| | | | | | | | | | A drumbeat is starting to rise in CRE — the time has come for the return of CLOs. Collateralized loan obligations, securitized pools of typically floating-rate loans, are coming back into favor after falling away with the rise of interest rates. Arbor Realty, which used to lean heavily on the practice but hasn’t issued CLOs since 2022, is finalizing a bond deal to raise $800M by bundling and selling floating-rate mortgages on apartments, Bloomberg reported. | | | | | | | | That follows Invesco closing its first CLO ever last week, a $1.2B doozy it billed as the largest U.S. diversified CRE CLO in three years. Blackstone Mortgage Trust launched a $1B CLO vehicle in March — its first since 2021 — and TPG priced a $1.1B package. There were $7.4B of commercial property-backed CLOs issued in the first 2.5 months of the year, a 374% YOY increase. The risk of CLOs is that they are floating-rate, and Arbor was the poster child of what happens when you make a huge bet ($10B, in Arbor’s case) on interest rates staying low and then the Fed pulls the rug out from under you. Arbor got caught up in a short seller battle last year as its CLO delinquency rate spiked. Last year, nearly half of the $45.4B in CLOs issued at the peak of the market in 2021 were underwater. But those are steadily being modified and worked through, and big moves back into this space by the largest CRE investors in the world indicate they are confident interest rates and probably CRE itself have bottomed. Let’s effin’ CLO? — Jay Rickey, Catie Dixon, Mark F. Bonner and Kayla Carmicheal Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or a news tip? Email first...@bisnow.com. CRE News Quiz What retailer, the first to reach $1B in annual sales within four years of launch, just signed NYC’s biggest retail lease of the year? (Answer at the bottom.) On Our Radar FIRST IN FD: CRE hiring finds its footing, but entry-level roles still struggle. After a sharp 33% drop in CRE hiring from 2022 to 2023, the market showed signs of stabilizing in 2024 with a milder 14% decline, according to SelectLeaders. Early 2025 brought a glimmer of hope: Q1 hiring rose 11% YOY. Entry-level positions, however, continue to lag — down 9% in 2024 after a 17% slide the year before — though Q1 2025 saw a 7% uptick. Compensation has largely flattened since the 2021–2022 surge. Meanwhile, AI is transforming job roles, automating tasks like underwriting and data modeling, and shifting demand toward strategic, high-value thinkers. Offshoring is also on the rise, sparking concerns about the future talent pipeline and leadership development in CRE. Franklin Street Properties explores sales after $21M Q1 loss. Office REIT Franklin Street Properties is reviewing strategic options — including a potential sale — after posting a $21.4M loss and watching its stock drop 20% this year, Bisnow just learned. The REIT’s 14-property, 4.8M SF portfolio is 69% occupied, with its largest asset, a Denver tower, half empty. Despite early trading gains, FSP cites weak demand, tenant turnover and prolonged distress in the office market as pressure points during the review. CRE delinquencies creep up — and may keep climbing. According to the Mortgage Bankers Association, the delinquency rates on commercial property loans rose in Q1, led by lodging, industrial, and GSE- and FHA-backed loans. That’s on top of loan delinquencies hitting a 10-year peak of 1.57% in Q4. While CMBS loans had the highest delinquency rate, at 5.2%, in Q1, that figure slightly improved from 5.3% in Q4. Life company, GSE and FHA loan delinquencies all edged up. MBA warns delinquencies could rise later in 2025. The data covers $2.6T in loans, representing over half of the total CRE mortgage debt.
Today’s Deep Dive: The Largest Hotel Companies Are Preparing For A U.S. Downturn | | | | Wikimedia Commons/Ludovic Bertron | | | | | | | | Q1 was OK for hotels, but the largest firms don’t expect that to last. Every large publicly traded hotel company that provides forward-looking projections lowered its full-year outlooks for the key metric of revenue per available room. All but two of the REITs, Host Hotels & Resorts and Ryman Hospitality Properties, also reduced their guidance for earnings, reflecting lower-than-expected profits. The five brand operators all lowered their revenue and earnings outlooks. Read the full story here. This Morning’s News PEOPLE — Embattled Appraisal Institute Exec Will Skip Public Duties (Bisnow): Craig Steinley is stepping away from public appearances, but hasn’t resigned or been removed from his role. The institute is investigating harassment claims from a dozen women. Read more here.
RETAIL — Simon Says It Is On Track (Bisnow): World’s largest mall owner Simon is maintaining its full-year FFO guidance, but net income dropped to $413.7M from last quarter’s $667.2M. Read more here.
LEGAL — Brookfield Hit With Lawsuit Alleging Investor Deception (Axios): The plaintiff, Josh Raffaelli, argues in his complaint that a market downturn in commercial real estate caused the firm to pull back on its GP commitments to VC funds Raffaelli was hired to build. Read more here.
PEOPLE — JPMorgan Elevates New Global Real Estate Chief (CO): Chad Tredway has been named global head of real estate at J.P. Morgan Asset Management, about 18 months after rejoining the firm to lead its Americas division. Read more here.
MANUFACTURING — Kraft Heinz To Pour $3B Into U.S. Plants (Seeking Alpha): Kraft Heinz is investing $3B to modernize and automate its U.S. manufacturing network. The company operates 30 facilities across the U.S. Read more here.
| | | | | | | | Pixabay/stevepb | | | | | | | | MANUFACTURING — Shamekh SIV Plans Pharma Manufacturing Blitz (Shamekh SIV): Shamekh SIV Solutions plans to invest $5.8B in pharmaceutical manufacturing across the U.S. and the Middle East. Ground-breaking on its flagship facility in Saudi Arabia is scheduled for the fall. Read more here.
