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10 Must Reads for the CRE Industry Today (September 24, 2018)

To avoid bankruptcy Sears CEO Edward Lampert proposed a restructuring plan that would involve, among other things, the disposition of $1.5 billion in additional real estate, reports the Wall Street Journal. Forbes look at how commercial real estate investors can protect their assets in the digital age. These are among today’s must reads from around the commercial real estate industry.

  1. Sears CEO Pushes a Rescue Plan to Avoid Bankruptcy “Warning that Sears Holdings Corp. is running out of time and money, CEO Edward Lampert is making his biggest push yet to restructure the retailer to avoid a bankruptcy filing, as a debt payment looms next month. Mr. Lampert, who is also Sears’s chairman, controlling shareholder and biggest creditor, wants creditors to restructure about $1.1 billion of debt coming due in 2019 and 2020, according to a proposal made public on Monday. The proposal also calls on the Sears board to sell another $1.5 billion of real estate and divest some $1.75 billion of assets.” (Wall Street Journal, subscription required)
  2. Digital Realty to Buy Ascenty in a $1.8 Billion Deal, to Sell 8.5 Million Share to the Public “Digital Realty Trust Inc. announced Monday an agreement to buy Brazil-based data center provider Ascenty in a deal valued at $1.8 billion from private-equity firm Great Hill Partners. Digital Realty said it has entered into a "bilateral equity commitment letter" with a Brookfield Asset Management affiliate in which Brookfield has committed to fund half of the initial equity investment, which is estimated to be about $613 million. Brookfield will own 49% of the joint venture that is expected to ultimately own Ascenty.” (MarketWatch)
  3. How Can Commercial Real Estate Investors Protect Their Property in the Digital Age? “With a growing number of employees working from home and 96% of people shopping online, protecting your commercial investment property is more important today than it has ever been. Keeping commercial renters is becoming increasingly difficult, as more and more retailers shutter their doors to move toward an online profile. You need to think on a smaller scale and provide new ways to entice companies to stick with you even as times get lean for brick-and-mortar locations.” (Forbes)
  4. 7 U.S. Cities That Will Pay You Thousands to Live There “It pays to live in small cities. Literally. As young people flee to large metropolitan areas like San Francisco and New York, some smaller towns are facing labor shortages and dwindling populations. To remain competitive, these cities are doling out lucrative perks to get people to move there, such as cash handouts, student loan repayments and housing incentives.” (CNBC)
  5. Walmart Letter Warns Tariffs Will Raise Prices and Tax American Businesses “Walmart Inc. has sent a letter to U.S. Trade Ambassador Robert Lighthizer warning that proposed tariffs on $200 billion on Chinese goods would hurt consumers and American businesses. The letter, dated September 6, focuses on what Walmart says will be the repercussions of the tariffs, which would apply to goods like food and beverages, personal care products like shampoo, detergents, motor vehicles and paper goods like napkins.” (MarketWatch)
  6. Massive ‘Innovation District’ Could Change Little Haiti Forever. But What Would That Mean? “Days before the Miami City Commission votes on a billion-dollar real estate project in Little Haiti, the debate around how the development will impact the neighborhood continues to intensify. Proponents of the Magic City Innovation District, which will be headquartered at 6001 NE Second Ave., say that the massive development, which is projected to take 10 to 15 years to complete, will propel the Little Haiti area into an international draw for tourists, creatives and tech companies. City commissioners will vote on a first round of approvals of the project on Sept. 27. If it passes, the project must win a second approval at a later date.” (Miami Herald)
  7. Commercial Broker Games “On top of lease escalations and the distinctions between rentable and usable square footage, real estate brokers preparing for the state’s licensing exam have also been told to study regulations prohibiting some of the industry’s more underhanded practices. In particular, the curriculum for the exam has long instructed test-takers to review ‘tie-in arrangements’ — a type of quid pro quo in brokerage that amounts to cronyism, and one that many insiders say is commonplace in the highest echelons of their field.” (The Real Deal)
  8. Bridge Investment Buys Suburban Chicago Office Complex “Bridge Investment Group’s office division has acquired O’Hare International Center (OIC), consisting of two nine-story Class A office towers situated next to O’Hare International Airport in Rosemont, Ill. ‘Bridge has a focused repositioning strategy that is supported by a range of data and research on demographic and industry trends,’ Brian Tretinik, Bridge Investment Group’s managing director, told Commercial Property Executive.” (Commercial Property Executive)
  9. JP Morgan Bucks the Decline of Bricks-and-Mortar with its Plan to Open 50 New Branches in the Philadelphia Area “J.P. Morgan Chase is doubling down on the physical storefront known as the bank branch. Under pressure to cut expenses after the financial crisis, U.S. banks have been shuttering branches for most of the last decade. That trend accelerated as Americans got used to banking online and then on mobile phones. But J.P. Morgan is opening 50 new branches in Philadelphia, Delaware and southern New Jersey over the next five years, the bank said in a release.” (CNBC)
  10. Boscov’s: We’re Not Going Away When Monmouth Mall Gets Redeveloped “Where's Boscov's? If you look at the site plan for the redeveloped Monmouth Mall, you won't find a space that's clearly listed for Boscov's. Plans call for the eventual demolition of its current store and the construction of other spaces, including 34,416 square feet for an entertainment use, in its place. Jim Boscov, chairman and chief executive officer at Boscov's, knows that his store is missing from the plans. But he said Boscov's is here to stay.” (Asbury Park Press)
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