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10 Must Reads for the CRE Industry Today (May 14, 2020)

Neiman Marcus creditor has asked the retailer to consider a buyout by Saks Fifth Avenue, reports Reuters. CoStar is buying the commercial real estate division of Ten-X LLC for $190 million, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. After 27 Years, This Outlet Mall REIT Just Stopped its Dividend “One of the biggest reasons to like Tanger Factory Outlet Centers was its steadfast commitment to its dividend. Even the deep 2007-to-2009 recession, which led many of its mall peers to trim their payouts, didn't see this real estate investment trust's (REIT) annual dividend increase streak come to an end. But after 27 years, COVID-19 has taken out Tanger's dividend. Here's the ugly environment that led management to this decision, and what the future may hold from here.” (Nasdaq)
  2. CoStar Acquires Ten-X in $190 Million Deal "Data giant CoStar Group Inc. is buying the commercial real estate division of Ten-X LLC for $190 million in a deal designed to increase CoStar’s role in the huge distressed commercial-property market that the coronavirus pandemic is expected to fuel, CoStar announced Wednesday evening." (Wall Street Journal)
  3. Manhattan Faces a Reckoning if Working from Home Becomes the Norm “Before the coronavirus crisis, three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — had tens of thousands of workers in towers across Manhattan. Now, as the city wrestles with when and how to reopen, executives at all three firms have decided that it is highly unlikely that all their workers will ever return to those buildings. The research firm Nielsen has arrived at a similar conclusion. Even after the crisis has passed, its 3,000 workers in the city will no longer need to be in the office full-time and can instead work from home most of the week.” (The New York Times)
  4. Neiman Marcus Creditor Calls for Deal with Saks Fifth Avenue—Letter “Hedge fund Mudrick Capital Management LP asked Neiman Marcus Group’s independent directors on Tuesday to explore a combination with rival department store chain Saks Fifth Avenue, challenging the company’s plan to reorganize under bankruptcy protection. A lawyer for Mudrick, which holds portions of Neiman Marcus’s roughly $5 billion of debt, wrote in a letter to the directors that a sale or merger with Saks would result in better financial recoveries for creditors than the company’s current plan to restructure and hand control to senior lenders.” (Reuters)
  5. Hosting Coronavirus Workers Prepares Hotels for Industry’s Future “The health-care workers staying at the DoubleTree hotel in downtown Detroit had a few requests: microwaves, refrigerators and workout equipment, plus a way to get their uniforms cleaned. And maybe the hotel’s signature freshly baked chocolate chip cookies? Working with minimal staff, general manager Michael Glass bought microwaves and refrigerators for rooms that didn’t have them, and set up a sign-out system for dumbbells. He arranged to reopen overnight valet laundry at discounted rates. Since there was no kitchen staff, he began baking cookies himself.” (Wall Street Journal, subscription required)
  6. COVID-19 Derails Commercial/Multifamily Mortgage Originations in Q1 “The coronavirus pandemic has dampened what should have been a strong first quarter for the commercial real estate markets, according to the Mortgage Bankers Association's latest survey. MBA's quarterly survey showed that annual commercial and multifamily loan originations dipped 2% year over year. Originations were also 40% lower than Q4 2019.” (Mortgage Professional America)
  7. Mall Free Fall: Macerich Collects Just 26% of April Rent Payments “We know it is a bad time to own malls, but retail landlord Macerich’s Tuesday earnings call highlighted how dire matters are. Tom O’Hern, CEO of the Santa Monica retail real estate investment trust, reported that the company ‘collected about 26 percent of rent’ from tenants at the 47 shopping centers Macerich owns throughout the country, malls replete with brands like H&M and Pottery Barn that have been shut down throughout the coronavirus pandemic.” (The Real Deal)
  8. The World’s Largest Public Real Estate Companies 2020 “The Global 2000 is our annual ranking of the world's largest and most powerful public companies. The list is based on four equally-weighted metrics: revenue, profit, assets and market value. In all, 35 firms primarily in the business of owning real estate made the list this year—not including firms such as Blackstone BX, the private equity giant that has a massive property portfolio but also invests in many other asset types.” (Forbes)
  9. What Simon Property’s Q1 Results Say About Retail’s Future “Simon Property Group, the nation’s largest owner and operator of shopping malls, is leading the charge back to retail centers by opening 77 of its U.S. properties in states where COVID-19-related restrictions have been loosened. The REIT expects to have about half of its U.S. assets reopened next week and has also begun opening its designer and international premium outlets. Those shoppers who venture out will find shortened hours at the shopping centers, so maintenance can do more sanitizing, disinfecting and other safeguards, including reduced capacity and social distancing enforcement.” (Commercial Property Executive)
  10. Clean Bill of Health: Remedying Spaces Hit by COVID-19 “The COVID-19 pandemic has had a number of indirect impacts on commercial real estate, from shuttering businesses to capital market hesitancy. But it’s also had a very real impact on many physical places, as any location that has endured an infection requires extreme cleaning before anyone can re-enter the space. When an individual has a confirmed case of COVID-19, everywhere they have been is a possible vector for the disease. According to the CDC, current evidence suggests that COVID-19 may remain viable on doorknobs, countertops and other potential fomites for hours or even days, depending on the type of material.” (Real Estate Journals)
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