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10 Must Reads for the CRE Industry Today (January 31, 2019)

Brookfield Asset Management completed fundraising for a $15 billion real estate fund, reports the Wall Street Journal. The New York Times looks at the efforts to make New York’s The Strand bookstore a landmark. These are among today’s must reads from around the commercial real estate industry.

  1. Brookfield Raises $15 Billion Real Estate Fund “Brookfield Asset Management Inc., which made some of the world’s largest real-estate deals last year, has finished raising its largest-ever property fund at $15 billion, the company said. The global fund, which will seek high returns by taking more risks than conservative investors, is the second-largest private real-estate fund ever to close, slightly smaller than the record $15.8 billion fund that Blackstone Group closed in 2015, according to data firm Preqin. Blackstone also is on the verge of closing an even bigger fund.” (Wall Street Journal, subscription required)
  2. Treasury Yields Extent Decline Below 2.7% in Wake of Fed Meeting “Treasury prices extended their rally early Thursday, dragging down yields, as bullish investors took comfort in the outcome of a Federal Reserve meeting that signaled a pause in rate hikes. The 10-year Treasury note yield fell 2.7 basis points to 2.668%, while the 2-year note yield as down 2.8 basis points to 2.498%. The 30-year bond yield  slipped 2.9 basis points to 3.025%. Bond prices move in the opposite direction of yields.” (MarketWatch)
  3. Local Leaders Find That Supporting Bay Area Housing Plan Spurs Anger at Home “In Rohnert Park, hometown of Sonoma State University, the Graton Casino and strip malls packed against Highway 101, the regional housing battle has become personal. The North Bay city is also home to Jake Mackenzie, local councilman and chair of the Bay Area Metropolitan Transportation Commission, a powerful transit planning agency that recently became bullish on housing. Earlier this month, Mackenzie landed in the crosshairs of a debate that has split cities and counties throughout California. In an abrupt decision, his City Council colleagues removed him from two board seats — one on the Sonoma County Transportation Authority, the other on the Sonoma-Marin Area Rail Transit District (SMART).” (San Francisco Chronicle)
  4. Blackstone Posts First Quarter Loss, Hurt by Falling Markets “Blackstone Group LP reported a quarterly loss Thursday, its first since the third quarter of 2015, as volatile fourth-quarter markets hurt the value of its private-equity investments. The firm posted a net loss of $10.9 million, or 2 cents a share, in the fourth quarter, compared with a profit of $304.1 million, or 45 cents a share, a year earlier.” (Wall Street Journal, subscription required)
  5. The Battle to Make the Strand a Landmark is About More Than a Building “Save for the Strand, the city’s biggest and most famous indie book shop, nearly all the rest is long gone, like the small-town, scruffy Village of the 1970s. What’s there now is a scrubbed, wealthy enclave punctuated by new luxury high rises and vacant storefronts. You might think this would make the site of the Strand a no-brainer for landmark status. But its third-generation owner, Nancy Bass Wyden, is having none of it. Rallying its devotees, she has been scrambling to keep her beloved shop’s 11-story, 1902 Italianate building, 828 Broadway, designed by William H. Birkmire, off the city’s registry of designated landmarks. She says that landmark regulations would saddle her unionized, thin-margin business with potentially crippling burdens.” (The New York Times)
  6. A Cluster of Towers at Market and Van Ness? Two are Rising and More are on the Way “The tower proposed for Market Street and South Van Ness Avenue hasn’t even been approved, but it’s already raised the bar for how developers and architects pitch big buildings in the San Francisco of 2019. The 590-foot residential tower would include sky gardens to ‘integrate nature with urban context,’ its developers say. They also promise the city’s ‘first carbon-neutral high rise,’ and only 246 parking spaces would accompany the 984 apartments. Add maker spaces and $13 million for affordable housing, and what’s not to like?” (San Francisco Chronicle)
  7. Prologis Reports on Logistics’ Global Growth “Prologis’ Logistics Rent Index examined the global landscape of logistics real estate and revealed rents on a global scale rose 6 percent. Rent growth globally in our industry—logistics real estate—has been incredibly strong and remains incredibly strong,’ Chris Caton, Prologis’ global head of research, told Commercial Property Executive‘The U.S. is a market that has had critical growth over the last four or five years and that continued last year as well.’” (Commercial Property Executive)
  8. Michaels Closes 36 Pat Catan’s Stores, Cites Consumer ‘Volatility’ Ahead “Irving-based arts and crafts retailer Michaels is closing all 36 Pat Catan's stores, mostly in Ohio, and said Wednesday that its fourth quarter is getting hit by new shopping patterns that showed up in January. ‘So far in January, we have seen more volatility in consumer shopping behavior than we initially expected,’ said Michaels CEO Chuck Rubin. As a result, he said, Michaels is lowering its fourth quarter outlook for same-store sales and profit.” (Dallas Morning News)
  9. Chris Herron Talks CMBS, Loan Workouts and Iron Hound’s Competitive Edge “From navigating $500 million CMBS loan workouts, to arranging an upsized $647 million debt package for Industry City and everything in between, Iron Hound is an industry force to be reckoned with. Often tasked with tackling the market’s more complex, hairier deals, Chris Herron is in the trenches on a daily basis, assisting borrowers in complex restructurings as well as debt and equity placements from coast to coast.” (Commercial Observer)
  10. Vornado Completes $168M Refi of NYC Office Building “A joint venture that’s 45.1 percent-owned by Vornado Realty Trust has completed a $167.5 million refinancing of 61 Ninth Ave. in Manhattan’s Meatpacking District. Rafael Viñoly Architects designed the newly constructed nine-story, 170,000-square-foot, Class A office building. The office space is fully leased to Aetna, and its retail component is home to the world’s largest Starbucks store.” (Commercial Property Executive)
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