Mubadala Wants to Turn Parking Lots into Hubs for Restaurants

Mubadala, the Abu Dhabi sovereign wealth fund, has led a $700 million growth equity funding round into real estate and technology firm REEF to transform thousands of parking lots and garages into urban hubs for restaurants and other services.

The financial investment arm of Mubadala Investment Company was joined by other participants including SoftBank, Oaktree, UBS Asset Management, and Target Global, the startup said this week.

“The concept of transforming infrastructure to better connect the origin of production with the destination of consumption resonated with us,” Adib Mattar, head of Mubadala Capital’s private equity business, said in a statement.

Separately, REEF and alternative asset manager Oaktree established a $300 million joint infrastructure vehicle to acquire real estate assets across the US. The online services firm already has a real estate network of 4,500 parking lots and garages.

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The investment is a vote of confidence in delivery services and last-mile distribution services that were already growing more popular before the pandemic. REEF, which has more than 100 “neighborhood kitchens,” offers a revenue share partnership to restaurant partners to share costs, operations, and food preparation. Built on the delivery and quick serve carry-out concept, the kitchens are set up in mobile vessels, outfitted to operate as full-functioning, take-out only kitchens. Some restaurant partners include Burger-Fi and David Chang’s Fuku chain.

While early stage investments have taken a hit, venture capital investments in proven startups are still showing strength in the coronavirus era, particularly for firms that are responding to accelerating trends, such as remote work and ecommerce.

Venture capital funding for US companies jumped to $36.5 billion in the third quarter, up 30% from the second quarter and up 22% year over year, making it the second biggest quarter of all time, according to PwC MoneyTree. Eighty-eight US companies raised rounds worth $100 million or more in the third quarter, the report said.

Among the most sizable venture capital deals in the quarter were a $1.9 billion funding round into Elon Musk’s aerospace company SpaceX and a $1.5 billion funding round into video game company Epic Games. Another large deal this year involved Google’s autonomous car company Waymo, which raised $3 billion from investors that included Mubadala in the largest deal of the second quarter.

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CPPIB, Mubadala Lead $2.25 Billion Funding for Google’s Waymo

Tags: company, Investment, investment company, Mubadala Development Company

Is the housing boom waning? Looks that way, according to a noted economist on the subject, TS Lombard’s Oliver Brennan.

The problem is that the housing market has had a K-shaped recovery, in his view. That means the activity has been concentrated on the higher end of the economic scale. But that’s not enough to keep the party going into the future.

While Brennan doesn’t foresee a housing crash, owing to support from very low mortgage rates (2.81% for an average fixed-rate 30-year loan, says Freddie Mac), there’s a slowdown happening that won’t be good for housing stocks.

Consider the iShares US Home Construction exchange-traded fund (ETF). The ETF has doubled since the March market trough, but since mid-October, it has fallen 10%. Meanwhile, homes are getting less affordable for many Americans. The most recent reading, from the US Census Bureau, shows the mean home price rising 15% over the preceding 12 months, to $320,000.

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Refinancing is where the action is in mortgages, thanks to the low rates, but applications for loans to buy homes have flattened, Brennan wrote. In effect, this home-sale boom is a case of pulling market demand forward, in his estimation. A lot of this is driven by the work-from-home movement, in response to the pandemic: Urban dwellers clear out for the suburbs, where they have more room than in the city, in which yards are mostly nonexistent.

Yet first-time buyers, who tend to be younger and less affluent than the folks doing all the home buying lately, need to be able to get in the game for the housing surge to continue, Brennan reasoned.

Sales on new single-family homes, the province of the young crowd, dipped 3.5% in September from the month before, Brennan pointed out.

That marks a reversal. The National Association of Realtors (NAR) released a report in late September finding that existing home sales had hit a 14-year high in August.

On the plus side, apartment vacancies have popped up and their rents are falling, down 15% to 20% in onetime hot rental real estate markets such as New York City, says broker Douglas Elliman. The same is true in other cities. Meanwhile, condominium prices also are down. Brennan indicated that may induce empty-nesting suburbanites to move to cities, which would put more inventory on the housing market. Result: more softening on home prices.