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10 Must Reads for the CRE Industry Today (October 16, 2019)

WeWork’s bonds fell to a new low this week, reports the Wall Street Journal. Global banks saw a significant increase in earnings from government-backed U.S. mortgage securities in the first half of the year, according to Reuters. These are among today’s must reads from around the commercial real estate industry.

  1. Banks Reap $1 Billion from U.S. Mortgage Bond Trading Boom “Global banks earned $1 billion from trading government-backed U.S. mortgage securities in the first half of 2019, data shows, a fivefold increase on last year for what industry sources say is the fastest growing revenue source in investment banking. The shift this year to a more dovish interest rate policy by the U.S. Federal Reserve has sparked a surge in investor demand for packaged-up home loans issued by mortgage agencies Fannie Mae, Ginnie Mae and Freddie Mac.” (Reuters)
  2. This Dallas Apartment Building’s Sole Tenant Is a New Lodging Company “An apartment-hotel company that manages short-term rentals is leasing and managing an entire 26-story Dallas apartment building, the latest sign this budding segment of the lodging market is starting to gain traction. Sonder Corp., a San Francisco-based startup, will manage the 270 units in the planned Dallas building. Like its peers Domio Inc. and Lyric Hospitality Inc., Sonder markets itself as offering upscale apartments as an alternative to cookie-cutter hotel rooms.” (Wall Street Journal, subscription required)
  3. PennPSERS Commits to Real Estate Fund “Pennsylvania Public School Employees' Retirement System, Harrisburg, committed $100 million to Exeter Industrial Value Fund V, a value-added real estate industrial fund managed by Exeter Property Group. The board approved the commitment at its Oct. 11 meeting, according to documents from the $59.1 billion pension plan's website. PennPSERS has previously committed to five investment funds managed by Exeter.” (Pensions & Investments)
  4. Gymboree Brand Will Stage a Comeback in 2020 Thanks to Children’s Place “The Gymboree clothing brand for boys and girls will be back online and in some stores next year, thanks to The Children’s Place. The Children’s Place had paid $76 million for the rights associated with both Gymboree and its Crazy 8 brand earlier this year, after Gymboree filed for bankruptcy protection back in January. At the time, Gymboree had 800 locations, all of which shuttered. It marked the second time Gymboree had gone bankrupt in under two years.” (CNBC)
  5. WeWork Bonds Fall to New Low “WeWork bonds plumbed new lows Tuesday, highlighting questions about the shared-office startup’s future as it explores options for raising desperately needed cash after shelving an initial public offering. WeWork’s unsecured bonds due in 2025 traded as low as 79 cents on the dollar, according to MarketAxess, translating to a yield of around 13.2%. That was down from 87 cents at the end of Friday and below its previous low of 81.25 cents reached earlier the same day.’ (Wall Street Journal, subscription required)
  6. Can the Right Home Make You Live Longer? “The latest high-end real estate amenity: living longer. At least that’s the view of South Florida real estate developer Rishi Kapoor, whose Location Ventures has begun selling units in a forthcoming beachfront development in Coral Gables that Kapoor believes will deliver the promise of a healthier home, which he says is ‘not just science fiction, but fact.’” (Curbed)
  7. Residential, Commercial Properties Close to Public Transit Enjoy Increased Values “According to a new report by the American Public Transportation Association and the National Association of Realtors, neighborhoods located within a half mile of public transit services outperformed those in areas farther from public transit based on a number of factors. APTA and NAR's ‘The Real Estate Mantra - Locate Near Public Transportation’ report highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by.” (World Property Journal)
  8. Apple, Facebook Face Off Over Posh NYC Office Space: Sources “Mark Zuckerberg’s Facebook is facing off with Tim Cook’s Apple over posh Manhattan office digs slated to open next year inside a grandiose former post office, The Post has learned. As The Post exclusively reported in September, Zuckerberg’s social media company has been in talks to take over all 740,000 square feet of office space being built in the former James A. Farley Post Office — a stately all-white structure located across from Madison Square Garden.” (New York Post)
  9. Barneys Bidding Starts and It’s a Bet on the Future of Shopping “A bidding war may be about to begin for Barneys New York, the beleaguered luxury department store chain that declared bankruptcy in August and became a cautionary tale of retail hubris and the death of shopping as we once knew it. One buyer could mean the liquidation of all of the retailer’s stores, while another could preserve at least some of the Barneys shoppers know today.” (The New York Times)
  10. Gap Inc.’s Hill City Brand Opens Year-Long Pop-Up Store “Gap Inc. has announced the first brick-and-mortar location for its year-old men's athleisure line Hill City. The 12-month pop-up store, located in San Francisco, is the first of many efforts to move the brand from e-commerce into the real world, with a Hill City Truck heading to the streets of San Francisco, wholesale partnerships that will put Hill City product in stores like Neighborhood Goods and Ships in Tokyo, and local events.” (MarketWatch)
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