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10 Must Reads for the CRE Industry Today (November 3, 2016)

10 Must Reads for the CRE Industry Today (November 3, 2016)


  1. Fed Holds Rates and Says It’s Waiting for “Some Further Evidence Before Hiking Again “The Federal Reserve on Wednesday left its benchmark fed funds rate unchanged, as expected, and said the case for a hike continued to strengthen. Most economists had expected that the Federal Open Markets Committee (FOMC) would leave the federal funds rate unchanged. That rate ends up influencing other rates on things like mortgages, and has been in a range of 0.25%-0.50% since last December.” (Business Insider)
  2. Why a Chinese Real Estate Bubble Could Bring Down the Global Economy “While U.S. GDP grew by 2.9% this quarter, trouble is brewing on the other side of the Pacific. Analysts are sounding the alarm about growing Chinese debt loads and a potential real estate bubble that threatens to dramatically slow growth in Asia, and which could be a drag on the entire global economy if it bursts. In September, Ma Jun, the chief economist of the People’s Bank of China’s research bureau, argued that the Chinese government must take action to stamp out real estate speculation.” (Fortune)
  3. American Apparel May Not Make It Through the Holidays “The largest clothing manufacturer in North America is hanging by a thread. American Apparel, less than nine months after emerging from Chapter 11 and losing sales and bleeding cash, has been slashing payroll at its Los Angeles factory — but it may not be enough to keep it afloat through the holidays. Working with a restructuring expert, the company, famous for its provocative ads and Made in the USA apparel, has had talks with licensing firms and could agree to be sold in a deal that would precipitate another trip through bankruptcy court.” (New York Post)
  4. The Restaurant Recession Has Arrived “Restaurant companies should brace for a challenging period as consumers grapple with the rising costs of rent, prescriptions and car loans and take advantage of cheaper groceries to eat at home more. That’s the verdict of Moody’s Investors Service, which on Tuesday slashed its operating-profit growth forecast for the restaurant sector and revised its outlook to stable from positive. The ratings agency is now expecting operating profit to grow 2% to 4% in the next 12 to 18 months, down from a previous forecast of growth of 5% to 6%.” (MarketWatch)
  5. CBMS Worries: Delinquency Declines May Reverse “Although the CMBS delinquency rate continues to steadily improve, the industry is bracing for the impact of the large number of loans originated at the height of the last bubble that will be maturing over the next year. Roughly $126 billion of CMBS 1.0 loans are still outstanding, and just over $105 billion have a maturity date through 2017, according to Trepp, a New York-based research and analytics firm. These loans have to be refinanced at a time when lenders are adhering to stricter standards that include lower loan-to-value ratios, which will make it difficult for a number of those loans to be refinanced without some sort of recapitalization.” (Commercial Property Executive)
  6. Q3 Commercial, Multifamily Mortgage Originations Up 2 Percent Annually in the U.S. “According to the Mortgage Bankers Association's latest Quarterly Survey of Commercial and Multifamily Mortgage Bankers Originations, commercial and multifamily mortgage loan originations for the first nine months of 2016 increased 2 percent compared to the same period last year. Third quarter 2016 commercial and multifamily mortgage loan originations were 5 percent higher than the third quarter of 2015 and seven percent higher than the second quarter of 2016.” (World Property Journal)
  7. How Marijuana Legalization Is Ultimately a Real Estate Story—and What That Means for California “Legalized marijuana doesn’t just benefit cannabis advocates, though. It can also be good stuff for commercial real estate players — specifically, those who get in on the action in the industrial sector early enough to buy, finance or lease out warehouses that can be used for marijuana. (See examples below and here for data about California warehouses.) What happens after marijuana is legalized is very much a real estate story.” (Forbes)
  8. Mall of America is Stepping Up its Digital Game with Virtual Realty, Robots “It is hard to convey the spectacle that is Mall of America in a PowerPoint presentation. Yet until recently, that is what its tourism staff had to do when speaking at conferences. Now, the staff can take people on a three-minute virtual reality experience that includes the Ferris wheel in Nickelodeon Universe, the 300-foot ocean tunnel in Sea Life Minnesota Aquarium, a view of the swanky Cedar + Stone restaurant in the new J.W. Marriott, the mall’s atrium and its endless corridors of stores.” (Chicago Tribune)
  9. Schneiderman Announces $20M for Land Banks to Combat Blighted Properties “Efforts to combat vacant and blighted properties around New York state are getting a $20 million boost. State Attorney General Eric Schneiderman says Wednesday $20 million in new funds will be committed for community land banks, which acquire and rehabilitate vacant buildings. The money comes from state legal settlements with Morgan Stanley and Goldman Sachs over banking practices that contributed to the housing and foreclosure crisis. It comes on top of $33 million Schneiderman's office has already invested in land banks in the past three years.” (Crain’s New York Business)
  10. GE @ The Banks Sells for $107M in Cincinnati “London-based 90 North Real Estate Partners has snapped up a minority stake in General Electric @ The Banks, the 338,000-square-foot office tower that serves as home to General Electric’s Global Operations Center, at The Banks master-planned community in downtown Cincinnati. 90 North and Kuwait-based majority partner Kamco Investment Co. acquired the trophy property from Carter, developer of The Banks, for $107 million.” (Commercial Property Executive)
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