📧 In today’s email: EQT Exeter raises $3B from global investors for its new and oversubscribed industrial real estate fund. The NFL’s Tennessee Titans reach a deal with the state to build a new, $2.1B football stadium. Treasury Secretary Janet Yellen hints that all is not well with the U.S. Treasuries market. Meanwhile, Bell Partners snaps up a four-state multifamily portfolio for $313M for its latest fund.

CAPITAL MARKETS

Global real estate firm EQT Exeter just shot past its $2.5B target and raised $3B for its latest industrial real estate fund, which will focus on high-occupancy, long-term lease properties for stable cash flow.

Investment mandate: The new fund will focus on Class A, single-tenant big box distribution, fulfillment centers, last-mile logistics, and industrial service facilities (ISFs) that attract “established, global tenants.” Unsurprisingly, EQT Exeter raised the $3B from investors in North America, Europe, Asia, and the Middle East.

Impending slowdown? While the oversubscribed fund demonstrates global enthusiasm for industrial assets, the sector has stalled lately in the U.S. Vacancy rates were up 20 basis points in Q3 while net absorption shed 132 MSF in Q2. Even Amazon (AMZN), one of the biggest buyers of industrial, has canceled leases and sold off assets.

THE TAKEAWAY

Global diversification: EQT Exeter claims 1,200 B2B tenants globally, and believes it is well diversified against an industrial slowdown in the U.S. Over the last 15 years, the firm closed 900 industrial investments totaling nearly $30B in gross asset value. As of June, the firm boasted €77B in AUM across 36 active funds with companies in Europe, Asia-Pacific, and the Americas, totaling €29B in annual sales.

DEVELOPMENT PLAN

NFL’s Tennessee Titans, Gov. Officials Reach Initial Terms for New $2.1B Stadium Deal

The NFL’s Tennessee Titans finally reached a $2.1B agreement with Mayor John Cooper for a new enclosed stadium in downtown Nashville surrounded by acreage to be developed into green space, housing, retail and other uses.

Deal details: Rather than rely purely on taxpayer money to renovate Nissan Stadium, the new 1.7MSF stadium will get $840M from the Titans/NFL, $500M from Tennessee itself, and $760M in debt from the Metro Sports Authority. Hotel/motel and stadium/campus sales taxes will help fund the project as well. “We are getting a much better stadium and a much better deal,” said Mayor Cooper.

Construction timeline: If approved, the Titans will sign a 30-year lease for the new stadium that is expected to open as early as 2026. Likely candidates for construction include Turner Construction Co and AECOM Hunt (ACM). The two firms worked together to build LA’s $5B SoFi stadium for the Rams and Chargers.

THE TAKEAWAY

The bottom line The Titans ownership said in the statement that its goal for the new stadium is to place the citizens and taxpayers of Nashville in a better position than they are under the current lease, create an “amazing facility for Nashville and Tennessee that will attract world-class events” and to return valuable real estate surrounding the stadium to the government to develop “an unprecedented new riverfront neighborhood.”

FEDERAL EMERGENCY

Treasury Crisis Brewing in $23.7T US Securities Market

While everyone and their mom is worried about rising inflation and what the Federal Reserve plans to do about it, Treasury Secretary Janet Yellen hinted that a U.S. Treasury market emergency may be on the horizon.

Hitting the brakes on borrowing: Last Wednesday, Yellen said she was “worried about a loss of adequate liquidity” for U.S. government securities. Since the Great Recession, American borrowing has soared from a little under $6T to nearly $24T as a way to cover growing budget deficits. And the Fed doesn’t seem to know what to do about it.

Losing liquidity fast: Even worse, a Bloomberg index reveals that Treasury market liquidity is worse today than during the pandemic lockdowns. Implied volatility measured by the ICE BofA MOVE Index is at its highest point since 2009. Other signs of vanishing liquidity include extreme swings in daily interest-rate swaps and the fact that newer, more liquid “on-the-run” securities are trading at a discount.

