10 Must Reads for the CRE Industry Today (December 7, 2016)

10 Must Reads for the CRE Industry Today (December 7, 2016)


  1. Restaurant traffic suffers first decline in five years as fear of recession takes hold “Traffic at U.S. fast-food restaurant fell 1% in the third quarter to mark the sector’s first traffic decline in five years, the industry tracker NPD Group said Tuesday. Total restaurant visits were also down 1%, hurt by the now familiar list of factors that have weighed this year, ranging from the higher costs of eating out, changing consumer behavior and higher bills for items such as rent and prescriptions. ‘The term growing your business in a 1% world has become a popular mantra for the restaurant industry after six consecutive years of annual traffic gains of just 1%,’ said NPD analyst Bonnie Riggs. ‘However, over the past six months, restaurant industry traffic growth has come to a standstill and quick-service restaurants, which have been the traffic growth drivers, are now experiencing a slowdown in visits.’ Eating out has become more expensive even as the cost of at-home dining has fallen, according to recent government data.” (MarketWatch)
  2. Caesars unit's bank lenders threaten to end bankruptcy deal “The bank lenders of Caesars Entertainment Corp's operating unit said they might walk away from a plan to bring the casino unit out of its $18 billion bankruptcy, potentially sending a high-stakes reorganization plan into disarray. The committee of bank lenders, which includes Blackstone Group LP's GSO Capital Partners, has yet to resolve a dispute over the terms of their recovery, their lawyer Kristopher Hansen said at a hearing in U.S. Bankruptcy Court in Chicago on Tuesday. Hansen said the lenders would inform the court on the status of a deal by Dec. 14, a month before a scheduled confirmation trial in Caesars Entertainment Operating Co Inc's long-running bankruptcy case. Without a deal, Hansen said the committee would terminate a restructuring support agreement, forcing the confirmation trial to be postponed from Jan. 17.” (Business Insider)
  3. Bruce and Charles Ratner resign from board as Forest City gives up dual stock structure “Following pressure from an activist investor, Forest City Realty Trust today announced it would eliminate a dual-share structure that gave the Ratner family unchallenged voting control over the company. Simultaneously, Bruce and Charles Ratner announced they will resign from the real estate investment trust’s board at the end of the year. Bruce Ratner will continue to serve as executive chairman of Forest City Ratner, the trust’s New York division. ‘After carefully reviewing the Company’s options to further enhance value for shareholders, we determined that now is the right time to collapse the dual-class structure,’ company chairman Charles Ratner and the firm’s special committee chair Scott Cowen said in a joint statement. ‘Today’s announcement will strengthen the Company’s corporate governance profile by aligning voting rights with the economic interests of all our shareholders.’ Activist investor Scopia Capital Management had called for the change in August, arguing that the dual structure ‘clearly harms the company.’” (The Real Deal)
  4. Commercial real estate after Trump: What to expect? “Business owners, investors and others are asking key questions, such as whether it is feasible to make hiring decisions, launch expansion programs or make investments during this uncertain period. In a broader sense, they are asking how markets and foreign leaders will respond. Some early signals, within the first seven to 10 days after the election, aren’t conclusive; they may only reinforce the uncertainty: Just after the election a prospective client announced his intention to delay investing in our Fund III until there is “greater clarity about what a Trump presidency means for the investment outlook” in the United States. Since election day, the Dow Jones Industrial Average has produced a 625-point-gain (3.4 percent) to about 18,957. This is far different than late election night when the futures market was down 800 points. Interest rates already have started to climb, increasing more than 30 percent, from 1.75 percent to 2.30 percent. We know a lot of the president-elect’s positions and likely actions on a variety of issues, or at least we think we do.” (REJournals.com)
  5. New Stop & Shop format to debut at New York Center “Heidenberg Properties has received planning board approval to build a new 54,000-sq.-ft. Stop & Shop prototype at its Lake Plaza Shopping Center in Mahopac, New York. The store will replace a Key Food supermarket and increase total square footage at the center to 165,000 sq. ft. ‘This was a complicated process involving multiple municipal agencies,’ said Heidenberg VP of Operations Jason Lazar.  ‘We are excited to deliver the new prototype for Stop & Shop.’ Stop & Shop operates 419 stores in New York, New Jersey, Massachusetts, Connecticut, and Rhode Island.” (Chain Store Age)
