Divergence

US central bank, the Federal Reserve, opted to keep interest rates unchanged at a meeting last Wednesday, but cautioned it could complete two additional interest rate increases before the end of 2023 as it seeks to reduce inflation to its targeted 2 percent level. “Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy,” the US central bank said in post-meeting commentary. The target range continues to be 5 to 5.25 percent.

Despite the clarity, Marcia Kaufman – chief executive of mortgage lender Bayport Funding, based in Great Neck Plaza, New York – expects continued dislocation in the market. “We will continue to see private credit funds take advantage of the void in the credit market by opportunistically stepping into high-quality lending opportunities,” she told affiliate title Real Estate Capital USA on Wednesday.

Meanwhile, the European Central Bank continued its current upwards trajectory, raising its policy rate another quarter point to 3.5 percent. The move brings rates on the continent to a 22-year high. “Barring a material change to our baseline, it is very likely the case that we will continue to increase rates in July,” ECB president Christine Lagarde told a press conference. “Are we done? Have we finished the journey? No. We’re not at our destination. Do we still have ground to cover? Yes, we still have ground to cover.”

This Thursday, the UK’s Bank of England is also expected to raise rates by 0.25 percent to 4.75 percent as the country continues to grapple with its inflation, although some commentators are predicting a more aggressive 0.5 percent hike.

Selling Starwood
Miami-based Starwood is looking to offload a significant portion of its single-family rental portfolio out of its non-traded REIT, Starwood Real Estate Income Trust. The 2,000 single-family rental homes the firm is planning to sell are understood to be part of the 2,300 homes Starwood purchased from New York-based residential specialist Pretium Partners for $1 billion in 2021, first reported by Bloomberg. Starwood’s entire SFR portfolio is around 3,200 homes. Pretium will reportedly buy back around 100 homes from the firm.

Comprised of mainly housing and industrial properties, SREIT has a net asset value of $12.8 billion. It becomes the latest private REIT to sell assets in the face of redemptions queues, after New York-based Blackstone sold another asset out of its BREIT vehicle this month, a San Antonio hotel.

Mending bridges over the Nile
Tourism commerce in Egypt is expected to rise again and Qatar’s state investment vehicle, Qatar Investment Authority, wants in. According to news service Reuters, the investor is in talks with fellow sovereign wealth fund The Sovereign Fund of Egypt about acquiring meaningful minority stakes in seven hotels in the country. The hotels are the Cairo Marriott Hotel, Steigenberger El Tahrir in Cario, Marriott Mena House at the Giza pyramids, Sofitel Legend Old Cataract in Aswan, Mövenpick Aswan, Sofitel Winter Palace in Luxor and Steigenberger Cecil Alexandria.

While diplomacy following long-standing friction between Qatar and Egypt is understood to be part of the narrative associated with this deal, a transaction would also be in keeping with broader increasing optimism of a brighter economic future for Egypt’s hospitality sector following the pandemic amid greater levels of general international investment interest. That is leading to greater volumes of investment, with the International Monetary Fund forecasting 65 percent growth in net foreign direct investment by year-end 2025 versus this year – that is $16.5 billion in absolute value.

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