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WeWork inks San Francisco's largest lease YTD; Simon plans Pa. mall renovation

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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


WeWork inks San Francisco's largest lease YTD; Simon plans Pa. mall renovation

Editor's note: The Daily Dose will not be published March 30. The next edition of the Daily Dose will be published April 2.

Commercial real estate

* WeWork Cos. signed the largest lease so far in San Francisco in 2018 with a 251,000-square-foot deal for the second through 19th floors of Kennedy-Wilson Holdings Inc.'s and Takenaka Corp.'s 430 California St. building, the San Francisco Business Times reported. The co-working company is also planning a major overhaul of the building.

Kennedy-Wilson and Takenaka acquired the asset for $135 million in late 2016. MUFG Union Bank, which fully occupies the property, plans to move out, the report noted.

* WeWork inked a deal with the city of Miami under which it will offer discounted rates for local entrepreneurs or those relocating to the tri-county South Florida region, the South Florida Business Journal reported. Tenants can rent the space through the city to receive a 20% discount for the first three months of their lease and an additional 10% for the next three months.

* Simon Property Group Inc. is planning to kick off a renovation of the King of Prussia Mall in King of Prussia, Pa., including upgrades to common areas and other remodeling work and improvements, the Philadelphia Business Journal reported. The landlord completed a $150 million development to connect two sections of the mall in August 2016.

The renovation work is slated to commence in March and close by early 2019. The report noted that the company's long-term plans for the area include a mixed-use transformation of a vacant J.C. Penney property.

* Citing sources familiar with the transaction, The Real Deal reported that Principal Global Investors is the buyer of Forest City Realty Trust Inc.'s 363-unit 461 Dean St. apartment community in Brooklyn, N.Y. The company did not disclose the buyer when it announced the $156 million deal.

The Real Deal noted that the asset was the last property that Forest City owned by itself in Pacific Park after selling a majority stake to Greenland USA in January.

* Alexander & Baldwin Inc. has sold two office buildings near its headquarters in downtown Honolulu to an unnamed Hong Kong investor for an undisclosed price, Pacific Business News reported, citing an email from company spokesman Darren Pai. The sale proceeds will be used to finance the real estate investment trust's $254 million acquisition of three shopping centers in Hawaii, the report noted, citing Pai.

The sold properties are the Stangenwald Building at 119 Merchant St. and the Judd Building next door at 851 Fort Street Mall.

* TIER REIT Inc. sold the Loop Central office complex in Houston to real estate investor Griffin Partners for an undisclosed sum, the Houston Business Journal reported. The company indicated a sale of the property in February.

The office campus consists of three buildings: the 178,130-square-foot Loop Central 1, the 197,868-square-foot Loop Central 2 and the 198,946-square-foot Loop Central 3, as well as three parking garages containing a total of 2,327 parking spaces. The buildings are between 84% and 89% leased, the report noted, citing a marketing flyer on the project.

* Chinese multinational automotive components manufacturer Wanxiang Group Corp.'s U.S. division, property investor Sterling Bay and a Blackstone Group LP affiliate are teaming up to buy the Prudential Plaza office complex in downtown Chicago for a price that could surpass the $850 million mark, Hotel Real Estate News reported, citing CMBS documents.

The asset encompasses the 41-story One Prudential Plaza building offering 1.25 million square feet of area and the 64-story Two Prudential Plaza featuring 1.02 million square feet of space.

* A Colliers International Group Inc. analysis of 14 North American markets found that large high-tech warehouse properties sold at an average cap rate of 5.8% in 2017, compared to 6.7% for U.S. office space in suburban and rural areas and 5.7% for office space in central business districts, Bloomberg News reported.

The news outlet noted that the big box warehouses surging in value are those with at least 200,000 square feet of space and 28-foot ceilings.

* According to an analysis by The Wall Street Journal of city records of closed sales, apartment sales in Manhattan, N.Y., dropped more than 10% year over year in the first quarter, reflecting the slowest pace since the first quarter of 2013. Sales of new condominiums fell more than 35%, while co-op sales declined 2.3%.

* U.S. retail REITs rated by Moody's Investors Service will not be affected by the closure of Toys R Us Inc. stores, the rating agency said. Moody's said four of its 21 rated retail REITs have significant exposure to the toy store chain, and while those REITs will initially see cash flow declines, their long-term prospects are positive.

After the bell

* Shares of LaSalle Hotel Properties jumped 15.33% to close at $28.13 on Wednesday, after Pebblebrook Hotel Trust disclosed that it had offered to purchase the company at an implied price of $30.00 per share.

Housing

* According to The New York Times, the upcoming spring homebuying season should be the most interesting in years due to the near-term effects of the tax overhaul and high mortgage rates, which could lead to uncertainty and lower sales, in opposition to the supply and demand factor, which is expected to prevail in the long term.

The day ahead

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

In Asia, the Hang Seng was up 0.24% to 30,093.38, and the Nikkei 225 rose 0.61% to 21,159.08.

In Europe, as of midday, the FTSE 100 rose 0.40% to 7,072.99, and the Euronext 100 was up 0.39% to 1,010.74.

On the macro front

The jobless claims report, the Chicago PMI report, the consumer sentiment report, the EIA natural gas report, the Fed balance sheet and the money supply report are due out today.

Now featured on S&P Global Market Intelligence

Data Dispatch: US REITs repurchase 190 million shares in 2017: Chart Watch: Thirty-one U.S. real estate investment trusts announced new share repurchase programs or increases to existing plans in 2017, with American Tower Corp. announcing the largest repurchase plan at $2 billion.

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