S&P Global Market Intelligence offers our top picks of real estate news stories and more published throughout the week.
Almost 90% of North America-based members of the Pension Real Estate Association who responded to an April survey have had real estate deals fall through because of the effects of the coronavirus pandemic, and 70% have scaled back investment plans.
In the same survey, conducted April 9 through 14, 69.3% of respondents — including institutional investors, investment managers and consultants — said property appraisals now being conducted may contain material uncertainties, while 22.0% said the appraisals may be "somewhat less accurate" than under normal circumstances.
According to the survey, 97.8% of respondents said all or a significant majority of their organizations' employees are working remotely.
The survey sought to gauge investor confidence in various property sectors by asking those that would have considered investing in a sector before the pandemic if they would consider new investments in the next six months. Medical office property investors retained the most confidence, with 92.6% saying they would consider a new investment. Investor confidence stood at 91.2% for data centers, 88.4% for industrial and 88.2% for multifamily.
Of the surveyed sectors, the greatest loss of confidence was in the shopping mall sector, with 56% of market participants who would have considered an investment before the virus saying they would no longer consider a similar move. Meanwhile, 45.6% of investors in seniors housing said they would back away, followed by 41.8% for student housing and 40.0% for hotel/lodging.
Real estate investment trust analysts were also recalibrating their views on the retail sector: Mizuho Securities USA analyst Haendel St. Juste lowered the firm's price targets for mall and strip center REITs by an average of roughly 60% and 30%, respectively. Citing a "dismal" retail landscape and doubts about rent collections, BMO Capital Markets analyst Jeremy Metz cut 2021 earnings estimates for retail REITs by 10%.
The coronavirus effect tracker
* Marriott International Inc., which has already pulled back its 2020 guidance, said it expects the pandemic to continue to impact its business, operations and financial results, anticipating the impact to "worsen and last for an unknown period of time." The global hospitality company said the "complex and rapidly-evolving" pandemic is expected to adversely impact its ability to raise funds via equity financings, among other risks to its business.
* Hilton Worldwide Holdings Inc. presold Hilton Honors points to American Express for $1 billion in cash and said that as of April 14, operations were suspended at approximately 1,000 hotels, constituting roughly 16% of its global hotel properties.
* The latest weekly data by STR, which tracks the hospitality industry, showed that the performance of U.S. hotels in the week ended April 11 remained severely impacted by the pandemic, with revenue per available room falling 83.6% year over year to $15.61 and occupancy dropping 69.8% to finish the week at 21.0%.
* Embattled coworking giant and The We Co. unit WeWork Cos. Inc. will be making additional job cuts by the end of May, following the axing of about 2,400 jobs in late 2019, Bloomberg News reported, citing an audio recording of a staff meeting. CEO Sandeep Mathrani said the job-cutting round will potentially be the last, but did not disclose the size of the planned layoffs.
* Multifamily REIT Camden Property Trust and casino REIT VICI Properties Inc. withdrew their respective earnings outlooks for the 2020 full year due to the uncertainty caused by the pandemic.
* Washington Prime Group Inc. slashed its workforce by about 20% and temporarily reduced its executive officers' salaries, among other measures, while fellow regional mall REIT CBL Properties outlined a temporary salary cut program and partial and full furlough programs to mitigate the pandemic's effect on its business.
* Fitch Ratings said delinquencies for commercial mortgage-backed securities loans will peak between 8.25% and 8.75% by the end of the third quarter, near the peak of 9.01% seen during the Great Recession in July 2011.
The rating agency expects delinquency rates to be highest in sectors most affected by the pandemic, with hotel delinquencies increasing to about 30.00% from 1.44% as of March, and retail delinquencies increasing to approximately 20.00% from 3.51% in March. Both figures would surpass prior peaks of 21.31% and 7.67%, respectively.
That's a wrap
* Nontraded REITs Carey Watermark Investors Inc. and Carey Watermark Investors 2 Inc. completed their merger and the internalization of their management.
Property deals or not
* Co-founder of RFR Realty LLC, Aby Rosen, suspended the roughly $400 million deal to buy the 36-story, 600,000-square-foot office tower at 900 Third Ave. in Midtown Manhattan, N.Y., from office REIT Paramount Group Inc., Business Insider reported, citing a source with direct knowledge of the deal.
Separately, a joint venture between Brookfield Asset Management Inc. and The Blackstone Group Inc. reportedly removed the One Liberty Plaza office tower in lower Manhattan from the market. The partnership was looking to sell the 2.3 million-square-foot building for up to $1.7 billion.
* Prime Healthcare Services Inc. is set to acquire the 384-bed St. Francis Medical Center in Lynwood, Calif., for about $275 million from bankrupt hospital operator Verity Health System of California Inc., The Wall Street Journal reported.
Around the globe
* Singapore-based property company City Developments Ltd. agreed to acquire a 51.01% stake in Chinese real estate developer Sincere Property Group for 4.39 billion yuan.
* LaSalle Investment Management Inc. raised an initial $681 million of its target of between $750 million and $1 billion for the Lasalle China Logistics Venture LP fund and its co-investment vehicle, IPE Real Assets reported. The Chinese logistics fund will manage a diversified logistics portfolio and will target underperforming properties.
* Hong Kong-based private equity firm PAG closed its SCREP VII fund at its $2.75 billion hard cap. SCREP VII is the ninth opportunistic fund for PAG's real estate strategy.
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