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

CNBC looks at what’s inside the Senate tax reform proposal. CBL & Associates’ rating has been cut to junk status, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Here’s What’s in the Senate Republican Tax Plan “The proposal chops the corporate tax rate from 35 percent to 20 percent. It would delay the change until 2019, a source told CNBC. In the House bill, that measure would take effect next year. The Senate plan would keep seven individual income tax brackets, a source told CNBC. A 12 percent bracket would replace the current 15 percent, while the top rate would get cut slightly to 38.5 percent. The House plan would reduce the number of brackets to four.” (CNBC)
  2. Economist See Few Monetary Changes with Powell Leading Fed “Economists surveyed by The Wall Street Journal this month expect that a Federal Reserve led by Jerome Powell would mean little change in monetary policy and a less aggressive approach to financial regulation. Most survey respondents expect the Fed to raise short-term interest rates next month and lift them three times next year.” (Wall Street Journal, subscription required)
  3. An Unpopular Real Estate ETF Is Remaking Itself as a Cannabis Fund “An exchange-traded fund has seen strong performance but little adoption this year is giving itself a makeover, and is turning to cannabis to do it. The Tierra XP Latin America Real Estate ETF LARE, -0.60% which, as the name implies, tracks companies involved in Latin America’s real-estate market, is filing to change the focus of its holdings. The new focus amounts to a massive overhaul in exposure, strategy, region, and sector: it will now track an index of cannabis companies.” (MarketWatch)
  4. Retail Clouds Darken as Mall Giant CBL Is Downgraded to Junk Status “The storm battering the retail sector entered a new phase this week as two credit-rating firms downgraded a major mall operator’s debt to junk status for the first time since the financial crisis. Both S&P Global Ratings and Fitch Ratings slashed the rating of CBL & Associates Properties Inc. after the company last week reported weaker-than-expected third-quarter earnings and announced a sharp cut to its dividend.” (Wall Street Journal, subscription required)
  5. Historic Aerospace Plant to Be Turned into ‘Creative’ Offices in El Segundo “A gated enclave spanning 30 acres in El Segundo where secret aerospace work has been going on for decades will be opened up to laid-back techies and other creative types in a $100-million makeover. Los Angeles real estate developer Hackman Capital Partners — which last month landed a large Amazon Studios lease at another property — is redeveloping four industrial buildings near Los Angeles International Airport that it acquired from defense giant Northrop Grumman.” (Los Angeles Times)
  6. World’s Fanciest McDonald’s Is Full of Leather, Gold and Marble “With its glass floor-to-ceiling windows and grand spiral staircase, you’d be forgiven for assuming this building is a modern art gallery or a museum. But, in fact, it’s not a swanky gallery. It’s not even an Apple Store. It’s a McDonald’s. Finished in 2015, the glass-fronted McDonald’s can be found in the Dutch city of Rotterdam. Designed by Mei Architects, the classy fast food joint is decked out with leather seats and marble tables and is as swanky on the inside as it is from the outside.” (The Sun)
  7. Blockchain’s Real Estate Break “REcoin is one of many startups looking to leverage blockchain within real estate. And incidents such as this illustrate some of the potential hazards of the nascent technology. While blockchain-based applications are touted as secure, the world of ICOs is a virtual Wild West. It’s a regulatory gray zone, and anyone can launch a token sale with nothing more than a white paper. It’s the same technology that enables the use of Bitcoin — which JPMorgan Chase CEO Jamie Dimon referred to in September as ‘a fraud.’” (The Real Deal)
  8. This 27-Year-Old California Mayor Wants to Pay you $500 Cash Per Month to Live Here “Michael Tubbs is the 27-year-old mayor of Stockton, California. In October, Tubbs introduced an experimental program to give about $500 per month to all Stockton residents, with no conditions or restrictions. This program - the Stockton Economic Empowerment Demonstration (SEED) - would make Stockton the first city in the nation to offer universal basic income, which is a system that regularly provides residents with sufficient money to cover basic living expenses.” (Forbes)
  9. Compass Stokes Skeptics with $1.8B Valuation “For nearly five years, Compass’ rivals have told a well-worn story that goes something like this. It has too many engineers. It’s spending too much. The concept can’t last. Investors will lose their money. The company’s $100 million funding round this week has prompted a gut check from industry stalwarts, however, who are no longer predicting Compass’ demise.” (The Real Deal)
  10. Los Angeles Now the Least Affordable Market in the U.S. “According to the latest National Association of Home Builders-Wells Fargo Housing Opportunity Index released this week, San Francisco, which has been the nation's least affordable housing market for nearly five years, was supplanted by Los Angeles in the third quarter of 2017. In all, 58.3 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $68,000. This is down from the 59.4 percent of homes sold that were affordable to median-income earners in the second quarter.” (World Property Journal)
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