10 Must Reads for the CRE Industry Today (May 4, 2016)

10 Must Reads for the CRE Industry Today (May 4, 2016)


  1. Negative Rates May Cost Property Investors More “Negative interest rates have real-estate investors facing a counterintuitive quirk: Their borrowing costs can actually rise as interest rates fall. This is a mounting concern for many property investors given the potential for rates to decline further as central bankers try to spur economic growth, according to the lobbying group Commercial Real Estate Finance Council. The impact is being felt in particular by property investors taking out floating-rate loans.” (The Wall Street Journal)
  2. How Real Estate Adds to Retirement Income “For those looking to beef up their retirement income stream, real estate investing is another option to consider. But investing in real estate isn't like writing a check to a mutual fund company. This one requires legwork, maintenance and perhaps a few headaches along the way. Think broken pipes, bad tenants or vacant rental units. Investors willing to pull up their sleeves and invest time along with money may find real estate could be another pipeline toward the multiple streams of income that we all desire. Real estate can be another form of diversification.” (U.S. News & World Report)
  3. New Chicago high-rise will be city’s biggest Chinese property deal “China’s biggest commercial property company, Dalian Wanda, and a Chicago real estate developer have announced they will build a $USD900 million ($1.17 billion) skyscraper, the largest-ever real estate investment by a Chinese company in Chicago. Builders will break ground this summer on the Vista Tower, a 95-storey condominium and hotel complex that will be Chicago’s third-largest skyscraper, the two companies and Chicago city officials said in a statement.” (Commercialrealestate.com)
  4. Hersha Sells Manhattan Hotels to Chinese JV Partner “Hersha Hospitality Trust makes another move in its capital recycling program with the sale of seven Manhattan hotels through the closing of a joint venture with China-based Cindat Capital Management Ltd. The price tag on the 1,087-key group of premium limited service hotels was $571.4 million. There are few spots in Manhattan that aren’t hot so the portfolio, with properties developed between 2003 and 2010, is well-located. Three of the hotels—Candlewood Suites, Hampton Inn and Holiday Inn—sit side-by-side in Times Square. The remaining assets include Hampton Inn Chelsea, Hampton Inn Herald Square, Holiday Inn Wall Street and Holiday Inn Express Water Street.” (Commercial Property Executive)
  5. Boston Announces Plan to Ramp Up Housing Supply “The City of Boston released its quarterly housing report this week, and among other things, it detailed how Boston remains on target to meet its goal of creating 53,000 units of housing by 2030. During the first quarter of 2016, some 565 new housing units were permitted, for a total of 17,183 units that have either been permitted or completed since the launch of the administration’s housing plan, Housing a Changing City: Boston 2030, in October 2014. Currently, there are more than 8,000 new units of housing in construction in Boston, representing more construction employment in the housing sector than at any time in the last 20 years, the report said.” (Multihousing News)
  6. Subway Revenue Drops as It Closes Hundreds of U.S. Restaurants “Subway Restaurants revenue fell in 2015 for the second straight year, a sign one of the fast-food industry’s stalwarts is losing ground to newer chains. Revenue dropped 4.3 percent to $1.11 billion last year, according to the company’s Franchise Disclosure Document, which was filed with the Minnesota Department of Commerce last week. Subway owner Doctor’s Associates Inc. also is slowing its pace of new restaurant openings and shuttering hundreds of underperforming locations. Fast-casual chains such as Panera Bread Co. have been taking share from Subway restaurants in the U.S., bringing its once-torrid growth phase to a halt.” (Bloomberg)
  7. Aéropostale Set to Close 100 Stores, File for Bankruptcy Protection “Unable to shake off a long slide in sales, teen retailer Aéropostale is set to file for bankruptcy protection this week and close more than 100 of its stores, the Wall Street Journal reported on Monday evening. Unlike its higher end peers American Eagle Outfitters and Abercrombie & Fitch, Aéropostale has not been able to return to growth in the last years as young consumers turn away from branded clothing. The retailer has also been hurt by the growth of fast-fashion retailers like Forever 21, Uniqlo, and H&M. Aéropostale’s comparable sales fell 6.7% during the holiday quarter.” (Fortune)
  8. Wal-Mart’s massive size may be an obstacle for further growth, analyst says “Wal-Mart Stores Inc. was initiated at underperform at RBC Capital Markets on concerns that the retailer’s massive size coupled with heightened competition and the broad shift to e-commerce are risks to both the top and bottom lines. After years of growing, ‘virtually everyone that was going to shop at Walmart, already shops at Walmart,’ RBC analysts wrote in a bearish Tuesday note. RBC estimates that Walmart stores serve more than 260 million people around the world every week and values the U.S. business at $300 billion. ‘Recent store closures and labor investments are a step in the right direction, but we feel that a lot more changes need to be made, from greatly improving retail basics to further simplifying the portfolio,’ RBC analysts wrote.” (MarketWatch)
  9. Fairway files 'prepackaged' Chapter 11 “The parent company of iconic New York grocery chain Fairway Market has filed a "prepackaged" Chapter 11 bankruptcy restructuring Tuesday whereby lenders have agreed to exchange existing debt for new equity and debt in a reorganized company. Fairway, suffering under heavy debts and competition from a variety of formats, said it filed the plan after an extensive search for a buyer or other substantial investment was unsuccessful. Current lenders have also agreed to provide $55 million in debtor-in-possession and exit financing.” (Supermarket News)
  10. More filling: Craft brew craze adds body to real estate market “The craft brewery craze flooding the Indianapolis area with custom suds makers shows no signs of receding anytime soon. The number of microbreweries is expected to top 50 by summer and has grown fivefold since 2009, when less than 10 existed, according to a new study from the CBRE real estate firm. Local microbreweries collectively occupy nearly 360,000 square feet of commercial space—space that otherwise might be sitting vacant, the study estimates.” (Indianapolis Business Journal)
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