Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.
The Dow Jones industrial average gave up 28.97 points, or 0.2 per cent, to 17,897.46. The Standard & Poor’s 500 index slid 2.05 points, or 0.1 per cent, to 2,080.73. The NASDAQ composite index declined 7.67 points, or 0.2 per cent, to 4,938.22.
U.S. crude fell $1.14 to $40.36 a barrel in New York. Brent crude, the international benchmark, lost 74 cents, or 1.7 per cent, to $43.10 a barrel in London. In other energy trading, wholesale gasoline slipped 4 cents, or 2.9 per cent, to $1.46 a gallon and heating oil decreased 2 cents, or 1.8 per cent, to $1.23 a gallon. Natural gas fell 7 cents, or 3.5 per cent, to $1.90 per 1,000 cubic feet.
Top finance officials: World economy still faces threats — The global recovery has regained most of the ground lost from the market turbulence at the beginning of the year, finance officials of the world’s largest economies said Friday. But they worry that growth remains uneven in the face of a variety of threats ranging from terrorist bombings to Britain’s upcoming vote on whether to leave the European Union. The finance ministers from the Group of 20 major economies pledged to pursue policies that will bolster growth and further stabilize financial markets, but they offered no new measures to accomplish these goals. (AP)
Senior Housing Market Past its Prime, But Not All is Lost “The seniors housing market is generally healthy, and while 2016 won’t be a banner year like 2015, it should still be a good year, says New York-based independent commercial real estate valuation and consulting firm Integra Realty Resources (IRR) in its in-depth seniors housing outlook 2016 report. Since the publication of IRR’s Viewpoint 2016 report in January, which included an abbreviated seniors housing outlook for the year, there’s been a bit more clarity about the state of the investment market, Charles Bissell, IRR Seniors Housing & Health Care National Practice Leader and author of the report, told Senior Housing News. ‘We know that transaction volume has slowed, that the Big 3 REITs are not nearly as aggressive as they were last year, and we also have some clarity related to the new construction concerns,’ Bissell said. “We have seen a little bit of softening of occupancy, and there are growing concerns that there’s going to be saturation in certain markets.’” (Seniors Housing News)
Gap’s Return to Blunder “Year-over-year sales at its established stores have dropped for four consecutive quarters--eight for its namesake Gap stores. Sales weakness across all its brands continued into February and March. Things are particularly terrible at its Banana Republic stores -- sales dropped 14 percent at established locations during the most recent quarter compared with results in the period a year earlier -- after the company failed at basic tasks like making blazers with armholes big enough for an average woman to fit into.” (Bloomberg)
Saks OFF 5TH Enters D.C. Market “Saks Fifth Avenue has revealed plans to open a new Saks OFF 5TH store in the heart of Washington, D.C., in the fall. The new 33,000-square-foot Saks store will be located at 555 12th St., N.W., within the historical Thurman Arnold Building, and will mark the brand’s entry into the Washington, D.C., market. The store will feature a blend of designer fashion, accessories and footwear for both men and women, with offerings from more than 800 brands.” (Commercial Property Executive)
6 Things to Consider Before Investing in a Rental Property “Investing in rental property has long been a popular option for people who want to diversify their investments beyond stocks and mutual funds. But, unlike those more mainstream investments, rental properties can require significant hands-on work, including dealing with tenants and keeping up with maintenance. You have to be smart to make rental investment pay. ‘The idea of investing in real estate being easy money is nonsense,’ says Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage and a mortgage professional in the San Francisco Bay Area who owns rental properties. While investing in real estate is often referred to as "passive income," there is nothing passive about it. You should expect to put in plenty of effort if you hope to bring in a return.” (U.S. World News & Report)
Cornerstone Comes Through for Blackstone in a Big Way “Private equity firm Blackstone called, and Cornerstone Real Estate Advisers LLC answered. Acting on behalf of an institutional investor, Cornerstone recently originated a $335 million loan for a Blackstone affiliate’s acquisition of a four-property Club Quarters Hotels portfolio featuring 1,228 guestrooms in four top-tier U.S. markets. The sponsorship is top notch and the properties, which are based on a membership hotel business model, tick the right boxes, including the all-important location category. Premier cities on the East Coast and West Coast, as well as in the Midwest and Mid-Atlantic—the portfolio covers quite a bit of ground.” (Commercial Property Executive)
China Real Estate Bubble Could Lead to Largest Wealth Drought in Modern History “The reason: 75% of their wealth is in real estate, with the rest largely in cash. They’ve over-invested in one illiquid and bubbly asset that they wrongly believe can only go higher. Relative to income, China has seven of the 10 most expensive cities in the world. In other words, it has the greatest real estate bubble in modern history!” (Equities.com)
