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10 Must Reads for the CRE Industry Today (Sept. 21, 2022)

New CalPERS’ investment chief decried the fund’s underperforming returns over the past decade, reports The Wall Street Journal. Apartment rent growth normalized to a more moderate pace in August, according to Multifamily Dive. These are among today’s must reads from around the commercial real estate industry.

  1. Norway’s $1.5 Trillion Investment Fund Sets 2050 Climate Target “The huge government fund that invests Norway’s oil revenue said on Tuesday that it was going to step up its efforts to persuade companies to slash their carbon dioxide emissions by 2050. It’s the first time that the $1.2 trillion fund has set a date by which companies it invests in should be at ‘net zero,’ meaning they either emit no carbon or offset their emissions by removing equivalent amounts of carbon from the atmosphere.” (The New York Times)
  2. Calpers’ Investment Chief Highlights Lagging Returns, “Lost Decade” for Private Equity “The nation’s largest pension fund got a scathing performance review Monday when its new investment chief highlighted the retirement system’s underperforming returns and estimated it missed out on $11 billion in gains during a ‘lost decade’ for private equity. The unusually candid presentation to board members of the California Public Employees’ Retirement System, known as Calpers, showed returns lagging behind other large pensions in almost every asset class during the past 10 years, with private equity trailing the most, 1.3 percentage points.” (The Wall Street Journal)
  3. Rent Growth Normalized Month to Month in August “While apartment rents are still rising, they are doing so at a much more moderate rate now than in 2021 and early 2022, according to Jay Parsons, vice president, head of economics and industry principles at RealPage, in a report. Same-store asking rents for new leases rose by 0.4% between July and August 2022, according to data from RealPage Market Analytics. While this stands far below the 1.9% rent spike in August 2021, rent growth tends to drop off in the summer, Parsons said.” (Multifamily Dive)
  4. A Decade in the Making: KBRA on SFR Trends and Outlook “More than a decade ago, marketplace dialogue arose about the feasibility of securitizations backed by diversified pools of single-family rental properties. Invitation Homes issued the sector’s first transaction in November 2013. That securitization, IH 2013-SFR1, was collateralized by a single $479.1 million floating-rate loan secured by first mortgages on 3,207 income-producing SFR homes. More than $70 billion in SFR bonds have been issued since then. KBRA, New York, recently published a report, SFR Securitizations: A Decade in the Making, analyzing the sector’s evolution and growth.” (MBA Newslink)
  5. Cold Storage Feels the Chill of Inflation, Power Costs “Cold storage is one of a few benefactors of the dramatic shift in consumer tendencies that resulted from the pandemic, but as the ebbing effects of the virus ripple and collide with other forces, this subsector of the red-hot industrial real estate market faces growing pains.” (Bisnow)
  6. Peter Thiel Compares FL’s Soaring Real Estate Prices to California “Thiel, a Miami Beach transplant from Silicon Valley, warned conservatives that soaring real estate prices in Florida make the Sunshine State more like California than they would like to admit. Speaking at the National Conservatism conference held at Jeffrey Soffer’s JW Marriott Miami Turnberry Resort & Spa in Aventura on Sept. 11 and 12, Thiel said that if conservatives are going to have a ‘high-growth alternative’ to states like California, the real test will be if real estate prices come down.” (The Real Deal)
  7. Extra Space Acquires 107-Property Storage Express Self-Storage Portfolio, Expands Board “Extra Space Storage Inc., a self-storage real estate investment trust (REIT) and management company, acquired Storage Express, including 107 remote-managed properties in Illinois, Indiana, Kentucky and Ohio. In addition, Storage Express Founder and Owner Jefferson Shreve has been appointed to the REIT’s board of directors, according to a press release.” (Inside Self-Storage)
  8. Gap Is Cutting 500 Corporate Jobs “Gap Inc. is eliminating about 500 corporate jobs, according to people familiar with the matter, moving to reduce expenses at the apparel retailer amid declining sales and profits. The jobs are mainly at Gap’s main offices in San Francisco and New York as well as in Asia, the people said. The company is laying off staff and eliminating positions that are currently open across a range of departments. Some employees have been notified of the layoffs in recent days, the people said.” (The Wall Street Journal)
  9. New York City Ends Private Employer Vaccine Mandate and Pushes Boosters “New York City will no longer mandate that private employers require all of their workers to be vaccinated for Covid-19, and children will no longer have to be vaccinated in order to participate in sports or other after-school activities, Mayor Eric Adams announced on Tuesday, as he continued to roll back restrictions that had defined an earlier stage of the pandemic.” (The New York Times)
  10. Real Estate Industry Urges D.C. to Slow Down on Requiring All-Electric Buildings “Washington, D.C., has been recognized for several years as one of the most forward-looking cities for green building standards in the United States, but it’s also got a dirty secret: The gas lines that fuel D.C. buildings’ power and cooking elements are leaking more than any state in the nation. Those conflicting realities have helped fuel a pair of moves by the D.C. Council and a behind-the-scenes agency to bring an end to the use of natural gas in new commercial buildings.” (Bisnow)
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