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10 Must Reads for the CRE Industry Today (April 13, 2017)

CalPERS will consolidate its real estate, infrastructure and forestry allocations, reports IPE Real Estate. Luxury hotels are experiencing the fallout from President Trump’s travel ban, reports the New York Post. These are among today’s must reads from around the commercial real estate industry.

  1. CalPERS to Create 13% Real Assets Allocation and Replace Benchmark “The California Public Employees’ Retirement System (CalPERS) is planning to consolidate its real estate, infrastructure and forestry investments into a single 13% real assets allocation. The $316bn (€298bn) pension fund is also to adopt a single MSCI benchmark for real assets, replacing the National Council of Real Estate Investment Fiduciaries (NCREIF) Open-Ended Core Equity (ODCE) index, according to board meeting documents. The changes, to be considered at its investment committee meeting next week, build on efforts to harmonise CalPERS’s real asset investments.” (IPE Real Estate)
  2. Special Consideration in Forming Private Real Estate Funds “While closed-end real estate private equity funds (Real Estate Funds) are generally structured similarly to traditional private equity funds, there are several key differences. First, there are sometimes significant regulatory differences under the Investment Advisers Act, the Investment Company Act and similar state laws, stemming from the unique nature of Real Estate Fund investments. Second, Real Estate Fund managers often have different potential conflicts of interest than private equity fund managers, including because Real Estate Fund managers often seek to retain their affiliates to provide various specialized services to the fund for a fee.” (Mondaq)
  3. Trump’s Travel Ban Is Hitting Luxury Hotels the Hardest “Travel to the US from the Middle East and North Africa has fallen 20 percent since President Trump signed his travel ban, a hotel chief executive said this week. The effect of the decline by travelers from these areas is outsized, as they spend much more relative to other hotel guests, sources said. Arne Sorenson, CEO of Marriott International, speaking at a company meeting in Dubai, said the ban on travel from six predominately Muslim countries has been hurting his business.” (New York Post)
  4. Renters Are Staying Put. Here’s Why “Fewer Americans own homes than ever before, and rising consumer confidence does not appear to be changing that. The nation's homeownership rate dropped to a record low in 2016 from a record high in 2004, and even as home sales improve first-time buyers are still missing out on much of the recovery. Some renters are staying put by necessity and some by choice — it depends on who is asking them. The number of renters who said they don't know when they expect to move rose to 37 percent in March compared to 30 percent in survey conducted last September.” (CNBC)
  5. If You’re Involved in Real Estate, You Need to Understand These 2 Innovations “Building owners in the know are increasingly looking at two emerging innovations that could dramatically disrupt the entire construction and property management market. I’ve been writing about digital twins and blockchain technology for the past year, and was excited to find out what’s percolating for building owners and their business partners. Tobias Decker, Head of Line of Business Real Estate at SAP, recently gave me an early look at a proof of concept SAP has been exploring that applies digital twin and blockchain technologies to the real estate industry.” (Forbes)
  6. Charlotte Real Estate Firm Plans Half Billion Dollars in New Development, Acquisitions “The Spectrum Companies has new top leadership and a war chest it estimates will fuel up to a half-billion dollars of apartments and commercial buildings, as the Charlotte-based firm ramps up its development and acquisition efforts. Steve McClure, 36, has been appointed chief operating officer at the company, formerly Spectrum Properties. The company is now focused on aggressively expanding its $1.5 billion portfolio, which McClure said they plan to double in the coming decade.” (
  7. Ben Carson Visits Miami Public Housing Development—and Gets Stuck in Elevator “Housing and Urban Development Secretary Ben Carson's two-day visit to Miami -- his third stop on a national listening tour -- started with a big glitch. Carson, Miami-Dade County Public Housing Director Michael Liu and five other people got stuck inside an elevator Wednesday on the way down from a visit to the rooftop of the Courtside Family Apartments in Overtown. Miami Heat basketball legend Alonzo Mourning, whose nonprofit AM Affordable Housing co-developed the complex with Miami's Housing Trust Group, waited anxiously in the building's lobby while Miami-Dade fire rescue labored to pry open the elevator's jammed doors.” (Miami Herald)
  8. Whole Foods Wanted to be More Than a Supermarket, and Therein Lies the Problem “John Mackey won the battle for America’s taste buds, but his victory is proving costly. As co-founder of Whole Foods Market Inc., the 63-year-old Texan helped reshape how Americans approach eating, transforming health food from a niche market into a booming retail sector attracting millions of urbanites, soccer moms and baby boomers. Whole Foods became a Fortune 500 company, and Mr. Mackey, a wealthy, foodie celebrity.” (Wall Street Journal, subscription required)
  9. Typically Slow-Moving Industrial Sector Sees Rapid Gains “Although the sector’s growth has myriad reasons, the chief force behind the burgeoning demand for industrial space is e-commerce. Demand is measured not only in square feet, but also new facilities with modern technology and in locations closer to population centers. That has led to robust development and atypical growth in rents and property values. Industrial property values are rising fast. According to research and analytics firm MSCI, U.S. industrial properties returned 11.7 percent, the highest of any property segment in 2016, and well above the 7.7 percent all-property average.” (Commercial Property Executive)
  10. TF Cornerstone Lands $325M Loan for Carnegie Hall Tower “TF Cornerstone refinanced the Carnegie Hall Tower in Midtown with a $325 million loan from Metropolitan Life Insurance Company. The 15-year mortgage carries an interest rate of less than 4 percent, according to the Wall Street Journal. Major tenants in the 555,000-square-foot, 60-story tower at 152 West 57th Street, which sits next to the eponymous concert hall, are financial firm Greystone and law firm Grubman Shire & Meiselas.” (The Real Deal)
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