Distressed asset sales expected to rise; Prologis pays $184M for Ariz. property

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Distressed sales of assets — which occur when assets must be sold quickly due to economic pressure and often at a financial loss — are picking up rapidly as smaller developers reel from the effects of rising interest rates, according to real estate services company CBRE Group Inc.

"We're seeing a lot more distressed sales through receiverships and power of sales," said Lauren White, co-head of CBRE's Land Services Group.

Developers resort to distressed sales when they quickly need funds to pay debt, accepting offers for their properties at a lower price.

"Those smaller developers typically went to B and C lenders, who are now being cautious about what they lend on and watching their book of business carefully," said Mike Czestochowski, a vice chairman at CBRE.

Larger developers, on the other hand, seem to be doing fine, given their relationships with big financial institutions, Czestochowski said.

Public office real estate investment trusts in the US are cushioned from the effects of rising interest rates by manageable debt and quality assets.

CHART OF THE WEEK: 4 US REITs pause dividends in 2023

⮞ Four US REITs have suspended their dividends in the year to Oct. 3.

⮞ Eight others reduced their dividend payments, five of which came from the office sector.

⮞ About 53.4% of REITs in the US are paying higher dividends than their pre-pandemic payouts.

Top deals

– Prologis Inc. acquired the newly built Airpark Logistics Center, a 170-acre industrial campus in Goodyear, Ariz., for $184 million from Creation, The Real Deal reported.

– A Goldman Sachs Asset Management LP-advised fund bought the Hanover North Cambridge apartment community in North Cambridge, Mass., REBusiness Online reported. The Hanover Co. and its institutional partner sold the 294-unit property for $182 million.

– Newbond Holdings and Apollo Global Management Inc. are under contract to buy the 317-room Renaissance hotel in New York City's Times Square neighborhood from Sherwood Equities for roughly $165 million, The Wall Street Journal reported.

– TA Realty LLC paid about $99.3 million for Crescent Communities' Novel Harpeth Heights apartments in Nashville, Tenn., the Nashville Business Journal reported, citing Davidson County records. The property features 322 units across 22 acres at 615 Old Hickory Blvd.

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