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Mall vacancies in Q2 highest since 2012; Thor gets $427M loan for Chicago hotel

Editor's note: The Daily Dose will not be published July 4.

Commercial real estate

* Citing Reis Inc. data, The Wall Street Journal reported that the U.S. mall vacancy rate hit 8.6% in the second quarter, up from the previous quarter's 8.4%, reflecting the highest vacancy rate since 2012. The vacancy rate for strip malls and other neighborhood and community shopping centers hit 10.2% for the quarter as the segment recorded roughly 3.8 million square feet of emptied space during the period.

* Thor Equities received a $427 million refinancing for the Palmer House Hilton, Chicago's second-largest hotel, replacing $420 million in financing from 2014 that was slated to expire in August, Crain's Chicago Business reported, citing Cook County property records and a source familiar with the deal.

The new debt is led by JPMorgan Chase. The 1,639-room hotel has been refinanced for the third time in six years, the report noted. Thor Equities has twice attempted to sell the property, located in the Loop district. The company sought roughly $575 million for it in 2015 before opting to retain the asset amid a period of growth, according to the report.

* L&L Holding Co. is the buyer in SL Green Realty Corp.'s recent $153 million deal to off-load the fee interest in the 635 Madison Ave. building in Midtown Manhattan, N.Y., The Real Deal reported, citing confirmation from unnamed sources. According to the report, the buyer had owned the interest in 2014 before selling it to SL Green while retaining a right of first refusal and a purchase option, which it exercised.

IStar Inc. affiliate Safety Income & Growth Inc. was in contract to acquire the interest for $151 million but its deal was terminated when L&L Holding exercised its right of first refusal.

* TF Cornerstone Inc. received a $265.7 million loan from M&T Realty Capital Corp. for its 33 Bond St. luxury rental property in downtown Brooklyn, N.Y., The Real Deal reported, citing property records. The lender is assuming the existing $250 million mortgage on the 714-unit, roughly 600,000-square-foot property and providing $15.7 million in new financing, the report noted.

* Toll Brothers Inc. is facing accusations from the U.S. Department of Housing and Urban Development of discrimination against persons with disabilities at its Fifth Street Lofts condominium building at 5-09 48th Ave. in Queens, N.Y.'s Long Island City neighborhood, The Real Deal reported.

The department alleges that the eight-story property contains "extensive design and construction deficiencies" that render certain parts of it inaccessible to people with disabilities. Toll Brothers, architect Henry O'Hara Jr. and the construction company that built the project are accused of violating the Fair Housing Act.

* Apartment Investment and Management Co., or AIMCO, said a number of organizations have submitted friends of the courts briefs in the Ninth Circuit Court of Appeals supporting the company's efforts to hold Airbnb Inc. legally accountable for brokering and promoting illegal short-term rentals.

A court had previously dismissed AIMCO's case against Airbnb on grounds that the online rental platform was not responsible for the listing information posted by its hosts. AIMCO appealed the ruling.

* Sterling Bay received a full construction permit to develop a 19-story office tower in Chicago's Fulton Market at 333 North Green St., The Real Deal reported. The plans filed with the city denote an estimated cost of $100 million, and the developer received a $181.5 million construction loan for the project from Wells Fargo in April, the report noted.

The building is the first of two that Sterling Bay plans to develop, with a 21-story building planned at 360 North Green St., according to the report.

* Los Angeles' industrial market is expected to see a second consecutive quarter of negative net absorption, The Real Deal reported, citing CoStar data. The last time the market saw two straight quarters of negative absorption was the first two quarters of 2007.

According to the report, tenants are looking to the Inland Empire market as they seek space outside Los Angeles County due to high rents.

After the bell

* LaSalle Hotel Properties shareholder Mudrick Capital Management LP issued a letter to the company's board arguing in favor of Pebblebrook Hotel Trust's revised merger offer, as opposed to a merger with affiliates of Blackstone Group LP's Blackstone Real Estate Partners VIII.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, Hang Seng fell 1.41% to 28,545.57, while the Nikkei 225 dropped 0.12% to 21,785.54.

In Europe, around midday, the FTSE 100 climbed 0.58% to 7,591.56, and the Euronext 100 gained 0.93% to 1,045.47.

On the macro front

The motor vehicle sales report, the Redbook Index for retail sales and the factory orders report are due out today.

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The Pipeline: LaSalle Hotel-Blackstone deal offers upfront payment, lucrative i-bank payday: LaSalle's deal agreement with Blackstone offered the sell-side advisers, Citi and Goldman Sachs, fees that were not tied to the fairness opinion or the transaction's close.

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