-year lease

Leasing

• Retail: Wegmans to open a 88k sf store in Yardley, PA as part of the Prickett Preserve development

• Office: Arch-Con Crop signs a 52k sf lease a Westway II, a 242k sf office building in Houston, TX owned by Workspace Property Trust

• Office: M&C Saatchi Group signs a 10-year, 13k sf lease at GFP Real Estate’s 88 Pine Street in New York, NY

Meme Summary

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