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Monday Market Meditations

On Super Bowl Sunday, the second snowstorm in two weeks rolled through the Northeast, however this one was more of a yawn, at least for the Philadelphia region. With the Super Bowl behind us and Valentine's day ahead, here are some thoughts on the capital and other markets heading into the week.

Multifamily Freddie and Fannie multifamily rates remain near historic lows, off about 10BPS since last week. SBL 10-year rates are hovering around 3.4% without affordability discounts, and about 40BPS lower with them. Loans of $7MM+ are trading in the high 2's, depending on structure and term. There is still plenty of capital available from local, regional banks and non-bank lenders for these assets as well. We are also seeing well-located construction loans booked at 75% LTC, in line with pre-COVID levels. Strong sponsorship remains key in obtaining the best terms.

On the Industrial Front, South Jersey continues to be attractive for national developers, with last month's $110.5MM purchase (buyers Clarion Partners and MRP Industrial) of a 117-acre parcel at 1900 River Road in Burlington Township and last week's Denver-based Black Creek Group's purchase of 45 acres (price undisclosed) in Burlington County. Both sites benefit from proximity to highways and the insatiable appetite for e-commerce distribution, which shows no sign of abating any time soon. Institutional capital is flowing freely to developers in this asset class as the land grabs continue.

PREIT Evolution Since emerging from bankruptcy, Philadelphia-based PREIT is proceeding with its plan to transform its properties into multi-use, sustainable districts. To that end, the traditional mall operator has been busy adding restaurants and otherwise diversifying its retail revenue stream, with the January announcement of a 1,065-multifamily development at the Moorestown Mall and last week's lease agreement with Poverni Sheikh Group for a 90,000SF self-storage project underground at the Mall at Prince George in Hyattsville, MD.

Schuylkill Yards Groundbreaking Brandywine Realty Trust announced a March groundbreaking in conjunction with its partnership with an unnamed global institutional investor for its Schuylkill Yards West mixed-use tower at 3025 JFK Blvd. This is the first vertical development within the 14-acre, $3.5 billion Schuylkill Yards innovation neighborhood. The 570,000 SF project will cost approximately $287 million and will deliver 326 ultra-luxury rental residences, 200,000 SF of Life Science/Innovative Office space, indoor/outdoor amenity space and retail. In a show of New York-based capital commitment, the residential tower will be developed in conjunction with the Gotham Organization. In related news, Brandywine will create a Life Sciences incubator to occupy several floors in its nearby Cira Centre, after losing law firm BakerHostetler as a building tenant.

That's it for this week. With Valentine's Day coming up, I took a dive into the history. Seems this day has a pretty dark origin story involving drunk and naked Romans. Well, it's now big business that will generate about $22 billion in spending, down from $27 billion last year. Is COVID ruining romance, too?

Stay well, and take care of each other. We can all use it.

Contact us at (267) 908-4015 with any of your debt-related inquiries. We are scheduling complimentary debt assessment calls, where we can quickly assess your current debt. It's quick, easy, and just might save you a lot of money.


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