Happy New Year!

Back to the grind. Starting off 2024 with more office distress as the infamous Watergate office building in D.C. has had its $73mm CMBS loan fall delinquent. A small mortgage REIT files for Chapter 11 Bankruptcy. Lennar acquires an insolvent proptech company. Proptech companies suffer a 42% drop in capital raising in 2023. And the lawsuit against RealPage will move forward. Lots of jobs data set for release this week. S&P Global predicts the levered loan default rate to increase. And tax credits for EVs just became harder to come by

DEBT SURVEY: PropMemo & Real Assetzz are conducting a Debt Survey on recently financed transactions or term sheets. Results will be published this Friday with all data published being anonymous

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Capital Markets

Market News

• Happy New Year! Data for the First Week of 2024

  Below is the timeline of economic data that will be released this week

  Tuesday: S&P Global US Services December PMI (48.4 expected, 48.2 previously), MBA Mortgage Applications for week ending Dec 29

  Wednesday: JOLTS November 2023 Job Openings, (8.85mm expected, 8.73mm previously reported in October), FOMC meeting minutes

  Thursday: ADP employment change for December 2023 (113,000 expected, 103,000 previously), Weekly initial jobless claims for week ending Dec 30 (218,000 previously)

  Friday: Jobs report, most important in showing Nonfarm payrolls for December 2023 (+168,000 expected, +199,000 previously); Unemployment rate for December 2023 (3.8% expected, 3.7% previously)

• Some Electric Vehicles Lose US Tax Credits

  Many electric vehicles lost eligibility for tax credits of up to $7,500 after new battery sourcing rules took effect on Monday. The new guidelines issued in December by the U.S. Treasury aim at pulling the EV supply chain away from China

• S&P Expects Levered Loan Default Rate to Rise to 3% by Sept

  S&P Global Ratings Credit Research & Insights expects the U.S. leveraged loan default rate to climb to 3% by September 2024, up from 1.9% in October 2023. The analysis assumes stressed issuers continue to rise based on tightening credit markets, elevated interest rates, and a slowdown in U.S. GDP growth

CRE Headlines

• Proptech Companies Struggled with Funding in 2023

  The proptech sector raised $11.4bn in venture capital funding, a 42% drop from the $19.8bn invested in 2022, and well below 2021's $32.0bn. The decrease in funding reflects a broader market correction and return to pre-pandemic levels of funding. The sector continues to be important as proptech solutions are sought out for cost reduction measures in the CRE space

  Proptech Quarterly VC Equity Funding

  

• Mortgage REIT, JER Investors Trust, Files for Chapter 11 Bankruptcy

  According to Chapter 11 petition, the REIT owes more than $100mm to creditors, but has less than $50mm in assets. Private equity firm C-III Capital Partners is among its top shareholders, with roughly 8.4% ownership. C-III and The Bank of New York Mellon are owed nearly $20mm and $94mm according to the bankruptcy petition

• Lennar Acquires PropTech Firm Veev

  Veev, a proptech company specializing in pre-fabricated construction, has been acquired by Lennar after recently entering insolvency. The company had been valued at $1bn in March 2022 and had been reported to have raised $600mm. Lennar acquired the company after extending a three-week bridge loan and emerging as a the sole bidder. The company’s two founders were let go following the acquisition

• 2024 CRE Trends/Topics To Look Out For

  The nearly $500bn in CRE loan maturities coming due in 2024, will likely be the most talked about topic as companies start to refinance in a world with tighter lender requirements. Another topic will be the wide bid-ask spread between buyers and sellers in CRE which could close up as more direction is given by the Fed and funds begin to allocate capital. High insurance costs and understanding returns for different strategies will also be major talking points as the landscape continues to change

• RealPage Must Face Multifamily Price-Fixing Lawsuit

  A federal judge rejected RealPage’s bid to dismiss lawsuits claiming it conspired with major residential property owners to artificially inflate rental prices for multifamily housing across the United States. RealPage and its parent company, private equity firm Thoma Bravo will now have to defend against U.S. antitrust law violations. At the center of the argument is that housing property owners and managers provided non-public, commercially sensitive data to RealPage as part of its revenue management platform

Deals Deals Deals

Sales

• Retail: Octave Holdings and Investments LLC acquires Freedom Plaza, a 197k sf grocery-anchored shopping center in Rome, NY, from DRA Advisors

• Multifamily: Timberlane Partners acquires a 132-unit multifamily asset in Seattle, WA for $45mm

• Industrial: Blackstone’s Link Logistics acquires an 800k sf warehouse leased to Home Depot in California’s Inland Empire from IDI Logistics for $184mm

• Multifamily: The Connor Group, acquires a 326-unit multifamily asset in Denver, CO from Alliance Residential for $100mm

• Industrial: GPR Ventures acquires a 211k sf, 22-building industrial park in Dallas, TX. GPR secured a $23mm senior financing and preferred equity package for the acquisition

• Office: Meyers Accesso acquires an 100k sf office building in Boca Raton, FL, for $25mm, from Alchemy-ABR Investment Partners and Breakers Capital Partners

Debt

• Hospitality: Hall Group secures a $46mm C-PACE loan from Peachtree Group for it new 168-key Hyatt-branded hotel in Palm Springs, CA

Distress

• Office: The Watergate Office Building, a 216k sf office building in Washington D.C. known for the 1972 burglary which led to President Nixon resigning, has its $73mm CMBS loan fall delinquent. The building was acquired in September of 2019 by Friedman Capital from Rockwood Capital for $102mm

Meme Summary

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