Category: San Francisco Commercial Real Estate Tips (103)

Calco Commercial recently completed a lease transaction at the 30 Tanforan Industrial Park in South San Francisco. Calco represented the Chariot, the Tenant, who will be occupying 51,524+/- square feet of building area and a total of 215,289+/- square feet (4.49 acres) of land. Chariot, a division of Ford Smart Mobility, is focused on transit solution by providing transportation options for commuters, enterprises and charters. Chariot operates across the Bay Area and is now offered in cities ranging from Austin to London.

Source: CoStar
By: Randyl Drummer
Date: October 18, 2018
Link to article: ProLogis

Prologis, the world’s largest warehouse and logistics property company, has begun to consider its leasing options should space suddenly come available as a result of recent bankruptcies by retailers or the consequences of a trade war with China.

So far, San Francisco-based Prologis has yet to find any “measurable impact” from trade issues or retailer bankruptcies this year, Prologis Chief Executive Hamid Moghadam told investors during the company’s third-quarter earnings conference. In the latest sign of struggles among retailers, Sears Holdings Corp. filed for Chapter 11 bankruptcy this week and announced another 142 closings of Sears and Kmart stores.

“If we search real hard, we can point to one or two companies who backed out of lease negotiations in the U.S., but the impact of those isolated cases was negligible in the context of our overall leasing volume,” Moghadam said.

“I can think of 20 other reasons why tenants stopped negotiating or dropped out of a negotiation, and certainly the trade stuff has not yet in any way translated to any action on the ground that we can tell,” Moghadam added.

The company isn’t waiting for any trade war to start before monitoring possible effects on customers. Prologis is already making sure it’s aware of how long it would take to fill space should customers start vacating.

The fact that the largest company of its kind is concerned enough to seek signs of effects of tariffs and bankruptcies reflects the cautious nature of corporations at this point in the extended economic expansion since the recession.

The company has found that “there are plenty of other customers that are waiting in line for quality space and are frustrated by the shortage of suitable options,” Moghadam said.

The Trump Administration has levied tariffs on a total of $250 billion of imported goods from China, which has retaliated by announcing tariffs on $110 billion of U.S. exports.

About 25 percent of the most recent round of tariffs enacted in September is on consumer goods, unlike earlier announcements that mostly targeted materials and intermediate goods, according to Peterson Institute for International Economic, a Washington D.C.-based think tank.

Prologis has said that while a protracted trade war could increase the likelihood of a global downturn, about three-quarters of its U.S. customers are focused on local and regional business activity, including e-commerce delivery, rather than international trade.

Prologis now expects companies to take 260 million square feet of industrial space in the U.S. this year, 15 percent more than 2017, even as newly built space falls an estimated 10 million square feet short of tenant demand. As a result of the tight market, Prologis has been able to keep more than 80 percent of its tenants when their leases expire, despite imposing average rent hikes of more than 11.5 percent.

Not all companies in that industry can operate with that level of efficiency, meaning that Prologis could have a better chance of withstanding any downturn than smaller rivals.

“The markets are really strong and that’s why we’re getting these increases,” Moghadam said. “And not every discussion with every tenant starts out with the intention of them staying. In fact, many of them when they hear about the new rent get a little spooked.”

He said many tenants come back to Prologis and renew after shopping the market and failing to find lower rents.

Among the major commercial property types, only apartment and industrial real estate investment trusts have gained ground in their stock prices since the beginning of the year, according to National Association of Real Estate Investment Trust data.

Matt Kopsky, an analyst for Edward Jones, noted that about 30 percent of new Prologis leasing activity is related to space needed to fill online orders, with Amazon the company’s largest tenant at about 3 percent of total revenue from rents across its portfolio. The company also has demand from overseas to help insulate it from any downturn.

“Despite increasing competition from new construction and trade-tariff concerns, we think demand will remain robust,” Kopsky said. “Increased global trade is also a significant factor, particularly overseas, since Prologis leases space to third-party logistics firms providing warehouse and distribution to multinational corporations.”

According to Bisnow, “tech and life sciences companies made up 67.1% of total office leasing activity in Silicon Valley and 64.6% in San Francisco for 2017 through midyear 2018.” With nearly daily headlines of Facebook and other tech giants snapping up huge swaths of space in San Francisco and its surrounds, it is no surprise that the Bay Area’s tech leasing activity is approximately 40% higher than the nation.

