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Nine Must Reads for the CRE Industry Today (July 11, 2020)

Pension funds are finding it hard to value their real estate holdings amid the pandemic disruption, reports the Wall Street Journal. Up to 28 million Americans might soon be facing evictions, according to CNBC. These are among today’s must reads from around the commercial real estate industry.

  1. For Pensions, Valuing Real Estate Is Hard. COVID-19 Brings New Hurdles “Public pension funds invested in malls, apartments and offices over the last decade in search of higher returns. Now they are grappling with how much those real-estate investments are worth in a world transformed by Covid-19. Pension giant California Public Employees’ Retirement System is projecting malls will lose some of their value in the second quarter, according to an internal estimate. The Arizona State Retirement System predicts the value of distribution centers for e-commerce will rise as more people shop online.” (Wall Street Journal, subscription required)
  2. CRE Needs to Step Up its Game on Transparency “Although commercial real estate transparency is progressing across most countries and territories, overall improvement is the weakest since the period directly following the Global Financial Crisis. The average transparency improvement score now stands at 1.1% globally. So says JLL in the biennial Global Real Estate Transparency Index prepared by JLL and LaSalle. One reason for the slowdown in progress has been the economic and political headwinds that have blown in across the Middle East, Latin America and sub-Saharan Africa.” (Connect Commercial Real Estate)
  3. Looming Evictions May Soon Make 28 Million Homeless in U.S., Experts Say “Emily Benfer began her career representing homeless families in Washington, D.C. Her first case involved a family that had been evicted after complaining to their landlord about the holes in their roof. One of the times she met with the family, one of the children, a 4-year-old girl, asked her: ‘Are you really going to help us?’ Benfer struggled with how to answer.” (CNBC)
  4. Pandemic-Proofing: Insurance May Never Be the Same Again “Insurers are creating products for a world where virus outbreaks could become the new normal after many businesses were left out in the cold during the COVID-19 crisis. While new pandemic-proof policies might not be cheap, they offer businesses from restaurants to film production companies to e-commerce retailers ways of insuring against disruptions and losses if another virus strikes.” (Reuters)
  5. Congressman Mulls Risky Relief for Real Estate “A real estate financier turned U.S. representative is leading the charge to give the commercial real estate industry a lifeline — albeit a risky one for the government. Texas Republican Rep. Nicholas Van Taylor plans to introduce a bill that would authorize the Treasury Department to provide real estate investors hit by the pandemic with low-cost financing to support their properties, according to real estate attorneys briefed on the proposal.” (The Real Deal)
  6. Colony Capital Leads $1.2 Billion Investment in Vantage Data Centers “As part of a new $3.5 billion strategic partnership, an investor group led by Colony Capital Inc. will invest $1.2 billion in Vantage Data Centers’ portfolio, which includes 12 stabilized North American data centers. Citi served as financial advisor to Vantage. The definitive agreement to form the strategic partnership is expected to close in late July. The partnership aims at two goals, according to the parties.” (Commercial Property Executive)
  7. Muji Files for U.S. Bankruptcy in Latest Coronavirus Casualty “Trendy Japanese retailer Muji’s US business filed for bankruptcy Friday, making it the latest corporate casualty of the coronavirus crisis. The minimalist home-goods chain plans to close some unprofitable stores and renegotiate rents in the US after the pandemic forced its 18 American locations to shut down in March, according to its Tokyo-based parent company, Ryohin Keikaku.” (New York Post)
  8. B. Wayne Hughes Built a Self-Storage Empire. Now He Want to Rent You a McMansion “In the depths of the last housing crisis, self-storage billionaire B. Wayne Hughes flew to Las Vegas and Phoenix to lay the groundwork for a new bet. His plan: Buy foreclosed homes, spruce them up and rent them out. He tested his ideas on three houses in each market and then dispatched deputies to buy tens of thousands more across the U.S. Nine years later the land grab is paying off as an economic downturn, the rising unaffordability of homeownership and a global pandemic push a new generation to suburban home rentals.” (Wall Street Journal, subscription required)
  9. A Coffee Chains Reveals Flaws in the Fed’s Plan to Save Wall Street “La Colombe, a Philadelphia-based purveyor of fancy coffee and canned draft lattes, has seen its business fall off sharply in 2020 as the coronavirus pandemic shuttered its cafes and closed the upscale restaurants that serve its brew. But the company has fallen through the cracks when it comes to government relief. La Colombe didn’t think it qualified for the government’s forgivable small-business loan program given its size and canned coffee manufacturing business.” (The New York Times)
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