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.
Monday, the Dow Jones industrial average fell 82.91 points, or 0.5%, to 17,766.55, giving it a loss of 0.3% for 2015. The Standard & Poor’s 500 index dropped 13.55 points, or 0.7%, to 2,079.28. The NASDAQ composite declined 46.83 points, or 0.9%, to 5,021.63.
Benchmark U.S. crude fell 99 cents to close at $58.14 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, fell 62 cents to close at $62.69 in London. Wholesale gasoline fell 2.3 cents to close at $2.007 a gallon. Heating oil fell 1.5 cents to close at $1.855 a gallon. Natural gas rose 11.5 cents to close at $2.705 per 1,000 cubic feet.
U.S. economic growth in the second quarter will be far weaker than previously expected and it will prevent the pace of growth from exceeding last year’s 2.4%, according to a forecast by a group of U.S. business economists. Growth is expected to accelerate significantly in the third quarter, but “sluggish” conditions in the first three months of the year will persist into the second quarter and drag down average growth for the year, a survey by the National Association for Business Economists said Monday. (St Louis Dispatch)
Leaders from the G7 industrial nations are scheduled to meet in the Bavarian Alps for a second day of a summit overshadowed by Greece's debt crisis and ongoing violence in Ukraine. On Sunday, leaders focused on global growth, climate change and the TTIP free trade agreement being negotiated between Washington and the EU. Today, the summit will discuss militant threats from groups like Islamic State and Boko Haram.
ARC Hospitality Buying 25 Hotels from Summit for $351 Million “American Realty Capital Hospitality Trust Inc. is buying 26 hotels from Summit Hotel Properties Inc. for $351 million. The properties, which have 2,793 rooms in 11 U.S. states, are operated by companies including Marriott International Inc., Hilton Worldwide Holdings Inc. and InterContinental Hotels Group Plc.” (Bloomberg)
Adding on to the Willis Tower? “Among changes in the works are a likely low-rise extension of the building into the south plaza, according to the brokers who will take over leasing for Blackstone. Although exact plans for the plaza are unclear, it likely will include adding a new structure in the plaza that could include some combination of food, retail and entertainment, the brokers said.” (Crain’s Chicago Business)
America’s Most Overvalued and Undervalued Housing Markets “It’s no secret that the Texas economy has been on fire in recent years. Thanks to the unconventional oil boom, last year the state’s oil output reached levels not seen since 1976. That sparked a surge in new home construction and a simultaneous run-up in housing costs in many metro areas.” (Forbes)
Retail Sales May Give Fed Comfort to Move toward Rate Hikes “The Federal Reserve may draw comfort from retail sales figures if, as forecast, the data confirm the solid economic growth that the May jobs report suggested. A strong month for vehicle sales in May and better weather should have lifted spending at a variety of stores last month, economists say.” (MarketWatch)
Japan’s Mitsui Joins Hell’s Kitchen Project “One of Japan’s largest real-estate companies has joined forces with a homegrown New York investment company on a $330 million Hell’s Kitchen development with an unusually large component of affordable housing.” (The Wall Street Journal)
REIT Buys Vintage in Orange County “Resource Real Estate Opportunity REIT acquired Yorba Linda Apartments in Yorba Linda, Calif., from AvalonBay Communities for $118 million. The acquisition included 50 two-story buildings consisting of approximately 400,000 net rentable square feet.” (Commercial Property Executive)
Want to Save Time? Let Your Office Building Do Laundry, Buy Dinner “Developer Rick Caruso has a new plan for your workday: let your office building do your laundry, shop for groceries, pick up dinner and deliver it all to you by 5 p.m. It’s a first among landlords, according to Caruso -- five-star concierge service for employees of companies that take space in his debut office development, a renovated 1920s Masonic Temple about 7 miles (11 kilometers) north of downtown L.A.” (Bloomberg)
These are the Buildings that Make Up the “Cloud” “Everything you know about the Internet is wrong. Virtual? Try physical. ‘The cloud’? Try the ground. Our beloved information superhighway has very real exits. Behold the ‘carrier hotel.’” (Fortune)
Real Estate Crowdfunding Platform Fees—Can Kill Your Return! “There are a variety of fee structures in crowdfunding deals, which range from investment offerings that have no fees to those with annual fees as well as partial participation in upside returns above the preferred returns offered and participation in profits on exit. For comparison purposes, look at the difference in returns from recent investment offerings of Real Crowd, Realty Share, and iFunding” (CrowdFundBeat)
Walmart CEO Outlines Omnichannel Retail Strategy to Shareholders, Associates “Discount retail chain Walmart held its annual shareholders meeting in Fayetteville, Arkansas on Friday, where CEO Doug McMillon took advantage of the soapbox moment to preach the importance of technology.” (ZDNet.com)
China's exports fell for a third month in May, while imports slumped the most in three months, underscoring a sluggish domestic environment in need of more stimulus. Annual exports in May fell 2.5% while imports plunged 17.6%, data from the General Administration of Customs showed on Monday. Many analysts have already penciled in sub-7% growth for the second quarter, raising the risk that the government will not meet its full-year growth target of around 7%. Shanghai closed up 2.2%.
