John Worth is executive vice president for research and investor outreach at Nareit, the national association of real estate investment trusts. Motley Fool analyst Deidre Woollard and Motley Fool contributor Matt Frankel caught up with Worth to talk about topics including:
- Strong REIT business performances and sliding stock prices.
- The lasting effects of COVID on commercial real estate.
- Why private equity firms are buying up public REITs.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on September 25, 2022.
John Worth: One of the things we’ve seen is that as rates have risen, we’ve seen REITs really actually reduce the amount of debt they’re issuing at because they don’t have a lot of debt coming due immediately. They’ve got a lot of flexibility to deal with a higher-rate environment.
Chris Hill: I’m Chris Hill, and that’s John Worth, Executive Vice President for Research and Investor Outreach for Nareit, the national association of real estate investment trusts. Deidre Woollard and Matt Frankel caught up with Worth to talk about how REITs are feeling the effects of rising interest rates. Why more of them could be taken private, and which sectors are showing some promise in a challenging environment.
Deidre Woollard: We’re long-term investors here, but we’re reaching the end of another earnings season. Was there anything in this quarter that surprised you about overall REIT performance?
John Worth: I think I wouldn’t necessarily say it’s a surprise, but we’ve seen this consistent, strong operational performance where REITs are delivering earnings. For the second quarter, REITs had total FFO, which is the REIT measure of earnings funds from operation. They had total FFO of over $19 billion. That was a record high. Virtually, all of the sectors of the REIT space, and we could talk a little bit about the diversity of property sectors within REITs later, but most of them now have total FFO that’s above their pre-COVID levels. We’ve really seen a very significant recovery from COVID. Frankly, that operational performance, I think if there’s anything that’s a surprise, really, we’ve seen this gap between the strong operational performance. In a year like most equities, it’s been a tough year for REITs. REITs are down about 12 percent for the year. There’s really a divide between what we’re seeing coming through the earnings statements and again, how REITs are getting valued in the stock market today.
Matt Frankel: You mentioned the COVID pandemic and I want to expand on that a little bit. We’ve seen the stock market, as you said, is been on a downtrend lately. The short way to say what you just said is that the business results don’t always match the stock price performance and that’s what we’re seeing in the real estate. COVID affected real estate subsectors in a lot of different ways. Demand for industrial properties is off the chart because of e-commerce. Some other ones like retail had to shut down for a while because of COVID. What do you think are the lasting effects of the COVID pandemic on the real estate space as opposed to the temporary effects like the retail shutdowns?
John Worth: I think there’s going to be a couple of lasting effects. One, I’m not sure if it’s an effect, but I put it down under lessons is really the critical role of having a well-diversified portfolio of real estate. As you mentioned, we had some sectors that were really hard hit at the beginning of the pandemic as we were essentially shutting down a lot of in-person activity in the economy. Hotels and leisure, retail, healthcare was hard hit obviously. But we had other sectors. Industrial and logistics properties which are participating in e-commerce, data centers, cellphone towers, and interestingly, self-storage that really, we’re picking up some of that activity as parts of the economy we’re shutting down and we were increasingly living digital lives in our homes.
That was actually encouraging the use of other types of real estate. I think one lesson is, it’s really important to have a broad-based portfolio of commercial real estate, and one that really maps to what the economy is today, that embraces the digital aspects of our economy today. That’s one of the things where REITs have really been on the front and have been leaders in terms of innovating in data centers, cellphone towers, integrated logistics centers. As we look forward, I think how our lives going to change permanently because of COVID, I think the most obvious is the role of the office in our lives and the impact of work-from-home. As people, I think at least for the near term, we’re going to continue to see a lot of experimentation around how people use offices.
Ultimately, it’s an open question how that’s going to impact demand or how negatively it’s going to impact demand over the long term. We’re also going to see some sectors like retail that originally were really hard hit. But over the longer term, what we’ve really seen is more innovation into multi-channel shopping and I think it embrace by consumers of a shop here, buy online, pickup in-store, and that true integration of online and the retail shopping experience. The last piece is just, I think we did see a jump ahead in terms of our digital lives, the increased use of video conferencing. We’ve got my 80-year-old mother doing Zoom calls all the time. I never would have predicted that three years ago. It’s become part and parcel of daily life. All of that activity actually resides in real estate. I’d say those are some of the key takeaways.
