- Can banks handle $400 billion in refinancings? “Banks burned by soured home loans in the aftermath of the housing bust and subsequent financial crisis found a quick replacement: mortgages secured by commercial properties ranging from malls to offices. In the years since 2008, U.S. lenders have opened the commercial real estate (CRE) credit spigots, lending money underpinned by properties including hotels, multifamily rental units and industrial compounds. Banks' total share of the CRE market has subsequently jumped to a record 52 percent of loan originations compared to just 35 percent as recently as two years ago, according to Morgan Stanley data. Now the concern is that banks won't be able to fund the $400 billion worth of CRE loans that need to be refinanced in 2017 alone as financial regulators step up their scrutiny of the sector. That worry has grown more acute as sales of commercial mortgage-backed securities (CMBS) have fallen to levels not seen in more than a decade. ‘Banks have been filling the void in the CMBS market, where issuance has declined 50 percent year-on-year,’ Morgan Stanley analysts led by Richard Hill wrote in a note. ‘Given [regulators'] increasing concern about banks with high CRE exposures and years of loosening underwriting standards, we see a scenario where the most exposed banks will be unable to satisfy the CRE market's financing needs.’" (Chicago Crain’s citing Bloomberg)
- Q&A: Closing the commercial real estate gender gap “Though the income differences between men and women in commercial real estate are shrinking, a significant income gap still exists along with a gender gap when it comes to opportunities and advancement. So what can women in the commercial real estate industry do to narrow that gap and create more opportunities? AZRE talks business, leadership and what it takes to thrive in the commercial market with local executives Karen Halpert, senior vice president, head of property management of VEREIT, Inc.; and Lisa Johnson, president and CEO at Corporate Interior Systems (CIS).” (AZ Big Media)
- Security Robot Pwns Toddler at Stanford Mall: Report “The toddler, named Harwin, was allegedly assaulted by the shopping mall’s security robot, which stands five-feet-tall and weighs 300 pounds. Harwin didn’t suffer any serious injuries, but the robot ran over his right foot causing it to swell. He also got a nasty scrape on his leg from the incident. The parents said the machine is dangerous, and they’re hoping to get the word out to prevent others from getting hurt... The robot is developed by Knightscope, a Silicon Valley startup located in Mountain View (the robot happens to bear the name of its manufacturer). The current version, the K5 beta prototype, is a fully autonomous robot that’s used to deter and detect crime. To that end, it’s equipped with a battery of instruments, including a video camera, thermal imaging sensors, a laser range finder, radar, air quality sensors, and a microphone. When the Knightscope K5 senses trouble, it alerts local authorities—though it didn’t seem particularly concerned when it plowed into the toddler earlier this week. Little is known about the incident, but the robot’s sensors didn’t seem to detect Harwin—and that’s obviously a problem. This Knightscope K5 unit, which began its duties at the mall last year, will undoubtedly come into contact with other pint-sized shoppers.” (Gizmodo)
- Compass wants investors to believe it’s worth $1.3B “Less than a year after raising $60 million, Compass is seeking a new cash infusion that sources said would value the company between $1.2 billion and $1.3 billion, The Real Deal has learned. To date, the three-year-old startup brokerage has raised $135 million from investors including Joshua Kushner’s Thrive Capital, Founders Fund, .406 Ventures, Salesforce CEO Marc Benioff and Condé Nast parent Advance Publications, all of which made repeat investments in Compass. ‘With our last funding round less than 10 months ago, and due to extremely strong [first half of 2016] results, Compass is exploring another funding round based on inbound interest from investors,’ Compass told The Real Deal in a statement, adding that proceeds from the round — expected to close in late 2016 — would fund its international expansion. ‘While the company has not yet begun formally inviting specific existing investors to participate, every existing investor that was asked if they would be interested in investing in the next round said they would like to.’” (The Real Deal)
- HCP CEO Lauralee Martin Steps Down “HCP, the largest healthcare REIT in the U.S., has announced that CEO Lauralee Martin, who assumed the role in 2013, has stepped down. Executive Chairman Michael McKee has assumed the additional role of interim president & CEO. The board will begin the process of appointing a permanent CEO, which is expected to take between three and six months. ‘With the completion of our strategic portfolio review in May and the resulting spin-off transaction that is well underway, the board felt now is the appropriate time to advance the process of developing HCP’s next generation of leadership. We have made substantial progress towards rebuilding our executive team to align with our strategic vision for the future, and identifying our next CEO represents the cornerstone of that effort,’ McKee said in prepared remarks.” (Commercial Property Executive)