Tech, media, and e-commerce firms, both large and small, understand that in order to be competitive and attract talent, they need a physical presence in the Bay Area. San Francisco Bay Area continues to hold the title for most tech jobs in the United States. Real estate professionals project that tech will continue to expand in Silicon Valley, although solutions to issues such as affordable housing/cost of living will need to be explored to retain the skilled labor force necessary for start-ups and big tech.

Source: Costar
By: Randyl Drummer
Link: Starwood Capital

Investment firm Starwood Capital Group has sold 33 prime office properties totaling 3.3 million square feet in San Diego; Portland, Oregon; and Raleigh, North Carolina, to a Singapore-based developer in its first foray into U.S. real estate investment, according to sources familiar with the deal.

Starwood Capital had been quietly shopping the portfolio with New York brokerage Eastdil Secured and accepted an offer from Ascendas-Singbridge Group, a developer and investor jointly owned by Singapore state-owned real estate companies Temasek Holdings and JTC Corp., said the sources, who are not authorized to publicly discuss the transaction.

In a brief release that did not mention Starwood, Ascendas-Singbridge said Friday it plans to expand within the U.S. and is opening an office in San Francisco to provide support for asset management, business development and other related services.

Ascendas-Singbridge manages more than $14.6 billion in global assets, predominantly in Asia and Australia. According to its website, Miguel Ko, the current executive director and group chief executive of Ascendas-Singbridge, is the former chairman and president of Starwood Hotels & Resorts, Asia Pacific Division.

The discussions come as the group and parent company Temasek also aim to buy into the lucrative North American shared workspace market as part of a $45 million investment in Breather, a flexible workspace provider.

Sources in Los Angeles, San Diego and Portland said the portfolio includes most of Starwood Capital’s office holdings in San Diego and the Portland suburb of Beaverton, Oregon, plus properties in North Carolina.

The portfolio includes a heavy concentration of office and flex properties in the Rancho Bernardo and Sorrento Mesa areas of San Diego, home to many technology and life science companies, a source said.

Starwood acquired 12 San Diego buildings in 2014 totaling more than 1 million square feet in Rancho Bernardo and Sorrento Mesa from Los Angeles-based developer Kilroy Realty Corp. for $295 million, according to CoStar data. The properties, mostly built between 2000 and 2006, include six office buildings and a flex building at an office park in Rancho Bernardo known as Innovation Corporate Center, a source said.

The San Diego properties being sold also include the three-story, 318,000-square-foot Pacific Corporate Center at 10020 Pacific Mesa Blvd., occupied by medical device maker Becton, Dickinson and Co., and several buildings at Sorrento Mesa’s The Campus at Sorrento Gateway, the source said.

The bulk of Starwood’s current Portland portfolio is comprised of office and flex buildings in Beaverton acquired from Glendale, California-based PS Business Parks Inc. Starwood purchased 25 low-rise buildings, ranging from 16,500 to 65,500 square feet each from PS in October 2014 for $164.1 million, according to CoStar data. Most were built in the 1980s and 1990s.

Eastdil and Ascendas-Singbridge did not immediately return calls or emails requesting comment on the transaction. Starwood Capital didn’t immediately comment.

The portfolio purchase is the first major real estate investment in North America for Ascendas-Singbridge, which has properties in 28 cities in Australia, China, India, Indonesia, Singapore and South Korea. The group, under its subsidiary Ascendas, manages three Singapore exchange-listed funds, including Ascendas Real Estate Investment Trust, Ascendas India Trust and Ascendas Hospitality Trust. Ascendas-Singbridge also manages several private real estate funds.

Ascendas REIT just last month announced its first push beyond Australia and Asia into Europe, which includes a plan to buy 12 logistics properties in the United Kingdom. Ascendas-Singbridge Group Chief Investment Officer He Jihong said in a statement the move “fits well with Ascendas-Singbridge Group’s plans to widen our international presence.”

Ascendas-Singbridge and Temasek are also aiming to indirectly enter the shared workspace business through their investment in Breather, a flexible workspace provider specializing in leases of less than a year. Breather, launched in Montreal by entrepreneurs Caterina Rizzi and Julien Smith in 2013, announced in June it had raised $45 million from Ascendas-Singbridge, Temasek, Menlo Ventures, Canadian pension fund Caisse de dépôt et placement du Québec, and others to expand into more markets and provide “longer duration bookings.”

