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Real Estate Daily News Buzz April 5, 2017

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.

U.S. stocks hardly moved Tuesday as investors were slow to dip a toe back into the market, although energy companies did climb with the price of oil and natural gas. Banks and retailers took losses.
On Tuesday, the Standard & Poor’s 500 index gained 1.32 points, or almost 0.1 percent, to 2,360.16. The Dow Jones industrial average climbed 39.03 points, or 0.2 percent, to 20,689.24. The Nasdaq composite edged up 3.93 points, or 0.1 percent, to 5,898.61. The Russell 2000 index of smaller-company stocks slipped 1.49 points, or 0.1 percent, to 1,368.18.

For the week, the S&P 500 is down 2.56 points, or 0.1 percent. The Dow is up 26.02 points, or 0.1 percent. The Nasdaq is down 13.13 points, or 0.2 percent. The Russell 2000 is down 17.74 points, or 1.3 percent.

For the year, the S&P 500 is up 121.33 points, or 5.4 percent. The Dow is up 926.64 points, or 4.7 percent. The Nasdaq is up 515.49 points, or 9.6 percent. The Russell 2000 is up 11.05 points, or 0.8 percent.

Rumors Swirl of Possible Panera Bread Sale – Shares of Panera Bread skyrocketed Monday as reports surfaced of a possible sale, a move that would shakeup the fast casual industry to the tune of $7 billion, according to one analyst. Bloomberg reported that Panera was exploring strategic options, including a possible sale, after receiving takeover interest. An anonymous source told Bloomberg that potential suitors could include JAB Holding Co., Starbucks Corp., and Domino’s Pizza, adding that there was no certainty any deal would be struck. A Domino’s spokesperson later told Benzinga it wasn’t interested and was not “having any conversations regarding the purchase of Panera.” Panera has a market value of around $6.5 billion. Maxim Group analyst Stephen Anderson told TheStreet that a buyer would fork up around $7 billion, or $300 a share for the fast casual pioneer. Anderson also tacked on McDonald’s and Yum! Brands as companies potentially in the pool of suitors.

YUMA PROVING GROUND — New electric gun for Phalanx® Close-In Weapon System passes first test Ariz., April 4, 2017. Raytheon Company (NYSE: RTN) successfully tested a new electric gun for the Phalanx® Close-In Weapon System. The upgrade allows soldiers and sailors to fire at varying rates, which uses less ammunition. Phalanx is a rapid-fire, computer-controlled radar and 20 mm gun system that automatically acquires, tracks and destroys enemy threats that have penetrated all other ship defense systems. More than 890 systems have been built and deployed in navies around the world. The goal of the live-fire test was to ensure the electric gun can operate despite the heavy vibrations that occur when Phalanx is fired. The new design replaces a pneumatic motor, compressor and storage tanks, reducing the system’s weight by 180 pounds. These changes also increase reliability and reduce operating costs. “Phalanx is a weapon of last resort and the electric gun’s larger magazine will allow the U.S. and its allies to stay in the fight longer,” said Rick McDonnell, director of Raytheon’s Close-In Defense Solutions program.” This Raytheon-funded test is one part of a series of “tech refresh” projects for Phalanx.

On April 30, Oro Valley will be burnin’ down the (pit) house and the Public is invited – Oro Valley Parks and Recreation, Oro Valley Historical Association, and Archaeology Southwest invite the public to Steam Pump Ranch on Sunday, April 30, 2017, for the controlled burning of a scale-model replica of an Early Agricultural period pit dwelling (circa 2000 B.C. to A.D. 50). The burn, which will be attended and monitored by the Golder Ranch Fire District, will begin at 10 a.m. Visitors are encouraged to arrive at 9:30 a.m. in order to see the replica pithouse. Steam Pump Ranch is located at 10901 N. Oracle Road. Representatives from Archaeology Southwest and other sponsoring organizations will be on site to answer questions about the project and the archaeology behind it, as well as about the adjacent Heritage Garden and other programs at the Ranch. “In terms of construction materials and methods, this pithouse is based on one that was excavated in the 1990s, at the site of Los Pozos, an ancient village near today’s Prince Road and I-10,” said Allen Denoyer, project leader for Archaeology Southwest. “Families would have used this kind of brush-and-mud structure for shelter and storage, but they would have spent most of their days outdoors. We have archaeological evidence that villagers deliberately burned these dwellings from time to time. My volunteers and I built this half-size model with the intention of burning it, burying it, leaving it to time and the elements, and later excavating it, to compare observations with excavated examples.” The pithouse replica is based on dates to the later centuries of the Early Agricultural period, about 2,000 years ago. At that time, people were settling in groups along the major rivers and streams in the Tucson Basin, and farming corn with sophisticated field-irrigation systems. They continued to hunt and gather plants. Archaeology Southwest (archaeologysouthwest.org) is a private 501(c)(3) nonprofit organization based in Tucson, Arizona, that explores and protects the places of our past across the American Southwest and Mexican Northwest. To learn more about ancient farmers of the Tucson Basin, watch this short video by Archaeology Southwest: vimeo.com/194565952.

