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10 Must Reads for the CRE Industry Today (November 8, 2019)

Sears to close 96 more stores after securing $250 million loan, reports Reuters. WeWork accounted for 69 percent of all new flex space leasing activity in U.S. in the third quarter, according to a CBRE report. These are among today’s must reads from around the commercial real estate industry.

  1. Sears Says It Has Secured a $250 Million Lifeline, Will Close 96 Stores “Sears told Reuters on Thursday it had won a $250 million lifeline from lenders that include billionaire owner Eddie Lampert, and will close additional stores, as mounting losses strain the beleaguered U.S. department store chain’s finances. The new loan, put together in recent weeks, increases by roughly $100 million the $150 million of financing that Sears raised several weeks ago, said people familiar with the transaction, who were not authorized to discuss publicly some aspects of the deal.” (Reuters)
  2. WeWork Accounted for 69% of Co-Working Space in Third Quarter, Even as Crisis Loomed “On the last day of the third quarter, WeWork withdrew its IPO filing and kicked off a desperate race to find fresh capital to keep the business afloat. At the same time, the company was wrapping up a period of breakneck expansion, signing up big facilities in cities like New York, Los Angeles and Boston. According to data just released by real estate firm CBRE and provided to CNBC, WeWork leased a total of about 2.8 million square feet in the U.S. in the quarter and was the No. 1 leaser in 9 of the top 10 markets for flexible space growth.” (CNBC)
  3. Fannie, Freddie Government Lifeline Cut Could Cause Economic Pain: DoubleLine “The Trump administration’s aspiration to end government control of Fannie Mae and Freddie Mac is unlikely to be realized anytime soon, and any weakening of the long-standing government backstop of the mortgage market could hurt housing and the wider economy, said a top investor. While ending the support would benefit the government, there would be a chain reaction if the costs of mortgage lending were to increase, said Andrew Hsu, portfolio manager at DoubleLine Capital, the investment manager headed by Jeffrey Gundlach.” (Reuters)
  4. Old Navy Spinoff in Doubt After Gap’s Art Peck Departs “Old Navy’s spin-off was predicated on its outperformance of Gap’s other brands, but Peck’s departure, after recent poor sales in a flooded market, had Wall Street wondering whether the split could be delayed or abandoned altogether. ‘We think the Old Navy spin should be scrapped … it makes little sense to spin Old Navy until, at least, its sales have stabilized,’ Morningstar analyst David Swartz said.” (New York Post)
  5. Former Chevron Headquarters in SF to be Sold for $722 Million, 41% Profit “The former Chevron headquarters on San Francisco’s Market Street is being sold for $722 million in one of the biggest real estate deals in city history. New York developer Paramount Group confirmed it was buying Market Center, home of Chevron until 2001, in an earnings report on Wednesday. The deal is expected to close by the end of the year.” (San Francisco Chronicle)
  6. A Bad Rx for What Ails Walgreens “$55 billion in unproductive debt won't solve Walgreens' business problems. But that's how much the Deerfield-based drugstore chain likely would borrow to fund a leveraged buyout CEO Stefano Pessina reportedly has tried to engineer. The current status of his efforts is unclear, but several media outlets report that he made the rounds of private-equity firms in recent months to gauge their interest in backing what would be the biggest such deal in corporate history.” (Crain’s Chicago Business)
  7. A Retirement Community That Comes to You “Typically, a C.C.R.C. operates a complex or campus where residents shift from independent living to assisted living, a memory-care unit or a nursing home if their health and mobility decline. But in continuing care at-home programs, members essentially spend the independent living years in their own houses. In 2015, Ms. Basso joined a program called Springpoint Choice that allows her to stay in her comfortable ranch house with an also-aging English setter named Princess Leia. Diane Willoughby, her ‘care navigator,’ checks in regularly to monitor her needs.” (The New York Times)
  8. Arlington’s Old Rangers Stadium Is Hunting New Tenants “A commercial property company hopes to bring new business to an old ballpark. Vision Commercial Real Estate has been tasked with finding new office and retail uses for Globe Life Park, the former home of the Texas Rangers. With the baseball team moving into new digs next door, the 25-year-old former stadium in Arlington is hunting new uses.” (Dallas Morning News)
  9. Facebook-Leased Office Development in Seattle Trades for $415M “Ponte Gadea has acquired Arbor Blocks, a 388,900-square-foot, Class A, recently completed office property in Seattle, from Vulcan Real Estate for $415 million, according to Yardi Matrix. The buyer first entered the market in March with the $740 million acquisition of the Amazon-occupied Houdini North and South.” (Commercial Property Executive)
  10. Brixmor Property Group CEO On Leveraging Online Shopping to Boost its Open-Air Malls “Online shopping doesn’t have to be bad news for brick-and-mortar retail, Brixmor Property Group CEO James Taylor told CNBC’s Jim Cramer on Thursday. That is why the real estate investment trust, which operates open-air shopping malls across the country, has turned some of its prime space — close parking spots — into places for people who ordered online but want to pick up in store, Taylor said.” (CNBC)
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