Industrial Loans Surge in Q1, Defying Wider Borrowing Slowdown

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Good morning. Industrial property loans surged nationwide at the start of the year, while originations in other CRE sectors, including office, healthcare, and multifamily, remained muted.

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📈 High Occupancy: The New Braunfels submarket boasts the highest occupancy in the Austin-San Antonio MSA, ensuring consistent returns on your investment.

💰 Exceptional Value: Viking Capital secured this asset at a significant discount, leveraging the city's growth and low-cost basis to offer investors an unparalleled opportunity.

• Waiting game: The Fed anticipates cutting interest rates but is awaiting a housing cost slowdown to meet its 2% inflation target despite a 1.5-year delay.

• Power struggle: Georgia faces an impending power crunch as tech companies flock in, challenging the state’s green goals as utilities push gas to meet surging demand.

• Doubling down: Deer Park Road Management, which made a killing on discount mortgages in 2008, plans to capitalize on low prices in the residential mortgage market.

• Taxing times: San Francisco officials are planning a business tax reform initiative to diversify the city’s tax base and boost recovery.

• Debt dilemma: Fed warns of rising delinquencies in CRE loans, with rates surpassing pre-pandemic levels, signaling more losses.

• Condo chaos: A New Florida law triggers statewide condo market turmoil with a $30M assessment shock, leading to price declines.

• Tax bill: Trump faces a potential $100M tax bill due to an IRS dispute over Chicago tower losses.

• Maturity crunch: $62B in CMBS SASB loans are set to mature this year, with rising defaults projected amid declining payoff rates.

• Deal of the day: Bell Partners acquired the 492-unit Silverado Apartment Homes in Murrieta, CA, for $146.5M on behalf of Value Add Fund VIII.

• On the rise: Secondary markets in the Midwest, Northeast, and South are seeing increased apartment asking rates, with cities like Albany and Milwaukee reporting over 2% growth.

• If it ain’t broke: Wisconsin's Continental Properties closes its 10th Illinois acquisition at $78.35M for a 284-unit Plainfield complex, or $275,880 per unit.

• Dream deferred: AvalonBay Communities (AVB) reported 4.2% higher Q1 revenue at $669M, driven by high home costs and limited supply, keeping the American Dream out of reach for most.

• Artistic oasis: San Francisco residents can finally be thankful for something as $100M from an anonymous benefactor will end up funding 100 affordable housing units for artists in the city.

• Data debut: Tishman Speyer (TSIB) ventures into data centers with an initial Frankfurt project, starting at 32 MW but potentially expanding to 70 MW.

• In the name of industry: The US industrial real estate market reported $9.97B in 1Q24 sales, although some big moves by Amazon on the West Coast slightly skewed results.

• Power moves: Redfearn Capital and TPG Angelo Gordon bought an 8-building Jacksonville industrial portfolio, 91% occupied by 18 tenants, for $47.8M.

• E-commerce evolution: E-commerce spending in 2024 is up 7% to $331.6B, driven by budget-conscious consumers and buy-now-pay-later plans.

• Mixed-use moves: Kushner Cos. secured $100M in loans for a Long Branch project, accelerating its Monmouth County expansion in the revitalized waterfront.

• Foot traffic figures: Q1 multi-tenant retail investment sales grew by 7.8% from the previous quarter but were down 18% YoY as average shopping center cap rates hit their highest since mid-2014.

• Rethinking sports: Sports and entertainment venues are enhancing retail by increasing foot traffic and providing diverse consumer experiences like pickleball, gaming, and music.

• Skyscraper steal: In one of the best deals of the year, Fort Worth's tallest building, Burnett Plaza, sold at auction for just $12PSF, less than 1% of its previous sale price.

• In a lot of trouble: Fitch Ratings may downgrade Mount Street's U.S. special servicing arm due to transparency concerns in the firm’s loan workout processes.

• Green innovation: Howard Hughes' (HHH) eco-friendly office building, One Bridgeland Green, will anchor the town center of Bridgeland, with low submarket occupancy.

• Financing fortunes: Miami-based firm Driftwood Capital provided $30M in mezzanine financing for the largest hotel in Texas as part of a $300M refinancing package.

📈 CHART OF THE DAY