10 Must Reads for the CRE Industry Today (September 9, 2016)

10 Must Reads for the CRE Industry Today (September 9, 2016)

 

  1. Investors moving billions into real estate ahead of a big market change “Real estate stocks are getting a place of their own in the market this week, and investors are taking notice. As of the close of trading Friday, the industry will become its own sector in the S&P 500, bringing the broad market index up to 11 divisions. The move primarily affects real estate investment trusts (REITs), moving 28 issues with nearly $600 billion in market cap out of the financial sector and into the new real estate heading. The decision came primarily because officials at S&P Dow Jones Indices believe the industry has become large enough that it should be split from the broader financials that include commercial and investment banks, insurers, brokerages and exchanges. Practically speaking, there's an important impact on investors.” (CNBC)
  2. Walgreens Will Divest Up To 1,000 Stores To Win Rite Aid Deal “Walgreens Boots Alliance said U.S. antitrust regulators are requiring a divestiture of between 500 and 1,000 retail stores if its acquisition of Rite Aid will be approved. The announcement comes during a period of intense regulatory scrutiny from U.S. antitrust regulators with the Justice Department suing to block both the proposed purchase by health insurer Aetna of rival Humana as well as Anthem’s proposed purchase of Cigna. In the Walgreens-Rite Aid deal, it’s the Federal Trade Commission that is evaluating the transaction and demanding divestitures if the deal is going to win approval. ‘Walgreens Boots Alliance now expects that the most likely outcome will be that the parties will be required to divest more than the 500 stores previously communicated, but still continues to expect that fewer than 1,000 stores will be required to be divested,’ the company said in a statement Thursday.” (Forbes)
  3. Amazon Is Growing Like A Weed: Cash In On REIT Landlords - Fall 2016 Update “It updates my thesis that there are profits to be made investing in REITs which support public cloud providers and e-commerce order fulfillment and package delivery. It might surprise many investors that REITs, which play 'supporting roles' for e-commerce and cloud computing, have rewarded shareholders with superior returns. Amazon.com continues to chalk up strong results in both retail sales and its Amazon Web Services cloud computing business. Back in December, I suggested to SA readers that Amazon's REIT landlords - specifically those that benefit from e-commerce and cloud computing growth - should be top performers in 2016. I updated that thesis for SA readers in May. This article is intended to take a look at where things stand as we begin to head into the final months of the year. In a nutshell, pursuing the Amazon landlord strategy has paid off nicely for investors, so far.” (Seeking Alpha)
  4. Former American Realty Capital CFO arrested over accounting scandal “Federal authorities have arrested the former chief financial officer of American Realty Capital Properties, charging Brian Block with purposely misleading investors about the health of the company’s finances. Block is accused of intentionally inflating the REIT’s earnings in 2014 to cover up an accounting error that ultimately sapped billions of dollars in value from the real estate investment trust, U.S. Attorney Preet Bharara said Thursday. Separately, the Securities and Exchange Commission announced Thursday that it is also charging Block and the REIT’s former principal accounting officer Lisa McAlister in the matter. McAlister pleaded guilty in June to four counts of securities fraud and conspiracy. She’s cooperating with federal authorities. According to Bharara and the SEC, the pair conspired to falsify figures to make it seem that the company had met its earnings estimates in the second quarter of 2014, not long after the REITs internal accounting team informed them that the wrong metrics had been used to determine the adjusted funds from operation.” (The Real Deal Miami)
  5. Luxury real estate developer Michael Shvo indicted for alleged tax scam “Major real estate developer Michael Shvo has been indicted for ripping off New York State in a tax evasion scam, prosecutors said. Shvo, who has U.S. and Israeli citizenship, faces seven counts of criminal tax fraud. He is expected to be released on $500,000 bond in a deal struck between his lawyers and the Manhattan District Attorney. Assistant District Attorney Lisa White said Shvo "engaged in a six-year scheme to evade New York State and local sales tax" as well as corporate taxes and taxes owed "on the sale of "art, furniture, jewelry and a Ferrari." Shvo and his corporation pleaded not guilty in front of Manhattan Supreme Court Justice Daniel FitzGerald late Thursday morning. He faces up to 15 years behind bars if convicted.” (New York Daily News)
