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Cerberus RE fund raises $1.8B; D.R. Horton fiscal Q1 profit on the rise


Essential IR Insights Newsletter Fall - 2023


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Cerberus RE fund raises $1.8B; D.R. Horton fiscal Q1 profit on the rise

Commercial real estate

* Cerberus Capital Management raised $1.8 billion for Cerberus Institutional Real Estate Partners IV LP, its fourth global opportunistic fund. It intends to invest in distressed or undervalued real estate transactions primarily in the U.S. and Western Europe. More than 60 investors committed to the fund.

* Vornado Realty Trust said that subsidiary JBG SMITH Properties has filed a Form 10 with the SEC related to Vornado's proposed spinoff of its Washington, D.C., area business into JBG SMITH Properties, which will become a new publicly traded REIT. Immediately following the spinoff from Vornado, JBG SMITH Properties will be merged with the management business and certain Washington, D.C., assets and other assets of the JBG Cos.

* Carmel Partners Inc.'s Carmel Partners Investment Fund VI raised approximately $1.03 billion, the former said in a release. The U.S. multifamily real estate value creation fund is focused on property development and construction in "supply-constrained, high barrier-to-entry" markets in the U.S.

The fund's first project involves a 630-unit apartment tower proposed in downtown Oakland, Calif., according to the San Francisco Business Times.

* Fairmont Hotels & Resorts, the luxury brand acquired by AccorHotels in 2016, signed a deal to manage the Century Plaza Hotel in Century City, Los Angeles. The property is undergoing an approximately $2.5 billion restoration and is slated to reopen as Fairmont Century Plaza, Los Angeles in 2018.

The redevelopment includes about 394 guestrooms, 63 branded residences within the original building, two new 46-story luxury residential towers with 290 luxury units, and approximately 100,000 square feet of high-street retail space, along with expanded parking facilities.

* Lexin Capital snapped up a 17-story office building at 551 Madison Ave. in Midtown Manhattan, N.Y., for $155 million, The Real Deal reported, citing sources. The 151,000-square-foot property was acquired from Barings, which was formerly known as Cornerstone Real Estate Advisers.

The asset is 94% occupied, and also has a retail component. Lexin, which is developing a 40-story rental tower in Manhattan's Financial District, is planning a long-term hold of the Madison Avenue building, the report said, citing sources.

* Crain's New York Business took a look at the impact of e-commerce and high rents on New York City's retail landscape. The market is witnessing "record" vacancy rates in parts of Manhattan, and many traditional neighborhood stores are being phased out, the report noted.

* On a similar note, Bloomberg News featured a report on the impact of a "shaky" holiday sales season and declining mall traffic on retail chains that now face increased pressure to close down locations.

More than 10% of total U.S. retail space, reflecting nearly 1 billion square feet, may have to be shut down, converted for alternative uses or renegotiated for lower rent in the coming years, the news outlet noted, citing data provided by CoStar Group. Around 5,000 stores, accounting for an estimated 50 million square feet of space, have been shuttered in the past 18 months, the report said, citing Clarion Partners.

* The vacant Detroit Free Press building could be transformed into a mixed-use development with retail, office and residential space under a new plan, the Detroit Free Press reported. Jim Ketai, CEO of businessman Dan Gilbert's Bedrock LLC real estate arm, did not give a cost estimate for the renovation but the publication estimated the project to cost roughly $75 million.

Gilbert's team said work could commence in the second quarter, with a reopening expected in 2019. The 14-story, 300,000-square-foot building was built in 1925, the report said.

* The Dallas-Fort Worth area's industrial market saw 5.3 million square feet of net leasing of warehouse space in the fourth quarter of 2016, leading the county in terms of industrial building demand, The Dallas Morning News reported, citing Cushman & Wakefield. Chicago and Houston had the second-highest leasing volume with 4.1 million square feet each.

After the bell

* UDR Inc. created an unsecured commercial paper program in the U.S. under which it may issue up to $500 million of notes from time to time.


* D.R. Horton Inc.'s net income for the three months ended Dec. 31, 2016, was $206.9 million, or 55 cents per share, up from $157.7 million, or 42 cents per share, in the year-ago period.

* Annual new home sales in Clark County, Nev., in 2016 reached 7,984, marking the highest point since 2008 for new home sales in the county, the Las Vegas Review-Journal reported, citing Home Builders Research. The figure marked a 16.7% boost compared to 2015.

* Wisconsin saw a record year for home sales in 2016, with sales increasing 6.1% compared to 2015 to reach the highest point since 2005, when the Wisconsin REALTORS Association recalibrated its tracking system. According to the report, median prices for the year increased 5.9% compared to 2015.

Other real estate news

* Brookfield Property Partners LP offloaded a 50% stake in the Principal Place development in London to Antirion SGR, Property Week reported. The stake is based on a total valuation of £763 million, the report said.

The day ahead

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

In Asia, the Hang Seng rose 0.22% to 22,949.86, while the Nikkei 225 fell 0.55% to 18,787.99.

In Europe, around midday, the FTSE 100 had gained 0.10% to 7,158.41, and the Euronext 100 had climbed 0.07% to 930.81.

On the macro front

The Redbook, the PMI manufacturing index flash, the existing home sales report and the Richmond Fed manufacturing index are due out today.

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