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10 Must Reads for the CRE Industry Today (May 9, 2022)

Brookfield reached an agreement to acquire Watermark Lodging Trust in a deal that would be $3.8 billion. The New York Post reports that major New York City office tenants have been renewing leases, but quietly cutting back on space. These are among today’s must reads from around the commercial real estate industry.

  1. Watermark Lodging Trust Agrees to be Acquired by Brookfield in $3.8B Deal “Under the terms of the deal, Brookfield will acquire all outstanding shares of Watermark's common stock. Brookfield will pay $6.768 per Class A share and $6.699 per Class T share in an all-cash transaction valued at $3.8 billion, including the assumption of debt and preferred equity, the companies said.” (Marketwatch)
  2. Big NYC office tenants quietly shrink square footage in ‘major reset’ “But there’s a shadow over the deals as well. All of them were for much less space than the companies had previously, a trend that Wharton Property Advisors president Ruth Colp-Haber views as portending a ‘major macroeconomic reset’ looming in the office market.” (New York Post)
  3. ‘Onslaught’ Of Office Renovations Taking Place As Companies Redesign Spaces For Hybrid Work “In recent months, for the first time ever, architectural firms are making more income from renovation work than new construction, said American Institute of Architects Chief Economist Kermit Baker, who expects the run on retrofitting to be more than a late pandemic blip.” (Bisnow)
  4. A Landlord ‘Underestimated’ His Tenants. Now They Could Own the Building. “On the cusp to become homeowners, the tenants’ feat comes at a time when rents are spiraling and speculative development is rampant in South Bronx neighborhoods like Port Morris. They navigated a long and complicated legal case, staving off multiple attempts by the landlord to evict them.” (The New York Times)
  5. How The Political Climate Affects The Real Estate Market “With low mortgage rates and a tight housing supply, the real estate market has been booming for years. But continued supply chain challenges and an inflationary market may bring about problems that property developers and commercial real estate investors have never been confronted with before -- at least not on this scale.” (Inc.)
  6. Luxury real estate is 'at the top of the list' as the Justice Department investigates Russian money laundering, DOJ official says “While luxury real estate remains a focus of the Justice Department, Adams noted that federal forfeiture law requires layers of litigation before the government can seize an individual's private property. Last week, President Biden proposed a new White House plan that would expedite this legal process and allow the government to sell seized Russian assets to help fund Ukraine.” (Insider)
  7. Where have all the sellers gone? “Inventory has collapsed in markets across the country. A recent estimate by found that the U.S. is short by more than 5 million homes. The number of homes on the market plunged to a record low of 456,000 in March, according to a report by Redfin, a 50 percent decrease from two years ago.” (The Real Deal)
  8. Taxpayers May Foot Bill for Penn Station Revitalization, Report Says “The ambitious undertaking would be complex but necessary, they said, as the development of new towers would help pay for much-needed improvements at Penn Station, which was, before the pandemic, the busiest train station in the Western Hemisphere and, perhaps, the most universally disliked.” (The New York Times)
  9. Sternlicht: Starwood is “sea of stability,” ready for recession “The billionaire chairman and CEO of Starwood also offered his insights on the market. He predicts overall demand will slow, and he’s expecting a recession. But Starwood investors need not worry, he said: The real estate investment trust has an average 57 percent loan-to-value ratio for its portfolio of loans, a statistic repeated throughout the call.” (The Real Deal)
  10. Apollo Aims to Ramp Up Fundraising From Wealthy Individuals “The New York firm said Thursday it expects to release one to two new investment products designed for individual investors each quarter for the next 18 to 24 months. That pace would mark a major expansion for Apollo’s retail business, which had four product offerings as of last year.” (The Wall Street Journal)
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