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13 Must Reads for Real Estate Investors for the Weekend (May 26, 2023)

Office REITs are trading at their lowest levels since 2009, reports Bloomberg. Crow Holdings formed a $2.6 billion joint venture focused on retail assets. These are some must reads from around the real estate investment world heading into the weekend.

  1. Crow Holdings Launches $2.6B Retail Platform “Crow Holdings has formed a $2.6 billion joint venture and retail real estate investment platform with its investment management business, Crow Holdings Capital, and a global institutional investor to acquire additional small-format, convenience-oriented, open-air, food and service shopping centers. The platform is an expansion of the firm’s retail investment strategy and will enable CHC to continue capitalizing on the opportunity to aggregate an institutional-quality portfolio in a highly fragmented market.” (Commercial Property Executive)
  2. GNL and RTL Definitive Merger Agreement Slammed by Activist Investor Blackwells “In connection with the merger, GNL and RTL announced that they have entered into a definitive agreement that will result in the combined entity becoming internally managed, with the external asset and property management functions currently performed by affiliates of AR Global LLC being internalized.” (The DI Wire)
  3. Office Real Estate Looks Dicey With REITs Plunging to a 2009 Low “Office real estate investments trusts are trading at their lowest level since 2009 as the trend toward remote work leaves desks empty and economic pressures tighten corporate budgets.” (Bloomberg)
  4. Office Loan Losses Could Reach 8% “To estimate base-case losses in the office loan sector, Tracy Chen of Brandywine Global Asset Management assumes office vacancy rates will increase another 10% to 20%. In an April 12 report, she projected potential losses would fall in the range of mid-to-high single digits over the next three to five years.” (CFO)
  5. Private Market Fundraising Hits the Skids “Private capital funds raised a total of $211 billion in the first quarter, down from $293 billion in the first quarter of 2022, according to the latest private capital fundraising report from PitchBook.” (Institutional Investor)
  6. Fundrise Seeks $500 Million Credit Fund for Real Estate Distress “Fundrise, led by Chief Executive Officer Ben Miller, is seeking to raise a $500 million credit fund to take advantage of increasing distress in the US commercial real estate industry. The fund is the first such offering from Fundrise, which has previously been an active credit investor through its property funds. The firm plans to focus on lending to residential landlords at a time when higher interest rates and heightened scrutiny of real estate exposure has made financing harder to secure.” (Bloomberg)
  7. Office to Multifamily Conversions – how attractive is this conversion strategy for Commercial Real Estate (“CRE”) investors? “OTM exchanges are not a one-size-fits-all solution for real estate investors, but they can be a viable option for those looking for new ideas in an ever-changing business and could create value for developers and society. Despite the challenges and limitations, OTM conversion will likely remain a good idea for office investors who have buildings tailored for use by a specific sector.” (Acuity)
  8. WeWork CFO To Step Down A Week After CEO's Surprise Resignation “Fernandez's resignation was made public eight days after WeWork CEO Sandeep Mathrani announced he was leaving the company after a three-year run in the top job. Mathrani's last day is Friday, after which point he will join private equity firm Sycamore Partners.” (Bisnow)
  9. Small-Time Multifamily Investors Go Belly Up “Rising interest rates have hurt the business model of syndicators, harming the small investors who contribute to deals.” (The Real Deal)
  10. New York City’s Housing Chief Resigning Amid a Homelessness Crisis “The official, Jessica Katz, Mr. Adams’s chief housing officer, is leaving as the mayor struggles to respond to a housing crisis in the city and as the homeless shelter population reaches record levels. Mr. Adams has faced criticism for focusing too narrowly on providing emergency housing, rather than addressing structural issues in order to free up shelter space for both the tens of thousands of asylum seekers who have come to the city over the last year and for city residents experiencing homelessness.” (The New York Times)
  11. Gural’s Group Wins Auction for Flatiron Building “Second time’s a charm? Jeff Gural made the top bid for the Flatiron Building after the winner of a previous auction failed to close.” (The Real Deal)
  12. KKR Realty Trust Taps Butler as Chief Investment Officer “In her new role, Butler will oversee investment management for the fund as it continues to scale its portfolio of private real estate equity and credit investments.” (PE Hub)
  13. The Luxury Shopping Oasis Emerging in San Francisco’s Struggling Downtown “Coco Republic, H&M, Abercrombie & Fitch and Crate & Barrel are among the retailers that have announced plans to close stores in and around Union Square. But tourism is close to prepandemic levels in San Francisco, and many tourists are visiting the growing number of luxury stores in Union Square, as are wealthy shoppers. High-end retailers including jeweler Van Cleef & Arpels, watchmaker Patek Philippe, Chanel, Saint Laurent, Bottega Veneta and Brunello Cucinelli have opened new stores, expanded, or announced plans to do so.” (The Wall Street Journal)
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