Source: CoStar
By: John Doherty
Link: Amazon HQ2

After Amazon gave his county a painful snub in January, David Iannucci is stuck exactly where 19 communities may find themselves in coming months: trying to market sites that online retailer Amazon rejected for its new $5 billion second headquarters.

Iannucci, head of economic development for Maryland’s Prince George’s County, said he’s been in talks with “several dozen” companies since the world’s largest retailer rejected the county’s bid for its second headquarters, known as HQ2. Many of those companies are looking to move from nearby Washington, D.C., including tech and cybersecurity firms. Those companies aren’t promising to bring 50,000 jobs, like Amazon, though. More like 300 to 400 apiece. And here’s the real peril for other losing cities: After eight months, Iannucci still has no takers, just talkers.

Even so, he said the process has improved the county’s pitch in those talks: “This process reinforced our knowledge of our strengths. We see that there are things we could focus on and promote. That won’t stop.”

For cities from Boston to Atlanta, the effort to woo Amazon has led officials to come up with development plans for long-fallow areas they can quickly turn around and pitch as facility sites for other companies if they meet the same fate. In Newark and Denver, officials say they are positioned to attract other companies should Amazon reject them, Atlanta’s mayor is urging steps that could position the city to find other companies after a rejection, and Boston already has an alternative in place.

To a greater and lesser extent, the 20 finalist cities are beginning to grapple with an irrefutable truth: All but one will lose this commercial real estate beauty pageant. Most of the sites proposed as HQ2 homes are too large to quickly market to another company other than Seattle-based Amazon because the list of U.S. corporations needing that kind of space can be counted on one hand.

In some cases, the process of applying itself was edifying: Officials in finalist cities Newark and Denver both say the process raised their profile as legitimate hosts for corporate headquarters. They hope that could pay off down the line, even if Amazon passes them over.

“There is a lot of excitement in the development world about the possibilities for Amazon,” said Richard Dunn. He’s vice president of operations at Paramount Assets, an investment firm that owns about 40 properties in downtown Newark.

“Even making that list of the 20 basically tells the tale about the resurgence of Newark,” he says. “Now if Newark wasn’t in a resurgence stage, if it wasn’t for its renaissance, obviously Amazon wouldn’t be looking at Newark.”

Whether or not Amazon picks it, the proposal process has elevated the city’s profile not only nationally but internationally in a tangible way, local officials said, and they intend to build on that momentum.

“We’ve seen a huge uptick in the number of inquiries that are coming into our office,” said Aisha Glover, president and chief executive of the Newark Community Economic Development Council. “And then, just kind of anecdotally speaking to brokers around the city, they’ve been saying how the quality of the inquiries has changed. For them, the uptick in inquiries hasn’t been so dramatic, but the types of firms that been inquiring with them.”

The same goes for Denver. Sam Bailey, who, as vice president of the Metro Denver Economic Development Corp., is managing the state’s bid for Amazon’s second headquarters. He said there’s now a burgeoning pipeline of 31 active prospects for space that represents more than 12,000 jobs and about $1.5 billion in capital expenditures from entrepreneurs to Fortune 500 companies. Denver winning a spot on Amazon’s short list has been noted about 30 percent to 40 percent of the time in those discussions, Bailey said.

“We always looked at this as if we don’t win HQ2, we’re going to make the most of this opportunity to showcase to the world everything that is going on in our region,” Bailey said. It will put Denver on the minds of future executives looking for new corporate digs, he said. “The experience, the notoriety, the visibility – we could’ve spent millions of dollars and never have gotten the exposure we’ve had,” Bailey added.

Other finalists aren’t so sure. Austin, Texas, another member of the 20-region shortlist, has endured a long local debate about what inviting the corporate giant into their city might do to it: raise rents, increase traffic, mess up the balance of the artsy city’s culture.

“I don’t know that we want to be” Amazon’s second home, Austin Mayor Steve Adler admitted this past March.

A poll conducted by Elon University and American City Business Journals found 13 percent of Austin locals don’t want their city to host Amazon’s second headquarters, second only to Denver, at a whopping 17 percent.

The full details of what Austin has offered to Amazon are between the city and the online retail giant, but if the mayor’s comments are any indication, Amazon was left wanting. On the day of Amazon’s shortlist announcement, Austin Mayor Steve Adler reiterated the reluctance of city leaders to extend tax breaks and other incentives in order to lure Amazon HQ2.

