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10 Must Reads for the CRE Industry (January 25, 2019)

Both parties want to get Fannie and Freddie out of conservatorship, according to the Wall Street Journal. MGM Resorts plans to evaluate its real estate portfolio this year to maximize its value, reports The Street. These are among today’s must reads from around the commercial real estate industry.

  1. Lawmakers Promise Fresh Push to Overhaul Housing Finance “Lawmakers from both parties plan to take a fresh crack at getting Fannie Mae and Freddie Mac, two companies that underpin nearly half of U.S. mortgages, out of government control. For more than a decade, lawmakers have tried and failed to overhaul the mortgage-finance giants, which were placed in conservatorship during the 2008 financial crisis. Now, Republicans and Democrats in Congress say it is time to try again. Meanwhile, the Trump administration may soon propose steps to ease government control.” (Wall Street Journal, subscription required)
  2. Struggling Malls Will Have a Hard Time Adjusting to More Sears Vacancies “Sears Holdings Corp.’s plan to shutter more stores will hurt struggling lower-tier regional malls most, according to the latest Moody’s report. Sears said it would close more than 260 stores when it filed for bankruptcy in October, leaving it with about 400 stores if the company moves forward with the latest bid from Chairman Eddie Lampert’s hedge fund ESL Investments. Sears had about 1,400 stores a couple of years ago, Moody’s says.” (MarketWatch)
  3. MGM to Evaluate Real Estate Properties in Effort to Turn Around its Fortunes “MGM Resorts International jumped nearly 3% Thursday after the company announced that it formed a board committee to evaluate its vast real estate portfolio. The committee will be composed of three independent directors -- John B. Kilroy Jr., Keith A. Meister and Paul Salem -- with real estate and financial markets experience. The group's mandate is to assist management in the evaluation of the company's real estate holdings in an effort to maximize the value of the properties, enhance free cash flow, and preserve MGM's financial stability.” (The Street)
  4. Developer of Ace and NoMad Hotels Scoops Up Parker New York Hotel “The developer behind trendsetting hotels in Manhattan’s NoMad neighborhood has acquired the Parker New York hotel, looking to bring some of its downtown success to a midtown strip known more for opulent residences than hip hotels. Real-estate firm GFI Capital Resources Group and Elliott Management Corp., a hedge fund and activist investor, closed Wednesday on the purchase of the 729-room hotel for about $420 million, GFI Capital said. The joint venture purchased the hotel from the family of the late Jack Parker, a hotel and property developer.” (Wall Street Journal, subscription required)
  5. How to Capitalize on Cleveland’s Commercial Real Estate Market “Commercial real estate deal making has been on the rise in the U.S. As tier one markets tighten, greater attention is being paid to secondary markets, such as the Greater Cleveland area, and even tertiary markets like the Greater Akron area.  Buyers, sellers and even landlords are in a position to benefit as the buying frenzy continues and vacancy rates drop. However, their ability to capitalize on the current situation in the commercial real estate market is contingent on how well they work a deal.” (Smart Business)
  6. How CRE Firms Should Prepare for New #MeToo Employment Laws “The California Legislature has implemented several new employment laws tied to the #MeToo movement for 2019. This isn’t new for the State. New employment laws have emerged in recent years as a result of emerging trends. Past laws have included efforts to combat employee misclassification and wage theft, to protect immigrants in employment, to expand equal opportunity and to strengthen anti-discrimination laws. This year, new bills were inspired by the #MeToo movement.” (GlobeSt.com)
  7. Ex-Sears CEO: The Embattled Chain Probably Won’t Survive if Retail Bankruptcy History is Any Guide “The odds are stacked against billionaire investor Eddie Lampert and his $5 billion-plus effort to resurrect Sears from bankruptcy, former Sears Chairman and CEO Alan Lacy told CNBC Thursday. ‘Obviously, many people have said it, it’s doubtful and unlikely that a retailer that goes into a Chapter 11 process comes out of it and stays out of it,’ he said on ‘Squawk on the Street.’ ‘It’s rare that that’s happened in retail bankruptcy history.’” (CNBC)
  8. Six Exciting Real Estate Developments That Will Arrive in 2019 “A lot more people will soon be living directly across the street from Nationals Park (see rendering above). Developer Jair Lynch is erecting a two-phase project with 312 apartments, 127 condos, and 55,000 square feet of retail. Phase one, with the apartments, is expected to open in the fall at 1250 Half Street, Southeast. In addition to the typical amenities for a luxury building—such as a pool and fitness center—residents will get to take in Nats games from the rooftop and private terraces.” (Washingtonian)
  9. California Emergency Laws Stir Worries About Rent Limits “California state law has long limited raising prices on consumer goods or services—including rental housing—more than 10 percent within 30 days after a state of emergency is in effect. But new laws passed in recent years in the wake of wildfires and other disasters have led some in the state’s multifamily sector to worry that the scope of those laws is growing. The lack of clarity involves matters of interpretation and enforcement. Questions include whether the limits on rent growth encompass the entire state or just the local areas surrounding the location of the emergency, and how long the 10 percent limit remains in effect.” (Commercial Property Executive)
  10. Behind 550 Madison’s Messy Makeover “Craig Edward Dykers drove from Austin, Texas, to Manhattan as an architecture student in 1985 to see an imposing, 37-story tower at 550 Madison Avenue that AT&T just had built for its headquarters. Dykers made the more than one-day journey to view the latest work of Philip Johnson — the world-famous architect who had defined the ubiquitous glass and steel International Style decades earlier and was now taking a sharp left turn with the first postmodern skyscraper.” (The Real Deal)
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