Good Morning All!

Nightingale strikes a tentative settlement with CrowdStreet investors to reimburse them for money misappropriated by CEO Elie Schwartz. Banc of California announced $4bn community benefits plan. VC funding for Life Sciences slows down but picks up for early stage companies. Fitch Ratings says Life cos. are no at risk to real estate overexposure. Oil prices cool off, while Germany’s real estate market struggles. Healthcare workers began their strike yesterday adding to the number of strikes happening all over the U.S. And finally, 30-year mortgage rates hit a new 23-year high.

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Capital Markets

Market News

• Oil prices slide down to $84.22 a barrel (WTI) as U.S. fuel demand falls. Finished motor gasoline supplied fell last week to around 8 million bpd, the lowest since the start of the year. Data was released on Wednesday by the U.S. Energy Information Administration (Reuters)

• ADP reported private payroll job growth at just 89k for September, well below the 160k estimate from the Dow Jones and down from 180k in August. The increase came mostly from the services (81k). This report comes a day after the Labor Department showed job openings shoot up in August. The Government’s official count will be released on Friday (CNBC)

• Bonds maturing in 10 years have lost roughly 46% in value since March 2020. This rivals the 49% loss in value during the dot-com bust. 30-year bonds slid 53% in the same time frame, rivaling the 57% drop in equities during the financial crisis (Yahoo)

• More than 75k healthcare workers began their 3-day union strike at Kaiser Permanente. Workers point to recent company profits and high executive salaries and demand higher wages and better staffing conditions (TheGuardian)

• Impact of higher rates, higher construction costs, and decreased values is impacting developers the hardest in Germany. Several real estate developers in Germany have filed for insolvency according to law frim Noerr (Yahoo)

• 30-Year mortgage rates hit new 23-year high again. Rates rose 8.13% on Wednesday following the sharp decline last week

  30-Year Mortgage Average

  

CRE Headlines

• Annual VC funding for life sciences has seen a major drop since 2021 when it hit a record $33bn in funding. Recently funding allocation has shifted in favor of early startups with these companies receiving 41% of all funding year to date (CBRE)

  Life Sciences VC Funding by Stage

  

• Nightingale strikes tentative settlement with CrowdStreet investors to reimburse them for money misappropriated by CEO Elie Schwartz. The agreement could see investors be paid a quarterly installment of over $4mm over a period of several years until investors are repaid in full. The company would sell off assets to fund payments (Bisnow)

• Fitch Ratings said life insurance companies are not at risk of overexposure to the real estate sector due to their stable portfolios. Life insurance companies’ mortgage loans accounted for 13% of their portfolio with the top three asset classes being 30% multifamily, 20% office, and 16% industrial (Bisnow)

• EV manufacturing primarily benefits the Southeast and Michigan. Due to lower shipping and power costs, the manufacturing of EV batteries is primarily concentrated in the following states: AL, GA, SC, NC, KY, TN, IN, OH, and MI (CBRE)

• Banc of California and Rise Economy unveil a $4bn community benefits plan. The plan will aim to provide $1.45bn of small business lending, $2.3bn in community development for affordable housing, $300mm in community development investments, and other strategic goals (ConnectCRE)

Deals Deals Deals

Sales

• Retail: Empire State Realty Trust buys two retail assets in Brooklyn for $26mm. The purchase was funded as part of 1031 exchange following a non-core asset sale (BusinessWire)

• Senior Housing: Arcus Healthcare Partners acquires a five-property senior housing portfolio in Oregon. The portfolio consisted of 468 units and generated approx. $4.8mm in EBITDAR in 2022 (REBusinessOnline)

• Industrial: CAPSTAR Real Estate acquires a 490k sf distribution center in San Antonio, TX. Triten Real Estate Partners sold the cross-docked asset which was completed in early 2023. The acquisition was financed with a floating-rate, interest-only loan from Prime Finance (REJournals)

• Multifamily: Sachs Companies sells two Houston, TX-area multifamily assets totaling 532 units (REJournals)

Debt

• Multifamily: Post Brothers secures a $312mm refinance of its mixed-use development in Philadelphia, PA. The new loan for the 695-unit, 37k sf asset was funded by Societe Generale and Rockwood Capital (ConnectCRE)

• Multifamily: Aria Development Group lands a $77mm construction loan for a low-rise condo development in Miami, FL Bank OZK provided the financing (CommercialObserver)

• Multifamily: A JV between Avery Hall, Declaration Partners, and Bridge Investment Group secured a $73mm construction loan from TD Bank for a 133-unit multifamily development in Brooklyn, NY (ConnectCRE)

• Industrial: Greek Real Estate Partners secures a $44mm construction loan from CIT Bank. The 30-month term, interest-only loan will be used to develop a distribution center outside of Philadelphia, PA (CommercialObserver)

• Office: Triangle Assets and Faraj Srour refinance two Manhattan office assets with Bank of Montreal and Citibank. The financing package was for $102mm (Bisnow)

Developments

• Multifamily: Gee Group and Bonaventure set to deliver a 300-unit multifamily community in Suffolk, VA (ConnectCRE)

• Industrial: Red Rock Development begins construction of a 946k sf spec industrial property in Pataska, OH. The property will have a 40-foot clear height, 156 dock doors, four drive-in doors, 210 trailer spaces, and 200-foot truck courts (REJournals)

Capital Raising

• Diversified: Ardian, a Paris-based PE firm, raises €300mm in commitments from European investors for its third real estate value-add fund (PERE)

Leasing

• Office: Katsy Korins, a law firm, expands offices by 10k sf in a new 15-year lease with Fisher Brothers’ 605 Third Avenue office building in Manhattan (CommercialObserver)

• Office: The SEC signs a 5-year lease extension to stay in D.C. The 1.1m sf lease expires in 2028 and will see government agency stay in Station Place I and II, while giving back part of Station Place III. Property Group Partners is the owner (Bisnow)

• Office: Invenergy expands its HQ in Chicago, IL by 84k sf. The clean energy producer leased space at the 1.2mm sf office building owned by 601W (REJournals)

• Office: FourKites, a supply chain visibility provider, opens new global HQ in downtown Chicago, IL. The office will be on the 45th floor of 110 N Wacker Drive (ConnectCRE)