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10 Must Reads for Real Estate Investors (May 22, 2023)

PacWest Bancorp struck a deal to sell a portfolio of $2.6 billion in construction loans to Kennedy-Wilson Holdings, reported Reuters. Equity Commonwealth named a successor to Sam Zell. These are among today’s must reads for real estate investors.

  1. PacWest Bancorp to Sell Real Estate Loans to Kennedy-Wilson Unit “Regional lender PacWest Bancorp said on Monday it had agreed to sell a portfolio of 74 real estate construction loans with an aggregate principal outstanding balance of around $2.6 billion to a unit of Kennedy-Wilson Holdings Inc. Bank stocks have stabilized recently on hopes the worst is over for the regional banking crisis. But deteriorating loans in the commercial real estate may pose a fresh risk with regulators stepping in to instruct banks to reduce exposure.” (Reuters)
  2. How Debt Costs Will Affect Industrial Demand This Year “Newmark anticipates that quarterly absorption this year will stabilize at about that 65 million square foot figure, ‘a return to pre-pandemic levels of demand.’ However, a record amount of industrial space—138 million square feet—delivered in the first quarter. The result, according to the report, is that ‘Many markets will encounter rising vacancy as the pipeline delivers into an environment of normalized demand, with an attendant increase in sublease availability.’ Nonetheless, there are indications that new construction starts will slow, with vacancies tightening in some markets beginning next year.” (Commercial Property Executive)
  3. Online Shopping Is Getting Old “In contrast, retail sales excluding e-commerce sales were up just 2.9%—not by enough to keep up with inflation. With the latest gain, e-commerce sales accounted for 15.1% of retail sales which, other than the second quarter of 2020 when pandemic lockdowns stuck people in their homes, was the biggest share ever.” (The Wall Street Journal)
  4. Equity Commonwealth Names Successor to Sam Zell “The president and CEO of Equity Commonwealth, one of Sam Zell's three real estate companies, has taken over as chairman, succeeding Zell after his death.” (Crain’s Chicago Business)
  5. ICSC Convention to Spotlight a Changing Industry Rife With Challenges “Thousands of shopping center developers, property managers, dealmakers, retailers, architects and real estate brokers descend on Las Vegas this weekend for the ICSC convention, seeking ideas and answers on how to elevate productivity, differentiate their properties with new kinds of tenants and uses, and how to keep them as safe and secure.” (Women’s Wear Daily)
  6. The Applicability of the SEC’s Proposed Custody Rule to Real Estate “The SEC has proposed sweeping changes to its custody rule that would impose new obligations on registered investment advisers with respect to physical assets such as real estate. On this Ropes & Gray podcast, regulatory partner Nicole Krea and real estate funds partner Matt Posthuma, both in the firm’s asset management practice, discuss how these requirements would affect investment advisers in their management of real estate assets.” (Ropes & Gray)
  7. What Makes Patrick Carroll Go Tick, Tick Boom? “But as he faces a personal firestorm, Carroll is setting up for his biggest play yet: seeking a buyer for the Carroll Organization, his Atlanta-based company which has amassed nearly 30,000 units in the southeast and southwest U.S.” (The Real Deal)
  8. How Regional Banking Consolidation Threatens Commercial Real Estate “The standing fear now among economists is not whether another regional bank will fold, but which larger institution will grow stronger from the latest FDIC-induced consolidation, where shotgun marriages between lending institutions sold for pennies on the dollar to their Too Big To Fail overlords has become the feature, rather than the bug, of a federally engineered response.” (Commercial Observer)
  9. San Francisco is investigating claims made by 6 ex-Twitter staff about Elon Musk's 'Twitter hotel' plans “The complaint, filed on May 16, accused Musk and Twitter of counts including fraud, and breaches of contract and labor-rights laws, and failure to pay severance.” (Insider)
  10. Returning to the Office Is Killing My Budget “I know I’m not alone in contending with the back-to-office money math. Remote work allowed many people to save more these past few years—working, eating and socializing at home. Going back to the office has forced us outside, and now we have to relearn how to budget.” (The Wall Street Journal)
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