On Tuesday, index provider MSCI will decide whether to include China’s domestic markets in its widely followed emerging-market and global indexes. Rival index provider FTSE Group has already inaugurated transitional indexes for emerging markets to include Chinese A-shares, while S&P Dow Jones Indices said it would likely add the shares to its indexes in September. The new step will add a piece of a market that has some of the world's highest valuations and volatility to millions of foreign investors.
Japan's economy grew faster than initially estimated in the first quarter, data on Monday showed, however doubts remain over whether the momentum can be sustained. GDP expanded at an annualized pace of 3.9% in January-March, higher than the preliminary reading of a 2.4% increase, and up from 1.5% in the October-December period. The upward revision reflects a better-than-expected rise in capital spending, alongside solid exports to the U.S. and China.
Turkey's financial markets were rattled on Monday after the country's governing Justice and Development Party, or AKP, lost its parliamentary majority after 13 years in power. With an uncertain period of a coalition- or minority-led government ahead, Turkey's stock market index, the BIS 100, plunged 8% at the open, while the lira fell almost 4% to a record low of 2.75 against the dollar. The vote also scuttled President Recep Tayyip Erdogan's bid to further centralize power by redrawing Turkey's constitution.
As talks between Greece and its creditors drag on, relations between Athens and its European partners seem to be getting worse, not better. Tensions over a cash-for-reform deal came to a head Sunday when European Commission President Jean-Claude Juncker accused Greek PM Alexis Tsipras of distorting what the creditors had proposed to make some headway in securing a deal for the country. It was also reported that Juncker refused a request from Tsipras to meet on Saturday after the Greek leader rebuffed the proposals as "absurd" and "irrational, blackmailing demands."
General Electric is close to an agreement to sell its private-equity-lending unit to Canada's largest pension fund, marking a major step in the industrial giant's retreat from banking, in one of the biggest finance takeovers since the credit crisis. The deal, which would include assets of more than $10B, may be announced by GE (NYSE:GE) and the Canada Pension Plan Investment Board as soon as today.
Monsanto has now offered to pay a $2B reverse break-up fee to Syngenta (NYSE:SYT) if it cannot obtain global regulatory approvals to acquire the company, and reiterated that it would sell any overlapping business to obtain clearance for the deal. Despite the new proposal, Syngenta seems to have rejected Monsanto's (NYSE:MON) approach, calling it the "same inadequate price" ($45B in cash and stock) with the same flawed view of execution risks.
Panasonic plans to send hundreds of its employees to Tesla's (NASDAQ:TSLA) Gigafactory in Nevada from this autumn to prepare for production of lithium-ion batteries for electric cars, which it confirmed will start sometime next year. Panasonic (OTCPK:PCRFY) also said it expects to invest around ¥60B ($478M) in the current fiscal year through March in its automotive business, which includes the Gigafactory and a joint development project with Spanish auto parts maker Ficosa International.
