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10 Must Reads for the CRE Industry Today (November 21, 2019)

The Federal Reserve does not plan to cut rates again, reports The New York Times. Blackstone has sold its remaining stake in Invitation Homes, according to the Wall Street Journal. These are among today’s stories from around the commercial real estate industry.

  1. Fed Unlikely to Cut Rates Again Unless Economy Shows Signs of Weakening “Federal Reserve officials do not plan to cut interest rates again unless economic data begins to show cracks, a message reinforced by the minutes from their October meeting. After the Fed cut interest rates last month — its third reduction this year — most officials thought that policy ‘would be well calibrated’ to support the economy, according to the minutes, unless something were to cause ‘a material reassessment’ of the outlook.” (The New York Times)
  2. Blackstone Moves Out of Rental Home Wager with a Big Gain “The investment firm late Wednesday sold the last of its stake in Invitation Homes Inc., the company it created after the housing crisis to scoop up tens of thousands of foreclosed single-family properties from the courthouse steps, spruce them up and rent them out. Blackstone began whittling its position in March through a series of bulky stock offerings. The last of which, on Wednesday, was for nearly 11% of Invitation’s shares and brought back about $1.7 billion. Including dividends paid before and since Invitation’s 2017 initial public offering, Blackstone reaped about $7 billion in all, according to securities filings. That’s better than twice what the firm invested.” (Wall Street Journal, subscription required)
  3. L Brands CEO Lex Wexner’s Future Could Be at Stake as Epstein Ties, Falling Stock Haunt Victoria’s Secret Parent “Les Wexner, chief executive of Victoria’s Secret parent L Brands, has never been under more pressure. The company, which also owns Bath & Body Works, has seen its shares fall 37% year-to-date. Sales have lagged at Victoria’s Secret as shoppers increasingly see its products as exclusionary and too provocative in the ‘Me Too’ era. Perhaps most troubling of all the shadows over Wexner, however, is that of late sex criminal Jeffrey Epstein.” (CNBC)
  4. The Trees and the Forest of New Towers “Michael Green has seen the future of the building industry, and that future is wood. Lots of wood. The Vancouver-based architect is among the most ardent proponents of what is known as mass timber, prefabricated structural wood components that can be used to construct buildings — even large-scale buildings — faster, with less waste and eventually with less money.” (The New York Times)
  5. Real Estate and the Value Investor “I've long been enamored with real estate, especially situations where publicly traded names own land or, if they are in the retail space, their stores. I've soured a bit on the latter, given what appears to be a glut of commercial space. Situations such as Sears, where several years ago the value crowd became overly excited about the "value" inherent in Sears' owned buildings, were a wake-up call. Fortunately, I was not a believer in the Sears value story, nor the J.C. Penney real estate fantasy.” (The Street)
  6. Kroger Dials Back Overhaul as Sales Sputter “The supermarket operator is navigating a tough conundrum: how to bring its stores and e-commerce operations up to speed while pressure to compete on price is tougher than ever. Kroger is facing increased competition from all sides. Discounters including Aldi and Lidl are expanding, putting pressure on Kroger to keep prices low. At the higher end of the market, regional grocers like Publix Super Markets Inc. and Wegmans Food Markets Inc. are increasing their sales more rapidly than Kroger.” (Wall Street Journal)
  7. Developers Tweak Planned High-Rise Next to Tribune Tower “The development team planning what would be the city’s second-tallest building unveiled revisions that would change the way vehicles and people get to, around and through the building but left the design of the sleek monolith next door to the old Tribune Tower largely unchanged. ‘The architecture of the supertall didn’t change, but the guts that make it work in the neighborhood did,’ said Ald. Brendan Reilly, 42nd.” (Crain’s Chicago Business)
  8. Amid Gentrification Fears, Officials Kill Plan for 577 Apartments in South L.A. “The South Los Angeles Area Planning Commission has voted to reject a plan for 577 apartments near a Crenshaw Boulevard light-rail station, the latest flare-up in a debate over gentrification and the benefits of market-rate housing. The commission, which is made up of appointees of Mayor Eric Garcetti, unanimously opposed the six-story development known as District Square, despite a last-minute offer from the developers to charge below-market rents at 63 apartments inside their project.” (Los Angeles Times)
  9. WeWork Lays Off 2,400 Employees “WeWork is laying off 2,400 employees as it works to cut costs and right-size the business, the company confirmed to CNBC. In a statement, a WeWork spokesperson told CNBC that the cuts were being made as part of the company’s efforts to ‘create a more efficient organization’ and refocus on the core office-sharing business.” (CNBC)
  10. Elizabeth Warren and Tom Steyer Want to Build Millions of Homes—Where the 2020 Presidential Candidates Stand on Affordable Housing “Housing hasn’t traditionally been a hot topic in presidential elections, but with homeownership financially out of reach for many Americans, the candidates vying for the Democratic nomination have been eager to discuss the issue. On Thursday night, candidates on the debate stage answered a question about affordable housing for the first time this election cycle. MSNBC debate moderator Kristen Welker asked billionaire hedge fund manager Tom Steyer whether he was the best person to address this issue, citing the housing crisis in Steyer’s home state of California.” (MarketWatch)
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