Aritzia Courtesy Aritzia

10 Must Reads for the CRE Industry Today (May 12, 2017)

Fannie Mae and Freddie Mac are running out of money, according to MarketWatch. The New York Times looks at how Sephora is beating the challenging retail environment. These are among today’s must reads from around the commercial real estate industry.

  1. Fannie and Freddie Are Nearly Out of Money and D.C. Is Getting Anxious “In 2008, as the financial crisis swirled, the federal government rushed Fannie Mae and Freddie Mac into conservatorship. The two giant mortgage-finance companies became wards of the state under a new regulator that would manage their affairs until they were healthy enough to stand on their own. Nearly nine years later, they’re still under government control. And while in some ways their crisis has receded, in other—and what some would call self-inflicted—ways, Fannie and Freddie still teeter on the edge of needing another taxpayer bailout.” (MarketWatch)
  2. How Sephora Is Thriving Amid a Retail Crisis “.Much has been written about the crisis in retail, with shoppers deserting department stores for e-tailers and fast fashion, if they shop at all. The beauty business, though, has not had the same fate. Prestige beauty sales in the United States rose 6 percent in the 12 months ending in February, tallying $15.9 billion, according to the market research company NPD Group. Makeup alone is up 11 percent, totaling $7.3 billion. But that industry, too, is in the midst of its own upheaval, driven in part by the success of stores such as Sephora.” (The New York Times)
  3. Eight Ways for New Investors to Succeed in Today’s Real Estate Market “Investing in real estate is an increasingly popular way for entrepreneurial-minded individuals to diversify their portfolios and earn income. It's not the easiest endeavor, and like any investment, it requires plenty of research and due diligence to make it work. But when done correctly, real estate can be an incredibly lucrative business opportunity. If you're new to the real estate market or are thinking about making your first investment, now is the time to get a jump on learning the latest industry trends.” (Forbes)
  4. Related Nearing Deal for $2.5B Financing Package at 50 Hudson Yards: Report “Related Companies, which is developing what’s slated to be New York’s most expensive office building at 50 Hudson Yards, is in advanced talks to secure a $2.5 billion financing package for the property, The Real Deal has learned. The financing would include a roughly $700 million equity injection and a $1.8 billion senior loan from a syndicate of banks, sources familiar with the discussions said. The loan, if it closes, would be among the largest-ever construction loans for an office tower.” (The Real Deal)
  5. Prices for Luxury Condos Under Pressure in Top U.S. Housing Markets “Want to bask in the luxury condo lifestyle? Know your real estate markets, as sales of luxury condos are a mixed bag right now. From Miami To Los Angeles and New York to San Francisco with a stop in Chicago, take an in-depth look at the luxury condo markets in these five U.S. cities. A stronger U.S. dollar is good for our economy, but is partly to blame for slowing sales of high-end condos by international buyers. With more inventory on the market, buyers are requesting (and getting) lower-than-asking prices from sellers.” (MarketWatch)
  6. Sears Stock Crashes a Day After its CEO Goes on a Bizarre Rant Against the Media “Shares of the dying owner of Sears and Kmart plummeted as much as 8.5 percent to $10.32 in afternoon trading Thursday. In part, the sell-off in Sears' stock could be tied to a nasty first quarter earnings miss from fellow mall player Macy's. Given Macy's struggles to kick off the year, investors may now be concerned Sears' sales got even worse from when it provided guidance in late April.” (The Street)
  7. REITs vs. Private Real Estate “Both have their own advantages and disadvantages, and how I see it, both may deserve a place in a well-diversified portfolio. Coming myself from a private equity real estate background, I have a certain insider view to this topic that may add value to other comparisons found online. There are very valid arguments for investing in private real estate over REITs. These include a greater control over the assets, potential tax benefits and a lower correlation to other financial assets.” (Seeking Alpha)
  8. HTA Grabs Multi-State MOB Portfolio for $150M “Already the largest owner and operator of medical office buildings in the U.S., Healthcare Trust added 592,000 square feet of space in Arizona and Southern California. The portfolio consists of the 168,000-square-foot McAuley Medical Center, located within the St. Joseph’s Hospital and Medical Center campus in downtown Phoenix and the others are primarily located on Dignity Health (Rated A3) campuses in Phoenix and Southern California.” (Commercial Property Executive)
  9. Young Women’s Apparel Retailer to Open Chicago Flagship “Canada’s Aritzia Inc. is expanding its Chicago footprint as it targets both brick-and-mortar and online expansion. The fashion retailer will open a flagship on Rush Street in Chicago this fall. The Vancouver, British Columbia-based company already operates a store in the Windy City, at Water Tower Place. Aritzia recently made its Los Angeles debut, opening a 10,000 sq.-ft. flagship at Westfield Century City. The company plans to open three to four new stores during the remainder of its fiscal year, including the repositioning of an existing San Francisco location into a flagship on Market Street.” (Chain Store Age)
  10. Lightstone Group Seeks EB-5 Funds for $700M FiDi Condo Project “David Lichtenstein’s Lightstone Group is seeking EB-5 funds for its 228-unit Financial District condominium tower, which will be designed by noted architect David Adjaye and is expected to be valued at $701 million. The developer recently launched a teaser site for the 800-foot building at 130 William Street, which it is calling the Wall Street Tower. On Lightstone’s EB-5 website, the company is seeking $100 million, or 18 percent of the project’s total cost, from investors, and is marketing the project to investors in China and Vietnam.” (The Real Deal)
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