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

There is a wide difference in compensation gaps between REIT CEOs and median workers depending on the company, reports the Wall Street Journal. USA Today looks at retail chains that may not survive this year. These are among today’s must reads from around the commercial real estate industry.

  1. Fannie Mae, Freddie Mac Privatization Would Affect Many Real Estate Portfolios “A private Fannie Mae and Freddie Mac would impact investors' real estate portfolios — but to what degree depends on what the Trump administration means by ‘private,’ industry insiders say. The idea of privatizing the Federal National Mortgage Association and Federal Home Loan Mortgage Corp. bubbled to the surface in June as part of a reorganization plan for the federal government proposed by the Office of Management and Budget.” (Pensions & Investments)
  2. REITs’ CEO-Employee Pay Gap Varies Greatly “The compensation paid to the chief executive of Park Hotels & Resorts Inc. in 2017 was 567 times greater than the wages of its median workers, the widest such disparity among the top 100 real-estate investment trusts, according to FPL Associates LP, a compensation consultancy focused on the real-estate industry. Park Hotels said in company filings that its median employee was paid $21,082, while its CEO, Thomas J. Baltimore Jr., earned $11.95 million last year.” (Wall Street Journal, subscription required)
  3. Nordstrom Plans to Open More Stores with No Inventory in Los Angeles, New York “Late last year Nordstrom opened the first Nordstrom Local on Melrose Avenue in Los Angeles. The store, roughly 3,000 square feet, has a nail salon, a bar stocked with beer and wine, a seamstress and ample fitting rooms. But you can’t buy any clothes there. You can have online orders shipped to Nordstrom Local for pickup, but the goal is for the smaller spaces to be experiential and service-oriented.” (CNBC)
  4. Developers Go with the Flow as New Water Rules Kick In “Four years ago, Elm Street Development broke ground on a 535-unit detached housing project south of Baltimore along one of the tributaries of the Chesapeake Bay including 8 miles of trails and a 40-slip marina. Developers of such properties typically maximize the sales value of waterfront homes by building as close as possible to the water’s edge. But Elm Street’s project along Marley Creek had to comply with environmental rules enacted by the state in recent years to help save the Chesapeake Bay from ecological disaster.” (Wall Street Journal, subscription required)
  5. Acquisition Lifeline: For Some Firms, Getting Bought Is the Difference Between Staying in Business and Going Under “Mergers and acquisitions aren’t just about growth. For some firms, they are the final lifeline. And without that lifeline, the company goes under. Such was the case with Town Residential and Eastern Consolidated, which spent a combined 45 years brokering deals in New York. In the span of just two months in 2018, both shops pulled the plug. This spring, Town CEO Andrew Heiberger shopped the eight-year-old firm to former rivals.” (The Real Deal)
  6. J.C. Penney to Open New Brooklyn Store “J.C. Penney Co. Inc. said Tuesday that it will open a new store location in Brooklyn, at the Kings Plaza mall, on August 10. Another Brooklyn location, launched in 2014, ‘has consistently been on of our top performers since it opened,’ said Joe McFarland, J.C. Penney's chief customer officer. The location will have 75,000 square feet, including a 2,000-square-foot Sephora and an energy-efficient design.” (MarketWatch)
  7. Disney Picks Up Massive Hudson Square Site for $650M “At the same time that it’s selling its longtime Upper West Side headquarters, the Walt Disney Company picked up a massive development site at 4 Hudson Square for $650 million. Disney acquired the rights to develop the Trinity Church Real Estate-owned site, which offers 1.2 million buildable square feet, for 99 years, the corporation announced Monday. The sale of the Disney subsidiary American Broadcasting Company’s Upper West Side campus for north of $1 billion to Silverstein Properties is expected to close sometime this month, sources told The Real Deal.” (The Real Deal)
  8. This Texas City Claim’s the Nation’s Most Demanding Renters “America’s pickiest renters hail from none other than Alamo City. According to new data from Apartment List, San Antonio renters have the biggest list of demands when it comes to choosing a property. Among their must-haves? Air conditioning, parking, a private balcony, a pool and hardwood floors. Though some of these are a given (especially A/C for those hot Texas summers), many fall on the more superficial side. According to the data, though, San Antonio renters can afford to be choosy.” (Forbes)
  9. Developers Search for Business Efficiency and Profit Maximization “Whether you are an international real estate firm, a developer working on a joint venture or working on a particular development deal, building out your operations and infrastructure can be quite challenging. Hiring talent, managing office space and operations, technology and other management factors can be a significant burden on business and a drain on resources.” (Commercial Observer)
  10. Shopping Struggles: These 11 Retailers May Not Survive 2018 “The retail apocalypse is entering its ninth year. Many North American retailers were wiped out in the “retail apocalypse” which started in 2010. Amazon and Walmart’s growth, the rise of fast fashion retailers, reserved spending habits after the Great Recession, and dying malls crushed countless retailers. Some retailers survived the downturn by closing stores and expanding their e-commerce presence, but others weren’t as lucky.” (USA Today)
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