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10 Must Reads for the CRE Industry Today (January 7, 2019)

Investors are expected to favor real estate and infrastructure assets in 2019, according to Pensions & Investments. Activist investor Starboard Value LP is calling for the sale of Family Dollar, reports Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. As Big Retailers Seek to Cut Their Taxes, Towns Bear the Brunt “With astonishing range and rapidity, big-box retailers and corporate giants are using an aggressive legal tactic to shrink their property tax bills, a strategy that is costing local governments and school districts around the country hundreds of millions of dollars in lost revenue. These businesses — many of them brick-and-mortar stores like Walmart, Home Depot, Target, Kohl’s, Menards and Walgreens that have faced fierce online competition — maintain that no matter how valuable a thriving store is to its current owner, these warehouse-type structures are not worth much to anyone else.” (The New York Times)
  2. Falling Mortgage Rates Raise Hope for Battered Housing Market “Mortgage rates have fallen to around their lowest levels in eight months, offering a potential boost to the housing market after a rough patch in recent months. The average rate for a 30-year fixed mortgage fell to 4.51%, matching the lowest level since last spring, according to data released Thursday by mortgage-finance giant Freddie Mac . That rate is still higher than its level of 3.95% from a year ago but has fallen from a more-than-seven-year high of nearly 5% in October.” (Wall Street Journal, subscription required)
  3. Infrastructure, Real Estate to Remain High on Investors Lists “Real estate and infrastructure are expected to remain the most popular of all the real asset sectors in 2019, despite increasing leverage in real estate and slow distributions in infrastructure, industry executives say. The new year is expected to build on the asset classes' popularity in 2018. In 2018 as of Dec. 20, infrastructure funds raised a total of $83.8 billion worldwide, compared to 88 funds that closed on $75.1 billion in all of 2017, a record year in terms of total capital raised by infrastructure funds, according to London-based alternative investment research firm Preqin.” (Pensions & Investments)
  4. Activist Starboard Seeks Family Dollar Sale, Board Changes at Dollar Tree “Activist investor Starboard Value LP on Monday called on Dollar Tree Inc to sell its underperforming Family Dollar business and proposed replacing a majority of its board after taking an almost 2-percent stake in the company. In a statement, Dollar Tree said its board had “the right balance” and did not comment on the fund’s call for a change in pricing strategy and a sale of a business, which now accounts for more than half of its 14,000 U.S. stores.” (Reuters)
  5. Senior Cohousing an ‘Antidote to the Loneliness’ That Hits People as They Age “JoAnna and Ken Allen wanted to relocate from suburban Baltimore to the East Bay to be closer to their three children and four grandchildren. But JoAnna was reluctant to give up the friends and activities she had established after 45 years in Maryland and didn’t know what she’d do out here. ‘I was imagining living in an apartment and reading books all day long,’ she said. The couple heard that a new senior cohousing project called Phoenix Commons was going up in Oakland, so on the way to the airport after a visit to the Bay Area in 2015, they stopped in to see it.” (San Francisco Chronicle)
  6. Starbucks CEO Kevin Johnson Reins In Predecessor’s Ambitions: ‘I am not Howard’ “Starbucks Corp. Chief Executive Kevin Johnson is scaling down some of founder Howard Schultz’s biggest initiatives as he seeks to revive sales in the chain’s core coffee shops. Mr. Johnson is curbing ambitious plans for a related brand of upscale coffee shops that were central to the company’s growth strategy just two years ago. Under Mr. Schultz’s vision, the chain had planned to open about a thousand Starbucks Reserve cafes, where baristas would brew more expensive coffee using the latest techniques, serve artisanal baked goods and even mix cocktails.” (Wall Street Journal, subscription required)
  7. Kroger and Microsoft Take On Amazon with Digital Grocery Store Experiment “Amazon.com Inc. is used to being the industry disrupter, but grocer Kroger Co. (KR - Get Report) and software company Microsoft Corp. have teamed up to encroach on the online retailing giant's territory. The two companies announced they are remodeling two test stores to try out certain features like ‘digital shelves’ that can show ads among other digital breakthroughs using RaaS feeds.” (The Street)
  8. DHA’s Move Toward Private Partnerships Is Good for Affordable Housing in Dallas “We’ve long argued that to make a dent in the generational poverty that grips large swaths of our community, Dallas has to develop stronger partnerships with private developers to provide more much-needed affordable housing. For far too many of our citizens — even some with full-time jobs — housing is too expensive in our city and there simply aren’t enough of the places that are affordable to go around. That’s why we’re encouraged to learn that the Dallas Housing Authority has made another positive step in its plan to engage private developers to help fill some of the gaps.” (Dallas Morning News)
  9. Equus Capital Sells 345 KSF Office in Scottsdale “A joint venture between Oaktree Capital Management LP and Cypress Office Properties has acquired Raintree Corporate Center in Scottsdale, Ariz. Equus Capital Partners sold the 345,417-square-foot, multi-tenant office property for $91.7 million. Located at 8800 and 8888 E. Raintree Drive, the institutional-quality office project sits on a little more than 11.6 acres and was constructed between 2007 and 2008. The asset features two three-story office buildings and a six-level parking garage. It also offers on-site amenities such as a deli/restaurant and fitness center.” (Commercial Property Executive)
  10. Combined U.S. Housing Market Worth $33.3 Trillion in 2018 “According to Zillow research, the U.S. housing market is more valuable than ever, worth a cumulative $33.3 trillion in 2018. Since the market hit its lowest point in 2012, it has gained $10.9 trillion in value, and is now worth $4 trillion more than it was at the peak of the housing bubble. Since owning a home is the single largest source of wealth for many U.S. households, and the collapse of the housing market and subsequent recession demonstrated the importance of housing to the overall U.S. economy.” (World Property Journal)
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