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10 Must Read Items for the CRE Industry Today (May 16, 2019)

The We Company has created a $2.9 billion real estate investment platform in partnership with a Canadian pension fund, even as it continues to lose money, according to The New York Times and Reuters. Taco Bell is temporarily taking over a hotel, reports CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. WeWork Starts $2.9 Billion Property Investment Platform with Canada’s CDPQ “The We Company, parent of workspace provider WeWork, said on Wednesday it has created a $2.9 billion real estate investment platform with funding from one of Canada’s largest pension funds, building on ties with private equity firm the Rhone Group. The platform, called ARK, has gained $1 billion from Canada’s Ivanhoe Cambridge, the property arm of Caisse de dépôt et placement du Québec, the Montreal-based company said.” (Reuters)
  2. WeWork Continues to Lose Money Ahead of Potential IPO “WeWork’s primary business mission remains maintaining its heady growth rate, even as it continues to lose money, according to its latest quarterly financial results. It’s a strategy that will soon be tested by investors, as the co-working company heads toward a potential initial public offering. And WeWork could face a lot of skepticism if the rocky market debut of Uber, another money-burning tech start-up, provides any guide.” (The New York Times)
  3. Microsoft Leases New Office Building in Downtown Manhattan “Microsoft has signed a downtown lease for a major office outpost in New York City, The Post has learned. The tech giant this week signed its lease for about 70,000 square feet of space with the new owners of 300 Lafayette St., who have just closed their $125 million purchase of the newly developed, 11-story office tower located on the south side of Houston Street, sources said.” (New York Post)
  4. The Office of the Future Is No Office At All, Says Startup “GitLab Inc. is extreme, even for Silicon Valley: It has no headquarters and everyone works remotely, even the CEO. The software-development startup, which has more than 600 employees in 54 countries, plans to raise headcount to about 1,000 by year-end. Its far-flung workers rely on internal tools and cloud-based services to collaborate, communicate and contribute to projects. The idea is to remain headquarters-free even after GitLab’s initial public offering, planned for late 2020, giving it flexibility to cut costs and hire people world-wide as opposed to relying on expensive talent hubs and office space, said Sid Sijbrandij, the company’s chief executive and co-founder.” (Wall Street Journal, subscription required)
  5. REITs Offer Shelter, and Dividends, as the Trade War Hits Market “Plenty of dividend stocks took it on the chin as Beijing and Washington sparred over tariffs, hammering the market on Monday. Real-estate investment trusts offer a way for income investors to avoid that kind of trade-related volatility. Stock in Texas Instruments, which yields 2.8%, was down nearly 5% on the day, compared with a loss of 2.4% for the S&P 500. The FTSE Nareit All Equity REITs index, meanwhile, was down 0.06%, although the results differed markedly among sectors.” (Barron’s)
  6. Taco Bell Is Opening a Hotel and Resort “aco Bell’s latest limited-time offer isn’t Nacho Fries — it’s a hotel. The Mexican fast-food chain is taking over a Palm Springs, California, hotel and resort in its latest move to recognize the brand’s super fans. Reservations will open in June, and guests can start checking in Aug. 9. The Yum Brands unit didn’t specify how long it would operate the hotel. The Bell will feature a gift shop with exclusive Taco Bell-themed apparel and an on-site salon with Taco Bell-inspired nail art and hair styling services.” (CNBC)
  7. The World’s Largest Real Estate Companies 2019: Brookfield on Top “From finance to tech to retail, in most industries the largest and best known companies trade on the public market. Real estate, on the other hand, has historically been a private game and even today privately held property developers and owners often dominate the headlines. This year private Related Companies opened Hudson Yards, the most expensive and (debated) real estate development in American history, while Donald Trump became president thanks in part to the allure of his (relatively small) family-owned real estate outfit.” (Forbes)
  8. Is Planet Fitness the Healthy Pick for a Market Downturn? CEO Weighs In “CEO Chris Rondeau weighed in on why the stock is doing so well, the company's partnership with Kohl's and why he's not worried about a possible recession. The Kohl's partnership was announced back in March. Rondeau broke down what the partnership is. ‘So Kohl's boxes, they are about 70,000 square feet and then right-sizing the stores, some of them, and then going down to 15,000 square feet. And they actually giving us 20,000 square feet right next door to them with our own storefront-- like a strip mall,’ Rondeau explained.” (The Street)
  9. Jeff Bezos Breaks Ground on $1.5 Billion Amazon Air Hub Near Cincinnati “Amazon.com. Inc. broke ground on construction of a $1.5 billion air hub outside Cincinnati on Tuesday as part of a plan to deliver packages to consumers faster. ‘Let’s move some earth,’ Chief Executive Jeff Bezos said as he climbed into a John Deere front loader and scooped a pile of dirt. ‘If you’re wondering, that’s fun,’ Bezos said. The new hub near Cincinnati/Northern Kentucky International Airport was announced in 2017, and is scheduled to open in 2021. Amazon expects about 50 of its planes will operate from the facility, which will employ around 2,000 people.” (MarketWatch)
  10. Online Luggage Brand Packs on Funding; to Open 50 Stores, Expand Product Line-Up “Away is soaring to new heights — with unicorn status. The fast-growing, direct-to-consumer brand, which designs and manufactures its own luggage, has raised $100 million in a Series D investment round led by Wellington Management, with support from Baillie Gifford, Lone Pine Capital and Global Founders Capital. The round, which brought Away’s total equity funding to $156 million, valued the company at $1.4 billion, giving it unicorn status.” (Chain Store Age)
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