10 Must Reads for the CRE Industry Today (January 25, 2016)

10 Must Reads for the CRE Industry Today (January 25, 2016)


  1. AIG to Pursue Spin-Off of Mortgage Insurance Unit “American International Group Inc has decided to pursue a spin-off of its mortgage insurance business, according to people familiar with the matter, in a move that would come as the U.S. insurer fends off activist Carl Icahn. The spin-off of that business however, which accounted for 7.4 percent of AIG's pre-tax operating income in the first nine months of 2015, is unlikely on its own to appease Icahn, who is calling for AIG to break up into three separate businesses. The mortgage insurance business had revenue of $791 million in the first nine months of 2015.” (Reuters)
  2. Index Breakouts of Real Estate Securities Called Good News for Investors “The decision by two major stock index providers to break out real estate securities into a separate sector could, in the long term, benefit investors by dampening real estate stock volatility and pushing up valuations. Real estate now is lumped in with financial companies such as banks and insurance companies in the Global Industry Classification Standard, which forms the basis of S&P Dow Jones Indices and MSCI Inc. stock indexes.” (Pensions & Investments)
  3. The Cities Where Rents Will Fall This Year “After a three-year period of rapid growth, rents are likely to flatten in 2016, according to a new report. By December, year-over-year rent increases will have slowed to 1.1 percent across the U.S., according to projections published on Friday by Zillow. That follows a three-year period during which rents grew more than 3 percent each year. Rent growth is probably easing now because construction of new apartments is catching up with pent-up demand.” (Bloomberg)
  4. Apple’s New Massive Underground Auditorium, as Seen in Drone Footage “Construction for Apple Inc.’s  new campus, dubbed Apple Campus 2, is well under way, as evidenced by the latest drone footage to surface. The footage shows foundations for a 1,000-seat underground auditorium, as well as the building’s spaceship-like glass exterior in progress. Eighty percent of the 175-acre site will be open space and will house 7,000 trees. The campus will also include 600,000 square feet of research facilities and a corporate fitness center.” (MarketWatch)
  5. Macy’s Won’t Be the Only Retailer Facing Activists “Macy's may only be the tip of the iceberg. After a year of underperforming the broader stock market — and amid forecasts that they will record their weakest quarterly earnings performance in nearly two years — analysts have identified retail as the next sector that's likely to get rattled by activist investors. The potential targets aren't limited to one category.” (CNBC)
  6. How Much are These Nation-Based Global Funds Really Shelling Out for NYC Real Estate “The number of these funds has swelled over the past five years — there are now 73 sovereign wealth funds worldwide, up 18 percent from 2010, according to the investment-research firm Preqin. Altogether, the world’s sovereign wealth funds have $7.2 trillion in assets as of June 2015, according to the Sovereign Wealth Fund Institute, which tracks these funds.” (The Real Deal)
  7. Why NY’s Biggest Healthcare System Wants to Become One of NY’s Biggest Landlords “By 2020, healthcare’s on pace to account for 20% of US GDP. And as Northwell Health (formerly North Shore LIJ) chief physical assets officer Phil Silverman pointed out to the 450-plus who attended Bisnow's 5th annual NY Healthcare event, occupancy costs aren’t going down, and margins are razor-thin. It’s a serious problem for the industry, and Northwell has a bold way to address it, which Phil shared as the event’s keynote speaker.” (Bisnow)
  8. Larry Roth Steps Down as CEO of RCAP “After just two months in the role, Larry Roth has stepped down from his role as CEO of RCS Capital (RCAP), the struggling parent of Cetera Financial Group that plans to file a prearranged Chapter 11 bankruptcy by the end of the month. The resignation was not due to a disagreement with the company or its board of directors, the company said in an SEC filing. Roth will continue to serve as head of Cetera, which has about 9,500 across 10 broker/dealers.” (WealthManagement.com)
  9. The “Poor Door” and the Glossy Reconfiguration of City Life “The letter of the law and the interpretation of the law are not the same thing, and there is something genuinely grotesque in Extell’s interpretation of the affordability mandate—a mandate that exists not simply to house non-millionaires in Manhattan but expressly to house them alongside millionaires. (If, that is, the millionaires are even around; as my colleague Patrick Radden Keefe wrote yesterday, many of the wealthiest owners of Manhattan property use their apartments as investments while avoiding official residency, and the taxes that come with it.)” (The New Yorker)
  10. 6 Most Important Things I Learned from Managing People’s Money “If you don’t read the rest of this post, take this piece with you: Liquidity matters. It matters for you personally, and it matters for your investments. You need to be liquid. That means you should have some cash. Not cash “substitutes” like floating rate bonds or whatever garbage your broker sold you, but actual money in the bank. It should help you sleep at night and it should be there for your regardless of the economic environment.” (MarketWatch)
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