Goooooood Middle of the Day Everyone!!!

CPI data was released earlier today with data coming in very slightly above expectations. Economists don’t expect this will support a Fed rate hike. This could be good news for landlords with expiring swap contracts which face a wall of swap contracts expiring in 2024. More residential brokerages are quitting NAR, and 30-year mortgages dropped on Tuesday after hitting a new 23-year high last week. Multistory warehouses enter the game in dense cities and nuclear powered data centers are under development in Ohio and Pennsylvania.

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Capital Markets

Market News

• The Consumer Price Index showed inflation rose 0.4% month-over-month in September and 3.7% YoY. Both measures were slightly higher than the forecasted 0.3% MoM and 3.6% YoY estimates. Inflation was in line on a core basis. Economists don’t see this data supporting another Fed rate hike (Yahoo)

• Delta Air Lines’ profit jumps 60% citing strong international travel. Despite this increase Delta and other airlines decreased their earnings estimates due to higher fuel prices. Delta mentioned an increase in demand for premium seats and flights flying 88% full in Q3 (up 1% from Q2) (CNBC)

• United Auto Workers launches strike against Ford’s highly profitable major truck plant in KY. UAW’s strike at the plant where Ford Super Duty pickups, Ford Expeditions, and Lincoln Navigators are made began on Wednesday night. The plant is the largest in terms on employment and revenue for Ford (CNBC)

• Oil falls 2% on Wednesday after Saudi Arabia pledged to stabilize the market following concerns over supply disruptions due to war in the Middle East. U.S. West Texas Intermediate crude fell by $2.48 per barrel on Wednesday, after surging by $3.50 per barrel (Reuters)

• 30-Year mortgages drop by over 30bps on Tuesday after hitting a fresh 23-year high the week before

  30-Year Mortgage Average

  

• Producer Price Index rate of increase rose by 0.5% in September compared to consensus estimate of 0.3%, and 0.7% in August. The index measures the rate of change in selling prices for domestic manufactures for their goods. The index rose 2.2% year-over-year, the largest increase since April (Reuters)

CRE Headlines

• Standard Power is planning to use small modular nuclear reactors to power data center campuses in Ohio and Pennsylvania. Two data campuses will use the small modular reactor technology, which has been approved by the Nuclear Regulatory Commission. The reactors will be similar in scale to those used by the Navy to power submarines and aircraft carriers (GlobeSt)

• Multistory warehouses are becoming more common in the U.S. as the need for logistics sites in dense urban markets continues to rise. Population dense cities like New York are seeing a number of project of these projects rise up. Second stories can be used for additional loading docks for shorter trucks, as a parking garage, or as office space (JLL)

• Landlords to face additional challenges as wave of swaps and interest rate caps set to expire. The wave of expirations will cause rates to increase on existing loans or force a new, more expensive, swap contracts to be executed. Data analyzed in March showed about $30bn in floating-rate loans with approximately 40% having interest rate cap agreements. Roughly $10bn of rate cap agreements are set to expire in the first half of 2024 (Bisnow)

• UBS selling off multiple assets from Credit Suisse Real Estate Fund International, which it inherited as part of the Swiss bank merger. UBS has denied a full portfolio sale after multiple sources stated the bank was looking to sell off all 53 buildings in the office-heavy fund (CoStar)

• More residential real estate brokerages are quitting the National Association of Realtors. This could translate to lower fees for homeowners as the main reason is the requirement of a buyer’s fee/commission. Major brokerages in favor of leaving NAR include” ReMax, Sotheby’s, Century 21, Coldwell Banker, and Redfin (Yahoo)

Deals Deals Deals

Sales

• Industrial: Prologis acquires a 2.7mm sf logistics center in Goodyear, AZ from Creation. The asset was sold for $184mm setting the record for Arizona’s largest multi-building industrial business park acquisition in Arizona (GlobeSt)

• Hotel: Sherwood Equities in under contract to sell the 317-key hotel portion of it 2 Times Square building to a partnership between Newbound Holdings and Apollo Global Management for $165mm (Crain’s)

• Multifamily: Goldelm acquired a 400-unit multifamily community in Florida’s Tampa Bay from Passco Cos. for $102mm (MHN)

• Office: Garden State Commercial Properties sells a 240k sf office asset in Trenton, NJ. The buyer intends to renovated the building to residential usage. The project conversion is expected to be completed by 2026 (REBusinessOnline)

• Retail: MetLife Investment Management acquired a 54k sf net-leased retail center in suburban Chicago, IL from GW Properties. The center is shadow-anchored by Costco (connectcre)

Debt

• Retail: Big V Property Group secures a $125mm cash-out refinancing for a 847k sf retail center in southeast of Nashville, TN (JLL)

• Multifamily: A regional investment firm secured a $33mm loan to pay off its construction loan on a 94-unit multifamily asset in Burbank, CA. The loan was funded by a life company with a 15-year term and 30-year amortization (REBusinessOnline)

Developments

• Industrial: Principle Construction is building a 22k sf warehouse and truck parking facility in suburban Chicago, IL for Alvil Trucking. The five-acre site will have 48 parking spaces, six docks, and two drive-in doors (connectcre)

Distress

• Office: Free Market Ventures delinquent on a $18mm loan secured by a 180k sf suburban office asset in Chicago, IL. The firm is seeking a 1-year loan extension (TheRealDeal)

• Retail: Westfield Mall in downtown San Francisco, CA is now under the receivership of Trident Pacific. The company will add security and begin to prepare the asset for sale (SFist)

Capital Raising

• Diversified: Invesco raises €400mm its first close of its Invesco Real Estate - Europe Fund III (PERE)

Leasing

• Industrial: Western Post, a supply chain logistics provider, leased 317k sf at Trammell Crow and Clarion’s industrial asset outside of Houston, TX (RNR)

• Industrial: Action Sales, a food service equipment and supplies company, signs a 64-month lease at EverWest Real Estate’s 181k sf logistics center in Los Angeles, CA (CommercialObserver)

• Industrial: A Fortune 50 food distributer has signed a 131k sf lease at Bridge Industrial’s Doral, FL industrial development. The development will total 2.6mm sf, with Building 6 scheduled for delivery in mid-2024 (commercialsearch)

• Retail: Equinox leases 42k sf in Domino Sugar Factory in Williamsburg in Brooklyn. The upscale gym operator leased the basement and first floors from the Two Trees development (CommercialObserver)

• Office: Quest Workplace signs a 41k sf lease in downtown Miami, FL at the 47-story Miami Tower (CommercialObserver)

Meme Summary