10 Must Reads for the CRE Industry Today (January 23, 2017)

10 Must Reads for the CRE Industry Today (January 23, 2017)

 

  1. Commercial real estate experts gaze into 2017 crystal ball “Commercial real estate may sound like a yawn, but the bottom line of that business affects every person — and every person's bottom line affects it. That’s how the CCIM Institute played it Thursday at its annual Southwest Florida Real Estate Outlook Conference in downtown Fort Myers. No chest beating about deals, just rapid-fire insights into the economic road ahead by a panel of national and local experts ranging from a Federal Reserve analyst to an office designer. Here are their top takeaways on where we are and are likely to be heading in 2017.” (News-Press.com, a division of USA Today)
  2. With New Trump Presidency, U.S. Executives Bet Big on Industrial Properties in 2017 “According to the Altus Group, in collaboration with the National Association of Real Estate Investment Trusts and the National Council of Real Estate Investment Fiduciaries recently released 2017 Real Confidence Executive Index, U.S. commercial real estate executives are especially bullish on industrial, infrastructure and multi-family asset classes in 2017. ‘The U.S. transition of government has prompted expectations in the industrial and infrastructure sectors and we're seeing this impact in the survey results,’ said Richard Kalvoda, Executive Vice President at Altus Group. ‘Anticipated tax cuts and increased spending from the New Administration is expected to further strengthen the commercial real estate market in 2017.’ The Real Confidence Executive Index survey polled industry leading C-suite level CRE decision makers on how they would each allocate a theoretical $1 billion in commercial real estate investments to get the best returns for 2017. The Real Confidence Executive Index is based on these allocations and represents a total theoretical investment of $65 billion in a variety of commercial real estate investment opportunities. This year's index allocation saw 43% of the total capital allocated to direct real estate investments or private equity, followed by 30% to public equity, commonly known as REITs. On the debt side, private debt received a 20% allocation while public debt received 7%.” (World Property Journal)
  3. Will Trump end crackdown on dirty cash in luxury real estate? “Just a month after President Donald Trump’s inauguration, a federal anti-money laundering program that targets luxury real estate is set to expire. The dragnet monitors pricey home deals for signs of dirty cash, helping detect criminals who launder money through real estate. Manhattan and Miami-Dade County were the first markets scrutinized by the feds. Here’s the big question: Will Trump — who made his money as a developer — keep the heat on the real estate industry? And if the administration of a developer-turned-president chooses not to renew or expand the regulations, will it be perceived as a conflict of interest? Unlike other industries where cash changes hands freely, real estate has few checks on buyers. Drug dealers and corrupt foreign officials have been busted buying condos and mansions in the United States. While the Obama administration rules were blasted by developers and brokers as faulty, they don’t seem to have hurt business as much as first feared since going into effect in March.” (Miami Herald)
  4. Foxconn may team with Apple to build $7 billion manufacturing facility in U.S. “Foxconn Technology Group is considering building a display-panel manufacturing facility in the United States in a joint venture with Apple Inc. that could create up to 50,000 jobs, the company’s chairman said Sunday. Terry Gou, Taiwan-based Foxconn’s chairman and CEO, said the facility could cost $7 billion and create between 30,000 and 50,000 new jobs, according to a report by the Nikkei Asian Review, and could include the production of TV screens in addition to smartphone displays. Gou noted that the U.S. has no TV-display factories, even though it is the world’s second-largest TV market. ‘Apple is willing to invest in the facility together because they need the (panels) as well,’ Gou told Nikkei. Foxconn is the world’s biggest contract maker of electronics, and makes most of Apple’s iPhones at its Chinese factories. Gou said the company, also known as Hon Hai Precision Industry Co., had been considering building a new U.S. facility for years but the issue was recently revisited during a conversation between Gou and Softbank Group Co. founder and CEO Masayoshi Son. In December, Son met with then-President-elect Donald Trump and pledged to invest $50 billion in the U.S. The day after that meeting, Foxconn said it was planning to expand its U.S. operations, but offered no details.” (MarketWatch)
