Happy Friday To All!

Multifamily markets are all seeing slower rent growth, with the rental growth gap between those experiencing highest and lowest growth tightening. CMBS loan losses grow in January and a Chicago suburb bans industrial developments citing noise and traffic congestion. Revised inflation data was largely unchanged for December, mortgage rates topped 7% again this week before retreating, low performing Barclays bankers get hit with zero bonus, and super bowl ads can run companies up to $10M for celebrity appearances

If you enjoy the newsletter, then help us out by sharing with friends and colleagues. Click the referral link below to share the newsletter, hit milestones, get rewards!

Interested in advertising? Then get in touch with us

Capital Markets

Market News

• Revised December Inflation Data Largely Unchanged

  Revised data indicated headline CPI grew at a 2.7% annualized rate in Q4, down 0.1% from the initially stated figures. Excluding food and energy, core CPI increased 0.3% for December, the same as originally reported.

• Barclays Bankers - Zero Bonus

  Lower deal-making lead to reduced fee revenue in 2023. The result is now dozens of bankers at Barclays (the lowest performing or lowest reviewed) will end up with zero bonus for the year. The total bonus pool is also expected to shrink as payouts are cut. Investment Banking bonuses can usually be over 100% of base salary for top performers

• 30-Year Mortgages Briefly Hit 7%

  Homebuyer demand was low after rates broke the 7% mark on Monday hitting 7.04% before settling at 6.95% on Thursday. The central bank’s decision to hold off on any rate cuts sent rates up. Purchase activity was down 19% from a year prior, with mortgage applications down 1% for the week ending Feb 2. Data next week will reveal the impact on mortgage applications the sudden spike in interest rates had. Homebuyer activity has also been impacted by a lack of new supply

• Celebrities Get Paid Big For Quick Super Bowl Ads

  Last year’s Ben Affleck appearance in a Dunkin Super Bowl commercial cost the company close to $10M, while Larry David received $10M for his appearance in FTX’s ad in 2022. Major celebrities typically average $1M to $3M for their short appearances on Super Bowl ads. Companies are willing to pay the big bucks for the short exposure in hopes of reaching the 115M viewers the event draws

CRE Headlines

• Multifamily Rent Growth Is Slowing Across All Markets

  New Supply is expected to have rental rates decline in 2024. The gap between the markets experiencing the highest rent growth (Midwest) and those experiencing the lowest rent growth (South) is tightening. Slower economic growth is will limit rental growth across markets with CBRE estimating median national multifamily rent growth will be limited to 2% this year

  Two-Year Trailing Rent Growth, Range Between Top And Bottom Markets

  

• CMBS Loan Losses Mount Up In January

  The top 5 largest CMBS loans which were resolved for a loss are provided below. The $448M Veritas Multifamily Portfolio Pool Loan was the largest loan to resolve. The 60+ property loan was originally underwritten with a 64% LTV, 75% Occupancy, and 1.15x DSCR. Portals I was generated the largest loss after being appraised at $235M at the time of securitization and only coming at $88M in 2023. The asset 450K sf office asset backing the loan was 4.67% leased in November

  Largest CMBS Loan Losses In January

  

  Source: Trepp

• Chicago Suburb Bans Industrial Developments

  Deerfield, a suburb of Chicago, IL, has signed a amended its industrial zoning to prohibit motor freight terminals, logistics centers, fulfillment centers and facilities used for the parking or moving of trucks. The move comes at the request of the Mayor after industrial developers have increasingly targeted vacant offices to convert into large industrial business parks.The community citied concerns with increased truck traffic and 24-hour a day operations which cause increased noise

Deals Deals Deals

Sales

• Multifamily: Harbor Group International acquires a pair multifamily communities with 238 units in Denver, CO for $133M

• Industrial: ViaWest Group acquires a six-building, 428K sf industrial portfolio in Gilbert, AZ from Clarion Partners for $71M. Walton Street Capital provided a $53M acquisition loan

• Retail: KABR Group, BTF Capital and AJM BRE Ventures acquire a Broadway Commons, a 730K sf shopping center in Hicksville, NY, from UBS Group AG for $40M

• Industrial: Component Plastics Inc., a plastic parts manufacturer, acquired a 144K sf warehouse in Chicago, IL from Seefried Properties for $19M

• Multifamily: Sunstone Two Tree acquires a 384-unit apartment community in Houston, TX for $29M from Comunidad Partners. Sunstone plans to invest $11M in capital improvements

Debt

• Hospitality: MCR Hotels secures a $333M floating-rate SASB CMBS loan to refinance a 16-hotel portfolio totaling 2.274 keys. The deal generated $51M in net proceeds. MCD increased NOI from $36M to $15M, representing a 9.4% cap rate on their cost basis for the portfolio. Deutsche Bank Securities and BMO Capital Markets acted as co-lead managers and joint book runners on the transaction

• Retail: Epic Real Estate Partners secures a $100M in financing to refinance a grocery -anchored retail portfolio spanning five states. Prime Finance Partners and John Hancock Life Insurance provided the loans

• Multifamily: JCI Residential secures an $88M debt package from KeyBank to finance Cantarra Apartments, a 325-unit multifamily development in Austin, TX. The financing consists of a $42M construction loan and a $46M forward commitment for Freddie Mac permanent financing upon stabilization

• Multifamily: Panku secures a $82M loan from Western-Southern Life Assurance Co. to refinance The Cartwright Apartments, a 272-unit luxury community in Irvine, CA. The 5-year loan featured 5 years of interest-only payments

• Multifamily: Belpointe OZ secures a $56M mezz loan from Southern Realty Trust for the development of a 424-unit luxury mixed-use community in Sarasota, FL with a Sprouts at the ground level

• Multifamily: Norsq Companies and Enclave Companies secure a $36M construction loan and $21M in equity for a 155-unit BTR community in suburban Minneapolis, MN

Developments

• Mixed-Use: Cain International and OKO Group break ground on One Beverly Hills, a residential condo and hotel development in Los Angeles, CA with an estimated final cost between $4B and $5B. The 17.5-acre project is expected to be completed in 2028

• Multifamily: Property Markets Group, Lndmrk Development, and Lion Development paid $17M for a 1.5-acre development site in Miami, FL to build a multifamily development

• Multifamily: OHT Partners breaks ground on 293-unit multifamily project in Houston, TX

• Office/Multifamily: Revesco Properties is looking to convert a 16-story office building at 475 17th St. in Denver, CO into approximately 210 affordable and market-rate apartment units. The conversion project is expected to be completed by summer 2027

Leasing

• Office: Intuit opens a 360K sf office in New City Properties’ 480K sf Fourth Ward office development in Atlanta, GA

• Life Sciences: Generation Bio Co. seeks to terminate its 104K sf lease at CS Capital Management’s Waltham biomanufacturing facility citing a breach of agreement, which CS Capital disputes. Generation recently announced layoffs of 40% of its staff

• Office: Hanover Street Capital, signs a 13K sf lease at Empire State Realty Trust’s 250 West 57th Street in Midtown Manhattan, NY

Meme Summary

Interested in advertising? Then get in touch with us