Deidre Woollard: Interesting. One of the things that I love that Nareit puts out is that pie chart that’s got all of the different types of REITs as they changed from 10 years ago to now, it’s fascinating to see how everything’s changing. I wanted to ask you about the two Is that are troubling consumers right now, we’ve got inflation and interest rates. We are seeing that impact really heavily on the residential side. What are you seeing on the commercial end of things?
John Worth: Well, I think that certainly in Q2 earnings, we saw REIT earnings keep up and we saw REIT net operating income, the measure of the revenues that they’re bringing in through their properties. Net operating income actually grew on a year-on-year basis faster than the rate of inflation. Even on a same-store basis where we hold the number of properties constant, almost kept up with the rate of inflation. That’s really important because one of the ways that real estate has historically provided inflation protection is by having the ability to pass through increases and pass the rent increases that allow total revenue to rise as fast or faster than the rate of inflation. We think the evidence is pretty good that, in previous inflation cycles, REITs are going to provide good inflation protection in this cycle. We’ve gone back and looked at the historic data. Historically, REITs, like other types of real estate, do provide some nice Inflation Protection and tend to meaningfully outperform the broader stock market during periods of moderate and high inflation.
I think the operational performance suggests that we’ll see the same in this cycle. Then on interest rates, higher interest rates are not going to be good for any part of the economy. I think we’ve got a real risk of an economic slowdown. But in terms of how the higher interest rates are going to impact REITs directly, they’re in a very good place in terms of how they’ve managed their balance sheets. They’re coming into this rate-tightening cycle with leverage near historic lows, with interest expense at historic lows, and with the debt they do have very well termed out on their balance sheets. The term structure of that debt is out more than seven years now. One of the things we’ve seen is that as rates have risen, we’ve seen REITs really actually reduce the amount of debt they’re issuing at because they don’t have a lot of debt coming due immediately. They’ve got a lot of flexibility to deal with a higher rate environment.
Matt Frankel: One thing I wanted to ask is, this is not a normal market environment right now. I don’t really know when it is a normal market environment or if there is such a thing. We always say, well, it’s off just normal environment or just the normal recession or just the normal bull market. But what subsectors are really the big performers right now and what has really surprised you? For example, I read some of the industrial REITs earnings reports and they’re getting something like 20 percent releasing spreads, which is just unprecedented. The successive industrial, even though it’s a natural fit for e-commerce and natural catalyst has really surprised me. Has anything in the real estate industry really surprised you over the past year or so?
John Worth: I wanted to say one of the big surprises over the entirety of the COVID period to me has been the fact that if you look and you ask, what is the sector with the best stock market performance over the entirety of the COVID period really from early March 2020 through today, and it’s actually self-storage. I think it shows in a way how the consumers are in some ways, always a step ahead of the analysts. We understood going into COVID, retail was going to suffer, healthcare was going to sell through, this wasn’t going to be good for hotels. We thought it was going to be good for the digital sectors. But the impact on self-storage was really the second-order effect. As people started spending more time in their homes, cleaning out the garage, teaching their kids in their basement, all the things we went through. They needed to use that real estate in a different way.
That required them to go use self-storage to house some of their belongings. But the persistence has been really strong and self-storage actually had very strong FFO growth in the second quarter. Self storage, I think has been one of those really interesting stories. I think some of the other surprises, I would say was across the board. I was a little bit surprised about the Q2 earnings, the degree to which REIT acquisitions actually held up. In a higher rate environment, we knew transactions in commercial real estate generally were falling. Buyers and sellers we’re really in a way, taking time to coalesce around some new equilibrium pricing and cap rates in a higher rate environment. We certainly saw REIT transactions volumes fall. But even with the current environment, we still saw that $18 billion in REIT transactions in the second quarter. Those transactions end up being driver of future earnings growth. It is good to see that hold up.
Deidre Woollard: I want to ask you about that because we have been noticing that M&A activity. M&A just got the Prologis and Duke Realty perspectives mail to me. You mentioned some of the factors that are driving this, but is it going to keep happening? Are we going to see more of these types of deals?
John Worth: Well, I think that over time we’re likely to continue to see deals of the type that I think Prologis and Duke is a good example. These are actually the majority of deals by deal volume over the last couple of years are transactions that are from retreat within the same property sector. So we’ve seen a number of deals where rates are focused on getting bigger, growing their operating platform, lowering costs, lowering their cost of capital, and really getting prepared for future growth by creating more size and scope. I do I think it’s one of the most interesting trends in REIT mergers and acquisitions.
