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10 Must Reads for the CRE Industry Today (October 21, 2016)

10 Must Reads for the CRE Industry Today (October 21, 2016)


  1. [Video] What's in Store for Real Estate Investors if Donald Trump Wins “Donald Trump may be a real estate titan, but a Trump presidency would not necessarily lift the commercial real estate market. ‘A Trump presidency would cause more emotional investing than quantitative and there would be a tremendous amount of volatility in the commercial real estate world, primarily from the liquidity side,’ said Jay Rollins, CEO of JCR Capital. ‘Equity markets would also freeze up and that could cause a value decline, which would primarily affect people who have loans coming due.’ Rollins added that a Trump victory could also slow down the transactional side and likely a ‘value decline due to less capital available.’ As for a Hillary Clinton presidency, Rollins said it would mean a more progressive agenda and a lot more government spending. As a result, there will be ‘a lot more need for capital and money is going to accelerate the sales market because many people will want to sell their properties and buy new properties.’ A Clinton coronation would also stoke fears that the 1031 exchange on real estate could become a target for taxation.” (The Street)
  2. 6 Reasons To Invest In Multifamily Real Estate “With interest rates at historic lows and a strong rental market encompassing much of the country, people are investing in real estate. Many investors automatically think “single-family home” when they set out to buy a property, and while this may be a smart move in cities where the rental market is hot, like Austin, TX, or Provo, UT, there are definite advantages to buying multifamily real estate that should not be overlooked.” (Yahoo)
  3. Economy Watch: Apartment Sector Slows in 3Q “Though the multifamily sector still has a lot of momentum in some of the hotter markets (Seattle, Denver or Nashville, for instance), nationwide the property type, so hot for so long, is at least taking a pause. According to NMHC’s October 2016 quarterly survey, apartment markets softened during the third quarter. All four of the indexes that the NMHC publishes quarterly were down compared with the second quarter; Its Market Tightness, Sales Volume, Equity Financing and Debt Financing indexes all landed below the breakeven level of 50—showing weaker conditions from the previous quarter. The Market Tightness Index fell to 28, the lowest since July 2009, and the fourth quarter in a row showing declining conditions. Almost half of respondents (49 percent) to the survey reported looser conditions than three months ago. The Sales Volume Index decreased from 50 to 42, signifying lower overall sales volume. Sixteen percent of respondents reported higher sales than three months prior, compared to 33 percent that reported lower sales volumes.” (MultiHousing News)
  4. Starbucks Opening up to 1,000 Reserve Cafes in Bid to Go Upscale “Starbucks Corp. plans to open as many as 1,000 locations of a new upscale chain that will tout its premium Reserve coffees, escalating an effort to reach more sophisticated customers. The world’s biggest coffee-shop operator had previously set a target of 500 globally for the Reserve chain, which hasn’t rolled out yet. The first location, scheduled to open next year, will sell more expensive small-lot coffee, along with food from Starbucks’ Italian bakery partner, Princi. The push is part of a move by Starbucks to add different store concepts around the world. It’s also opening giant locations known as Roasteries, which offer tastings and spotlight its premium coffee and the roasting process. The company announced plans on Thursday to open its next Roastery in Tokyo, following a location in Seattle and planned sites in Shanghai and New York.” (Bloomberg)
  5. Most EB-5 funds go to gerrymandered districts: fed gov’t study “The overwhelming majority of EB-5 funding goes into gerrymandered districts where affluent neighborhoods are combined with high-unemployment areas that qualify for the program, a new study shows. The study, released Wednesday by the U.S. Government Accountability Office, is the first attempt by the federal government to quantify claims of abuse critics have lobbed at the visas-for-dollars program, which is set to expire in December as lawmakers debate its future. Conducted over a three-month period last year, the study found that 90 percent of EB-5 funds went to gerrymandered districts made up of two census tracts stitched together, and in some cases more than 100, the Wall Street Journal reported. EB-5, a low-cost source of financing for developers, allows projects to stitch together areas of low unemployment with affluent neighborhoods, one of the main points of criticism in the debate. The program allows investors to get a green card in exchange for investing at least $500,000 in U.S. businesses that create jobs.” (The Real Deal)
