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10 Must Reads for the CRE Industry Today (January 19, 2018)

The Trump administration is finalizing its infrastructure improvement plan, reports Reuters. Wyndham Worldwide agreed to buy La Quinta Hotels for $1.95 billion in cash, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Trump Administration’s Infrastructure Plan Taking Shape “The Trump administration is finalizing its long-awaited infrastructure plan, which would push most of the financing of projects to private investment and state and local taxpayers, according to sources familiar with the proposal taking shape. President Donald Trump, who spoke frequently of improving U.S. infrastructure during his 2016 campaign, may preview the plan in his Jan. 30 State of the Union address, but details are not expected until afterward, the sources said.” (Reuters)
  2. Wyndham to Buy La Quinta Hotels in $1.95 Billion Deal “Wyndham Worldwide Corp. on Thursday said it will buy La Quinta Holdings Inc.’s hotel franchise and management businesses for $1.95 billion in cash, adding 900 hotels to Wyndham’s portfolio. Under terms of the deal, Wyndham will buy La Quinta’s hotel franchise and management business after La Quinta spins off its real-estate assets into a separate company, CorePoint Lodging Inc. La Quinta CEO Keith Cline will lead CorePoint.” (Wall Street Journal, subscription required)
  3. NYC’s Storage Industry Has Crate Expectations “A CBRE report calls the New York metropolitan area the “most underserved market” for storage in America, averaging 3.5 square feet of self-storage space per person, not even half the national average of 7.2 square feet. Storage developers have found demand from both New Yorkers packed into small apartments and small business owners who need to store inventory, according to Jon Dario, chairman of the New York Self-Storage Association.” (New York Post)
  4. Seattle’s ‘Amageddon’ Crisis Should Terrify the City Amazon Chooses for HQ2 “Critics say Amazon's coveted jobs could come at a staggering cost to the winning bidder, and not just in the form of billions of dollars in tax breaks that cities are offering to lure the e-commerce giant. In Seattle, the home of Amazon's existing headquarters, the retailer has been blamed for astronomical hikes in real estate costs, traffic gridlock, and rising homelessness, among other issues. Some locals call this phenomenon ‘Amageddon.’ Seattle has led the nation in housing price increases for 13 consecutive months, with prices rising about twice as fast as the national average, according to the Seattle Times.” (Business Insider)
  5. Deutsche Bank Looking at ‘Suspicious’ Kushner Transactions: Report “Deutsche Bank is looking at evidence that companies related to Jared Kushner may have moved "suspicious" money through the German lender, according to a report. The bank has informed a national finance supervisor about the transactions and will also inform special counsel Robert Mueller’s investigation into alleged Russian election meddling, Manager Magazin, part of the Der Spiegel group, reported Friday.” (New York Daily News)
  6. Life Sciences Industry to Drive U.S. Office Market Growth in 2018 “According to a new report by CBRE, multiple factors are propelling the U.S. life-science industry in 2018, and by extension the real estate that supports it, to strong growth, thereby positioning research-and-development centers like Boston and California's Bay Area for outsized gains. While many U.S. industries are navigating fundamental disruption, the life-sciences industry - which includes pharmaceuticals, biotechnology and medical-device manufacturing - is on a long-term expansion track.” (World Property Journal)
  7. There’s Never Been a Better Time to Open Retail Stores in NYC “Retailers from China and Korea, Germany, the Netherlands and Latin America are scouring city streets for deals they could have only dreamed of in the past. Additionally, Italian and Aussie fashion companies that tested out the market with pop-ups (and liked it) now want a more permanent piece of New York’s retail pie. With rents finally dropping to a deal-making level, the smart companies are rushing to stake out locations they love.” (New York Post)
  8. After That Cash Windfall, Where Is Apple’s Second Campus Going? “Apple only said in its statement that it will announce a new campus location later this year and didn’t say that it would publicly solicit bids like Amazon. The company also hasn’t made public how much space it needs, how big of a campus it’s planning, and what kinds (if any) economic breaks it’s seeking. Still, Apple’s timing is impeccable. If the company hasn’t already chosen a location for a second campus, it now knows what some of the cities that bid for Amazon’s campus were willing to offer. It’s likely Apple would get a similar, if not identical, deal.” (Fortune)
  9. Primark Owner ABF Expects a Boon from Lower U.S. Taxes “Lower corporate taxes will grease the wheels for Associated British Foods PLC’s expansion of its fast-fashion retailer Primark in the U.S., said Chief Financial Officer John Bason. The British food-to-fashion conglomerate is growing its U.S. footprint and will add its ninth Primark store, in Brooklyn, New York, this summer. The expansion comes at a time when many U.S. retailers including Macy’s Inc. and J.C. Penney Co. are retreating amid growing competition from online sellers such as Inc.” (Wall Street Journal, subscription required)
  10. With a Flawed Strategy, J.C. Penney’s Future Is Uncertain “The recent Christmas 2017 sales report for J.C. Penney implies that improved sales should be a balm for optimists. I share this feeling but hesitate to recommend purchasing the stock. Hard times are looming for the company. The company has about $7.5 billion in total debt if you take total liabilities minus cash minus receivables. J.C.Penney calculates outstanding long-term debt to be about $4.06 billions.” (Forbes)
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