- AMC to buy Odeon & UCI but Carmike deal at ‘considerable risk’ “AMC Entertainment Holdings Inc. said Tuesday that it would acquire European movie theater operator Odeon & UCI Cinemas Group in a roughly GBP500 million ($650 million) deal even as the U.S. theater chain works to close its delayed deal for Carmike Cinemas Inc. At the same time, the company warned that its $1.1 billion deal to buy Carmike remains at “considerable risk” because some shareholders have an “unrealistic view” of Carmike’s value to AMC. AMC said the deal to buy Odeon & UCI would make it the world’s largest movie theater operator. Odeon & UCI operates 2,236 screens in 242 theaters across seven European countries, including in the U.K., Spain and Italy. AMC has 385 locations and 5,380 screens located primarily in the U.S. AMC is buying the European theater operator from private-equity firm Terra Firma in a deal valued at about GBP921 million, including GBP407 million in debt. The equity part of the deal comprises 75% stock and 25% cash.” (MarketWatch)
- Remove the zoning cap and increase housing density “It can seem like gigantic apartment buildings are springing up on every corner, but constructing large residential towers in New York City is a lot tougher than you think. In fact, restrictions on residential-building size, even in the densest neighborhoods of Manhattan, are now working against the development of affordable housing. Last month, a bill was introduced by lawmakers in Albany to remove a longstanding cap on the size of residential buildings in New York City. The legislation, which ultimately was tabled so that it could be given a fuller hearing next year, has the potential to generate a significant amount of affordable housing, almost all in neighborhoods out of reach for all but the wealthiest New Yorkers. The bill would have allowed the city to rezone neighborhoods for more density and affordability without having to get Albany’s permission. Today, areas like midtown, the financial district and downtown Brooklyn are already zoned at or near the maximum, which is 12 times the square-footage of the lot on which a building stands. With this restriction gone, the city could allow larger apartment buildings.” (Crain’s New York)
- Toys 'R' Us CEO Says He Wants Toy Chain to Return to New York City “Back to the example of the toy market in New York City, where the company operates just a single store now—a Babies ‘R’ Us store in Union Square. Brandon hinted the main Toys ‘R’ Us brand could return to the island of Manhattan, though he admits it won’t look like it did in the past. He says locations will likely be smaller, perhaps between 8,000 to 12,000 square feet, an ‘urban model’ that is similar to what Toys ‘R’ Us operates in China. Those potential city locations would have a leaner inventory, but also would be commercially feasible. Why would Toys ‘R’ Us want to think about building urban stores when consumers are spending more and more money online? Brandon explained that there’s a synergy between the two. ‘They work together,’ he said, adding online sales are stronger when there is a physical store in the neighborhood. They also are a distribution center, as Toys ‘R’ Us can ship from those retail locations. Another point of differentiation, Brandon hopes, is the fact that Toys ‘R’ Us is the only national chain left that just focuses on selling toys. ‘We are a specialty retailer and we need to really compete on that,’ he argues.” (Fortune)
- Forecast for back-to-school spending is sluggish “After two years of benefiting from gasoline price tailwinds, still-stressed consumers will generate only a sluggish 3.3% year-over-year increase in this year’s back-to-school sales, according to Customer Growth Partners’ 14th Annual BTS Forecast. Total BTS sales for the season will reach $540 billion — a new record, but the lackluster 3.3% growth represents a marked slowdown from the 4%-plus BTS growth seen in both 2014 and 2015, when sales were boosted by declining gasoline prices. ‘As in past years, the single biggest driver of retail sales is real income growth, which remains anemic for all but the highest income quintiles,’ said Craig Johnson, president, Customer Growth Partners, a consulting and research firm covering the retail industry. Johnson noted that rising gasoline prices in many parts of the nation are another factor in consumer spending. ‘At the same time, discretionary income normally available for retail spending has been crowded out by non-discretionary spending for health care, insurance, housing and student debt — to the tune of about 4% of consumer spending,’ he added.” (Chain Store Age)
- Bloomingdale's will join WeWork at new Long Island City office tower “Bloomingdale's will anchor a $700 million office tower that Tishman Speyer is putting up in Long Island City. It will join co-working-space provider WeWork at the two-tower project. The high-end department store, owned by Macy's Inc., has agreed to take about 550,000 square feet of office space at the 1.1 million-square-foot buildings at 28-10 Queens Plaza South, according to sources. On Monday, Tishman Speyer revealed that WeWork took 250,000 square feet at the 27-story development and noted that it had leased 550,000 square feet, but would not disclose the name of the tenant. A spokeswoman for Bloomingdale's did not respond to a request for comment, while Tishman Speyer declined to comment.” (Crain’s New York)
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