Anywhere Real Estate softens; Diversified Healthcare Trust up; Office Properties lower

By Cristal Cody

Tupelo, Miss., March 19 – Distressed real estate names went out mixed on Tuesday but have mostly pulled back slightly in March.

Anywhere Real Estate Inc.’s 5¾% senior notes due 2029 (B3/CCC+) traded off about 1 point on Tuesday in active supply.

The bonds declined about 4 points over the prior week.

Diversified Healthcare Trust’s 4 3/8% senior notes due 2031 (Caa3/B) traded on Tuesday nearly ¼ point better in thin activity but have slipped over 2 points since February.

The trust’s $1.75 billion of outstanding debt is listed among Fitch Ratings’ top 10 U.S. market concern corporate bonds.

Office Properties Income Trust’s 3.45% senior notes due 2031 (Caa2/CCC) gave back about ½ point on Tuesday and have dropped over 3 points in the past month.

Real estate names have seen some pressure following Friday’s announcement the National Association of Realtors agreed to a $418 million settlement following a ruling last year against the association regarding agent fees.

The association announced Friday the agreement, expected to have major changes on the home buying process with a reduction in agent fees, is subject to court approval.

The real estate space also may have lost some investors after the Bank of Japan said Tuesday it would no longer invest in real estate investment trusts.

The Bank of Japan terminated its negative interest rate policy and set the new target for benchmark short-term interest rates at 0.0% to 0.1%.

“Just as important, the central bank said it will stop setting a yield target for 10-year Japanese government bonds and cease buying stocks, real estate investment trusts, and other unorthodox investments,” according to a Confluence Investment Management report.

Market tone was mostly strong with stocks higher on the day.

The iShares iBoxx High Yield Corporate Bond ETF increased 24 cents, or 0.3%, to $77.49.

The CBOE Volatility index was down 3.56% at 13.82 ahead of the Federal Reserve’s rate decision on Wednesday.

Market economists anticipate the Fed’s first rate cut in June.

Anywhere Real Estate down

Anywhere Real Estate Group LLC’s 5¾% senior notes due 2029 (B3/CCC+) went out Tuesday down about 1 point at 66¾ bid on more than $11 million of paper traded, a source said.

The bonds were up about 1¼ points on Monday after going out Friday about 4 points lower in the prior week.

Anywhere Real Estate’s 5¼% notes due 2030 have declined more than 5 points from where the issue was quoted on Feb. 20 with a 73 bid handle.

Ahead of Friday’s settlement announcement, Anywhere Real Estate reported in February an 18% decline in fiscal 2023 revenue and a net annual profit loss of $97 million that was improved from a $287 million loss a year earlier.

The Madison, N.J.-based real estate services company, formerly known as Realogy, owns Coldwell Banker, Century 21, Corcoran, Sotheby's International Realty and Better Homes and Gardens Real Estate.

Diversified Trust soft

Diversified Healthcare Trust’s 4 3/8% senior notes due 2031 (Caa3/B) traded on Tuesday nearly ¼ point better on a 74 bid handle but activity was thin, a market source said.

The bonds were mostly unchanged from Friday and have declined over 2 points since February.

Diversified Healthcare Trust’s $1.75 billion of outstanding debt is listed among Fitch’s top 10 U.S. market concern corporate bonds, the only real estate name in the group.

The Newton, Mass.-based REIT has a $7.2 billion portfolio focused on health care properties in 36 states and Washington, D.C.

Office Properties declines

Office Properties Income Trust’s 3.45% senior notes due 2031 (Caa2/CCC) slipped about ½ point to around 39½ bid on Tuesday in light secondary volume, a source said.

The issue has softened from trading about a month ago with a 44 bid handle.

The Newton, Mass.-based national REIT has 152 properties in its portfolio of owned and leased office and mixed-use properties in 30 states and Washington, D.C.

Distressed index soft

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns started the week softer at minus 0.13% on Monday, down from 0.07% on Friday and 0.18% in the same session last week.

Month-to-date total returns declined to 1.24% on Monday from 1.37% on Friday but remained up from 1.17% in the week-ago session.

Year-to-date total returns were 3.89% on Monday, compared to 4.02% on Friday and 3.82% in the same session a week earlier.

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