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10 Must Reads for the CRE Industry Today (Oct. 14, 2022)

The Wall Street Journal looks at how rising interest rates are impacting real estate firms’ investment calculations. Donald Trump is forming a new company called Trump Organization II, according to The New York Times. These are among today’s stories from around the commercial real estate industry.

  1. Real Estate Firms Grapple with High Interest Rate Hedging Costs “Real estate companies are facing soaring costs to protect their variable debt against jumps in interest rates, with prices on some contracts jumping at least 10-fold this month from a year earlier. Banks and other lenders often require real-estate firms relying on floating rate debt to hedge their exposure with so-called interest-rate caps. The caps are derivatives contracts, sold by the lender, in which companies receive a payment when an interest-rate benchmark—for example, the Secured Overnight Financing Rate—exceeds a certain level. Companies have to buy these caps after they secure new debt and risk defaulting if they violate that covenant.” (The Wall Street Journal)
  2. Analysts on Why the Simon-Jamestown Deal Is a Savvy Move from Both Sides “Simon Property Group, the largest owner of malls in the United States, is buying urban street mixed-use acumen in its purchase of a 50% stake in Atlanta-based developer Jamestown.” (Bisnow)
  3. LA’s Racism Scandal Reverberates in Real Estate “Tremors from the scandal in which Los Angeles City Council members made insulting comments about African-Americans, LGBTQ+ people and Oaxacans have reached The White House with President Joe Biden urging councilmembers Nury Martinez, Kevin De León and Gil Cedillo to resign. On Wednesday afternoon, Martinez resigned from the City Council, the Los Angeles Times reported.” (The Real Deal)
  4. Sternlicht Sees ‘Incredible’ Distressed Real Estate Opportunities “Billionaire Barry Sternlicht says he sees ‘incredible opportunities’ to find distressed investments in the real estate market. He’s looking to ‘kick through the debris’ to find investments and companies ‘that they’re broken balance sheets but not broken assets,’ the chief executive officer of Starwood Capital Group said Tuesday in a Bloomberg TV interview on the sidelines of the Robin Hood Investors Conference in New York.” (Crain’s Chicago Business)
  5. Life Sciences Employment Doubled in 10 Years: Report “It’s a good time to own lab space. While workers appear to be wandering away from traditional offices, laboratories and research & development real estate are full as the number of life sciences jobs continues to reach new heights. A new report from Cushman & Wakefield shows how life sciences employment in the U.S. has grown at an accelerated pace and more than doubled over the past 10 years.” (Commercial Observer)
  6. Why a 17-Mile Stretch of Arizona Highway is a Booming Logistics Hub “Warehouses are taking over Loop 303 near Phoenix, a city that leased 16 million square feet of industrial real estate in the first half of the year, as companies look to shift how they move goods to avoid supply-chain bottlenecks.” (The Wall Street Journal)
  7. Judge Dismisses DOJ Bid to Force Wynn to Register as a Foreign Agent “A federal judge dismissed a Justice Department effort to force Las Vegas casino magnate Steve Wynn to acknowledge a stint as an agent of the Chinese government, contending that the government has no power to require such a disclosure after the purported foreign relationship had ended. U.S. District Court Judge James Boasberg expressed reservations about his own ruling issued Wednesday but suggested that long-standing appeals court precedent bars DOJ from requiring foreign agents to retroactively register once they are no longer performing that work.” (Politico)
  8. Trump Forms New Company, Drawing Scrutiny from N.Y. Attorney General “Days before the New York attorney general filed a lawsuit accusing Donald J. Trump and his company of fraud and seeking to shut down some of their business in the state, Mr. Trump’s lawyers created a new company in Delaware. The new company’s name had a familiar ring to it: the Trump Organization, the same name as his old company, now threatened by the lawsuit. And on Sept. 21, the day the suit was filed, the new Delaware company filed paperwork in New York, seeking to be recognized there as the Trump Organization II.” (The New York Times)
  9. Yardi Acquires Planimetron, Space Management Specialist “Yardi has acquired Planimetron, which provides space management tools for commercial property operators and owners. The move targets the increasing demand for space management in office, retail and industrial properties. Founded in 1983, Planimetron provides software that supports visual decisions, identifying opportunities and potential risks in a portfolio.” (Commercial Property Executive)
  10. Colliers Expands U.S. Property Management Business with Arcadia Purchase “Canada-based investment management firm Colliers is expanding its US property management business with the acquisition of Arcadia Management. Colliers said it is investing an undisclosed sum to acquire a controlling interest in Arcadia, a leading commercial real estate management firm focused in the Southwest US. Arcadia’s senior leadership will retain a direct equity stake in the business and continue to drive operations. Arcadia will rebrand as Colliers immediately following the closing of the deal.” (IPE Real Assets)
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