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

The New York Times looks at how real estate developers benefit from tax loopholes. Hotels are starting to feel the impact of slower economic growth, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. How Loopholes Help Trump and Other Real Estate Moguls Avoid Taxes “Donald Trump reported more than $1 billion in real estate losses on his tax returns from 1985 to 1994, The New York Times revealed this week. Those losses allowed him to avoid paying any income tax for eight of the 10 years that were reviewed. The Times investigation offered a detailed portrait of Mr. Trump’s financial failures over a decade. It also showed the extent of the special treatment the tax code allows for real estate investments.” (The New York Times)
  2. Fed’s Bostic: Higher Tariffs Could Result in Interest Rate Cuts If Consumer Spending Suffers “Atlanta Fed President Raphael Bostic said Friday the central bank might have to cut interest rates if consumer spending suffers as a result of the new round of tariffs placed on Chinese goods overnight. Consumers did not feel much pain from President Donald Trump’s earlier decisions to slap tariff increases on foreign goods, but that might change with this new round, Bostic said.” (MarketWatch)
  3. Marriott Revenue Drags as Slower Economic Growth Pressures Hotels “Marriott International Inc., the world’s largest hotel company, posted weaker than expected revenue growth from guest stays in the latest period, but said its business is stable as it generates more money in fees and expands its portfolio. Marriott, the parent of hotel brands including Ritz-Carlton, Westin and Renaissance, said Friday that comparable systemwide revenue per available room rose 1.1% excluding currency fluctuations in the first quarter. RevPAR, which reflects pricing power, grew at a faster pace outside North America than it did on the continent, but both regions still missed Marriott’s outlook for the quarter.” (Wall Street Journal, subscription required)
  4. Wealth Bay Area Suburbs Could Have a Whole New Look Under California Housing Bill “When Paul Wickboldt moved to the Bay Area from Boston more than two decades ago, he settled in Walnut Creek for the same reasons many families choose the suburbs: good public schools, safety, a backyard for the kids to play in, and the pleasure of knowing his neighbors. ‘There’s a different level of anonymity that you have living in an urban environment,’ he said.” (San Francisco Chronicle)
  5. Retailers, Already Planning for 2019 Holiday, Expected to Get Whacked by Tariffs “Tariffs in the U.S. have increased to 25% from 10% on $200 billion worth of Chinese goods, including on things most American shoppers buy for their homes, like furniture and electronics. And that's expected to leave retailers, many of which are already planning for the 2019 holiday season, in a crunch, scrambling to make purchase orders, set prices and even make crucial staffing decisions — all amid the uncertainty of additional tariffs going into effect.” (CNBC)
  6. Penson Fund Manager Gets $500M Refinancing on National Portfolio “FCA Partners, an investment manager that counts one of the country’s top pension funds as a client, refinanced a national portfolio of commercial and residential property for $500 million. Wells Fargo led a syndicate of banks in providing the loan, including JPMorgan, U.S. Bank, PNC, and TD Bank. The loan is a revolving credit facility that matures in three years.” (The Real Deal)
  7. Young Real Estate Flippers Get Their First Taste of Losing “Sean Pan wanted to be rich, and his day job as an aeronautical engineer wasn’t cutting it. So at 27 he started a side gig flipping houses in the booming San Francisco Bay Area. He was hooked after making $300,000 on his first deal. That was two years ago. Now home sales are plunging. One property in Sunnyvale, near Apple Inc.’s headquarters, left Pan and his partners with a $400,000 loss. ‘I ate it so hard,’ he says.” (Bloomberg Businessweek)
  8. Carlyle Takes Majority Stake in Ritz Plaza Rental Building for $251M “An affiliate of the Carlyle Group has closed on the majority stake in a 43-story Midtown rental tower for about $251 million, property records show. The move brings the firm together with long-time owner Stonehenge NYC in a joint venture to recapitalize the Ritz Plaza, a 1980s-era, 479-unit complex, with a $235 million first mortgage from Deutsche Bank, Carlyle added in a press release.” (The Real Deal)
  9. Dallas Downtown Landmark Redos Come with a Soaring Cost “When the First National Bank tower opened in 1965, it was the largest skyscraper in Dallas and the tallest building west of the Mississippi. More than a half century later, redevelopment of the 1.5 million-square-foot office tower on Elm Street is the biggest building redevelopment ever attempted in Texas. For a while, it looked like the deal would fall through.” (Dallas Morning News)
  10. Toll Brothers JV Breaks Ground on NJ Creative Office Project “The gap in creative office offerings in Hoboken, N.J., will soon shrink by more than 100,000 square feet now that Toll Brothers City Living has broken ground on 1000 Maxwell Lane, a mixed-use tower that will sprout up within the developer’s multi-phase Maxwell Place project. A 12-story building with ground-level retail space, 1000 Maxwell will feature approximately 110,800 square feet of state-of-the-art office space spanning six floors beneath a five-level luxury condominium component.” (Commercial Property Executive)
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