Real Estate Daily News Buzz – June 5, 2015
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 fell 170.69 points, or 0.9%, to 17,905.58. The Standard & Poor’s 500 index lost 18.23 points, or 0.9%, to finish at 2,095.84. The NSDAQ composite lost 40.11 points, or 0.8%, to 5,059.12.
Benchmark U.S. crude fell $1.64 to close at $58.00 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, fell $1.77 to close at $62.03 in London. Wholesale gasoline fell 6.4 cents to close at $1.981 a gallon. Heating oil fell 4.8 cents to close at $1.844 a gallon. Natural gas fell 0.8 cents to close at $2.626 per 1,000 cubic feet.
High-Rise Landlords Respond to Retro-Cool Buildings Luring L.A. Tenants “When a group of prominent Los Angeles trial attorneys started its own firm in January, it shunned the sleek office skyscrapers that typically house blue-chip firms.” (Los Angeles Times)
Bell Partners Sells 8 Properties in $140 Million Deal “Greensboro, N.C.–based Bell Partners sold eight properties in a $140 million transaction, the company announced Tuesday. The properties include 1,679 units and were sold to Hudson Capital Acquisitions, Somerset Partners, and Summit Multifamily Group.” (Multifamily Executive)
Tallest Seattle Tower Said to Sell for Over $700 Million “A group led by Gaw Capital Partners agreed to buy Columbia Center, Seattle’s tallest tower, for more than $700 million, said two people with knowledge of the deal. The price would be a record for an individual office building in the city.” (Bloomberg)
Silicon Valley Offices Prove Profitable: ‘When It’s Good, It’s Very Good’ “These days, it pays to be a landlord in Silicon Valley. West Coast landlord Bixby Land Co. has sold a San Jose office park to MetLife for $96 million, according to Bixby, netting a tidy return for the Irvine, Calif., company.” (Wall Street Journal)
The Plan: High 5 Games at 1 World Trade Center “It definitely got the ‘high’ part down when this company signed a lease on an upper floor at the World Trade Center. High 5 Games, the New York-based casino gaming company, opened its new headquarters on the 58th and 59th floors of 1 World Trade Center on April 27, and the company wanted the inside of its new office to reflect its business. It is simultaneously a serious, corporate environment in a maximum-security building and a creative space rooted in recreation.” (Commercial Observer)
JPMorgan, Partner Want $300M for Grand Central Office Building, Double What They Paid in 2008 “Sherwood Equities and JPMorgan Chase are putting on the market a Grand Central office building that could fetch as much as $300 million.” (Crain’s New York Business)
Blackstone Said to Seek $1.5 Billion for Boston Buildings “Blackstone Group LP is seeking about $1.5 billion for two Boston office buildings acquired in the 2007 buyout of Equity Office Properties Trust, said two people with knowledge of the marketing.” (Bloomberg)
Why Are CRE Execs So Happy? “Commercial real estate executives are feeling much more confident about the market this year with nearly 60 percent saying they are more optimistic than last year, according to the sixth annual Akerman U.S. Real Estate Industry Outlook Survey released today.” (Commercial Property Executive)
Why Tech Loves Quirky, Old Buildings “As giants like Facebook and Google build shiny new cities in Silicon Valley, other technology companies are doing just the opposite to the national office landscape. They are revitalizing and transforming older buildings and breathing new life into a market that had been on life support.” (CNBC)
May DOB Report: Manhattan Has Its Biggest Month of 2015 “Manhattan ruled the roost in terms of residential permits filed with the Department of Buildings in May, getting a boost from the largest residential property filed in the borough this year, according to The Real Deal‘s analysis of permit applications.” (The Real Deal)
Bond yields across global markets continued their sell-off into Thursday as a six-week-long bond rout rumbled on. Yesterday, ECB President Mario Draghi said asset prices tend to be more volatile in a low interest rate environment and policymakers were prepared to look through the sharp rise in yields. With the ECB seeing no reason to adjust its stance on monetary policy, German 10-year Bund yields rose to fresh 2015 highs today at 0.95% (up from near zero in mid-April). U.S. 10-year yield +3 bps to 2.4%.
Greece’s creditors stuck to a hard line but made some concessions in the outlines of a final deal presented to Athens on Wednesday, although differences between the two sides still remain. “Our proposal continues to be the only realistic and constructive proposal. The discussions will continue,” tweeted Greek PM Alexis Tsipras this morning. According to a Dow Jones newswire report, Athens is now planning to make a new counter-offer.
Whether it’s concerns of margin tightening and liquidity or simply a correction, Chinese stocks had yet another volatile session today, keeping the week’s roller coaster ride on high speed. Plunging as far as 4% at one point in the session, the Shanghai Composite ended the day in the green, up 0.8%. Last Thursday, the index tumbled 6.5%, but rose 4.7% the following Monday.
Dozens of people were reportedly killed or injured around the city of Donetsk on Wednesday in one of the bloodiest battles between Ukrainian forces and Russia-backed militias since a fragile ceasefire began in February. “Russia bears direct responsibility for preventing these attacks…any attempts to seize additional Ukrainian territory will be met with increased costs,” said Marie Harf, spokeswoman for the U.S. Department of State. The scale of the violence spooked investors, with the Russian stock market falling more than 2.5% and the ruble losing 2% vs. the dollar.
Nearly a year after oil markets entered a deep downward spiral, some OPEC members are publicly talking for the first time about a new “fair” price for their crude. Oil ministers from Iraq, Venezuela and Angola said in Vienna this week that a price of $75-$80 a barrel could be just fine, however, Saudi Arabia – which has for years pointed to $100 a barrel as a “fair price for producers and consumers” – has given no indication that it subscribes to this view. Whatever the case may be, there is a reported consensus among the 12-country group to leave the current production ceiling of 30M bpd unchanged at their meeting tomorrow.
