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WeWork office PATRICK T. FALLON/AFP via Getty Images

13 Must Reads for Real Estate Investors (Sept. 8, 2023)

WeWork’s stated plan to renegotiate its leases with landlords may run into issues, reports CoStar. Bisnow looked at how extreme heat is creating delays with construction. These are among the must reads from around the real estate investment world to end the week.

  1. WeWork’s Global Lease Renegotiation Plan Seems ‘Sort of a Stretch,’ Real Estate Pros Say “WeWork held a call with its landlords ahead of publishing the letter, a WeWork spokesperson told CoStar News, adding the locations that will be involved in the talks are its consolidated locations that exclude franchised markets such as India, China and Israel or at its acquired Common Desk. The spokesperson declined to give more details on what took place on the call or how many landlords were involved.” (CoStar)
  2. ‘Adaptation Cost Of Anguish’: How Extreme Heat Is Slowing Down Construction “During extreme heat, construction activities involving physical work on average take 36% longer to execute, according to an exclusive analysis for Bisnow by nPlan, a British construction analytics and software firm that draws from a dataset of 750,000 projects from English-speaking countries around the world.” (Bisnow)
  3. How Construction Financing Remains Resilient Despite Rate Hikes “It might seem counterintuitive that given the many risks associated with construction lending — primarily the need to build the project in the first place — that this type of CRE financing would be popular in a market beset by lower liquidity, threatening inflation and high interest rates.” (Commercial Observer)
  4. PGIM Taps Eric Adler to Lead Private Alternatives Under Single Umbrella “Adler’s current roles are president and CEO of PGIM Real Estate and chairman of private equity. His appointment takes effect on 1 October, at which time Cathy Marcus and Raimondo Amabile will jointly assume leadership of PGIM Real Estate as co-CEOs.” (Mingtiandi)
  5. Rising Rents Are Hitting American Suburbs Hardest “Rents in suburbs had climbed 26% through this past July since March 2020, 8 percentage points higher than the gain in urban cores, according to a report from rentals website Apartment List. Suburban rent growth was greater than its urban counterpart in 28 of the 33 metro areas studied, the company said.” (The Wall Street Journal)
  6. The business of multifamily lending: Inside Arbor Realty Trust’s books “Arbor’s bread is short-term, floating-rate loans — called a ‘bridge’ to more permanent financing — perfect for those who want to get in and out of a deal quickly. Its butter is packaging some of these liabilities into collateralized loan obligations, or CLOs, securities then sold off to investors.” (The Real Deal)
  7. Emptying office buildings bring back memories of mall failures “Outdated office buildings are facing a reckoning of relevance, just as many malls did in the 2000s, 2010s and even today.” (The Business Journals)
  8. SEC Fines Real Estate Private-Equity Firm Prime Group “The Securities and Exchange Commission said Prime, a private-equity firm that buys and manages self-storage properties, didn’t disclose that millions of dollars in brokerage fees paid by fund investors between 2017 and 2021 went to a firm owned by Prime’s chief executive.” (The Wall Street Journal)
  9. Over 40,000 eviction notices have gone out in L.A. this year, many to upscale apartments “They were issued at buildings across the city, for amounts ranging from $0 to $561,700. The 10 buildings sending the most notices to their tenants — more than 150 each — were upscale apartments in places such as downtown, Hollywood and Woodland Hills.” (Los Angeles Times)
  10. Healthcare, Office REITs Call Off Contested Merger “The scuttled deal leaves Diversified Healthcare with $700 million of debt coming due by 2024, for which it has disclosed it would be unable to refinance in its entirety. It viewed the merger with Office Properties as one way to help with dealing with the debt.” (CoStar)
  11. How U.S. Tax Law Impacts Foreign Investors Considering a Sale “When exploring tax considerations, withholding exemptions, and the nuances of selling, it can be beneficial for real estate investors to work with a tax advisor to tailor strategies supported by an informed understanding of FIRPTA.” (Commercial Property Executive)
  12. Kroger, Albertsons In Talks to Sell Stores to C&S, SoftBank “C&S Wholesale Grocers—with backing from SoftBank Group Corp.—is in talks to buy grocery stores that Kroger Co. and Albertsons Cos. are selling to win regulatory approval for their $25 billion merger, according to people familiar with the matter.” (Bloomberg)
  13. Storm Clouds Gathering Over Sun Belt Office Markets As Pace Of Migration Slows “Leasing activity in the trailing four quarters ending June 2023 was down 13% across 11 Sun Belt cities tracked in Savills’ State of the U.S. Office Market report, according to a Bisnow analysis. Markets that saw some of the most activity since the start of the pandemic have now seen the largest declines.” (Bisnow)
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