My guess is it’s something that over time, when it’s strategically appropriate, we’ll see more of this. These are deals that are really, I think they’re not opportunistic, they’re strategic deals. But I do think we’ve seen these across a number of sectors. My guess is that over the coming years, we’re going to see more of this. Because as real estate modernizes, as you’re dealing with more real estate that is engaging with the modern digital economy. I think that the value of that operating platform and the ability for REITs to have world-class operating platforms that adds significant value to shareholders becomes a more and more important part of the business. Scale and scope really can help in that way.
Matt Frankel: I hope you’re right that we see more of that type of M&A. We’ve also seen a lot of REITs being taken private by private equity. A trend that I’m not personally a fan of because just today morning, American Campus Communities has recently taken private, and I would have rather had seen the next 10 years of that growth story play out rather than just get a little quick bump from the premium of the buyout. What’s fueling that trend is there just a lot of investor money sitting on the sidelines instead of a more attractive way to invest in real estate than just buying properties.
John Worth: Some of these deals they did not technically going private, they’re going into the non-listed REIT space. So those are still REITs that investors have access to. I think a lot of that activity, it is still in the public REITs space, but not, they’re not listed on the stock exchange. One of the things about REITs that I think has helped them really outperform over the long term out to be one of the, if not, the best performing vehicle for commercial real estate, has been the strong corporate governance and having shareholder control. One side of that coin is when there’s a bid out there, the leadership and the board has to respond to that. When a bid comes in, that values of REIT significantly above where they’re trading, they need to take a close look at that and do what’s in the shareholders best interests. I think that when you see these deals and virtually all of these deals that we’ve seen over the last couple of years have happened at very significant premiums to where the stock is trading. You really have to look at that and say, “Well, that’s what we expect from good corporate governance.”
Deidre Woollard: I always remind people that the Cloud isn’t in the Cloud, it’s in data centers. Many of the tech companies that we love, well, their REIT clients all over the place. If you could look into the future thinking about that pie chart, is there any sector that you think is small now that’s going to be really big?
John Worth: That’s a great question. I think that one of the sectors we’ve seen some growth in, that it’s not even an independent sector yet. There is specialty right now is gaming and leisure properties. Properties that are having triple-net leases with gaming companies. I think that’s an area where we’ll see continued growth. I think that we’re going to also see that the property sectors that we have continued to evolve. If you think about industrial, which is a traditional property sector. But what we call industrial properties today, which are really logistics facilities. They’re very different from the warehouses of 20 years ago. I think we’re going to see throughout our property sectors, continued innovation and change, and continued uptake of a lot of interest in PropTech. That is going to change the way the tenants interact with the property and continued to grow and evolve what we think of as real estate.
Matt Frankel: Really interesting to think of the future of real estate and what’s evolved. Just by looking back when you think, and you mentioned industrial. Today’s industrial properties don’t look anything like they used to. Even with malls, I would go so far as to say today’s malls, don’t look anything like the malls we’ve had 20, 30 years ago.
John Worth: Absolutely. It’s a totally different shopping experience today than when I was a teenager in New Jersey, going to the mall. It’s a totally different experience and even strip centers, grocery stores, big-box stores. The whole experience has changed through and continues to change because of multi-channel retailing.
Matt Frankel: Investors need to know that when things evolve, consumers demand different malls that creates opportunities for REITs to adapt to changing tastes.
John Worth: Absolutely. I think when you think about a property sector like an office where there’s a lot of uncertainty. That uncertainty is also an opportunity. When you get the model right, and you get the pricing right, that creates a real opportunity and a lot of upside potential.
Matt Frankel: What would you like people to know about REIT or REIT investing in general right now in 2022?
John Worth: I really finished where we started, which is we think, and there’s lot empirical evidence and data that suggests having real estate is part of a portfolio is absolutely critical. Commercial real estate represents about 15-20 percent of the investible universe in the United States. We’ve done a lot of portfolio optimization that actually suggest somewhere in that range is the exposure to commercial real estate that is appropriate at an optimal portfolio and REITs or the way that the vast majority of investors are actually getting that exposure in US. They’re really worth exploring and there’s a lot of different active and passive strategies to bring them into a portfolio.
Chris Hill: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. I’m Chris Hill. Thanks for listening. We’ll see you tomorrow.
(Glenwood) — Mills County officials are revisiting possible changes to an ordinance governing commercial solar projects.