Dish Network and T-Mobile are in talks to merge, WSJ reports, in what would be the latest multi-billion dollar consolidation move in the media and telecom industry. The two aren’t far apart about the resulting company’s look: Dish’s (NASDAQ:DISH) Charlie Ergen would become chairman and T-Mobile’s (NYSE:TMUS) John Legere the CEO. Talks are still in the “formative stage,” so price and cash/stock mix have not yet been determined. TMUS +13%; DISH +6.4% premarket.
Apple has canceled plans to unveil a revamped Apple TV set-top at the Worldwide Developer Conference next week, NYT and Re/code both report. Sources say Apple (NASDAQ:AAPL) planned as recently as mid-May to reveal the set-top, along with a new remote and developer SDK, but changed its mind “partly because the product was not ready for prime time.” Re/code also recently reported that Apple won’t announce its rumored Web TV service at WWDC since licensing deals haven’t yet been finalized.
After thirteen months in the position, Chris O’Neill, the business chief for Google (GOOG, GOOGL) Glass, is stepping down, although he will still be staying with the company. Separately, Sergey Brin said one of the company’s driverless car has been involved in another rear-end accident, bringing the total number of accidents over the last six years of testing to 12. Defending the prospects for the self-driving technology, Brin said he’s “very proud of the record of the cars” and his goal is to “beat human drivers.”
Molycorp plans to file for Chapter 11 bankruptcy protection as soon as this month, after skipping a $32M bond interest payment this past Tuesday, WSJ reports. The plan marks a dramatic turn for Molycorp (NYSE:MCP), which rode temporary concerns of a shortage in rare earths elements to a $6B market capitalization in 2011. Since then, China has relaxed restrictions on exports of rare earths, oversupplying the market.
European oil majors are openly declaring interest in returning to Iran, with leaders of Royal Dutch Shell (RDS.A, RDS.B), BP (NYSE:BP) and Total (NYSE:TOT) all saying they are ready to return as soon as international sanctions are lifted. U.S. oil companies remain somewhat more cautious on Iran, although “certainly we would think about it,” said ConocoPhillips (NYSE:COP) CEO Ryan Lance.
Activist Investor Elliott Associates has acquired a 7.1% stake in Samsung C&T, stating that a proposed takeover of the company by the Samsung Group’s de facto holding company, Cheil Industries, wasn’t in the best interests of shareholders. Elliott’s move will likely increase the pressure on Cheil to improve its offer for the affiliate and could complicate the path for management succession as the founding Lee family looks to extend its grip on the conglomerate.
With just weeks to go before he steps down, Ben Lawsky, New York’s top financial regulator, released the final set of rules governing virtual-currency businesses in the state, concluding a nearly two-year effort to regulate the growing Bitcoin (COIN, OTCQB:BTCS) industry. Lawsky said that the final form of the so-called BitLicense would put in place crucial guidelines for protecting consumers and preventing money laundering.
AIG sold $3.7B in AerCap Holdings stock on Wednesday, building capital to buy back its own shares. The New York-based insurer previously announced a $3.5B share-repurchase plan in April. The larger-than-planned transaction saw AIG selling about 71.2M shares, following expectations for a 50M share public offering. The move reduces AIG’s stake in AerCap (NYSE:AER) by 5% to 46%.
General Electric has now put virtually all of its U.S. commercial loan businesses on the market, sources told Bloomberg, after hiring banks to unload $20B of assets in its healthcare, railcar and franchise finance divisions. The move follows GE’s (NYSE:GE) bidding process for a separate $40B portion of its U.S. commercial lending assets last week. CEO Jeffrey Immelt has said the divestiture of about $200B of GE Capital’s operations would be done by 2016, as the conglomerate looks to move away from finance and refocus on industrial manufacturing.
Applications for US jobless aid remain low at 276,000 – Fewer Americans sought unemployment benefits last week, a sign that job cuts remain low as employers are confident enough in the business outlook to hold onto their staffs. The Labor Department says applications for unemployment aid dropped 8,000 to a seasonally adjusted 276,000. The four-week average, a less volatile figure, ticked up 2,750 to 274,750. Applications have been below 300,000, a historically low level, for 13 weeks. Applications are a proxy for layoffs. The small number of people seeking benefits indicates that Americans are enjoying solid job security.
US productivity fell in first quarter while labor costs up – U.S. worker productivity declined more sharply in the first three months of the year than previously thought while labor costs rose more quickly. Productivity fell at a 3.1% rate in the first quarter, a bigger drop than the 1.9% decline estimated a month ago, the Labor Department reported Thursday. Labor costs rose at a 6.7% rate in the first quarter, faster than 5% rise first estimated.
Average US rate on 30-year mortgage stays at 3.87 per cent – Average long-term U.S. mortgage rates were flat to slightly lower this week, remaining near their highest levels so far this year. Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage was unchanged from a week earlier at 3.87%. The rate on 15-year fixed-rate mortgages slipped to 3.08% from 3.11%. Despite their climb in recent weeks during the height of the spring home buying season, mortgage rates remain low by historic standards. A year ago, the average 30-year rate was 4.14% and the 15-year was 3.23%.
EPA: No widespread harm to drinking water from fracking – Hydraulic fracturing to drill for oil and natural gas has not caused widespread harm to drinking water in the United States, the Environmental Protection Agency said Thursday in a report that also warned of potential contamination of water supplies if safeguards are not maintained. A draft study issued by the agency found specific instances where poorly constructed drilling wells or improper wastewater management affected drinking water, but said the number of cases was small compared to the large number of wells that use hydraulic fracturing, better known as fracking.