Payless Shoes Files Bankruptcy, plans to close 400 stores right away — Payless ShoeSource has become the most recent retailer to file for bankruptcy in the face of hard times. The discount shoe store filed for Chapter 11 bankruptcy protection on Tuesday, saying it needed to shore up its balance sheet in order to position itself for long-term survival in an increasingly tough retail landscape. “This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” said Payless’ CEO W. Paul Jones in a statement. Payless plans to immediately close 400 stores in the U.S. and Puerto Rico and will also “aggressively manage” the rest of its real estate portfolio. That will mean closing additional stores and seeking to modify existing lease terms. The retailer currently has 4,400 stores in more than 30 countries. (News Release)

The U.S. trade deficit declined sharply in February as imports from China fell by a record amount and American exports rose for a third straight month. The deficit fell to $43.6 billion in February, 9.6 percent below January’s deficit of $48.2 billion, the Commerce Department reported Tuesday. Exports rose a tiny 0.2 percent to $192.9 billion. Imports dropped 1.8 percent to $236.4 billion as the flow of Chinese goods tumbled by $8.6 billion, led by a big drop in cell phone imports. The politically sensitive trade deficit with China narrowed in February to $23 billion, 26.6 percent below the January total. President Donald Trump, who was sharply critical of Chinese trade practices during last year’s presidential campaign, will hold his first meeting with Chinese President Xi Jinping later this week in Florida. In a tweet last week, Trump said that his meeting at Mar-a-Lago with the Chinese leader would be “a very difficult one in that we can no longer have massive trade deficits and job losses.”

Dollar General to Acquire 323 Stores “A batch of 323 small discount stores spun off in 2015’s Dollar Tree-Family Dollar merger are being sold to rival Dollar General, the seller told SN Monday. The stores, which are currently operating under the Family Dollar banner, were acquired less than two years ago by New York private equity firm Sycamore Partners, which had planned to convert the stores to the Dollar Express banner. Instead, the stores will be converted to the Dollar General banner in coming months.” (Supermarket News)

Orders to U.S. factories rose in February amid a surge in demand for commercial aircraft, but a key category that tracks business investment spending slipped for the first time in five months. Factory orders increased 1 percent in February after a 1.5 percent gain in January, the Commerce Department reported Tuesday. Much of the strength stems from a second straight month of booming demand for commercial aircraft. But a key category that serves as a proxy for business investment slipped 0.1 percent. It was the first decline since investment orders fell by 1.5 percent in September. American manufacturers are slowly recovering from a weak patch caused by falling demand for American exports, reflecting weak economies overseas and the strength of the dollar which makes U.S. products cost more in foreign markets. Orders for durable goods, items such as autos and airplanes designed to last at least three years, rose 1.8 percent in February after a 2.4 percent gain in January. Demand for nondurable goods, items ranging from food to paper and chemicals, edged up a slight 0.2 percent following a 0.6 percent January increase. The strength in durable goods was led by a 47.5 percent increase in orders for commercial aircraft, a gain that followed an even bigger 83.2 percent rise in January in this volatile sector. Demand for military aircraft fell 12.8 percent after a big gain in January. Demand was also up for primary metals such as steel, computers, construction machinery and oilfield drilling equipment. On Monday, the Institute for Supply Management reported that American factories expanded for a seventh straight month in March but at a slightly slower pace than February. American factories have bounced back after being hurt in early 2016 and late 2015 by the weakness in exports and also cutbacks in the energy industry, a decline that reflected falling oil prices.

