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.
Tuesday, the Dow Jones industrial average rose 156.41 points, or 0.9%, to close at 17,524.91. The Standard & Poor’s 500 index climbed 21.47 points, or 1.1%, to 2,043.41. The NASDAQ composite climbed 43.13 points, or 0.9%, to 4,995.36.
U.S. crude rose $1.04, or 2.9%, to $37.35 a barrel in New York. Brent crude, a benchmark for international oils, rose 53 cents, or 1.4%, to $38.45 a barrel in London. Natural gas fell 7.2 cents, or 3.8%, to $1.822 per 1,000 cubic feet. Wholesale gasoline fell 1.1 cents, or 0.9%, to $1.2444 a gallon and heating oil rose 1.9 cents, or 1.7%, to $1.147 a gallon.
Fed betting it will avoid central banks’ errors of the past — The Federal Reserve is poised to raise interest rates Wednesday for the first time in 9 1/2 years. It may not take so long to know whether its decision was correct. History is filled with cases when central banks raised rates prematurely, sometimes with dire consequences. Raising rates or otherwise tightening credit too soon can slow borrowing, jolt confidence and choke growth. Some economists have suggested that the Fed could wait a bit longer before raising rates, especially with inflation still low amid slumping oil and commodity prices. In a survey of top academic economists, the University of Chicago found that while 48% favored a rate hike, 36% felt the Fed should hold off.
US homebuilder sentiment slips in December - U.S. homebuilders are feeling slightly less confident about their sales prospects in coming months, though they remain positive overall that the housing market will continue to improve next year. The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped to 61 this month, down one point from a reading of 62 in November. Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index has been consistently above 60 since June.
Inland Real Estate to be Bought for $1.07 Billion in Cash “Inland Real Estate Corp., a U.S. shopping-center landlord, agreed to be acquired by funds managed by DRA Advisors LLC for about $1.07 billion in cash. DRA Advisors will pay $10.60 a share for the Oak Brook, Illinois-based real estate investment trust, the companies said in a statement on Tuesday. That’s 6.6 percent more than Inland Real Estate’s closing share price on Monday. After the deal -- valued at $2.3 billion, including the assumption of debt -- Inland Real Estate will become a closely held REIT.” (Bloomberg)
Related Companies Raises $1 Billion for Real Estate Fund “Related is expected to report on Tuesday that it had received equity commitments of more than $1 billion, surpassing a target of $850 million, for Related Real Estate Fund II. Included in the investment roster are sovereign wealth funds, public pension plans, endowments and family offices. Unlike some traditional real estate funds, which acquire assets and then pay other firms to develop them, Related does everything from start to finish.” (New York Times)
Commercial Real Estate Boom Won’t End on Higher Rates “The commercial real estate boom that's sent rent prices soaring in places like New York and San Francisco this year won't end even if the Federal Reserve raises rates this week, according to one expert. "There's still massive liquidity. That liquidity is not going away anytime soon, and it's pointed right at the United States, whether it be U.S. investors themselves or foreign investors," said Brian Ward, president of Capital Markets at Colliers International.” (The Street)
New York City Economist Warns of Recession in 2016 “Crain's asked New York City Independent Budget Office Director Ronnie Lowenstein for her outlook on the new year. What's your outlook for the city's economy? The most important indicator for us is job creation, and we go into 2016 with meaningful momentum. My guess is we'll see more than 90,000 new jobs in 2015, which are fewer than the 121,000 we had in 2014, although that was the most in any year on record going back to the 1950s. I think next year should be good, but probably not as strong as this year.” (Crain’s New York Business)
US consumer prices unchanged but core inflation up — U.S. consumer prices were unchanged in November as declines in energy and food held down overall costs. But core inflation was up 2% over the 12 months ending in November. That was the fastest pace in more than a year and the kind of increase Fed officials want to see to justify the start of a round of interest rate increases. The flat reading for consumer prices last month followed a modest 0.2% increase in October and outright declines in August and September, the Labor Department reported Tuesday. (AP)
Bernanke Says He Never Expected Rates to be at Zero for So Long “Former Federal Reserve Chairman Ben Bernanke is optimistic the U.S. economy can power through renewed global economic weakness and inflation will pick up, but said Congress has to be the first line of defense just in case the downward pressure is too much. On the eve of the likely first interest rate hike in nine years, Bernanke told MarketWatch the domestic economy is ‘pretty strong,’ resilient enough to withstand the headwinds from the weak global economy.” (MarketWatch)
Millennials Are About to Kickstart a Home-Buying Boom “Investing icon Peter Lynch used to say that some of his best stock ideas came from observing everyday trends in stores and on the streets. Michael Mattioli, a portfolio manager with John Hancock Asset Management, thinks he’s found one. He’s been going to a lot more weddings lately. To Mattioli, a millennial in his early 30s, that means at least one thing: They’re going to buy homes. And demographic experts agree with him.” (MarketWatch)
Developer Preps for Potential Downturn with New, Affordable Housing Arm “Residential developer HAP Investments, known for eye-catching and sometimes pinkish designs by architect Karim Rashid, is launching an affordable-housing arm, in part to offset a potential downturn in the market. The Manhattan-based firm announced Monday it hired Gary Gutterman, the former housing director at the Metropolitian Council on Jewish Poverty, to run its new division.” (Crain’s New York Business)
Caesars May Sink Because of Alleged $3B Typo “Caesars in its 2008 debt agreement set conditions that would need to be met so it could strip the guarantee between the parent company and the gaming-operating subsidiary. In the debt agreement, it says it can strip the gaming subsidiary’s guarantees if: A) it stopped being a subsidiary of the parent, B) the company transferred substantially all of its assets out of subsidiary, “AND” C) it essentially prepaid the bonds.” (New York Post)
Should a Real Estate Company Cash In on Climate Change Awareness “The COP21 conference last week made it clear that climate change is real and that we are passed the point of successfully solving it. Instead, we’re going to have to adapt to it and learn to live in the world with higher temperatures and drastic shifts in weather. While many are now looking at how to solve for less drastic outcomes, there are some looking to cash in on what’s now environmentally inevitable. Case and point – real estate group Higher Tides Realty. Higher Tides touts that they want to ‘turn the tide on global warming.’ In fact, the whole company is a fake.” (PSFK)
AMC Entertainment Names Starwood’s Adam Aron as Chief Executive “AMC Entertainment Holdings Inc., the second-largest U.S. theater chain, named hotel executive Adam Aron as chief executive officer. He replaces interim CEO Craig Ramsey, who remains chief financial officer. Since February, Aron has been interim CEO at Starwood Hotels & Resorts Worldwide Inc., which is being sold for $12.2 billion. The 61-year-old executive starts at AMC Entertainment on Jan. 4, according to a statement on Tuesday. Since August, Ramsey has been filling in for former CEO Gerry Lopez.” (Bloomberg)