"It's unlikely that the next policy move will be a hike." — Jerome Powell

Phew. With that big decision behind us from the man who always seems to be wearing a purple tie, (we’re not the only ones seeing this, right?) here’s what else is making headlines today. 

About half of the 51 REITs have reported Q1 earnings, and so far they have performed a bit above expectations. And about 43% raised their outlook for funds from operations — historically, 40% of REITs increase their FFO guidance in Q1, according to Hoya Capital. Fourteen percent lowered their guidance. 

Worker productivity and compensation are up, the Bureau of Labor Statistics said this morning. Productivity rose 2.9% year-over-year, the strongest growth since Q4 2019. Labor costs rose 4.7% quarter-over-quarter and 1.8% year-over-year. 

Once again, CRE is under the spotlight for its role in money laundering. We’ve got the details below on a new report tracking $2.6B in commercial property sales using “illegal, allegedly illicit or suspicious funds.” The Treasury Department has said it will release a rule this year cracking down on dirty money in CRE. 

And oh, yeah — Cushman & Wakefield’s former global CEO has found a new home. 

— Kayla Carmicheal, Mark F. Bonner, Catie Dixon and Jay Rickey 

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On Our Radar

• It’s an earnings call bonanza today. Walker & Dunlop, Equity Commonwealth, Kimco, Iron Mountain, MAA, Ventas, Host Hotels and RLJ Lodging Trust all had their calls this morning.

• Still to come: Kilroy Realty at noon ET, Ryman Hospitality Properties and National Retail Properties are at 1 p.m. ET, and Federal Realty and Digital Realty Trust are at 5 p.m. ET. 

• The April Jobs Report drops first thing tomorrow. The expectation is that the gains will be slower than March — which came in at a surprisingly strong 303,000 — but still robust. 

• May 2 is National Password Day. Fun fact: Of the world’s 20 most common passwords, 17 can be cracked in less than a second. We’re looking at you, “123456” people — your days are numbered.

Open Mic: Fed Predictions Edition

There are five more FOMC meetings this year. What is your best prediction of what the Fed will do before the end of the year? Let us know at firstdraft@bisnow.com.

Today’s Deep Dive: Cannabis Reclassification Would Likely Boost Cash Flow, Opening Doors For CRE Moves

Even if the DEA reclassifies marijuana as a lower-risk Schedule 3 drug, CRE will need Congress to puff, puff, pass some additional legislation to really get the most out of the industry. 

The reclassification opens up the cannabis industry to tax breaks that will increase its profitability, and that freed-up cash could translate into expansion that trickles into CRE demand. A reduction of stigma could alter marijuana zoning laws and help pot businesses secure more favorable space. 

But the cannabis industry will still be limited in its access to the banking system — and thus held back from doing CRE deals — unless Congress enacts the SAFER Banking Act, providing legal cover to lenders and landlords to work with cultivators and dispensaries. 

Bisnow Denver Reporter Bruce Kennedy has the analysis here.

This Morning’s News

CRE: A Magnet For Laundered Money (Miami Herald and Anti Corruption Data Collective): A new report highlights that commercial real estate continues to be an attractive target for billions in laundered money. The analysis of 25 case studies totaling $2.6B in property sales reveals how the sector’s characteristics facilitate such illicit activities and calls for enhanced regulatory oversight and transparency measures. Read about the report’s findings and review the detailed analysis.

Colliers Hits $1B In Q1 (Colliers): Colliers reported a strong first quarter with revenues reaching $1B and an injection of $300M in new equity to fund expansion. Explore Colliers’ Q1 results.

John Forrester Moves To Related Argent (CoStar and Commercial Property Executive): John Forrester, former global CEO of Cushman & Wakefield, has joined Related Argent. Read about Forrester’s new role and background on the joint venture.

U.S. Banks Sell Off CRE Loans (S&P Global): U.S. banks had a common theme on their Q1 earnings calls: They are planning to sell more commercial real estate loans to diversify their portfolios and mitigate potential financial stress. Learn about the banks’ strategies.

BXP Cuts Guidance (Bisnow): Boston Properties, the country’s largest publicly traded owner of office buildings, adjusted its expected FFO down 6 cents for Q2 and the full year. It puts the blame squarely on interest rates, which added $7M in expenses in Q1. Look through its quarterly earnings.

Losses Increase At Piedmont Office Realty Trust (Bisnow): Piedmont, one of Atlanta’s largest office owners, posted a $27M loss in Q1, well above its $1.4M loss a year ago. It is now forecasting a net loss between $41M and $47M for 2024. Dig into its Q1 earnings.

Crescent Communities, Heitman Form JV (Crescent Communities): Crescent Communities and Heitman have announced a joint venture to invest $235M in Crescent's Harmon portfolio, a single-family build-to-rent platform. Read about the JV.

Bruce Ratner Says CRE Is ‘Pretty Much Finished’ (CNBC): Bruce Ratner, former CEO of Forest City Ratner, expresses a bleak outlook on commercial real estate, describing it as "pretty much finished" in part due to the ongoing shift in work habits with fewer people returning to physical offices. Watch Ratner’s commentary on CRE.

