Investor home buys plunge in Q1; Sterling Bay, Harrison Street get $265M loan

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Home purchases by real estate investors fell 48.6% year over year and slid 15.9% sequentially in the first quarter.

The nearly 50% year-over-year decline is the largest on record, according to a report from real estate brokerage Redfin Corp. High interest rates, declining rents and falling home values led to the sharp fall, the report stated.

Among the 40 metro areas Redfin analyzed, Nassau County, NY, tallied the largest year-over-year drop in investor home purchases at 67.9%. It was followed by Atlanta and Charlotte, NC, with 66% decreases and Phoenix with a 64.2% decline.

"Investors have gravitated toward more affordable properties due to still-high housing costs and rising mortgage rates, which has left first-time homebuyers with fewer starter homes to choose from," said Sheharyar Bokhari, senior economist at Redfin.

CHART OF THE WEEK: US equity REITs share repurchase activity slows in Q1

⮞ US equity real estate investment trusts repurchased $818.4 million worth of common shares in the first quarter, down 6.8% from the previous quarter and 46.5% on an annual basis.

⮞ Hotel REITs repurchased $307.7 million worth of common shares in the quarter.

⮞ Eight REITs announced new share buyback programs in the first quarter, including Park Hotels & Resorts Inc., which announced the largest new program in the period.

Financing

– Sterling Bay Cos. LLC and Harrison Street secured a $265 million construction loan from Bank OZK for the first phase of the Pacific Center life sciences campus in San Diego, Commercial Observer reported. The companies will use the funds to build 500,000 square feet of research space, an amenity center and a parking facility.

– E11even Partners and Property Markets Group Inc. obtained a construction loan worth $262 million for E11even Residences Beyond, a 65-story condo tower in Miami, The Real Deal reported. The tower, which will feature over 550 units, is now 80% presold.

– Real estate developer Douglaston Development LLC secured a $185 million loan from Wells Fargo and M&T Bank for the construction of a 456-unit rental building in Brooklyn, NY, The Real Deal reported.

Property transactions

– KKR & Co. Inc., through its KKR Real Estate Partners Americas III fund, paid an aggregate of nearly $250 million, in two separate deals, to acquire two class A industrial properties near Phoenix and Palmetto, Ga. The properties include a 1.3 million-square-foot, three-building industrial park in Phoenix's Southwest Valley submarket, and a newly built warehouse covering about 700,000 square feet in Palmetto.

– A partnership comprising Slate Property Group LLC, Avenue Realty Capital and KABR Group paid $120 million to purchase a 166-unit mixed-use residential building at 600 Columbus Ave. in Upper West Side in Manhattan, NY, from KB Cos., Commercial Observer reported. The property also features 27,500 square feet of retail and 100 parking spaces.

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