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 gained 222.57 points, or 1.4%, to 16,196.41. The Standard & Poor’s 500 index added 30.80 points, or 1.7%, to 1,895.58. The NASDAQ composite index rose 98.44 points, or 2.3%, to 4,435.96.
U.S. crude lost 40 cents, or 1.4%, to $29.04 a barrel in New York. It jumped 12% Friday, its biggest gain in years. Brent crude, a benchmark for international oils, gave up $1.21, or 3.6% cent, to $32.18 a barrel in London.
Wholesale gasoline fell 7.2 cents, or 6.9%, to 97.1 cents a gallon. Heating oil fell 4.2 cents, or 4%, to $1.027 a gallon. Natural gas slid 6.3 cents, or 3.2%, to $1.903 per 1,000 cubic feet.
US homebuilder sentiment slips in February -- U.S. homebuilders are feeling less confident about their sales prospects ahead of the spring home-selling season, though they remain positive overall that the housing market will continue to improve this year. The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slipped to 58 this month, down three points from a revised reading of 61 in January. The index had been hovering in the low 60s since June. Readings above 50 indicate more builders view sales conditions as good, rather than poor.
Hedge Fund Losses Drive AIG Shift to Commercial Mortgages, Bonds “American International Group Inc. is expanding bets on property lending and safe fixed-income securities after hedge-fund investments soured. ‘We are reallocating roughly 50 percent of our hedge-fund portfolios,’ Sid Sankaran, who is taking over as the insurer’s next chief financial officer, said in a conference call Friday. The shift will be ‘primarily into investment-grade bonds and commercial-mortgage loans, which we believe will free up about $2 billion in additional capital.’” (Bloomberg)
Big Banks Are Fleeing the Mortgage Market “When it comes to residential mortgages, big banks are waving the white flag. Banks originated 74% of all mortgages in 2007, but their share fell to 52% in 2014, the most recent data available from the Mortgage Bankers Association. And it could go even lower. But even at these levels, the big bank backtrack is reshaping a lending landscape that’s already undergone seismic shifts since the housing bubble burst.” (MarketWatch)
ADT being purchased by Apollo Global for $6.94 billion — Home security services company ADT has agreed to be purchased by affiliates of Apollo Global Management for about $6.94 billion. ADT shareholders will receive $42 per share. That’s a 56 per cent increase from Friday’s closing price of $26.87. The companies said that ADT will be merged with a subsidiary of Prime Security Services Borrower LLC, which is also owned by Apollo. The combined business will operate primarily under the ADT brand and be based in Boca Raton, Florida.
Brooklyn’s ‘Once in a Lifetime Deal’ Said to Draw Top Investors “Vornado Realty Trust, one of the biggest owners of Manhattan office towers, and Silverstein Properties Inc. are among potential bidders for real estate offered by the Jehovah’s Witnesses in an area of Brooklyn that’s in high demand by developers. The companies have expressed interest in at least one of three properties for sale, including the Brooklyn Heights complex that’s been the religious movement’s headquarters for almost half a century, according to people with knowledge of the matter.” (Bloomberg)
Report Says Airbnb Fudged Data to Hide Illegal Hosts “Airbnb is just a cool Internet place where regular people rent out their extra rooms to make some cash on the side, right? Well, a new report by an activist claims that lodging platform Airbnb manipulated the numbers it released about its New York City hosts to hide how the site is being exploited by commercial landlords acting as ‘illegal hosts.’ Last month, a report from the Penn State School of Hospitality Management also alleged that Airbnb has a large number of professional landlords who operate multiple and full-time listings on the site.” (CNBC)
What New York City’s Cutthroat Commercial Real Estate Environment Taught Us about Failure “When we at TheSquareFoot ultimately pivoted our business model from from a subscription-based listings platform to a commission-driven real estate firm, I finally began to understand what my old boss meant when he said ‘this industry is cutthroat. You eat what you kill.’ We would call building agents (to try to set up property tours for our clients, for example) and often they wouldn’t even pick up the phone.” (Forbes)
Israeli Bond Boom Continues “U.S. developers, seeking easy access to equity to finance projects, continue to turn to the Israeli bond market with its lower interest rates. At least 14 companies have borrowed over $2 billion since 2008, primarily Manhattan-based real estate firms. REIT Strawberry Fields, which owns Alzheimer care facilities in the Midwest, is the latest to turn to Israeli market for financing, borrowing 265 million shekels, or around $67.8 million.” (The Real Deal)
Investor Puts His Posh Manhattan Properties on the Block “A low-key Irish investor with high-profile Manhattan properties has quietly embarked on a selling spree. Aidan Brooks, 47, the London-based founder of Tribeca Holdings Ltd., is in the process of unloading several glamorous retail buildings, sources tell Realty Check. Tribeca’s Manhattan portfolio includes the Rhinelander Mansion at 867 Madison Ave., the Ralph Lauren Polo flagship which Brooks and his Tribeca partner JP McManus bought in 2005 for about $80 million, and Bloomingdale’s Soho home at 504 Broadway.” (New York Post)
How a Real Estate Exec and an Entrepreneur Will Change DC’s Co-Working Spaces "Startup companies' pressing need for office space has driven innovation in co-working spaces and incubators like never before. Yet commercial real estate often seems to be slow to respond to evolving needs of growing startups. But D.C.-based SwingSpace is eager to prove that commercial real estate's reputation for being behind the tech and startup curve doesn't always have to be true.” (DCInno)
City Quadruples Fines for Serious Construction Violations Following Fatal Crane Collapse “Mayor Bill de Blasio and the city Department of Buildings Commissioner Rick Chandler announced stricter rules for construction sites Friday, including quadrupling fines for serious safety violations. Despite advances in technology and new laws, working on a New York City construction site has become more dangerous during the past decade. After a string of accidents over the past two years, including a fatal crane collapse last week, the de Blasio administration has come under increasing pressure to address the problems.” (Crain’s New York Business)
How Crowdfunding Has Made Flipping Houses a Lot Easier “Although crowdfunding is closely associated with tech start-ups, the practice has found a niche in real estate and in house flipping in particular. Between September 2013, when equity crowdfunding was first permitted under new Security and Exchange Commission rules, and September of last year, investors pumped $870 million into crowdfunding platforms tracked by New York data provider Crowdnetic.” (Los Angeles Times)
The Big Uh-Oh: Global economy shaky and cavalry may not come — Eight years after the financial crisis, the world is coming to grips with an unpleasant realization: serious weaknesses still plague the global economy, and emergency help may not be on the way. Sinking stock prices, flat inflation, and the bizarre phenomenon of negative interest rates have coupled with a downturn in emerging markets to raise worries that the economy is being stalked by threats that central banks may struggle to cope with. Meanwhile, commercial banks are again a source of concern, especially in Europe.