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10 Must Reads for the CRE Industry Today (January 27, 2017)

10 Must Reads for the CRE Industry Today (January 27, 2017)


  1. What A 2017 SEC Filing Can Tell Us About America's Real Estate Presidency “As America’s real estate president begins his term of office, it is, perhaps, fitting that the top loan in one of the year’s first CMBS deals turns out to be for a building that’s closely connected to the president’s son-in-law and fellow real estate developer, senior White House adviser Jared Kushner. And not just any building, but one that can be said to represent one of the president’s favorite targets: the media. CD 2017-CD3 Mortgage Trust is a $1.1 billion commercial mortgage-backed securities deal issued by Citigroup, according to the preliminary prospectus filed with the Securities and Exchange Commission this week. The sponsor behind the deal’s $370 million top loan – for the retail portion of the former New York Times headquarters at 229 W. 43rd St. in Manhattan – is listed in the prospectus as Jared Kushner. The 'sponsor' classification is a strong indication of ownership of a property. Kushner is also listed as a guarantor.” (Forbes)
  2. Sears Shares Tank on Forecast It’ll Burn Through $1.8 Billion This Year “Sears Holdings's (SHLD, -3.02%) cash problems are only getting worse, raising the odds the troubled retailer may have to restructure, credit agency Fitch Ratings said in a research note this week, implying the possibility of a bankruptcy filing. The company, which also operates the discount Kmart chain, is likely to burn through $1.8 billion in the fiscal year starting next week, an even bigger cash drain than 2016, Fitch estimates. And to keep up, Sears will have to raise some $2 billion to get through the latest cash squeeze. The company has been selling off assets for years such as its tools brand Craftsman, the Lands' End apparel brand, some of its best stores, and its stake in Sears Canada, as a long promised turnaround has failed to materialize. The company has lost more than $10 billion since as sales have cratered. During the holiday season, comparable sales at Sears and Kmart fell 12 to 13%, a sharper drop than earlier periods in the years, and Sears Holdings said this month it would close 150 stores. And Fitch warned investors that the company is running out of ways to raise money.” (Fortune)
  3. Economy Watch: US GDP Growth Tepid in Q4 “U.S. GDP in the fourth quarter grew at an annualized rate of 1.9 percent, a drop from the third quarter surge, when the rate came in at 3.5 percent, the Bureau of Economic Analysis reported on Friday. The estimate is the bureau’s first for the quarter, and so it is necessarily preliminary. Usually, but not always, estimates are adjusted somewhat upward in later months. Real GDP increased 1.6 percent for all of 2016, the BEA also reported, compared with an increase of 2.6 percent in 2015. A number of factors were drags on economic growth during the year, including a downturn in private inventory investment (business spending), a deceleration in personal consumption expenditures, a downturn in nonresidential fixed investment—part of which is commercial real estate—and deceleration in residential fixed investment and in state and local government spending.” (MultiHousing News)
  4. Teen retailer Wet Seal closing all its stores “Troubled teen retailer Wet Seal LLC is closing all of its stores after it was unable to nail down fresh capital or a buyer. In a letter dated Jan. 20, the retailer notified employees in its Irvine, Calif., headquarters that the office would be permanently closed and all of the workers would lose their jobs. 'Unfortunately, the company was unable to obtain the necessary capital or identify a strategic partner, and was recently informed that it will receive no further financing for its operations,' Vice President and General Counsel Michelle Stocker wrote in the letter, a copy of which The Wall Street Journal reviewed. There are 148 employees in the company's headquarters, according to a public notice of the layoffs. Wet Seal's website says the chain has 171 stores in 42 states. Earlier this month, the Journal reported that Wet Seal was exploring its options, including a liquidation, sale or restructuring that could take place in or out of bankruptcy court.” (MarketWatch)
