10 Must Reads for the CRE Industry Today (May 24, 2018)

Federal Reserve will likely raise its benchmark interest rate in June, reports the Wall Street Journal. Seritage Growth Properties has entered a new joint venture, according to The Motley Fool. These are among today’s must reads from around the commercial real estate industry.

  1. Fed Minutes Signal Rate Increase in June “Federal Reserve officials at their meeting earlier this month signaled they were likely to raise their benchmark short-term interest rate at their June meeting, and they debated how to characterize an evolving policy strategy that soon would no longer try to stimulate economic growth.” (Wall Street Journal, subscription required)
  2. U.S. Mall Owners Look to Apartments and Hotels to Replace Sears and J.C. Penney “Mall owners are still grappling with how to fill those spaces being vacated by department store chains like Sears and J.C. Penney. It's no easy task and remains one of the biggest questions in the retail real estate industry today, Dirk Aulabaugh, managing director of Green Street Advisors' advisory and consulting group, told CNBC at the annual ICSC RECon event held in Las Vegas this week. The fact of the matter is, filling in the gaps takes time, years even, he said. And there aren't ‘cookie cutter’ solutions. (CNBC)
  3. Cloudy with a Chance of Frustration at Target “Weather is rarely a good excuse, but it has been a popular one among retailers reporting disappointing earnings for the first quarter. Target joined this cohort on Wednesday morning when it explained that a cool spring delayed purchases of patio furniture, grills and gardening gear.” (Wall Street Journal, subscription required)
  4. Bill Ackman Takes $1 Billion Stake in Lowe’s “Bill Ackman isn’t the first person to shop at Lowe’s for a rehab project. But can the 2,152-store chain help make over the activist investor’s spotty record of late? The Pershing Square hedgie certainly hopes so — saying on Wednesday that he has taken a $1 billion stake in the struggling home-improvement chain, a source familiar with the situation told The Post.” (New York Post)
  5. Looking for New Investment? Owning Rental Homes Almost as Lucrative as Stock Market “Millions of Americans who own rental homes count on the income they receive from rent but may not know how they stack up as investments. A new study might change that. Single-family homes in large U.S. cities have generated returns of about 9% annually on average, according to the study, which examined results from 1986 to 2014.” (USA Today)
  6. Unwelcome Guests: Airbnb, Cities Battle Over Illegal Short-Term Rentals “The SUV slowly approaches an apartment complex in a quiet residential section of Miami Beach, Florida. On the second floor balcony, a group is gathered. Code Compliance Officer Vijma Maharaj approaches, her body camera recording, and tells them she has bad news. The apartment they rented on Airbnb is illegal.” (CNBC)
  7. Cresa Settles Gender, Sexual Discrimination Suit with Broker “Cresa has reached a settlement with a former office-leasing broker who accused the firm’s principals of sexual harassment and lewd and discriminatory conduct. Last summer, Jamie Addeo, then a vice president in the tenant-focused commercial brokerage’s New York office, filed a lawsuit claiming that ‘the work environment within Cresa is openly hostile toward women and geared toward promoting and advancing only male employees.’” (The Real Deal)
  8. Seritage Growth Properties Forms New Real Estate Joint Venture “In Seritage Growth Properties' 2017 annual report, CEO Benjamin Schall wrote that the real estate investment trust was likely to form joint ventures to redevelop many of its premier assets. Joint ventures can help Seritage tap into other companies' expertise for major projects. They are also an efficient way for the Sears Holdings spinoff to fund the redevelopment of its properties, due to buoyant demand among investors for private real estate.” (The Motley Fool)
  9. After a Banner 2017, Housing Stocks Pace for Worst Year Since the Financial Crisis “Housing stocks, among the top performers of 2017, are biting the dust. Homebuilders as a group, measured by the U.S. home construction ETF ITB, has sunk over 12 percent this year; that places the group on pace for its worst year since 2008, when it lost 44 percent, and its first negative year since 2011. Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, says challenges may continue for the housing space.” (CNBC)
  10. 5 High-Yielding REITs to Avoid “When yields get stratospheric, plant your feet, and take a lesson from Greek mythology. Icarus, escaping from the isle of Crete, uses wings his father fashioned from feathers and wax. His father warns him to not fly too close to the water, lest the feathers get damp, and not too close to the sun, lest the wings melt. But Icarus, giddy with flying, ignores the instructions, and, as feathers peel off, and the wax melts, it ends badly for Icarus.” (Forbes)
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