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10 Must Reads for the CRE Industry Today (January 29, 2019)

Chinese investors continued to dispose of U.S. assets in the fourth quarter, reports the Wall Street Journal. The New York Times looks at whether the tech industry can help solve the affordable housing shortage. These are among today’s must reads from around the commercial real estate industry.

  1. Money Funds Buy Most of Fannie Mae SOFR Bond Issue “U.S. money market funds on Monday bought most of a $2 billion Fannie Mae floating-rate debt offering referenced against the Secured Overnight Financing Rate (SOFR), the U.S. mortgage finance agency said. Fannie Mae and other companies have been issuing more floating-rate bonds that are benchmarked against SOFR, which is an alternative to the London interbank offered rate (LIBOR).” (Reuters)
  2. Chinese Exiting U.S. Real Estate as Beijing Directs Money Back to Shore Up Economy “Chinese purchases of U.S. real estate last year dwindled to their lowest level since 2012, as Beijing kept up the pressure on Chinese investors to bring cash home during a period of worsening economic growth. Insurers, conglomerates and other investors from mainland China were net sellers of $854 million of U.S. commercial real estate in the fourth quarter, according to Real Capital Analytics. That marked the third-straight quarter Chinese investors sold more U.S. property than they bought, the first time ever these investors have been sellers for that long a stretch.” (Wall Street Journal, subscription required)
  3. Wynn Resorts to be Fined Over Sex Allegations Against Steve Wynn “Nevada gambling regulators say they will fine Wynn Resorts after an investigation found former executives failed on multiple occasions to investigate allegations of sexual misconduct against former CEO and founder Steve Wynn. A complaint and settlement released Monday by the Nevada Gaming Control Board detailed at least seven allegations of misconduct by Wynn dating to 2005 where the board says former executives and managers failed to act. The control board’s settlement with Wynn Resorts does not revoke or limit its gambling license but requires the company to pay a fine. The amount will be set by the Nevada Gaming Commission.” (MarketWatch)
  4. Can Technology Help Fix the Housing Market? “Billions have been flowing into a corner of the tech industry focused on the housing market. And now there are start-ups to help landlords manage properties, or homeowners manage sales, or tenants manage their packages. But hardly any of it touches the central problem of housing: For many people, it costs too much. ‘None of that investment, nor the solutions that those companies are offering, will fundamentally change the dynamic of the housing market in a way that increases housing affordability,’ said Matt Hoffman, the vice president for innovation at the national housing nonprofit Enterprise Community Partners.” (The New York Times)
  5. U.S. Tariffs Will Slow GDP Growth: Congressional Budget Office “Tariffs imposed by the Trump administration will limit growth of U.S. real gross domestic product by an average of 0.1 percent each year for the next 10 years if they remain in place at current levels, the Congressional Budget Office (CBO) said on Monday. The nonpartisan agency said growth of GDP - a measure national economic output - would be curbed by a drop in consumer spending power and a fall in U.S. exports. Those declines would be only partly offset by an expected increase in output as domestic goods replace imports, the CBO said in its budget and economic outlook for 2019-2029.” (Reuters)
  6. Cooling Housing Market Prompts Scrutiny of Some Lenders “One of the principal gatekeepers to housing-finance markets is stepping up scrutiny of nonbank mortgage lenders, concerned that some may not have the financial heft needed to overcome stressed conditions. The increased oversight by the Government National Mortgage Association, or Ginnie Mae, comes as nonbank lenders play an ever-bigger role in making mortgages to Americans and as housing markets are cooling. Many of these companies flourished after the financial crisis as banks stepped back from the mortgage market but haven’t yet been tested by an economic downturn.” (Wall Street Journal, subscription required)
  7. How to Launch Yourself into Real Estate Investing “I would have to write a book to even begin to properly cover all the things a new real estate investor would need to know to get started. I am going to try to do it here in just a few hundred words. I thought long and hard about how to address the topic and provide an end result that is still useful and not just trite clickbait like so much we see these days. I figured I needed to boil this down to the very basics. I had to really think: What are the fundamentals of real estate investing? What is it every aspiring real estate investor needs? It can be different for everyone, and it depends on what motivates you, your expectations, current financial status and more.” (Washington Post)
  8. 760 Madison Ave. Deal Will Help Ailing Luxury Retail Market “The deal for SL Green and Armani Group to redevelop 760 Madison Ave. — home to Giorgio Armani’s flagship emporium — is good news not only for the once-squabbling developer and tenant, but also for the city’s entire luxury retail scene, which can use all the help it can get. The project will include a new Armani flagship store when it’s completed in 2023, and is a vote of confidence in Madison Avenue’s future as the Big Apple’s preeminent high-end shopping corridor.” (New York Post)
  9. Are New Brick-and-Mortar Solutions the Key to Digital Brand Growth? “A few more communal retail spots have arrived in recent months to join a growing crop of places offering turnkey solutions to support digital natives’ journey to physical retail. In December, a four-story brick and mortar retail concept called SHOWFIELDS, ‘bringing digitally native brands to life with customized flagship spaces’ opened in lower Manhattan. So far, only the first floor has opened with a focus on wellness brands. Most of the 11 tenants offer testing and trial in Instagramable settings.” (RetailWire)
  10. Amazon to Open Last Mile Delivery Center in the Bronx “Amazon will open the last-mile center at a pair of warehouses, at 1300 Viele Avenue and 1301 Ryawa Avenue, which were purchased by MRP Realty and AEW Capital Management last year. The duo paid $26.5 million for the adjacent warehouse, which together take up an entire block, property records indicate. The fulfillment center will be Amazon’s first in the Bronx, and will open later this year, according to the Welcome2theBronx.” (Commercial Observer)
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