Real Estate Daily News Buzz February 5, 2016


Reserve-White-house-domeReal 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.

Thursday, the Dow Jones industrial average rose 79.92 points, or 0.5%, to 16,416.58. The Standard & Poor’s 500 index rose 2.92 points, or 0.2%, to 1,915.45 and the NASDAQ composite rose 5.32 points, or 0.1%, to 4,509.56.

Benchmark U.S. crude edged down 56 cents to $31.72 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oil prices, fell 58 cents to $34.46 a barrel in London.

Heating oil rose less than a penny to $1.081 a gallon, wholesale gasoline rose 1.5 cents to $1.0284 a gallon and natural gas fell 6.6 cents to $1.972 per thousand cubic feet.

Uber delivers puppies to benefit Arizona Humane Society The Uber app was for more than just ordering rides on Wednesday afternoon. Valley residents could click on the added button “puppies,” in the app to get puppies delivered for 15 minutes of playing. It cost $30, with proceeds benefitting the Arizona Humane Society. But Uber benefitted as well. “Partnering with the Arizona Humane Society and delivering puppies, it’s good for them and their public image, and it makes them be endeared by the community as a whole,” said Roger Hurni, managing partner of advertising and marketing agency Off Madison Ave. This is the second year that Uber has put on the event, and Arizona Humane Society spokesperson Ashleigh Goebel said this year and last year were successful.

Hersha Jumps After Forming Joint Venture for 7 Manhattan Hotels “Hersha Hospitality Trust surged the most in more than four years after the company said it sold stakes in seven Manhattan hotels, three of them in the tourist-heavy Times Square neighborhood, to a Chinese investment firm. The hotels — which operate under the Holiday Inn, Hampton Inn and Candlewood Suites brands — have a total of 1,087 rooms. Cindat Capital Management Ltd. will pay $571.4 million for a 70 percent stake in the joint venture.” (Bloomberg)

Mall Executive Backtracks from Statement on Amazon Retail Stores “A day after saying that Amazon plans to open hundreds of physical bookstores, the chief executive of a large shopping mall operator has backed away from the comments. In a statement Wednesday from General Growth Properties, the mall operator’s chief executive, Sandeep Mathrani, said a comment he made this week on a conference call referring to the Internet retailer’s ‘goal’ to open 300 to 400 bookstores ‘was not intended to represent Amazon’s plans.’” (The New York Times)

Why Washington is Making it Easier for Rich Foreigners to Buy U.S. Real Estate “The real motivation behind the change in the Act back in December is a tax exemption that makes it easier (and cheaper) for foreign stock funds and REITs to buy American real estate. This also opens the door for institutional investors, particularly those in Europe, who are dealing with zero yield and negative interest rates and don’t have attractive options for capital preservation long term. Now they have a tax-friendly haven for moving money off shore in a tangible asset.” (Forbes)

Jehova’s Witnesses’ Brooklyn Tax Exemptions Totaled $368 Million “The Jehovah’s Witnesses have been exempted from paying at least $368 million in taxes on their Brooklyn real estate holdings over the last 12 years, according to an analysis by the Downtown Brooklyn Partnership and consulting firm BJH Advisers. The Partnership released the finding to increase its pressure on the religious organization to donate $50 million to the borough as it sells off at great profit the remainder of its Brooklyn property and moves upstate.” (Crain’s New York Business)

Life Companies Gaining an Edge as Regulatory Hurdles Become a Reality in 2016 “Despite the SIFI tag, life companies seem to have been active in 2015. Last year, MetLife actually increased its global CRE lending business to a company record of $14.3 billion, up 18 percent from $12.1 billion the year prior. Prudential Mortgage Capital Company President and CEO David Durning told CO that the firm’s final lending numbers for 2015 were $14.6 billion. Comparatively, J.P. Morgan Chase originated the most in U.S. CMBS debt, with $11.14 billion, followed by Deutsche Bank with $9.62 billion, according to Commercial Mortgage Alert.” (Commercial Observer)

Five Mistakes Entrepreneurs Make When Buying Real Estate “There are countless investors who make high return realty investments, but there are also many who lose just as much from their investments. If you are considering investing in real estate, then it is important that you know five of the most common mistakes that real estate investors tend to make. Do your best to avoid these pitfalls and you can be on your way to the successful real estate investment you have always dreamed of.” (Huffington Post)

