%1

Bankrupt trucking company Yellow Corp received court approval on Tuesday to sell most of its shipping centers and real estate to multiple buyers for $1.88 billion, ending a bidder's long-shot effort to keep the company intact, Reuters reported. Bankruptcy Judge Craig Goldblatt approved the sale at a court hearing in Wilmington, Del., saying that the purchase price was a "tremendous outcome" for the trucking company and its creditors. The sale, which will parcel out 130 of the company's shipping centers to multiple buyers, generated enough cash to pay off the company's $1.2 billion in pre-bankruptcy debt, including $700 million owed on a U.S. Treasury Department COVID-19 pandemic relief loan approved by former President Donald Trump's administration in 2020. Yellow is still seeking buyers for its remaining owned and leased real estate, including 46 shipping terminals, as well as its fleet of trucks. Yellow chose to break up its assets rather than keeping the company intact for an outside buyer, despite pressure from U.S. Senators from both parties who argued that the company should remain intact as a way to save jobs.

WeWork Inc., the embattled coworking giant navigating a bankruptcy, is keeping a Manhattan office spot largely leased to Amazon.com Inc. through a deal that includes reduced rent and a shortened lease term, Bloomberg News reported. WeWork reached a new agreement with its landlord for its space at 1440 Broadway, according to a filing Tuesday. The firm will continue to operate 300,000 square feet (28,000 square meters) spanning 10 floors at the building. The court will still need to approve the agreement. WeWork’s bankruptcy filing in early November set off a tense process surrounding many of the coworking firm’s leases, many of which the company sought to cancel or renegotiate. So far, WeWork has canceled around 70 of those contracts and expects to request more in the coming weeks, Steven Serajeddini, an attorney with Kirkland & Ellis who represents the company, said in a bankruptcy hearing on Monday. Once the biggest private office tenant in Manhattan, the company immediately nixed dozens of leases in New York City upon filing for bankruptcy. Some landlords have objected to the company’s plans to shut down many of its locations. Although in recent weeks, several of them have withdrawn formal objections through court filings.

A Dallas investor is buying another of the office buildings up for grabs with the bankruptcy of a Houston real estate firm, the Dallas Morning News reported. Hartman SPE is selling its office and retail properties as part of a plan to refocus the real estate investment trust on self-storage properties. The unit of Houston’s Silver Star Properties REIT has been in bankruptcy since this summer following a dispute with the company founder. Hartman recently contracted to sell one of its North Dallas high-rises — a 10-story office on North Central Expressway — to retailer Costco which owns the property next door.

WeWork has resolved landlords' objections to its bankruptcy financing agreement, saying on Monday that it had agreed to reserve a portion of any future loans in an account that will be used for rent payments, Reuters reported. U.S. Bankruptcy Judge John Sherwood, who is overseeing the SoftBank-backed company's chapter 11 proceedings, approved the compromise during a court hearing in Newark, New Jersey. The deal allows SoftBank to redirect up to $682.5 million into new credit facilities used to backstop the shared office space provider's rent obligations. SoftBank had already posted the funds as collateral for WeWork's rent costs, but the redirected funds will give SoftBank more flexibility to extend and replace expiring credit agreements, avoiding a scenario in which landlords attempt to collect on the posted collateral. WeWork is not borrowing any new money as part of the approved financing, the company's attorney Ciara Foster said in court. But if it does bring in new money, through a future loan or asset sale, some of the future funds would be reserved to pay landlords, Foster said.

Pennsylvania Real Estate Investment Trust filed for its second bankruptcy in three years, succumbing to the consumer shift away from bricks-and-mortar locations, WSJ Pro Bankruptcy reported. The owner of 16 shopping malls, primarily on the East Coast, filed a chapter 11 petition in the U.S. Bankruptcy Court in Delaware seeking to implement a restructuring agreement that allows its junior lenders to take control of the company. Under the agreement, junior lenders that are collectively owed more than $700 million will exchange their holdings into a controlling equity interest in the company. Certain of those lenders will provide a new $60 million debtor-in-possession facility to fund the bankruptcy proceedings. Senior lenders owed roughly $400 million will have their claims either repaid in cash or through a new exit loan facility, according to a securities filing. Mario Ventresca, Preit’s chief financial officer, said in a declaration to the court Monday that its previous bankruptcy, filed in 2020, “proved insufficient to address the company’s long-term liquidity needs and persisting macroeconomic challenges.” Ventresca attributed some of the company’s troubles to online shopping and lower consumer spending, due in part to rising inflation and interest rates. Many of Preit’s tenants, including anchors such as JCPenney, commenced their own bankruptcy cases and closed stores at Preit’s properties, he said.

