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10 must-770-Bal Harbour Shops.jpg Bal Harbour Shops rendering courtesy Zyscovich Architects

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

The risks of a global recession are rising, and central banks may have limited ability to contain the damage, according to The New York Times. Publicly-traded REITs are taking on riskier short-term debt, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Global Recession Risks Are Up, and Central Banks Aren’t Ready “Central bankers have a favorite mantra: Patch the roof while the sun is shining. But 10 years after the Federal Reserve worked alongside the European Central Bank and the Bank of Japan to bring the global economy back from the brink, their ability to prevent the next downturn is limited. Whether the world’s central banks are prepared to combat another slump is becoming less of a hypothetical question as the global economy shows signs of strain.” (The New York Times)
  2. Old Boys’ Club Gives Ground as More Women Join Real Estate Boards “Public real-estate companies are adding slightly more women than men as directors to their boards, a sign that this male-dominated industry may be starting to heed a call for gender diversity. Boards of real-estate investment trusts added 60 new female members, or 50.4% of the 119 new directors, during the 2019 spring proxy season, according to professional-services company Ferguson Partners. During the 2018 proxy period, 52% of the newly elected directors were women, marking the first time females comprised the majority of new board members.” (Wall Street Journal, subscription required)
  3. Cities Need Affordable Housing, But Builders Want Big Profits. Can It Work? “Along a mile of the Potomac River is an array of high-end hotels, entertainment venues, shops, restaurants and apartments. They include the 6,000-capacity Anthem concert venue, an InterContinental hotel and Vio, a luxury condominium where prices have soared up to $2.9 million. But the city has also required the developer to include affordable housing on the project’s 24 acres. Of the 761 units in the first phase of the development, 26 percent are listed as affordable, and more are promised in the second phase.” (The New York Times)
  4. Future Returns: Opportunities in Direct Real Estate Investing “For U.S. commercial real estate investment opportunities, head to the Sunbelt. Particularly Dallas; Atlanta; Charlotte, N.C.; Raleigh-Durham, N.C.; Orlando, Fla., and each of their surrounding suburban regions. That’s where David Koletic, real estate investment executive at Bank of America’s Specialty Asset Management Group, and his group are making direct investments for wealthy clients, family offices, and foundations.” (Barron’s)
  5. Real Estate Companies Amass Cheaper—But Riskier—Short-Term Debt “More publicly-listed real-estate companies are taking on short-term debt, assuming additional risk to reduce their borrowing costs. This debt, known as commercial paper, can have terms as short as a single night. It is a popular tool for many companies to cover accounts payable or pay for inventory. Real-estate investment trusts tend not to have these expenses, but some property firms are amassing short-term obligations because they can borrow at cheaper rates than longer-term debt. Interest rates on commercial paper are generally a half percentage point lower than those on bank credit facilities, according to a new report from Fitch Ratings.” (Wall Street Journal, subscription required)
  6. Have No Fear? Debt Brokers Say Deutsche Bank Quelled Concerns about Real Estate Lending “It’s business as usual. That’s the message Deutsche Bank has sent to New York’s real estate industry following the weekend announcement it would shutter its investment banking arm’s equity sales and trading divisions and slash thousands of jobs worldwide. The German bank has been battered in recent years, enduring losses and a declining reputation in part based on its associations with President Trump.” (The Real Deal)
  7. Bal Harbor Shops Lands $500 Million Construction Loan for its Long-Awaited Expansion “Bal Harbour Shops is about to get a lot bigger. The upscale mall, located at 9700 Collins Avenue, has secured a $550 million construction loan for its long-awaited expansion, which will add 300,000 square feet of retail space to its existing 463,000 square feet. Among the new tenants: A 57,414 square-foot Barneys New York, the first flagship store of the luxury department brand in the southeastern U.S.” (Miami Herald)
  8. Earthquake-Proof Buildings, Earthquake Vulnerable Buildings. What Do You Have? “The Ridgecrest earthquakes didn’t cause any notable damage in the Greater Los Angeles area. But the shaking did spur hundreds of thousands to ask that eternal question in earthquake country: How safe is my building? Major earthquakes in metropolitan areas of California have highlighted the vulnerabilities of certain types of buildings. Unreinforced masonry can crumble. Houses not bolted to foundations can slide. Brittle concrete towers can collapse, as can ‘soft story’ apartment buildings.” (Los Angeles Times)
  9. Macy’s New ‘Story’ Is the Outdoors “Macy’s is celebrating the great outdoors — with a little help from Dick’s Sporting Goods and Miracle-Gro — in its latest experiential store concept. The department store retailer has added Outdoor Story shops to 36 locations nationwide. The shops are the second iteration of Story at Macy’s, and come about 14 months after Macy’s acquired Story, the experiential Manhattan retailer that reinvents itself with a new theme every couple of months.” (Chain Store Age)
  10. Charlotte Investor Stakes Big Claim in Fulton Market “A North Carolina real estate investment firm has picked up a handful of prominent properties in the Fulton Market District, joining the cast of investors hoping to cash in on soaring rents in the fast-changing neighborhood. In separate deals that closed over the past two weeks, Charlotte, N.C.-based Asana Partners bought a trio of buildings surrounding Google's Midwest headquarters and purchased a stake in a multi-building mixed-use complex on the 900 block of Randolph Street, according to public records and sources close to the deals.” (Crain’s Chicago Business)
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