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10 Must Reads for the CRE Industry Today (June 2, 2017)

Delinquency rates for commercial and multifamily mortgages declined or stayed flat in the first quarter, according to Mortgage Professional America. Lululemon Athletica said it will close 40 out of 55 ivivva concept stores, which were aimed at tween yoga apparel, and convert the rest to Lulemon, Fortune reports. These are among today’s must reads from around the commercial real estate industry.

 

  1. Delinquencies for multifamily, commercial mortgages ease “The delinquency rates for commercial and multifamily mortgages were flat or decreased in the first three months of 2017. The Mortgage Bankers’ Association looked at five of the largest investor-groups for its latest delinquency report and found that at the end of the quarter the rates were: 0.56% for banks & thrifts, down 0.4 percentage points from the end of the fourth quarter of 2016; 0.02% for life insurers, down 0.02 points; 0.05% for Fannie Mae, unchanged; 0.03% for Freddie Mac, unchanged; and 4.45% for CMBS, down 0.08 points. Together these groups hold more than 80% of commercial/multifamily mortgage debt outstanding.” (Mortgage Professional America
  2. Lululemon To Close Most Tween-Focused Ivivva Stores “Lululemon Athletica is planning to close most of the company's ivivva stores, a store concept it first unveiled in 2009 to sell athletic apparel to younger girls. On Thursday, the yoga- and running-gear maker revealed that it would close about 40 of the company's 55 ivivva-branded stores and convert half of the remaining stores to Lululemon-branded shops. It will also close all of the ivivva showrooms and other temporary locations as part of a restructuring that will cost about $50 million to $60 million in pre-tax costs throughout fiscal 2017. Lululemon promised it would continue to sell ivivva activewear online, as well as in the eight remaining physical stores. ‘The store closures and restructuring will be substantially complete by the end of the third quarter,’ said Chief Financial Officer Stuart Haselden in a presentation to analysts.” (Fortune
  3. 10 years later, Zell explains the perfect timing of his Equity Office sale “Sam Zell is celebrated for cashing out of his giant office REIT a decade ago, just before credit markets began collecting frost, ultimately sending real estate values and the economy into an icy crevice. But in his new memoir, ‘Am I Being Too Subtle?,’ the anything-but-subtle maverick, now 75, confesses: He sold Equity Office Properties in 2007 because Blackstone Group simply made an offer he couldn't refuse. The $39 billion bid was 25 percent above the public REIT's market cap and nearly double the firm's year-earlier value. ‘To this day, people credit me with calling the top of the market when I sold Equity Office,’ he writes. ‘The reality is, I wasn't trying to. While the market was frothy, I wasn't selling to get out of the office market. I had simply received a Godfather offer.’ A year or two later, with acquired assets written down to 65 cents on the dollar after the crash, Blackstone's gambit seemed foolish, and Zell looked like a savant.” (Crain’s Chicago Business)
  4. Mapletree Investments buys more student housing assets in US, Canada “MAPLETREE Investments has bought a portfolio of student housing and multi-family properties in the United States and Canada from Kayne Anderson Real Estate Advisors. The size of the latest transaction was not disclosed, but Mapletree has so far spent US$1.6 billion to acquire from Kayne 22 assets comprising 12,000 student housing beds and 1,388 multi-family units, including the latest deal. With the latest purchase, Mapletree now has 43 student housing assets in North America and the United Kingdom with 18,024 beds. That includes assets held under its sponsored Mapletree Global Student Accommodation Private Trust.” (The Business Times)
  5. Whitestone REIT Completes $158M Acquisition of BLVD Place “Whitestone REIT plans to develop a six-story building on a 1.4-acre site acquired as part of its $158 million purchase of the BLVD Place mixed-use center in the Galleria/Uptown area of Houston. Plans call for 137,000 square feet of space to be split between two floors of retail and four floors of office in a project estimated to cost $45 million. The Houston-based REIT bought the 216,944-square-foot urban mixed-use center from developers Wulfe & Co. and Bailard Inc., which had built the property out over 13 years. BLVD Place is 99.2 percent leased with tenants including Whole Foods Market, Frost Bank, True Food Kitchen, North Italia, Regus Workspaces, Newmark Grubb Knight Frank, Virage Capital Management, Pinkberry, Elaine Turner, The Eye Gallery and more.” (Commercial Property Executive
