CBO: US' climbing debt load will pose "significant risks" | Senate bill would change tax treatment of certain mergers | Initial jobless claims edged downward last week
March 21, 2024
The daily source on REITs and real estate investment
The Federal Reserve left interest rates unchanged at the conclusion of its meeting, but officials indicated they still anticipate three rate cuts this year. However, they also raised their expectations for core inflation and predicted that there would only be three cuts next year, down from a prior projection of four.
Government debt will reach 107% of GDP by 2029 and 166% by 2054, according to the Congressional Budget Office, which noted that increasing debt poses "significant risks" for the economy. Interest payments on the debt will hit 6.3% of GDP by 2054, the analysis found.
A Senate bill takes aim at the tax-free reorganizations that companies sometimes employ for mergers. Under the bill, drafted by Sens. Sheldon Whitehouse, D-R.I., and J.D. Vance, R-Ohio, shareholders in all-stock transactions could face an immediate capital gains tax liability.
Initial jobless claims declined to 210,000 last week, according to the Labor Department, below the median projection of 213,000 in a survey of economists by Bloomberg.
Lawmakers have unveiled the text of a $1.2 trillion bill to fund the government, although Congress faces a tight schedule to pass it before the start of a partial government shutdown this weekend. President Joe Biden has indicated that he will sign the legislation after it reaches his desk.
A Goldman Sachs analysis shows the maturity dates on nearly $270 billion in commercial real estate loans were deferred from 2023 to this year. Valuations have dropped for office properties, the analysts say, and hotter inflation has encouraged the Federal Reserve to take a patient approach to cutting interest rates. Still, the analysts note that "banks are much better positioned than they were in the runups to the Global Financial Crisis and Savings & Loan Crisis."
US retail sales growth is expected to slow to between 2.5% and 3.5% in 2024, down from the 3.6% growth last year, according to the National Retail Federation. The forecast comes amid conservative expectations from major retailers such as Walmart and Target as lingering inflation continues to affect the economy.
Easterly Government Properties' portfolio is somewhat insulated from forces affecting the rest of the market as a result of its investment strategy, which focuses on supplying government agencies with premium, secure facilities to carry out their work. Looking to the future, CEO Darrell Crate foresees $2 billion of development opportunity ahead. "We have a deep understanding of government, we work really hard to meet the special needs and preferences of each agency, and they know we are a partner of choice to help them facilitate their mission," Crate says.
Piedmont Office Realty Trust has sold a Dallas office property to Triumph Financial in a deal worth $54 million. Piedmont will remain as property manager for the 257,000-square-foot office, which will serve as Triumph's new headquarters.
February was a solid month for US hotels, which had an average daily rate of $158.23, up 3.9% year over year, and revenue per available room of $93.19, a 2% increase, according to CoStar data. Meanwhile, overall occupancy edged downward 1.8%.
The US has incredible geothermal potential and could increase its installed capacity from 3.7 gigawatts today to at least 90GW by 2050, according to the Energy Department. The energy source could also account for one-third of all clean energy needed to meet the Biden administration's 2050 targets.
Elisabeth Troni, fund manager with CBRE IM's flagship global investment strategy, discusses her approach toward cultivating exposure to listed REITs. She explains the timing behind the decision to allocate to listed REITs in December 2022, noting that since higher interest rates are already priced into public markets, "We are backing the view that this is an attractive time to enter listed real estate."
Read about executive career moves, board changes and other notable individual achievements within the REIT and publicly listed real estate market during February.