10 Must Reads for the CRE Industry Today (February 19, 2016) Rendering courtesy of Foster+Partners

10 Must Reads for the CRE Industry Today (February 19, 2016)


  1. As Hedge Funds Struggle, REIT Shares Become Their Victims “Hedge funds that piled into real estate investment trusts are hurting the companies on their way out. REITs that have had a relatively large portion of hedge fund owners are struggling with declining stock prices. NorthStar Realty Finance Corp. is one of the two worst performers this year in a Bloomberg index of 41 mortgage REITs, with a 39 percent decline. IStar Inc. has dropped 25 percent, Colony Capital Inc. has fallen 19 percent and New Residential Investment Corp. has slumped 10 percent.” (Bloomberg)
  2. CPPIB Forms Joint Venture with REIT Welltower “Canada Pension Plan Investment Board, Toronto, on Thursday said it and real estate investment trust firm Welltower have created a joint venture to buy a 97.5% stake in six Florida-based senior housing properties for a combined $555 million. CPPIB, which manages the assets of the C$282.6 billion ($203 billion) Canada Pension Plan, Ottawa, acquired a 43.9% stake from Welltower, which will hold a 53.6% stake, said Dan Madge, CPPIB spokesman.” (Pensions & Investments)
  3. Banks Back Off Fed Rate Hike Hopes “Just a few weeks into 2016, the Fed interest rate hikes that big banks were counting on to boost revenue clearly aren't coming. A growing chorus of economists at banks including Goldman Sachs, Wells Fargo and Bank of America Merrill Lynch have said in recent days that the Federal Reserve won't raise interest rates as much as was anticipated toward the end of 2015. Most economists backed off predictions the Federal Open Market Committee will move in less than a month, when it meets again in mid-March.” (CNBC)
  4. Starwood Property Said to Hire JPMorgan’s Schuh as Debt Chief “Starwood Property Trust Inc., Barry Sternlicht’s commercial-mortgage real estate investment trust, hired JPMorgan Chase & Co.’s Dennis Schuh to head its originations business, according to two people with knowledge of the matter. Schuh, who spent 17 years at JPMorgan, will oversee the REIT’s balance-sheet lending, said the people, who asked not to be identified because the move hasn’t been announced. He will report to Jeffrey Dimodica, the president of the Greenwich, Connecticut-based company.” (Bloomberg)
  5. Falling Dominoes: How Store Closures Hit Real Estate Investment “Envision each store closure as one domino. How many others stand ready in line, just behind it? If and when that domino gets knocked over, what impact could that closure have on the buildings in which they’re located, and on the malls, real estate investment trusts (REITs), commercial mortgage-backed security deals (CMBS) and local real estate markets they touch? The possible outcomes are not only about risk, however.” (Forbes)
  6. BRA Approves $586 Million in New Projects “The Boston Redevelopment Authority’s board of directors approved eight new projects, as well as updated zoning for the South Huntington Avenue corridor in Jamaica Plain and Mission Hill and the Stuart Street area of Back Bay. All together the projects represent a combined investment of $586.1 million and will create approximately 700 units of new housing in the city. The projects are expected to generate nearly 1,400 construction jobs, according to BRA. See details on all projects below.” (Boston Real Estate Times)
  7. CRE: Optimism, with Possible Slowdown on the Horizon, in 2016 “It's been a record-setting run for Silicon Valley's real estate sector, with enormous leasing and development activity across all property sectors. But now there are growing worries about the region dipping into a slowdown, thanks to global economic headwinds and a pullback in venture funding. Here and there, sublease space — real estate that companies decide to put back on the market after expecting to grow into it — is popping up.” (San Francisco Business Times)
  8. Bauhouse Sues Gamma to Block 3 Sutton Place Foreclosure “Bauhouse Group is striking back against Gamma Real Estate’s bid to foreclose on its planned 68-story 3 Sutton Place condo tower, filing suit against the lender and claiming Gamma’s move to foreclose on nearly $129 million in debt is premature. Bauhause defaulted on $128.8 million in loans from Gamma Real Estate last month, prompting the Richard Kalikow-led lender to initiate foreclosure proceedings on the development site at 426-432 East 58th Street.” (The Real Deal)
  9. NAIOP Panel Forecasts Blue Skies for Seattle Area Real Estate in 2016 “Lenders and investors are still high on Seattle — including the booming apartment sector — despite the forest of cranes along the skyline. NAIOP offered a capital markets forecast yesterday that asked the question: “More blue sky or are storm clouds on the horizon?” The panel — two lenders and one investment broker — leaned toward the blue sky.” (Daily Journal of Commerce)
  10. Why Private Equity Groups Are Buying Up Franchisees “Private-equity groups a decade ago avoided franchisees. But that has changed in recent years, as investors have discovered the benefits of buying these companies. What franchisees lack in absolute value, they make up for in cash generation. Because they operate a lot of restaurants, franchisees make a lot of cash that can be sent to owners in the form of dividends or management fees. In recent years, they’ve also demonstrated an ability to grow at rates that rival many brands.” (Nation’s Restaurant News)
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