FINANCING — £25B UK Pensions Pledge Could Boost Property Investment (Bisnow): A group of 17 pension fund managers has committed to invest at least 5% of their assets in UK private markets, including real estate, by 2030. Read more here.
INVESTMENT — Cohen & Steers, IDR Target Valuation Mispricing (Cohen & Steers): Cohen & Steers and IDR have teamed up on a new tactical real estate strategy seeking to capitalize on valuation mispricing between the listed and private real estate markets. Read more here.
| | | | | | | | Courtesy of Sky Harbour Group | | | | | | | | AVIATION — Sky Harbour Expanding Jet Campuses (Seeking Alpha): Sky Harbour plans to have 23 private hangar campuses open or under construction by the end of 2025, accelerating its rollout of aviation infrastructure tailored to business jet owners. Read more here.
INVESTMENT — Manufacturing Booming In The South (WaPo): The Rust Belt’s manufacturing jobs didn't go to Mexico. They went to Alabama, South Carolina, Georgia and Tennessee. Read more here.
ENTERTAINMENT — Netflix Building $1B Studio Hub At Old Army Installation (Netflix): Netflix has begun construction on its $1B campus at New Jersey’s former Fort Monmouth Army base, transforming the site into a major East Coast hub for film and television. The project will include 12 soundstages totaling nearly 500K SF. Read more here.
RETAIL — Trump Org Looks To Fill Long-Empty Chicago Retail (CoStar): The Trump Organization has hired new brokers to lease the retail space at Trump International Hotel & Tower in Chicago — space that’s sat vacant since the property opened in 2009. Read more here.
PEOPLE — Ex-AIG Real Estate Chief Joins Chicago Firm (CoStar): Former AIG and JPMorgan real estate exec Sean Sullivan has been named president of KWill RE Asset Management, the firm founded by former Northwestern linebacker Hugh Williams. Read more here.
ENTERTAINMENT — Kroenke Planning Olympic Broadcast Center (Bisnow): Hollywood Park Studios will serve as a home base for Olympic Games broadcasters. After the games, the studios will be used for movie and television productions. Read more here.
PROPTECH — Airbnb Pivots Into 'Everything App' (Wired and Fast Company): CEO Brian Chesky is pouring hundreds of millions into transforming Airbnb into a full-service platform offering not just stays, but also experiences, dining, transportation and more. Read more here and here.
FINANCE — Brookfield Resurrects $2.4B CMBS Deal (Bloomberg): Brookfield has revived a massive $2.4B CMBS financing package tied to a 2.7M SF office and retail property in Honolulu. Read more here.
TARIFFS — U.S. Slashes De Minimis Tariff On Chinese Goods (Reuters): The Trump administration has cut the de minimis tariff on small parcel imports from China to 30%, offering relief to big Chinese e-commerce players like Shein and Temu. Read more here.
PROPTECH — NAR Taps 8 Startups For Scale-Up Program (NAR): The investment arm of the National Association of Realtors has selected eight companies for its 2025 REACH scale-up, including firms focused on AI leasing, property data and mortgage automation. Read more here.
| | | | | | | | Courtesy of DBOX and Centennial Yards Co. | | | | | | | | DEVELOPMENT — Live Nation Joins $5B Bet On Atlanta (WSJ and Centennial Yards): Live Nation will operate the anchor entertainment venue at Centennial Yards, the $5B redevelopment project aiming to transform Atlanta’s downtown. Read more here and here.
HIGHER ED — Penn State Eyes Closure Of 7 Campuses (Spotlight PA): Penn State is proposing to shut down seven of its campuses. Read more here.
POLITICS — NYC Real Estate Power Brokers Quietly Back Cuomo (Politico): The commercial real estate industry is quietly backing Andrew Cuomo, the overwhelming favorite to unseat Mayor Eric Adams. Read more here.
SENIOR HOUSING — Omega Invests In Sunbound (Sunbound): Healthcare REIT Omega has acquired a stake in Sunbound, a fintech firm focused on senior living finance and receivables management. Read more here. *** BTW … Alexander Hamilton in 1787 (allegedly): “I was chosen for the Constitutional Convention!” That began today. Yat’s all, folks. The iconic New Orleans Yat accent — ya mom’nem’s signature sound — is slipping away, especially among millennials like Mark, whose mom made sure it stopped with his father, “Bayou Bull.” But it wasn’t mothers who killed Yat linguistics — it was Hurricane Katrina. Turns out, the real enemy of “Where y’at?” was “Where’d y’all go?” Pete Rose and “Shoeless” Joe Jackson got reinstated. That means they may finally make the Hall of Fame — or not. Catie grew up hearing her Ohio native mom rant that Pete Rose was done dirty. After all, he wasn’t throwing games: “He always bet on his sucky team to win!” So You’ve Come For An Answer Old Navy. The retailer is opening a 55K SF flagship in Manhattan in 2026. Old Navy is relocating from and permanently closing its existing Manhattan location. *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from AI. We’d love your feedback! Email us at first...@bisnow.com. | | | | | | | | | | | | | | | | | | | | | |
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