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10 Must Reads for the CRE Industry Today (September 21, 2017)

The Fed will start unwinding its balance sheet in October, reports the Wall Street Journal. The Street looks at the most expensive zip codes in the country. These are among today’s must reads from around the commercial real estate industry.

  1. Fed to Start Paring Holdings, Keeps December Rate Rise on the Table “The Federal Reserve said Wednesday it would initiate in October its long-telegraphed plan to shrink the portfolio of bonds acquired after the 2008 crisis and left open the possibility of raising short-term interest rates by December. The Fed left rates unchanged Wednesday, but the central bank penciled in one more rate rise in 2017, even though persistently low inflation has given some officials second thoughts.” (Wall Street Journal, subscription required)
  2. Toys ‘R’ Us Bankruptcy Could Push Retail Loan Default Rate Past 10% by Year-End: Fitch “Toys “R” Us Inc.’s bankruptcy filing moves the retail loan default rate past 7% and could drive it past the 10% mark by year-end, according to the latest Fitch Ratings data. The loan default rate was more than 5% in July and August, according to Fitch. Retail accounts for 30% of the year-to-date loan volume, with $5 billion in defaults. Toys “R” Us filed for Chapter 11 bankruptcy protection on Monday night, succumbing to a number of factors including $5 billion in debt and shifts in the toy sector driven by e-commerce, Inc. and discounters like Wal-Mart Stores Inc.” (MarketWatch)
  3. The 10 Most Expensive Zip Codes to Live in the U.S. “While most of the zip codes on this list are located in two of the country's largest states, Florida's Miami Beach does appear in the top-five most expensive locales. Property research firm Property Shark determined its list by looking at the median price of residential transactions that closed in 2016, including co-ops, condos, single and two-family homes.  TheStreet takes a look at the top 10.” (The Street)
  4. Make Sure Clients Don’t Romanticize Real Estate Investing “The prospect of real estate investing has an alluring pull for clients, but advisors caution that those romantic notions can obscure some of the pitfalls that arise when purchasing investment property. As a starting point, the message that advisers emphatically convey to clients looking to purchase an investment property is to do their homework and research the unique features of a given market.” (Financial Planning)
  5. Is Amazon Putting Kohl’s Through a Trial Run before Acquisition? “While most retailers try to come up with responses to blunt Amazon’s forward attack, many are also supporting it by selling the Echo voice-activated speaker line and other devices such as Fire and Kindle. Best Buy, Target and Staples fall into this camp. Going one step further is Kohl’s, which last week announced it is opening Amazon smart home experience shops inside 10 stores in the Chicago and Los Angeles markets next month. Kohl’s customers will be able to purchase devices such as the Amazon Echo along with accessories and services directly from Amazon in the shops.” (Forbes)
  6. California Takes Aim at Contractors Working on Trump’s Wall “President Donald Trump’s promise of a ‘great, great wall on our southern border’ is hitting a wall of its own in Los Angeles and the state of California. In response to the White House’s multi-billion-dollar plan to extend or, at the minimum, re-enforce the barrier, Los Angeles and state officials have proposed laws that will expose and possibly impede firms working on the project from city or state contracts.” (Commercial Observer)
  7. Albertsons Buys Meal Kit Company Plated “Albertsons, one the largest U.S. grocers, is buying meal-kit company Plated, the grocer announced on Wednesday. The deal is Albertsons' first big strategic move since Amazon's acquisition of Whole Foods Market earlier this year. That $13.7 billion deal sent ripples throughout the grocery industry, with Kroger's stock plummeting roughly 30 percent since the deal was announced.” (CNBC)
  8. Is Simon Property Group in Trouble? “Macy’s, Sears Holdings, JC Penney and their peers are closing hundreds of stores. On paper, it seems like this may have a negative impact on Simon Property Group which counts the three retailers as its top tenants. However, I believe Simon Property Group’s future outlook is still looking bright due to two factors.” (Seeking Alpha)
  9. Chick-fil-A to Open its Biggest Restaurant Ever in NYC “Chick-fil-A fans across the country should start planning a pilgrimage to the Big Apple, because the chain is planning to open the Mecca of all chicken-sandwich shops in New York City in 2018. The chain announced Monday that it’s building the ‘largest Chick-fil-A ever’ — a five-level, 12,000-square-foot restaurant complete with a rooftop seating — smack-dab in the middle of Manhattan’s Financial District.” (New York Post)
  10. Coffee Chain Fika’s Fraud Claim Against Westfield Can Proceed: Judge “On Wednesday, a Manhattan Supreme Court judge dismissed the mall operator’s motion to dismiss claims brought against it by Fika after the shop was sued for breach of contract by Westfield. Fika alleged it was induced into a lease at the World Trade Center shopping complex, even though Westfield knew the space wouldn’t be ready in time for the mall’s grand opening last August. Justice Melissa Crane said Friday that Fika’s fraud claims can go forward, according to court filings.” (The Real Deal)
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