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10 Must Reads for the CRE Industry Today (May 12, 2020)

Chinese investment in the U.S. dropped to the lowest levels since the financial crisis, reports Reuters. Wall Street investors are flocking to single-family rental REITs, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. Reopening the Coronavirus-Era Office: One-Person Elevators, No Cafeterias “Welcome back to work. The corporate cafeteria is closed. The coffee makers are unplugged. And the desks are separated by plastic. Every part of office life is being re-examined in the era of Covid-19. When employees file back into American workplaces—some wearing masks—many will find the office transformed, human-resources and real-estate executives say. Elevators may only take one person at a time.” (Wall Street Journal, subscription required)
  2. Chinese Investment in the U.S. Drops to Lowest Level Since Global Financial Crisis “Chinese investment in the United States dropped to $5 billion in 2019, a slight decrease from a year earlier and the lowest level since the global financial crisis a decade ago, according to a new analysis by the U.S.-China Investment Project. The analysis attributed the investment slowdown to Chinese restrictions on outbound capital, more regulatory oversight in the United States, slower Chinese economic growth, and rising tensions between the two nations.” (Reuters)
  3. Simon Property Group (SPG) Misses Q1 EPS by 20c, Revenues Beat; Withdraws FY20 Guidance "Simon Property Group (NYSE: SPG) reported Q1 EPS of $1.43, $0.20 worse than the analyst estimate of $1.63. Revenue for the quarter came in at $1.35 billion versus the consensus estimate of $1.29 billion.... Funds From Operations ("FFO") was $980.6 million, or $2.78 per diluted share, as compared to $1.082 billion, or $3.04 per diluted share, in the prior year period. The first quarter 2019 results also included the $0.24 per diluted share noted above." (StreetInsider.com)
  4. Wall Street Bets Virus Meltdown Gives Landlords a Chance to Grow “Wall Street’s wager on high-earning suburban renters is paying off, and it is raising its stakes. Investors are flocking to America’s mega landlords, drawn by signs the companies that emerged from last decade’s foreclosure crisis owning huge pools of rental houses are weathering the economic shutdown far better than feared. Many also expect that the coronavirus pandemic will make suburban single-family homes both more desirable and more difficult to buy for even the relatively well-heeled.” (Wall Street Journal, subscription required)
  5. AMC’s Stock Soars After Report Amazon Held Merger Talks “Shares of AMC Entertainment Holdings rocketed on heavy volume Monday, after a media report that the struggling movie theater chain had held buyout talks with Amazon, as AMC’s value has shrunk since the COVID-19 pandemic led to theater shutdowns world-wide. AMC hasn’t responded to a request for comment. The stock shot up 41% in morning trading to the highest price seen since March 4. Trading volume topped 32.3 million shares, which was already more than triple the full-day average of about 9.1 million shares. Amazon shares rose 1.4%.” (MarketWatch)
  6. Vacation Real Estate Are ‘Toast’ Because of the Pandemic as Airbnb Owners Rush to Offload Their Homes, Redfin CEO Says “Redfin is the latest real-estate company to jump back into the iBuying game after a coronavirus-related shutdown. The Seattle-based brokerage said Thursday that its RedfinNow segment, which provides instant offers to home sellers to purchase their properties, would resume home-buying activities. In doing so, Redfin joins fellow iBuyers Opendoor and Offerpad in re-entering the housing market. Zillow also said Thursday that it would slowly relaunch its iBuying arm, Zillow Offers, in the coming weeks.” (MarketWatch)
  7. PGIM’s Mike Roberts Talks COVID-19 and His Outlook on Multifamily “Agency lending has been going strong during the COVID-19 pandemic in comparison to other commercial mortgage markets as government sponsored entities such as Fannie Mae and Freddie Mac have been fulfilling their purpose of providing stability to U.S. housing markets. PGIM Real Estate’s Mike McRoberts is chairman of the firm’s agency lending platform, which was responsible for $6.3 billion of the company’s record $11 billion in multifamily debt transactions in 2019.” (Commercial Observer)
  8. Return to Travel Will Be ‘Regional and Sporadic,’ Choice Hotels CEO Says “Pacious said that 97% of the company’s U.S. hotels have continued to operate during the pandemic, even as travel has fallen precipitously as people shelter in their homes. Airlines have slashed their flight schedules and major tourist attractions, such as theme parks, have closed due to the pandemic. However, the number of customers has increased during recent weekends and it appears family and vacation travel will bounce back before business travel, Pacious said.” (CNBC)
  9. Petco Promotes Curbside Pickup at Local Level with Google “Petco is using Google ads to inform customers of what products are available for contactless curbside pickup at nearby stores. Since November, Google has been allowing retailers who use its local campaigns advertising service to promote inventory that is available for in-store pickup at nearby physical locations. Google is now beta-testing a local inventory ads curbside pickup badge that shows customers if the products they are searching for are available for curbside pickup at nearby stores.” (Chain Store Age)
  10. Neiman Marcus and J.Crew Could Survive Bankruptcy Filings, Experts Say “Neiman Marcus and J.Crew may survive the bankruptcy process, thanks to assets like name recognition and favorable store locations, according to experts. Both retailers announced bankruptcy filings over the past week. They fell victim to heavy debt loads and stale business models that failed to keep up with changing consumer tastes and shopping behavior. However, Neiman Marcus and J.Crew could use the bankruptcy filing to lay the groundwork for a stronger, post-COVID-19 comeback.” (MarketWatch)
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