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Eight Must Reads for the CRE Industry Today (June 5, 2020)

Simon Property Group is now suing Gap for failing to pay more than $65 million in rent and other charges, reported CNBC. Small businesses that were already struggling from COVID-19 shutdowns now have taken a second blow from looting in some cities, according to the Wall Street Journal. These are among today’s must reads from around the commercial real estate industry.

  1. The biggest U.S. mall owner, Simon Property, sues Gap over skipped rent payments “The biggest mall owner in the country, Simon Property Group, is suing one of its biggest tenants, Gap, saying it failed to pay more than $65.9 million in rent and other charges due during the coronavirus pandemic. The battle in Delaware state court highlights the mounting tension between retail landlords and their tenants, many of which stopped paying rent after the crisis forced them to shut stores.” (CNBC)
  2. The next big problem for the economy: Businesses can’t pay their rent “Overall, Datex found that 58.6 percent of retail rents were paid in May. Office and warehouse tenants are still paying rent for now, but there remain concerns about whether tenants will renew leases as working from home gains in popularity.” (Washington Post)
  3. ‘Everything Is Gone’: Looting Strikes a Second Blow to Reeling Businesses in Minority Neighborhoods “Small businesses, especially minority-owned ones, typically have little savings and very often don’t have multiple locations to help blunt the ravages of the pandemic and the looting. Forty-six percent of black-owned businesses were profitable at the end of 2017 compared with 55% of white-owned firms, according to a report released in 2019 by the regional Federal Reserve Banks.” (WSJ.com)
  4. Reading the Tea Leaves on Forbearance “It is likely too early to tell how the recovery from the coronavirus crisis will play out and there is no single solution to the challenges borrowers and lenders are facing. Large tenant bankruptcies have begun and there is a growing chorus around the fact that certain shuttered businesses may never reopen. The speed of change is unlike anything we have seen and there are too many variables to make decisions in bulk.” (Commercial Observer)
  5. NYC Finally Unveils a More Ambitious Outdoor Dining Plan “Restaurants will soon be able to use sidewalks and parking spaces for outdoor dining, a development that cash-strapped restaurants have been lobbying for as the COVID-19 crisis keeps their dining rooms shuttered…. Unlike past sidewalk cafe permitting, restaurants will not need to receive approval from local community boards for these new outdoor dining spaces — a move aiming to offer outdoor dining as soon as possible.” (Eater.com)
  6. Hotel Owner Seeking Mortgage Relief? Not If Wall Street Owns Your Loan “Just 20% of hotel owners whose loans had been packaged and sold to investors have been able to adjust payments in some form during the pandemic, versus 91% of hotel owners who borrowed from banks, according to a survey by the American Hotel and Lodging Association. Some hotel owners are worried they will lose their properties to foreclosure, despite unprecedented stimulus by the federal government to help hard-hit industries weather the pandemic.” (WSJ.com)
  7. HSBC Private Banking raises record US$1.3 billion in alternative investments “HSBC Private Banking raised more than US$1.3 billion of private client funding for alternative investments in Asia from April 2019 to April 2020 across a broad range of product solutions including hedge funds, private equity, private credit and US$350 million in a private REIT strategy.” (TheAsset.com)
  8. Dallas-Fort Worth construction starts plunged as COVID-19 spread “Nonresidential building starts plunged by more than 40% from a year ago, according to a new report from Dodge Data & Analytics. Residential building activity was also down 14% year-over-year in April as the coronavirus shut down the economy. Total building activity in the D-FW area was 28% lower than in April 2019, according to Dodge Data.” (The Dallas Morning News)
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