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10 Must Reads for the CRE Industry Today (June 21, 2018)

Cushman & Wakefield has field the documents for an IPO, reports Business Insider. Starbucks will close more U.S. stores, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Chinese Investment in the U.S. Drop 90% Amid Political Pressure “Chinese acquisitions and investments in the U.S. fell 92 percent to just $1.8 billion in the first five months of this year, consulting and research firm Rhodium Group said Tuesday. Counting divestitures, net Chinese deal flow to the U.S. during that time was a negative $7.8 billion, the report said. The decline follows a sharp drop in the second half of last year as pressure from both Beijing and the Trump administration curbed a recent surge in cross-border investment.” (CNBC)
  2. One of the World’s Largest Commercial Real Estate Companies Is Going Public “The commercial real estate giant Cushman & Wakefield has filed for an initial public offering. The filing, published on Wednesday, showed that the company is betting on the continued growth of commercial real estate around the world and greater participation from institutional investors in the property market. Cushman & Wakefield employs about 48,000 people worldwide and operates in 70 countries. Its revenues have grown every year since 2015 and totaled $6.92 billion in 2017, the filing showed. It's also operated at a loss, which totaled $220.5 million in 2017.” (Business Insider)
  3. Starbucks Shares Slide as Company Plans More U.S. Store Closures “Starbucks Corp. said it would close more coffee shops in the increasingly crowded U.S. market where it was a pioneer, sending shares sharply lower in trading Wednesday. The company said the need for closures was driven in part by slowing sales in the U.S. Starbucks said Tuesday that it expects global same-store sales growth of just 1% in the current quarter, well below analysts’ expectations of 2.9% growth, due not only to the weakness in the U.S. but also to worsening sales in China.” (Wall Street Journal, subscription required)
  4. Tariffs on Chinese Goods Threaten Southern California Ports and Could Ripple Through to Consumers “For months, as the Trump administration ratcheted up trade threats — announcing tariffs on allies and adversaries alike — business at the nation’s largest port complex in San Pedro Bay has hummed along, seemingly oblivious. Smartphones, clothes and toys flowed in from China. Ceramics and beverages arrived from the European Union. Fruit arrived from Mexico. About 40% of all U.S. imports moves through the ports of Los Angeles and Long Beach, supporting hundreds of thousands of jobs throughout Southern California. Shipments in and out have been rising this year, especially those from China.” (Los Angeles Times)
  5. Your Property Manager Should Know Your Exit Plan “The retail industry has changed tremendously, and property managers have become integral to the success of an asset. Retail property manager Coreland Cos. emphasizes that property owners should work with property management to strategize, execute a business plan and maximize value at a property. Specifically, the firm says that it is important for owners to communicate the end goal and so the property manager can guide the strategy appropriately. We sat down with Cheryl Todd, EVP at Coreland Cos., to talk about why owners should communicate their exit strategy and to find out how they are maximizing value at retail properties.” (GlobeSt.com)
  6. Larry Silverstein’s Big World Trade Center Bet Is Paying Off “A few days before 3 World Trade Center opened its doors last week, developer Larry Silverstein sat in his glass-walled office on the 38th floor of 7 World Trade Center, surveying the Downtown empire he’d built over the last 17 years. The avuncular 87-year-old explained that his company, Silverstein Properties, was the only tenant in 7 World Trade when it opened in 2006. So, despite some recent softening in the Financial District office market, he wasn’t too concerned that 3 World Trade—now 40 percent leased—would eventually fill up with tenants, too.” (Commercial Observer)
  7. Study: Lidl Not So Disruptive So Far “German discount grocery giant Lidl is not shaking things up to the extent that many had feared. That’s according to a report by shopper intelligence firm Catalina, which found that the opening of U.S. stores by Lidl was less disruptive to competing supermarkets than some grocers had originally feared. Catalina found that nearby incumbent supermarkets lost close to 7% of overall sales during the first month of a Lidl store opening, but the impact on those same stores declined rapidly, falling to less than 2% of store sales by the fourth month.” (Chain Store Age)
  8. Why This U.S. City is the Worst Place for You to Retire “San Francisco is home to beautiful vistas, yet retirees may want to resist settling down in the Bay Area. That's because it's the worst city in the country to retire if you'd like to keep more of your cash in your pocket, according to an analysis from GoBankingRates. The personal finance website looked at major cities in all 50 states, ranking them based on property taxes, state levies on retirement benefits, health care costs and the average retirement benefits check from Social Security.” (CNBC)
  9. Easterly to Pay $430M for U.S. Government-Leased Portfolio “Easterly Government Properties has agreed to make its biggest acquisition so far this year—a 14-property portfolio in 11 states for $430 million. The company expects to close the acquisitions between July and December. When combined with the pending purchase of a 90,085-square-foot Department of Veterans Affairs outpatient clinic in San Jose, Calif., and completed acquisition of a 56,753-square-foot VA facility in Golden, Colo., the REIT has announced deals totaling $514.9 million this year. The two VA purchases totaled $84.9 million.” (Commercial Property Executive)
  10. Cosco Offers to Put Long Beach Terminal into U.S.-Run Trust “Chinese state-run Cosco Shipping Holdings Co. has offered to put a large container terminal in Long Beach, Calif., in a U.S.-run trust to allay U.S. national-security concerns about Chinese ownership of the facility, according to people familiar with the matter. The terminal is part of Cosco’s proposed $6.3 billion purchase of an Asian shipping rival, which holds a long-term concession to operate the facility at the Port of Long Beach, one of the biggest gateways for imports into the U.S.” (Wall Street Journal, subscription required)
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