- Active Managers May Have ‘Limited’ Appetite For New REIT Sector “At the end of this month, real estate will be split from financials to become the 11th standalone market sector. Stifel’s Matthew Heinz writes that data shows actively managed portfolios are already accounting for the change, holding a 3.91% aggregate position in real estate at the end of the second quarter, an 80 basis point increase in active REIT allocations in the past year. This makes REITs the second biggest allocation among subsectors in the financial space behind large-cap banks, and the second most overweight sub-sector of financials relative to S&P 500 weightings behind P&C insurance. Heinz suggests that this shows active managers may have “limited appetite” for more REIT exposure when the reclassification happens.” (Barron’s)
- U.S. Apartment, Condo Market Index Dips Slightly in Q2 “According to the National Association of Home Builders (NAHB) latest Multifamily Production Index (MPI) released today, the index dropped three points to 50 in the second quarter of 2016. The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse. The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and "for-sale" units, or condominiums. The component measuring low-rent units decreased two points to 52 in the second quarter, while market-rate rental units dropped five points to a level of 53 and for-sale units fell three points to 45. The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, increased three points to a level of 42, with higher numbers indicating more vacancies. After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.” (World Property Journal)
- A word or two on (the lack of) diversity in commercial real estate “You should meet Aaron Moore. He is an up-and-coming real estate broker in the Royal Oak office of Jones Lang LaSalle. Starting as a research analyst, he is now an associate specializing in sales and purchases of both urban and suburban multifamily properties. But even though he is gaining crucial commercial real estate experience and holds a degree in economics from Brooklyn College and will be finishing his MBA at Wayne State University at the year, based on historical precedent Moore has only a small chance of becoming a senior commercial real estate executive. Why? Because he is black. And it's not just him that the cards are stacked against. It's basically everyone who is not a white man. A 2013 report from the Commercial Real Estate Development Association, a national organization founded almost 50 years ago and that has more than 18,000 members, used Equal Employment Opportunity Commission data and found that more than three-quarters of senior commerical real estate executive positions nationwide were held by white men.” (Crain’s Detroit)
- Billionaire Behind Lipstick Building Is a Master at Sharing Risk “Gerald Hines, the 91-year-old real estate developer, has always been known for his belief in the striking and iconic. He built the Lipstick Building in Manhattan, helped develop Goldman Sachs Group Inc.’s Jersey City tower and today is constructing the tallest skyscraper in San Francisco. But it was a little lesson he learned back during the oil bust of the 1970s that deserves equal attention when explaining his firm’s longevity and his family’s billionaire status. As the crash hit Hines and most others in his home base of Houston hard, he increasingly reduced his risk by pulling in partners to take big equity stakes in each project. That model has served the Hines Group well during economic downturns -- most recently when oil prices collapsed again in 2014, just a year after the firm had embarked on a $1.7 billion development spree in Houston. This summer, when Hines and its investors walked away from a six-building office complex in the city that they’d owned since the 1990s, the developer’s exposure to the 70 percent-vacant Greenspoint Place was largely limited to its role as property manager.” (Bloomberg)
- Yankees seeking $1.04B refi for stadium “The Yankees are looking to reload their bases. The team is looking to refinance Yankee Stadium for $1.04 billion, according to documents filed with the New York City Industrial Development Agency, the financing arm of the New York City Economic Development Corporation. The agency, which controls the Bronx property through a ground lease with the city and in turn leases the stadium to the Yankees, issued two rounds of tax-exempt bonds in 2006 and 2009 to fund construction of the 54,000-seat ballpark. The initial principal balance of those two issuances totaled $1.2 billion. The sports team is now asking the IDA to issue a new round of tax-exempt bonds to refinance the stadium, according to agency’s upcoming meeting agenda. The original plan to build a new home for the Bronx Bombers faced pushback on many fronts, not the least of which was controversy over a ruling by the Internal Revenue Service that allowed the sports team to use public debt to finance its stadium.” (The Real Deal)
