Blackstone Real Estate Partners VIII has closed on a previously announced deal in which it acquired a 40-asset industrial warehouse portfolio in the mid-Atlantic region for $347.2 million from FRP Holdings. The original deal had been slightly larger, but one facility was dropped after the tenant exercised its right of first refusal to purchase it.
Westbrook Partners and Host Hotels & Resorts are close to signing a hard contract for Westbrook to acquire Manhattan's W Union Square hotel for $168 million, according to sources. The REIT put the hotel on the market in 2016 after acquiring it in 2010 for $185.3 million.
Sales of new single-family homes dropped 1.5% in April to a seasonally adjusted annual rate of 662,000 while rising 11.6% year over year. Jim O'Sullivan of High Frequency Economics attributed the drop to volatility in March.
The developer behind Plantation Walk, a $350 million mixed-use space with 700 apartments and 200,000 square feet of retail space, says the project's construction is "imminent." Also, the company expects to submit plans for the Plantation City, Fla., project's second building and sign tenant leases for the office space in the coming months.
Phillips Edison & Co. released its industry insights at the International Council of Shopping Center's ReCon event, showing growth in experiential retail such as interactive locations, including gyms, nail studios and salt rooms. The report also shows retail properties are adding food halls, pop-up shops, restaurants and showrooms.
A new building at The Shoppes at Cinco Ranch in Katy, Texas, will house a Starbucks, About Face & Body Medical Spa and Medical Clinic at The Ranch. Thor Equities, which manages the 35-acre location, expects to complete construction on a 12,000-square-foot building on the property in November.
Despite robust demand, the multifamily market is feeling the effect of new supply with many owners unable to raise rents as they could earlier in the cycle. With vacancy rates rising, apartment owners will find this year challenging, but fundamentals are strong enough to "weather the storm," says Victor Calanog, chief economist with Reis.
Analysts are watching with concern the rising number of interest-only commercial mortgage-backed securities, as these borrowers will have to shoulder heavier debt payments just as the cash flow from their properties starts to slow. Partial-interest-only loans are also at risk, and the overall situation could lead to an increase in defaults during an economic downturn.
REIT returns generally have low correlations with returns from the broad stock market. Nareit's Brad Case reports that some REIT property sectors -- including health care, self storage, residential, infrastructure, and data centers -- seem to be especially defensive with average correlations of 65% or less even during periods encompassing market crises. Even those property sectors with the highest REIT-stock correlations, though, have shown correlations of 78% or less even during the Financial Crisis.
Industrial and multifamily REITs are benefiting from strong economic trends, but they both face short-term supply headwinds, says Spencer Levy, head of Americas research at CBRE. In the long run, their fundamentals are strong, but the asset class that he believes represents the best buying opportunities is in the retail REIT space "because there's been a tremendous overreaction to the encroachment of the internet."