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10 Must Reads for the CRE Industry Today (July 1, 2016)

 

  1. Avoid These 5 Traps When Buying Real Estate in Self-Directed IRAs Self-directed individual retirement accounts are catnip to real estate investors. These special IRAs allow investors to deploy their retirement capital into real estate and to enjoy the substantial tax benefits offered by IRAs. But in some cases, using a self-directed IRA for real estate investments can hurt investment results. (The Street)
  2. SMU, Yale Trimmed Real Estate Investments Before Values Cooled “Large endowments including Southern Methodist University and Yale University reduced investments in real estate through the middle of last year before values cooled, a timely move that could help their performance. Southern Methodist’s $1.5 billion endowment decreased its real estate holdings by 84 percent to 1.2 percent -- the biggest drop among schools -- in the year ended June 2015 from two years earlier, according to responses to a congressional inquiry. Yale trimmed its allocation 31 percent to 14 percent in its $25.6 billion fund in the same period. The selloff may be a bright spot for endowments as they struggle to boost performance in the fiscal year that ended June 30. Real estate was one of the best-performing investment categories in fiscal 2015, prompting some endowments to cash in.” (Bloomberg)
  3. U.S. Rent Growth Strong Amid Brexit Concerns “As the media is abuzz with talk of Brexit’s impact on the U.S., the multifamily industry is questioning whether Britain’s vote to leave the European Union will affect this currently booming market. In Yardi Matrix’s monthly report, the topic of Brexit was addressed along with the usual recap of market trends and rent growth. 'We foresee little immediate impact on the U.S. multifamily market, largely because the United States is a relatively small trading partner,' the report stated, 'but the real danger is the potential that the process of splitting the European Union could create upheaval in global financial markets.' The report contends that since less than 4 percent of U.S. goods end up in the U.K., it is unlikely that reduced demand from Britain would have a major impact on the U.S.” (MultiHousing News)
  4. Seniors Housing Operators Share Their Secrets to Smart Growth at InterFace Conference in Chicago “The U.S. economy may be stuck in low gear, but tactical and targeted growth strategies can produce outsized returns in the seniors housing space, according to a panel of property owners and operators who spoke during France Media’s InterFace Seniors Housing Midwest conference. The event, which took place June 21 at The Westin Chicago River North hotel, attracted 265 attendees from the seniors housing industry. Close attention to rental rates and occupancies boosts top-line revenue growth, said panelist Joe Solari, vice president of corporate development at Capital Senior Living. The Dallas-based company owns and operates 126 independent and assisted living properties. 'We focus on buildings that are less than 90 percent occupied,' said Solari. Other successful growth strategies at Capital Senior Living include converting independent living units to those designed for a higher level of care, and the acquisition of stabilized communities in locales where the company already operates. 'We can absorb these properties without almost any increase in corporate overhead,' said Solari.” (REBusiness Online)
  5. CBRE Snags $250M Loan for Prime Industrial Portfolio “Becknell Industrial Operating Partnership LP, a joint venture between a fund managed by UBS Asset Management, Global Real Estate-US and Becknell Industrial, has received a $250 million loan for its Becknell Industrial Portfolio, which contains 140 Class A distribution properties located in core markets across the U.S. The portfolio includes more than 14 million square feet of space, and the properties are situated around transportation hubs in key distribution corridors, contributing to its appeal as an investment opportunity.” (Commercial Property Executive)
  6. Historic theaters gain new life as retail stores “Downtown’s L.A.’s Broadway Theater District, home to one of the largest concentrations of historic movie palaces in the nation, is gaining a new lease on life that doesn’t involve showing films. Some of the dozen remaining theaters are turning to other uses: There’s a hotel, the occasional church and retail. The theaters may be unusual because of their opulence and because there are so many of them in such a small area, but they reflect a growing need by landlords to find alternative uses for the cavernous spaces as movie audiences gravitate away from single-screen theaters toward multiplexes and streaming video services.” (Los Angeles Times)
  7. To fight foreclosures, NYC to buy long-unpaid mortgages “New York City is taking a novel approach to addressing enduring pockets of the home foreclosure crisis. It's buying long-unpaid mortgages, with plans to help owners stay in their homes, if possible, or use the properties as affordable housing, if not. Mayor Bill de Blasio and other officials are announcing the $13 million program Thursday. Details of the program were provided to The Associated Press ahead of a planned afternoon announcement. So far, the effort involves 24 properties, containing a total of 41 homes and apartments. Officials say the cost includes millions in reserve for repairs that may not be required. They hope to expand the project.” (Crain’s New York)
  8. Dick’s Sporting Goods wins bidding war “Dick’s Sporting Goods was the victor on Thursday at the bankruptcy auction for former rival Sports Authority Holdings. Dick’s bid $15 million for the brand name and other intellectual property, beating British-based Sports Direct International PLC’s $13 million bid, according to the Wall Street Journal. Dick’s also had the winning bid at the auction for 31 Sports Authority store leases, for an additional $8 million, the report said. The winning bids are subject to the approval of the U.S. Bankruptcy Court.” (Chain Store Age)
  9. Google’s Chicago HQ Fetches Record Price “The 10-story office building at 1000 W. Fulton Market in Chicago’s West Loop—which serves as Google’s Midwest headquarters—will reportedly sell for a record $305 million after spending only a few months on the market, Crain’s Chicago Business reports. The sale price equates to roughly $574 per square foot, making it the third-largest per-square-foot price in Chicago history, according to the newspaper. American Realty Advisors of Glendale, Calif., has agreed to buy the 531,000-square-foot 1KFulton building from Sterling Bay, who purchased the asset back in November 2012 for $12 million. The developer then went ahead and converted the former Fulton Cold Storage building into state-of-the-art offices.” (Commercial Property Executive)
  10. Large Anaheim Multifamily Project Gets Green Light “The mayor and city council of Anaheim have unanimously approved the development of Jefferson Stadium Park on a 17.6-acre site in the city’s Platinum Triangle. JPI will develop a mixed-use property on the site. JPI, a multifamily specialist, plans that Jefferson Stadium Park will be a 1079-unit apartment community that also includes a 1.1-acre public park and 14,600 square feet of community-oriented retail. Scheduled to break ground in December this year, Jefferson Stadium Park is directly adjacent to Angel Stadium of Anaheim, on the southwest corner of State College Boulevard and Gene Autry Way. Residents will have access to Anaheim’s Regional Transportation Intermodal Center (ARTIC), as well as including Major League Baseball’s Los Angeles Angels of Anaheim, and the National Hockey League’s Anaheim Ducks. The development is also one mile away from the Downtown Disney Shopping District, Disneyland and California Adventure theme parks.”  (MultiHousing News)
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