Demand for US vacation homes slumps in March; Carmel Partners raises $1.58B

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

Demand for US vacation homes in March declined by more than half from pre-pandemic levels due to high costs, a slowing short-term rental market and the return to onsite work, according to a report from residential real estate brokerage Redfin Corp.

Mortgage-rate locks — an agreement between a homebuyer and a lender that lets the former lock in a mortgage's interest rate for a specific time period — for second homes in March declined 49% from the same month in 2022, outpacing the 29% year-over-year drop for primary homes.

Mortgage-rate locks for second homes also decreased 52% from levels seen in January and February of 2020, before homebuyer activity spiked during the pandemic.

Redfin attributed the slump in demand for primary and vacation homes to a slew of economic woes, including scarcity of new listings, high mortgage rates, still-elevated home prices and persistent inflation.

Homebuyers are also deterred by the return to office work, giving them less time to spend in second homes.

CHART OF THE WEEK: US REITs continue to trade at discount

⮞ US equity real estate investment trusts with market capitalization above $200 million traded at a median 20.2% discount to net asset value (NAV) as of March 31.

⮞ Office REITs are trading at the highest discount to NAV among all property sectors.

⮞ As of the end of the first quarter, only the casino sector traded at a median premium to NAV.

M&A

– Office Properties Income Trust agreed to acquire Diversified Healthcare Trust in an all-stock transaction valued at $2.82 billion, according to S&P Global Market Intelligence data.

Funds in focus

– Carmel Partners Inc. gathered $1.58 billion at the final close of its Carmel Partners Investment Fund 8. The fund seeks to invest in multifamily real estate properties across the US.

– Barings LLC, an investment company under MassMutual, raised $680 million at the final close of Barings Innovation and Growth Real Estate Fund and related vehicles. The vehicle aims to invest in the life sciences and science, technology, engineering and mathematics office space.

Property transactions

– Veris Residential Inc. divested the Harborside Financial Center Plaza, featuring three class A office buildings in Jersey City, NJ, to 601W Cos. for $420 million, Commercial Property Executive reported, citing county records.

– Pendulum Property Partners LLC acquired The Mix at Harman, a 761,000-square-foot office campus in Los Angeles, from Shubin Nadal Realty Investors LLC and DRA Advisors LLC for $171 million, The Real Deal reported April 10, citing a source familiar with the matter.

– Blackstone Inc. sold the two-building Griffin Towers office park in Santa Ana, Calif., to a joint venture between Barker Pacific Group Inc. and Kingsbarn Realty Capital for $82 million, according to Commercial Observer.

– Westbrook Partners LLC acquired the 335-unit Broadstone Oak City, a four-building apartment complex in Raleigh, NC, from Alliance Residential Co. for nearly $93.3 million, the Triangle Business Journal reported, citing deed records.

9 US REITs, 1 Canadian REIT announce higher dividends in March

Goldman Sachs tops equity REIT common stock offering underwriters in Q1

BofA, J.P. Morgan, Morgan Stanley top REIT M&A league table through Q1