In other cases, the competition itself sparked questions about economic development. How far was a city willing to go to land a whale like Amazon: Would it offer free land, reduced taxes or no taxes?

Atlanta Mayor Keisha Lance Bottoms last month urged the City Council to support proposed incentives to make a site leaders see as critical to downtown Atlanta more appealing to developers.

Known as the Gulch, the site is a former railyard that covers 30 football fields worth of land near CNN Center and Mercedes-Benz Stadium, and has lain fallow for decades. While the city hasn’t officially confirmed it is the site for its bid for Amazon’s headquarters, several council members said they believe the incentives push is designed to help in the city’s bid to land HQ2.

With or without Amazon, Bottoms said the city has a “once in a lifetime” opportunity to redevelop the Gulch and stressed that developer CIM would assume all financial risks of the $3.5 billion development. She added that the redevelopment of the Gulch “will ultimately generate tens of millions of dollars a year in tax revenues” and create thousands of jobs. The mayor’s push for incentives so late in the Amazon selection process would leave the city in a stronger position to find alternative companies to occupy the site should it not be selected as home to HQ2, city leaders said.

Other cities are also not making the HQ2 battle their only priority.

In Boston, the primary site for a possible new headquarters is at Suffolk Downs, a 161-acre former horse-racing track that straddles Boston and the northern suburb of Revere. Long under-used, the site has been the subject of several redevelopment efforts over the years.

In 2017, Boston investment firm HYM Investments paid $155 million for the site. It was offered up as an HQ2 contender, but some preliminary plans have also called for a massive mixed-use project with apartments, for-sale homes and office and retail space.

Whatever happens, according to HYM, the firm will keep shopping the site.

That day-after thinking is starting to pervade most planners in HQ2 finalist cities. And Iannucci, of Prince George’s County, thinks that’s the right attitude.

His bid didn’t make it, but bids in nearby Washington, D.C., Montgomery County, Maryland and Northern Virginia did. Any of those sites, if picked, could have a spill-over effect – jobs, housing demand – for Prince George’s.

“We stand by ready to help [those finalists] any way we can,” he says.

Still, as 19 other cities will discover it hurts to be told no.

“Amazon was wrong about their conclusion about our workforce,” said Iannucci, a former Maryland state Secretary of Commerce. “We have feelings about that to this day.”

Contributing to this article are CoStar News Reporters Kyle Hagerty, Linda Moss, Jennifer Waters and Tony Wilbert.

According to the The Registry and the San Francisco Business Times, Amazon’s real estate presence in San Francisco continues to grow by nearly doubling its leased area at the 525 Market Street building.

Amazon currently leases approximately 176,000 square feet in San Francisco’s third largest office building, where the e-commerce leader will be expanding into an additional 143,000 square feet. Per The Registry article, “Amazon has been actively expanding its presence across the entire Bay Area region” as the company continues its search for the secondary HQ location.

Amazon’s pending purchase of online pharmacy PillPack has the potential to create a need for specialized warehouse space to ship prescription drugs and even lead to small retail clinics, adding demand to an already surging industrial property market.

The move by the online retailer could have significant implications for industrial property sales, which outperformed other major commercial sectors across the U.S. in the second quarter as Amazon and other companies pump up their supply chains for e-commerce delivery, according to CoStar data.

“If you really read between the lines here, and kind of analyze this, Amazon wants to be part of every single transaction that happens in our lives,” said Gregory Healy, senior vice president of chain and logistics at Colliers International.

Amazon, the world’s largest retailer, bought PillPack in late June for an estimated $1 billion. PillPack holds pharmacy licenses in all 50 states and ships medications from its primary drug distribution center in Manchester, NH, to customers who take multiple daily prescriptions. The company is targeting a major market: On its website, PillPack says 40 million adults take more than five prescriptions each day.

If Amazon incorporates PillPack’s approximately 1 million customers into its Prime membership business, which has 100 million subscribers, the company would need drug distribution centers near large cities cleared to handle medicines, said Santo Leo, founder and CEO of MailMyPrescriptions.com in Boca Raton, FL.

Those could be small centers dotted across the country or a handful of larger ones. In either case, they will have to meet far more specialized state and federal requirements because the goods being handled are medicine, Leo said.

