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10 Must Reads for the CRE Industry Today (Jan. 24, 2020)

Treasury Secretary Steven Mnuchin promises another round of tax cuts, according to CNBC. The Wall Street Journal looks at the Koch brothers’ considerable real estate empire. These are among today’s must reads from around the commercial real estate industry.

  1. White House Has Started Work on Second Round of Tax Cuts to Boost Growth, Mnuchin Says “Talk of election year tax cuts comes amid a swelling budget deficit that eclipsed $1 trillion for the 2019 calendar year. In addition, total government debt recently passed $23 trillion, despite President Donald Trump’s promises that economic growth would wipe out the deficit and pull down the federal IOU. Mnuchin maintained that the tax cuts would pay for themselves even as growth has fallen well short of the administration’s promises of 3%-4% annually.” (CNBC)
  2. The Koch Brothers Are Sitting on a Real Estate Empire Worth Hundreds of Millions “Billionaire brothers Charles Koch and the late David Koch became known for their financial support of conservative and arts causes. But they, and their two brothers, Bill and Frederick, quietly built another legacy: hundreds of millions of dollars worth of high-end real estate. The four brothers have amassed some of the world’s most spectacular private homes, including a large waterfront compound on Massachusetts’ Cape Cod once owned by Bunny Mellon, sprawling Palm Beach estates, a replica of an old Western town in Colorado and an Austrian castle once owned by Archduke Franz Ferdinand.” (Wall Street Journal, subscription required)
  3. How 5G, IoT and AI Will Change the CRE World “In our newsletter story last week, Connected Real Estate Magazine wrote about how IoT (Internet of Things) is changing the world, based on insights from a recent Economist article. The reported noted IoT’s potential impact on consumer products, domestic and global economies, the industrial market as well as residential and commercial real estate. These revelations are good indicators that IoT will change the world, but it will do so alongside AI (artificial intelligence) and the fifth generation of wireless networks, more commonly known as 5G.” (Connected Real Estate Magazine)
  4. After Bankruptcy, Nearly Half of Retailers Close All Stores “Secured creditors are recovering all or most of their investments when retailers file for bankruptcy protection, even as nearly half these companies don’t survive with a physical presence, according to Fitch Ratings research. Among large retail and supermarket chains that filed for bankruptcy protection over the past 15 years, 45% closed all of their stores, the ratings firm said in a new report. Fitch found that the bankruptcies of 25 out of 55 retail and supermarket companies ended in liquidations.” (Wall Street Journal, subscription required)
  5. Pier 1 Said Stores Deleted from its Website Are Shutting Down. Here’s the List of Closing Stores. “Pier 1 is planning to close roughly half its stores as it struggles to stay afloat amid years of falling sales.  The company hasn't yet released a full list of the 450 stores it plans to close. But it recently erased more than 270 stores spanning 43 states from its website, according to an analysis by Business Insider that relied in part on data from the research firm AggData.” (Business Insider)
  6. She’s 91 and Is Being Kicked Out of Her Apartment “Gabrielle Wagner, 91, moved into the Riverview Senior Independent Living facility last April after her identical twin, whom she had lived with, died in 2018. She had been lonely and the modern apartment tower in Hell’s Kitchen felt less like assisted living and more like a comfortable community for active seniors where she could live out her days. ‘I thought I’d go out feet first,’ she said just before Christmas. ‘I thought I’d finally found a place I can stay in until I die.’” (The New York Times)
  7. How to Invest in Commercial Real Estate in 6 Steps “Learning how to invest in commercial real estate (CRE) may seem intimidating at first, but these six fundamental steps focus on the main aspects of investing in CRE and show you that it's more straightforward than you may think. These six steps are focused on active investing, where you as the investor are participating in the management and operation of the property. You may oversee the onsite manager or manage the property yourself, but ultimately you play an active roll in the success or failure of the investment.” (Million Acres)
  8. After Denying Liquidation, Fairway Declares Chapter 11 Bankruptcy, Will Sell Stores “Fairway Market filed for Chapter 11 bankruptcy for the second time in four years Thursday as it announced plans to sell all of its supermarkets. The beloved Big Apple grocer said it has reached a deal to sell up to five New York City stores and its distribution center for about $70 million to Village Super Market, which operates about 30 ShopRite locations in the New York region.” (New York Post)
  9. The World’s Biggest Video Game Retailer, GameStop, Is Dying. Here’s What Led to the Retail Giant’s Slow Demise “The world's biggest video game retailer, GameStop, is in serious trouble. In the past 12 months, the company's stock value has dropped by two-thirds — from about $15 in January 2019 to under $5 by January 2020 — and it reshuffled its C-suite. Like Blockbuster Video and Tower Records before it, GameStop faces major challenges to its business model from the internet.” (Business Insider)
  10. German Investor Pays $120M for D.C. Hotel “Just days after the official opening of Thompson Washington D.C., Geolo Capital has completed the disposition of the 225-key hotel. Geolo, which developed the luxury boutique hotel in a joint venture with JW Capital Partners, sold the property to Germany’s Union Investment GmbH in accordance with a forward-sale arranged in 2018.” (Commercial Property Executive)
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