S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.
US apartment building starts in August fell 41% month over month to a seasonally adjusted annual rate of 334,000 units, The Wall Street Journal reported, citing the Census Bureau.
The decline in apartment projects starting development was attributed to higher interest rates, declining rents and scarcity of construction financing.
The lower apartment construction starts are also coming from a dramatic increase in apartment constructions in the last few years, with more rental buildings expected to open in 2023 and 2024 than at any time since the 1980s.
Areas that have seen a boom in apartment construction during the pandemic are now seeing the steepest decline in apartment starts. In Denver, where more than 30,000 apartment projects are under construction, multifamily starts declined 66% in the second quarter, according to the report, which cited Institutional Property Advisors.
CHART OF THE WEEK: US REIT indexes underperform S&P 500 in Q3
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Deal news
– Texas-based multifamily developer JPI Investment Co. LP is selling its operating platform to Sumitomo Forestry America Inc., a housing and wood products subsidiary of Japan's Sumitomo Forestry Co. Ltd. The acquisition is expected to be finalized in the fourth quarter.
– Hersha Hospitality Trust has set the special meeting of shareholders to approve its acquisition by private equity firm KSL Advisors LLC for Nov. 8. The luxury hotels company expects the transaction to close in the fourth quarter.
Transactions
– Realty Income Corp. completed its approximately $950 million investment in Blackstone Real Estate Income Trust Inc.'s Bellagio BREIT Venture, which owns the majority of the real estate assets of The Bellagio Las Vegas.
– Boston Properties Inc. and an affiliate of Blackstone Inc. sold the Metropolitan Square office building at 655 15th St. NW in Washington, DC, for $305 million, the Washington Business Journal reported. Artemis Real Estate Partners LLC was the buyer, according to filings with the D.C. Recorder of Deeds.
– Medical Properties Trust Inc. is on track to complete the sale of its remaining Australian facilities in October after the Australian Foreign Investment Review Board approved the deal with HMC Capital Ltd. The four facilities are being acquired for approximately A$470 million.
– Parkway Inc. acquired two landmark properties in Houston, namely, Post Oak Central and CityWestPlace, from its former partners. Post Oak Central, a three-building, mixed-use asset and CityWestPlace, a 39-acre class A office campus, were valued at $214.8 million and $329 million, respectively, as of Jan. 1., the Houston Business Journal reported, citing Harris Central Appraisal District records. The properties comprise more than 3 million square feet.
– Clarion Partners LLC is under contract to sell the office building at 100-104 Fifth Avenue in Midtown South in New York for about $125 million to Sovereign Partners, The Real Deal reported. Clarion acquired the 20-story asset for $230 million a decade ago, according to the report.
Silver lining
– BREIT received investor withdrawal requests totaling $2.1 billion in September, Bloomberg News reported, citing a BREIT letter to investors Oct. 2. The requests were 28% lower than in August and the lowest since October 2022.
– The New York hotel market is seeing increasing sales and new listings, according to Green Street's Real Estate Alert. Properties that were recently put on the market for sale include an unbranded 365-room hotel near Penn Station worth about $120 million, the 162-room Hyatt Centric Midtown valued at roughly $75 million, and the leasehold interest in DiamondRock Hospitality Co.'s 189-room Courtyard-New York Manhattan/Fifth Avenue, valued at roughly $40 million.
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