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Good morning. Blackstone strikes another $8B real estate debt fund, doubling down on distressed assets as traditional lenders pull back. With a $1.5 trillion debt wall looming over commercial real estate, the private equity giant is positioning itself to fill the financing gaps—and profit in the process.

Today’s issue is brought to you by WareSpace, the next-gen of small bay industrial.

Market Snapshot

*Data as of 03/07/2024 market close.

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• Mixed signals: The Fed’s Beige Book reports modest economic growth with commercial real estate seeing stable multifamily demand, a struggling office sector, and a slight decline in construction activity.

• Investor fallout: CrowdStreet investors are seeking $7.2M in arbitration, alleging the crowdfunding platform failed to detect fraud by Nightingale Properties in a high-profile Chicago office deal.

• Sales slowdown: CRE sales fell 14% in January as portfolio deals plummeted, but single-asset transactions and select sectors—like office and hospitality—showed signs of resilience.

• Site swap: Shoma Group sold its Coral Gables development site for $35M to 13th Floor Investments, barely breaking even after securing approvals for a $250M mixed-use project.

• Midwest momentum: Chicago’s suburbs are emerging as one of the most competitive rental markets, rivaling Miami, as affordability and strong job growth drive demand in the region.

• Funding cut: HUD has canceled $60M in Section 4 contracts with two major affordable housing groups, sparking concerns over stalled projects and increased housing challenges for low-income communities.

• Lender lockdown: As NYC multifamily distress deepens, lenders are tightening terms, demanding personal guarantees, and making it harder for landlords to walk away from struggling properties.

• Modular move: SoLa Impact secured a $34.8M loan from Acore Capital to build a 188-unit modular affordable housing project in South Los Angeles, expanding its footprint in the region.

• Value-Add: Fairfield closed its $1.47B multifamily value-add fund, surpassing its $1B target, as it eyes distressed asset opportunities in over 30 major U.S. metros.

• Industrial bet: Penzance acquired two flex industrial parks in Manassas, VA, for $55M, aiming to capitalize on Northern Virginia’s booming data center market and supply-constrained industrial sector.

• Expansion: Lincoln Equities Group signed a 109,450 SF lease with modular ramp provider National Ramp at its newly completed Lincoln Logistics Rockland facility in New York.

• Tight market: San Diego’s retail vacancy dipped to 4% despite negative absorption, as limited new supply and ongoing redevelopment help stabilize the market amid rising rents.

• Creditor protection: Iconic Canadian retailer Hudson’s Bay has filed for creditor protection, putting its 80 department stores at risk and signaling a major shake-up in the country’s retail real estate landscape.

• Gaining steam: Landlord concessions fell in 2024 for the first time since 2019, signaling a potential office market recovery as top-tier buildings see rising rents while lower-tier assets struggle.

• In the money: PSAI Realty Partners acquired a Silicon Valley office complex for $54M, a 62% discount from Oaktree Capital’s 2019 purchase, highlighting ongoing office market distress.

• Trophy refi: A.M. Property Group and Northeast Capital secured $133M in refinancing for The Link, a recently renovated 560,000 SF office complex in Stamford, CT, now 92% leased.

• Adapting to a new world: Hospitality REITs are navigating a slow deal market by focusing on strategic renovations, portfolio repositioning, and capital reinvestment to drive long-term value and revenue growth.

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📈 CHART OF THE DAY