Burger King's $300M Modernization Initiative (RBI): Burger King plans to invest $300M to modernize its U.S. restaurants, aiming for 85-90% of its outlets to reflect a modern image by 2028. That will entail about 1,100 more remodels in the next few years. Read about Burger King’s modernization plan.

Increased Hotel Investment Expected (CBRE): More than half of hotel investors surveyed by CBRE said they are planning to increase their acquisitions this year. Opportunistic and value-add deals are highest on their wishlist. Explore CBRE's hotel investment report.

CMBS Firsts Open Up UK Lending Market (Bisnow): The UK CMBS market logged two firsts in the span of a week. Blackstone secured £537M of debt against two industrial portfolios, including the first industrial outdoor storage UK CMBS loan, and Vantage secured £600M against two Welsh data centers, the inaugural European data center CMBS deal. Learn about the loans.

Adjustment To Higher Cost Of Capital (Cushman & Wakefield): Cushman & Wakefield reports that buyers, sellers, and lenders in the real estate sector are adjusting to the higher cost of capital, a shift that could stabilize market conditions and influence future transactions. Economists say the likelihood of recession this year has dropped to 22%, the lowest since March 2022. Read about the market adjustment.

Slowdown Looms For Retail (Colliers and CNBC): Colliers' 2024 forecast suggests that the retail sector may continue to outperform expectations, although concerns linger about the sustainability of this trend. This analysis comes amid signs of a consumer pullback affecting major restaurant brands like Starbucks, KFC, and McDonald’s. Review Colliers' retail forecast and consumer trends.

VICI Funds Expansion At Venetian Las Vegas (VICI Properties): REIT VICI Properties is set to fund up to $700M in developments at The Venetian Resort Las Vegas, including the addition of a new Yahoo Sportsbook. Learn about the funding details and explore the project presentation.

Rue21 Files For Bankruptcy … Again (Bloomberg): Teen clothing retailer Rue21 has filed for bankruptcy for the third time, underscoring persistent challenges in the retail sector, especially among brick-and-mortar stores catering to younger demographics. Read more about Rue21’s bankruptcy.

CBRE Highlights Biomanufacturing Real Estate Opportunities (CBRE): CBRE discusses the emerging real estate opportunities linked to the cell and gene therapy sector. As biomanufacturing evolves, there is significant potential for real estate development to support the specialized facilities required for this next-generation healthcare industry. Explore CBRE’s insights on biomanufacturing real estate.

Blackwells Campaigns Against Braemar Hotels CEO (Blackwells Capital and Bisnow): Activist investor Blackwells Capital has launched a campaign titled 'No More Monty' to oust the CEO of Braemar Hotels & Resorts, citing poor performance and management issues. This campaign follows Braemar’s rejection of board nominations proposed by Blackwells earlier in the year. Read about the activist campaign and Braemar’s board nomination rejection.

Urgent Board Changes Advocated At Crown Castle (Boots Capital): Boots Capital has released an investor presentation arguing that urgent board changes are needed at REIT Crown Castle. The presentation highlights concerns over governance and strategy, suggesting that these changes are crucial for improving performance and shareholder value. Review the investor presentation calling for board changes.

Airbnb Introduces Pop Culture-Themed Listings (Seeking Alpha): Airbnb is diving into pop culture with new experiential listings, including iconic locations like Pixar houses and Prince’s "Purple Rain" house. Explore Airbnb's new pop culture experiences.

Analysis Of Q1 Rent Growth (RealPage): Apartment rent growth is lagging typical seasonal behaviors. Read the Q1 rent growth analysis.

CMBS Delinquency Rate Climbs (Trepp): The CMBS delinquency rate has spiked to above 5% in April for the first time since September 2021. Office, hospitality and retail led the pain with an unusually high $100M going delinquent in April. Learn more about the rise in CMBS delinquency rates.

REIT Valuations Drop In April (S&P Global): According to S&P Global Market Intelligence, REIT valuations fell in April, closing at a median discount of 19%. Read about the decline.

Impact of Suburban Housing On Urban Affordability (JCHS): A new study by the Harvard Joint Center for Housing Studies explores whether new suburban housing developments can make urban areas more affordable. This research examines the potential for suburban expansion to relieve pressure on urban housing markets and improve overall affordability. Explore the research.

REITs Secure Nearly $18B In Q1 2024 (Nareit): REITs have raised $17.6B through debt and equity offerings in the first quarter of 2024. Read more about REIT fundraising efforts.

It's REIT Time, Baby (Chilton Capital and Cohen & Steers): Chilton Capital asserts that higher interest rates often result in higher returns for public REITs. It predicts a bull market for REITs over the next few years. Similarly, Cohen & Steers discusses the strategic advantages of investing in listed REITs in the current economic climate. Explore Chilton’s analysis and Cohen & Steers' investment perspective.

WP Carey Continues Its Office Exit (Net Lease Office Properties and Bisnow): Net Lease Office Properties sold three office properties for a total of $132M. This transaction follows the strategic decision by WP Carey to spin off its office assets into this new REIT, focusing on managing and leveraging net lease office spaces. Read about the property sales and the background on the REIT formation.

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com. 

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