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10 Must Reads for the CRE Industry Today (April 5, 2018)

The Street looks at two REIT sectors that are likely to prosper. Retail vacancies have reached a six-year high, reports Seeking Alpha. These are among today’s must reads from around the commercial real estate industry.

  1. Using Housing as a Hub for Senior Services “Most seniors want to age at home rather than move to a senior living facility. But this choice brings many challenges, including the risks of social isolation, limited access to medical care and supportive services, and the potential for falls or other injuries that come from living in a home that is unsafe for a frail older adult. But there are ways to reimagine community-based housing as a resource for senior services, rather than a frequent impediment.” (Forbes)
  2. Blackstone Unloading Another Suburban Office Complex “As Blackstone Group puts more money into Willis Tower, it continues to cash out of the suburban office market. The New York-based private-equity giant has agreed to sell the 1.1 million-square-foot Westbrook Corporate Center in Westchester to a venture of New York investor Group RMC for $132 million, according to sources familiar with the deal. The deal would be the third office complex in the Chicago suburbs that Blackstone has unloaded since December as it capitalizes on healthy investor demand for high-quality suburban office buildings.” (Crain’s Chicago Business)
  3. 2 REITs in the Right Place at the Right Time: Cannabis and Logistics “There's an entire sector that's poised to grow exponentially with every package that e-commerce retailers like Amazon ship. And nobody's talking about it. Why? Well, it may be the absolute most boring business in the world: logistics. The results are kind of exciting, but the process -- the whole idea -- just doesn't get the blood pumping. Logistics is the business of getting things where they need to be when they need to be there.” (The Street)
  4. Retail Vacancies at Six-Year High “Q1 retail vacancies at regional malls have jumped to 8.4%, the highest level since Q4 2012, according to Reis. ‘The first quarter tends to see the lowest activity,’ says the report. ‘However, this was an unusually slow quarter for retail leasing and construction.’ Adding to the misery, community shopping centers in 41 of the 77 areas tracked by Reis experienced a rise in vacancy rates during the 12 months ending March 31.” (Seeking Alpha)
  5. The 50 Most Important Figures of Commercial Real Estate Finance “With even the industry’s top lenders battling it out for every deal—bank against debt fund, CMBS shop against life insurer—never has there been a more competitive year in American commercial real estate finance than 2017. ‘We were doing head-to-head combat every day,’ as UBS’ Chris LaBianca, this year’s No. 31 honoree, put it. That made it trickier than ever before for our survey of the battlefield to rank the most exemplary victors—especially given our desire to take a broader nationwide perspective this time around.” (Commercial Observer)
  6. Kohl’s Teams with Aldi, Nordstrom Adds Anthropologie Home: Are Retailers Becoming Mini Malls? “Head-turning retail mashups and sleeping-with-the-enemy-style pairings — from Aldi grocery stores on Kohl’s turf to Anthropologie shops at Nordstrom — are rocking the retail sector, as stores scramble to woo finicky, choice-rich consumers in a marketplace upended by the limitless store that is e-commerce. The deals reflect a variety of strategic plays by retailers, be it a bid for product categories outside a merchant’s core competency, like food for Kohl’s, or reaching for that elusive cool factor, such as Walmart’s implicit courtship of younger and hipper shoppers via its collaboration with media platform BuzzFeed on a kitchenware line.” (Forbes)
  7. Judge Calls Cushman “Wage Thief” in Decision Favoring JLL Brokers “Real estate brokers are in it for the money, and when they don’t get it, they’re often inclined to sue. So in 2011, when a five-man troupe of Cushman and Wakefield leasing agents left an expiring contract to head to competing brokerage JLL, they expected to take their final paychecks with them. Instead, the agents — Mitchell Konsker, Paul Glickman, Matthew Astrachan, Mitti Liebersohn and Alexander Chudnoff — said they were given short shrift and sued for up to $8 million to recover unpaid wages.” (The Real Deal)
  8. What to Expect from CRE Valuations “As commercial property valuation growth continues strong, the Federal Reserve Bank has warned that prices may be inflated. Despite the concern-inducing Fed reports, industry insiders see no reason to worry. Bob Martinek and John Provenzano, senior managers in BDO USA’s Valuation and Business Analytics practice, believe that current CRE valuations appear to be supported by available market evidence. The two revealed the factors that will influence pricing going forward and how valuations are performing in various markets and property types.” (Commercial Property Executive)
  9. Real Estate Funds Just Raised the Most Cash in a Q1 Since 2008 “A staggering $33 billion in new private real estate funds closed globally between January and March, according to research firm Preqin — the largest first-quarter volume in a decade. The figure only includes so-called closed-end funds, or investment vehicles with a fixed lifespan. Preqin notes that it “expects these figures to rise up to 10 percent as more information becomes available,” and that the total could eventually surpass the record $35 billion raised in the first quarter of 2008.” (The Real Deal)
  10. The Striking Similarities Between Mortgage-Backed Securities and the 17th Century Financial System “It’s been exactly a decade since the collapse of Bear Stearns that prefaced the banking crisis of 2008. So you would think that by now investors might have absorbed and learned their lessons from financial history, namely that purchasing debt backed by questionable cash flows can backfire. Yet, last weekend the Financial Times reported that in the first quarter of 2018 a total of $1.3 billion of bonds backed by sub-prime loans were purchased by investors. This is more than double the amount that was issued in the first quarter of 2017 and up from practically zero issuance during the financial crisis.” (MarketWatch)
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