NYC’s Multifamily Conduit Distress Rate Hits 8.5%

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Good morning. NYC’s multifamily conduit distress rate hit 8.5% in 2024, with older rent-stabilized buildings struggling amid rising costs and limited rent growth potential.

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• Cash buyers dominate: Nearly 50% of luxury homes in 2024 were bought with cash, as high-net-worth buyers remain unfazed by mortgage rates and economic headwinds. (sponsored)

• Deal of the day: RCG Ventures acquired 100 retail properties from Global Net Lease (GNL) for $1.8B, advancing GNL’s shift to a single-tenant net lease model.

• Rates still restrictive: Atlanta Fed President Raphael Bostic said rates should remain high to curb inflation, though he expects two cuts in 2025 amid economic uncertainty.

• Latest $1B fund: Neuberger Berman closed its $1B real estate secondaries fund, surpassing its $800M target, as demand for secondary market liquidity grows.

• Paid parking era: Atlanta landlords are converting free parking into paid lots to offset rising costs, with rates surging as demand returns amid office vacancies.

• Sold in Bethesda: JBG Smith sold its only Bethesda multifamily property as the buyer expands its regional apartment portfolio with a fifth acquisition in two years.

• Facing the Senate: Bill Pulte, Trump’s FHFA nominee, is facing Senate scrutiny on Fannie Mae privatization, which raises concerns over government stock sales and market stability.

• Changing rent trends: Sun Belt rent declines are slowing, while Midwest cities like New Haven and Omaha see double-digit rent hikes amid strong job growth and limited supply.

• Port activity surges: North American ports handled 61.3M TEUs in 2024, driven by shippers front-loading freight, while industrial leasing near ports remains sluggish but poised for recovery.

• Southern expansion: SL Industrial Partners acquired a 293.7K SF Greensboro industrial asset for $29.5M, expanding its North Carolina portfolio beyond 6 MSF.

• Wise investments: Investcorp acquired two industrial portfolios in Minneapolis and Baltimore, totaling 27 properties and 2.7 MSF, expanding its US logistics footprint.

• Mall redevelopment woes: Office-heavy mall conversions face distress as Stockdale’s $550M Horton project in San Diego risks foreclosure, while Alexandria exits its biotech redevelopment plans.

• West Coast best coast: Federal Realty (FRT) acquired Monterey’s 674K SF Del Monte Center from AAT, expanding its West Coast footprint in an affluent but underserved market.

• Dallas future unclear: A last-minute land donation could keep Neiman Marcus' downtown Dallas flagship open, but new owner Saks Global still plans to close the store.

• Full-time RTO: The SEC mandated a full-time office return for all workers starting April 14 despite SEC union opposition, aligning with Trump’s push to end federal remote work.

• Demand rebound: Larger office leases surged in 2024, with tech companies leading expansions, while prime Class A spaces in amenity-rich districts attracted most relocations and renewals.

• Surrendered asset: Nightingale signed over Miami Beach’s Lincoln Place to Granite Point after CEO Elie Schwartz admitted to a $54M crowdfunding fraud scheme.

• Refinancing secured: Ashford Hospitality (AHT) refinanced 16 hotels with a $580M loan, extending debt maturities and eliminating corporate-level debt amid ongoing financial restructuring.

📈 CHART OF THE DAY