Lennar Goes “Land-Light” with $6B Spin-Off and 105K Homesites

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Good morning. One of the largest U.S. homebuilders is finalizing plans to create a $6 billion REIT to manage land holdings and capitalize on a unique recycling-based acquisition model.

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*Data as of 12/19/2024 market close.

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• Major overhaul: GM’s $1.6B plan to transform Detroit’s Renaissance Center into a mixed-use hub faces backlash over its request for $350M in public subsidies, igniting debate over corporate reliance on taxpayer funds.

• Fear and Greed: Credit conditions are tight across all CRE sectors, though investors across asset classes note an improvement in their ability to access capital in 4Q24 relative to 3Q24.

• Lending rebound: CRE lending could surge in 2025, driven by multifamily, self-storage, and grocery-anchored retail, as improving cap rates and stable interest rates attract capital.

• Yield pressure: Rising 10-year Treasury yields, potentially reaching 5–6% in 2025, threaten to raise CRE mortgage rates, increasing refinancing and loan costs.

• Preservation debate: NYC’s historic preservation movement, marking 60 years, faces a crossroads as housing crises and urban growth challenge its balance of protecting landmarks like the Chrysler Building while accommodating modern development.

• Exiting gracefully: Taconic Capital Advisors is winding down its CRE operations, transferring its $200M CRE Dislocation Fund IV to Axonic Capital as it shifts to merger arbitrage and structured credit.

• Rent struggles: Meyer Chetrit’s $540M loan for two Upper East Side rental towers has gone into special servicing as rising costs, falling occupancy, and rent constraints cripple the portfolio’s performance.

• Vacancy metric: Time on market for multifamily units has steadily gone up due to rising supply, with rents falling as landlords cut prices to fill vacancies, reflecting broader seasonal trends.

• Financing Queens: TF Cornerstone secured a $205M Fannie Mae (FNMA) loan for its luxury residential property in Long Island City, which features 584 units and amenities.

• Rental surge: Canada saw a 4.1% jump in purpose-built rental completions in 2024—the largest in 30 years—slowing rent growth but leaving affordable housing scarce.

• North Bay deal: BH Group is set to acquire the 329-unit Wake Biscayne Bay apartment complex in North Bay Village from Mast Capital and partners for over $80M.

• Industrial leader: Dallas leads the nation in industrial sales with $3.8B YTD, up $1.1B from 2023, despite vacancies doubling to 8.3% amid a surge in new supply and the 2nd-largest pipeline in the US.

• Record subleases: Industrial sublease availability hit a record 198.7 MSF in Q3 driven by 3PL providers, but steady absorption, lower sublease rates, and less construction point to a potential decline in vacancies by late 2025.

• Studio expansion: East End Studios is betting big on LA with new purpose-built soundstages, including a $1B Arts District campus, despite industry challenges like strikes and runaway productions.

• Luxury acquisition: LVMH purchased the €50M Villa Bagatelle in Cannes to host exclusive brand events and capitalize on the city’s star-studded festivals.

• On second thought: Tom Thumb has withdrawn from the Shops at RedBird redevelopment in Southern Dallas, citing viability concerns, forcing developer Peter Brodsky to seek a new grocery partner.

• Transit hub: Terra secured $170M to launch Upland Park, a $1B mixed-use community in Miami’s West Dade County, featuring 2K apartments, retail, commercial space, and transit connections.

• Trophy towers thrive: Manhattan’s prime office towers, like the Seagram Building, are fully leased with record rents exceeding $275 PSF, while older properties face high vacancies.

• Return to office: AT&T (T) and Sweetgreen (SG) joined Amazon (AMZN) in enforcing stricter return-to-office rules for 2025, requiring employees to be on-site 4–5 days per week starting in January.

• Hotel defaults: Highgate is surrendering the 686-room Hyatt Regency Downtown SoMa to Blackstone Mortgage Trust amid $290M in debt, joining a wave of San Francisco hotel defaults.

• Motel conversion: Orange County is acquiring the 78-room Travelodge in Costa Mesa for Project Homekey, with American Family Housing leading a $45M redevelopment to provide 76 supportive housing units for the homeless by late 2025.

📈 CHART OF THE DAY