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10 Must Reads for the CRE Industry Today (April 6, 2017)

Tax reform might take a while to materialize, reports Reuters. ValueWalk looks at whether real estate investors are no longer buying. These are among today’s must reads from around the commercial real estate industry.

 

  1. Ryan Says Tax Reform Could Take Longer Than Healthcare Overhaul “House Speaker Paul Ryan said on Wednesday that tax reform will take longer to accomplish than repealing and replacing Obamacare would, saying Congress and the White House were initially closer to an agreement on healthcare legislation than on tax policy. ‘The House has a (tax reform) plan but the Senate doesn't quite have one yet. They're working on one.’” (Reuters)
  2. Are Real Estate Investors and Developers No Longer Buying? “For the last several days I’ve been speaking at an investment conference organized by my friends Robert Helms and Russell Gray. It’s been great so far, and my fellow speakers here include the legendary Robert Kiyosaki, G. Edward Griffin, Peter Schiff, and many more. One of the key themes so far in the event is that there are likely problems ahead for the US real estate market. On the first day I had a great conversation with the Chief Economist of Fannie Mae, who was also speaking at the conference. I asked him point blank– what do you think of US housing right now? He answered succinctly: ‘It’s overpriced.’” (ValueWalk)
  3. Walgreens CEO ‘Still Optimistic’ FTC Will Clear Rite Aid Deal “Walgreens Boots Alliance CEO Stefano Pessina said Wednesday he was “still optimistic” the company would be successful completing its acquisition of Rite Aid, which sits before regulators at the Federal Trade Commission waiting for approval. ‘I’m still positive on this deal,’ Pessina told Wall Street analysts Wednesday morning on the company’s second-quarter earnings call. ‘I believe we have a strong argument to defend this deal.’” (Forbes)
  4. More Retail Closures Add to Gloomy Outlook for Malls “A fresh round of distress signals sounded in the retail industry this week, as another big-name chain announced hundreds of new store closings and still others moved aggressively to recalibrate their businesses for the online shopping stampede. Payless ShoeSource filed for Chapter 11 bankruptcy and outlined plans to immediately close nearly 400 of its 4,400 stores globally. Ralph Lauren is shuttering its flagship Polo store, a foot-traffic magnet located on tony 5th Avenue in Manhattan, the latest step in a massive cost-cutting effort.” (The Washington Post)
  5. Interest Rates Are Rising Again. Here’s How It Affects Commercial Real Estate “With the Federal Reserve raising its benchmark short-term interest rate in March for the third time since December 2015 and two more rate hikes expected by the end of 2017, interest rates are becoming an increasingly relevant factor in analyzing the near-term future of U.S. commercial real estate. Higher interest rates make borrowing more expensive for owners, which can have a constraining effect on the commercial real estate market. All else being equal, cap rates will go up and property prices will come down.” (Forbes)
  6. The 8 States Suffering the Most from the Affordable Housing Crisis “While there is a nationwide shortage of affordable housing, some states are worse off than others. That's a reality reflected in a new report by the National Low Income Housing Coalition, which analyzed the availability of affordable housing in every state. The report defines an affordable housing deficit as when ELI households must spend more than 30% of their incomes on rent and utilities. Eight states have fewer than 30 affordable homes available per 100 households in extreme poverty, according to the report.” (Business Insider)
  7. Hudson’s Bay Considering Acquisitions During Cost Cutting Plan “Toronto-based retailer Hudson's Bay is said to be considering more acquisitions, even as it undertakes an aggressive cost cutting plan. The company, which owns Hudson's Bay, Saks Fifth Avenue and Germany's Kaufhof, "is very focused on our core operations," executive chairman Richard Baker said, the Financial Post reports. The company's cost cutting efforts follow disappointing fourth quarter earnings results.” (The Street)
  8. The 50 Most Important Figures of Commercial Real Estate Finance “Was it a sweet ‘16? Only for some of the industry’s powerhouses. Most banks saw a decrease in lending activity last year, as did some of the larger institutional private funds. It was, undoubtedly, the year of the alternative lenders, who filled the construction and transitional debt void nicely, upping their originations significantly on the way. Life companies didn’t fall far behind and, in several cases, outperformed their 2015 figures. That said, we added a few private lenders to our rankings.” (Commercial Observer)
  9. Cooling U.S. Tech Sector Office Demand Having National Impact in 2017 “According to Cushman & Wakefield, commercial tenant demand for U.S. office space continued to cool off in the first quarter of 2017. Occupancy levels remained stable, though, and rents continued to rise in most markets. First quarter net absorption (the change in occupied space) totaled 6.8 million square feet (msf), down 39% from levels observed in the same quarter one year ago and the smallest amount of space absorbed in just under five years. While slower, the record streak of positive absorption continues.” (World Property Journal)
  10. Hines, Oaktree Sell 2 Buildings in Utah’s Silicon Slopes “A joint venture between Oaktree Capital Management and Hines recently sold South Towne Corporate Center in southern Salt Lake City to a partnership between EverWest Real Estate Partners and Independencia Asset Management. NGKF Capital Markets’ President of West Coast Capital Markets Kevin Shannon, Executive Managing Director Ken White, Managing Director Rick Stumm and Eli Mills with CBRE represented the sellers of the two-building, Class A asset totaling 262,219 square feet.” (Commercial Property Executive)
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