During its regular monthly meeting Tuesday at 5:30 p.m., the Mills County Planning and Zoning Commission is expected to discuss and possibly approve several proposed amendments to Chapter 27 of the county ordinances involving utility solar. If approved, the amendments would then go before the county board of supervisors for review. Holly Jackson is the Mills County Building and Zoning Technician. In a recent interview with KMA News, Jackson says that the primary concerns addressed in the amendment involve proper preparatory and accountability measures taken by the developer and the county.
“If we have the right screening requirements, what types of panels and fencing would look like, and height requirements of the panels,” Jackson explained. “And to make sure there is a solid decommissioning plan in place — what that process would be to begin each project. You know would it go through the zoning board of adjustment or the board of supervisors?”
The board of supervisors recently extended the current moratorium on commercial solar projects until November 1. Among other things, proposals have included setting a minimum height limit to go with the county’s current 15-foot maximum limit and requiring proper notification and collaboration with other departments, such as conservation and secondary roads.
However, Jackson said a first draft of the amended ordinance is beginning to take shape.
“We are in a solid place with where the draft of the ordinance is and working with each of those departments in the county that would assist with that,” said Jackson. “Right now, we are exploring what the options are if we need any zoning district amendments to make adjustments to our matrix and we are also establishing a committee that would review all of this information as well.”
Jackson has also communicated with several other jurisdictions dealing with solar developers and ordinance revisions, including Linn and Johnson Counties officials.
In other business Tuesday night, the commission is expected to hear a presentation from Supervisor Richard Crouch regarding an ordinance governing carbon pipelines. Montgomery County officials have had an extended discussion regarding a similar ordinance, mostly in response to Summit Carbon Solutions’ proposed Midwest Express CO2 Pipeline that would cut through the western portion of Montgomery County.
The owner of a Fairbanks, Alaska, commercial flooring company, pleaded guilty on Sept. 22 for his role in a conspiracy to provide kickbacks related to contracts for commercial flooring services at a U.S. Army Facility.
Benjamin W. McCulloch pleaded guilty to five-count felony charges filed on Aug. 25, 2022, in the U.S. District Court for the District of Alaska. According to the plea, from March 2016 to March 2021, McCullough conspired to pay kickbacks to an employee of a prime contractor related to flooring construction contracts administered by the U.S. Army at Fort Wainwright. The charges state that McCulloch conspired to inflate the costs of four flooring construction subcontracts, and then provided the proceeds to his co-conspirator as kickbacks. During the five-year scheme, McCullough paid over $100,000 in kickbacks.
“When subcontractors and prime contractors at U.S. Army facilities collude, they undermine competition for government contracts and waste public funds intended to bolster our national defense,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The division and our law enforcement partners will bring to justice criminals who cheat on government contracts.”
“Those who engage in fraudulent kickback schemes undermine the government’s competitive contracting practices, and harm American taxpayers in the process,” said Special Agent in Charge Antony Jung of the FBI’s Anchorage Field Office. “Detecting and disrupting these schemes will always be a priority for the FBI, and together with our partners, we will hold offenders accountable.”
“Today’s plea is a fitting end for those who conspire to defraud the U.S. Army,” said Special Agent in Charge L. Scott Moreland of the U.S. Army Criminal Investigation Division’s Major Procurement Fraud Field Office. “The Army CID’s Major Procurement Fraud Field Office is proud to work with our federal law enforcement partners to protect the coffers of the U.S. government from those who break the law and threaten economic damage to the U.S. Army.”
“The government contracting process is supposed to be a healthy competition, not a rigged match with illegal kickbacks thrown in,” said Special Agent in Charge Bret Kressin of the IRS-Criminal Investigation, Seattle Field Office. “Mr. McCulloch’s greed not only undermined the U.S. Army, but it hurt our communities when the stolen funds went directly to line his coconspirators’ pockets.”
“Mr. McCulloch’s guilty plea is a crucial step forward in holding him, and potentially others, accountable for his illegal efforts to enrich himself and others by willfully committing a years-long fraud against the U.S. Army and American taxpayer,” said Special Agent in Charge Bryan D. Denny of the Department of Defense, Office of Inspector General (DOD-OIG), Defense Criminal Investigative Service (DCIS), Western Field Office. “DCIS and our partners will continually seek to identify and eliminate kickback schemes, such as those utilized by Mr. McCulloch, because they corrupt the DoD procurement system by unlawfully suppressing competition and increasing costs.”
