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Real Estate Daily News Buzz – June 19, 2015

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  • Real Estate Daily News Buzz – June 19, 2015
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June 19, 2015
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Karen Schutte
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Reserve & White house Real Estate Daily News
Real Estate Daily News Buzz - business perspectives, real estate, government, the Fed, local news, and the stock markets

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.

Thursday, the Dow Jones industrial average rose 180.10 points, or 1%, to 18,115.84. The Standard & Poor's 500 index gained 20.80 points, or 1%, to 2,121.24. The NASDAQ added 68.07 points, or 1.3%, to 5,132.95.

Benchmark U.S. crude rose 53 cents to close at $60.45 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, rose 39 cents to close at $64.26 in London. Wholesale gasoline rose 1 cent to close at $2.111 a gallon. Heating oil rose 0.5 cent to close at $1.915 a gallon. Natural gas fell 7.8 cents to close at $2.777 per 1,000 cubic feet.

Fed Says Rate Hike Still on Track for This Year “The Federal Reserve signaled a pickup in the economy is keeping it on track to raise interest rates this year, though subsequent increases are likely to be more gradual than anticipated earlier.” (Bloomberg)

After American Realty Capital Properties Commits Fraud, CEO Tries to Regain the Trust “On April 1, Glenn Rufrano, the former head of Cushman & Wakefield and a longtime real estate executive, became CEO of American Realty Capital Properties. The job will be a challenge for the 65-year-old.” (Crain’s New York Business)

The New Money Masters: Blackstone Real Estate Chief Jonathan Gray “Largely under Gray’s leadership Blackstone has become one of the largest and most profitable landlords on the planet, with $93 billion in assets and an annualized net return of 18% over the last 23 years.” (Forbes)

Starbucks to Shutter One of Its Retail Concepts “Starbucks Corp. is getting out of the freestanding bakery store brand business. The coffee giant said it plans to close all 23 La Boulange retail (bakery café) locations by the end of September, as well as the two baking facilities serving the locations. The retailer said it determined that La Boulange stores are ‘not sustainable for the company’s long-term growth.’” (Chain Store Age)

Morgan Stanley Lends $205M for Vornado’s Herald Square Old Navy Buy “Morgan Stanley originated a $205 million acquisition loan to help finance Vornado Realty Trust’s purchase of the Old Navy building in Herald Square, records filed with the city show.” (Commercial Observer)

Lasting Impression: Renovating For Current, Future Seniors “Dean Maddalena is familiar with the sterile, nursing home-like attitude that is associated with senior communities. He’s determined to change that.” (Multifamily Executive)

NAI SPECIAL REPORT: Linneman, Zell Sound Off “Renowned real estate economist Peter Linneman, who is NAI Global’s chief economist, and Sam Zell, the salty real estate billionaire, didn’t argue with each other as the main speakers at today’s NAI Global Market Outlook in Chicago. But they did disagree (somewhat) about the direction of the U.S. economy and, by extension, the CRE market. Linneman posited that the economy still has at least two or three more years of reasonably good growth ahead. Zell was not so sure. ‘The situation is better than it was, but it’s important not to get too kumbaya right now,’ he said.” (Commercial Property Executive)

Regulator Restricts Mortgage Operations of Six Big Banks “JPMorgan Chase, Wells Fargo and four other big banks are facing new restrictions on their mortgage operations after a federal regulator determined the banks did not do enough to fix problems in their foreclosure practices in the aftermath of the financial crisis.” (New York Times)

Documents Confirm 1,522-Foot Parapet Height for 217 West 57th Street, aka Nordstrom Tower “The permitting process surrounding high-profile projects is becoming increasingly convoluted, with ‘dummy filings’ now commonly submitted prior to actual new building applications. This is particularly true at 217 West 57th Street, which still doesn’t have any on-site renderings. But luckily some new supporting documents have been filed with the city, revealing what appear to be the actual height numbers for the tower’s parapet and roof, confirming it will become the country’s tallest building.” (New York Yimby)

U.S. Commercial, Multifamily Mortgage Debt Reaches $40.4 Billion in Q1 “According to the Mortgage Bankers Association, the level of U.S. commercial and multifamily mortgage debt outstanding increased by $40.4 billion in the first quarter of 2015, as all four major investor groups increased their holdings. That is a 1.5 percent increase over the fourth quarter of 2014.” (World Property Journal)

Gathering in Luxembourg Bank savings in front line as Greece hurtles toward default - The last time Greece was facing a hard deadline to secure a deal with its bailout creditors, in February, it agreed to one only when it feared a worst case scenario — a run on the country's banks. Fast forward four months, and the situation is looking dire once again. With no sign of a breakthrough in Greece's talks with its creditors to avoid a default on June 30, the incentive is growing for Greeks to pull their cash out of the banks.

