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10 Must Reads for the CRE Industry Today (January 30, 2018)

Wynn Resorts has lost $3 billion in market value since sexual misconduct accusations against CEO Steve Wynn were made public, reports the Wall Street Journal. CNBC looks at the country’s 10 most valuable malls. These are among today’s must reads from around the commercial real estate industry.

  1. Amazon Just Expanded its HQ in Seattle. Now It Has a Rainforest “Amazon on Monday opens a rainforest-like office space in Seattle that it hopes will spark new ideas for employees. While cities across North America are seeking to host Seattle-based Amazon’s second headquarters, the world’s largest online retailer is still expanding its main campus. Company office towers and high-end eateries have taken the place of warehouses and parking lots in Seattle’s South Lake Union district. The Spheres complex, officially open to workers on Tuesday, is the pinnacle of a decade of development here.” (Fortune)
  2. Income Stocks with a Trump Tax Bonus “What’s new:  Beginning with returns filed in April 2019, shareholders will be able to trim 20% off the taxable part of their Reit dividends. It’s enough of a break to make many Reits a compelling purchase in a taxable account. Why 20%? Congress (the Republicans in it, that is) decreed that the economy would be boosted by a lowering of business income taxes. Businesses organized as corporations get a rate cut; those organized as partnerships, which pass through income to their partners, get a comparable benefit in the form of a 20% exemption.” (Forbes)
  3. Wynn Resorts Is the Biggest Test for Investors’ Tolerance “The price of sexual misconduct accusations has never been higher. Wynn Resorts has lost $3 billion in market value since its founder and chief executive was accused by former employees of behavior that would amount to a decades-long pattern of sexual misconduct. The situation is unique because of Steve Wynn’s role as CEO and his outsize importance to Wynn Resorts. ‘He is the company,’ industry executives and analysts say.” (Wall Street Journal, subscription required)
  4. Grocery Shoppers Could Move Online Twice as Fast as Originally Anticipated “The majority of U.S. grocery shoppers could be buying online within five years, according to a joint report from Food Marketing Institute and Nielsen. That timeline represents a faster pace of adoption than previously believed, as both organizations originally estimated it could take up to 10 years for consumers to warm up to buying groceries on the web. According to projections, 70 percent of shoppers will be buying some portion of their groceries online within five to seven years.” (CNBC)
  5. The Israeli Debt Game is Getting Crowded. Here’s a Look Inside the Battle to Win U.S. Business “Even three years ago, U.S. developers raising capital in Israel was something of a novelty. Scrappy mavericks and two-man shops willing to shepherd them through a long and hair-raising process while convincing a skeptical Israeli market stood to reap outsized rewards. But as the Americans have become a familiar presence in the market, Israel’s more established financial firms are trying to muscle their business away from the pioneers. And as they do, a high-stakes game of musical chairs among Israel’s financial talent is unfolding.” (The Real Deal)
  6. Decade of Easy Cash Turns Bond Market Upside Down “Last fall, a hydroelectric dam in Tajikistan, the government of Portugal and a cruise-ship operator all issued debt at unusually low interest rates. The seemingly unconnected deals are part of a proliferation of aggressive bond sales influenced by a decade of loose monetary policy and a demographic shift in global investing. Historical limits on who can borrow, and at what cost, have broken down as fund managers agree to previously unpalatable terms.” (Wall Street Journal, subscription required)
  7. America’s 10 Most Valuable Malls Are Brining in Billions in Sales. Here’s Where They Are “The U.S. retail landscape has its fair share of underperforming, out-of-date properties, but the highest-quality malls are still attracting shoppers in droves, raking in more than $1,000 per square foot, well above the industry's average. According to boutique research firm Boenning & Scattergood, the 20 most valuable malls in America that are owned by real estate investment trusts bring in roughly $21 billion in retail sales annually. So-called A malls owned by the likes of Simon Property Group, General Growth Properties, Macerich and Westfield have little to no vacancy today.” (CNBC)
  8. Aging Population Driving Medical Office Demand in U.S. “According to CBRE's recently released 2018 U.S. Real Estate Market Outlook, the aging U.S. population will be a significant tailwind for medical-office demand in the years ahead. ‘We expect demand for medical office buildings to grow, fueled by a shift away from the delivery of patient services on hospital campuses, the adoption of new technology, the aging population, health care job growth, tight market conditions and the relative recession-resistance of these properties,’ said Andrea Cross, Americas head of office research, CBRE.” (World Property Journal)
  9. ASB Fund Sells DC Trophy Building for $144M “900 G St., N.W., a 112,635-square-foot trophy office building in the East End submarket of Washington, D.C., has been sold to an affiliate of Masaveu Real Estate US for $144 million. The sale was announced by ASB Real Estate Investments, which sold the building on behalf of the Allegiance Fund, ASB’s $7.4 billion core investment vehicle. The acquisition of 900 G St. will grow Masaveu’s footprint in the U.S., which includes hotels in California and office buildings in Houston and Miami. The company’s portfolio here is reportedly valued at more than $720 million.” (Commercial Property Executive)
  10. Deal to Rescue Long-Vacant Wall Street Landmark Stalls “The curse of 23 Wall Street just won’t go away. A deal to rescue downtown’s long-vacant, black-sheep landmark from absentee Asian ownership has stalled more than 18 months since it was signed — and it’s unclear when, if ever, it will be completed. The latest problem for the building, once known as the ‘House of Morgan’ as the original headquarters for JP Morgan bank, can be traced to a mysterious Asian billionaire who is languishing in a Chinese prison.” (New York Post)
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