SMARTCAP RESEARCH – DECEMBER 2023 NEWSLETTER
Boeing's 737 Max Leads Strong Recovery with Record Deliveries and Orders in November
Boeing is experiencing a strong recovery in its manufacturing and sales, particularly with the 737 MAX. Despite earlier quality issues that affected deliveries, Boeing delivered 56 airplanes in November, including 45 MAXs. This marks the highest number of deliveries since June. Additionally, Boeing secured 104 net new orders in November, highlighted by a substantial order for 90 777X jets from Emirates at the Dubai Air Show.
Commentary from Dominic Vinti, SMARTCAP's Sr. Acquisitions Analyst
In November, Boeing got back on track delivering 56 commercial jets and 45 MAXs. The 45 deliveries of the MAX model tripled their deliveries in October (18) and September (15). Some of the 45 were built in prior months, but had deliveries pushed due to mechanical defects. Boeing is currently building Max's at a clip of 38 jets a month. The uptick in deliveries is also coming off of a successful Dubai air show where Boeing won 106 net orders to Airbus's 61.
Boeing will finish 2023 behind Airbus in net orders for 2023. (1,395 v. 945) The volume of orders is the highest in net orders for Boeing since 2014. Demand is beginning to rebound from the pandemic, and supply chains are still hindering the commercial airline production capabilities. Strong demand has outpaced the supplies capabilities thus far, but the banner year in net orders for both Airbus and Boeing could be foreshadowing bright years ahead for the airline manufacturers.
Bellevue's City Council to Extend Spring District Development Agreement, Shaping City's Future
Big news in Bellevue's real estate scene! The Bellevue City Council is poised to extend the Spring District development agreement with Wright Runstad & Co. by 10 years, shifting the completion target to 2037. This major mixed-use project, spanning 36 acres, has encountered various changes, including REI selling its headquarters to Meta in 2020.
As eight of the 27 parcels remain undeveloped, plans include a mix of lodging, multifamily, office, and retail spaces, despite current challenges in the office and multifamily housing markets. The extension is supported by the City Council, with a public hearing scheduled for Dec. 11.
Interesting to note: The JV has contributed over $10.7 million in fee-in-lieu payments under the existing agreement, with future amendments set to increase these rates significantly.
Stay tuned for how this substantial development shapes Bellevue's landscape and market dynamics in the coming years!
Commentary from Brian Burmester, SMARTCAP's Director of Acquisitions
In real estate development, the ability to navigate changing market conditions is essential for creating a successful project. The dynamic nature of market demand, capital markets, micro, and macroeconomic trends all play into the decisions made by a developer to manage a project’s risk and the investor returns. Articles like this, remind us how important the relationship a developer has with a city really is. Wright Runstad & Co has been working the City of Bellevue on the Spring District for nearly a decade and have delivered a tremendous amount of value to city. Extending the development agreement shows alignment between both parties and a great long-term partnership. Similarly, SMARTCAP has been working with the City of Arlington since 2018 and has partnered with the city to also create significant value for the community. This relationship has allowed for the flexibility for SMARTCAP to operate over the last 18 months as market conditions were not ideal. These key relationships have a tremendous impact on decisions that developers make.
Amazon's Project Kuiper Aims to Revolutionize Global Connectivity with AWS Integration
Amazon's Project Kuiper, aimed at launching a space-based broadband network, is set to enhance data management and private connectivity services, especially integrating with Amazon Web Services (AWS). The project's recent partnership with Japan's NTT Docomo and SKY Perfect JSAT, along with existing telecom partners like Verizon and Vodafone, will extend advanced satellite connectivity to diverse clients, boosting global broadband access.
Commentary from Dominic Vinti, SMARTCAP's Sr. Acquisitions Analyst
Amazon is preparing to launch satellites to build out its Project Kuper constellation. They also announced partnerships with Nippon Telegraph & Telephone Corp., NTT Docomo, and SKY Perfect JSAT. These will be strategic telecommunications partnerships to distribute services and boost wireless broadband connectivity to their customers. Their new Japanese partnerships join Vodafone and Verizon on their current list of strategic partnerships.
Amazon announced that 2 prototype satellites produced in their Kirkland, WA facility achieved a 100% success rate. As Amazon begins to scale the partnerships, hardware, and capabilities of Project Kuiper, it could mean future demand needs for R&D manufacturing space near their original Kirkland facility. With Amazon and Space X competing for market share in the satellite internet space, and their flagship development facilities located on Seattle's Eastside, future demand backed by high credit tenants could be on the horizon for this quickly developing industry.
SMARTCAP Team Tees Up for Holiday Celebrations at Top Golf
Earlier this month, the SMARTCAP team swapped office chairs for golf clubs, marking our holiday celebrations with a fantastic day at Top Golf in Renton! It was a great opportunity to connect outside of the office and see a different side of our talented team. 2023 gave us so much to celebrate, and we are already looking forward to another successful year, starting with our Baker View development, which is set to be delivered in January 2024.
Commentary from Laura Holloway, SMARTCAP's Investor Relations Manager
In reflecting upon 2023, SMARTCAP has much to celebrate and be proud of. We experienced remarkable growth by welcoming three new team members and successfully closed Value Fund 3 with the acquisition of the Harborgate Industrial Building in December.
To commemorate our accomplishments, we gathered at Top Golf for a holiday celebration! This event served as a testament to the importance of spending quality time with colleagues outside the office.
Engaging in activities outside of our workplace fosters stronger interpersonal connections, strengthens communication, and reinforces team dynamics. Our time at Top Golf was not just a social outing; it left us feeling more connected and united as a team.
The year ahead holds great promise, and we are eager to take on all that it has in store for SMARTCAP!