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10 Must Read Items for CRE Investors on August 5, 2019

A trade war escalation could bring on a recession in nine months, according to CNBC. A Hudson’s Bay panel found Chairman Richard Baker’s bid for the company “inadequate,” reports the Business of Fashion. These are among today’s must reads from around the commercial real estate industry.

  1. Morgan Stanley: If the Trade War Escalates, a Recession Will Be Here in 9 Months “If the U.S. continues to raise a wall of tariffs on Chinese goods in the coming months and China responds, expect a global recession in three quarters, Morgan Stanley said Monday. ‘As we view the risk of further escalation as high, the risks to the global outlook are decidedly skewed to the downside,’ Morgan Stanley chief economist Chetan Ahya said. The firm believes a global recession will come in about nine months if the trade war further escalates through the U.S. raising tariffs to 25% ‘on all imports from China for 4-6 months,’ Ahya said.” (CNBC)
  2. This Is Why Large Retailers Like Amazon, Walmart and Costco Won’t Be as Impacted by Fresh Tariffs “A 10% tariff scheduled to go into effect on September 1 drove declines in retail stocks on Monday morning, but Moody’s says there are some major retailers that are insulated from the impact. Walmart Inc., Target Corp., Costco Wholesale Corp., Amazon.com Inc. and Best Buy Co Inc. have diversified their supply chains and pre-purchased merchandise over recent quarters, which should lessen the damage, Moody’s analysts led by Charlie O’Shea wrote in a note.” (MarketWatch)
  3. Hudson’s Bay Panel Comments on Bid “A special panel of Hudson's Bay Co reviewing a C$1.74 billion take-private bid for the retailer, proposed by Chairman Richard Baker and a group of shareholders, said the offer was inadequate based on an initial analysis. The Baker-led consortium, owning 57 percent of Hudson's Bay, had offered to buy the struggling retailer for C$9.45 per share in June. Shares have since surged more than 50 percent and gone past Baker's bid, closing at C$9.79 on Thursday.” (Business of Fashion)
  4. Huge Rejected Housing Project May Be Revived Due to Pressure from State Officials “A massive housing project that San Bruno killed in a controversial vote last month could rise from the dead. Facing possible lawsuits and state fines over its recent rejection of the 425-unit project, the City Council will meet privately in the coming weeks to consider its options for the proposed development.” (San Francisco Chronicle)
  5. Why One Far-Flung Suburb Is Fed Up with This Rogue Developer “If you take Interstate 90 west through Schaumburg, you'll cruise past Motorola's former headquarters, which is being transformed into a mixed-use development with apartments, offices and a Topgolf driving range. Exit I-90 at Huntley and drive another hour or so up to Harvard, and you'll find an even bigger Motorola campus, which has been awaiting its rebirth since the company abandoned it 16 years ago. Its roof leaks, its fire sprinklers don't work and its owner is being prosecuted in Canada for securities fraud.” (Crain’s Chicago Business)
  6. 9 Reasons to Buy Simon Property Group and Never Sell “Many investors are afraid to put their money into anything having to do with the retail industry, and who could blame them? However, mall real estate investment trust Simon Property Group is in a league of its own. Here are nine reasons why. 1. Some of the best malls in the industry. One of my favorite investment strategies is to focus on the stocks of companies that own assets that are either irreplaceable or that would be difficult for competitors to replicate. For example, properties like local strip malls or budget hotels are a dime a dozen, so it's easy for competitors to enter the market and construct competitive assets.” (Motley Fool)
  7. Why People Love Living in the Baltimore Area “You have to venture away from downtown to find the ‘more’ in Baltimore. Sure, there is plenty to do in the city center, with its inviting mix of historic and modern attractions. But the surrounding communities have plenty to offer as well, from walkable neighborhoods to revitalized downtowns filled with attractive architecture and a growing number of locally-owned restaurants and boutiques. ‘A lot of our residents work in the Baltimore area, and they enjoy the things the city has to offer,’ says Christine McPherson, project manager at Main Street Maryland.” (MarketWatch)
  8. Oklahoma City’s $288M Convention Center Nears Completion “The new Oklahoma City Convention Center, which got underway in June 2018 and is scheduled for completion in late 2020, was topped out. The $288 million project is on the east side of Robinson Boulevard, between SW Fourth and SW Seventh streets, across from the 70-acre Scissortail Park, which opens next month. The site is also adjacent to the Omni hotel that’s currently underway and scheduled to open around the time the convention center does.” (Commercial Property Executive)
  9. Winners and Losers in Global CRE This Year “There were $341 billion in sales transactions in global real estate for the first half of this year, according to JLL. Among the most significant of these cross-border deals was Brookfield’s $1.5 billion acquisition of a mixed-use commercial complex in Shanghai. It is a telling transaction not only for its size—it is one of the largest purchases by a foreign investor in China to date, according to JLL—but also because it so aptly illustrates the robust appetite global asset managers continue to have for real estate around the world and not just in the US.” (GlobeSt.com)
  10. Los Angeles’ South Bay Galleria to Get Mixed-Use Makeover “South Bay Galleria, a 960,000-square-foot enclosed shopping mall in Redondo Beach, Calif., will soon become a mixed-use destination. Australia’s QIC Global Real Estate, owner of the Los Angeles-area retail center recently formed a strategic partnership with Luxembourg-based L Catterton Real Estate, selling a 50 percent interest in the property and paving the way for its redevelopment.” (Commercial Property Executive)
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