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10 Must Reads for the CRE Industry Today (February 23, 2017)

10 Must Reads for the CRE Industry Today (February 23, 2017)


  1. Deportation orders threaten Trump's own turf: the real estate market “Is Donald Trump, the property tycoon turned president, about to bust the housing market? That’s potentially one of the unanticipated impacts of the Trump administration’s crackdown on illegal immigration, according to demographics experts and immigrants’ rights groups. The effect of the mass deportations outlined in Department of Homeland Security memos released this week may not only affect real estate values at the lower and middle end of the housing market, they warn: they could resonate up to the top of the housing chain, testing the entire system in ways that are both novel and not clearly understood. ‘There are consequences for the economy and the whole of society, and the public doesn’t understand the value immigrants bring to the housing market,’ warns Dowell Myers, director of the Population Dynamics Research Group at the University of California. ‘They represent a large share of the demand supporting house values. If you were to subtract any part of that demand, it would jeopardize house values across the board.’” (The Guardian)
  2. Mnuchin says Treasury studying 50- and 100-year bonds “The Treasury is studying the possibility of issuing 50- and 100-year bonds, taking advantage of current low interest rates and potentially turning the 30-year long bond into a relative youngster. The idea was raised by Treasury Secretary Steven Mnuchin in an interview Thursday on CNBC, echoing an earlier comment he made when newly nominated by President Donald Trump. Traders say the idea would be to help the government's future debt payments by securing current low interest rates. ‘I think it's something we should seriously look at. I've already begun to talk to the staff about looking at that. We'll reach out to the market, investors, different people, but I think it's something that is a very serious issue of whether we should explore whether we can raise 50- or 100-year money at a very slight premium. That's something that makes sense for Treasury to look at,’ said Mnuchin.” (CNBC)
  3. A Global Real Estate Powerhouse “The Real Estate Sector represents nearly 4% of the equity market capitalization of the S&P 1500. Equity REITs make up about 98% of the equity market capitalization of the sector, and real estate management and brokerage companies make up the remainder…On August 31, 2016, S&P Dow Jones Indices and MSCI moved stock exchange-listed Equity REITs and other listed real estate companies from the Financials Sector of its Global Industry Classification Standard (or GICS) to a new Real Estate Sector. GICS is the industry classification methodology that both companies rely on for their proprietary stock market indices, and it serves as one of the primary classification systems for equities for investors around the world. The Real Estate Sector is the first new headline sector added since GICS was created in 1999. The change reflected the growth in size and importance of real estate, primarily Equity REITs, in the economy. Over the past 25 years, the total equity market capitalization of listed U.S. Equity REITs has grown from $9 billion to more than $1 trillion.” (Seeking Alpha)
  4. How many big US real estate deals have Chinese insurers made this year? NoneChina’s insurance giants have hit the brakes on their $100 billion buying spree following a regulatory squeeze on speculation and new limits on outbound capital. Insurers like Anbang Insurance Group, Ping An Insurance and China Life Insurance – some of the most active buyers last year – haven’t made any acquisitions so far this year, Bloomberg reported. Chinese investment has been behind some of the biggest New York City real estate deals in recent years, including Anbang’s notable purchase of the Waldorf-Astoria in 2015 for $1.95 billion. But the clampdown hasn’t just affected real estate. Chinese insurers have not made any purchases in other markets such Internet and software companies, traditional energy and finance.” (The Real Deal)
  5. TJX is planning a new chain that could deliver another blow to department stores “Off-price retailer TJX has been stealing apparel sales from department stores for several years. Now, it has another category in its crosshairs: home decor. The parent company of T.J. Maxx and Marshalls told investors on Wednesday that it will open a new line of home goods stores this year. The concept will be complementary to its existing chain of HomeGoods shops that sells pillows, lamps and accents. On a call with analysts outlining its fiscal fourth-quarter earnings report, TJX CEO Ernie Herrman said the company will open four U.S. stores under its new nameplate this year. Though Herrman was mum on additional details — including the name of the forthcoming chain — he said the strategy is to encourage customers to shop at both these new stores and its existing HomeGoods locations. That strategy is similar to the approach it's taken with T.J. Maxx and Marshalls.” (CNBC)
