— Tesla CFO Unexpectedly Resigns; Banks Struggle to Sell CRE Loans; PE Firms Offer Discounts to Attract Investors; 300,000 U.S. Student Loan Borrowers Have Died; BK Project Secures Bridge Construction Loan; KKR Distributable Profit Beats Expectations; Campbell Soup Acquires Rao’s Pasta Sauce Brand
1. Tesla CFO Unexpectedly Resigns
Tesla disclosed in a filing today that CFO Zachary Kirkhorn will step down after 13 years with the company.
He will continue working through the end of the year to ensure a smooth transition.
A University of Pennsylvania graduate, Kirkhorn joined Tesla in March 2010 and became CFO in 2019. He previously worked at PwC in India and the U.S.
His sudden departure introduces notable managerial and operational uncertainty for Tesla.
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2. Banks Struggle to Sell CRE Loans
Sources say that over recent months, major banks including Goldman Sachs and JPMorgan have attempted to offload commercial real estate loans backed by office buildings, hotels, and even apartments.
The Fed’s rate hikes have hit commercial real estate particularly hard, significantly slowing property sales.
Banks are urgently trying to reduce their exposure and raise liquidity. Many believe selling loans at a discount is safer than ending up repossessing the underlying assets.
Due to poor market sentiment toward CRE loans, liquidity remains extremely limited.
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3. PE Firms Offer Discounts to Attract Investors
Sources say leading private equity firms including CVC Capital Partners, Ardian, and TPG are offering discounts on management and performance fees to attract hesitant investors.
Sunaina Sinha, Head of Private Capital at Raymond James, said nearly all client firms are offering some form of incentive or discount.
Last week, Apollo Global CEO Marc Rowan warned that the era of inflated valuations driving returns is coming to an end.
In H1 2023, global PE fundraising totaled $517 billion, down 35% year-over-year.
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4. 300,000 U.S. Student Loan Borrowers Have Died
According to research by University of Utah professor Adam Looney, since March 2020, about 300,000 student loan borrowers have died, potentially forcing the U.S. government to write off tens of billions in loans.
Bloomberg’s analysis of government data shows that even if the number were halved, at least $5 billion could be lost.
While these loans are a small share of the total, they still represent a significant fiscal hit.
Student loan debt is automatically forgiven upon death, making it the only guaranteed way to avoid repayment.
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5. BK Project Secures Bridge Construction Loan
Madison Realty Capital recently secured a $40 million bridge refinancing loan from Maxim Capital Group for its 400,000 sq ft mixed-use project in Greenpoint, Brooklyn.
Once completed, the eight-story property will include 471 residential units, 143 of which will be affordable housing. The ground floor will feature a supermarket, garden, restaurant, and 189 parking spaces.
Although Madison aims to complete the project within two years, it has yet to secure a construction loan, potentially delaying development.
Typically a lender itself, Madison Realty is now also relying on bridge financing to move its project forward.
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6. KKR Distributable Profit Beats Expectations
New York-based private equity firm KKR & Co. reported $653 million in after-tax distributable profit for Q2, beating estimates.
CFO Robert Lewin said the firm has never been more confident in its investment strategy, which is partly why it is aggressively repurchasing shares.
In Q2 ending June 30, KKR’s fee-related earnings rose 31% to $602 million, driven by market recovery and fee growth.
However, realized investment income fell 58.6% to $114 million, and performance income dropped 79.6% to $149 million.
KKR’s traditional PE portfolio value rose 5%, and its leveraged credit portfolio rose 3%.
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7. Campbell Soup Acquires Rao’s Pasta Sauce Brand
U.S. food giant Campbell Soup has agreed to acquire pasta sauce and frozen foods company Sovos Brands for $2.7 billion, in what may be Campbell’s largest acquisition since 2017. The deal is expected to close in December.
Last year, Sovos’ Rao’s pasta sauce brand accounted for 69% of the company’s net revenue.
Following the announcement, Sovos shares surged 26%, while Campbell’s stock fell 1.5%.
Campbell says the acquisition aligns with its long-term financial growth strategy and could save $50 million annually.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.