THE TAKEAWAY

Deteriorating demand: Another concerning sign is that the demand for U.S. Treasuries is down at debt auctions. This past Wednesday, the bid-to-cover ratio for the latest Treasury auction of $32B in 10-year notes was more than one standard deviation below last year’s average. Measures of foreign demand were at their lowest since March 2021. Even more telling, banks have begun reducing their Treasury holdings.

MULTIFAMILY MOVES

Bell Partners Acquires Four Multifamily Communities for $313M

Bell Partners, a national apartment management and investment firm, just snapped up a $313M portfolio of four multifamily communities in Atlanta, Dallas, Denver, and LA.

A focus on community: The 846-unit portfolio acquisition, made on behalf of Bell Apartment Fund VII, includes Sidney at Morningside in Atlanta, GA; Residences at Starwood in Frisco, TX; Touchstone Apartments in Broomfield, CO; and Montecito Apartments in Santa Clarita, CA. All four communities were built between 1998–2018.

A pricey purchase: Some simple napkin math tells us that Bell Partners paid an average of nearly $370K per unit. But given the hot target markets, generous floorplans, and the modern amenities at each location, clearly Bell thinks it’s worth it. “The portfolio provided an opportunity to invest in diverse assets throughout the U.S.,” said EVP of investments Nickolay Bochilo.

THE TAKEAWAY

Surgical precision: Bochilo also revealed that Bell plans to target 14 specific “durable” U.S. markets with “favorable long-term fundamentals.” These markets include the Bay Area, Southern California, Seattle, Denver, Austin, Dallas, Fort Lauderdale, Orlando, Tampa, Atlanta, Raleigh, Charlotte, Boston and Washington, D.C.

📰 Editors’ Picks

• Rebuilding stronger: After Hurricane Ian swept through Florida and devastated southwestern coastal towns, the state’s housing codes will likely get even more stringent.

• Fall from grace? Once the crown jewel of Silicon Valley, San Francisco will face 1,300 expiring office leases by 2024, on top of its highest office vacancy rates ever.

• No thanks, Landlord: As interest rates keep rising, single-tenant commercial property owners find it hard to pass costs onto tenants, so they’re dumping assets on the market.

• The rental price hike algo: According to ProPublica, more property management companies are relying on RealPage’s YieldStar solution to calculate rental increases for apartments.

🤝 Deals & Dealmakers

• High-growth market: SPI Advisory has finalized the acquisition of “Skyview North,” a 336-unit, Class A institutional quality garden-style apartment community built earlier this year in the growing North Austin suburb of Hutto, TX.

• Moving stuff around: Irvine-based FPA Multifamily purchased three San Jose apartment complexes with 415 units for $135M after unloading other multifamily properties elsewhere.

• Which coast is the best? Arizona-based Creation Equity expands into the Northeast with a $200M purchase of three NJ and Long Island warehouses totally more than 400KSF.

• 0% occupancy? No problem: As residential demand rises in downtown Manhattan, 99c LLC buys a vacant 31-story, 685.5KSF office tower in Seaport for $252M.

• South Florida condos: Jeffrey Soffer’s Fontainebleau Development is forming a JV with Phil Perko to tear down an old condo complex in Tequesta, Florida, to build Savoy, a 10-story, 26-unit oceanfront condominium.

📈 CHART OF THE DAY

Reservations for Full-Service Dining Show Signs of Rebounding From Pandemic

💼 JOB BOARD

The CRE Daily Hiring Block

Looking for a new role? Or need to find top talent? The CRE Daily Hiring Block is a unique alliance of real estate professionals that connects talent and employers.

• Multifamily Debt Associate/ Vice President (Eastdil Secured)

• Deal Manager (Greysteel)

• Commercial Mortgage Banking Producer (Medalist Capital, Inc.)

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.