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

Invitation Homes and Waypoint Homes plan to combine to form a single-family rental giant, reports the Wall Street Journal. Payless ShoeSource has emerged from Chapter 11 bankruptcy, according to CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. Blackstone, Starwood to Merge Rental-Home Business in Bet to Be America’s Biggest Home Landlord “Two of the country’s largest rental-home owners have agreed to merge in a deal that would create a giant landlord with roughly 82,000 homes in 17 metro areas. Blackstone Group LP’s Invitation Homes Inc. and Starwood Waypoint Homes plan to combine in a bid to gain scale and operating efficiencies in markets that include Atlanta, Miami and southern California.” (Wall Street Journal, subscription required)
  2. Good, Bad and Ugly REITs “Now interest rates are beginning to head north, and REITs will have to pay more to finance future acquisitions or to refinance old ones. Besides, higher interest rates will eventually slow down economic growth and hurt occupancy rates, rents and income payout rates. That's why investors should be very selective in investing in REITs, and take care to separate the good REITs from the bad and the ugly.” (Forbes)
  3. Friends with Amenities: New York Apartment Developers Embrace “Co-Living” “At Frank 57 West, a new zinc-clad residential building on Manhattan’s far West Side, renters can choose a conventional one-bedroom apartment for about $3,500 a month. But for intrepid New Yorkers willing to embrace the concept of “co-living,” there is a second option: three-bedroom apartments specifically designed for roommates that can cost more than one-third less per person.” (Wall Street Journal, subscription required)
  4. Walmart’s Latest Strategy Confirms the Death of the American Middle Class as We Know It “Walmart is getting into aspirational retail — and it says a lot about the American economy. On Wednesday, Recode reported that online cosmetics subscription service Birchbox has discussed a potential sale to retail giant Walmart. In recent months, Walmart has purchased several trendy, online retailers, including high-end men's retailer Bonobos, hip fashion brand ModCloth, and outdoor gear retailer Moosejaw.’ (Business Insider)
  5. In Tough Retail Landscape, Payless Emerges as Rare Bankruptcy Survivor “Payless ShoeSource is set to emerge from bankruptcy as soon as Wednesday, one of the largest retail chains to do so, and is banking on a strategy focused primarily on bricks-and-mortar sales at a time when e-commerce is casting an ever-growing footprint on retail sales. Payless' emergence essentially gives the company a do-over after disposing of half of $847 million of debt it had built up under its private-equity ownership.” (CNBC)
  6. Suburban Office Markets with Urban Settings Provide Nice Returns in U.S. “According to CBRE, suburban U.S. office markets that provide an urban-like live-work-play environment are well positioned to capture strong demand from office users. Among the most common attributes of so-called "urban-suburban" submarkets are the presence of abundant retail, office and housing options, as well as employment opportunities, based on a survey of CBRE Research professionals in the 25 largest suburban markets.” (World Property Journal)
  7. Value-Add Visions “As luxury apartment towers continue to reshape skylines across the country, existing rental communities—some several decades old—are getting a new lease on life through renovations designed to appeal to more cost-conscious renters. Investing in and upgrading old properties in prime locations has proven to be a successful formula for a number of Chicago-based companies, including Draper and Kramer, Kass Management Services, Evergreen Real Estate Group, and The Habitat Co. Below, executives from each firm weigh in on the best practices for adding value to existing buildings small and large, market-rate and affordable.” (Multifamily Executive)
  8. Plans Scrapped for Bronx’s Baychester Square Mall, Housing Development “After opposition from a local councilman, the Economic Development Corporation pulled a proposal for a Bronx mall and senior housing known as Baychester Square Wednesday. The project, slated for vacant city land leased to the MTA, would have included 180 affordable senior housing units — and meant $30 million for the MTA capital plan. Proposed developers Grid Properties sought to buy the parcel from the city, which was to pass on the cash to the beleaguered transit authority.” (New York Daily News)
  9. Lowe, Partners Kick Off $300M Culver City Development “Lowe, formerly Lowe Enterprises, strikes a blow for smart growth in Los Angeles. The commercial real estate firm and its partners just commenced construction of the highly anticipated Ivy Station, a 500,000-square-foot mixed-use project that will sprout up across from a Los Angeles Metro Expo light-rail station in Culver City. Lowe is joined on the approximately $300 million transit-oriented development by AECOM Capital, its co-developer, and an investment vehicle sponsored by Rockwood Capital, which is providing additional financing.” (Commercial Property Executive)
  10. The Cracks That Could Sink Lansco’s Ship “Soon after the embattled commercial brokerage Lansco Corporation relocated to the 17th floor of 415 Madison Avenue from 575 Fifth Avenue in early 2016, its brokers spotted a huge red flag. Unbeknownst to most of the firm’s employees at the time of the move, Lansco had a provision in its lease with Rudin Management at 415 Madison that gave it a one-time opportunity to return the space to the landlord after the first few months.” (The Real Deal)
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