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10 Must Reads for the CRE Industry Today (September 22, 2014)

10 Must Reads for the CRE Industry Today (September 22, 2014)


  1. Ventas Bets Big on an Aging Population “Ventas, one of the nation's biggest health-care real estate investment trusts, or REITs, offers the prospect of solid growth and steady dividend gains. The Chicago-based concern boasts a market value of $18 billion and a diverse portfolio of 1,438 senior-living communities, skilled-nursing facilities, medical office buildings and hospitals. It operates in 47 states, Canada and the United Kingdom. Like its peers, the REIT stands to benefit from two powerful trends: rising health-care spending and an expected surge in the senior population. The number of U.S. residents age 75 and over is projected to hit 44 million by 2040, up 144% from 2012.” (The Wall Street Journal)
  2. Real estate losses near $200M for Dallas police, fire pension fund “The retirement fund for Dallas’ police officers and firefighters lost $196 million on risky real estate investments in recent years, according to figures given to the fund’s board Thursday. It is the fullest accounting yet of the $3.3 billion fund’s disastrous plunge into speculative development ventures that began in 2005. The failed investments include a luxury resort and vineyard in Napa County, Calif., ultra-luxury homes in Hawaii, and large tracts of land in Arizona and Idaho. The ventures prompted the fund’s staffers and board members to travel extensively over the years, trips they said were necessary to scope out and protect the investments. They traveled to the Napa area more than any other out-of-state destination — making 45 trips there from 2009 to 2012.” (The Dallas Morning News)
  3. Lone Star to Buy 38 Hotels From Hyatt for $590 Million “Lone Star Funds, the private-equity firm founded by billionaire John Grayken, agreed to buy 38 U.S. select-service hotels from Hyatt Hotels Corp. (H) for about $590 million. The purchase consists of about 4,950 rooms at properties including Hyatt Place and Hyatt House hotels, Chicago-based Hyatt said in a statement today. The hotels will maintain their existing branding under a franchise agreement between Hyatt and Lone Star, which plans to spend about $50 million in additional capital on renovations over the next two years.” (Bloomberg)
  4. How Dying Retailers Like Sears Are Trying to Stay Alive “Struggling large-box retailers Sears (SHLD_) and Toys R Us, which sell merchandise easily bought from a mobile device, are using a surprising tactic to forestall death. Their tactic: turning their vast real estate holdings into cash generating piggybanks. Toys R Us, collectively owned by private equity firms Bain Capital, KKR and Vornado Realty Trust, is the latest to offer a glimpse into how a floundering national retailer is morphing into a landlord. On Sept. 17, Toys R Us disclosed that it will open Claire's branded shops in 100 locations scattered across the U.S., U.K., France, Germany, Austria, and Spain. By the end of October, or pre-holiday, there will be 12 Claire's stores of varying size inside of Toys R Us sites in the U.S. Claire's, which peddles commodity items in apparel and accessories for young girls, will essentially become a tenant to Toys R Us.” (The Street)
  5. 3 Trends Could Affect These Real Estate Investments “What REITs really do is give small investors the chance to own big real estate properties, properties with economies-of-scale normally off limits to all but the rich and famous. The catch is that the traditional assumptions which power such investments are now in flux and so one has to ask: Can REITs evolve with the times?” (U.S. News & World Report)
  6. Long-Awaited 53rd Street Jean Nouvel Tower Gets $860M Construction Loan “Tower Verre, 53W53, MoMA Tower … the project has gone by many names, and dragged on for many years. But the super skinny Jean Nouvel-designed tower planned for 53 West 53rd Street is finally on the way, having closed on the purchase of needed air rights and an $860 million construction loan this week. Hines, the Texas-based mega developer and owner that is partnering with Goldman Sachs and Singapore-based developer Pontiac Land Group on the 82-story residential condominium tower, closed the massive loan with a foursome of Asian banks, according to a statement.” (Commercial Observer)
  7. Moody's: Off-price retailers will outperform industry next five years “The nation’s three largest off-price retailers (TJX, Ross Stores and Burlington) will see above-average growth, in the 6%-8% range, over the next five years, compared with 4% growth for the broader retail industry, according to a new report by Moody's Investors Service. The leaders in the space have thousands of vendor relationships and significant scale, so supply constraints aren't likely to hinder their growth, the report noted.” (Chain Store Age)
  8. Kohl's CEO Kevin Mansell on what it takes to get store's groove back “Kohl’s has embarked on an ambitious plan to get back to growth, with new initiatives going into high gear this autumn. The department store chain was a high-flyer for years, going from 79 stores in 1992 to 1,150 two decades later. But it has stumbled, with comparable sales falling in 2013 and continuing to do so in the first half of 2014. An accelerated roll-out of beauty departments within its stores and a new loyalty program focused on all customers, not just those with store cards, are key components of Kohl’s plan.” (Fortune)
  9. Rockpoint Group Closes Fund with Nearly $1B in Commitments “Rockpoint Group L.L.C. has wrapped up its first lower-risk, lower-return core plus investment vehicle with a bang. The private equity firm closed Core Plus Fund I, which was not formally marketed, with $950 million of equity commitments. Rockpoint took the offering to just a small collection of mostly existing investors and walked away with ample funds to pursue investments in high-quality assets in top-tier markets across the U.S. But that’s all Rockpoint has to say about it; a company spokesperson confirmed to Commercial Property Executive that the company is not sharing any details beyond those offered in the press release announcing the closing.” (Commercial Property Executive)
  10. Parkway to Buy 22 Office Properties for $475 Million “Parkway Properties Inc. (PKY) agreed to buy 22 office properties in the U.S. for $475 million and will finance part of the deal by selling shares. Parkway, which focuses on buildings in the southern U.S., will purchase three buildings in Tampa, Florida, the Orlando-based company said in a statement today. The real estate investment trust will also acquire 19 buildings in six states, which it plans to sell because they don’t fit with the company’s strategy.” (Bloomberg)
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