Good Morning!

Lots of charts today. Residential foreclosure starts rose to 33K in October – the highest level in 18 months. Active residential foreclosure inventory inched up, but remains more than 25% below pre-pandemic levels. The CMBS special servicing rate was up slightly November, with retail and office leading the way. The medical office sector continues to perform with NOI, occupancy, and rents growing. Big news this week, as all eyes are on the Fed’s press conference this Wednesday following the two-day FOMC meeting. The market will took to guidance on interest rates following the Fed’s comments.

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Merch Spotlight

Capital Markets

Market News

• What to Watch For This Week

  • Tuesday: Consumer Price Index Report

    The CPI report will offer inflation data ahead of the Fed’s final meeting of 2023

  • Wednesday: Fed to give their press conference in the afternoon, the Producer Price Index is set come out in the morning

  • Thursday: Retail Sales

  • Friday: US Manufacturing Activity

• Fenway Sports Group In Final Talks To Become Co-Investors In PGA Tour’s Saudi Deal 

  A group of investors led by Fenway is in the final stages to become co-investors in a potential deal between the PGA Tour and Saudi Arabia’s Public Investment Fund. The tentative deadline to strike a deal is set for December 31st. The group includes a number of high-profile sports club owners

• Construction Hiring Adds Lower-Than-Expected Jobs in November

  Economists expected the construction industry to add between 15,000 to 20,000 jobs for the month of November, instead only 2,000 jobs were added. The amount was down from the three-month average of 21,000 and the lowest since March

• Macy’s Receives a $5.8bn Buyout Offer

  Arkhouse Management and Brigade Capital Management have offered to buy Macy’s for $5.8bn. The offer would value the retail giant at $21 per share, the stock traded at $17.39 on Friday at close

CRE Headlines

• Borrowers Expected to Turn to CMBS 2024

  Multi-loan (conduit) and single-asset, single-borrower (SASB) CMBS loan issuance has declined in 2023 from 2022 levels. But the second half of the year has seen a spike in SASB and CRE CLO issuance, Moody's found. About 19% of $42.3bn in performing CMBS conduit loans maturing next year carry high default risk. However, investors seeking 10% or greater yields on these loans, will help them achieve refinancing even as lenders require lower LTVs

• CMBS Special Servicing Rate Rises to 6.84% in November

  The special servicing rate rose by 4bps in November, after falling for the first time in October by 7bps. There were $2.24bn of new transfers in November with office accounting for 57% and lodging for around 19%. The special servicing rate was highest for retail at 9.83%, followed by office at 8.87%. The largest loans to enter special servicing were the $670mm 230 Park Ave office in New York due to imminent maturity, and a $290mm New York hospitality portfolio due to payment default

  CMBS Special Servicing Rate 

  

• Medical Office Remains Resilient in 2023

  Despite hospital systems facing negative operating margins in 2022 due to pandemic era funds expiring, the medical office sector saw positive NOI growth. In Q3 expenses for the medical office sector rose by 5.4% while revenue rose by 3.5%. Absorption has outpaced deliveries since 2020 with rent growth and occupancy steadily continuing to climb

  Occupancy, Absorption, and Deliveries

  

   

• Residential Foreclosure Starts Were Up 30.4% in October

  The national delinquency rate fell 3 basis points (bps) to 3.26% in October, 61 bps lower than before the pandemic and 119 bps below the five-year October average heading into the Great Financial Crisis. Foreclosure starts rose to 33K in October – the highest level in 18 months. Active foreclosure inventory inched up 3K to 217K, but remains more than 25% below pre-pandemic levels. Near-term risk remains muted, with serious delinquencies historically low and more than 70% protected from foreclosure by loss mitigation. Among mortgage holders who are three or more payments past due or in active foreclosure, only 20% are underwater

  National Delinquency Rate of First-Lien Residential Mortgages

  

Deals Deals Deals

Sales

• Industrial: Longpoint Partners acquires a 25-property, 1.4mm sf industrial portfolio from Seagis Property Group in Miami, FL for $116mm. the portfolio was 97% leased at sale. Longpoint recently closed on a Fund III with $940mm in commitments