Harbor Custom Development, based in Tacoma, Wash., on Monday announced it has filed for chapter 11 bankruptcy protection, the New Star Tribune reported. The NASDAQ-listed company, known for multifamily housing development in the region and upscale housing development in other parts of the country, said in a news release it had “voluntarily filed for protection under Chapter 11 of the United States Bankruptcy Code in the Western District of Washington at Tacoma ... to pursue an orderly wind down or restructuring of its business.” It stated that it had filed motions “that will allow it to continue operating in the ordinary course of business while it prepares a reorganization plan to ensure that it can maximize value for the benefit of its creditors.” The company said it would continue “to market and sell finished lots and homes and to operate multi-family projects as they work towards stabilization.” Its filing listed total assets of $223,981,000, and total debts of $172,528,500 as of Sept. 30. A profile of the company online showed 41 employees, while its LinkedIn profile lists “11-50” workers. The company this year has seen management reshuffling, with former CEO Sterling Griffin retiring in July. Interim CEO Jeff Habersetzer, the company’s former chief operating officer, has been at the helm since Griffin’s departure. Its chief financial officer, Lance Brown, resigned in July, with the company announcement noting the departure did “not relate to any disagreement with the company’s management, the board of directors ..., or the company’s independent auditors regarding any matter pertaining to the company’s operations, accounting practices, financial disclosures, internal controls, policies, or practices.” The company abandoned plans for a luxury apartment development in Tacoma over the summer. Griffin blamed a dismal first-quarter earnings report this year partially on “ongoing challenges in the broader housing market, including higher mortgage interest rates and inflationary pressures.”

The U.S. Treasury Department on Monday said its Financial Crimes Enforcement Network (FinCEN) unit is planning to propose a long-awaited rule aimed at curbing money laundering in real estate in early 2024, Reuters reported. The regulator is also aiming to issue a notice of proposed rulemaking that would require investment advisers flag suspicious transactions to regulators. The proposal, which FinCEN was previously slated to unveil this year, is expected to require real estate professionals report the identities of the beneficial owners of companies buying real estate in cash to the regulator. Anti-corruption advocates have been pushing for years for regulators to close a loophole they say allows criminals to hide money in U.S. real estate.

Unaffordable rents are changing low-income life, blighting the prospects of not only the poor but also growing shares of the lower middle class after decades in which rent increases have outpaced income growth, the New York Times reported. Nearly two-thirds of households in the bottom 20 percent of incomes face “severe cost burdens,” meaning they pay more than half of their income for rent and utilities, according to the Harvard Joint Center for Housing Studies. Among working-class renters — the 20 percent of people in the next level up the income scale — the share with severe burdens has nearly tripled in two decades to 17 percent. For both groups, the proportion with severe cost burdens has reached record highs. The federal government deems shelter affordable if it takes 30 percent or less of household income, a goal that only about half of the nation’s 44 million renter households meet.

Chinese property giant Evergrande and its biggest foreign creditors are negotiating an 11th-hour deal to prevent a liquidation of the company’s offshore businesses on Monday, WSJ Pro Bankruptcy reported. Evergrande and a group of its bondholders have been negotiating to restructure the financially troubled company after Chinese regulators vetoed a previous version of their plan. In a recent proposal, Evergrande has offered to give control of around 20% of its Guangdong-based parent company, China Evergrande Group, to its creditors. To comply with Chinese regulators’ demands, Evergrande wouldn’t issue new debt as part of the restructuring. Additionally, Evergrande is in discussions with NWTN, a Dubai-based electric-vehicle company, to invest new money in Evergrande’s EV unit, the people said. NWTN had agreed to invest $500 million for a 28% stake in Evergrande Auto, which would have helped Evergrande Auto’s expansion, but NWTN temporarily suspended its commitment to invest the funds when Evergrande’s earlier restructuring plan fell apart, according to securities filings.

A lender run by the billionaire Reuben Brothers has filed to seize the Chatwal, a luxury hotel in Midtown Manhattan, after the debt went into default, Bloomberg News reported. The property’s mezzanine debt, which was loaned by the Reuben Brothers’ Motcomb Estates, is scheduled for a Jan. 17 auction, positioning the winning bidder to take control of the 76-room hotel at 130 W 44th St., where weekend rates often top $1,000 a night. The hotel is part of Hyatt Hotels Corp.’s global system, and is linked to an entity called Adams Hotels International in property records. A pre-foreclosure lawsuit filed in May lists Dubai businessman Iyer Vaidyanathan Narayan as a guarantor on the loan. A representative for Hyatt said that the property is expected to be put up for auction in January. The hotel will continue normal operations throughout a potential change in ownership, with service levels remaining intact, the representative said. The Chatwal is not the only New York hotel to grapple with lenders in recent years, as sluggish international tourism and business travel weighed on demand, and higher interest rates ramped up financial pressures. The Times Square Edition and the Margaritaville Resort Times Square Hotel have had similar issues, even as lodging demand has improved significantly from the early days of the pandemic.