US warehouse sector faces headwinds; TPG buys stake in Canada assets

Note: The Week in Real Estate will not publish Friday, Dec. 29. Your next issue will be Friday, Jan. 5, 2024.

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The warehouse property sector in the US has seen a drop in construction and sales on the back of higher interest rates and lower demand, The Wall Street Journal reported.

Industrial property construction starts dropped 48% in the first nine months of 2023 compared with the same period in 2022, according to CoStar. Industrial real estate sales in dollar volume during the third quarter fell 45% year over year, according to MSCI Real Assets.

Constructing warehouse properties has become more costly due to steeper mortgages and still-elevated land prices.

Vacancies have ticked up as some e-commerce companies reduced their leasing activity and as landlord competition increased due to the recent building upsurge, according to the WSJ report.

CHART OF THE WEEK: US REIT capital offerings up in November

⮞ US equity real estate investment trusts secured a total of $5.06 billion through capital offerings in November, up from $1.32 billion in October.

⮞ Almost all, or $5.05 billion, of the capital were raised via debt offerings.

⮞ Hotel REIT Service Properties Trust and regional mall landlord Simon Property Group Inc. each secured $1 billion, the biggest capital offerings for the month.

Property transactions

– TPG Inc. bought a 75% stake in two Canadian industrial business parks in the Ontario cities of Brampton and Vaughan from Oxford Properties Group Inc. in a deal valuing the portfolio at C$1.3 billion. The Brampton Business Park and Vaughan Business Park total 5.1 million square feet and each have five buildings.

– Prada SpA acquired its store location on Fifth Avenue in New York City for $425 million, WSJ reported. The fashion brand uses the 12-story building for retail, offices and storage.

– Crescent Real Estate Equities Co. acquired the 330,000-square-foot Midtown Plaza office tower in Raleigh, NC, from Lionstone Investments for $132.9 million, the Triangle Business Journal reported, citing deed records.

M&A

– Santander Bank NA paid $1.1 billion for a 20% stake in an entity holding about $9 billion of multifamily loans owned by Signature Bridge Bank NA. Signature will retain an 80% stake in the entity.

– FirstService Corp. acquired roof installation and repair company Roofing Corp. of America LLC from Soundcore Capital Partners LP in a deal that closed Dec. 15.

See key people moves in North American real estate.

US REIT at-the-market program usage continues to grow in Q3 2023

Distress in CRE loans on nonowner-occupied properties rises at US banks

REIT Replay: US REIT share prices jump in week ended Dec. 15