  5. Exclusive: Blackstone readies new Asia real estate fund of at least $5 billion: sources “Blackstone Group LP (BX.N) is readying a new Asia-focused real estate fund that aims to raise a record $5 billion or more, betting on strong returns from property investments in the region, people familiar with the plans told Reuters. The world's biggest alternative asset manager will likely launch the fund in the next 12-16 months, the people said. It has invested more than 70 percent of the $5.08 billion it raised in its first Asia-focused property fund, a threshold when buyout firms typically start considering and preparing for follow-up capital raising. New York-based Blackstone intends to boost investments in assets such as warehouses and shopping malls in China, India, Southeast Asia and Australia, one of the people said.”  (Reuters)
  6. Starwood Capital Snaps Up Canadian Apartment REIT for $2.9B “Starwood Capital Group agreed to buy Canada’s Milestone Apartments Real Estate Investment Trust in a deal valued at about US $2.85 billion. Under the terms of the deal, all of Milestone’s subsidiaries and assets will be absorbed by Starwood, while Milestone unit holders will receive $16.15 per trust unit in cash. Milestone, formed in 2013, is an unincorporated, open-ended REIT based in Toronto. Based on current exchange rates, the offer is a premium of 9.2 percent to the price per unit at the close of the markets on Wednesday. Currently Milestone portfolio consists of 78 multifamily garden-style residential properties, comprising 24,061 units. Geographically, its holdings are in 16 major metro markets in the Southeast and Southwest United States. Milestone is also the largest REIT listed on the TSX focused solely on the U.S. multifamily sector.” (MultiHousing News)
  7. Whole Foods Market bringing value format to Northeast “Whole Foods Market has announced the first Northeast location for its streamlined and value-oriented 365 by Whole Foods Market concept. The retailer will open a 365 store at 300 Ashland, a mixed-use development in Brooklyn, New York, in the Fort Greene neighborhood, not far from the Barclay Center. The opening date was not announced. Whole Foods debuted the 365 format in 2016, and has opened three locations to date, in Silver Lake, Calif; Bellevue, Wash., and Lake Oswego, Oregon. The next 365 is set to open in April 2017 in Cedar Park, Texas. Currently, are 23 leases in development for the format.” (Chain Store Age)
  8. SF Office Towers Land $975M “Refi Paramount Group, Inc., has completed a $975 million refinancing of One Market Plaza, a 1.6-million-square-foot Class A office and retail development, located in the South Financial District of San Francisco. Eastdil Secured LLC arranged the financing for the property, with a loan provided by Goldman Sachs Mortgage Co., Morgan Stanley Bank N.A., Deutsche Bank AG, New York Branch and Barclays Bank PLC. The new seven-year interest-only loan matures in January 2024 and has a fixed rate of 4.03 percent…The property consists of two landmark office towers, which offer spectacular bay and city vistas and breathtaking views of both the San Francisco Bay and Market Street. On-site amenities include more than 42,000 square feet of retail space that features two first-class restaurants, a gourmet coffee shop, a full-service bank, a food court, a hair salon and other services.” (Commercial Property Executive)
  9. Property Watch: Financing in Place for Brooklyn Navy Yard Project “The joint venture developing a waterfront office building in the Brooklyn Navy Yard has secured a $250 million construction loan, allowing the partners to move forward with the project called Dock 72. Rudin Development and Boston Properties Inc. secured the financing from lenders led by J.P. Morgan Chase & Co., M&T Bank Corp. and U.S. Bank. The joint venture last year broke ground on the 16-story, 675,000-square-foot building, where co-working giant WeWork Cos. plans to take 222,000 square-feet of space. ‘Co-working space is an integral part of New York’s new economy, transforming the way people do business,’ said Michael Rudin, a partner in Rudin Development. ‘With the development of Dock 72, we are building the infrastructure to meet that growing demand.’ The $410 million project, located on a strip of land in Wallabout Bay in the East River, is geared toward the creative sector and will offer a wide range of amenities including a health and wellness center and a rooftop conference center. The building will be ready for tenants to build out their spaces in late 2017 and will be completed in early 2018.” (The Wall Street Journal)
  10. Construction Kicks Off on Billion-Dollar Boston M-U “Construction has gotten underway on Bulfinch Crossing, a 2.9 million-square-foot mixed-use project in Boston. Developers National Real Estate Advisors LLC and The HYM Investment Group LLC have joined local leaders to celebrate the commencement of the $1.5 billion undertaking, which will be credited with ushering in a new era in Beantown. It will be quite the transformation of two full city blocks in downtown Boston. Designed by Pelli Clark Pelli and CBT Architects, Bullfinch Crossing will emerge from what had been the sprawling, 50-year-old Government Center Garage, presenting a host of offerings designed to transform the area into a new hub and link surrounding neighborhoods in the process.” (Commercial Property Executive)
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