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Eight Must Reads for the CRE Industry Today (Dec. 7, 2021)

Doubts emerge about the performance of office CMBS debt and other commercial real estate loans. A mortgage start-up used a Zoom call to fire more than 900 of its employees. These are among today’s must reads from around the commercial real estate industry.

  1. Kohl’s Urged to Consider Sale by Activist Investor “An activist investor is urging department-store chain Kohl’s Corp. to consider a sale of the company or a separation of its e-commerce business. New York-based hedge fund Engine Capital LP wants the retailer to examine the two alternatives to improve its lagging stock price, according to a letter sent to Kohl’s board Sunday. Engine owns a roughly 1% Kohl’s stake. Engine argues that the company has underperformed both the S&P 500 and other retailers in recent years.” (The Wall Street Journal)
  2. Office CMBS Debt Confronts Credit Pressures of Remote Working “The uncertain future of how office properties combat remote working trends is weighing heavily on the U.S. commercial mortgage-backed securities market. While office occupancy has improved in late 2021, at 38.6 percent as of November and in the 10 top U.S. metro areas, according to managed security company Kastle Systems, desire for remote or hybrid work among many employees is causing a number of companies to rethink their space needs.” (Commercial Observer)
  3. OCC Warns of High Corporate Debt Levels, Commercial Real Estate Risks “In a semiannual report on risks in the national banking system, the OCC noted that banks bounced back sharply from the pandemic in the first half of the year as credit conditions improved. But some banks may be accumulating risk too quickly with lower-quality loans, looser underwriting and failure to conduct sufficient due diligence of products and services, an OCC official said on a conference call with reporters.” (American Banker)
  4. NYC Employers Must Soon Mandate Proof of COVID-19 Vaccine, deBlasio Announces “All New York City employers will soon need to mandate that their workers present proof of vaccination against COVID-19, Mayor Bill de Blasio announced Monday. The outgoing mayor announced the policy during an appearance on MSNBC’s ‘Morning Joe,’ describing it as a ‘pre-emptive strike’ against an expected surge in COVID cases this winter amid the emergence of the Omicron variant of the virus. The policy will go into effect Dec. 27.” (The New York Post)
  5. CEO Fires 900 Employees over Zoom “ CEO Vishal Garg announced the mortgage company is laying off about 9% of its workforce on a Zoom webinar Wednesday abruptly informing the more than 900 employees on the call they were being terminated just before the holidays. ‘If you're on this call, you are part of the unlucky group that is being laid off,’ Garg said on the call, a recording of which was viewed by CNN Business. ‘Your employment here is terminated effective immediately.’ He then said employees could expect an email from HR detailing benefits and severance.” (CNN Business)
  6. Home Price Growth Is Finally Decelerating—and It’s Just the Start “The latest reading of the S&P CoreLogic Case-Shiller Index, the leading measure of residential real estate prices, finds year-over-year U.S. home prices rose 19.5% between September 2020 and September 2021. That slight 0.3% dip marks the first price growth deceleration in nearly two years. At first glance, that tiny dip hardly looks significant. However, a closer look at the numbers shows this deceleration is larger than the top-line figure would suggest.” (Fortune)
  7. A Bitcoin Boom Fueled by Cheap Power, Empty Plants and Few Rules “A bitcoin mining operation is opening northeast of Niagara Falls this month on the site of the last working coal plant in New York State. Across the state, a former aluminum plant in Massena, already one of the biggest cryptocurrency sites in the United States, is expanding. And in Owego, a metal-recycling mogul with 11.3 million Instagram followers is making a gritty start-up with banks of computers in shipping containers next to a scrapyard.” (The New York Times)
  8. Aussie Rules: Lendlease CEO Denis Hickey Talks ESG and 2022 Investment Goals “New York’s unique energy and dynamism is in part created by the passionate changemakers who travel across oceans and land to eventually call it home. One such changemaker is Denis Hickey, CEO and global COO of Lendlease. Hickey arrived in New York almost 10 years ago from Australia to oversee all aspects of real estate development and investment management for the global behemoth, and lead Lendlease’s expansion in the U.S. Prior to taking the reins, he was CEO of ING Real Estate for Australia, and, further back, a professional cricketer.” (Commercial Observer)
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