In Boston’s Surging Real Estate Market, New Condos Race to the Top “As Boston’s profile as an international city rises, so to are some of the tallest, most amenity-filled condominiums the city has ever seen. Glossy new residential towers are rising across the city, invading some corners of town long-neglected by upscale property developers. The flood of new buildings come as prices in Boston continue to soar. The median price of a condo reached $913,500 in the third quarter of 2016, a 43 percent rise from the same period last year, according to data from real estate marketing firm LINK.” (Forbes)

U.S. Households Will Soon Have as Much Debt as They Had in 2008 “It feels like 2008 again. At least, if you look at Americans’ wallets. The New York Federal Reserve announced Monday that in 2017 total household debt will reach its previous peak of $12.68 trillion, which it reached in the third quarter of 2008. It’s already close: Total household debt in the fourth quarter of 2016 was nearly as high, at $12.58 trillion. While the debt level is similar to 2008, the things Americans are in debt for have changed, as household incomes have increased in recent years, and housing and stock prices have improved.” (MarketWatch)

The newspaper chain owned by Warren Buffett’s Berkshire Hathaway is eliminating 289 jobs to cut costs because of declining advertising and circulation revenue. The Omaha World-Herald reports that 181 people will be laid off at BH Media Group newspapers and another 108 vacant positions will be eliminated. BH Media CEO Terry Kroeger says some of the group’s 31 daily newspapers are also reducing the number of pages they print. For instance, the Richmond Times-Dispatch in Virginia plans to lay off 33 employees, including 13 in the newsroom, and eliminate its separate daily business section. Newspapers are a relatively small part of Berkshire Hathaway, which owns more than 90 subsidiaries and holds investments in companies like Coca-Cola Co., Wells Fargo, Apple and IBM. (Omaha World-Herald)

Seattle Mayor Drops Property-Tax Plan, Seeks Sales Tax to Fight Homelessness “Barely a month after announcing it, Seattle Mayor Ed Murray and entrepreneur Nick Hanauer are scrapping their plan for a $275 million homelessness property-tax levy. Rather than ask city voters to approve the levy in August, Murray now intends to work with King County Executive Dow Constantine on a 2018 ballot measure that would use a 0.1 percent regional sales-tax increase to combat homelessness, the mayor said Monday.” (The Seattle Times)
Amazon Takes a Page from Bricks-and-Mortar Bookstores. Here’s What It’s Like Inside “Amazon Books on Southport Avenue, the fifth physical store from the Seattle online giant, and its first in the Midwest, is a deeply, unsettlingly normal place, a soulless, antiseptic 6,000 square feet, a stone’s throw from a J. Crew and a SoulCycle. It has the personality of an airport bookstore and conveys all the charm of its stone floor. Shopping there is as frictionless as a one-click purchase. There are no quirks, no attempts at warmth.” (Chicago Tribune)

A Real Estate Developer for the Next Generation “By the time it was completed last year, and its wealthy owners began occupying their sprawling new homes, The Pacific, a luxury condominium in San Francisco, had already begun getting buzz in real estate circles. much of the buzz surrounding the project had to do with its developer, Trumark Urban, and the man behind one of the most active real estate firms in the country, Arden Hearing.” (Forbes)

Children’s Investment Fund Provides $290M Construction Loan for UES Development “Last Friday night, a joint venture of Ceruzzi Properties and Kuafu Properties secured a $290 million construction loan from The Children’s Investment Fund for a project on the Upper East Side, Commercial Observer has learned. HFF‘s Dave Nackoul, Christopher Peck and Scott Findlay represented the developers in the deal, a company spokeswoman said. Peck would only say it was a floating-rate loan.” (Commercial Observer)

MBA Says Commercial U.S. Markets Feeling Early Stages of Tug of War “According to the Mortgage Bankers Association’s latest fourth quarter 2016 Commercial-Multifamily DataBook report released this week: The U.S. economy appears to have shifted gears post-election, with expectations of policy shifts and renewed “animal spirits” pushing both the stock market and interest rates higher. ‘Interest rates jumped markedly during the fourth quarter, in an immediate response to the November election,’ said MBA Vice President of Commercial Real Estate Research Jamie Woodwell.” (World Property Journal)

Hines Buys Houston Logistics Park for $155M “Talk about a growth spurt, Hines recently tripled its footprint in the metropolitan Houston industrial market with the acquisition of the 2.2 million-square-foot Underwood Distribution Center in La Porte, Texas. The international real estate firm purchased the five-building park, which also features three development parcels, from BlackRock in a $155 million transaction. Underwood is quite a catch. For starters, the portfolio is 100 percent leased. Additionally, it’s relatively new, with the buildings having been developed between 2005 and 2008.” (Commercial Property Executive)

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