- Opinion: Mall rats are a dying breed “While there are always plenty of reasons for investors and economists to fret that things aren’t as rosy as they should be, consumer spending is not one of them. The Commerce Department’s measure of consumer spending for June (just released in August) showed the third straight month of increases. Also, the University of Michigan survey of consumer sentiment in August was up again, with Americans expressing optimism about the next few months. And consumers have been getting a nice lift in the short-term thanks to cheaper gasoline prices this summer. But for all the optimism over spending, there is a decidedly dark tone in one segment of the American consumer marketplace: malls and mall-based retailers. The latest proof comes via a roughly 25% single-day crash in Express Inc. after a simply abysmal earnings report. Once the teen hangout of choice and a mecca in the fall thanks to back-to-school and Christmas shopping, these sprawling shopping complexes have been displaced in the era of Snapchat and e-commerce.” (MarketWatch)
- Five Below’s store count to reach big number “The extreme-value retailer will open its 500th store in Trexlertown, Pennsylvania, on Sept. 9 …In August 2002, Five Below opened its first location in Wayne, Pennsylvania, is now one of the fastest growing retailers in the country with stores in 30 states. The Trexlertown store is one of approximately 85 new Five Below locations opening in 2016, in addition to 71 new stores that opened in 2015. It is also one of 59 Five Below stores in the company’s home state of Pennsylvania.” (Chain Store Age)
- Economy Watch: Is Airbnb Affecting Rents in Major Metros? “A new analysis by FiveThirtyEight, which is better known for its political prognostications but which also does economic studies, finds that Airbnb’s impact on rental residential markets is still small in most cities. The concern, sometimes voiced by politicians and others, is that as more landlords list units on Airbnb–'commercial listings'–instead of offering them to live in, the already severe housing shortages in such metros as New York and San Francisco will get worse, and rents will continue to go up. FiveThirtyEight did its analysis of Airbnb using booking and revenue data provided by consulting firm Airdna, which is unaffiliated with Airbnb. To be “commercial” in the FiveThirtyEight analysis, a listing had to be for an entire home or apartment, as well as had to be booked for 180 days or more between June 2015 and May 2016. According to FiveThirtyEight, there were nearly 9,000 commercial listings in Airbnb’s 25 largest U.S. markets during the 12 months ending in May 2016. That’s 10 percent of Airbnb’s total listings in those markets, but they also make up about a third of its revenue, so there seems to be an incentive to grow commercial listings.” (MultiHousing News)
- Report: Chicago area new construction spending surges in 2016 “With construction cranes popping up all over Chicago’s downtown and in an increasing number of outlying neighborhoods and suburbs, it doesn’t take an expert to see that the Windy City is in the midst of a building boom. But just how much cash has Chicagoland invested in new construction? The answer, according to recently released numbers from Dodge Data & Analytics, is a considerable amount — $4.22 billion to be exact. The newest findings show an impressive 66 percent year-over-year increase through July. The residential segment of new construction faired even better, experiencing a staggering 133 percent surge since July of 2015. In fact, from a purely percentage based perspective, Chicago performed the best of the ten metropolitan areas featured in the analysis.” (Chicago Curbed)
- Nader’s team files suit against Miami Dade College demanding public records “Amid the contentious competition for Miami Dade College’s prime downtown site, bidder Gary Nader and his team have filed a lawsuit demanding access to public records related to the bidding process. Nader+Museu has already filed a bid protest as well as a lawsuit related to the $2.3 million bond required for the bid protest. The latest suit, filed in Miami Dade Circuit Court alleges that the college is in violation of the Public Records Act, and asks a judge for a hearing. Amid the litigation, the entire bidding process has halted and is on hold. 'We had to resort to a legal complaint to secure the public records, and once we get the public records we may amend our bid protest depending on what we learn in those public records,' Bill Riley, a partner with GrayRobinson, representing Nader+Museu, told The Real Deal... Miami Dade College has not yet awarded a contract in the months-long process to develop the 2.6-acre site at 520 Biscayne Boulevard into a mixed-use project in a public-private partnership. But the college’s evaluation committee has ranked the Related Group as the top bidder. Nader+Museu was ranked second.” (The Real Deal)
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