IWG’s Regus puts 90 flex-office locations in Chapter 11

With short-term commercial real estate hit hard by the coronavirus pandemic, IWG’s (OTCPK:IWGFF) Regus flex-office arm has put roughly 90 locations in the U.S. into Chapter 11 protection over the past six weeks, reports TheRealDeal, citing court filings.

Six of those shared workspaces are in New York City. And real estate investor Jonathan Litt points out that “co-working was the primary (and at times only) driver of positive absorption for Manhattan office landlords in recent years.”

Most of the sites affected by the bankruptcy are in urban cores, such as New York, Chicago, and San Francisco. The company believes, though, that its suburban offices, rather than those in dense cities, will be more attractive to clients.

Still the number of sites entering bankruptcy protection are only about 2% of the locations the company has in the U.S. and Canada.

Overall, the company plans to speed up its plan to trim 4% of its global portfolio

All told, almost $13B of commercial-mortgage backed securities have exposure to Regus locations, according to a recent Kroll Bonds Ratings Agency report.

Regus, the largest flex-office provider in the world, was founded in 1989 and is seen as a barometer for the short-term office market, which grew significantly in the past few years with WeWork’s (WE) expansion.

https://seekingalpha.com/news/3615088-iwgs-regus-puts-90-flex-office-locations-in-chapter-11-therealdeal

Apartment Rent Collections Continue to Decline

Multifamily fundamentals continue to show signs of distress in the wake of the widespread job and economic losses created by the Coronavirus. 

The latest report from the National Multifamily Housing Council’s Rent Payment Tracker, which measures the number of apartment households that make a full or partial rent payment, shows a drop of 2.4%—or 279,457 households—year-over-year, as well as a monthly decline. According to the NMHC Tracker, 86.2% of apartment households made a full or partial rent payment by September 13, compared to 86.9% that paid by August 13 of this year. The survey measures 11.4 million units of professionally managed apartment units across the country.

“While it remains clear that many apartment residents continue to prioritize their housing obligations and that apartment owners and operators remain committed to meeting them halfway with creative and nuanced approaches, the reality is that the second week of September figures shows ongoing deterioration of rent payment figures—representing hundreds of thousands of households who are increasingly at risk,” said NMHC president Doug Bibby in prepared comments.

Other research highlights small but growing problems with the multifamily asset class. Effective rents in the second quarter nationally declined by 0.4%, according to a report from Moody’s Analytic’s REIS subsidiary—the first decline since the multifamily sector started its recovery from the 2008 to 2009 recession. Further, according to REIS, 41 out of 82 major apartment markets recorded declines in effective rents, compared with just seven such markets for the first quarter of 2020 and zero a year ago.

The debt markets are also showing signs of strain, another REIS report found.

“In our review of August’s remittances, we’ve noticed some conflicting data, in addition to a multifamily sector displaying its first sign of pandemic related stress,” the two researchers wrote. “While the overall delinquency rate is fairly stable and even showing signs of decline, the volume of special servicing remains stubbornly high and is inching higher.”

“In certain cuts of the data, we even see sector-specific conflict in terms where stress is hiding and likely to show up in the near future,” the authors said.

A new report from Rentec Direct that evaluates the impact of COVID-19 on rent payments this month also gives further cause for concern. “Rentec Direct’s data has shown a consistent downward trend in the number of rent payments received nationwide by property managers and landlords, and the month of September has seen the biggest change with a 35% drop in total rent payments received. We began tracking data in March 2020.”

But Rentec did offer property owners a word of advice. “Of tenants who pay rent electronically, nationwide rent payments in September 2020 are 1.0% higher than online payments received in March 2020. Online rent payment options dramatically increase the likelihood of paying rent.”

https://www.globest.com/2020/09/17/apartment-rent-collections-continue-to-decline/

Homebuilder confidence hits highest on record

September NAHB Housing Market Index: 83 vs. 78 consensus and 78 prior.

Present single family sales: 88 vs. 84 previous.

Next 6 months single family sales: 84 vs. 78 previous.

Prospective buyer traffic: 73 vs. 64 previous.

NAHB Chief Economist Robert Dietz: “Lumber prices are now up more than 170% since mid-April, adding more than $16K to the price of a typical new single-family home … That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates.”

https://seekingalpha.com/news/3614608-homebuilder-confidence-hits-highest-on-record

Amazon Opening Hundreds Of Facilities In Hiring Binge

Retail giant Amazon is undertaking a major expansion of its North America facilities involving the opening of more than 100 buildings in September alone, including fulfillment centers, sorting centers and delivery stations.

