Editors’ Weekly News Roundup, December 11 – December 15
That clattering noise across the commercial real estate industry last week was the sound of other shoes dropping. Connect CRE’s five most-read stories for the week ending Dec. 16 all focused on the logical and expected next steps in ongoing scenarios.
Leading the roster was the latest move by a shopping center operator that was hit hard by the pandemic. PREIT Files for Prepackaged Chapter 11 Bankruptcy detailed the Philadelphia-based REIT’s reorganization plan.
The company’s trip to U.S. Bankruptcy Court this month was its second since the pandemic began; the first was in 2020. In a statement, CEO Joseph F. Coradino said that “unusual economic conditions have limited the company’s options with respect to its debt obligations as meaningful achievements on the operating front were met with inflation and rising interest rates.”
A REIT with some involvement in the retail sector was one of the key players in the week’s second most-read story. This story found Vornado Realty Trust putting on its office landlord hat, though. Following the development agreement that Vornado and fellow Manhattan office landlord Rudin struck with Ken Griffin’s Citadel a year ago, it stands to reason that the partnership would move forward sooner or later.
That forward movement is what we reported in Citadel, Vornado, Rudin to Buy St. Patrick Cathedral’s Air Rights for $164M. With air rights secured from the iconic cathedral, Citadel plans to build and largely occupy a 1,350-foot-tall office tower at 350 Park Ave. The story drew strong interest both in New York and nationwide.
A while back, Dallas-based Dart Interests endeavored to develop a large-scale resort near Walt Disney World, replete with an upscale Hilton concept, golf courses, rental homes, apartments and a crystal lagoon. That 1,100-acre project, known as Evermore Orlando Resort, is now poised to open its doors, and Connect CRE readers both regionally and nationally made $1 Billion Orlando Resort Readies for Openingour third most-read story of the week.
Following the collapse of Signature Bank, the FDIC—acting as receiver—began marketing billions of dollars of Signature loans collateralized by commercial properties and multifamily assets. Recent reports identified Blackstone as the front-runner to acquire one of the portfolios the FDIC brought to market, and sure enough, when the FDIC announced the winning bid late Thursday afternoon, the bid came from a Blackstone entity.
The breaking news story that came out of that announcement, Blackstone Affiliate Wins Bid for Signature Bank CRE Loans, was our fourth most-read story this past week. Blackstone’s partners in acquiring a 20% stake in the $16.8-billion loan portfolio included a unit of the Canada Pension Plan Investment Board and funds managed by Citadel Capital. Still to be announced are the winning bids for two portfolios of Signature multifamily loans, which combined are nearly equal to the portfolio that Blackstone and its partners will manage.
Commercial property prices have been going through an extended limbo dance throughout 2023, and the question on everyone’s minds was just how low these prices could go. In our fifth most-read story of the week, Green Street reported a further annual decline in pricing but also saw the proverbial light at the end of the tunnel.
Green Street: CRE Prices May Have Hit Bottomwas the headline, and the story quoted Green Street’s Peter Rothemund as saying that commercial property is now fairly priced vs. bonds. That being said, the story also reported that CRE pricing has dropped by 22% since the March 2022 peak, and by considerably more than that in a couple of sectors.
One of those sectors, not surprisingly, is office. However, our final Weekender mailing of new content this year is topped by a 2024 forecast from the experts who have helped Connect CRE go beyond the negative headlines about the office sector.