Google's new mobile phone payment service, Android Pay, will not garner any transaction fees from credit card companies, WSJ reports, possibly putting pressure on Apple (NASDAQ:AAPL) to drop or lower its charges for Apple Pay. Dominant payment networks, Visa (NYSE:V) and MasterCard (NYSE:MA), recently standardized their "tokenization" card-security service and made it free, preventing payment services, such as Google (GOOG, GOOGL), from charging fees to issuers. Separately, Apple is expected to unveil its new music service and better tools to build apps for its smartwatch at its annual gathering of developers in San Francisco today.
Samsung Electronics plans to offer a mobile payments function in a smartwatch to be launched in the second half of the year, Electronic Times reports. The South Korean firm has previously said its Samsung (OTC:SSNLF) Pay mobile payments service, which supports NFC technology, will become available for "select partners" in July.
Earthquakes that have rocked the Dallas-Fort Worth area are putting two major oil and gas producers on the spot, as Exxon Mobil's (NYSE:XOM) XTO Energy subsidiary and EOG Resources (NYSE:EOG) face scrutiny from Texas regulators in their use of injection wells to dispose of wastewater from fracking operations. The state's energy regulator, the Railroad Commission of Texas, is set to begin a series of hearings in Austin this week to assess some oil companies' role in causing the temblors.
AP analysis: More ‘phony numbers’ in reports as stocks rise - Those record profits that companies are reporting may not be all they’re cracked up to be. As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are. What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors. (ABC)
Apple wants a lead role in streaming music - Apple’s iTunes helped change the way music-lovers bought their favourite songs, replacing plastic discs with digital downloads. Now the maker of iPods and iPhones wants to carve out a leading role in a revolution well under way, with a new, paid streaming-music service set to launch this summer. With millions of listeners already tuning in to streaming outlets like Pandora and Spotify, analysts and music-industry sources say Apple has been gearing up to launch its own service, aimed at winning back some of those customers and nudging longtime iTunes users into a new mode of listening. (Salon)
American Pharoah owners racing to capitalize on champ’s name - American Pharoah’s owners and thoroughbred racing now have a new race to run: a race to capitalize on the horse’s Triple Crown victory before the excitement fades away. As the first winner of the sport’s Triple Crown in 37 years, American Pharoah has a wealth of marketing opportunities that could never have been imagined by owners of the last winner, Affirmed, in 1978. At the same time, horse racing has declined into a niche pastime that is facing an aging demographic, a shrinking number of race tracks, and competition from new ways of betting on sports. (AP)
Survey: Slow 2nd quarter to drag on 2015 economic growth - G-7 set far-off goal to move away from fossil fuels - The world should move away from using fossil fuels by the end of this century, G-7 leaders said Monday, setting an ambitious but distant goal ahead of a global conference on climate change this year. The leaders of seven wealthy democracies also warned Russia that sanctions imposed for its actions against Ukraine would remain until a cease-fire is fully observed in eastern Ukraine — and those sanctions could be made tougher if the situation requires.
Sears 1Q loss narrows but sales slump continues - Sears’ first-quarter loss narrowed but sales continue to slump as the retailer prepares the rollout of its real-estate investment trust this week to raise cash. Sears Holdings Corp., which operates Sears and Kmart stores, said that it expects the real estate investment trust that it is forming, Seritage Growth Properties, will be declared effective by the Securities & Exchange Commission this week. (Chicago Tribune)
Gov’t plans to erase student debt for Corinthian students - The federal government will erase much of the debt of students who attended the now-defunct Corinthian Colleges, officials announced Monday, as part of a new plan that could cost taxpayers as much as $3.6 billion. Corinthian Colleges was one of the largest for-profit schools when it nearly collapsed last year and became a symbol of fraud in the world of higher education and student loans. According to investigators, Corinthian schools charged exorbitant fees, lied about job prospects for its graduates and, in some cases, encouraged students to lie about their circumstances to get more federal aid. (ABC)