10 Must Reads for the CRE Industry Today (September 13, 2016)

10 Must Reads for the CRE Industry Today (September 13, 2016)


  1. Capital, Shipping Flows Likely to Buoy Development in U.S. Southeast “Although the Federal Reserve Board is expected to raise interest rates, many macroeconomic trends continue to favor U.S. commercial real estate as an asset class, Jimmy Hinton, a managing director of research at Holliday Fenoglio Fowler—a large provider of commercial real estate and capital markets services to the U.S. commercial real estate industry—told attendees at a ULI South Carolina capital markets conference held on Kiawah Island in September.” (Urban Land Magazine)
  2. Pay Rises for Local REIT Bosses “Rising rents and occupancies boosted the fortunes of local real estate investment trusts last year—and of their top brass, too. Six of eight Chicago-area REIT CEO's took home bigger paychecks in 2015 than they did a year earlier, according to company proxy statements. The king of the hill by far: Sandeep Mathrani, CEO of General Growth Properties, whose total compensation jumped eightfold, to $39.2 million, from 2014. Mathrani, 54, was not only the highest-paid local REIT executive last year, but he was also the highest-paid REIT CEO in the entire country.” (Chicago Real Estate Daily)
  3. Bubbles, Credit and Their Consequences “The collapse of an asset price bubble usually creates a great deal of economic disruption. But bubbles are hard to anticipate and costly to deflate. As a result, policymakers struggle to determine how they should respond, if at all. Evaluating the economic costs of past equity and real estate bubbles—with particular attention to how much credit grew during boom phases—can provide valuable insights for this debate. A recent study finds that equity bubbles are relatively benign. More danger comes from housing bubbles in which credit grows rapidly.” (Federal Reserve Bank of San Francisco)
  4. CPPIB Names Head of New Real Assets Group; Private Investments Leading Joining Carlyle “Graeme Eadie was named senior managing director and global head of real assets at the Canada Pension Plan Investment Board, Toronto, which manages the assets of the C$287.3 billion ($221.1 billion) Canada Pension Plan, Ottawa, said a news release from the board. Real assets is a new department for the investment board, combining the real estate investments group with the agriculture and infrastructure groups. Mr. Eadie previously was senior managing director and global head of real estate investments.” (Pensions & Investments)
  5. The Markets Where the Cost to Rent a Home is Rising Fastest “Rents for single-family homes are rising across the country, according to RentRange, a housing industry data provider, which has identified the 25 metro areas where the average rent rose the most in the 12 months ending June 30. Of the top 25, five are in California and five in Florida, led by Cape Coral, Fla., where single-family rents rose 26.1% over the 12-month span. In these states home sale prices are also rising faster than the national average, making it harder for would be buyers to take the ownership plunge.” (Forbes)
  6. Mack-Cali to Buy Back $250M in Debt, Refi 101 Hudson in JC “Mack-Cali Realty Corporation wants to buy back $250 million worth of high-yield debt early as part of an effort to reduce its financing costs, the real estate investment trust announced Monday. The company sent investors a tender offer to buy senior unsecured notes carrying an interest rate of 7.75 percent that don’t expire until 2019. Michael DeMarco, president of Mack-Cali, told The Real Deal that the firm plans to refinance the notes with a new $250 million mortgage on its Jersey City office building at 101 Hudson Street, at a floating rate of currently around 3 percent.” (The Real Deal)
  7. Wal-Mart’s Market Share Gain is Target’s Loss, Analysts Say “Wal-Mart Stores Inc. is poised to “regain retail dominance,” while Target Corp. is losing share to Wal-Mart in grocery, according to Cowen & Co., prompting a Wal-Mart upgrade to outperform and a Target downgrade to market perform. ‘Bottom line, we see Wal-Mart continuing to gain share at the expense of Target and retail peers,’ Cowen wrote in a note published Monday. Cowen analysts believe Target is facing a number of challenges, notably, the lack of ‘fill-in trips’ by consumers.” (MarketWatch)
  8. Despite Safety Push, Many Worksite Deaths Go Uncounted “In July of last year, a construction worker collapsed on a project in Williamsburg, Brooklyn, after working a full shift in sweltering heat. The death of Alton Louis, a young father, triggered action from federal workplace-safety officials, but was not probed by the city’s buildings or investigation agencies. In fact, the tragedy did not even make the city’s official tally of construction deaths in 2015. That was hardly unusual.” (Crain’s New York Business)
  9. Vornado Closes $675M Refi of Iconic Chicago Building “Vornado Realty Trust recently announced it has completed the $675 million refinancing of theMART building in Chicago. The five-year, interest-only loan has a fixed rate of 2.7 percent. Vornado realized approximately $124 million in net proceeds after repaying the existing 5.57 percent, $550 million loan and closing costs. Also known as Merchandise Mart, the iconic art deco building located at 222 Merchandise Mart Plaza totals 4.2 million square feet of space, including approximately 3.6 million rentable square feet.” (Commercial Property Executive)
  10. Cornerstone Puts Tower at 551 Madison Avenue Up for Sale “Asset management firm Cornerstone Real Estate Advisers, now known as Barings following a $275 billion merger Monday, is looking to sell the 150,000-square-foot office-and-retail building it owns at 551 Madison Avenue, sources told The Real Deal. The asking price wasn’t clear, but sources said Barings could be looking to get north of $180 million at a minimum. Connecticut-based Cornerstone paid $128 million in 2012 to buy the 17-story building at 551 Madison Avenue from LaSalle Investment Management.” (The Real Deal)
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