Decline in CRE activity to moderate in 2024; Wyndham evaluates Choice offer

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

The decline in US commercial real estate activity is expected to moderate in 2024, according to a report from CBRE Group Inc.

Total investment volume will likely decline 5% year over year in 2024, compared with the 45% year over year drop in 2023, the real estate service company said in its "U.S. Real Estate Market Outlook 2024" report.

"We expect that commercial real estate investment activity will begin to pick up in the second half of 2024, although an uncertain macro environment and elevated interest rates will continue to weigh on investor and lender sentiment."

Financing for office properties, particularly the non-prime assets, will remain extremely difficult. Some owners of class B and C office assets will be forced to sell due to further decline in value.

Multifamily and industrial assets, on the other hand, will be most favored by investors in 2024 on the back of strong demand, low vacancy and other long-term tailwinds.

CHART OF THE WEEK: 7 North American REITs raise November dividends

⮞ Three US-based real estate investment trusts and four Canadian REITs increased their regular dividend payouts in November.

⮞ Healthcare REIT Strawberry Fields REIT Inc. increased its quarterly payout by 9.1% to 12 cents per share on Nov. 14, the largest dividend hike announced in November.

⮞ Year to date, 69 REITs in the US and 11 Canadian REITs have announced dividend increases.

Potential M&A

– Arkhouse Partners LLC and Brigade Capital Management LP offered to acquire the shares they don't already own in department stores company Macy's Inc. for $21 per share, or $5.8 billion, The Wall Street Journal reported, citing people familiar with the matter. As of January, Macy's real estate portfolio includes roughly 783 stores, of which it owns 300, according to a separate report from the publication. The stores include Bloomingdale's and the Bluemercury beauty chain.

– Choice Hotels International Inc. commenced an unsolicited offer to acquire Wyndham Hotels & Resorts. The target company said the proposal "appears unchanged" from the terms outlined in the offeror's earlier offer. Wyndham urged its shareholders not to take action while the company is evaluating the proposal.

Property development

– JBG Smith Properties plans to develop an approximately 9 million-square-foot mixed-use entertainment district within National Landing in Northern Virginia in partnership with Monumental Sports & Entertainment LLC, the Commonwealth of Virginia, and the City of Alexandria. The project will span approximately 55 acres in the Potomac Yard section and will be anchored by a new arena for the Washington Wizards and Washington Capitals.

– Vornado Realty Trust, Citadel and Rudin Management agreed to acquire up to 525,000 square feet of air rights for their office tower project at 350 Park Avenue in New York City, PincusCo reported. The Roman Catholic Archdiocese of New York is selling the rights for $312.50 per square foot, for a total purchase price of up to $164 million.

See key people moves in North America real estate.

REIT Replay: US REIT share prices largely flat in week ended Dec. 8