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10 Must Reads for the CRE Industry Today (November 9, 2015)

10 Must Reads for the CRE Industry Today (November 9, 2015)


  1. Apollo Ends Deal to Buy Schorsch’s Real Estate Venture “Apollo Global Management and AR Capital terminated plans that would have seen the alternative-asset manager run by Leon Black buy the bulk of real estate investor Nicholas Schorsch’s holdings. Apollo and AR Capital mutually agreed to cancel the transaction, which would have invested in a new entity called AR Global Investments, the companies said in a statement Monday. AR Global Investments would have absorbed about $19 billion now overseen by Schorsch, with Apollo holding a 60 percent stake in the new company.” (Bloomberg)
  2. Fannie Change Would Boost Affordable Housing and Feather Hedge Bets: Report “Two Brookings Institute fellows said in a report to be released Monday that the US should recapitalize mortgage giants Fannie Mae and Freddie Mac, and release them from government conservatorship in order to fund affordable-housing initiatives. Such a change would be welcomed by Fannie and Freddie hedge-fund investors Bruce Berkowitz, Bill Ackman and Richard Perry, who have sued over what they say is the illegal expropriation of their property by the government.” (New York Post)
  3. Unsafe at Any Heights: It’s More Dangerous Than It Has Been in Years to Work in Construction “According to data from the city's Department of Buildings, which is tasked with ensuring site safety, injuries this year are on track to near 400, more than double the number in 2008, even while construction spending has barely surpassed the last peak, and building permits issued are up only 24%. So far this year, six fatalities have occurred, with four other work-site deaths under investigation, according to the city.” (Crain’s New York Business)
  4. How Poor Renters Pay for the Rich Apartments “Housing costs rise more slowly at the top of the market because most new construction tends to target affluent renters, mitigating rent inflation on existing high-end apartments. For households in the top quintile of income, most additions to the new rental and owner-occupied housing stock created between 1989 and 2013 came from new construction. Those households occupied 10.8 million new units, while 4.7 million units were "converted" (essentially, displaced by the new construction) to serve households earning incomes in the next quintile down.” (Bloomberg)
  5. The Giants Are Now in the Real Estate Business “San Francisco Giants may have been the biggest winners of anyone when folks went to the polls on November 3. They won because San Francisco voters approved something called Proposition D, which waived building height restrictions in the area around AT&T Park. An area where the Giants themselves own lease the land, allowing them to go ahead with a real estate development proposal called ‘Mission Rock,’ which will allow for 20+ story high-rises, offices and shopping on land that is now a parking lot.” (NBC Sports)
  6. REITs Fall as Jobs Report Boosts Odds of Interest-Rate Increase “Shares of real estate investment trusts fell the most since August after an upbeat reading on U.S. jobs increased the odds the Federal Reserve will raise interest rates this year. Companies that own properties such as luxury hotels, office towers and shopping malls are being whipsawed as investors wager on when the central bank will raise its benchmark lending rate for the first time in nine years. Higher interest rates may be a drag on property values and make it more expensive for REITs to raise money.” (Bloomberg)
  7. How Basel III Might Blow Up CMBS “The Basel Committee on Banking Supervision is expected to publish a rule change for banks' fixed income trading books (FRTB) that could hurt -- quite significantly in the worst case scenario -- the CMBS market, according to a client note published by JP Morgan Chase. This rule has been under consideration for a number of years in the Basel III deliberations and the industry had been expecting an increase in capital.” (GlobeSt.)
  8. Caution: Vacancies are Flat and Supply is Rising “Ryan Severino, senior economist at Reis, pulls no punches in offering up a contrast to today’s exhubrance at this year’s Economic Forecast session at the Multifamily Executive Conference. ‘I’m not trying to be the grim reaper … but the reality you find when you look at the data is often far more nuanced and often counter-intuitive than what you’re going to read in the Wall Street Journal.’” (Multifamily Executive)
  9. The Developer Default Club “Defaulting on a real estate loan can be ugly. But how a borrower defaults can determine whether they can maintain their relationships with lenders and get back in the game. Here’s an inside look at what worked and what didn’t for four high-profile developers. It’s well known that Macklowe revered Zeckendorf. Given his similar appetite for risk, that’s not surprising. In 2007, Macklowe famously bought a portfolio of Manhattan office buildings from the Blackstone Group for $7 billion.” (The Real Deal)
  10. Senior 55+ Housing Market Remains Strong in U.S. “According to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI), U.S. builder confidence in the single-family 55+ housing market remains strong in the third quarter of 2015 with a reading of 60, up three points from the previous quarter. This is the sixth consecutive quarter with a reading above 50, and serve as evidence to why massive master-planned 55+ residential communities like The Villages in Central Florida continue to grow and thrive.” (World Property Journal)
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