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10 Must Reads for the CRE Industry Today (Dec. 12, 2022)

Propmodo talks about the implications of the looming end of the bonus depreciation tax deduction. Institutional Investor looks at why preferred securities could have a big year in 2023. These are among today’s must reads from around the commercial real estate industry.

  1. Bye Bye to the Bonus Depreciation Deduction “The tantalizing subject of tax deductions may not be dominating the conversation at your holiday party, but with 2022 drawing to a close, it’s important to remember that several changes will affect property organizations in this year’s tax returns. Real estate professionals only have a few weeks left to decide whether or not to claim the bonus depreciation deduction before it gradually begins to wind down forever.” (Propmodo)
  2. How commercial real estate players use interest rate swaps and caps “There are investors out there who will speculate in the swaps market, but most real estate executives humbly acknowledge that their goal is simply to mitigate their rate exposure and not to forecast where the swaps market will be in the future.” (The Real Deal)
  3. Blackstone’s BREIT Highlights Looming Dangers of Private Funds “It isn’t just BREIT. Private credit funds became wildly popular over the past decade and mutual funds bought into private equity, part of increasingly creative attempts to make money in a world of zero interest rates. Some, which hold hard-to-trade assets and allow withdrawals, are also vulnerable to self-fulfilling fears about liquidity.” (The Wall Street Journal)
  4. How the End of Rate Hikes Could Set the Stage for Preferred Securities “According to the firm’s outlook for 2023, the asset manager also expects that lower average purchase-price multiples will allow its portfolio companies to make more acquisitions to drive growth and achieve scale. It also anticipates that as management teams focus on their core strengths, the number of public companies that will be taken private and the number of corporate carve-out deals that will be completed will increase.” (Institutional Investor)
  5. Apartment Sales Could End 2022 With a Whimper “The usual upswing in sales that occurs in the fourth quarter could be lower than the preceding third quarter for the first time in a decade if sales don’t surge in the final weeks — and they could end the year with the smallest fourth-quarter sales total since 2014, based on CoStar data for multifamily sales.” (CoStar)
  6. How a Hotel Was Converted into Housing for Formerly Homeless People “The most unusual thing about the project is that it happened at all: The former Jehovah’s Witness hotel is the only hotel that has been converted into supportive housing in the city since the start of the pandemic, though Mayor Eric Adams estimated last year that 25,000 hotel rooms could be transformed into supportive and affordable units. Plans to convert the building started before the pandemic and before Mr. Adams was elected.” (The New York Times)
  7. Will Trump Organization Conviction Trigger ‘Bad Boy’ Clause With Lenders? “Legal experts who spoke to Bisnow agree it is highly unlikely the lenders who work with Trump will trigger a bad boy clause unless a property is in default or is in immediate danger of such. If distress does occur, whether a lender chooses to work with the borrower to rescue the property may hinge on their perception of the organization’s integrity.” (Bisnow)
  8. ICSC New York in 2022: Sparser But Cheerier Crowds “The Innovating Commerce Serving Communities (ICSC) New York conference unfolded on Wednesday and Thursday, but not exactly with a bang. About 7,000 brokers, retailers and landlords poured into the Javits Center on Manhattan’s far West Side  — less than the 10,000 or so who attended the conference in 2019, according to Stephanie Cegielski, vice president of research and public relations for ICSC.” (Commercial Observer)
  9. Vornado, Rudin Partner on $1.2B NYC Project “A joint venture between Vornado Realty Trust and Rudin Management Co. has reached an agreement with Citadel Enterprise Americas LLC and an affiliate of Kenneth C. Griffin, Citadel’s Founder & CEO regarding two office buildings totaling 975,000 square feet in Manhattan, New York.” (Commercial Property Executive)
  10. Growing Number Of CEOs Issue Warnings About Retail Theft ‘Epidemic’ Across US “In September, the National Retail Federation reported that retail theft and other inventory loss—known as shrink—reached $94.5 billion in 2021, while reports indicate that retail theft incidents increased by about 26 percent last year.” (The Jewish Voice)
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