The charges to which McCulloch pleaded guilty carry a maximum penalty of ten years in prison and a fine of $250,000. The fine for the anti-kickback conspiracy charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. In addition to his guilty plea, McCulloch has agreed to pay restitution.
The Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the District of Alaska, the FBI’s Anchorage Field Office, the DCIS’s Western Field Office in Seattle, and the IRS’s Criminal-Investigation Seattle Office are investigating this case.
Anyone with information in connection with this investigation is urged to contact the Antitrust Division’s San Francisco Office at 415-934-5300, the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or http://www.justice.gov/atr/contact/newcase.html, or the FBI’s Anchorage Field Office at 907-276-4441.
In November 2019, the Department of Justice created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government – federal, state and local. To learn more about the PCSF, or to report information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to federal government contracts, go to https://www.justice.gov/procurement-collusion-strike-force.
Press Release Number: 22-1009
© 2022 The U.S. Department of JusticeNational Law Review, Volume XII, Number 269
The Latin American and Caribbean Air Transport Association (ALTA) released the air traffic report for July 2022 and highlighted that Latin America and the Caribbean continues to be the world’s region leading the recovery of commercial air transport activity from pre-pandemic levels.
According to the report, during the seventh month of the year activity reached 90.5% of the levels recorded in July 2019. Latin America and the Caribbean was followed by Africa, with a recovery of 87%, and North America, which has already reached 85%.
The report indicates that a total of 29.7 million passengers were carried in the region during July. Since the beginning of this year, the figure stands at 183.9 million passengers and represents a 13% decrease compared to the same period in 2019.
Passengers on domestic flights
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Domestic air transport is experiencing a faster recovery, helped by the reduced impact of health-related restrictions on this type of service. In July 2022, the Mexican market surpassed the level of activity of 2019 and recorded 106% of that year’s values. Brazil has already recovered 90% of its national market. Domestic passengers accounted for 68.7% of the total, while domestic traffic remained 5.8% below 2019 levels.
This recovery is largely due to the growth of the Mexican and Colombian markets, the largest in the region after Brazil’s. The occupancy rate reached 81.8% on domestic flights.
Passengers on international flights
ALTA’s report highlights three countries that exceeded the activity levels on international services recorded in 2019: Dominican Republic (116%), Colombia (109%) and Mexico (106%).
International traffic to destinations outside Latin America is 11.3% below 2019 levels, while traffic between countries in the region is still 24.4% below that year’s level.
The occupancy rate reached 85.5% for connections to non-Latin American countries and 78.8% for international flights between countries in the region.
49% of international flights passengers had a North American airport as their destination. 37% travelled to another Latin American country and 13% did it to Europe. 0.3% of passengers travelled to the Middle East, while 0.1% flew to Africa.
José Ricardo Botelho, Executive Director and CEO of ALTA, highlighted the region’s recovery and said that «the continued removal of restrictions on international traffic has been critical to achieving this».
In this regard, he added: «Looking ahead, we know that the population will continue to need air travel; however, in order to truly enable more people to use it, we need to continue to reduce costs associated with fares and taxes, as well as to continue to optimise regulations that create inefficiencies».
“Compared to previous months, CRED iQ observed a surge of CMBS loans with non-performing maturity balloons in August 2022,” wrote Marc McDevitt, a senior managing director at CRED iQ.
“There was approximately $4.7 billion in outstanding loans that were characterized as non-performing maturities as of August 2022. This figure excluded debt with properties that have entered into foreclosure as well as real estate-owned (REO) assets, but included loans that may have transferred to special servicing prior to scheduled maturity dates.
“Nearly all loans (99 percent) identified as non-performing maturity defaults have already transferred to special servicing. Many loans, around 36 percent of the aggregate outstanding balance, had monetary defaults before maturity came due, prompting the transfers to special servicing.
“However, maturity concerns were the primary reason for special servicing transfers for most of the non-performing maturity loans. Roughly 19 percent of the loans by balance transferred to special servicing due to a maturity default and an additional 20 percent of the loans transferred to special servicing for imminent maturity default.
“Altogether, the aggregate outstanding debt for non-performing maturity balloons was 35 percent higher than in July 2022, when the total was approximately $3.5 billion. The surge comes amid a rising rate environment that adds difficulty to the refinancing process. If cash flow issues are also present in the underlying collateral, then prolonged workouts may be required.
