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10 Must Reads for the CRE Industry Today (March 22, 2018)

The Federal Reserve raised its key interest rate on Wednesday, reports MarketWatch. Starwood Capital Group is making a bid to acquire part of an Austrian property firm, according to Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. Fed Raises Interest Rates, But It’s Sticking to Cautious Strategy for 2018 “The Federal Reserve on Wednesday lifted a key U.S. interest rate, but it stuck to a script for three rate hikes in 2018 even as it gave a more upbeat forecast for the economy. In the first meeting of Fed Chairman Jerome Powell, the central bank avoided sending any overtly hawkish signal about its interest-rate policy. The Fed stuck to its December forecast of three interest-rate hikes this year, but central bankers did push up their expected rate path in 2019 and 2020, however.” (MarketWatch)
  2. U.S. Firm Starwood Seeks Stakes in Austrian Property Groups, Shares Rise “U.S. private equity firm Starwood Capital Group announced bids on Thursday to acquire a quarter of Austrian property company CA Immo and a smaller stake in its rival Immofinanz, sending shares in both higher. A Luxembourg-based unit of Starwood is offering CA Immo shareholders 27.50 euros per share, minus any dividend paid, a slight premium to Wednesday’s closing price of 26.54 euros. It is seeking to acquire up to 26 percent of the company, it said.” (Reuters)
  3. Will EB-5 Immigrant Investor Visa Get Sucked into the Dreaded Omnibus Bill? “It's been called a pay-for-play citizenship program for rich Chinese. It's been lambasted as a fraudulent program where local real estate developers hoodwink innocent foreigners. And it's been blamed for converting precious urban space into luxury apartments instead of more affordable housing in cities like New York. It's the EB-5 investor visa. And it might have the misfortune of being tied to an omnibus spending bill everyone suspects will die on the vine on March 23.” (Forbes)
  4. Retirees Reshape Where Americans Live “Americans are relocating to retirement hot spots scattered around the country and returning to suburbia, according to Census Bureau figures released Thursday.” (Wall Street Journal, subscription required)
  5. The Billionaire Behind Bratz Dolls Has a Plan to Save Toys ‘R’ Us “As the liquidation sales get underway at Toys ‘R’ Us stores across the country today, a major toy executive has stepped forward with a proposal to save the beleaguered retailer. Isaac Larian, the billionaire CEO or MGA Entertainment, maker of the Bratz line of dolls, is leading a group that has pledged $200 million to save half of the chain’s stores. The group is looking to raise up to another $800 million via a GoFundMe campaign.” (Fortune)
  6. Active vs. Passive: Which Is the Superior Real Estate Investment Strategy? “When the average person thinks of real estate investing, they might imagine the likes of Donald Trump or some other billionaire who develops massive commercial properties, or an HGTV fix-and-flipper who turns a profit by converting a run-down property into someone’s dream home. With this mental representation, it’s no wonder more people aren’t real estate investors.” (Forbes)
  7. A Massive Commercial Property Sell-Off Driven by 2 Chinese Investors Could Disrupt U.S. Real Estate Markets “Two huge real-estate investors based in China are strapped for cash, and that could mean trouble for some commercial property valuations in the US. Chinese regulators started buckling down on Anbang Insurance (AI) and HNA Group (HNA) last year, and now the companies are scrambling to pay off debts. They're getting rid of properties left and right, many in the US.” (Market Insider)
  8. Last Minute Deductions for U.S. Rental Property Owners “The new tax bill has caused some confusion about depreciation, according to Mark Stone, a partner at New York City-based firm Holland & Knight. For residential buildings, there is ‘a 27.5-year depreciation period unless you elect the new full 163(j) interest allowance for real estate, in which case it is a 30-year life,’ he said. Both lawyers emphasised the need for thorough record keeping, including leases. Mr. Kambas noted that rental income is ‘scrutinized by the IRS.’” (Mansion Global)
  9. L.A. to Explore Helping Property Owners Pay for Earthquake Retrofitting Repairs “A Los Angeles City Council committee agreed this week to explore ways of helping property owners finance costly seismic retrofits required by law in roughly 15,000 buildings. The city passed an ordinance in 2015 requiring the retrofitting, but the high upfront costs can cause enormous financial strain on property owners and could prevent its implementation, according to a motion introduced by Councilman Mitchell Englander and approved Monday by the Budget and Finance Committee.” (Los Angeles Times)
  10. Gary Barnett Facing Rising Backlash in Israel Over $75M Payout “Gary Barnett is facing rising acrimony in Tel Aviv over a $75 million shareholder dividend that his company announced last week. Peeved bondholders claim the dividend is an undeserved payday for the Extell Development chief, who countered that it was justified since he’s covered significant expenses out of his own pocket.” (The Real Deal)
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