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

Sears may file for bankruptcy as soon as Monday, the Wall Street Journal reports. China’s HNA Group has listed $11 billion worth of real estate for sale, mostly the home country, according to Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. Sears Hires Advisers to Prepare Bankruptcy Filing “Sears Holdings Corp. has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week, according to people familiar with the situation, as the cash-strapped company that once dominated American retailing faces a debt payment deadline. Employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing, the people said. In recent days, M-III staff have been at the retailer’s headquarters in Hoffman Estates, Ill., one person said. Sears continues to discuss other options and could still avert an in-court restructuring, the people added.” (Wall Street Journal, subscription required)
  2. China’s HNA Lists Property Assets Worth $11 Billion for Sale: Documents “Chinese conglomerate HNA Group has put up for sale property assets worth at least $11 billion, according to documents seen by Reuters, accelerating a push to cut its large debt and restructure. Two sets of documents reviewed by Reuters listed more than 80 assets that HNA has either put up for sale or intends to sell, including hotels, commercial and residential buildings. They are mostly within China, with the bulk of them located in Hainan Island, where HNA is headquartered.” (Reuters)
  3. EPA Backs Down from New Energy Efficiency Ratings After Landlords Balk “The Environmental Protection Agency has put on hold plans to update its system for rating the energy efficiency of office and industrial buildings, pausing after some big landlords complained the methodology would unfairly penalize their properties. More than 200,000 properties across the U.S. participate in the Energy Star program, which generates scores of one to 100 to measure energy efficiency and rate buildings. The agency created the program to offer tenants and owners an easy way to compare how much energy each building uses, and a sense of how expensive their energy bills would be.” (Wall Street Journal, subscription required)
  4. Plan for New $2.5B Times Square Tower Faces Unique Challenge “As if not already complicated enough, Times Square’s $2.5 billion TSX Broadway tower, which will replace the Double Tree Hilton Hotel with a spectacularly lit, mixed-use skyscraper, faces a surprising additional challenge: Besides demolishing a 46-story building on a congested corner and elevating a landmarked Broadway theater by 30 feet, the developers must preserve 25 percent of the original hotel’s structural steel.” (New York Post)
  5. These 5 Retailers Are Following Sears into Irrelevance “A rising tide for U.S. consumers — cue booming jobs numbers and record consumer sentiment — still can’t help some struggling retailers. There’s no greater proof than the slow death march of Sears Holdings SHLD, which closed another 78 stores in September. Yes, there are occasional short-term uptrends in the stock for swing traders, such as a 7% bump about a month ago after earnings that showed losses that weren’t as terrible as expected. But make no mistake — this is a stock with one foot in the grave. It’s trading at less than $1 a share, and is down a staggering 98% in the last five years.” (MarketWatch)
  6. 6 Reasons Pro Sports Teams Invest in Ancillary Real Estate Development Projects “As my Business of Sports students at Washington University in St. Louis diligently prepare for their Wednesday midterm, some of the topics they are undoubtedly reviewing — or at least they better be — include stadium economics, franchise valuation and sources of revenue generation for pro teams. At the intersection of these three broad topics is the concept of pro sports teams making substantial real estate investments in the blocks nearest their facility.” (Forbes)
  7. Bill Ackman Reveals $900 Million Bet on Starbucks “Bill Ackman of Pershing Square Capital revealed a new stake in Starbucks on Tuesday at a conference in New York. The fund has 15.2 million shares, about $900 million worth. Starbucks shares popped more than 3 percent Tuesday afternoon amid the news. The move higher pushed the stock into positive territory for the year, up nearly 2 percent. In the food and beverage space, Pershing also holds shares of Chipotle Mexican Grill, Restaurant Brands International, which is the parent of Burger King and Tim Horton's, and Mondelez.” (CNBC)
  8. How Technology and Automation Humanize the Property Management Experience “Recently, it was reported that total investment in real estate tech has ballooned from $33 million in 2010 to more than $5 billion last year. Property management is one market segment feeling the impact — and it’s ripe for disruption, given how highly fragmented it is. Rental properties tend to be scattered, making it difficult for property management companies to scale.” (Forbes)
  9. Sears Hits Record Low as Restructuring Expert Joins Board Ahead of Debt Deadline “Sears Holdings Corp. shares extended declines Tuesday, taking the stock to another all-time low, as the struggling retailer added restructuring expert Alan Carr to its executive board just days ahead of a looming debt repayment that is nearly twice the company's market value. Carr, who also heads Drivetrain LLC, a restructuring consultancy, will remain on the Board until Sears' 2019 shareholders meeting, the company said Tuesday in an SEC filing, with CEO Eddie Lampert extolling his ‘deep experience as a director for companies that went through complex organizational change.’” (The Street)
  10. Fosun Looking to Sell Stake in 28 Liberty, to Revalue at $1.6B “The Chinese owners of 28 Liberty are putting it on the block for an expected revaluation at $1.6 billion. The company, Fosun, has hired CBRE to market the 2.2 million square-foot building, Real Estate Alert reported. But Fosun is merely seeking a strategic partner, the Post has learned, and expects to retain a majority stake in the property that was previously refinanced for $1.3 billion.” (New York Post)
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