Prologis 2Q 2021

Prologis (PLD) reported strong 2Q numbers, including a 2021 FFOSP midpoint increase to $4.06 that implies 7% y/y growth or a 40% gain vs the previous 5% forecast.

Results include a 10% gain in development starts and 14% more acquisitions, plus a 26% increase in dispositions. Same store NOI growth was 5.8% on a cash basis and 6.1% on a net effective basis. Same store occupancy is up 40 bps to 95.9%

June 2021 Retail Sales

Nine of 13 retail categories delivered June sales gains, including strong gains in electronics and appliances, clothing, and restaurants. Retail sales excluding autos gained 1.3% versus a forecast of 40 bps.

PepsiCo reported its fastest sales growth over a decade amnd Darden Restaurants was up 80% gain as consumers return to restaurants, bars, and stadiums.

2Q21 Lodging RevPAR

Cities with high exposure to business travel and group business travel continue to be most impacted with San Francisco -66%, Boston -64%, Washington -61% and New York -61%, whereas the average of the Top 25 markets are experiencing RevPAR of -33% vs 2019 in 2Q21. Group RevPAR is -49.5%.

Separately, five markets lead the post-COVID supply boom. New York has 22,000 rooms under construction with 8,500 coming on line 2H21. Atlanta, Dallas, Las Vegas, and Los Angeles have more than 5,000 rooms under construction with 50% coming on line 2H21.

31.5% Office Occupancy

Morgan Stanley’s commitment to a Labor Day return to office, leads our team to do a quick deep dive into current occupancy rates for ten top US office markets.

Austin, Dallas, and Houston lead the most recent numbers with 45% average office occupancy. Chicago, Philadelphia, and Washington DC are at 25.5%. Los Angeles, San Francisco, and San Jose are at 20%. New York is 18.2%.

Bankruptcy for 2014 Simon Property Spin Off

Washington Prime Group (WPG) announced its prepackaged bankruptcy and $100 million debtor in possession loan yesterday. The restructuring support agreement with Consenting Creditors includes provisions to reduce total debt by nearly $1 billion and the possibility of a $325 million equity rights offering.

WPG is the third publicly-traded mall operator in the US to file for bankruptcy in the past 8 months.

Ares Adds $11.6B Core and Core-Plus

Ares is expanding its real estate AUM by almost 50% with the takeover of Black Creek and its $11.6B in core and core-plus assets. Black Creek manages the assets thru two non-traded REITs and several institutional funds, including an open-ended vehicle focused on US industrial property.

The deal follows closely on the heels of Ares raising $1.7B for an opportunistic real estate fund as well as Ares buying Landmark Partners to capture $18.7B AUM in private equity, real estate, and infrastructure funds.

Lowe’s Pro outpaces DIY 1Q2021

LOW reported 1Q21 comps +25.9% with SSS increased +24.4% (compared to HD U.S. +29.9%). LOW saw over +18% growth in all 15 U.S. regions and +30% growth from Pro customers.

Lumber, kitchen & bath, electrical, seasonal & outdoor living, and décor categories led the charge with comps well over 30%. Positive traffic and ticket growth were in double digits and have been for the past 4 quarters.

Coastal & Sunbelt Multifamily April 2021

Operating fundamentals improved across U.S. markets in April as the economy reopens and begins to normalize in eight major markets: Boston, Manhattan, DC, Atlanta, Dallas-Fort Worth, Los Angeles, San Francisco, and Seattle.

Asking rates improved across the markets, led by 2.2% MoM Atlanta; effective rents improved YoY for each market except Manhattan and San Francisco; absorption on a trailing 12-month basis was strongest in Atlanta, Dallas-Fort Worth, and Boston, while Manhattan and San Francisco were negative.

2H2021 outlook remains bullish

Cushman Wakefield 1Q2021

CWK reported better than expected 1Q201 EPS on Friday driven by stronger capital markets and leasing revenue, particularly industrial leasing.

1Q2021 leasing revenue declined 3.3% YoY compared to a 36% YoY decline in the prior quarter. Office leasing activity remains soft, although in line with its peers, CWK noted that property tours continue to pick up and should drive revenue acceleration in 2H2021.

1Q2021 Residential REIT Earnings

Eight residential REITS reported 1Q2021 earnings within the past week. Key trends include improving rent collection rates, rising occupancy, and increasing rent rates over 4Q2020.

More specifically, operating highlights include: 1) sunbelt strength in rent collections and relative weakness in urban, coastal collections; 2) occupancy trends improving in coastal cities; and 3) challenged blended leasing spreads for companies exposed to coastal, urban markets, but signs of emerging strength in April.