10 Must Reads for the CRE Industry Today (December 6, 2017)

CNBC notes that the tax reform plan disproportionately favors real estate companies. A judge asks Starbucks to keep its Teavana stores open at some Simon properties, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Starbucks Asked to Keep Teavana Stores Open at Some Malls “Mall owner Simon Property Group won an usual victory over Starbucks Corp. after an Indiana judge ordered the coffee giant to keep open Teavana stores in 77 of Simon’s shopping centers, striking a blow to underperforming tenants hoping to wiggle out of their leases in a retail storm. Landlords are pushing back against tenants that try to end their leases prematurely if they can remain economically viable with the store remaining open.” (Wall Street Journal, subscription required)
  2. Tax Plan Crowns a Big Winner: Trump’s Industry “When it came time to eliminate special breaks or impose tighter standards, real estate was generally excused from the room. Most businesses were hit with new limits on deductions for interest payments, but not real estate. Most industries lost the ability to defer taxes on the exchange of similar kinds of property, but not real estate. Domestic manufacturers and pharmaceutical companies lost some industry-specific breaks, like the tax credit for so-called orphan drugs, in exchange for lower rates.” (CNBC)
  3. Real Estate Developer Killed in Midtown Cycling Accident “An engineering professor and real estate developer has died after a driver hit him while he was cycling in Manhattan. Josef Mittlemann was pedaling southbound on 11th Avenue when he blew a red light at West 30th Street around 1:49 p.m. on Nov. 28, cops said. A 39-year-old in a 2011 Toyota Prius driving eastbound on West 30th Street smacked into him, and the crash left Mittlemann with severe head injuries, cops said. Mittlemann was taken to Bellevue Hospital, but died of his injuries a day later on Nov. 29.” (New York Post)
  4. Here’s What Else Tax Reform Means: Another Bailout of Fannie and Freddie “The tax legislation currently under discussion in Congress is almost certain to have one big unintended, and uncomfortable, consequence. Fannie Mae and Freddie Mac, the two giant mortgage financiers, hold billions of dollars of ‘deferred tax assets’ on their balance sheets. These assets include items like credits that can be used to defray tax bills in future years. But if the corporate tax rate is reduced, the value of those assets would tumble.” (MarketWatch)
  5. Two Worlds Meet in Brooklyn Neighborhood, but Don’t Yet Connect “What happens when you lure 450 of the area’s trendiest small businesses to a working-class Latino neighborhood? New York City is full of such unintentional sociological experiments, and the most interesting these days has to be the development of Industry City—a former warehouse complex catering to sophisticated craftspeople, designers and technology types—in the Sunset Park section of Brooklyn.” (Wall Street Journal, subscription required)
  6. EPA Deregulation’s Increased Risk for Real Estate “It is the business of insurance companies to price risk. Insurance, in fact, has been doing this since the second millennium B.C., as evidenced in the Babylonian Code of Hammurabi. Lloyd’s of London has been underwriting risk since the 1750s, and Benjamin Franklin set up a fire insurance company in the colonies as early as 1752. Today, no commercial real estate owner would consider foregoing property and casualty insurance.” (Commercial Property Executive)
  7. Wal-Mart Stores to Change Name to Walmart, as it Shifts its Focus to E-Commerce “Wal-Mart Stores is dropping a 48-year-old habit, the dash in its name. It's also ditching the word ‘stores.’ Wal-Mart said Wednesday it is changing its legal name to Walmart, as the company looks to emphasize its shift from a company that sells in stores to a company that sells both on and offline. The name change comes as Walmart been investing in its digital initiatives, propelled by its acquisition of Amazon competitor last year.” (CNBC)
  8. An Insider’s Guide to Real Estate Syndication “When the equity for what would become New York City’s tallest residential skyscraper came together, it looked less like a partnership than a billionaire boys club. More than 200 ultra-high-net-worth investors crowded into the capital stack for a piece of 432 Park Avenue, CIM Group and Macklowe Properties project that sought to oust One57 as the city’s priciest condominium. Over a frenetic three weeks in 2012, Citibank raised $400 million from more than 200 clients.” (The Real Deal)
  9. Inland Empire’s Road to Recovery “The Inland Empire’s economy is strong, fueled by port activity and a bustling housing market, but that doesn’t translate into significant growth for the office sector. Although office-using jobs have grown by about 17 percent during the last decade, they account for only a small share (14 percent) of total employment. As a result, lease rates and development are increasing at moderate levels. Job growth is led by port-related activities.” (Commercial Property Executive)
  10. Donald Trump’s Real Estate Business is Losing One of its Most Important Tenants “Donald Trump’s private real estate empire officially lost one of its most important tenants on Monday, when Nike announced that it is closing its store at the president’s 6 East 57th Street property in New York City next spring in favor of a new location just a few blocks away. The announcement comes a year after commercial landlord SL Green disclosed that it had signed a 15-year lease with Nike at 650 Fifth Avenue.” (Forbes)
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