“Additionally notable, the increase in the amount of maturity defaults coincides with a higher volume of loans coming due for maturity. In December 2021, CRED iQ published a report looking ahead to scheduled maturities in 2022, and, on a monthly basis, July 2022 had the third-highest total of scheduled maturities with $2.3 billion. This came one month prior to the August surge in non-performing maturity loans.
“Scheduled maturities for the remainder of 2022 are concentrated in October and December, creating opportunities for maturity defaults to continue to manifest at a relatively high rate.
“Our observations included loans securitized in both single-asset single-borrower and conduit securitizations. Maturity defaults were split evenly, by outstanding balance, between both types of securitizations.
“Further examination shows that the amount of maturity defaults within the conduit subset has remained fairly level over the past three months, ranging from $2.3 billion to $2.5 billion. This indicates the recent surge in August can be attributed to single-asset single-borrower securitization loans.
“The amount of outstanding debt securitized in single-asset single-borrower transactions increased, on a net basis, by roughly $1.3 billion during August.
“One such example was the $465 million Greenway Plaza loan, which was securitized in a 2017 single-asset single borrower securitization. The loan is secured by a 20-building, 4.2 million-square-foot office park in Houston.
“The Greenway Plaza loan transferred to special servicing in July 2022 after a maturity default in May 2022. A forbearance agreement expired in July that rendered the status of the loan as non-performing.
“Maturity defaults can also severely impact conduit securitizations in the form of adverse selection. Take the UBSBB 2012-C2 securitization, for example, which had eight specially serviced assets remaining as of September 2022, including three REO assets. The remaining five loans have all failed to pay off at maturity, leaving all of the outstanding debt in the securitization in the hands of special servicing workouts.
“By property type, loans secured by retail and lodging account for the highest percentages of non-performing matured loans. Isolating our view to only CMBS conduit securitizations, retail loans accounted for approximately 67 percent of all non-performing matured loans while loans secured by lodging properties accounted for 20 percent.
“The high concentration of retail loans is made of primarily regional mall collateral. The Cumberland Mall in Vineland, N.J., and the Greenwood Mall in Bowling Green, Ky., are two of the more recent examples of regional malls securing loans that have defaulted at maturity in the past month.”
JLL has hired Austin Sanders and Howard Traul as senior managing directors of the firm’s Government Investor Services leasing team based in Washington, D.C.
The two longtime federal leasing brokers come over from Cushman & Wakefield.
“We are absolutely thrilled to welcome Howard and Austin to the GIS team,” Bob VeShancey, JLL’s executive managing director, said in a statement. “Their deep knowledge of the [General Services Administration] coupled with their combined decades of experience are true differentiators, and we are confident in the immense value they will bring to our clients in this space.”
Traul is no stranger to the JLL team, having previously worked for the firm in federal tenant representation for eight years, before spending the past seven at Cushman & Wakefield.
Sanders was with Cushman & Wakefield for six years, following six years as part of Newmark’s federal leasing group.
“Current market conditions allow for us to execute strategic solutions for clients,” Sanders said. “The state of the market, paired with JLL’s extensive service offerings, will enable us to add immense value to the team and our clients. We are excited to join the team and get to work.”
JLL’s team recorded last year’s largest federal lease with the Securities and Exchange Commission taking 1.2 million square feet for its new headquarters at 60 New York Avenue NE. The lease was for 15 years with an option to extend an additional 10 years. JLL repped the landlord, a joint venture between Douglas Development and Midtown Equities.
Keith Loria can be reached at Kloria@commercialobserver.com.
Musselwhite was one of the first mines in Canada to enter into a comprehensive agreement with First Nations communities. Musselwhite currently has formal agreements with North Caribou Lake First Nation, Cat Lake First Nation, Windigo First Nation Council, Wunnumin Lake First Nation, Kingfisher Lake First Nation, Shibogama First Nation Council and the Mishkeegogamang First Nation.
Since the commencement of the Musselwhite agreement in 1992 and the first commercial production in April 1997, the Musselwhite mine has produced more than 5 million oz. of gold. In 2021, Musselwhite employed 737 people and invested $320,000 into the nearby communities.
“In the six months that I have joined the team I’ve learned first-hand that Musselwhite is an outstanding example of how sustainable and responsible mining rooted in partnerships with our indigenous communities can create shared prosperity and success,” said Mark Kiessling, general manager of the Musselwhite mine.
