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NYC office tower seeks $1.4B; Piedmont plans revamp in Orlando, Fla.

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

Capital Markets View – January 2021


NYC office tower seeks $1.4B; Piedmont plans revamp in Orlando, Fla.

Commercial real estate

* RXR Realty and private equity firm Walton Street Capital are looking to sell the 237 Park Ave. office tower in Midtown Manhattan, N.Y., for an unofficial price of roughly $1.4 billion, The Real Deal reported, citing unnamed sources. The partners refinanced the 21-story, 1.25 million-square-foot tower at East 46th Street with a $850 million mortgage in June 2017.

The sources told The Real Deal that RXR and Walton Street will decide to sell based on the bidders and their offers.

* Piedmont Office Realty Trust Inc. Executive Vice President George Wells told the Orlando Business Journal that the company is considering a number of projects in and around its 30-story SunTrust Center building in Orlando, Fla. SunTrust Banks Inc. recently announced plans to move its Orlando headquarters out of the property in August 2019, freeing up roughly 250,000 square feet of office space in SunTrust Center and the adjacent 10-story SunTrust Bank office building.

The SunTrust Center has more than 654,000 square feet of rentable space and counts SunTrust Bank as its largest tenant, according to the report.

* New York City plans to build "thousands" of affordable apartments for low-income senior citizens with a $500 million commitment to build on vacant public-housing land owned by the New York City Housing Authority, The Wall Street Journal reported. The city also agreed to spend more than $2 billion over the next decade on improving the public housing system, the report noted.

* PGIM Real Estate, the real estate investment arm of Prudential Financial Inc. unit PGIM Inc., paid $250 million to acquire a 50% stake in CityView's apartment portfolio in the San Francisco Bay Area, the San Francisco Business Times reported. The Los Angeles County Employee Retirement Association, CityView's equity partner, sold the stake and owns the remaining interest, according to the report.

The portfolio comprises over 700 units across five properties.

* Amazon.com Inc. is scouting the Greater Nashville, Tenn., area for a new distribution facility, the Nashville Business Journal reported, citing multiple real estate sources. According to the sources, the e-commerce giant was initially seeking a roughly 300,000-square-foot property but is now looking for a larger space.

Amazon leased a 125,000-square-foot industrial building five miles north of downtown Nashville in June. The planned expansion would take Amazon's total footprint in the region to 3 million square feet. Sources said a building in La Vergne is one of the likely locations, although no lease has been signed so far, the publication added.

* A Journal report featured a look at the recent increase in merger and acquisition activity among real estate investment trusts, pointing out that private and public buyers of REITs have not merely been acquiring REITs trading at the steepest discounts, compared to the private-market valuations of their properties, but are in fact targeting owners of certain property types that are expected to "weather a downturn."

Buyers are also seeking out REITs that are among the leading owners of certain property types like skilled nursing facilities. The publication noted, citing Dealogic, that there have been eight announced deals for REITs for a total of $16.5 billion since April, compared to two deals totaling $4.4 billion in the first quarter.

Announced REIT acquisitions in the fourth quarter of 2017 totaled $16.4 billion, the report noted.

* Citing data from Real Capital Analytics Inc., Bloomberg News reported that roughly $3 billion worth of retail real estate changed hands in April, reflecting a 27% year-over-year decline and the lowest monthly figure since February 2013. The news outlet added that while mall giants like Simon Property Group Inc. and GGP Inc. are spending large amounts on upgrades, there is a growing number of lower-tier malls that have shrunk in relevance and do not justify expensive overhauls.

Owners of such lower-tier malls are trying to sell them off but there is only a narrow set of buyers willing to acquire a declining mall, with even fewer willing to pay the asking price, according to the report. According to Thomas Dobrowski, an executive managing director at brokerage Newmark Knight Frank, there is a definite "pent-up backlog of malls" up for sale by REITs, although exact data is unclear.

* China's Shenzhen New World Group Co. Ltd. has filed plans to convert a 1982-built hotel in downtown Los Angeles into residential units and build a 77-story adjacent tower with a 599-room hotel, 242 condominiums, 28,705 square feet of commercial space and 36,674 square feet of hotel amenities, Urbanize LA reported, citing an application to the City of Los Angeles.

The company intends to convert the 469-room L.A. Grand Hotel Downtown at 333 S. Figueroa St. into 224 apartments. Shenzhen New World paid roughly $60 million for the asset in 2010.

The day ahead

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

In Asia, Hang Seng lost 1.22% to 30,725.15, while the Nikkei 225 rose 0.38% to 22,966.38.

In Europe, around midday, the FTSE 100 gained 0.45% to 7,738.39 and the Euronext 100 increased 0.43% to 1,066.63.

On the macro front

The MBA Mortgage Applications, PPI-FD, Atlanta Fed Business Inflation Expectations, EIA Petroleum Status, FOMC Meeting Announcement, FOMC Forecasts and Fed Chair Press Conference are due out today.

Now featured on S&P Global Market Intelligence

Weather hurt earnings of 15% of S&P 500 companies, disclosures show: About 15% of companies in the S&P 500 index between April 2017 and April 2018 disclosed that events such as drought, cold snaps and excessive rainfall had impacted their earnings, S&P Global Ratings said in a report released June 11.

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