10 Must Reads for the CRE Industry Today (May 20, 2016)

10 Must Reads for the CRE Industry Today (May 20, 2016)


  1. How Commercial Real Estate Is Changing Residential Housing “As suburbs developed, commercial hubs – from shopping malls to office complexes – grew to meet the needs of suburban residents. But over time, the move away from city centers has reversed itself, as people move back to urban areas for closer proximity to work, shopping and cultural amenities they enjoy on a regular basis. Urban home values are now outpacing suburban homes, worth more than 2 percent on average, according to a January 2016 report by real estate information company Zillow…Recent college graduates and empty nesters alike are returning to homes within the city limits of major urban areas. The change has not only reunited commercial and residential property in the same neighborhood, but they now are more reliant on each other than ever. But the tightening bond between residential and commercial space isn’t exclusive to major cities. New developments are incorporating a variety of property uses throughout their plans, including homes, retail space and even offices for residents to easily access.” (U.S. World News & Report)
  2. Sports Authority to close all stores; going-out-of-business sales start soon “Sports Authority, the once-mighty sporting goods chain that filed for bankruptcy protection in March, now plans to close all its 450 remaining stores, where going-out-of-business sales will start before Memorial Day. A group of liquidators that offered the winning bid for the debt-ridden company’s assets at Monday’s bankruptcy auction will sell off remaining merchandise in going-out-of-business sales at stores not already in the process of closing, according to a filing in bankruptcy court in Delaware. The move comes after Englewood-based Sports Authority could not reach agreement with lenders and creditors on a reorganization plan, and then failed to lure a bidder willing to buy most or all of its stores and operate them. Sports Authority previously said it would close 140 of its 450 stores, including the flagship Sports Castle in Denver, where a liquidation sale has been underway for weeks. But now the company says that all stores will be closed. Going-out-of-business sales at stores where selloffs are not already underway will start about May 25 and end about Aug. 31, the filing said.” (Denver Business Journal)
  3. First Look: Target's 'Store of the Future' Launches in California “Target  (TGT) has tapped its largest market, California, to test several potential changes to the look of its future stores. In a pilot program called "LA25," the discounter has taken its 35 top store enhancements that it has been testing across the country and put them all together in 25 stores in Los Angeles. Some of the enhancements include sleeker apparel fixtures, a better-lit fresh produce section that emphasizes organics, dedicated service stations for people to quickly pick up online orders, as well as the addition of specialists in key departments to help provide product knowledge. There are ‘service advisers,’ too, that assist in navigating the chain's website and mobile app Cartwheel. Also, Target continued with the overhaul of its restaurant options to make them more interesting for shoppers. For instance, it expanded the floor space devoted to Starbucks (SBUX)  and added the coffee king to the five or so stores that didn't have the concept before. It is also testing "healthy" fast-casual concepts such as salad bowl seller Freshii and sandwich maker Which Wich, which comes on the heels of the company announcing the launch of a Chobani yogurt cafe inside a new store set to open in New York City in October.” (The Street)
  4. Top Up-And-Coming Cities For Tech Jobs In 2016 "To pull together its survey, Homes.com’s researchers zeroed in on six jobs within the tech industry as a snapshot: Computer and Information Systems Manager, Computer Programmer, Software Developer, App Hardware Engineer, Network Support Specialist and Web Developer. They then calculated the average median wage for those positions using data from the U.S. Bureau of Labor Statistics. Says Simmons: ‘The data was taken from external sources such as the US Bureau of Labor and FHFA, cross-referenced with our own median house listing data, in order to get a strong and detailed look at both the housing and tech sectors.’ Labors statistics from 365 cities were taken into account to calculate data for the study, but established tech hubs like San Jose, San Francisco, New York and others were excluded to get a clearer picture of up-and-coming tech towns. Home price data for cities – and the recent changes to the average price of homes – was also taken into account to come to the top 20, with low cost living being a plus for the cities being ranked." (Forbes)
