10 Must Reads for the CRE Industry Today (August 24, 2016)

10 Must Reads for the CRE Industry Today (August 24, 2016)


  1. Should You Manage Your Rental Properties Yourself?  “When investing in rental properties, there are a lot of tasks that need to be done on a regular basis if you want to find success. From placing ads to taking phone calls to showing properties and more, a landlord has a full list of responsibilities to handle if they want the process to return a great profit long-term. However, all that work doesn’t need to be done by you. Professional property management companies can take care of most of the above list and more, but management companies are not a perfect solution either. So should you manage yourself or hire someone else? Although there is no “one size fits all” solution, there are several key issues that a real estate investor should consider before making the decision.” (Forbes)
  2. Opinion: Fear a restaurant recession? Here’s more evidence “Times are tough for the restaurant industry, and even many of the best chains are suffering from rising overhead costs. The use of the frightening words “restaurant recession” started to spread in July after Stifel Nicolaus analyst Paul Westra downgraded 11 restaurant stocks, while saying a deceleration of sales growth, along with rising expenses, was setting up a grim period for the industry. Westra also said an economic recession in the U.S. in 2017 could be the “worst ever” for restaurants, because the likelihood of minimum-wage increases would take away the industry’s usual post-recession labor-cost decline. There aren’t any strong signs of a recession in the works, with the economy continuing to expand slowly and adding 255,000 jobs in July, in nearly every broad category. So, in a positive frame of mind, we decided to look at the S&P 1500 Composite Index to see which restaurant companies were putting up the best numbers.” (MarketWatch)
  3. Alternatives Blackstone and KKR Underperform the Industry “Over the past year, alternative asset managers’ stocks have fallen by 3%–25%, reflecting weak performances, changes in investing patterns, and a clear bias toward low-cost ETFs and index funds. Things improved in 2Q16 as equities and other asset classes rebounded. The Brexit vote led to short-term panic, but the markets have risen since then, reflecting higher valuations. Asset managers with substantial dry powder are well positioned to take advantage of attractive buyout options. On the flip side, asset classes and equities have remained stable with weak fundamentals, which could result in either consolidation or correction in the current quarter.” (Market Realist)
  4. Blackstone to finance $620M Kips Bay Court buy with Fannie Mae loan “To finance its $620 million purchase of Kips Bay Court, Blackstone Group plans to assume the existing $200.1 million Fannie Mae mortgage and will not seek additional debt, sources told The Real Deal. Wells Fargo Bank provided the 10-year loan on the eight-building, 894-unit rental complex in 2013, replacing a $90 million Freddie Mac loan from M&T Bank from 2004, property records show. Wells Fargo had originated the loan and passed it on to Fannie Mae. Late last week, Blackstone officially entered contract to buy Kips Bay Court from affordable housing developer Phipps Houses for nearly $700,000 per unit, sources said. TRD first reported last Wednesday that Blackstone was finalizing the acquisition. The deal, which would become the largest New York City multifamily transaction of the year when it closes, marks Blackstone’s deeper dive into residential rental assets.” (The Real Deal)
  5. Pros and Cons of Real Estate Crowdfunding for Retirement “Real estate is an important element of any well-diversified portfolio. Not only is it a good way to insulate yourself against volatility in the stock market, but it can provide a steady of stream of income in retirement. One of the best things about investing in real estate is that you have so many different ways to do it. House-flipping is one option if you want to pocket big profits all at once. Becoming a landlord is another way to go if you'd rather be on the receiving end of monthly rental payments. Real estate crowdfunding, on the other hand, is an alternative that's growing in popularity. Massolution estimates that the industry topped $2.5 billion and counting in 2015. If you're wondering whether you should grab a slice of the pie to bolster your retirement goals, here's a look at real estate crowdfunding's finer points.” (U.S. News & World Report)
  6. Retailer in store expansion push “Not all retailers are reducing their store portfolios.  DSW Inc. announced it will open 21 stores nationwide between August and October. The footwear and accessories retailer currently operates 482 stores in 42 states.  ‘New store growth is an important and exciting piece of the DSW formula,’ said Valara Gee, VP of stores, DSW.  ‘It allows us to bring the brand to more communities and build relationships with new customers. More stores also enable us to provide additional customers with immediate access to our full assortment.’ The new store locations will span from California to Connecticut.” (Chain Store Age)
  7. Aeropostale creditor Sycamore pushing for liquidation “Private equity firm Sycamore Partners on Monday filed an objection to Aeropostale’s bankruptcy reorganization plan, saying the teen apparel retailer has wasted millions of dollars during the process without garnering “a firm purchase offer of any kind,” according to news reports. Sycamore maintains that liquidation, not a sale, is the preferred option for Aeropostale's creditors. But during a hearing Tuesday in New York bankruptcy court, creditor attorney Robert Feinstein said Aeropostale's lesser creditors are on board with its reorganization plans, the Wall Street Journal reports. Private equity firm Versa Capital Management is reportedly in talks to buy 500 Aeropostale stores, mostly in malls in the U.S.” (Retail Dive)
  8. Qatari fund pays $622M for stake in Empire State Realty TrustQatar’s sovereign wealth fund has acquired a stake in New York City’s Empire State Building through a $622 million deal for a minority stake in publicly-traded Empire State Realty Trust. An affiliate of the Qatar Investment Authority will now own 9.9 percent of the real estate investment trust, the REIT said Wednesday. Under terms of the deal, QIA purchased 26.6 million shares of newly-issued Class A common stock, priced at $21 per share, the REIT said. ESRT Chairman and CEO Tony Malkin called the relationship with QIA a “great fit” for the REIT, while other ESTR executives said the infusion of new capital would allow the company to execute on its long-term growth strategy and bolster its returns to shareholders. ‘From inception, we have made clear that we are committed to the long term for our capital structure and flexibility for the future,’ said CFO David Karp.” (The Real Deal)
  9. Laguna Development Bets $135M on Louisiana Casino Hotel “In an effort to boost its holdings beyond New Mexico, Laguna Development Corp.’s newly formed Kicks Entertainment unit has agreed to buy the Isle of Capri Casino Hotel Lake Charles in Westlake, La., for $134.5 million from Isle of Capri Casinos Inc. Laguna Development is a wholly owned subsidiary of the Pueblo of Laguna and the third largest casino operator in New Mexico. Based in Albuquerque, N.M., and the Laguna Pueblo Indian Reservation, the company currently manages the Route 66 Casino Hotel outside Albuquerque, the Dancing Eagle Casino near Grants, N.M., and a truck stop casino, Casino Express, as well as several travel centers and convenience stores.” (Commercial Property Executive)
  10. Related, partners close $132M construction loan for Auberge Fort Lauderdale “The developers of Auberge Beach Residences & Spa Fort Lauderdale closed on a $132 million construction loan, the Related Group told The Real Deal.  Related, along with its development partners Fortune International Group, Fairwinds Group and a firm led by Carlos Mattos, obtained the financing from TPG Real Estate Finance, a nontraditional lender. Related has worked with the firm in the past on projects that include SLS Lux Brickell Hotel & Residences. Buyers at Auberge include Dan Marino, Moss & Associates CEO Bob Moss, Related CEO Jorge Perez and Mattos, a Colombian businessman and Miami real estate investor. Mattos, Fortune and Fairwinds together are 50 percent partners on the project, and Related holds the remaining 50 percent, a spokesperson told TRD. Related is among the biggest borrowers in South Florida real estate. So far this year, the developer closed more than $780 million in construction financing for projects like the Residences by Armani/Casa (along with Dezer Development) and GranParaiso.” (The Real Deal Miami)
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