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10 Must Reads for the CRE Industry Today (February 8, 2019)

The bankruptcy judge has approved Eddie Lampert’s plan to keep Sears in operations, reports the Associated Press. WeWork has made its first acquisition of 2019, according to TechCrunch. These are among today’s must reads from around the commercial real estate industry.

  1. This Cocktail of Macro Risks Could Cause Downturn That “Rivals” Global Financial Crisis: Deutsche Bank “U.S. investors are once again paying attention to the dark clouds gathering over the global economy, with reason to fear that the next big storm could be as damaging as the downturn that accompanied the global financial crisis a decade ago. On a day when the S&P 500 and Dow Jones Industrial Average were under pressure (though still up sharply from their late December lows), Peter Hooper, chief economist at Deustche Bank Securities issued a research report estimating the damage that may result if the three gravest threats to the global economy come to fruition.” (MarketWatch)
  2. Bankruptcy Judge Gives Sears Another Chance “A bankruptcy judge has blessed a $5.2 billion plan by Sears chairman and biggest shareholder Eddie Lampert to keep the iconic business going. The approval means roughly 425 stores and 45,000 jobs will be preserved. Lampert’s bid through his ESL hedge fund overcame opposition from a group of creditors, including mall owners and suppliers, that tried to block the sale and pushed hard for liquidation.” (Associated Press)
  3. Heitman Closes Value-Added Real Estate Fund at $1.1 Billion “Real estate money manager Heitman said Thursday it has closed the $1.1 billion Heitman Value Partners IV fund. The North American closed-end value-added real estate fund closed well above its $750 million fundraising target, Heitman said in a news release. The previous fund, Heitman Value Partners III, closed at $690 million, a spokeswoman said.” (Pensions & Investments)
  4. The Church with the $6 Billion Portfolio “Since the blockbuster musical ‘Hamilton,’ tourists have been swarming Trinity Church, part of an Episcopal parish in Lower Manhattan that dates to the 17th century. Alexander Hamilton and his wife, Eliza Schuyler Hamilton, are buried in the cemetery there. Recent years have been good to the church and the rest of its campus. St. Paul’s Chapel, near the World Trade Center, escaped destruction during the terrorist attacks of Sept 11, 2001, and now gleams following a fresh coat of paint. After a cleaning in September, Hamilton’s white marble obelisk also sparkles. Soon the entire church — and a new $350 million glass tower under construction behind it — will, too.” (The New York Times)
  5. WeWork Just Made its First Acquisition of 2019, Snapping Up a Visitor Identity and Behavior Company “WeWork is diving more aggressively into software sales. Just six months after spending $100 million in cash on Teem, a Salt Lake City-based office management startup, the company has acquired Euclid, a data platform that tracks the identity and behavior of people in the physical world. WeWork isn’t saying what it’s paying for the nine-year-old, Bay Area-based company, which raised $43.6 million over the years and whose brand will be put to rest. But the deal is clearly an effort to move WeWork further away from merely selling memberships to its co-working spaces — a risky business model in a sour economy — and instead also become a software-as-a-service provider.” (TechCrunch)
  6. New York’s Grand Hyatt Hotel to be Torn Down “A development group has agreed to buy and tear down the Grand Hyatt New York, the glass-sheathed hotel by Grand Central Terminal that was Donald Trump’s first major Manhattan development, and replace it with a mixed-use project. TF Cornerstone, a Manhattan developer, and MSD Partners, which manages the assets of Dell Technologies founder Michael Dell and his family, said they plan a new development totaling about 2 million square feet, which will include offices, retail and a new, scaled-down Grand Hyatt.” (Wall Street Journal, subscription required)
  7. Google’s Leasing Spree Extend to Austin, Putting More Pressure on the City’s Office Market “The news comes less than two months after Apple announced plans to build a massive new, $1 billion campus in the city, which I wrote about here. Two tech giants committing in a major way to Austin is significant for the city, which in recent years has seen its tech scene explode. Besides being home to a growing number of startups, nearly all the large tech companies have a presence in Austin, including Facebook, Amazon, Apple, Google, Oracle, IBM and Cisco. And that’s had an impact on the city’s office market.” (Forbes)
  8. She Could Get Millions to Turn This Factory into Condos. She’s Not Selling “Before he died at the age of 100 in December, James Galuppo, founder and owner of Etna Tool & Die, urged his only child, Flavia, not to sell the company headquarters. She might have considered that a significant sacrifice. New condos surround the building, 42-44 Bond Street, a chic block in Manhattan. A triplex is going for $13.5 million in one of them. The other is home to both Chuck Close and Warren Beatty. In contrast to these cool glass and granite residences, 42-44 Bond is a tawny brick loft building. Its arched windows represent a classic feature of the late 19th century Renaissance Revival style. Some would say it could use an update.” (The New York Times)
  9. Sumitomo Buys $144M Minneapolis Office Asset “New York-based Sumitomo Corp. of Americas makes its entrance into the Minneapolis office market with the acquisition of SPS Tower in the central business district. The real estate investment company, a subsidiary of Tokyo’s Sumitomo Corp., acquired the approximately 655,000-square-foot office property from CalSTRS in a $144 million transaction. ‘We were looking for an asset in a stable market with good returns,’ a spokesperson for SCOA told Commercial Property Executive of the company’s reasons for setting its sights on Minneapolis.” (Commercial Property Executive)
  10. Avison Young: Greater Philadelphia CRE Sectors on Track for Strong 2019 “Greater Philadelphia’s commercial real estate market posted strong fundamentals in 2018, with rental rates up and vacancies down, and these are on track to continue in 2019. Those are some of the key findings in Avison Young’s 2019 North America, Europe and Asia Commercial Real Estate Forecast. The annual report covers the office, retail, industrial and investment sectors in 68 markets, including the Greater Philadelphia’s tri-state area.” (GlobeSt.com)
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