  5. Modern furniture retailer opens largest store to date “Design Within Reach has opened a store in Portland, Ore., in an historic building that dates back to the end of the 19th century. The retailer opened in the city’s North Pearl District, in a circa 1890 two-story brick warehouse that originally served as a distribution center for pottery and housewares. ‘We're thrilled to be a part of the vibrant, evolving Pearl District and the opportunity to support the preservation of this historic building,’ says DWR president John McPhee. The 26,000-sq.-ft. space replaces the company's previous location nearby and is its largest showroom in North America. New York-based architectural firm DFA partnered with Portland's Fieldwork Design and Architecture on the project, which draws inspiration from the landscape of the Pacific Northwest. The wood-slatted ceiling and dark wood floor of the partially enclosed environment reflect the warmth and the spirit of the region.” (Chain Store Age)
  6. NYU plans $500M expansion in Downtown Brooklyn “New York University isn’t just gobbling up space in Greenwich Village. The university plans to spend $500 million on an expansion in Downtown Brooklyn. NYU President Andrew Hamilton said the 10-year plan includes adding 500,000 square feet to the school’s Tandon School of Engineering by renovating the MTA’s former headquarters at 370 Jay Street. That project will nearly double NYU’s 600,000-square-foot footprint in the area. The high tech school, which has more than 5,200 students enrolled, plans to move into the 500,000-square-foot Jay Street building by the fall of 2017. NYU signed a 99-year ground lease for the building in 2012, under an initiative by the Bloomberg administration to boost science, technology, engineering and math (STEM) education.” (The Real Deal)
  7. Serendipity Labs Sets Up Shop in Nashville, Denver “Serendipity Labs Coworking just keeps growing and growing. The members-only, upscale workspace provider has recently secured exclusive development agreements with two new franchise partners, paving the way for the opening of 10 new workplaces in Nashville and Denver. The co-working market is on fire, and it’s not just for startups and freelancers anymore. ‘There is a massive shift away from conventional leases under 5,000 square feet, and upscale co-working, like Serendipity Labs, that can meet enterprise standards, is winning this demand now,’ John Arenas, CEO of Serendipity Labs Coworking, told Commercial Property Executive.” (Commercial Property Executive)
  8. Genting asks FAA to re-approve towers planned for old Miami Herald site “Malaysian gambling giant Genting is in a holding pattern on the bayfront property once owned by the Miami Herald: The company says it won’t sell the land but is still far from being able to build the casino it wants. On Monday, Genting asked the Federal Aviation Administration to re-approve plans to build three 649-foot towers, federal records show. The FAA approved the towers in 2013, but that approval expired Jan. 10. Real estate blog the Next Miami first reported the news. The towers are not expected to rise anytime soon. Art Miami recently said it had struck a deal to set up its tent on the site for the next several years. Genting also wants to build a marina on the property, which it bought for $236 million in 2011.” (Miami Herald)
  9. See Facebook’s $1 billion datacenter campus that’s growing in North Fort Worth “Facebook is still busy building its $1 billion datacenter in North Fort Worth. And the mega social media firm recently increases the size of its property by almost 50 percent in the AllianceTexas development in Tarrant County. Construction started on the 4-phase datacenter development back in mid 2015. The project in North Fort Worth is one of several regional datacenters in the U.S. that Facebook uses to power its huge online social networking site. Originally the company had a 110-acre tract on State Highway 170 near Interstate 35W.” (Dallas Morning News)
  10. South Park’s huge Circa towers will offer rents from $3,000 “Downtown LA’s crane-dotted skyline is a reminder that construction is flourishing. One under-construction complex near the Staples Center, at 12th and Figueroa, will bring two 35-story towers containing 648 luxury rentals to the South Park neighborhood. Formerly known as 1200 Fig but now called Circa, the Harley Ellis Devereaux-designed project includes the two towers, which will sit on a seven-story podium with numerous resident amenities, and 48,000 square feet of ground-floor retail space. The space is expected to house three restaurants and as many as four retail stores. The podiums will feature about 17,000 square feet of digital signs, an increasingly common feature on South Park towers with retail. If that sounds a little like New York’s Times Square, well ... “We are creating something that will rival Times Square, change the LA skyline and become a magnet in the downtown area,” said Scott Dobbins, president of Hankey Investment Company. Hankey is one of four ‘investment entities’ that makes up Circa 1200 LLC. Another is prominent corporate landlord, Jamison Services.” (Los Angeles Curbed)
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