  6. Lehigh Valley commercial real estate rents on the rise “Demand continued to outpace supply in the Lehigh Valley's industrial market during the first quarter, which further lowered the vacancy rate and pushed up the average asking rent. More specifically, the region saw 320,208 square feet of industrial space delivered to the market in the quarter, with another 6.1 million square feet under construction, according to the first-quarter commercial real estate report released by Lehigh Valley Economic Development Corp. earlier this week. With the available supply being quickly absorbed in the market, the regional industrial vacancy rate dropped to 4 percent in the quarter, down from 6.7 percent in the year-earlier period. By comparison, the national industrial vacancy rate declined to 5.3 percent in the first quarter, according to a report released in April by commercial real estate firm Cushman & Wakefield. Meanwhile, asking rates for industrial space in the Lehigh Valley averaged $5.35 per square foot in the first quarter, up from $4.84 per square foot in the first quarter of 2016.” (The Morning Call)
  7. RadioShack shuts down 1,000 stores “RadioShack Corp. has entered into the newest chapter of its financial saga. The company, which recently filed for bankruptcy protection, closed 1,000 stores over the Memorial Day weekend. This move leaves the chain with a mere 70 company-owned stores and 500 dealer stores in operation across the U.S., according to Fortune. RadioShack quietly announced its liquidation sales to loyal shoppers via social media, including Twitter. Among the tweets were “Stop by your local #radioshack and make an offer on our retail fixtures! Talk to a store manager for pricing details.” Another was “Everything must go! Last minute deals on all of our supplies and equipment are available at select locations!” The electronics chain filed for Chapter 11 bankruptcy protection in March, its second filing in just over two years. At that time, the retailer said it would close approximately 200 stores, and evaluate options on the remaining 1,300 locations.” (Chain Store Age)    
  8. NYC Seeks Developers to Build Affordable Housing on Four Sites “Plans to transform two parking lots, a trash compactor, and a lawn into rental buildings on the grounds of four New York City Housing Authority developments are moving forward. On Thursday, the authority released a request for proposals looking for developers to build up to 850 units, all of them affordable to people on limited income, on the four sites.” (The Wall Street Journal, subscription required)
  9. Kushner-backed Cadre wants to raise $65M at $800M valuation “The Jared Kushner-backed real estate investment platform Cadre is looking to raise $65 million in venture funding. The funds, if raised, would give Cadre a valuation of more than $800 million, the Information reported. The startup, founded in 2015 by Blackstone Group alum Ryan Williams and Joshua and Jared Kushner, has already raised around $68 million from investors including Alibaba’s Jack Ma, former Vornado Realty Trust exec Michael Fascitelli and Island Capital Group’s Andrew Farkas. Cadre also landed a $250 million credit line from George Soros’ family office, as The Real Deal first reported in January. Cadre acts as a real estate crowdfunding platform for high-net-worth individuals. The company will invest in commercial real estate deals using the credit line, and then make them available to investors online through its members-only platform. The company has been coy about disclosing what and how many deals it participated in.” (The Real Deal
  10. Striking new skyscraper in downtown Dallas will be tallest in decades “Chicago-based developer Amli Residential is building the tallest tower in Dallas in three decades. The 45-story apartment high-rise will go up on Field Street on downtown's north side. When the folks at Amli started planning the high-profile tower, they knew it had to be more than just another glass and concrete box. The development site is next door to one of Dallas' most recognizable skyscrapers — the rocket-shaped Fountain Place. ‘It was of the utmost importance we do something unique and different being next to I.M. Pei's Fountain Place,’ said Amli executive vice president Taylor Bowen. ‘We want to have one of the premier timeless buildings downtown.’” (Dallas News)
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