Good Morning All!

Cold Storage is so hot right now! Related launches $1bn venture, RealCold, for cold storage assets. Wyndham Hotels rejects a $7.8bn buyout at a 30% premium citing regulatory concerns and too low of a valuation. Hotel RevPAR growth is slowing as consumers favored international travel. To no one’s surprise, the San Francisco office market continues to worsen with more negative net absorption. WeWork makes headlines as its landlords could start to see more defaults in the wake of its lease negotiations. Mortgage applications hit 28-year low amid 8% interest rates. Consumer spending is finally slowing down, just like DJ D-Sol’s (Goldman CEO’s DJ name) public sets.

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Capital Markets

Market News

• Bank of America notes that consumer spending is beginning to slow down, particularly for lower-end consumers who are seeing their excess savings depleted. In some cases consumers are spending more than they bring in. High income households are moving their cash into investments out of their checking accounts (Yahoo)

• US mortgage application drop to their lowest since May 1995. Mortgage rates continue as they follow Treasury yields. The 10-year note yield reached its highest since 2007 on Tuesday (Bloomberg)

• For the first time since July, their were no reported corporate defaults according to S&P Global. Credit downgrades jumped from a week prior. Real Estate companies and Homebuilders jumped on the list of companies most at risk (SPGlobal)

• Goldman CEO ends his DJ gigs amid concerns from the Investment Bank’s board that his extracurriculars were impacting his main job (TheGuardian)

• Mortgage Rates hit a new high again at 8.45% (Investopedia)

  30-Year Mortgage Average

  

CRE Headlines

• Related announces $1bn investment into cold storage via its new venture RealCold. The company plans to create a network of cold storage distribution facilities with 10 locations by 2025 (Bisnow)

• Choice Hotels International publicly announced a $7.8bn stock-and-cash offer to take over Wyndham Hotels & Resorts, which was promptly rejected by the target citing regulatory and execution concerns. The $90 per share offer was at a 30% premium to Wyndham’s share price on Monday’s close. The board also cited the offer undervalued the Wyndham’s future growth potential (Bisnow)

• WeWork’s NYC landlords owe $2.6bn in CMBS and could be unable to pay if the troubled tenant goes under. Landlords like Winter Properties, acquired buildings where WeWork was the only tenant. Previous landlords like Walter & Samuels have already defaulted on assets where WeWork has quit paying rent earlier this year (TheRealDeal)

• US Hotel RevPAR slowed down to a 1.1% YoY growth in Q2 after achieving a 15.9% in Q1. This was partly driven by Americans traveling abroad while inbound international travel has not fully recovered. CBRE’s estimate for 2023 RevPAR growth was revised down to 4.6% from 6.0% earlier in the year, but maintained its 3.8% estimate for 2024 (CBRE)

• Net Absorption for Q3 in San Francisco’s office market totaled negative 1.6mm sf, above the average of negative 1.3mm sf seen since the start of 2020. Overall vacancy was 27.3%, increasing by 130bps in Q3, and asking rents declined to their lowest since 2017 at $71.85/sf/yr. A bright spot comes from several AI companies looking to move-in and occupy large spaces at low rates (Newmark)

Deals Deals Deals

Sales

• Industrial: Dedeaux Properties acquires a 882k sf distribution facility in Los Angeles, CA for $190mm. 99 Cents Only Stores, which is owned by Ares Management, executed a sale-leaseback on its HQ (commercialsearch)

• Multifamily: Spira Equity Partners acquires a 340-unit income-restricted apartment community in Washington D.C. for $69mm. Capital One funded a $36mm Freddie Mac loan (Bisnow)

• Multifamily: HASTA Capital acquires a 314-unit mixed-use asset from AMLI Residential in Dallas, TX. The buyer had previously lined up $58mm for the acquisition (connectcre, CRENews)