U.S. Black Investors Shift from Real Estate to Stocks “Burned by the housing bust of 2008, more black Americans are tying up their wealth in the U.S. equity market through workplace retirement plans, experts say. The percentage of blacks citing real estate as the ‘best investment overall’ was 61 percent in 2004, according to a survey released on Tuesday by Ariel Investments, a Chicago money management firm. In mid-2015, the percentage of black investors ranking real estate as the best investment was down to 37 percent, according to the survey.” (Reuters)

Related Buys Stake in London Affordable Housing Firm “Related Cos. is one of America’s most prominent real estate firms, developing mixed-use, residential, retail, office, and affordable properties. It regularly appears on Top 50 lists of owners and developers. Overall, it owns and operates a premier portfolio of global assets valued at over $20 billion. Affordable Housing Finance’s Donna Kimura reports the company now has its eyes set to Europe.” (Multifamily Executive)

Wal-Mart to Operate its Own Gas Stations “For most of the past 20 years, Wal-Mart Stores Inc. has let another company build and operate gas stations in the parking lots of its stores. Now, the retailer has decided it wants to pump its own gasoline. Last week, Wal-Mart executives told Murphy USA Inc. that going forward it will build and operate its own gas stations. Murphy will continue to run the more than 1,000 locations it has already built near Wal-Mart stores.” (MarketWatch)

Documents: Mets’ Owners Real Estate Fund Was $300 Million in the Hole This Past June “The owners of the New York Mets are no strangers to financial calamity. After losing $550 million in Bernie Madoff’s Ponzi scheme and paying out $80 million to settle a lawsuit claiming they were in on the scheme, Fred and Jeff Wilpon managed to keep their team by taking out loans and slashing payroll. But Madoff’s predatory investment schemes aren’t the only source of red ink for the Wilpons. One of their own major investments in real estate—long their area of business expertise—has gone deep underwater.” (Deadspin)

US productivity fell at sharp 3 per cent rate in Q4 — U.S. productivity fell sharply in the final three months of 2015, closing out a fifth straight year of weak gains in worker efficiency. The Labor Department said Thursday that productivity — the amount of output per hour of work — fell at an annual rate of 3% in the fourth quarter. It was the biggest quarterly decline in nearly two years. Productivity last year edged up a slight 0.6% after a tiny 0.7% gain in 2014. It has been weak since 2011, a troubling development given that productivity is a key ingredient needed for rising living standards. Rising productivity enables businesses to pay employees higher wages without having to boost the cost of the products and services they sell.

Orders to US factories fell sharply in December — Orders to U.S. factories fell sharply in December, closing out a year in which demand for American manufactured goods retreated for the first time in six years. Factory orders dropped 2.9% in December, the fourth decline in the past five months, the Commerce Department reported Thursday. Orders were down 6.6% for the full year, marking the first annual fall since 2009, a year when the country was struggling to emerge from the Great Recession. The 2015 decline underscores the problems American manufacturers are facing from spreading global weakness and the rising strength of the dollar.

Applications for US jobless aid rise, but levels still low — More Americans sought unemployment benefits last week, but applications stayed near historically low levels in a positive sign for the job market. Weekly applications for jobless aid rose 8,000 to a seasonally adjusted 285,000, the Labor Department said Thursday. The four-week average, a less volatile measure, increased slightly to 284,750. The number of people collecting aid has dropped 5.5% in the past year to 2.3 million.

Average long-term US mortgage rate falls fifth straight week — Average long-term U.S. mortgage rates fell for the fifth straight week amid volatility in world financial markets. Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage slid to 3.72% this week, down from 3.79% last week and the lowest since it averaged 3.68% in April 2015. The average rate on a 15-year fixed-rate mortgage slid to 3.01% from 3.07% last week.

LinkedIn shares tumble on weak forecast for 2016 — LinkedIn shares plunged as much as 28% in after-hours trading Thursday after the company reported better-than-expected results for the fourth quarter but provided a weak forecast for 2016. The professional networking service’s adjusted earnings and revenue beat Wall Street’s estimates for the last three months of 2015, thanks to strong demand for its hiring and recruiting software. But it issued a forecast that was far below what analysts were expecting. LinkedIn also said it will phase out a new online advertising product that hasn’t worked out as planned, which will cause it to forego roughly $50 million in near-term revenue.