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10 Must Reads for the CRE Industry Today (June 22, 2021)

Real estate companies are receiving more auditor warnings about potential bankruptcies, reports The Wall Street Journal. ETF Trends concludes potential changes to the 1031 exchange legislation are unlikely to affect REITs and real estate ETFs. These are among today’s must reads from around the commercial real estate industry.

  1. Blackstone, Starwood Capitalize Extended Stay America Buy with $4.7B CMBS Loan "JPMorgan Chase, Citi and Deutsche Bank have come together to originate one of the largest single-asset, single-borrower commercial mortgage-backed securities (CMBS) loans of the last decade — on a massive hotel portfolio, no less. Blackstone Real Estate Partners and Barry Sternlicht’s Starwood Capital Group finally got their roughly $6 billion purchase of Extended Stay America across the finish line last week, financing most of the acquisition of the brand and its 560-hotel portfolio with $4.65 billion in CMBS debt that will soon hit the market, according to a Fitch Ratings analysis of the deal.” (Commercial Observer)
  2. New York Faces Lasting Economic Toll Even as Pandemic Passes “New York has suffered deeper job losses as a share of its work force than any other big American city. And while the country has regained two-thirds of the positions it lost after the coronavirus arrived, New York has recouped fewer than half, leaving a deficit of more than 500,000 jobs.” (The New York Times)
  3. A History of Real Estate Fraud in 8 Scandals “Real estate is rife with fraud. Over the years, regulators and lawmakers have honed tools aimed at catching criminality. From foreclosure fraud to title fraud, the modern landscape of impropriety in American real estate is shrinking. Major criminals have taught important lessons about how to protect ourselves from scams. Here we have compiled some important historical real estate scams, each with an important lesson.” (Propmodo)
  4. Companies In Certain Industries Receive More Auditor Warnings About Survival “Even though going-concern filings at U.S. public companies overall declined during the 12 months ended May 31, they rose in certain industries, such as real estate and transportation. The percentage of these filings increased in three industry sectors, which are categorized based on codes some U.S. government agencies use: construction; finance, insurance and real estate; and transportation, communication, electric and gas.” (The Wall Street Journal)
  5. UBS in Tie-Up for Wealthy Real Estate Offering “Zurich-based UBS and Invesco will cooperate on tailor-made real estate investment mandates for wealthy clients, the two said in a statement on Monday. Specifically, Invesco will offer access to its real estate strategies, selected co-investments or direct real estate investments worldwide to clients in Switzerland and some other markets in Europe and Asia. UBS said the move aims to address growing demand from wealthy clients for income-producing strategies with a stable return profile.” (
  6. Biden’s Plan Unlikely to Pinch REIT Investors, ETFs “As Brown notes, the 1031 exchange lever isn’t one REITs pull with frequency. The companies usually do so when asset sales run so high that capital gains could exceed ‘the amount of the dividend payment that can be converted from ordinary income to capital gains income.’ Bottom line: even if the 1031 loophole closes and REITs and the related ETFs slide, the long-term impact is likely minimal. Any decline incurred by REITs could be an opportunity for investors to get involved with the asset class.” (ETF Trends)
  7. Will Work for Air Conditioning “After more than a year of dialing in, the physical office, in all its fluorescence, began to beckon.  After a heat wave in the Northeast and triple-digit temperatures in the West, some employees started to wonder if the grass might be greener — or, at least, the cubicle cooler — on the other side. ‘I’ve started going into work a few days a week to take advantage of the air-conditioning,’ said Courtney Walsh, a librarian at an intellectual property firm in Boston, whose third-floor apartment gets stiflingly hot.” (The New York Times)
  8. Allegations Against Cedar Realty Trust CEO Are Rejected “The arbitrator found that Ms. Mozzachio had made allegations about only a couple of comments that Mr. Schanzer allegedly made over 13 years and never reported the behavior to any authority. The comments ‘are insufficient to meet the legal standard for sexual harassment as they are neither severe nor pervasive,’ the ruling said. The 31-page ruling added that most of Ms. Mozzachio’s sexual-harassment claims were uncorroborated. The ruling added that Ms. Mozzachio failed to establish her claims of either discrimination or retaliation.” (The Wall Street Journal)
  9. Proptech and New York’s Next Mayor: An Unprecedented Opportunity Looms “New York City property owners are pouring money into myriad new technologies that manage the construction process, control building access, and lower energy consumption. Here are just a few examples from the past few years.” (Commercial Observer)
  10. WeWork Offers Business Update Showing Occupancy Improved in May “Its IPO documents in 2019 showed it had about $50 billion in long-term leases, most without early termination provisions. ‘Since March, the company has completed an additional 17 exits and 51 amendments and expects to be substantially complete with its optimization efforts by the end of June,’ said the statement.” (MarketWatch)
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