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10 Must Reads for the CRE Industry Today (July 27, 2018)

Wells Fargo is looking to sell its Eastdil Secured holdings, reports the Wall Street Journal. Extended Stay America might spin off its real estate, according to Skift. These are among today’s must reads from around the commercial real estate industry.

  1. Well Fargo Explores Sale of Real Estate Broker Eastdil “Wells Fargo & Co. is exploring a sale of its Eastdil Secured real-estate division, according to people familiar with the matter, as the bank continues to shed noncore businesses. The San Francisco bank has been sounding out private-equity firms to drum up interest in the real-estate brokerage and investment bank, the people said. Wells Fargo bought Eastdil in 1999 for an undisclosed sum in an effort to bolster its commercial real-estate-lending business.” (Wall Street Journal, subscription required)
  2. McDonald’s U.S. Comeback Hits a Speed Bump “McDonald’s is not lovin’ it when it comes to stiffening competition in the United States. The fast-food giant reported same-store sales growth at its U.S. restaurants rose 2.6% in the second quarter, missing Wall Street expectations for 3% in a rare miss by McDonald’s during its turnaround. McDonald’s has been anything but idle in wooing customers in the last two years as it shook off a few years lost to corporate stasis. It is doing things like adding fresh Quarter Pounder hamburgers and teaming up with the likes of Uber Eats to deliver.” (Fortune)
  3. Brooklyn Neighborhood Set to Get 900 Affordable Apartments as Part of $1 Billion Plan “New York City has selected three developers to build nearly 900 apartments on city-owned lots in the Brooklyn neighborhood of Brownsville as part of a $1 billion revitalization plan for area. The proposals outlined in the Brownsville Plan’s one-year progress report, which is set to be released Thursday, focus on affordable housing, job creation, new community facilities and public spaces.” (Wall Street Journal, subscription required)
  4. Extended Stay America Might Spin Off its Real Estate Unit “At a time when the majority of major hospitality brands pursue being completely ‘asset-light’ companies that own little to no real estate of their own, one holdout is considering joining the rest of the pack. Charlotte, North Carolina-based Extended Stay America is that company, following the lead of such companies as Hilton and, most recently, Wyndham. During a conference call with investors to discuss second quarter earnings Thursday, Extended Stay America CEO Jonathan Halyard said, ‘I want our shareholders to know that we continue to evaluate the merits of alternatives to our current corporate structure.’” (Skift)
  5. Supervalu to be Acquired for Nearly $3 Billion “Supervalu is being acquired in a deal that will result in the former supermarket giant’s exit from grocery store retailing. The company said Thursday that it is being acquired by grocery wholesaler United Natural Foods in a transaction valued at approximately $2.9 billion, or $32.50 per share in cash, including the assumption of outstanding debt and liabilities. The deal would create one of the nation’s largest food distributors, combining Supervalu’s strength in conventional grocery items with United Natural Foods’ emphasis on natural and organic products.” (Chain Store Age)
  6. The West Is the Best: These are the Fastest Growing States “The economy may have hit a soft patch in the first three months of 2018, but Washington and a handful of other far Western states skidded around the obstacles to growth. Washington posted the best performance among the 50 U.S. states in the first quarter, the federal Bureau of Economic Analysis said. Gross domestic product, the official yardstick for the economy, expanded at a 3.6% annual pace. By contrast, the U.S. economy as a whole grew just 2% in the first quarter.” (MarketWatch)
  7. Eager to Expand, Service Providers Strike Deals in Extended Real Estate Cycle “Commercial real estate service provider Cushman & Wakefield this week provided more details about its proposed IPO, in which it is seeking to sell 45 million shares for $17 per share for gross proceeds of $765 million. Under those terms, the company’s market cap would be nearly $3.4 billion, placing it below competitors CBRE Group and JLL. More than half of the proceeds would go toward paying down debt. Cushman & Wakefield’s proposed IPO comes a few years after a wave of consolidation swept through the commercial brokerage industry.” (Forbes)
  8. International Buyers Are Dropping Out of U.S. Housing Market “After strong interest for several years, international buyers appear to be souring on the U.S. housing market. The dollar volume of U.S. home sales to international buyers between April 2017 and March 2018 dropped 21 percent compared to the year-ago period, according to the National Association of Realtors. Of the $121 billion in sales to international buyers, those currently living in the U.S purchased $67.9 billion in properties, while non-resident foreigners purchased $53 billion, both marking a drop from the previous year.” (CNBC)
  9. Homes Have Become So Expensive in the Bay Area That Renting Is Now a Better Deal Than Buying “The rent or buy debate has come to a head in the ever-expensive Bay Area. A new study by Trulia found that for the first time in at least six years, you can save more money renting than buying a home in America's two most expensive metros, San Francisco and San Jose. That's because the gap has widened between rents and home values there. While the median rent remained constant over the last year in San Jose, home values surged by 29% to a median of $1.28 million. In San Francisco, rents dipped 3% and home values increased by 14.2% to a median of $1.4 million.” (Business Insider)
  10. Prosper Development with Plans for Crystal Lagoon Sells to International Investor, Local Partners “One of North Texas' most successful residential community developments has a new owner. An international investment firm has teamed up with two local developers to buy the 2,030-acre Windsong Ranch in Prosper. The $1.2 billion home community on U.S. Highway 380 has been under construction since 2013 and will eventually have more than 3,000 homes.” (Dallas Morning News)
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