At the celebration, Frank McKay, CEO of Windigo First Nation Council, remarked. “As we look toward to the future and another 25 years, let us learn from the lessons of the past. If we continue to work cooperatively and towards common interest, communicate honestly and with transparency, and respect each other for the knowledge and strength each of our parties bring to the table, I know we will face and conquer all challenges ahead. Migwech.”
Musselwhite’s 25-year achievement was also applauded by Newmont leadership. “I’d like to extend my congratulations to all employees, Indigenous community members and partners that were involved with this 25-year milestone of the first gold bar pour at Musselwhite in 1997,” said Mark Rodgers, Newmont’s SVP for North America. “Musselwhite demonstrates the value of the Northwestern Ontario mining jurisdictions and reinforces the commitment made by all to safe and responsible mining.”
The Musselwhite underground mine is located on the traditional territory of North Caribou Lake First Nation, approximately 500 km north of Thunder Bay, Ontario.
Governor Kathy Hochul today announced construction will start this fall on a project to improve public facilities adjacent to the swim area at Stony Brook State Park in Dansville. A new modern bathhouse and lifeguard office will be the centerpiece of a $4.5 million investment in a park that is a popular summer destination for New York families.
“The breathtaking scenery at Stony Brook State Park has been attracting New Yorkers for nearly a century, and I am proud to make this $4.5 million investment that will enhance its facilities,” Governor Hochul said. “New York’s State Parks are an anchor of our state’s tourism economy and are the gateways to the stunning natural beauty New York has to offer, and we will continue to invest in our parks system to ensure they will be enjoyed by all for generations to come.”
The new 1,700-square-foot bath house will provide more modern and accessible changing rooms, showers, and restrooms. It will replace an obsolete 1960s-era bathhouse that fits poorly with the park’s aesthetic. A second 750-square-foot building will serve as lifeguard headquarters, complete with a first aid area and a small office space. The new lifeguard building will improve safety by providing a quicker response and more visibility to the swimming area.
Finished in board and batten wood siding with standing seam roofs and skylights, the buildings complement other Civilian Conservation Corp structures in the park and enhance the overall swimming experience at the park. The buildings were designed by Beardsley Architects and Engineers.
Site improvements will include a new playground, renewed footpaths and wayfinding signage, and an area for a food truck for special events. The project will help improve accessibility and reduce pedestrian traffic flow in the busy area of the park. Work will take place during the course of the off-season and will continue during the 2023 operating season.
New York State Parks Commissioner Erik Kulleseid said, “I am grateful to Governor Hochul for supporting this much needed investment in Stony Brook State Park. New York State continues to build parks that offer world-class facilities and experiences across the state. I encourage our visitors to explore the many attractions found throughout the region.”
State Senator Tom O’Mara said, “The construction of this new bath house and lifeguard station celebrates a fantastic and impressive addition to one of our region’s and New York’s great state parks. Ongoing state investments to continually enhance an unparalleled network of parks and trails will keep strengthening these attractions and drawing tourists and visitors to the benefit of so many local communities and economies.”
Assemblymember Marjorie Byrnes said, “Stony Brook State Park is a beautiful place for our families to gather together, enjoy nature, and cool off in the summer months. Investing in our state parks will ensure these natural recreational areas are here for generations to come.”
Stony Brook State Park offers 88 campsites, swimming, hiking, and picnic pavilions in a forest landscape offering views of three dramatic waterfalls, in addition to playgrounds, playing fields and picnic areas. The bath house and lifeguard stations will further enhance the unique experience offered at the park, where people can swim in a dammed creek’s waterway at the base of a waterfall in a narrow gorge. For the last decade this Park has seen over 100,000 visitors every year and saw a record high 226,000 visitors in 2020.
The New York State Office of Parks, Recreation and Historic Preservation oversees more than 250 parks, historic sites, recreational trails, golf courses, boat launches and more, which are visited by 78 million people annually. For more information on any of these recreation areas, visit parks.ny.gov, download the free NY State Parks Explorer mobile app or call 518.474.0456. Also, connect on Facebook, Instagram and Twitter.
Some of the UK’s biggest mortgage lenders, including Virgin Money and Skipton Building Society, have stopped offering new home loans in response to the market volatility triggered by the government’s mini-Budget.
Halifax, part of Lloyds Banking Group, the biggest mortgage lender in the UK, is also withdrawing a range of new home loans, it told brokers.
