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10 Must Reads for the CRE Industry Today (June 13, 2019)

New York real estate developers are not happy about the new rent regulations, reports The New York Times. KKR is putting more money into short-term loans made to house flippers, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Fix Mortgage Finance, or We’ll Do it for You, Regulator Tells Congress “Mark Calabria has a message for Congress: Help the Trump administration overhaul mortgage-finance companies Fannie Mae and Freddie Mac, or he will do what he can on his own. The two companies, critical to half the nation’s mortgages, have been under government control since the 2008 financial crisis. For over a decade, policy makers have tried and failed to return them to the private sector and scale back the government’s role in housing.” (Wall Street Journal, subscription required)
  2. Titans of Real Estate in ‘Shock’ Over New York Rent Law Deal “Less than a day after newly emboldened Democratic lawmakers announced bills that would significantly tighten tenant protections, prominent real estate developers got Gov. Andrew M. Cuomo on the phone to make a last-ditch plea to persuade him to block the measures. The developers, including Douglas Durst, Richard LeFrak and William C. Rudin, are involved with some of the most iconic buildings on the New York City skyline, including One World Trade Center and 3 Times Square, and have long wielded major influence in Albany.” (The New York Times)
  3. Millennials Who Earn $100,000 or More Are Flocking to These 10 States “Highly paid millennials are moving out of the Northeast and heading toward the South and the West Coast. That’s according to personal-finance website SmartAsset, which conducted a study to find the total inflow and outflow of ‘rich’ young people in all 50 U.S. states and Washington, D.C. It defined ‘rich’ millennials as those between the ages of 18 and 35 who earn an adjusted gross income of $100,000 or more per year. All income data comes from the IRS.” (CNBC)
  4. KKR Doubles Down on House Flippers “KKR is raising its bet on fixer-uppers. The investment house known for corporate takeovers has agreed to pump another $250 million into Toorak Capital Partners LLC, which buys short-term loans made to real-estate investors who purchase, renovate and resell residential properties. KKR already has $250 million invested in New Jersey-based Toorak. By borrowing from banks on top of KKR’s investment, Toorak currently holds about $1.5 billion of so-called flip loans on its books.” (Wall Street Journal, subscription required)
  5. Lennar Closes $1.3B Fund to Invest in Multifamily Projects Across U.S. “Lennar Corp.’s multifamily arm closed a $1.3 billion fund that will invest in apartment projects in large U.S. cities. LMC, a subsidiary of Miami-based Lennar Corp. announced the closing of the equity fund on Tuesday. It said eight institutional investors, including foreign pensions, sovereign wealth funds, banks and insurance companies invested in the fund. Lennar also contributed $381 million to the fund.” (The Real Deal)
  6. Coworking Firm Common Desk Is Hunting Tenants for its New Downtown Dallas Location “Dallas-based coworking firm Common Desk has started hunting tenants for its newest location in downtown Dallas. The seven-year-old shared office firm is opening a 52,000-square-foot location as part of the renovation of downtown's Trammell Crow Center office tower on Ross Avenue. Plans for the new coworking operation were announced last year, and leasing for the center has started.” (Dallas Morning News)
  7. Plan Unveiled for San Francisco’s Waterfront—Includes Ferry Building ‘Piazza’ “Twenty-two years have passed since the Port of San Francisco released its last land use plan, a period that saw large portions of the waterfront revived. But stubborn challenges remain. Where the vision a generation ago was how to bring a moribund but sumptuous shoreline to life, the task ahead includes responding to high public expectations and the likelihood of sea level rise. Because of this, the new waterfront plan takes a more holistic approach — even going so far as to drop the phrase ‘land use’ from its title.” (San Francisco Chronicle)
  8. Neiman Marcus Kicks the Can Down the Road. So Now What? “Yesterday brought two big pieces of Neiman Marcus news. The day started with the announcement that the company had successfully extended the maturities on some $4.6 billion in debt. Then a few hours later Neiman's reported quarterly results, which were both disappointing and concerning. After six consecutive quarters of growth, comparable sales were down 1.5% and the luxury retailer posted a net loss of $31.2 million for the quarter.” (Forbes)
  9. Greystone Director to Launch Fintech Startup, TapCap “In riding the wave of the increased need for speed and flexibility in the world of multifamily finance, former Greystone Labs director Zac Rosenberg has branched off of his family’s prominent multifamily lending business to launch a commercial loan underwriting software product called TapCap. With his new model, Rosenberg, 30, the son of Greystone founder and CEO Stephen Rosenberg, aims at streamlining borrowers’ access to Fannie Mae and Freddie Mac dollars while staying involved in the deal throughout the entire loan process.” (Commercial Observer)
  10. Cash In on This Real Estate Boom Without Owning a Single Square Foot “Commercial Real Estate (CRE) loans are financing for property used solely for business purposes, such as office buildings, hotels, shopping centers, and the like. While the basic principles of commercial lending work much like residential mortgages that loan money to individuals, CRE loans are typically made to business entities. And commercial real estate lending experienced a banner year in 2018.” (Money Morning)
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