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10 Must Reads for the CRE Industry Today (May 11, 2017)

The Senate Intelligence Committee is seeking information on whether Vladimir Putin’s associates have invested in Donald Trump’s real estate assets, according to CNBC. Abercrombie & Fitch is in negotiations with American Eagle Outfitters and Express Inc. about a potential sale of the company, reports the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Russia Probe: Senate Requests Trump Documents from Agency That Monitors Money Laundering “The Senate Intelligence Committee wants to see any information relevant to its Russia investigation the Treasury agency has gathered, including evidence that might include possible money laundering, according to a committee aide who spoke on condition of anonymity. Also at issue: to what extent, if at all, people close to Vladimir Putin have invested in Trump's real estate empire.” (CNBC)
  2. Depreciation’s Tax Break Has Consequences for Real Estate Investors “The depreciation computation is figured based on the value of the improvements, not on the land underneath the improvements. This necessitates that you be able to determine the value of the land and the value of the improvements. This determination is generally included in the multitude of closing documents you received when buying the property or found on the county real estate tax website. It is essential that you keep your closing documents.” (Kiplinger)
  3. Property Developer Five Point Spikes as Much as 10% on its First Day of Trading “Shares of Five Point, a California real-estate developer backed by the nation's second-biggest homebuilder, soared on their debut on the New York Stock Exchange on Wednesday. Five Point raised $294 million in its initial public offering of 21 million shares priced at $14 each. The share pricing Tuesday night was well below the expected range. By Wednesday afternoon, share prices were about 7 percent higher than the IPO price, but had been up about 10 percent late in the morning.” (CNBC)
  4. Private Equity Investors Slow Real Estate Buying in First Quarter “The private equity real estate market, which saw exceptionally strong fundraising and dealmaking activity in 2016, seemed to pause and take some profits in early 2017.  CRE-focused equity funds completed 136 major property investments in the first quarter of 2017 totaling $6.1 billion, according to CoStar Group COMPs data. That total is well off the nearly $15 billion in purchases the same set of investors made in the first quarter of 2016.” (CoStar)
  5. Abercrombie & Fitch in Merger Talks with At Least Two Suitors “Among the suitors are apparel rivals Express Inc. and American Eagle Outfitters Inc., the people said. Abercrombie shares have tumbled 45% over 12 months and are near multiyear lows amid slumping sales in its namesake brand. It had revenue of $3.3 billion in its last fiscal year but sports a market value of less than $1 billion. Express, which has a market value of about $700 million, is interested in either a merger of equals or a stock-and-cash takeover of the company, one of the people said.” (Wall Street Journal, subscription required)
  6. Chinese Construction Giant to Buy Stake in Hudson Square Dev Site in $140M Deal “A subsidiary of state-run Chinese construction giant China State Construction Engineering Corporation is in contract to buy a majority stake in a Hudson Square development site, once slated for a cantilevering tower. The deal would value the site at north of $140 million, or $625 per buildable square foot, sources told The Real Deal. China Construction America (CCA) entered contract this week to acquire the vast majority of the ownership interest in the site at 537 Greenwich Street and 110 Charlton Street, sources said.” (The Real Deal)
  7. I.G. Closes $600M Real Estate Fund “H.I.G. Realty Partners closed on H.I.G. Realty Partners III, the firm’s value-add investment vehicle. Fund III secured capital commitments totaling $593 million, handily surpassing its hard cap of $500 million. The fund’s general partner and related parties were among the list of contributors, as was a $52 million co-investment vehicle. H.I.G. Realty, the real estate affiliate of multi-billion-dollar global alternative asset management firm H.I.G. Capital had 29 investors by January 20, at which point $471.7 million had been raised, according to an SEC filing.” (Commercial Property Executive)
  8. Aldi Raises Stakes in U.S. Price War with Wal-Mart “The strategy, previously unreported, centers on adding more private-label goods, which are a retailer's in-house brands, to win over price-sensitive customers, and a massive expansion to further disrupt a U.S. grocery sector that has seen 18 companies go bankrupt since 2014. Hart's plan calls for spending $1.6 billion to expand and remodel 1,300 U.S. stores, and open 400 new stores mainly in Florida, Texas and on both coasts by end of 2018. He also pledged Aldi will be willing to change prices more frequently to respond to rivals if needed.” (Reuters)
  9. Macy’s Takes Another Hit as Mall Traffic Dwindles “Macy’s reported a much bigger-than-expected drop in quarterly profit and sales, continuing its uphill struggle to attract customers amid a slump in demand for apparel and the shift toward shopping online. Macy’s shares fell as much as 10 percent to $26.40 on Thursday to levels last seen in 2011, and pulled down shares of rivals across the department store industry. Sales at Macy’s stores open at least a year, including sales in departments licensed to third parties, fell 4.6 percent in the first quarter.” (New York Post)
  10. CRE Opinion: Full Speed Ahead for Metro Multifamily “In the past 12 months, Dallas ranked no. 5 in the country in closed multifamily transactions. The Dallas-Fort Worth metro continues to show up on more buyers’ radar screens—with more institutional and foreign capital streaming into our market. We eagerly anticipate more product coming to market and selling in the next four quarters. The DCAD just released its 2017 values—two words: Sticker Shock!” (D Magazine)
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