The pause in new lending comes after yields on UK bonds rose sharply following the tax cuts announced on Friday by chancellor Kwasi Kwarteng.
“This is the first time we’ve seen a major withdrawal of products and repricing in the mainstream market since the global financial crisis,” said Ray Boulger, an analyst at mortgage broker John Charcol.
“The huge rise in gilt yields means lenders have to reprice mortgages very significantly. I expect by next week there will be very few mortgage deals available with rates under 5 per cent. Any lender who hasn’t pulled out yet is almost certainly going to on Tuesday.”
He said other lenders to have withdrawn new mortgage products include Nottingham Building Society, Bank of Ireland, Leeds Building Society and Paragon Bank.
Paragon chief executive Nigel Terrington told the FT: “We pulled our new fixed-rate deals today because they’re all priced off swap markets, and they have risen dramatically in the past 48 hours.”
Virgin Money is expected to return to the market later in the week once the markets have stabilised, according to a person close to the situation.
Halifax said that from Wednesday, it would withdraw its range of mortgage products with fees, which have cheaper rates. While the lender said that the measure was temporary, there was no timeline given for when it would be reversed.
Lenders use swap rates to mitigate interest rate risk in fixed-rate home loans. “Swap rates are dictated by gilt yields, which have just shot up,” said Boulger. “So the cost to lenders has just gone up.”
Property economists sounded the alarm that rising rates and turmoil in the mortgage market could trigger a house price correction more severe than the one that followed the financial crisis.
Andrew Wishart, senior economist Capital Economics, said the housing market was in uncharted territory after Kwarteng’s announcement.
Prior to the chancellor’s statement, the consultancy expected the Bank of England’s base rate to peak at 4 per cent, from 2.25 per cent, with mortgage rates around 5 per cent — a level they are already fast approaching.
In that scenario, Capital Economics forecasts a fall in house prices close to levels seen during the financial crisis. But if the base rate rises higher, prices could fall further, Wishart said.
“At the moment, we have [forecast] a correction of 20 per cent in real terms and 7 per cent in nominal terms, which is close to financial crisis levels . . . At the current level of house prices, a mortgage rate of 6.6 per cent [would] cause affordability to deteriorate to a level not seen since 1990, which preceded a correction of almost 35 per cent in real terms and 20 per cent in cash terms.”
A stamp duty cut also announced in the budget might moderate some of the price falls but was unlikely to have much impact, added Wishart.
“It might hold off the fall in values in London for a few months, but that’s already where prices are most stretched,” he said.
While 6 per cent rates are low in historic context, and less than half their peak during the late 1980s, high house prices mean affordability is at full stretch and many homeowners would have little room to manoeuvre if forced to refinance.
“It’s about affordability. People are borrowing such large sums that 6 per cent [mortgage rates] are going to make it difficult for everyone. People are going to have less money to spend so prices will soften,” said Henry Pryor, an independent property agent.
“Already, since Friday, 30 per cent of the deals I’m involved in are being restructured because someone is twitching: they can’t borrow what they wanted to borrow or it’s going to cost them more.”
A joint venture led by MG Developer scored $148 million to build a rental complex in Hialeah, Fla., the developers announced.
The development — a partnership with New York-based Baron Property Group and L.A.-based Township Capital — will feature 559 rental apartments, ranging between 500 and 800 square feet, across two 10-story towers. Amenities at the project, dubbed Metro Park, will include coworking spaces, a pool, a gym, a parking lot and ground-level retail.
Construction is slated to commence in December and is expected to end in the second quarter of 2024. Ayush Kapahi of HKS Real Estate Advisors procured the 30-month loan from Post Road Group, while Colliers’ Dmitry Levkov and Jeffrey Donnelly arranged the financing.
The property, at 955 East 25th Street and 980 East 26th Street, is only a block from the working-class town’s Metrorail and Tri-Rail train stations. In May, MG Developer paid $10.8 million for the 1.9-acre site, according to property records.
“This project will mark the first of more to come for us in Hialeah,” Alirio Torrealba, CEO and founder of MG, said in a statement.
Until now, the developer has focused on its hometown of Coral Gables, a wealthy suburb just south of Miami.
Besides Metro Park, MG and Baron are developing Merrick Parc, a 450-apartment property in Coral Gables that’s slated to cost $204 million. Also in Coral Gables, MG recently completed Althea Row, while Biltmore Row is nearing completion. Both projects are townhouse complexes.
Julia Echikson can be reached at email@example.com.