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15 Must Reads for the CRE Industry Today (July 29, 2020)

The Federal Reserve extended its lending facilities through the end of the year, reports Reuters. Sycamore Partners has offered a $1.75 billion bid for J.C. Penney in a plan to combine it with Belk, according to the New York Post. These are among today’s must reads from around the commercial real estate industry.

  1. Fed Announces Extension in Lending Facilities Until End of the Year “The U.S. Federal Reserve said on Tuesday it will extend several of its lending facilities through the year-end as the central bank continues to dial back expectations on how quickly the U.S. economy will recover from the novel coronavirus pandemic. The extensions apply to those facilities that were due to expire on or around Sept. 30, the Fed said in a statement.” (Reuters)
  2. Sycamore Partners Offers $1.75B for JC Penney with Plan to Grow Belk “The private equity firm that backed out of a deal to buy Victoria’s Secret in the midst of the coronavirus pandemic appears poised to win an auction to buy JCPenney out of bankruptcy, The Post has learned. Big Apple-based Sycamore Partners has offered $1.75 billion to buy the 118-year-old department store chain with plans to merge it with Belk, a source with knowledge of the situation told The Post.’ (New York Post)
  3. Despite the Market Rebound, Many Investors Still Shorting Real Estate Stocks “Investors rushed to short retail and hospitality stocks in the early part of the crisis, but shorting activity has continued through the summer.” (Bisnow)
  4. U.S. Banks Disclose Retail Exposure as Distress Mounts in the Space “The inventory of distressed retail assets is increasing as the COVID-19 pandemic deepens, and many banks are disclosing their exposure to the industry. By nominal amount, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp are among the U.S. banks with the most exposure to commercial retail borrowers. And there are signs the sector is struggling. A second-quarter report from Real Capital Analytics showed the inflow of distress in the second quarter was more than twice the average quarterly inflow in 2009 when the business world was mired in the global financial crisis.” (S&P Global Market Intelligence)
  5. Eviction Crisis Could Follow Failure to Extend Pandemic Unemployment Benefits “With Congress at loggerheads on an extension of pandemic-related unemployment benefits, analysts said that housing markets could take a hit if authorization for the $600 per week payments is ended as of July 31.” (GlobeSt.com)
  6. WeWork Sheds Youthful Image as It Lures Big Corporations “WeWork enjoyed explosive early growth as a refuge for small startups and freelancers. Now, it is ditching that image while trying to revive its business with larger, more-traditional corporate clients. With the new emphasis, WeWork hopes to weather a serious downturn in the office market triggered by the coronavirus. In June, large companies accounted for 65% of its new customers, said Sandeep Mathrani, chief executive of WeWork parent We Co.” (Wall Street Journal, subscription required)
  7. Marcus & Millichap to Acquire Mission Capital Advisors “Brokerage giant Marcus & Millichap is acquiring New York-based competitor Mission Capital Advisors.Acquisition talks began last year and the transaction was set to close in the first quarter.” (The Real Deal)
  8. McDonald’s Global Sales Suffer as COVID-19 Limits Operations “McDonald’s Corp on Tuesday reported a bigger-than-expected drop in global same-store sales and missed profit expectations, as its restaurants were shut due to the COVID-19 pandemic, limiting operations to only drive-thru and delivery. Shares of the Chicago-based restaurant chain fell about 2% before the opening bell. Global same-store sales fell 23.9% for the second quarter ended June 30, dragged down by big international markets including the United Kingdom, France and Latin America.” (Reuters)
  9. Bay Area Food Halls Face Confusing Questions After Ferry Building Closures “Health orders required San Francisco’s Ferry Building to briefly close its main hall last week because the state considered it a mall. A speedy change in categorization from indoor shopping center to transit terminal allowed the Ferry Building to resume full operations, but it also led to confusion for other Bay Area food hall operators who are grappling with what it means for their own businesses, with little clarity from county officials.” (San Francisco Chronicle)
  10. Banking Billion-Dollar Deals at CoStar Group "Three of the most senior attorneys at CoStar Group have had to evolve in their in-house roles and, in some cases, learn how to be in-house lawyers. General Counsel and Secretary Jaye Campbell, Chief Compliance Officer Jeannette Koonce, and Associate General Counsel and Head of Employment Law Stefanee Handon all found their way to the commercial real estate information and analytics giant after successful private practice careers as fee earners. The in-house proposition doesn’t just turn that idea on its head." (Modern Counsel)
  11. Hines Breaks Ground on Mass-Timber Office Project in Toronto “Hines has commenced construction of T3 Bayside’s first phase, a 251,000-square-foot speculative office building at the company’s 13-acre Bayside Toronto master-planned community along Toronto’s eastern waterfront. The 10-story tower, which will be one of two identical mass-timber buildings, marks the initiation of Bayside Toronto’s approximately 500,000-square-foot workplace component.” (Commercial Property Executive)
  12. Google Isn’t Coming Back to the Office Until Next Summer. Here’s the Space at Stake “In December 2018, Google CFO Ruth Porat announced plans for the search giant's new 1.7 million-square-foot campus in Manhattan's Hudson Square.” (The Real Deal)
  13. Chipotle Mexican Grill Joins Top Restaurant Chains Requiring Customers to Wear Masks “Chipotle Mexican Grill has joined a growing list of high-profile restaurant chains such as Panera Bread and McDonald’s that are requiring guests to wear masks when they enter the store. The mask mandate for customers went into effect Friday. Like at other chains, employees have been wearing masks for weeks.” (Nation’s Restaurant News)
  14. Shoppers Are Still Wary of Returning to Malls, Trying on Clothes and Traveling “As retailers take precautions to a new level to try to welcome shoppers safely back to stores, consumers are still wary of returning to bricks-and-mortar retail, a new survey says. Thirty-two percent of people feel unsafe or very unsafe visiting shopping malls, First Insight found in polling more than 1,200 people on July 10. That’s actually an uptick from 29%, the last time the firm surveyed consumers on April 30, the retail predictive analytics company said.” (CNBC)
  15. ‘There’s This Doomsday Feeling’ New York’ Restaurant Workers Confront a Terrifying Future “Those who do go back to work in restaurants are often picking up fewer shifts, and making less money than before. And the jobs that do exist are few and far between. ‘It’s slim pickings, and a lot of places aren’t offering any hours,’ says Trina Quinn, the former sous chef at Red Hook Tavern. ‘What I’m starting to look for is people who are advertising their safety protocol. And by word of mouth, you see who is abiding by, or actually practicing these protocols. It’s just really stressful.’” (Grub Street)
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