The new facilities will come on top of the more than 75 new fulfillment centers, sortation centers, regional air hubs and delivery stations the company has opened in the U.S. and Canada in 2020 so far.

“We’ve been able to expand the output in our existing facilities as we’ve had time to implement, learn and iterate on the new process paths we put in place,” Chief Financial Officer Brian Olsavsky said during Amazon’s most recent earnings call in late July.

“As a reminder, Q2 is typically our lightest volume quarter for the retail business. That’s not the case this year, but what that’s meant is that we can flex into space normally used for second-half peak demand,” Olsavsky said. “As we move toward peak in the second half of the year, we will ramp up our space needs even further, and we’ll be adding significant fulfillment center and transportation capacity in the second half of the year.”

The growth comes with a concurrent spate of hiring by Amazon, which says it plans to hire another 100,000 workers in the United States and Canada to handle the recent surge in online orders. The hires will include full-time and part-time workers.

Amazon added 175,000 warehouse workers in March and April, 125,000 of whom it plans to keep on, The Wall Street Journal reports. The company has also said there are 33,000 vacancies for corporate and technology workers.

Amazon reported last quarter was its strongest ever. Net sales spiked 40% to $88.9B during Q2 2020, compared with $63.4B in Q2 2019. Net income grew to $5.2B in the second quarter, or $10.30/share. That compares with income of $2.6B in Q2 2019, or $5.22/share.

Part of the upward surge in sales included online grocery sales, which tripled in the second quarter compared with the same period in 2019. Amazon responded by increasing grocery delivery capacity by over 160%. It also tripled grocery pickup locations.

https://www.bisnow.com/national/news/industrial/amazon-on-hiring-binge-opening-hundreds-of-facilities-105943

NYC malls can reopen on Sept. 9 with precautions

New York Governor Andrew Cuomo will allow New York City shopping malls to reopen on Sept. 9 at 50% occupancy if they have the proper high-quality air filtration systems to preven the spread of COVID-19.

Indoor dining, though, still isn’t allowed in New York City’s restaurants.

New Jersey Governor Phil Murphy is allowing indoor dining tomorrow at 25% capacity.

“want to open the restaurants in New York City. I don’t know how we’re going to do the compliance and, by the way, I am open to any suggestions,” Cuomo said during a press call.

Other businesses, such as gyms and museums, recently were allowed to reopen in the city.

Restaurants in other parts of New York state area are allowed to have indoor dining at reduced capacity, with limited table sizes and required face coverings except while seated.

REITs with NYC malls: Macerich (MAC +4.1%), Brookfield Property Partners (BPY -0.5%).

https://seekingalpha.com/news/3611521-nyc-malls-can-reopen-on-sept-9-precautions

Quicken Loans parent swings to profit in first results since IPO

Rocket Companies Inc, the parent of mortgage lender Quicken Loans, swung to a quarterly profit in its first results as a public company on Wednesday, driven by higher borrowings on the back of lower interest rates.

Shares of the company were last down 5% in volatile trading after the bell. They have gained 45.5% since their debut on Aug. 6.

The company, founded by billionaire Dan Gilbert, raised $1.8 billion in its downsized initial public offering, giving it a valuation of $36 billion.

Rocket’s quarterly net revenue rose to $5.04 billion from $937.5 million in the second quarter ended June 30.

Its closed loan origination volume more than doubled to $72.32 billion.

The company’s net income was $3.5 billion in the quarter, compared to a loss of $54 million a year earlier.

https://www.marketscreener.com/news/Quicken-Loans-parent-swings-to-profit-in-first-results-since-IPO–31222940/

Airbnb reportedly rebuffs approach by Bill Ackman’s SPAC

On a “mature unicorn” hunt, Bill Ackman’s Pershing Square Tontine Holdings (NYSE:PSTH.U) has been rebuffed by Airbnb (AIRB), according to a Bloomberg headline.

Pershing Square Tontine six weeks ago raised a SPAC-record $4B in an IPO.

Airbnb two weeks ago reportedly confidentially filed paperwork for an IPO. The company’s valuation at an April fundraising round was $18B, down from $31B prior to the pandemic.

Other possibilities for Ackman? Perhaps Bumble, which this morning is reported to be prepping an IPO in the $6B-$8B valuation range. Or maybe Robinhood (RBNHD), which recently raised $200M at an $11.2B valuation, and has massively shaken up the brokerage industry.

https://seekingalpha.com/news/3611050-airbnb-reportedly-rebuffs-approach-bill-ackmans-spac