  6. Home Depot: Cramer's Top Takeaways “In his "No-Huddle Offense" segment, Cramer expounded on the many things going right at Home Depot (HD), which saw a 7.1% boost in same-store sales this quarter, as well as announcing a stock buyback program. The company saw broad growth in all categories in all regions of the country and continues to take appliance marketshare from the ailing Sears Holdings (SHLD). But beyond increased employment, Home Depot management saw the strength in housing as a driving factor, as well as little impact from the Federal Reserve getting ready to raise interest rates.That gives the company a long runway of growth ahead, Cramer said. And let's not forget: Home Depot doesn't sell apparel or fashion items and is often not located at the mall.” (The Street)
  7. Toyota puts its 2M SF headquarters campus on the market “Toyota Motor North America Inc. has put its Los Angeles-area headquarters campus — which spans 2 million square feet on 110 acres in Torrance and Los Angeles — on the market, as part of its relocation to Plano. The Japanese automaker recently hired JLL to market the California campus. With the campus sitting near the airport and two major ports, JLL Managing Director Jeff Adkison said he expects to see significant interest from buyers attracted by proximity to the Ports of Long Beach and Los Angeles, as well as a high-educated workforce and a desirable southern California lifestyle. Adkison, along with JLL's Brendan McArthur are leading the JLL team in marketing the campus, which sits about 10 miles from the Los Angeles International Airport. Nearly three years ago, Toyota announced it would relocate the company's North American headquarters to Plano, which would bring its manufacturing, financial services, sales and marketing and corporate operations under one roof. The relocation is expected to happen this year, with Toyota executives saying the campus is on schedule for a mid-year delivery. In all, the relocation is expected to exceed $1 billion. To date, Toyota has spent more than $5 billion in the California campus, which housed the automaker for five decades.” (Dallas Business Journal)
  8. U.S. Crackdown on Money Laundering in Luxury Real Estate Set to End “Federal regulations meant to catch illicit money flooding into luxury real estate are set to expire on Thursday, leaving the future of the so-far successful initiative in limbo. The federal government launched the program a year ago in two municipalities—Manhattan and Miami-Dade County, luxury real estate hubs where all-cash buyers of multimillion-dollar homes commonly hide their identities behind obscure limited liability companies, known as “shell companies.” But the pilot program ends this week, and the federal government has given no indication of whether it will be continued, replaced or scrapped despite comments from top officials in the past about its effectiveness.” (Mansion Global)
  9. Tristar Capital Lands $232M in Financing for Sunnyvale Campus “Natixis has provided an approximately $232.5 million five-year, fixed-rate loan to Tristar Capital for the acquisition of Crossroads III, an office property in Sunnyvale, Calif. The financing was arranged by Richard Horowitz of Cooper-Horowitz in New York. According to a Tristar Capital press release, the properties were acquired from Rockwood Capital for a price tag of $290.7 million. The three, three-story freestanding office buildings are located at 410, 420 and 430 N. Mary Ave., and offer a total net rentable area of 349,758 square feet. Originally built between 1990 and 1992, the properties are situated on a 14.82-acre site and are 100 percent net leased to Apple Inc.” (Commercial Property Executive)
  10. Willis Tower upgrades set the table for National Restaurant Association lease “The National Restaurant Association has leased almost 51,000 square feet of office space in Willis Tower, whose owner recently unveiled plans for a $500 million redevelopment of the city's tallest building. The restaurant business group signed a long-term lease for the 50,852-square-foot 36th floor, where it plans to move in December, according to landlord Equity Office. Equity Office is a Chicago-based unit of private-equity giant Blackstone Group. New York-based Blackstone in 2015 bought the 110-story former Sears Tower for $1.3 billion, a record price in Chicago.” (Crain’s Chicago Business)
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