Though Amazon already owns or leases about 100 million square feet of distribution space, “you can’t just rip a warehouse out and put a pharmacy there,” said Leo, whose mail-order pharmacy is licensed to dispense prescription drugs in more than 40 states. “You need to design these from scratch. You need more power, more data, more security measures. Traditional big, bulky, automated facilities are just not designed for pharmaceuticals.”

Pharmaceutical warehouses must have processes in place for temperature control, security, documentation and the ability to address product recalls, said Carmine Catizone, executive director of the National Association of Boards of Pharmacy, which accredits wholesale pharmaceutical warehouses. Each state also has different licensing requirements.

The company may need new buildings for an online pharmacy, the analysts said. Though Amazon is opening fulfillment centers at a dizzying rate — eight so far in 2018 — it has a host of controls to ensure each center operates at maximum capacity and has little extra space, the company said in its 2017 annual report.

Amazon declined to comment on its plans for specialized PillPack warehouse space. Amazon hasn’t made any public statements about its PillPack strategy since shortly after the purchase, which is expected to close by the end of the year.

Amazon’s PillPack purchase follows its joint venture with Berkshire Hathaway Inc. and JPMorgan Chase to improve the U.S. health care system and cut costs. PillPack is part of that strategy, said Leo, who predicted Amazon would move quickly to grow PillPack to place pressure on health-care competitors.

“How do you keep people out of the doctor’s office or hospital lab? Make sure people take their prescriptions,” he said.

Healy said the purchase could have implications for any brick-and-mortar plans Amazon has as well, noting the trend toward small, walk-in clinics across the country. It’s estimated there are now almost 3,000 such clinics, according to Accenture. He also speculated that Amazon could add pharmacy services to its Whole Foods stores.

“It will probably net a greater industrial space for Amazon, but I would think there would be some sort of new retail model,” he said. “There could be something else down the pipeline, perhaps a new form of retail.”

Source: CoStar News
By: Rob Smith
Date: August 2, 2018
Link: Amazon

Source: San Francisco Chronicle
By: Roland Li
Date: July 26, 2018

Facebook’s recent share plunge was one for the stock-books as the $119 billion decrease officially became the largest drop on Wall Street, even surpassing Intel’s $90 billion one-day drop in 2000. Facebook is one of the Bay Area’s largest employers and drives a local economies–what does this severe decrease in stock value mean for the Bay? According to the The Chronicle, the plunge will not “hurt the Bay Area economy.” Coupled with their “$42.3 billion cash reserve,” and with a planned 20,000+/- jobs being added to the security team, Facebook will continue to “boost the local economy.”

Other economists worry that the drop in price could indicate a pending correction in the market. However, with Amazon’s massive increase in Q2 earnings, it may be too early to predict if Facebook is suffering from an overall market dip, or its own public relation woes.

According to Gary Schlossberg, a senior economist at Wells Fargo and quoted in the Chronicle article, the market has experienced a “mild deterioration in some of the fundamentals driving the market. The question is: how much will U.S. growth slow and with it earnings growth? A lot of strength in earnings has to do with corporate tax cuts. We need to see how aggressively the Fed will move interest rates. There could be a gradual turn toward ad less friendly environment for the stock market.”

Time will tell.

Source: CoStar News
By: Mark Heschemeyer
Date: July 19, 2018
Link: Distressed

The deal announced this week that private equity firm Stone Point Capital plans to buy Sabal Capital Partners, a small-balance, multifamily lender and loan servicer, is only the latest maneuvering in the shifting landscape for special servicing of commercial real estate loans. More deals are likely as a projected rise in interest rates may boost distress in the market.

Special servicers control the fate of billions in distressed loans and thus the fate of billions in commercial properties. And right now, that is a lucrative market flooded with capital but with fewer investment opportunities capable of providing the higher returns expected from private equity investors.

The jockeying for position is not only indicative of billions of private equity money flowing into distressed assets but also shows where the market is heading.

Driven in part by retail weakness, the volume of loans in commercial mortgage bonds on servicers’ “watch lists” has been on a gradual upswing since last November, according to Morningstar Credit Ratings data. Loans are put on a watch list because of issues such as declining occupancy or net incomes at the properties backing the loans. The rise in volume is considered a reliable indicator of future distress.

