Sunday Summary: It’s Lenders Issue Time!
It’s that time of the year again when the leaves are falling, turkey decorations crop up around your neighborhood, and mediocre pumpkin beers line store shelves.
No, we don’t mean Thanksgiving, where you’re forced to make awkward small talk with your cousin’s husband. We’re talking about Commercial Observer’s annual Lenders issue!
And what an interesting time (to put it mildly) for this year’s issue. We’ve seen interest rate hikes, bank failures and heightened dislocation in commercial real estate. And that means the lenders who are actively making deals are the ones holding many of the keys to the industry’s success.
Dig in to read key insights from the top lenders in commercial real estate, including how they’re stretching time through loan extensions and what scares the bejesus out of them (aside from normal things like being attacked by velociraptors who somehow learned how to open doors).
But, wait, there’s more. CO also dove into how loan structures have changed in this high interest rate environment and looked ahead to 2024 and asked if it will finally be the year the ice breaks in the CRE industry.
Speaking of loans
Since the lending environment is more akin to the ice planet Hoth this year, it’s worth noting when a sizable loan crosses the finish line.
And that happened last week when The Chetrit Group sealed a $235 million construction loan for its residential development on the Upper East Side that will take over the site of the former St. John the Martyr church.
The rays of the Sunshine State also seem to be melting the ice with Codina Partners landing a $115 million construction loan to build a luxury rental project in Coral Gables, Fla., and Related Group also scoring a $240 million construction loan for its condo project in Miami.
But perhaps the most eye-popping deal we’ve seen recently is retail trust Washington Prime Group closing on a $1 billion commercial mortgage-backed securities loan to refinance its 8.5 million-square-foot portfolio, two years after it filed for bankruptcy. Just like George Costanza, it looks like retail is back, baby.
And CBRE (CBRE) confirmed the ice might be melting. A new report from the brokerage found that CBRE-originated commercial loan closings declined only 3 percent between the second and third quarters of 2023, with construction loans comprising half of all the deals last quarter.
However, it wasn’t all good news. While the lending spread is tightening, CBRE’s loan origination levels in the third quarter were still 48 percent lower than the same time last year.
In Kings County, the total dollar volume of investment sales in Brooklyn dropped 50 percent in the third quarter compared to the same time last year and 27 percent quarter-over-quarter. That drop is after the borough reached historic highs the previous year.
It’s not just Brooklyn feeling the pain. In Los Angeles, NAI Capital found that sales of all commercial real estate fell in the city with the volume of multifamily deals down 65 percent compared to last year; retail dropped 52 percent; and office fell 51 percent. Meanwhile, The Trump Organization saw its $160 million loan on 40 Wall Street transferred to special servicing.
New lever on life
Lever House was the first office building in the city to have glass walls on all four sides, but it’s not resting on its laurels.
Owners Brookfield Properties and WatermanClark — which took over the property in 2020 — unveiled the historic renovation of the 21-story tower that includes restoring the lobby to its original grandeur, adding a new lounge for tenants, whiteboxing all the office floors, and upgrading the elevators.
New York wasn’t the only place to see something reopen after major work. In Los Angeles, the Ovation Hollywood center reopened after a $100 million renovation with updated retail, dining, entertainment and architectural features.
In other development news, Google (GOOGL) announced that it will build a new computer science education program in Los Angeles’ Hollywood Park, while Amazon said it will build two new solar farms in Maryland.
America has already seen an infusion of Australian coffee chains making waves, and they might have some company joining them from the land down under.
Funlab, the company behind Australian mini-golf chain Holey Moley, just opened its first U.S. outlets in Denver, Houston, San Francisco and Austin, and it’s gearing up for more.
CO talked to Holey Moley’s acting U.S. CEO, Blaise Witnish, to get the scoop on its expansion plans.
And, lastly, CO sat down with developer Matt Schwartz to talk about his firm’s developments in New Orleans, the Bronx and elsewhere.
Enjoy your Thanksgiving. Peace and love!