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10 Must Reads for the CRE Industry Today (July 31, 2020)

Fannie Mae reported a partial recovery in earnings in the second quarter, according to the Wall Street Journal. The majority of REITs will be dealing with water scarcity within a decade, reports Chief Investment Officer. These are among today’s must reads from around the commercial real estate industry.

  1. Fannie Mae Earnings Improve as Credit Expenses Decline “Fannie Mae reported a partial recovery in earnings during the second quarter as it set aside less money for loan losses due to the coronavirus pandemic. The government-controlled mortgage-finance giant said Thursday its net income rose to $2.55 billion in the second quarter from $461 million in the previous three months. Net income in the second quarter of 2019 was $3.43 billion.” (Wall Street Journal, subscription required)
  2. Hotels: Occupancy Rate Declined 38% Year-over-Year “U.S. hotel performance data for the week ending 25 July showed slightly higher occupancy and room rates from the previous week, according to STR. 19-25 July 2020 (percentage change from comparable week in 2019): • Occupancy: 48.1% (-37.9%) • Average daily rate (ADR): US$99.24 (-27.3%).” (Calculated Risk)
  3. Brookfield, Creditors Reach Deal on REIT’s $6.4B Credit Facility “Brookfield Asset Management has renegotiated a $6.4 billion credit facility for its retail-heavy real estate investment trust, Brookfield Property REIT.The deal imposes restrictions on dividends.” (The Real Deal)
  4. The Office Redesign Has Only Just Begun “Plexiglass dividers and floor decals might not be permanent, but the pandemic will bring lasting change to offices. Experts from the architecture and real-estate industries share how they are getting back to work and what offices will look like in the future.” (Wall Street Journal, subscription required)
  5. Black CRE Leaders Say ‘The Moment Is Now’ to Drive More Funding to Minority Development “The private and public financing sectors need to back projects led by people of color in order to move toward racial equality in the industry.” (Bisnow)
  6. Majority of REITs Will Experience Water Scarcity by 2030, BlackRock Says “Real estate investors preparing for rising tides and eroding coastal shorelines would also do well to watch for the effects that extreme water scarcity will have on their properties. According to a recent report from BlackRock, the amount of global real estate investment trust (REIT) properties subject to water shortages will double to 60% in 2030. The asset manager reviewed 84,000 global properties mapped to 590 publicly listed REITs.” (Chief Investment Officer)
  7. Logistics Real Estate Set for ‘Brisk Recovery’ in Prologis Report “Although the logistics real estate market saw a volatile second quarter, the sector proved resilient in the final results, according to Prologis’ U.S. Industrial Business Indicator for July. The company reported that its proprietary survey of logistics real estate customer activity—the survey began in 2007—“recorded historic volatility in the second quarter,” dropping to an all-time low of below 30 in April before rebounding to 57.9 in July.” (Commercial Property Executive)
  8. McDonald’s Partners with Mayo Clinic for Aid in Coronavirus Safety “McDonald’s is partnering with the Mayo Clinic as the global fast-food giant tries to navigate the coronavirus pandemic. The medical center will offer McDonald’s advice on best practices to mitigate the spread of Covid-19 and review the company’s environmental health and safety precautions and some of its global standards. McDonald’s did not disclose financial terms of the partnership, which was announced this week at its virtual Worldwide Connection event for all of its franchisees.” (CNBC)
  9. Race for COVID-19 Vaccine Boosts Real Estate in Life Sciences Hubs “Real estate is in high demand in the nation’s life sciences clusters, as companies race to develop a COVID-19 vaccine, and as more corporations look to take advantage of expiring pharmaceutical patents. Hubs are looking to use real estate to boost productivity as the growth of the global prescription drug market is expected to surpass $1 trillion by 2022, according to the JLL 2020 US Life Sciences Outlook. The top three hubs are Boston, San Francisco and San Diego, capturing 70% of venture capital in 2019.” (GlobeSt.com)
  10. Why We Are Betting Long on NYC Real Estate “The signs of brighter days ahead are already here, though. Lenders are increasingly active again, though they are generally looking for the right properties—ones that produce income and have high collection rates—and the right owners or asset managers. As of May, commercial mortgage-backed securities (CMBS) lenders are back in the market, while bridge lenders are extremely active. Debt prices have not dropped yet and underwriting is still conservative, but there is a much bigger lender appetite for New York City properties compared to the early days of the pandemic.” (Forbes)
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