Debt

• Hospitality: Kalahari Resorts and Conventions obtains an up-to $212mm mezz loan from VICI Properties to fund a $900mm, 907-key, indoor waterpark resort. The resort is expected to open in 2026. The mezz loan has an initial term of four years with two 12-month extension options

• Industrial: Blackstone to refinance a 109-property, 8.5mm sf, industrial portfolio with a $1bn CMBS loan lead by Citi Real Estate Funding. The CMBS loan will pay off an existing $864mm CMBS loan and return $98mm of equity to Blackstone

• Senior Housing: United Group of Companies obtained a $35mm loan from Washington Trust to develop a 123-unit senior housing project in Worcester, MA. Construction is expected to be completed in 2025, with the community catering to active seniors over 55

• Hospitality: SunCoast Properties secures a $29mm bridge loan from Seven Hills Realty Trust for SunCoast Park Hotel Anaheim in California. The 174-key select service hotel is part of the Tapestry Collection by Hilton

• Multifamily: Hudson Companies secures a $28mm loan to refinance House No. 94, a 75-unit multifamily asset in Brooklyn, NY. Voya Financial provided a $28mm, three-year, interest-only loan and Meadow Partners contributed $12mm in preferred equity

• Hospitality: Hawkins Way Capital refinances The Copley Square Hotel, a 164-key boutique hotel in Boston, MA

Developments

• Mixed-Use: MSD Partners and Trammell Crow are developing a1m sf mixed-use project in Dallas, TX that spans four acres and will feature a 140-ket hotel, 48 residential condos, 150k sf of office, 100k sf of retail, a 173-unit multifamily building, and a half-acre park. Beal Bank provided construction financing. The project is expected to deliver in 2026

• Hospitality: An affiliate of NextPoint Advisors and Alamo Manhattan plan to build a 250-key, full-service hotel outside of Raleigh, NC. The hotel will be a Marriott-branded Renaissance Hotel and is expected to begin construction in summer 2024

• Multifamily: Brook Farm Group and Emory Equity break ground on a 388-unit multifamily project 35 miles outside of Atlanta, GA. The project is being financed with a $68mm debt and preferred equity package from First Horizon Bank, Trustmark Bank, and SilverCap Partners 

• Multifamily: Greystar delivers NOMIA, a 281-unit apartment building. in Atlanta, GA

Capital Raising

• Multifamily: Eagle Property Capital and Promecap raise $309mm in equity to fund the acquisition of up to $833mm of value-add multifamily assets across Texas and Florida

• Multifamily: BEO Investments announces a $200mm capital allocation towards residential condo developments

• Retail: Northpond and a southeast U.S. pension fund partnered to form Northpond Retail Partners, a $200mm evergreen investment vehicle targeting unanchored neighborhood necessity-based retail centers across the Sunbelt

• Office: Hines Securities Inc. completes a $152mm DST offering. The DST owns 200 Park Place in Houston, TX, a 206k sf office asset completed in 2020 and acquired from Stonelake Capital Partners in 2022 for $145mm

Leasing

• Industrial: Kyungshin America Group, a Hyundai supplier, signs a 136k sf lease at The Broe Group’s Savannah, GA Industrial Hub

• Office: SouthWest Water Co. signs a 41k sf lease at The Minute Maid Building in Houston, TX. The building is owned by Lionstone Investments

• Office: Greenbaum Rowe Smith & Davis, a law firm, signs a 40k sf lease at Opal Holdings’ 99 Wood Ave S in Iselin, NJ

• Office: Keystone Advisors and US Med-Equip signed 32k and 34k sf leases at Agellan Commercial REIT’s 4920 Westway Park Blvd in West Houston, TX

• Life Sciences: MonoSol, a water-soluble technologies company, signs a 35k sf lease a Trammel Crow’s Fulton Labs at 1375 building in Chicago, IL’s Fulton Market district

Meme Summary

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