  5. RCAP Reorganization Plan for Cetera Is Approved “RCS Capital’s plan for Chapter 11 reorganization has been approved by a U.S. bankruptcy court for the district of Delaware. The approval brings Cetera Financial, the firm’s brokerage arm, one step closer to becoming an independent entity out from under the thumb of its troubled parent, RCAP. ‘We're excited by this final step towards the company’s successful exit from the Chapter 11 process and its emergence as a Cetera-only organization that is privately owned, independently managed and well positioned for long-term success in serving financial advisors and financial institutions,’ said David Orlofsky, Chief Restructuring Officer of RCS Capital and Senior Managing Director of Zolfo Cooper, the restructuring’s advisory firm. “We expect formal emergence from the restructuring process to follow soon, at which time Cetera will have further public comment.’ RCAP filed for a prearranged Chapter 11 bankruptcy in late January, listing 50 creditors, liabilities of between $100 million and $500 million and assets between $1 billion and $10 billion.” (Wealthmanagement.com)
  6. Jamestown Partnership Locks Down $314M Bank of China Loan for NoMad Office Building “Bank of China has provided a $313.5 million loan to Jamestown, George Comfort & Sons and Loeb Partners on a block-wide NoMad office tower, Commercial Observer can first report. The loan, which closed on May 18, will replace old debt and provide the borrowers with extra funds to complete renovations on the 15-story building at 63 Madison Avenue, a source with intimate knowledge of the deal confirmed on the condition of anonymity. The property, which occupies the entire block between East 27th and East 28th Streets, was completed in 1961. In February, Jamestown joined George Comfort and Loeb Partners’ joint venture in ownership of the 870,000-square-foot building, sweeping up a 49 percent stake for roughly $271 million, according to data from CoStar Group. Tenants include IBM and beauty subscription service provider Birchbox.” (Commercial Observer)
  7. Sovran, LifeStorage to Merge in $1.3B Deal “Well, the self-storage REIT sector is about to shrink again. Sovran Self Storage Inc., which operates its facilities under the name Uncle Bob’s Self Storage, has inked a deal to acquire LifeStorage LP for a whopping $1.3 billion—in cash. The merger will allow Sovran, the fifth largest self-storage operator in the world with 550 facilities in 26 states, to expand its 30 million-square-foot portfolio by an additional 6.5 million square feet in one fell swoop. LifeStorage, which ranks as the sixth largest private owner of self-storage facilities in the U.S., brings to the table 84 facilities spanning 9 states, with an average occupancy level of 87.1 percent and an average age of 12 years. “LifeStorage has built a high-quality national portfolio, and these stores will enhance and complement our physical footprint and digital presence,” David Rogers, CEO of Sovran, said in a prepared statement. Size isn’t the only thing that matters; geography is important, too. The LifeStorage portfolio will bolster Sovran’s presence in Chicago, Austin, Dallas, Orlando and Los Angeles.” (Commercial Property Executive)
  8. Extell bonds plummet in Tel Aviv “Extell led a widespread selloff of Israeli bonds backed by U.S. real estate assets, falling by around 6 percent on Thursday alone after seeing drops of around 4 percent on Wednesday. The Gary Barnett-led firm’s two bond series are now both trading at yields of around 15 percent, with Israeli market sources describing Extell’s performance as “distressed.” The selloff in Extell bonds is being attributed to a delay in the closing of more than $463 million in financing from Scott Rechler’s RXR Realty. The funds are going toward the development of Extell’s One Manhattan Square condominium tower and its rental projects at 500 East 14th Street and 555 10th Avenue. Extell and RXR have extended the closing date of the loan agreement to the end of June.” (The Real Deal)
  9. American Eagle has figured out how to sell in malls, Jim Cramer says “On Wednesday, the retailer posted better-than-expected first quarter results, logging in earnings per share of 22 cents on revenue of $749.4 million. Analysts polled by Reuters expected the firm to report profits of 18 cents a share on revenue of $731.4 million. The company's results were mainly driven by comparable store sales of its Aerie brand, which sells intimate apparel and personal care products for women, jumping 32 percent in the first quarter, smashing the 14.9 percent rise that analysts polled by Consensus Metrix had expected. The stock spiked 16 percent in mid-morning trade Thursday. Shares of American Eagle ended the session up more than 18 percent.” (CNBC)
  10. NYC multifamily sales make comeback in MarchDollar volume pushed above $1 billion after falling below the threshold in the previous month. Gross sales reached nearly $1.6 billion in March, an 86 percent increase compared to February’s dollar volume. Transaction and building volume also saw a boost of 50 percent and 79 percent respectively, although those figures were down year-over-year. The city had 129 multifamily sales across 69 transactions. In Manhattan, sales from 19 buildings brought in $786.3 million, a 139 percent increase in dollar volume from the prior month. A total of 936 units traded in 14 transactions.” (The Real Deal)

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