The maneuvering is not done, with a prize still to be had. One of the three largest commercial loan special servicers in the market, Rialto Capital Advisors, is still in play. Its owner, homebuilder Lennar Corp., has hired financial advisers to determine Rialto’s strategic alternatives as Lennar shifts to concentrating purely on residential building.

Three of Rialto’s larger competitors are owned by bank holding companies, PNC Financial Services Group owns Midland Loan Services, the largest special servicer in the market; and the second- and fifth-largest are Wells Fargo and KeyBank.

Notably, Wells Fargo is one of the two financial advisers Lennar hired to consider what to do with Rialto. The other adviser is Deutsche Bank.

The fourth-largest special servicer, CWCapital Asset Management, was acquired six months ago by Japanese multinational holding conglomerate SoftBank Group.

Distressed property purchasing is one of the country’s hottest investment categories and the primary target of new investment dollars. At a time when core property prices have hit new peaks, yield-hungry investors are aggressively sourcing new investment opportunities that offer more compelling returns.

Private equity funds raised $14.7 billion alone for value-add and opportunistic commercial real estate last quarter, according to private equity data provider Preqin.

About 75 percent of the new investment money being raised in the market is targeting value-add and opportunistic real estate, the categories that distressed assets fall into, said Chris Lee, vice chairman of CBRE Capital Markets Group based in Miami.

Lee directed one of the largest distressed deals of this year. CBRE, in conjunction with Ten-X, arranged the sale of a foreclosed upon leasehold interest in 110 E. Broward in Fort Lauderdale in January for $41.06 million. Stockbridge Capital Group acquired the 24-story office tower and an adjacent two-story office and retail pavilion. LNR Partners was the seller as special servicer for owner CMBS trust.

“There is no lack of demand for distressed properties,” Lee said of private equity firms. “There is a lot of hidden, and not so hidden, value in these properties.”

At the time of the sale, 110 E. Broward was only 42 percent leased at the time, representing a value-add opportunity by the lease-up of 198,803 square feet of vacant space in a market where the competitive set vacancy is just 8 percent.

In this environment, banks and servicers have had little trouble liquidating the distressed assets. So, the problem for Lee and other brokers is finding inventory right now to sell. The amount of distressed assets in the market at the moment is at post-2008 recession lows as the recovery is now approaching 10 years running.

The amount of foreclosed commercial properties on bank books had shrunk to just $4.7 billion in the first quarter from $31.2 billion seven years ago, according to Federal Deposit Insurance Corp. data.

The amount of specially serviced loans in commercial mortgage-backed securities has fallen by $70 billion in that time, down to about $23 billion.

The diverging trends of money coming in and assets available for liquidation has created a lot of jockeying among special servicers for the dwindling supply of deals. Wells Fargo Bank, PNC’s Midland Loan Services, Rialto Capital and KeyBank have grown their market share in the past two years at the expense of CWCapital Asset Management and other smaller servicers.

Of those loan balances assigned, the amount of distressed loans being actively serviced is small, about 2.4 percent. At year-end 2017, Rialto’s active special-servicing portfolio contained 364 loans and 481 real estate owned properties with a combined unpaid loan balance of $1.98 billion, according to Morningstar Credit Ratings.

In advance of any decision from Lennar about Rialto’s fate, the special servicer has also been particularly active in the past two months growing its special servicing assignments.

Another arm of Rialto has been one of the most active buyers of B-piece commercial mortgage bond offerings. That affiliate has underwritten and purchased over $6.1 billion in face value of such bonds in 88 different securitizations.

B-piece buyers generally purchase the lowest-rated and the very bottom of the bond classes — the unrated class. Any losses to the bond trust come out of the lowest-rated bonds first.

Because of that, B-piece buyers have the right to play an active role in making decisions on important issues that can affect the value of the loan or the collateral. That includes such issues as identifying what collateral goes into the offering and having first-purchase options on defaulted loans or, in this case, appointing new special servicers.

In the past two months, the Rialto affiliate has removed the existing special servicer on 11 different commercial mortgage bond offerings in which it has invested and replaced them with Rialto Capital, according to bond rating agency announcements. Rialto has taken assignments away from Midland Loan Services and CWCapital.

Such removal and replacing of special servicers is not unusual. CWCapital has also won such assignments in the past two months. However, the number of such switches involving Rialto has been much higher than for the others.

Executives from neither Rialto nor Lennar responded to requests for comments for this story.