  6. GRESB Data Shows Broad Improvement in Real Estate ESG Performance “Real estate companies and funds are showing improvement across all aspects of environmental, social and governance (ESG) performance, according to the 2016 Global Real Estate Sustainability Benchmark (GRESB) Real Estate, Developer and Debt assessments. ‘The global real estate sector is working to manage its carbon footprint, build resilience in the face of climate change and respond to more stringent environmental regulations,’ said Nils Kok, CEO of GRESB. According to 2016 GRESB data, 90 percent of property companies and funds reporting to GRESB are integrating carbon management strategies into their investments. These actions have contributed to a 2 percent annual decrease in carbon emissions, according to GRESB, which noted that is the equivalent of taking 704,464 passenger cars off the road. The data also showed a 1.2 percent reduction in energy consumption and close to a 1 percent reduction in water use. The overall GRESB score, which is a measure of how well ESG issues are integrated  into  the management  and  holdings of real estate companies and funds, rose to a level of 60 in 2016 from 54 in 2015.” (REIT.com)
  7. Top 10 biggest real estate projects coming to NYC “The biggest real estate project proposed in August was a pair of affordable apartment buildings in East New York. Arker Companies, one of the city’s most active affordable housing developers, filed plans for apartment buildings at 911 Erskine Street and 11629 Seaview Avenue, which would collectively span 313,334 square feet. That makes this project the month’s largest proposed project, according to The Real Deal‘s analysis of Department of Buildings filings. Arker’s project was followed by BD Hotels’ plans for a site in Hell’s Kitchen, where the Richard Born-led company plans to build a 281,347-square-foot mixed-use building. The largest projects proposed last month were pretty evenly spread between Manhattan, Queens, Brooklyn and the Bronx. Most of the projects include a residential component, and nearly half of the top 10 include an affordable housing component.” (The Real Deal)
  8. Vanbarton lines up big Grand Central play “The Art Deco office building at 292 Madison Ave. is in contract to be purchased by the Vanbarton Group for $180 million. The 203,000-square-foot building on the southwest corner of East 41st Street sits across from 300 Madison and is one block south from SL Green’s upcoming 1 Vanderbilt skyscraper in the Grand Central submarket. It has 26 floors occupied by single tenants with asking rents in the $70s per square foot. The sparring Marciano brothers, known for launching jeans maker Guess, own the building under a long-term lease set in place in 2007 with Gramercy Capital, which the brothers bought in 2012 for $85 million. The land was purchased from SL Green in 2011 for $78.04 million.” (New York Post)
  9. Kimco Goes Solo with 4-Property Portfolio “Kimco Realty Corp. has gone from minority partner to sole owner of a 722,500-square-foot portfolio of grocery-anchored shopping centers with the acquisition of the remaining 85 percent joint venture stake in the four-property collection. The REIT wanted the open-air retail destinations all to itself, and shelled out $170.7 million for the privilege. The transaction included the assumption of $103 million in mortgage debt, and concurrent with the portfolio purchase, Kimco prepaid $26 million in mortgage debt on the properties. It’s a well-located assemblage that includes the 175,800-square-foot Perimeter Expo in Atlanta; the 166,500-square-foot Cranberry Commons in Pittsburgh; Cypress Towne Center, which offers 279,200 square feet in Houston; and Doc Stone Commons, a 101,000-square-foot suburban Washington, D.C., property in Stafford, Va.” (Commercial Property Executive)
  10. Maker Bros. Buys Land for Major Austin Mixed-Use Project “Maker Bros. has closed on an Austin land parcel on which it intends to develop a mixed-use property called the Saint Elmo Market District. Situated off of South Congress near Ben White in South Austin, the Saint Elmo Market District will be a mixed-use development featuring 400 multifamily residences and a 40,000-square-foot renovated warehouse for an indoor-outdoor marketplace. The project will also feature 100,000 square feet of creative office, a boutique hotel, a for-sale condo development and a new location for Austin’s famed Saxon Pub, known as ‘Austin’s Choice for Live Music.’” (MultiHousing News)
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