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10 Must Reads for the CRE Industry Today (July 28, 2017)

Nordstrom is offering preferential terms to potential equity partners who would fund a buyout, reports Reuters. Small-scale investors come to the forefront in the single-family rental market, according to The New York Times. These are among today’s must reads from around the commercial real estate industry.

  1. Nordstrom Family Offers Preferential Terms to Clinch Buyout Partner, Sources Say “The group of Nordstrom Inc. family members seeking to take the eponymous U.S. department store operator private is offering preferential terms to potential equity partners willing to fund the buyout, people familiar with the matter said. The Nordstrom family's decision to offer these concessions underscores the apprehension of investors over leveraged buyouts of department store chains, as private equity-owned peer Neiman Marcus Group Inc now struggles with its debt pile.” (Reuters)
  2. L.A. Commercial Property Sales Decline, but Total Surpasses Slumping Manhattan “High-priced trades of hotels, shopping centers and industrial properties helped launch L.A. County to an estimated $12.6 billion in sales, according to a study released Thursday by property data provider Real Capital Analytics. That total was down 11% from the first half of 2016, but property sales in Manhattan, last year’s leader, fell much more — 55% to $10.6 billion as big investors such as pension and sovereign wealth funds grew more wary of pulling the trigger, said analyst Jim Costello of New York-based Real Capital Analytics.” (Los Angeles Times)
  3. Smaller Housing Markets Lure Individual Investors “While publicly traded companies like American Homes 4 Rent and Colony Starwood Homes are major players in this market, most single-family rental properties are owned by small-time investors, like Mr. Bahr. In 2015, 85 percent of the 17.5 million single-family rental properties in the United States were owned by investors with portfolios of 10 properties or fewer, with 45 percent of those houses owned by investors with only one property, according to the Housing Finance Policy Center at the Urban Institute, a research institution.” (The New York Times)
  4. Retail’s New Normal: Three Trends Stores Must Embrace to Win “You need only look at Wall Street's reaction to the nearly $14 billion acquisition of Whole Foods – or the multitude of headlines about brick-and-mortar locations doubling as distribution hubs – to see that a new normal is on the horizon for the retail industry. Retail consumers today are adapting to new shopping norms that include more choices, co-browsing (in-store while shopping on a mobile device) and higher expectations. So what are today's retail leaders doing to ensure future success?” (Forbes)
  5. Starbucks Tempers Expectations, Says It’s Closing All of its Teavana Stores “Starbucks Corp on Thursday reported quarterly profit that matched analysts' estimates, but tempered expectations for the current quarter amid softness in the U.S. retail and restaurant industries, and said it would close all 379 of its Teavana stores. The company's shares rose slightly in late trade to $59.60. The results landed just hours after Starbucks announced plans to buy the remaining 50 percent share of its East China business from its joint venture partners for about $1.3 billion, in its biggest ever acquisition.” (Reuters)
  6. Off-Price Retailers Are Losing Their Steam “The once red-hot off-price operations of upscale department stores have cooled considerably. Over the past several months, Neiman Marcus has closed three of its Last Call off-price stores — and this week the Dallas chain said it would be ‘assessing’ the Last Call portfolio ‘to ensure we have the right mix of brick- and-mortar and online stores.’ At Neiman rival Nordstrom, which has been aggressively doubling down on Nordstrom Rack, its off-price stores, performance has been ebbing.” (New York Post)
  7. Kroger-Anchored Shopping Center Trades in Dallas “Located at 10675-10677 East Northeast Highway, close to Interstate 635, the shopping center sits on nearly 15.5 acres. Combined, traffic from Northwest Highway and Plano Road totals 52,000 cars per day. More than 120,000 residents with an average annual household income of $78,000 live within three miles of Northview Plaza, . The shopping center features multiple national and local retailers and restaurants, including Petco, Allstate Insurance and McDonald’s.” (Commercial Property Executive)
  8. Steadfast’s Star III Acquires Another Denver-Area Community “Steadfast Apartment REIT III, or STAR III, has acquired its sixth apartment community. The latest property, Belmar Villas, is a 318-unit, garden-style apartment development located in the Denver suburb of Lakewood, Colo., and was purchased for $63.3 million. STAR III is sponsored by Steadfast REIT Investments, an affiliate of Orange County, Calif.–based Steadfast Cos. Belmar Villas includes 17 three-story buildings with one-, two-, and three-bedroom apartments that average 856 square feet. In-place rents average $1,318 per month, and the community is currently 93% occupied.” (Multifamily Executive)
  9. Why REITs Still Deserve a Place in Your Portfolio “So far, it hasn't been a very good year for real estate investment trusts (REITs). However, this isn't to say these stocks have performed badly as a whole. So far this year, the Dow Jones Equity REIT Total Return Index is up about 3.8%. Even though it's less than the return of the market -- the S&P 500 index is up more than 13% over the same period -- these aren't the numbers to really complain about. Especially in the context of this market environment. As we move a little more than six months into the year, the U.S. Federal Reserve has already hiked interest rates twice -- something that many had anticipated would trigger a REIT sell-off.” (Nasdaq)
  10. Marriott Unveils New $600M HQ, Flagship Hotel “The hotel giant announced two years ago it was looking to move from its 10400 Fernwood Road campus in suburban Bethesda, where it had been since 1978, to a more urban and transit-friendly location. The new site is a short walk to the Bethesda Metro station. JLL worked with Marriott on the search and six months ago Marriott signed a letter of intent with the Bernstein and Boston Properties joint venture to develop its global headquarters on the site at the corner of Wisconsin and Norfolk avenues.” (Commercial Property Executive)
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