Can Crowdfunding Change Real Estate Investment? Portland Developers Trying to Find Out “There’s a few things you should know about the Fair-Haired Dumbbell development in Portland. First, yes, that is its real name. A pair of six-story towers connected by a skybridge planned for a fast-developing, formerly industrial area of town called the Burnside Bridgehead, the nascent project does vaguely resemble a set of old-timey weights, the kind lifted by a mustachioed, turn-of-the-century strongman. Second, the rendering isn’t exaggerating the busy exterior. As a cheeky response to Portland's rainy climate, the developers initially tried to use the specific Florentine pattern shown in renderings, Rossi, but couldn't gain approval from the city's Design Review Board, so they’re commissioning an artist to create an original design for the facade. Third, and perhaps most important, the local firm behind the project, Guerrilla Development Company, is turning to crowdfunding to help finance the building's construction. While that might be dismissed as a Portlandia-esque affectation, or tech-savvy marketing ploy—according to Anna Mackay, a designer and developer, crowdfunding will raise only $1.5 of the $18 million required, and they can proceed without the public investment—it’s a real test of a new funding model the developers hope leads the way toward more public engagement in real estate.” (Curbed)
Miami real estate is melting down “The number of sales and prices in posh Miami Beach — home to many of the city's most expensive and highest-profile properties — fell during the first quarter, according to a new report. Meanwhile, inventory soared by roughly a third compared with the prior-year quarter. The report, released Thursday by Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants, found the average sale price in Miami Beach and the nearby Barrier Islands fell 7.5 percent year over year to $905,252. The median sale price fell 6.6 percent year over year to $408,750. The total number of sales in the area also fell during the period, dropping 21.1 percent to 810 properties. Inventory surged nearly 33 percent, and there is now a 21.5-month supply of properties.” (CNBC)
How a plan to create a much-needed park in Koreatown withered “Now, five years later, a 346-unit luxury apartment building dubbed the Pearl on Wilshire is taking root where Koreatown Central Park was slated to go. It will have a dog wash, yoga room, putting green and spa, but not so much as a park bench for public use. And as heavy equipment roars and beeps at the once-vacant lot at Wilshire and Hobart boulevards, people familiar with the abandoned project are left to wonder: Who's to blame for letting a park die in this neighborhood where residents have about one-hundredth of the park space as the average Angeleno citywide? The state had, after all, already awarded $5 million to the project to transform part of the lot into an open public space, with a community garden, walking loop and splash pad for kids. In 2011, the Community Redevelopment Agency agreed to use the state money and add additional dollars to buy half the lot for $9.9 million, in partnership with Don Hankey, a local investor who would develop the other half of the site into apartments with retail space.” (The Los Angeles Times)
Bal Harbour Shops to resubmit expansion plans following ‘no’ vote “More than 100 gathered Wednesday night at the Sea View Hotel across the street from the mall for the often-contentious meeting. The $400 million expansion considered at Wednesday’s meeting called for expanding the mall by 400,000 square feet over the area that Village Hall occupies and on the site of the former Church by the Sea, which was demolished in December 2015 and sold to Whitman Family Development in January. As part of the proposal, the Whitman firm would have built a new municipal hall. The expansion plan for the shopping center, which turned 50 last year, has been in the works for about five years and the design was finalized last October.” (The Miami Herald)
Citigroup’s profit sinks 27 per cent, but beats expectations — Citigroup’s profit fell nearly 27 per cent in the first quarter, hurt by weak results at its consumer bank and trading business. But the company’s earnings still beat Wall Street expectations. The New York-based financial conglomerate quarter continued to clean up its balance sheet and slim itself down from the depths of the financial crisis. Citi Holdings, the so-called bad bank that holds most of Citi’s toxic assets left over from the bubble years, posted its seventh straight quarterly profit. The value of Citi Holdings’ investments fell 44 per cent from a year earlier as the bank sold off complicated derivatives, bonds and other assets.(AP)
Consumer-ratings business JD Power sold for $1.1 billion — McGraw Hill Financial, the financial-data group behind Standard & Poor’s ratings agency, says it has its sold consumer-ratings unit J.D. Power for $1.1 billion. The buyer is XIO Group, a London-based investment firm established in 2014 with an aim to invest over $5 billion in North American and European companies and help them expand into Asia. (AP)