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Marriott breach losses could reach $600M; GreenOak, Sun Life unit to merge

Commercial real estate

* The data breach that Marriott International Inc. recently revealed could lead to direct cyber incident losses of between $200 million and $600 million, catastrophe risk modeling firm AIR Worldwide said. The loss estimates are based on the assumption that the breach may have potentially compromised information on about 500 million guests. The estimates excludes the impact of any insurance coverages that Marriott may use to recover losses.

* Sun Life Financial Inc. plans to merge its North American real estate and property management division, Bentall Kennedy, with global property investor GreenOak Real Estate LP. GreenOak and Bentall Kennedy serve more than 700 institutional clients with roughly C$62 billion in assets under management as of Sept. 30.

Sun Life is set to acquire a 56% stake in the combined Bentall GreenOak entity by contributing its interest in Bentall Kennedy and paying GreenOak shareholders C$195 million in cash. GreenOak shareholders will hold the remaining interest in the combined business. The deal is expected to close in the first half of 2019.

* E&M Associates sold a portfolio of apartment buildings in Manhattan, N.Y.'s Harlem neighborhood to Sugar Hill Capital Partners for over $250 million, The Real Deal reported, citing unnamed sources. The news outlet said the buildings are primarily on the blocks between Manhattan and St. Nicholas avenues.

* Facebook Inc. is in talks to lease SL Green Realty Corp.'s One Madison Ave. in the Midtown South neighborhood of Manhattan, which is said to be the subject of an over $1 billion redevelopment plan, New York Post reported, citing unnamed sources. Credit Suisse Group AG is moving out of the 1.127-million-square-foot building.

Sources told the publication that the social media network's recently reported discussions to lease the entire office space at the nearby 870,000 square-foot, 15-story 63 Madison Ave. building may have fallen through amid the shift in focus to One Madison. Facebook was reported in October to be negotiating the 63 Madison Ave. lease deal with George Comfort & Sons, Loeb Partners Realty and Jamestown.

* Citing FactSet, a report by The Wall Street Journal highlighted real estate stocks as the fifth best-performing sector out of 11 sectors in the S&P 500, after utilities, healthcare, information technology and consumer discretionary stocks. Real estate investment trusts are expected to outperform the broader stock market for the first time since 2015, the publication said, adding that JPMorgan Chase expects REITs to offer 4% dividend yields in 2019.

Morgan Stanley anticipates that multifamily, healthcare, industrial and certain office companies with greater exposure to West Coast markets will be the top performers, while retail and storage REITs may face difficulties, according to the report.

* 601W Cos. landed a $310 million loan for its acquisition and planned refurbishment of the 1.2 million-square-foot office tower at 1 S. Wacker in Chicago, The Real Deal reported, citing 601W Principal Mark Karasick.

Blackstone Group LP extended the financing, of which roughly 70% was directed toward the purchase and 30% was set aside for $93 million worth of upgrades. The borrower was said to be finalizing a roughly $310 million purchase of the property from John Hancock Financial Corp. in September. The deal has now officially closed, the news outlet added, citing Cook County records.

* Alere Property Group LLC obtained a $135 million, fixed-rate financing from TH Real Estate for its 19-asset industrial portfolio across Southern California, Commercial Observer reported.

Spanning 1.7 million square feet across 19 properties, the portfolio is 95% occupied by 18 tenants, the publication said, citing TH Real Estate.

* Broad Street Development LLC secured a $101 million loan from Invesco Real Estate Ltd. that it will use for the acquisition of the property at 370 Lexington Ave. in New York City, The Real Deal reported, citing filed mortgage documents. Broad Street agreed to buy the building from UNIZO Holdings Co. Ltd. in September in a $190 million deal.

The Japanese investment company sold the building at a loss, as it acquired the 27-story, 311,000-square-foot property in 2015 from Sherwood Equities and JPMorgan Chase for $247 million, the news outlet added.

* Sunstone Hotel Investors Inc. sold the 396-room Marriott-Tysons Corner in Virginia for a net sale price of $85.5 million, representing an 8.2% cap rate on trailing 12-month hotel net operating income.

* WeWork Cos. Inc. will fully occupy the 1525 11th Ave. building in Seattle's Capitol Hill, which features over 73,000 square feet of office space and about 13,000 square feet of retail space, the Puget Sound Business Journal reported, citing a company spokesman. The building, set to be the coworking giant's first Capitol Hill location, may also house WeWork's first Seattle retail store, according to the report. The location is scheduled to open in the summer of 2019.

In 2019, the company plans to open a location in Chicago's West Loop, where it has signed a lease for over 60,000 square feet across two floors at 222 S. Riverside Plaza, Crain's Chicago Business reported, citing the company. The deal is with a venture of Germany's DWS, which acquired the 35-story property in 2014. The location will be the New York City-based company's ninth in downtown Chicago and will boost its footprint in the city to about 650,000 square feet.

The day ahead

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

In Asia, the Hang Seng increased 0.20% to 25,865.39, while the Nikkei 225 decreased 0.60% to 20,987.92.

In Europe, around midday, the FTSE 100 increased 0.91% to 6,762.45, and the Euronext 100 increased 0.46% to 927.74.

On the macro front

The MBA mortgage applications report, existing home sales report and EIA Petroleum status report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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