Happy Friday!

The SEC is concerned over some regional and community bank’s exposure to CRE loans and the asset class' potential to trigger bank failures, national office leasing picked up in Q4, and Silicon Valley’s R&D market ends 2023 with 13.5% vacancy. U.S. GDP grows by 3.3% in Q4, BoA wants people in the office, and more layoffs coming at Levi’s and Microsoft

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Capital Markets

Market News

• U.S. Economy Grows By 3.3% In Q4 of 2023

  Economists polled by Reuters had forecast GDP rising at a 2.0% annualized rate in Q4. Instead, GDP rose by a 3.3% annualized rate in Q4. Low unemployment and continued wage gains have helped fuel growth, with many economists walking back their recession predictions

• Bank of America Issues Warning Letters To Workers Who Haven’t Been Coming Into The Office

  Workers who haven’t been coming into the office at least three days a week as required, have been told they’ll face “disciplinary action” if they continue to foil the company’s in-office policy. Some workers received notices giving them two weeks to comply or face disciplinary action

• Levi Strauss To Lay Off Up To 15% Of Corporate Staff

  As part of restructuring, Levi Strauss plans to lay off 10% to 15% of its corporate employees. The company had 19,000 employees as of November, but no detail was given on how many of those are in corporate offices. The company is expecting revenues to rise 1% to 3% in 2024, below Wall Street estimates of 4.7%

• Microsoft Lays Off ~9% Of Gaming Division After Activision-Blizzard Acquisition

  Microsoft is laying off 1,900 workers in its Gaming unit after closing on the acquisition of Activision Blizzard in 2023. According to Microsoft’s Gaming CEO the layoffs come from areas of overlap as a result of the merger

CRE Headlines

• Office Leasing Activity Picks Up In Q4

  U.S. office leasing volume saw a 14.1% quarter-over-quarter increase in Q4. A number of large leases that had been placed on hold returned at the end of the year. Major sectors are returning to pre-pandemic leasing activity, with the exception of tech and media & entertainment which remain at 50% of pre-pandemic levels. Sublease additions have slowed down and construction activity appears to be slowing down which should help the 2024 outlook

• SEC Wants More Disclosure on CRE Exposure From Banks

  The SEC is concerned over some regional and community bank’s exposure to CRE loans. The commission believes further losses could trigger additional pullback in lending. Banks are coming under scrutiny from the regulator as high exposure to CRE debt could trigger a failure. There are concerns of CRE losses bleeding into the broader financial system and triggering a 2008-2009 type financial crisis

• Thor Equities Being Sued Over Lack Of Distributions

  Two investor groups who contributed a combined $8.9M towards the acquisition of a 50% interest in the retail condo at 530 Fifth Ave. in New York, NY have sued over a lack of distributions between 2017-2022 due to operating losses. The investor groups are suing to review Thor’s books and understand how an asset in a prime retail corridor performed poorly

• Silicon Valley R&D Vacancy Reaches 13.5% At The End of 2023

  Silicon Valley’s net absorption in Q4 totaled negative 282K sf, ending 2023 with negative 2.3M sf. The vacancy rate has climbed from 10.3% in Q2 of 2022 to 13.5% to end 2023. Leasing activity has largely been concentrated on renewals a trend expected to continue due to high interest rates tightening lines of credit for tenants. Despite the lower leasing activity, rents increased by 3.7% quarter-over-quarter

Deals Deals Deals

Sales

• Industrial: Stockbridge Capital Group sells a 1.7M sf, 49-property national light industrial portfolio to BKM Capital Partners and Brennan Investment Group, acquired the assets in four separate transactions

• Retail: A JV between Cohen & Steers Income Opportunities REIT, Inc. and Sterling Organization acquire a 451K sf shopping center in Dallas, TX for $42M. The asset is shadow-anchored by Walmart Supercenter

• Industrial: The Dixie Group executes a 10-year, $16M sale-leaseback on its 294K sf distribution center in north of Atlanta, GA. The buyer was undisclosed

Debt

• Multifamily: Legado Companies secures $128MM in construction financing for 268-unit multifamily project in the Los Angeles, CA market

• Industrial: A JV between Wheelock Street Capital and Camber Development secures a 3-year, $57M construction loan for a 237K sf logistics facility development in Wilmington, MA

• Self Storage: 1784 Holdings secures a $53M construction loan for a self-storage facility in Bethesda, MD

• Multifamily: Magma Equities and Prudent Growth Partners secure a $19M Fannie Mae for a 202-unit multifamily asset in Fayetteville, NC. The nonrecourse, fixed-rate loan had a five-year term, two years of interest-only payments and a 30-year amortization schedule

• Retail: Northpath Investments secures an $18M loan to acquire a 161K sf retail center in Hyattsville, MD. The five-year, floating-rate loan was provided by Loews Corporation

Developments

• Data Centers: Meta Platforms revealed plans to build an $800M, 700K sf data center campus in Jeffersonville, IN. Construction is set to start this month with a target opening in 2026

• Multifamily: Sterling Bay and Key International propose a 750K sf, 51-story office tower in Miami, FL

• Life Sciences: Alexandria acquires 307 Dorchester Ave., a showroom and wholesale store in Boston, MA, for $43M. Plans for the site were not revealed

• Retail: Thompson Thrift Real Estate acquires 20-acres to develop a 200K sf retail center in outside of Phoenix, AZ

• Multifamily: Woda Cooper Cos. Inc. opened Lockbourne Greene, a 60-unit affordable housing community in Columbus, OH

• Life Sciences: St. John Properties and Greenebaum Enterprises acquire a 12.5-acre site for $8M in Laurel, MD and plan to develop two single-story flex/R&D buildings totaling 68K sf

Distress

• Office: M-M Properties defaulted on the $96M loan against the TC Energy Center, a 1.3M sf office complex in Houston, TX

Capital Raising

• Diversified: Goldman Sachs raises $2.6B for a new credit fund. According to an SEC filing the money was raised for West Street Real Estate Credit Partners IV

• Office: SL Green to launch fundraising for its $1B New York City Opportunity debt fund

Leasing

• Industrial: RIM Logistics signs a 75K sf lease at Molto Properties’ 465K sf spec development in Dallas, TX

• Office: Greater New York Mutual Insurance signs a 17-year, 52K sf lease at Empire State Realty Trust’s Empire State Building in New York, NY

• Life Sciences: Mattiq, a clean chemistry company, signs a 17K sf lease at Trammell Crow Company’s Fulton Labs building in Chicago, IL

Meme Summary

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