- CRE Expects a Rate Hike Pause. Here’s What It Means. “Ahead of the Federal Reserve Open Markets Committee’s next meeting on June 14, many across commercial real estate anticipate a likely, if short-lived pause on interest rate increases. Following the committee’s meeting in May, Fed Chairman Jerome Powell hinted at a pause on rate increases, if data from sources such as the Consumer Price Index, the Employment Cost Index and metrics such as inflation and wage growth allow for one.” (Commercial Property Executive)
- CRE Loan Distress Declines in Most Large Metro Areas “Distress rates improved in May in most of the 50 largest metropolitan statistical areas (MSAs) that CRED iQ tracks. Commercial real estate distress declined in 37 marks, or 74 percent of the 50 largest MSAs. The average decline was approximately 64 basis points. The recoveries were a welcome signal of alleviation, but declines in May were not enough to outweigh the extensive increases in distress rates experienced in April in most markets.” (Commercial Observer)
- Renters Are About to Get the Upper Hand “Apartment rent growth is declining fast, shifting the rental market to the tenant’s favor for the first time in years. The average of six national rental-price measures from rental-listing and property data companies shows new-lease asking rents rose just under 2% over the 12 months ending in May. That is down from the double-digit increases of a year ago and represents the largest deceleration over any year in recent history, according to data firm CoStar Group and rental software company RealPage.” (The Wall Street Journal)
- Blackwells Capital Gives Rationale for GNL-RTL Merger “Alternative investment manager Blackwells Capital LLC, a shareholder of both Global Net Lease Inc. (NYSE: GNL) and The Necessity Retail REIT Inc. (NASDAQ: RTL), gave its rationale for supporting a proposed merger of the two. The combination will result in a pro forma entity with nearly $10 billion in real estate assets, making GNL one of the largest publicly traded net lease REITs, Blackwells said in a statement. Blackwells said it expects that the increased scale, diversity and efficiency, combined with internalization of management and impressive governance enhancements, will position the company to create immediate and long-term value for all shareholders.” (CorpGov.com)
- Struggling Mall Owner PREIT’s Board Members Reject One Another’s Resignations “The Pennsylvania Real Estate Investment Trust’s (PREIT) board of directors has decided against firing themselves. A report to the federal Securities and Exchange Commission posted on Monday showed that the board has rejected the resignations offers of seven of its nine members who failed to win a majority of votes at the annual shareholder meeting June 1. PREIT’s corporate governance guidelines require that those who did not win a majority of votes must offer to resign. Seven directors, including CEO Joseph F. Coradino, tendered their resignations.” (Inquirer)
- Kennedy Wilson Buys 1st Tranche of $5.7B Loan Portfolio “Kennedy Wilson has purchased the first tranche of loans as part of a $5.7 billion loan portfolio acquisition from Pacific Western Bank. Alongside its Toronto-based affiliate Fairfax Financial Holdings Ltd., the company acquired the loan package for a total of $3.3 billion in commitments and $1.8 billion in current principal balance. Gibson, Dunn & Crutcher advised the buyers in the deal. The first batch of loans traded for $1.6 billion; 12 additional notes, valued at $800 million in commitments, will close on a rolling basis by the end of next month.” (Multi-Housing News)
- PacWest Sells Another $1.2B in Loans “Pacific Western Bank found a taker for another billion in construction loans as it attempts to survive its deposit outflows. Cain International acquired more than $1.2 billion in construction loan commitments from PacWest, the Commercial Observer reported. The London-based firm’s acquisition is focused in New York, with the majority of the undisclosed properties in New York City. The loan portfolio includes 10 construction loans for multifamily and student housing projects with an aggregate balance of approximately $500 million.” (The Real Deal)
- M-Core, New Tax Incentive for NYC Building Owners, Debuts “Investment in these buildings has been weak, especially with hybrid work remaining popular, interest rates going up and lenders getting stingier. ‘Empty office buildings and empty retail spaces are not good for the city of New York,’ said Melissa Román Burch, chief operating officer of the city’s Economic Development Corporation, in an interview.” (The Real Deal)
- WeWork Faces More Turmoil After its Chief Executive Departs “Instead of building a company that would “elevate the world’s consciousness” as Mr. Neumann had wanted, Mr. Mathrani focused on the staid details of running a real estate company. He steered WeWork through the pandemic, got its landlords to accept less rent, took the company public and oversaw a financial restructuring, completed last month, that cut the company’s debt. But just weeks after the restructuring, the company said on May 16 that Mr. Mathrani would step down, and that no permanent successor was lined up. Wall Street analysts who had recently met with him were stunned — one analyst wrote in a research note that the executive was ‘abandoning ship.’ A couple of weeks later, WeWork’s chief financial officer, who had joined last June, departed, too.” (The New York Times)
- Adam Neumann, the Ousted CEO of WeWork, Toyed with a Rescue Package for the Company “WeWork, the company that popularized shared office space in 2010, has managed to survive despite mounting pressures over the past year. Its stock and bond prices have plunged, indicating that investors have all but given up on the company as its raison d'etre of leasing shared office spaces is hitting a proverbial wall. The seasoned executive it brought on in 2020 to streamline the cash-burning company abruptly resigned last month. Options for the company have been whittled down, and now include bankruptcy, The New York Times reported on Monday.” (Insider)
- Westfield, San Francisco’s Premier Mall, to Abandon Downtown Lease, Adding to SF’s Exodus of the Largest Hotel, Nordstrom & Others “In a city that was once bustling with tourists and shoppers, the downtown area's desolation today raises serious concerns about its future viability, with crucial businesses like the 312,000-square-foot Nordstrom in Westfield Mall announcing that they're closing their doors when their leases expire later this year, according to Hoodline, amidst concerns over declining customers and a post-pandemic shift in shopping habits. It seems the effects of remote work, a decline in tourism, and safety issues have hit downtown San Francisco and the nearby Mid-Market area hard, sending offices, apartment buildings, and hotels into default and foreclosure, impacting the city’s once prosperous economy.” (Hoodline)
- Tulsa Will Pay You to Live There. And You’ll Love It. “Like many middle-American cities, Tulsa is trying to bring those things back. And recruiting knowledge workers to move to the city is a big part of that effort. For one, it means more cultural and economic diversity. The latest Tulsa Remote economic impact report, which the organization conducted itself, found that in 2022, full-year Tulsa Remote members each generated $150,000 in labor income, which includes their salaries plus the estimated income Tulsans got based on their spending. That’s more than 10 times what the George Kaiser Family Foundation, which funds Tulsa Remote and a lot of the city’s other programs and public works, paid out to bring them there. Members also spent a lot in the local economy, leading to an estimated $2.5 million in new sales tax revenue for Tulsa County last year.” (Vox)
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