• Retail: Brixton Capital acquires a 143k sf retail center in Stockton, CA from CORE Commercial. The center was anchored by Michael’s, Smart & Final Extra, Mancini’s, and Pier 1 Imports. The asset was 42% leased at sale (commercialsearch)

• Retail: KPR Centers sells 102k sf grocery-anchored center in Sicklerville, NJ. The center was anchored by ACME Food Markets (commercialsearch)

• Industrial: Dayton Street Partners acquires a six-property industrial portfolio in Chicago, IL’s O’Hare submarket (connectcre)

Debt

• Industrial: Dedeaux Properties secures a $190mm, 7.5-year, Interest-only loan from New York Life Insurance Company to finance a logistics portfolio in California’s Inland Empire (CommercialObserver, connectcre)

• Multifamily: Sutphin Boulevard Equities obtained a $142mm construction loan from SCALE Lending to building a 521-unit multifamily asset in the Queens borough of New York City. The loan had a floating rate, 30 month term, and two six-month extension options (CommercialObserver)

• Multifamily: Venterra Realty acquires a 288-unit apartment community in Orlando, FL from CH Penler Clermont for $80mm (connectcre)

• Self-Storage: JV between Castle Hill Investors and Olympus Ventures secures a $25mm refinancing package from Severn Hills Realty Trust for two self-storage facilities outside of Atlanta, GA (MHN)

• Multifamily: Village Creek Development secured a $20mm construction loan from River Bank & Trust to build a 98k sf mixed-use project in suburban Birmingham, AL (CommercialObserver)

Developments

• Mixed-Use: Hilco Redevelopment Partners begins construction on its $4bn Bellwether District development in Philadephia, PA which will include life sciences, research lab, and logistics uses (commercialsearch)

• Student Housing: Weill Cornell Medicine is building a $260mm, 272-bed student residence in NYC’s Upper East Side. The project is primarily being funded via donations (connectcre)

• Life Sciences: JV between UC Berkeley and SKS Partners will seek to build a 36-acre innovation center with R&D/lab space outside of San Jose, CA. Construction is tentatively scheduled to begin in 2026 (connectcre)

• Office: Key International announces plans to build a 750k sf office tower in Miami, FL’s Brickell neighborhood (Bisnow)

• Industrial: Trammell Crow Co. and STAG Industrial break ground on 300k sf industrial project in Tampa, FL. The buildings are scheduled for delivery in 2024 (commercialsearch)

Distress

• Office: CIM Group and QSuper to give keys back to lender on 1440 Broadway in NYC. Won’t repay $399mm loan (TheRealDeal)

• Hospitality: PIMCO walks away from 20-property hotel portfolio with a $240mm mortgage. The portfolio was valued at $326mm in 2017, a new appraisal cut the value to $273mm in December 2022 (Yahoo)

Capital Raising

• Industrial: Longpoint announced final closing of its third Institutional fund, Longpoint Fund III, with $940mm of commitments, above its original target of $750mm. The Fund will focus on well-located, underutilized industrial assets (BusinessWire)

• PropTech: SwiftConnect, a provider of connected building access enablement, closed on an oversubscribed fundraise of $10mm (BusinessWire)

Leasing

• Industrial: All Glass Production, a glass manufacturing company, signed a 250k sf lease at EverWest Real Estate Investors’ distribution center in Pembroke Pine, FL (CommercialObserver)

• Office: Ralph Lauren renews 250k sf office lease in RXR’s Starrett-Lehigh Building in New York, NY (NYPost)

• Industrial: LAX Freight Delivery signs a 124k sf lease for a distribution facility owned by Staley Point Capital and Bain Capital Real Estate’s in Los Angeles, CA (CommercialObserver)

Daily Poll (New Section???)

A poll conducted by a reputable CRE meme account across over 1,000 CRE professionals revealed the general sentiment is that market conditions will worsen over the next 6 months

In the Next 6 Months do you Expect Market Conditions to…

Meme Summary