10 Must Reads for the CRE Industry Today (December 18, 2017)

A Washington lawyer filed a complaint against Ivanka Trump and Jared Kushner alleging they omitted assets owned by 30 investment funds they have stakes in in their financial disclosures, according to Politico. China’s HNA Group plans to dispose of $6 billion in foreign real estate assets, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Ivanka Trump, Jared Kushner Are Sued Over Financial Disclosures “First daughter and presidential adviser Ivanka Trump and her husband and fellow White House adviser Jared Kushner were hit with a lawsuit Sunday alleging illegal omissions on their public financial disclosure forms. Washington lawyer Jeffrey Lovitky contends that Trump and Kushner failed to identify the assets owned by 30 investment funds the couple had stakes in. The complaint filed in U.S. District Court in Washington also claims the couple should have declared the value of and income they derived from two investment vehicles, but did not.” (Politico)
  2. Corker Asks How Real Estate Provision Ended Up in Tax Bill “Sen. Bob Corker (R-Tenn.) sent a letter on Sunday to Sen. Orrin Hatch (R-Utah) asking how a provision that would potentially benefit real estate owners, including Corker, made it into the final version of the Republican tax-reform bill. ‘Because this issue has raised concerns, I would ask that you provide an explanation of the evolution of this provision and how it made it into the final conference report,’ Corker wrote.” (The Hill)
  3. China’s HNA Group Seeking Sale of $6 Billion in Overseas Property “One of China’s biggest deal makers is looking to sell a large portfolio of commercial properties in New York, London and other major cities, according to people familiar with the matter, in a sharp reversal of its buying spree in recent years. HNA Group Co, an airlines-to-hotels conglomerate that until a few months ago was aggressively scooping up assets around the world, has come under pressure to raise cash to help pay off debt that helped fund over $40 billion worth of acquisitions since 2015.” (Wall Street Journal, subscription required)
  4. More Than 8,000 Store Closures Were Announced in 2017—Here’s the Full List “Retailers are closing thousands of stores following years of declines in sales and customer traffic. Bankruptcies accounted for a large chunk of the stores that have closed or are closing. But a tough physical retail environment stemming from steeper online competition is also being blamed. We compiled a list of the 8,053 closures that were announced in 2017.” (Business Insider)
  5. Home Builder Confidence Roars to an 18-Year High “The National Association of Home Builders’ monthly sentiment index surged five points to 74 in December, its highest reading since 1999. What happened: Economists had forecast a flat reading at the 70 level. November’s reading was revised down a tick, while builder sentiment turned far more bullish than expected this month. In November, the subindex of current conditions rose four points to 81, while the gauge of future sales rose three points to 79. The subindex that tracks buyer traffic jumped eight points to 58, its highest since 1998.” (MarketWatch)
  6. Penn National Buys Rival Casino Company for $1.87 Billion “Casino operator Penn National Gaming Inc., said Monday it will buy Pinnacle Entertainment Inc. in a cash and stock deal worth roughly $1.87 billion. Pinnacle shareholders will receive $20 and 42% of a Penn National share, or about $32.47 per share based on Penn National’s Friday closing price. The offer represents a roughly 36% premium from the Pinnacle closing price of $21.86 on Oct 4, the last day before The Wall Street Journal reported the companies were considering a deal.” (Wall Street Journal, subscription required)
  7. Little Left of Once Expansive Portfolio After Another Sale “One of the last Manhattan buildings left in a once-expansive portfolio of city properties held by New York REIT is in contract to be sold to the investment firm JMC Holdings for roughly $47 million. The firm is acquiring the seven-story, 82,000-square-foot office building at 306 E. 61st St., a property known as the Interior Design Building for its roster of tenants in that industry. An investment sales team from Cushman & Wakefield led by Adam Spies and Doug Harmon arranged the sale for New York REIT.” (Crain’s New York Business)
  8. Knotel’s First Group-Up Development Is Coming to Gowanus “Knotel is getting into ground-up development. The flexible office space provider signed a deal to anchor a commercial project at 473 President Street in Gowanus. Once completed, the building will span between 150,000 and 300,000 square feet and Knotel will take the entire office portion, co-founder Amol Sarva told The Real Deal. The startup is also buying a small stake in the project. Knotel declined to name the developer, but property records show that MCP President Street LLC, an entity managed by Cynthia and Michael Schlegel’s EcoRise Development, is the owner of the two adjacent lots at 469 and 473 President Street.” (The Real Deal)
  9. Carter Validus Sells Data Center for $315M “In a $315 million deal, an affiliate of Digital Realty Trust LP (DLR) has purchased an approximately 250,000-square-foot data center in the Chicago suburb of Northlake, Ill., from Carter Validus Mission Critical REIT Inc. The data center was originally developed by Ascent LLC, and the 19-acre site provides room for expansion, a DLR spokesperson told Commercial Property Executive. Designated CH2 by its developer, the center features an onsite 2N electrical substation, 2N UPSs and PDUs, and substantial security measures, according to information from Ascent.” (Commercial Property Executive)
  10. Avoiding the Dangers of Buying to Flip in an Overvalued Market “’Flipping’ is a home investment strategy that is simple in theory and lucrative under the right circumstances. You purchase a house below market value, make a few low-cost, high-impact improvements and sell it at market price for a profit. In the best case scenario, you obtain the property at a discount due to its condition and complete the flip in a rising market. That way, not only do you get the bump in value from your renovations, you also benefit from the upward pricing trend in the area.” (Forbes)
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