A crackdown on margin financing? A wave of IPOs? An equity bubble going "pop"? Pick your reason. Chinese stocks got crushed again today, suffering heavy losses across several indexes. The Shanghai Composite closed down 3.7%, while the smaller Shenzhen market fell 3.6%. The ChiNext index, which tracks small startup stocks, saw its biggest drop since 2013, plunging 6.3% - the third-worst trading day in its history after nearly tripling in the past year.

Hong Kong's legislature has vetoed a China-vetted electoral reform package that had been criticized by pro-democracy lawmakers as flawed and undemocratic. Although the new system would allow the next leader to be directly chosen by voters, Beijing would retain the right to choose the candidates on the ballot. Prior to the vote, Hong Kong’s government made it clear that if the package was defeated, the status quo would prevail and the chief executive would continue to be chosen by a committee of 1,200 members.

The Swiss franc extended its upbeat momentum this morning, despite the Swiss National Bank maintaining its deposit rate at a record low of -0.75% and warning it's ready to take further action to reduce the impact of the overvalued currency. Consumer prices are falling and the Swiss economy is on the verge of its first recession in six years after the SNB's shock decision to unpeg the franc from the euro in January. Since then, the currency has risen 15%, undermining exports and pushing down import costs. Franc +0.3% to $1.0881.

Treasuries and German bund yields are heading lower after the Federal Reserve cut its outlook for interest rates and warned of spillover if Greece talks fail. At yesterday's meeting, the Fed suggested it might raise rates only once in 2015 by a quarter percentage point, rather than twice as many officials previously anticipated. Both ten-year U.S. and German Bund yields are down 4 bps, to 2.27% and 0.77%, respectively.

Republicans in the U.S. House of Representatives The Republican-controlled U.S. House revived President Barack Obama's trade agenda on Thursday, voting to strengthen his hand in global negotiations and clearing the way for a showdown in the Senate. The 218-208 vote marked the first step in a bipartisan rescue operation mounted in the week since labor-backed Democrats in the House rebelled against the president and derailed the legislation he seeks to proceed with a landmark 12-nation Pacific Rim trade deal. Additionally, a companion bill to provide federal aid for union cworkers harmed by imports awaits action in both houses in the coming days.

General Electric will move significant manufacturing jobs to Canada and Europe, warned GE CEO Jeff Immelt, should the Export-Import Bank close and the Trans-Pacific Partnership continue to be blocked. The charter of the Ex-Im Bank will expire on June 30, unless Congress acts to reauthorize it, while "fast-track" authority for the TPP remains stuck in the U.S. House.

U.S. commercial drone operations could take off on a large scale by next June, after FAA officials said they expect to finalize regulations for the unmanned aircraft within the next 12 months. The news has commercial drone operators hoping for looser terms than the proposed regulations announced in February. Those rules required drones to fly during daylight hours only, remain within an operator's visual line of sight and stay at a 500 foot ceiling. Related stocks: AMBA, AMZN, AVAV, DPZ, HON, INVN, IXYS, GPRO, TRMB.

General Motors and Fiat Chrysler Automobiles have turned to investment banks for help to deal with a stand-off as the latter seeks to force a merger with its Detroit-based rival, Reuters reports. Earlier this year, GM's (NYSE:GM) board rebuffed a merger proposal from the Italian-American carmaker and Chief Executive Mary Barra said last week she had no interest in a combination. Barra's rejection has not stopped FCA (NYSE:FCAU) boss Sergio Marchionne, who is lobbying GM investors to support his case.

Lagging behind other social networks in mobile use, LinkedIn (NYSE:LNKD) is developing two new apps and a major mobile messaging overhaul. The apps being tested are LinkedIn Groups, which alerts users when messages are posted to groups to which they belong, and LinkedIn LookUp, which allows users to find information about co-workers at their company.

FitBit has priced its 36.6M-share initial public offering at $20 per share, a dollar above its already heightened price range of $17-$19. At that level, the company will raise $732M, at a valuation of $4.1B. FitBit (Pending:FIT) shares will begin trading on the New York Stock Exchange this morning.

More IPO news: Univar has priced its initial public offering at $22 per share, valuing the company at about $3.03B. The IPO will raise $770M, after 35M shares were priced at the top end of its $20-$22 price range. Shares of Univar (Pending:UNVR), one of the largest chemical distributors in North America, will also begin trading on the New York Stock Exchange today.

