—— Squarespace Privatized After Brief IPO; GameStop Shares More Than Double; Intell, Apollo to Build Ireland Plant; Apple to Sell VR Headset Internationally; UAE Releases New AI Model; JPMorgan Buys Queens Retail Plaza; CRE Loan Distress Rate Hits New High
1. Squarespace Privatized After Brief IPO
Permira is purchasing Squarespace Inc. for approximately $6.6 billion in cash, marking the year’s second-largest privatization deal. The London-based private equity firm has agreed to buy Squarespace shares at $44 each, a more than 15% premium on the closing price last Friday, a statement released on Monday revealed. Including debt, the transaction amounts to $6.9 billion.
Squarespace’s tenure on the public market has been short since its direct listing debut in 2021 at $50 per share. Once valued privately at around $10 billion, the company’s value had dropped by about 24% from its initial offering to last Friday’s closing.
This deal reflects a renewed enthusiasm from private equity to invest, especially in the technology sector, following a quiet period in 2023. This acquisition is the year’s second-largest leveraged buyout, following Silver Lake’s $13 billion agreement in April to acquire Endeavor Group Holdings Inc., as reported by Bloomberg data.
By 11:11 a.m. on Monday in New York, Squarespace shares climbed 13% to $43.26, bringing its market value to approximately $6 billion.
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2. GameStop Shares More Than Double
GameStop’s stock price nearly doubled on Monday morning following a new post by Keith Gill, known as “Roaring Kitty,” who was pivotal in the 2021 “meme stock” phenomenon. Gill posted a meme on the social platform X on Sunday, showing a man leaning forward in his chair—a pose that GameStop itself mirrored on its X account in February of this year. Gill’s account had been silent since June 2021.
The shares experienced a dramatic rise in early Monday trading, increasing by as much as 118%. The price then settled to an 83% increase by 10:20 am in New York, before trading was temporarily halted due to regulations aimed at curbing excessive volatility in individual stocks.
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3. Intell, Apollo to Build Ireland Plant
Intel Corp. is reportedly in advanced discussions with Apollo Global Management concerning a potential deal involving over $11 billion in funding for a chip manufacturing plant in Ireland, according to the Wall Street Journal. The discussions are exclusive and an agreement might be reached within the next few weeks, as noted by sources familiar with the matter who chose to remain anonymous.
This potential collaboration aligns with global efforts, particularly by the US and European Union, to allocate substantial funds for building advanced semiconductor manufacturing capabilities domestically. This initiative is partly driven by the desire to compete with China in the semiconductor arena and to reduce reliance on Asian suppliers.
Apollo and Intel have both declined to comment on the matter. Bloomberg News reported last month that other asset managers, including KKR & Co. and Stonepeak, had previously engaged in discussions to fund Intel’s project in Ireland.
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4. Apple to Sell VR Headset Internationally
Shares of Zeekr Intelligent Technology Holding Ltd., the premium electric vehicle subsidiary of Zhejiang Geely Holding Group Co., surged up to 40% following an expanded initial public offering, marking the largest U.S. listing by a China-based company since 2021.
Zeekr’s American depositary shares (ADS) debuted at $26 each on Friday after the company successfully sold 21 million shares—3.5 million more than initially planned—at the top of its marketed price range of $18 to $21. By midday in New York, the shares traded at $28.70 each, valuing the company at approximately $7 billion.
The IPO’s underwriters have the option to buy up to an additional 3.15 million ADS in an over-allotment option. If exercised fully, this would increase the total offering to 24.15 million ADS, which would represent about 9.1% of Zeekr’s issued share capital.
Prior to the offering, notable investors such as Geely Auto, Mobileye Global Inc., and Contemporary Amperex Technology Co. Ltd. expressed interest in subscribing for up to $349 million worth of shares, as stated in Zeekr’s filings.
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5. UAE Releases New AI Model
A research division of the Abu Dhabi government has updated its artificial intelligence model, Falcon, which now reportedly surpasses its competitors, establishing the emirate as a formidable contender in the global AI landscape. Falcon, a large language model similar to OpenAI’s GPT and Google’s Gemini, was initially launched in 2023. It is open-source, allowing widespread access to its code.
The latest version, Falcon 2 11B, is said to be more potent than the latest comparable open-source model from Meta Platforms Inc. and matches Google’s Gemini in certain metrics. This advancement was disclosed by the Technology Innovation Institute (TII), the entity responsible for developing Falcon.
Faisal Al Bannai, the secretary-general of the Advanced Technology Research Council, which funds TII, emphasized the significant achievements of Falcon, stating, “We were able to achieve way higher performance than a lot of the bigger guys,” with considerably less computing power and a smaller team.
The United Arab Emirates is strategically positioning artificial intelligence as a central pillar of its post-oil economy. This initiative is part of a deliberate, top-down effort to harness the potential of AI technology across various sectors.
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6. JPMorgan Buys Queens Retail Plaza
Acadia Realty Trust has sold The Shops at Grand Avenue, a retail property located in Maspeth, Queens, to J.P. Morgan Asset Management for approximately $50 million, according to the Commercial Observer. Situated about five miles from the Queens-Midtown Tunnel at 74-25 Grand Avenue, the property spans nearly 100,000 square feet.
The property is fully leased and features Stop & Shop as its anchor tenant, occupying over half the space with 52,336 square feet. Its lease, including renewal options, runs until January 2032. Other notable tenants at The Shops at Grand Avenue include Party City, CityMD, Starbucks, Ridgewood Savings Bank, and the discount store Five Below.
The property boasts a strong performance with a weighted average lease term of eight years.
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7. CRE Loan Distress Rate Hits New High
CRED iQ’s research team has recently concluded their monthly evaluation, tracking payment statuses and special servicing statuses for loans across all property types. In April, they reported a distress rate of 8.35%, marking the highest rate ever recorded by the team. This represents a significant increase of 74 basis points from the 7.61% distress rate observed in March.
This new peak in distress rates surpasses the previous record set just a month earlier. The sharp increase in April was largely influenced by issues with one large loan, which dramatically impacted the overall distress rate for the segment.
The distress rate for multifamily properties experienced a significant surge, jumping from 3.7% in March to 7.2% in April. This considerable increase can be largely attributed to a $1.75 billion loan, which calculates to approximately $561,000 per unit, for Parkmerced, a large 3,221-unit multifamily complex located in San Francisco.
The loan was transferred to a special servicer due to an imminent non-monetary default, driven by the impending maturity date in December 2024. Additionally, the loan’s performance has been problematic, evidenced by underperforming credit metrics including a debt service coverage ratio (DSCR) well below the break-even point at 0.47, and an occupancy rate of only 83.5%. These factors combined have significantly impacted the overall distress rate in the multifamily segment.
The industrial and self-storage segments of the market have maintained their robust performance, continuing to exhibit distress rates that are virtually nonexistent, staying below 1 percent. This stability contrasts sharply with the significant distress observed in other segments like multifamily, highlighting the resilience and strong demand within the industrial and self-storage sectors.
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.