- Here’s Where You’ll Find Distress in Multifamily “Rents may be falling but fundamentally multifamily fundamentals are very strong. Widespread distress is highly unlikely to happen; indeed forecasts for the asset class’ long-term growth are quite rosy. But for investors eager to get a cost-effective foothold in this category or expand their holdings, here is an emerging opportunity: developers or owners that are highly-leveraged and unable to make debt payments as interest rates rise, according to Jahn Brodwin, senior managing director and co-leader of the Real Estate Solutions practice at FTI Consulting.” (GlobeSt.com)
- Home-Buying Companies Stuck with Hundreds of Houses as Demand Slows “Ribbon Home Inc. had a fast-growing business during the housing boom. The New York City-“ (based startup purchased homes with cash on behalf of buyers. Then it sold the homes to the buyers at the same price, plus a fee, once the buyers got a mortgage. This approach made their clients’ offers more appealing, since sellers often prefer all-cash transactions that can close quickly and are considered more reliable. Ribbon has been active in hot markets such as Atlanta and Charlotte. But last year as mortgage rates surged, some Ribbon customers backed out of their purchases or needed more time to get financing.” (The Wall Street Journal)
- As Debt Climbs, Debt Becomes Attractive to Many Investors “There’s an old saying that water finds its level, and usually it means people gravitate toward the like-minded. But there’s another way to take it from physics — that water will move about until pressure and force equalize. It adapts to changing conditions. That’s what’s happening in the CRE debt market. There’s a lot of ongoing change, with inflation up and then tapering off, the Federal Reserve pushing up its benchmark interest rate to slow the economy, and financing costs following.” (GlobeSt.com)
- Sizing Up CRE Investment’s Plunge: CBRE “If it feels like investment in commercial real estate is down—a lot—it is, according to fourth-quarter numbers in a new report from CBRE. U.S. commercial real estate sales volume dropped by 63 percent year-over-year in the fourth quarter of 2022, to $128 billion. To put that in perspective, however, the fourth quarter of 2021 was stunning, approaching $350 billion in investment volume. In 2022 overall, CBRE reports, although volume fell by 17 percent to $671 billion from the record year of 2021, the 2022 total was still the second-highest annual amount on record.” (Commercial Property Executive)
- Occupancy Growth in D.C.’s Trophy Office Buildings “Office leasing in Washington, D.C., was pretty bleak in 2022, but the city’s top-tier properties were an exception. Occupancy in D.C.’s Class A buildings grew by 756,000 square feet in 2022, according to JLL. Within that, the majority (53 percent, or 399,000 square feet) went to so-called trophy buildings, which are office properties that command between $75 and $90 per square foot, according to JLL.” (Commercial Observer)
- Gender Imbalance in Senior Real Estate Leadership Roles Is Getting Worse “The proportion of women in senior leadership roles in UK real estate has worsened in the past six years, a comprehensive new industry survey revealed, with a blockage at middle management level a key cause of the problem. A survey undertaken every two years by industry body Real Estate Balance found that women made up 27% of the workers in senior leadership positions at the end of 2022, down from 32% in 2016. A total of 32 companies employing 53,000 staff provided data for the survey.” (Bisnow)
- Simon Says It ‘Made Mistakes’ with its Retail Brands, But Is Now Reinvesting “Shopping mall giant Simon Property Group plans to put more money into at least one of the retail brands it owns after it says its retailers underperformed in 2022.” (Bisnow)
- Amazon Slows Warehouse Leasing in Shift to Ownership “Amazon is still growing its warehouse footprint. Unfortunately for industrial landlords, it’s mostly doing that by acquiring its own facilities. After rapidly doubling its North American real estate footprint as Covid fueled demand for warehouses, Amazon all but paused its expansion entirely last year — at least as a tenant. The e-commerce giant was renting around 392 million square feet of warehouses across North America by the end of last year, SEC filings show, up 5 percent from 2021.” (The Real Deal)
- Proptech Seed Rounds Shift in Frequency and Amount “In the realm of risky business propositions, investing in proptech startup seed rounds might be compared to playing roulette. The odds of success are low, but the payoff on a winning bet can be too enticing to pass up. Despite the odds, as well as the current macroeconomic instability caused by high inflation and interest rates combined with a confusing jobs market, proptech-focused venture capitalists are not shying away from placing their bets on seed rounds — albeit with more stringent rules attached, experts say.” (Commercial Observer)
- Same Old Story: American Dream Mall Misses Another Payment “It’s deja vu all over again at the American Dream mall. Don Ghermezian’s Triple Five Group missed its $8.8 million semiannual debt service payment at the East Rutherford shopping complex, CoStar reported. The payment is for interest due on $290 million in municipal bonds. Triple Five had been pulling from its reserves to pay off its debt, but that wasn’t possible this time around. There’s only $878.50 left in the reserve account, according to bond trustee U.S. Bank National Association.” (The Real Deal)
- CVS Nearing $10 Billion Deal for Primary-Care Provider Oak Street Health “CVS Health Corp. is close to an agreement to acquire Oak Street Health Inc. OSH 31.47%increase; green up pointing triangle for about $10.5 billion including debt, a deal that would rapidly expand the big healthcare company’s footprint of primary-care doctors with a large network of senior-focused clinics, according to people with knowledge of the matter. The companies are discussing a price of about $39 a share, the people said. The deal, if it goes through, could be announced as soon as this week, they said. CVS is scheduled to report earnings on Wednesday.” (The Wall Street Journal)
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