Comcast is not interested in buying T-Mobile (NYSE:TMUS), a source told Reuters, shooting down an earlier report from Germany's Manager Magazin. The magazine had stated T-Mobile's parent, Deutsche Telekom (OTCQX:DTEGY), was in talks with Comcast (NASDAQ:CMCSA) about taking on its whole U.S. wireless subsidiary.

McDonald's to shrink in US, 1st time in decades - The burger chain that put "supersize" into the American vernacular is slimming down: For the first time in more than 40 years, and perhaps ever, McDonald's says the number of U.S. restaurants it has is shrinking. McDonald's plans to close more restaurants in the U.S. than it opens this year, according to the world's biggest hamburger chain. That hasn't happened since at least 1970, according to an Associated Press review of McDonald's regulatory filings. Becca Hary, a McDonald's spokeswoman, declined to provide a specific figure but said the reduction would be "minimal" compared with its total of about 14,300 U.S. locations.

Bank savings in front line as Greece hurtles toward default - The last time Greece was facing a hard deadline to secure a deal with its bailout creditors, in February, it agreed to one only when it feared a worst case scenario — a run on the country's banks. Fast forward four months, and the situation is looking dire once again. With no sign of a breakthrough in Greece's talks with its creditors to avoid a default on June 30, the incentive is growing for Greeks to pull their cash out of the banks.

Gas-price jump pushes consumer prices up 0.4 pct in May - Consumer prices increased in May by the largest amount in more than two years, reflecting the biggest one-month jump in gas prices in nearly six years. But outside of energy, price pressures remained modest. The consumer price index rose 0.4% in May, the biggest advance since February 2013, the Labor Department reported Thursday. The increase was driven by a 10.4% rise in the cost of gasoline, which has started climbing after nearly a year of falling energy prices.

Applications for US jobless aid fall to nearly 15-year low - The number of people seeking unemployment benefits fell last week, evidence that layoffs remain at unusually low levels and the job market is moving closer to full health. Weekly applications for jobless aid dropped 12,000 to a seasonally adjusted 267,000, the Labor Department said Thursday, near 15-year lows reached two months ago. The four-week average, a less volatile measure, declined 2,000 to 276,750. The figures suggest that Americans are enjoying solid job security. Applications, a proxy for layoffs, have remained below 300,000, a historically low level, for 15 weeks. The trend indicates that employers are confident enough in future consumer demand to retain their staffs.

Current account trade deficit widens to $113.3 billion - The deficit in the broadest measure of U.S. trade increased in the January-March quarter to the highest level since the spring of 2012 as American exports declined. The Commerce Department said Thursday that the deficit in the current account increased to $113.3 billion in the first quarter, up 9.9% from a fourth quarter deficit of $103.1 billion. It was the largest imbalance since a $118 billion deficit in the second quarter of 2012.

Gauge of US economy posts solid 0.7 percent May advance - An index designed to predict the future health of the economy posted a second straight strong increase in May, indicating the economy should gain strength in the second half of this year. The Conference Board said Thursday that its index of leading indicators rose 0.7% in May, matching the gain in April. Both months represented the strongest increase since a 1 percent rise last July.

Manufacturing in the Federal Reserve's Philadelphia region expanded this month at the fastest pace since December, suggesting that an improving economy is boosting factory output. The Federal Reserve Bank of Philadelphia said Thursday that its index of factory activity rose to 15.2 from 6.7 in May. That's the highest level since December, though below a recent peak of 40.2 in November. Any reading above zero indicates that manufacturing is expanding.

Average US rate on 30-year mortgage eases to 4% - Average long-term U.S. mortgage rates eased this week after hitting their highest levels this year in the previous week. Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage declined to 4 percent this week from 4.04% a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.23% from 3.25%. Mortgage rates have been surging in recent weeks amid signs of improvement in the economy.

Analysts see several reasons for Colt's slide to bankruptcy - The bankruptcy being sought by Colt Defense was fueled by missteps with gun owners, a misreading of the police firearms market and a fall in gun sales to the public after an initial spike several years ago, analysts and industry observers say. But a major blow to the 179-year-old gun maker was the plummeting revenue from government contracts, which Moody's Investor Service said has dropped to less than 10% of sales from 60 percent in 2009. Colt lost a U.S. military contract for the M4 carbine in 2013 to Remington, though the contract ultimately went to F.N. Herstal of Belgium following a dispute between Colt and Remington.

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