Good Morning!

Bilt Rewards recently obtained a $200M equity investment which values the company at $3.1B, Trepp posts a list of troubled loans to watch, investor demand for hotels is expected to pick up in 2024, and the number of coworking spaces grew in Q4. Rates creep up for treasuries as rate cut expectations keep getting pushed out, mortgage applications are back up from a week prior, a Dallas-based bank is the latest to lay employees off, and Australian lithium mining companies are cost-cutting after weaker EV demand reduces demand for the metal

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Capital Markets

Market News

• Poor Demand For U.S. 5-Year Notes Drives Up U.S. 30-Year Yield

  The latest auction for U.S. 5-year notes drew a yield of 4.055%, compared with an expected yield of about 4.035%, a sign of weak demand from investors. The U.S. 30-year yield climbed to 4.42% following the auction. Traders are pricing in fewer than 100bps of cuts by September, down from around 130 basis points earlier in January

• Mortgage Applications Up 3.7% Last Week

  Data from the Mortgage Bankers Association’s (MBA) showed mortgage applications rose by 3.7% for the week ending January 19 compared a week earlier. The MBA data shows that purchase applications increased by 8% from one week earlier, while refinancing applications were down 7% in the same period. Refis comprised 32.7% of total applications, down from 37.5%

• Comerica Lays Off 250 Employees, Closes 26 Branches

  A Dallas-based bank, Comerica, cut roughly 250 positions and closed 26 branches in Q4 of 2023. The layoffs cost Comerica $25M in severance charges. The bank is aiming to reduce expenses by $45M in 2024

• Australia Lithium Miners Cutting Jobs Thanks To Price Slump

  Slowing demand for electric vehicles has driven lithium, an EV’s battery’s most essential metal, prices down over 80% in the last 12 months. As a result of the weak demand, Australian lithium miners have begun cutting jobs and reducing their exploration budgets

CRE Headlines

• Bilt Valued a $3.1B Following Latest Investment

  The rental payment platform, Bilt Rewards, which rewards tenants for paying on time and helps them build credit, recently obtained a $200M equity investment which values the company at $3.1B. The investment was led by General Catalyst and included the appointment of General Catalyst managing director Ken Chenault and NFL Commissioner Roger Goodell to its board

• Troubled Loans To Watch

  A recent list published by Trepp, outlines a number of CMBS loans facing potential distress/opportunities which are outlined below

  350 Bush Street (San Francisco, CA): Occupying 186K sf, Twitch is a major tenant at the 388K sf office building. Twitch is subleasing 46K sf feet and is expected to layoff 500 employees. Twitch’s lease runs through January 2029

  3555 Timmons (Houston, TX): The $18M loan on the 226K sf office asset is the fourth largest loan in its pool, accounting for 10%. The loan on the asset recently had its maturity extended, prior to a sale. The C class notes in the mortgage pool trade at 95 cents on the dollar and could see a paydown following the sale

  55 Green Street (San Francisco, CA): The 54K sf single-tenant office building recently had it sole tenant terminate its lease early in October. At the time of securitization the $37M loan valued the building at $64M

  1290 Avenue of the Americas (New York, NY): A law firm recently signed a 175K sf lease at the 2.1M sf office building. The asset backs a $950M SASB loan

  Ashford Office Complex (Houston, TX): A recent appraisal valued the asset at $33M, a decline from its $80M 2012 value when a $61M loan was written against it. The loan is the last one in its pool and has been hands of the receiver since March 2023

• Global Investor Interest In Hotels Expected To Resurface In 2024

  Hotels could see a resurgence in investor interest following the reopening of various economies and international travel. In New York, 2023 RevPAR exceeded 2019 levels by 14%, while London was 19% above 2019 levels. Deferred capex and loan maturities could spur transaction activity, but growth is expected following the removal of China’s group travel ban in August. Chinese travel was only half of pre=Covid levels in 2023. AirBnb bans are also poised to benefit hotel occupancy and revenue growth

• The Number of Coworking Spaces Grew In Q4 Across the U.S.

  U.S. coworking inventory grew by 1.3% in Q4, reaching a total of 6,251 flex workspaces at the end of 2023. Virtual and dedicated office space saw rates drop nationally, while open workspace remained the same. Chicago had rates for virtual workspace at nearly double the national average, while rates for dedicated office were significantly lower than average, almost in-line with virtual space. Meanwhile, Manhattan dedicated office came in vastly above average as expected

Deals Deals Deals

Sales

• Multifamily: Equity Residential sold a 310-unit multifamily community in Los Angeles, CA, to a private buyer in Orange County for $127M

• Industrial: Investcorp International Realty acquires a 416K sf, 14-property South Florida warehouse portfolio for $72M from Stockbridge Capital and the Los Angeles County Employees Retirement Association  

Debt

• Multifamily: Sunroad Enterprises secures a $149M loan to refinance an 857-unit, three-property multifamily portfolio across Georgia, South Carolina, and North Carolina

• Cold Storage: Related Fund Management secures a $74M loan from BGO develop a 368K sf cold-storage facility in Auburndale, FL

• Life Sciences:

• Multifamily: SMA Equities secures a 10-year, fixed-rate, interest-only $71M Fannie Mae loan to refinance a new 108-unit New York, NY apartment

• Student Housing: Blue Vista and Bain Capital Real Estate secure a $45M loan from Argentic to refinance a 267-unit student housing community in Chicago, IL

Developments

• Multifamily/Hospitality: Jamestown announces plans for a 405 fully furnished apartment tower as part of Ponce City Market in Atlanta, GA. The units will be able to be leased for both residential tenants with traditional annual terms and for hospitality tenants on shorter stays

• Multifamily: LV Collective proposes a 289-unit, 15-story multifamily asset at the site of a former hotel that served as a transitional shelter for the homeless in Tempe, AZ

• Multifamily: Bellwether Housing and the Evergreen Impact Housing Fund open The Aries at Bitter Lake, a 200-unit affordable apartment complex in Seattle, WA

Distress

• Retail: A real estate group headed by Jiashu Xu acquired Eastridge, a 1.3M sf mall in San Diego, CA from GS Pacific ER, an affiliate of Silver Eagle Capital Partners and Pacific Retail Capital Partners, for $135M and financed it with a $98M loan from Bank of China. The seller acquires the asset for $225M in 2016 and defaulted on the $150M loan last year

• Office: Lincoln Property Company, Ritz Banc Group and Masic default on a $38M loan with JPMorgan Chase backed by Reston Eastpointe, a 196K sf office in Reston, VA

Meme Summary

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