—— US Inflation Eases in May Again; Innovo Secures Hundreds of Millions for LIC Warehouse Loan; Cain Buys $1.2B PacWest Real Estate Debt; Arm’s IPO Seeks Intel Support; Adani Group Plans First Post-Crisis Financing; China Drafts New Property Support Policies; Family Office Launches $30M Real Estate Fund
1. US Inflation Eases in May Again
According to the latest data from the US Bureau of Labor Statistics, US CPI rose 4% year-over-year in May, marking the smallest increase since March 2021.
Although the pace slowed significantly, inflation remains above the Fed’s 2% target. Core CPI rose 0.4% for the third straight month, in line with expectations. However, due to falling gas prices, overall CPI increased by just 0.1%.
Tomorrow, the Federal Reserve will decide whether to raise rates. However, with the new CPI data, it becomes more likely that the Fed will pause rate hikes and observe market conditions.
Fed officials, including Chair Powell, believe pausing in June is appropriate, and that hikes can resume later if needed.
The peak of inflation may indeed have passed, with the easing trend continuing for several months.
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2. Innovo Secures Hundreds of Millions for LIC Warehouse Loan
Recently, Andrew Chung’s Innovo Property Group secured a $354 million development loan from Axos Bank and Cerberus Capital Management to build a six-story warehouse in Long Island City, Queens.
Goldman Sachs’s Urban Investment Group and Innovo provided equity for the project.
Last year, Innovo submitted a development plan for this 682,000-square-foot project, which includes 174 parking spaces, electric vehicle parking, and 60,000 square feet of leasable space per floor. Completion is expected by the end of 2025.
In 2020, Innovo acquired the land from JBL Asset Management for $34 million. In recent years, Innovo has grown into one of the most prominent industrial developers in New York.
A year ago, Innovo secured a $435 million loan for another five-story warehouse in LIC, which is expected to be completed next spring.
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3. Cain Buys $1.2B PacWest Real Estate Debt
To improve liquidity, PacWest Bank has been trying to sell off loan portfolios.
Recently, London-based Cain International purchased a portfolio of construction and development loans from PacWest in New York City for $1.2 billion.
The portfolio includes development loans for 10 multifamily and student housing projects, totaling about $500 million. Cain believes it has the capacity to manage the debt risk and sees strong return potential.
Since its founding nine years ago, Cain has issued $7 billion in real estate debt worldwide and manages over $15 billion in assets.
In 2019, Cain partnered with Bank OZK to provide $750 million in debt for the Crown Building condo conversion project in New York, of which Cain provided $450 million in mezzanine debt.
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4. Arm’s IPO Seeks Intel Support
Sources say UK chipmaker Arm Ltd., backed by SoftBank, is in talks with potential strategic investors including Intel, seeking strong anchor support for its upcoming IPO.
The discussions are still in early stages, and investment amounts and equity structures have not been finalized.
Today, SoftBank’s Tokyo-listed shares rose 7.7%.
Arm aims to raise $10 billion in its planned year-end IPO in New York and has repeatedly declined the UK Prime Minister’s invitation to list in London.
For over 50 years, Intel has focused on developing its own technology and products. Arm’s technology is a direct competitor to Intel’s processors, but Intel may still support the IPO.
Most of the world’s smartphones use Arm’s technology, making it a crown jewel of the UK’s tech industry.
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5. Adani Group Plans First Post-Crisis Financing
Sources reveal that Adani Group is in talks with several international banks to refinance a $3.8 billion credit facility originally used to acquire Ambuja Cements last year.
Gautam Adani is considering extending the maturity of the original loan, marking the group’s first restructuring move since being targeted by Hindenburg’s short-seller report.
Interested banks include Barclays, Deutsche Bank, Standard Chartered, and Mitsubishi UFJ Financial Group.
If successful, the refinancing would signal that the company has begun to move past the negative publicity.
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6. China Drafts New Property Support Policies
Sources say multiple Chinese government agencies are drafting over a dozen new policies aimed at boosting the real estate sector and stimulating domestic demand.
The policies include lowering interest rates on existing residential mortgages and increasing refinancing to help developers complete housing projects.
Larry Hu, head of China economics at Macquarie Group, said the rate cuts show that China is willing to support the property sector. With weak consumer demand and declining business confidence, policy action is the only tool left to turn things around.
Last week, China’s largest state-owned banks were authorized to cut deposit rates to improve interest margins. Meanwhile, the auto industry launched tax and credit support measures, especially for EVs.
Investors remain focused on the scale and specifics of the new policies. Recent announcements have not yet lifted market confidence.
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7. Family Office Launches $30M Real Estate Fund
Miami-based family office Pestana Capital has partnered with real estate firm SuccessPar to launch a US property investment fund aimed at Brazilian investors.
The new fund, SP2, is currently targeting a $30 million raise and will invest in rapidly growing markets across the US Sun Belt.
The fund’s primary strategies include providing mortgage loans, buying and flipping foreclosed homes, and developing multifamily and other property types.
Pestana projects a net annual return of 10% for investors.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.