  6. New LEED Version to Spur Green Building “Green energy continues to advance, with a major milestone set for Nov. 1. That’s when the U.S. Green Building Council unveils its new version of the 16-year-old Leadership in Energy and Environmental Design certification program that created an international standard for sustainable buildings and communities. The new version raises the bar on increasing energy efficiency and covers more sectors, like data centers. The new version of the LEED certification program, v4, becomes the primary version and ‘pushes the green building industry forward in a way that no previous iteration of LEED ever has,’ said Corey Enck, vice president of LEED technical development at the USGBC. Since it was unveiled in 2000, LEED has become an international standard, certifying hundreds of thousands of square feet per day. As of July, more than 80,100 total commercial and LEED ND (neighborhood development) projects have been certified.” (Commercial Property Executive)
  7. San Diego medical marijuana landlord files for IPO “A nascent San Diego real estate firm that aims to own buildings used to grow medical marijuana has filed to become publicly traded on the New York Stock Exchange. Innovative Industrial Properties, lead by former BioMed Realty Chief Executive Alan Gold, submitted its prospectus Monday to the U.S. Securities and Exchange Commission. Founded in June, the company is seeking to sell 8.75 million shares at around $20 each for net proceeds of $175 million, according to the prospectus. Innovative Industrial plans to use the money to buy 10 to 20 indoor grow facilities for state-licensed medical marijuana producers in nine states, including California. These early IPO financial estimates are often revised before the company actually goes public, based on the interest of institutional investors.” (The San Diego Union Tribune)
  8. Miami condo tower will pour 52 million pounds of concrete for foundation “More than a decade after proposing the massive, mixed-use project known as Miami Worldcenter, developers are laying the foundation for a 60-story luxury condo tower in downtown’s derelict Park West district. One hundred trucks and more than 700 construction workers will start pouring an estimated 52 million pounds of concrete for the high-rise, called Paramount Miami Worldcenter, at 1 a.m. Saturday morning. General contractor CoastalTishman will perform the 30-hour pour. In a statement, developer Daniel Kodsi called the milestone ‘a very proud moment in the evolution of the city as our tower and neighborhood fulfill its potential to become a gleaming global landmark for the city of Miami.’” (Miami Herald)
  9. Sentinel to sell Washington Heights portfolio for $102M “A group of real estate investors led by Joshua Sternhell and Mike Spira is in contract to pick up five Washington Heights rental buildings known as the Fort Riverside portfolio from Sentinel Real Estate Corporation for $101.5 million, or about $300 per square foot, sources told The Real Deal. The six-story elevator buildings contain 289 apartments and span 341,148 square feet. They are spread along Fort Washington Avenue and Riverside Drive. The package also includes a combined 199,000 square feet of air rights. The addresses are 66-72, 80 and 86 Fort Washington Avenue and 838 and 884 Riverside Drive. Of the 289 apartments, 104 are renovated. About 62 percent of the apartments are rent-regulated and rent for about 50 percent of the market rate at $20 per square foot, according to an offering memorandum. Together, the buildings generate $5.8 million in annual revenue and $3.4 million in net operating income, the memo shows.” (The Real Deal)
  10. Ireland to hit foreign investors with new tax on real estate deals “Non-resident investors in Irish real estate funds will have to pay a 20 percent withholding tax from next year, the finance ministry said on Thursday, in a further clamp down on structures used to minimise tax bills on property transactions. Ireland last month proposed to amend tax laws for so-called ‘Section 110’ special purpose vehicles and widened the net on Thursday to include all funds where 25 percent of their value is made up of Irish real estate assets. Such a change targets two other popular types of funds used by foreign investors to buy up swathes of Irish property in recent years: Irish Collective Asset-management Vehicles (ICAVs) and Qualifying Investor Alternative Investment Funds (QIAIFs). The new withholding tax will not apply to certain categories of investors such as pension funds, life assurance companies and other collective investment undertakings, the finance ministry said in a statement.” (Reuters)
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