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10 Must Reads for the CRE Industry Today (November 25, 2019)

Blackwells Capital is trying to get Tom Barrack to resign from Colony Capital, reports The New York Times. The Wall Street Journal looks at the practice of separating ownership of land from commercial buildings that sit on it. These are among today’s must reads from around the commercial real estate industry.

  1. The Generational Divide in Holiday Shopping “Black Friday is coming up: Are you an ecoshopper, an online convert or a retro doorbuster? It might depend on your age. Recent trends have loosened Black Friday’s grip on holiday shopping and changed the ways people shop. Socially conscious shopping—with an eye to cutting waste and avoiding impulse buys—is on the rise, especially among younger consumers. Social media and new shopping apps are making it easier than ever to score deals online. And retailers are offering specials earlier and earlier in the season.” (Wall Street Journal, subscription required)
  2. Luxury Giant LVMH to Buy Tiffany for $16.2 Billion “LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, said on Monday that it had reached an agreement to buy the jeweler Tiffany & Company in a $16.2 billion deal, the largest ever in the luxury sector. The acquisition will give LVMH a bigger foothold in the United States, as well as help Tiffany in Europe and China. It will also cement the status of Bernard Arnault, the LVMH chairman and chief executive, as the most acquisitive deal maker in the luxury business.” (The New York Times)
  3. Backer of Time Out Food Hall Has Bigger Plans for Fulton Market “One of the firms backing the massive new Time Out Market Chicago food hall in the Fulton Market District is upping its bet just a few blocks away in the red-hot neighborhood. Chicago-based real estate investor L3 Capital is planning to redevelop a pair of bank branches on Randolph Street and a nearby parking lot in the trendy corridor after buying them last month in a $19.2 million deal.” (Crain’s Chicago Business)
  4. An Activist Investor Tries to Oust a Trump Confidant “Tom Barrack, the C.E.O. of Colony Capital and the chairman of President Trump’s inaugural committee, is being pressed by an activist investor to resign, DealBook has exclusively learned. The activist investor, Blackwells Capital, sent a letter to Colony saying: ‘With Mr. Barrack’s track record and personal issues, no reasonable, fiduciarily-aware public company Board of Directors would select Mr. Barrack as C.E.O. of Colony or any other public company today.’” (The New York Times)
  5. Why Own a Property When You Can Profit from the Dirt Below? “Instead of buying or developing buildings, more commercial real-estate investors want only the ground beneath them. The practice of separating a property from the land, and then renting out that ground to a developer on a long-term basis, is known as creating a ground lease. It is viewed as safer than owning the property because real-estate risk mostly falls to building owners, who usually need to finance a purchase or construction, pay for future renovations and fill the space with tenants.’ (Wall Street Journal, subscription required)
  6. SL Green Execs Still Confident After WeWork’s Near-Collapse “Asked about the impact on the Manhattan office market and whether landlords would step in if WeWork were to default at specific locations, SL Green executive VP and leasing director Steven Durels noted that all co-working spaces in the city (including co-working outfits other than WeWork) account for less than 3.5 percent of the overall market.” (New York Post)
  7. Smaller Cities See Bigger Gains Even as U.S. Home Price Growth Remains Sluggish “The numbers: The S&P CoreLogic Case-Shiller 20-city index rose by 0.4% in September compared with August, on a seasonally adjusted basis. The index was 2.1% higher than a year ago, continuing a slow rate of home-price growth. The Case-Shiller national index, meanwhile, recorded a higher rate of growth on an annual basis at 3.2%, but the same increase on a month-to-month level as the 20-city index.’ (MarketWatch)
  8. Groceries and Glutes: Supermarkets Add Boutique Gyms and Yoga Classes “Supermarkets are trying to entice shoppers with more than just food. Hy-Vee is teaming up with high-intensity training gym OrangeTheory to build studios attached to two of its stores. In Morristown, New Jersey, ShopRite opened a store with a fitness studio that offers yoga and Zumba classes for its shoppers with loyalty cards. And Whole Foods' flagship store in Austin, Texas, partners with barre, spinning and yoga studios in the area for classes on its rooftop plaza.” (CNN Business)
  9. CIP Real Estate Secures $58M to Recapitalize an Industrial/Office Portfolio “CIP Real Estate has secured a $58.6 million loan to recapitalize a three-property industrial and office portfolio totaling 609,898 square feet in Southern California’s Inland Empire. The recapitalization included the procurement of up to $300M of equity growth capital creating nearly $900M of buying power over the next three to four years. The portfolio comprises the 17-building College Business Park in Upland, California; the 12-building Milliken Business Center in Ontario, California; and the five-building Summit Business Center in Riverside, California.” (GlobeSt.com)
  10. Blue States File Appeal Over SALT Tax Deductions “New York, Connecticut, Maryland and New Jersey had sued Treasury Secretary Steven Mnuchin and the IRS in July 2018. A federal judge dismissed the suit on Sept. 30, 2019. The states are battling the $10,000 cap on state and local tax deduction that filers can claim on their federal tax returns. The four states filed an appeal to challenge the dismissal on Tuesday.” (CNBC)
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