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10 Must Reads for the CRE Industry Today (January 2, 2019)

Chinese investors step away from cross-border property acquisitions, reports the Wall Street Journal. Seniors housing operators face a rising number of lawsuits, according to Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. Chinese Investors Back Away from Global Property Markets “Chinese investors will likely continue beating a retreat from the world’s top commercial real-estate markets in 2019, adding to the downward pressure on prices from rising interest rates. For years, the increasing flow of Chinese capital, alongside investments from other foreign countries, helped push property values higher. But now, the opposite is happening as Beijing continues its tight restrictions on capital outflows.” (Wall Street Journal, subscription required)
  2. Omega Healthcare to Buy MedEquities Realty in a Deal Valued at $600 Million “Omega Healthcare Investors Inc. announced Wednesday a deal to buy fellow real estate investment trust MedEquities Realty Trust Inc. MRT, in a cash and stock deal valued at $600 million. Omega's and MedEquities's stocks were still inactive in premarket trade. Under terms of the deal, MedEquities shareholders will receive 0.235 Omega shares and $2.00 in cash for each MedEquities share they own. Based on Monday's closing prices, that values MedEquities stock at $10.26, or a 50% premium.” (MarketWatch)
  3. Big Claims Strain Senior Living Market for U.S. Insurers “Last March, a 103-year-old resident of a Sunrise Senior Living facility in Willowbrook, Illinois, went on a field trip to the movies.  Ruth Smith, who used a walker, fell down two concrete steps in the theater and died about six weeks later. Now Smith’s estate is suing Sunrise, saying that aides did not properly watch her. As the U.S. society ages, senior living communities are on the rise. So are claims and lawsuits against them. And when they lose, it is usually down to insurers to pay up.” (Reuters)
  4. Log Cabins? No, These Wooden Buildings Are High-Rises “Developers have not used wood for much other than houses since the horse-and-buggy days. But the knotty building material is making a comeback. Seeking greener projects, which many consumers continue to embrace despite an anti-environmental mood in Washington, builders are choosing timber for offices, apartments and campus buildings, rather than the concrete and steel that dominated construction for decades. Not everybody is on board with the trend, which is playing out from coast to coast.” (The New York Times)
  5. Here’s a List of the 80 New Store Closures Sears Has Announced “Time could be running out for Sears Holding Corp., but in the meantime the bankrupt retailer continues to announce store closures. Sears will shutter 80 stores by late March 2019, with liquidation sales starting in two weeks. Accompanying Sears Auto Center locations will be closing as well. Sears’ fate is in the hands of its Chief Executive Eddie Lampert, who may only have until Friday at 4 p.m. to make his $4.6 billion proposal to save the retail icon official.” (MarketWatch)
  6. To Woo Millennials, Atlanta Considers Covering Highways with Parks “Leaders of this southern city want to draw more young workers, and their strategy includes covering congested downtown highways with acres of green park land. Jennifer Ball, who works with a business group promoting a plan to cover over a section of interstate downtown, said cities such as Atlanta that in the past neglected their urban centers need to make improvements to compete for tech jobs and millennials.” (Wall Street Journal, subscription required)
  7. Grand Plans: Case Studies in Mixed-Use Real Estate “In light of the emphasis on placemaking and walkability, multipurpose properties with multiple owners are increasingly common. But, while more prevalent, mixed-use projects are still hard to assemble, difficult to finance and challenging to manage. In these case studies, Commercial Property Executive zeroes in on three successful mixed-use projects from three different perspectives: the developer, the financing professional and the property manager.” (Commercial Property Executive)
  8. The Surprisingly Bright Future of Retail “This past year, brands have been  throwing retail concepts against the wall to see what sticks. (Remember Glossier’s all-pink Instagrammable cafe and Naadam’s $75 sweater shop?)  But in 2019, we predict that brands and consumers will settle into a new normal with stores. There will be fewer gimmicks, but shopping will be ever more seamless. It’s just one of the many ways retail will be transformed in 2019. Here’s the full list of our predictions.” (Fast Company)
  9. SF Transit Officials Have Seen the Future, and It Is Housing Atop New Bus Yard “The next ripe housing site in San Francisco is a bus yard at 17th and Bryant streets, where busy lines like the 5-Fulton and the 14-Mission park for the night. By 2026, the Potrero bus yard project could be a triple-decker facility topped with apartments, an example of city officials getting creative as they strain to build more homes. Empty turf is scarce, and developers have already laid claim to gas stations, parking lots, shuttered fast-food restaurants and laundromats. Apartments stacked on a bus yard seem to fit the trend.” (San Francisco Chronicle)
  10. Can Dallas Alone Save a Dangerous, Decaying West Oak Cliff Apartment Complex HUD Won’t Help? “Let's begin this new year with an old familiar: Ridgecrest Terrace, the 50-year-old sprawl of subsidized housing in west Oak Cliff -- forever in the city's scopes but always, somehow, elusive. When I went to visit the morning of New Year's Eve, the 16-acre apartment complex perched on a trash-strewn hill off Walton Walker Boulevard just south of Interstate 30 looked better than when last I stopped by in October, shortly before tenants went to Dallas City Hall asking the City Council for the hand it refused to extend.” (Dallas Morning News)
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