  6. Economy Watch: Hotel Metrics Stabilize in 3Q “The U.S. hotel sector has done particularly well in recent years, but there’s some evidence that the industry is beginning to skate along a plateau. According to JLL’s third-quarter lodging outlook report, hotel RevPAR was up 3.2 percent year-to-date compared with the same period a year ago, which is certainly better than no growth. But a year ago, the RevPAR growth rate was a brisker 6.7 percent year-to-date compared with the same period in 2014. JLL also noted that occupancy growth has stalled as room demand has experienced downward pressure from more cautious corporate transient demand and a slight uptick in group cancellations in the short term, coupled with increasing supply. ‘Despite these headwinds, the national occupancy rate continues to hover at a historic high, and ADR gains are driving the entirety of RevPAR growth,’ the report said. Year-to-date ADR growth at the end of the third quarter was 3.2 percent.” (Commercial Property Executive)
  7. Real Estate, Phone Shares Join Trump Rally as Dow Sets Record “U.S. stocks advanced as the Dow Jones Industrial Average set a record for the second day in a row. Telecom, real estate and financial shares climbed as 10-year Treasury yields held steady around 2.4 percent, utilities declined. The S&P 500 Index added 0.3 percent to 2,212.2 by 4 p.m. in New York as phone companies and real estate shares, which have trailed banks and energy stocks since the presidential election, rallied with banks that extended gains to 15 percent the past month. Nine of 11 sectors advanced as the benchmark gauge for American equity closed less than 0.1 percent below its all-time high reached last month. Small-cap stocks in the Russell 2000 Index jumped more than 1 percent and the Nasdaq 100 Index added 0.2 percent.” (Bloomberg)
  8. Spanish billionaire closes on $517 million deal for Miami’s Southeast Financial Center “Spanish billionaire Amancio Ortega opened his wallet to the tune of $516.6 million to buy the Southeast Financial Center, downtown Miami’s iconic office tower. Word of the deal leaked out last week. Now it’s official: A deed recorded on Tuesday shows Ponte Gadea Biscayne, Ortega’s U.S. investment arm, purchased the 55-story tower. Commercial real estate in Miami has seen big investments so far this year but none the size of Ortega’s. Last year, Ortega, who owns fashion chain Zara, spent $370 million to buy a block on Lincoln Road. He is known to invest in trophy properties around the world. But Ortega may be coming in at the top of the market. Rents on Lincoln Road stayed flat over the last year and could drop over the next year, according to a report from brokerage Cushman & Wakefield.” (Miami Herald)
  9. Block 37 mall put up for sale: report “About five years after buying the Block 37 shopping mall, a Los Angeles investment firm has decided to sell the Loop property, which could fetch as much as $200 million, according to a report. CIM Group has hired the brokerage Eastdil Secured to seek buyers for the retail space and parking in the project at the southwest corner of State and Randolph Streets, according to Real Estate Alert, a trade publication. Block 37 was the first Chicago deal for CIM, which has gone on to buy office buildings and develop apartment towers here, and take on a major redevelopment of the historic Tribune Tower on North Michigan Avenue. Eastdil and CIM representatives did not immediately respond to requests for comment. Real Estate Alert did not identify the source of the information in its story. When CIM paid $84 million for Block 37 in April 2012, the four-story, 290,000-square-foot mall was badly in need of a turnaround. The seller, Bank of America, had seized the property through foreclosure in 2011, and its retail space was just 30 percent occupied.” (Crain’s Chicago Business)
  10. A peek at AvalonBay, an Arts District development with 475 apartments “We’re getting our first look at AvalonBay, a development that, if approved by the city, would bring 475 live-work apartments to nearly four acres at Alameda and 7th streets in the southern edge of the Arts District. Developer Mark Janda wants to demolish a cold storage warehouse and surface parking lot to build AvalonBay, which would be one of the biggest residential developments in the neighborhood. But it doesn’t look like it’s going to be a blocky fortress, like we’ve seen with some of other giant residential buildings in other parts of the city (ahem, Geoffrey Palmer). A site plan and renderings from architects BNIM show a handful of courtyards and landscaped areas, some of which would be open to the public. Two plazas would face Industrial Street and two intersecting “paseos” would connect Industrial with Mill Street (the pathways would be open to the public during business hours). In total, there would 44,000 square feet of open space, according to Brian Lewis of Marathon Communications, a project rep. That’s about equal to the amount of proposed commercial space.” (Los Angeles Curbed)
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