Real Estate Daily News Buzz May 6, 2016
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 9.45 points, or 0.05 per cent, to 17,660.71. The Standard & Poor’s 500 index closed down 0.49 of a point, or 0.02 per cent, to 2,050.63. The NASDAQ composite index lost 8.55 points, or 0.2 per cent, to 4,717.09.
Benchmark U.S. crude oil rose 54 cents, or 1.2 per cent, to $44.32 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, was up 39 cents at $45.01 a barrel in London. In other energy commodities, wholesale gasoline rose less than 1 cent to $1.49 a gallon, heating oil was unchanged at $1.33 and natural gas fell 7 cents to $2.076 per thousand cubic feet.
Average US rate on 30-year mortgages falls to 3.61 per cent — Long-term U.S. mortgage rates fell this week, following the Federal Reserve’s decision not to raise its benchmark interest rate. The decline put long-term mortgage rates near their low levels for the year, offering an inducement to prospective home buyers during the spring buying season. Mortgage buyer Freddie Mac said Thursday the average 30-year fixed-rate mortgage declined to 3.61 per cent from 3.66 per cent last week. It’s far below its level a year ago of 3.80 per cent.
Qatar Said in Talks for St. Regis New York, San Francisco Hotels “The Qatar Investment Authority is in advanced talks to buy the luxury St. Regis hotels in New York and San Francisco from Starwood Hotels & Resorts Worldwide Inc., according to people with knowledge of the discussions. The properties may be worth as much as $1 billion, though they could sell for less, said the people, who asked not to be identified because the talks are private.” (Bloomberg)
The Seeds of the Next Housing Crisis Have Been Planted “Back when the 2005-07 housing bubble was brewing, photos of impossibly small houses selling for insanely high prices famously made the rounds. It was one of those signals that you look back on and say, ‘Hmmm … that was a clear indictor of trouble ahead.’ So in what feels like déjà vu, it’s worrying now to see a glorified ‘tool shed’ on the market in New York for a cool $500,000. In Brooklyn, no less. Not even in Manhattan.” (MarketWatch)
Silverstein Properties Leaning Towards BIG 2 WTC Design “Silverstein Properties now has two, 3 million square-foot options for a new 2 World Trade Center tower, and we’ve now learned the developer is leaning towards the BIG one. The first was the original Norman Foster design proposed after the site’s master plan was created. It has distinctive lighted diamonds on its slanted top. The other is the Bjarke Ingels Group, aka BIG, design that was created to house 20th Century Fox and News Corp, The Post’s parent.” (New York Post)
German Fund Pays $139M for Fiduciary Trust Building “A German real estate fund has acquired 175 Federal St. in Boston’s Dewey Square from Blackstone’s Equity Office Properties for $139 million, or $611 per square foot. Deka Immobilien Investment GmbH closed on the purchase Tuesday, according to Suffolk County Registry of Deeds filings. The 17-story, 227,365-square-foot tower completed in 1977 is 92 percent leased to tenants including Fudiciary Trust Co., Bank of America, Adler Pollock & Sheehan, QPID Health and Intercontinental Insurance.” (Banker & Tradesman)
High-End Hotels Told Not to Fear Airbnb “In his bullish call on Hyatt Hotels Corp., John Khoury of Long Pond Capital LP said the high-end leisure market shouldn’t worry about Airbnb Inc. The budget hotel market, however, may be in for a rough ride. Speaking at the Sohn Investment Conference in New York, Khoury touted Hyatt, saying shares have more than a 60 percent upside despite lodging being the most ‘out of favor’ piece of the real estate sector.” (Bloomberg)
Developers Paying 33% Above Market for Pier 40 Air Rights “Developers who agreed to buy the air rights over Pier 40 are paying 33% more than what they are worth, according to a recently finished appraisal commissioned by the owner of those air rights, the Hudson River Park Trust. Last year, developers Westbrook Partners and Atlas Capital Group agreed to pay $100 million to acquire 200,000 square feet of air rights over Pier 40, which holds sports fields that have become a key amenity in the neighborhood. The money is enough to fund the restoration of deteriorating steel piles under the pier that threaten the integrity of the structure.” (Crain’s New York Business)
Build-a-Bear is on the Hunt for a Sale “There’s a big sale occurring in the toy aisle: Build-A-Bear, with a market value of around $200 million, says it is mulling strategic alternatives – typically corporate lingo indicating a firm is on the block. Investors cheered the news, sending shares of toy maker, which operates around 400 stores globally, up more than 8% on Tuesday. Specifically, Build-A-Bear’s board is weighing ‘an exploration of a full range of strategic alternatives.’ It has retained Guggenheim Securities as a financial adviser.” (Fortune)
Securing Liquidity for Transitional Asset Projects “While fears in certain segments of the capital markets seem to have abated in the second quarter, many of the ‘easy’ credit terms available for complex assets in 2015 have tightened, resulting in liquidity constraints in the bridge lending space. This market pivoting has posed challenges to holders of non-cash-flowing assets in particular, leading many sponsors to ask: How can we ensure funding when seeking project development bridge loans in today’s capital markets?” (Commercial Property Executive)
What Makes Starwood’s Barry Sternlicht Tick? “In the late 1990s, shortly after Barry Sternlicht, the head of Starwood Lodging Trust (and Starwood Capital Group), went through a dramatic and highly public purchase of ITT Corporation (the conglomerate perhaps best known for Sheraton Hotels), he decided he didn’t want to keep one of the assets: Caesars Palace in Las Vegas. Although he was still in his 30s (he’s now 55), Mr. Sternlicht had done deals with many of the wealthiest and most successful figures in real estate from Sam Zell of Equity Group Investments to the Ziff and Burden families.” (Commercial Observer)
U.S. Hotels Located in Oil, Gas Regions Continue to Struggle in 2016 “According to a new study by STR’s consulting & analytics division, U.S. hotel tracts dependent on the oil and gas industry continue to see weakened demand as a result of low oil prices. In addition, hotel supply in these regions continues to grow at a strong pace. Of STR’s 630 U.S. hotel tracts, 39 submarkets (see list below) are identified as being primarily driven by the oil and gas industry. Of those 39 submarkets, 20 account for the vast majority of hotel rooms and accommodated demand.” (World Property Journal)
Walmart brings back greeters at the store door — Those smiley door greeters are back at Walmart. The nation’s largest retailer said this week that it’s bringing back door greeters to a majority of its 5,000 stores by mid-summer to improve customer service. For stores which have been selected as higher risks for thefts, Walmart will position a “customer host,” who will not only greet customers but also check receipts to prevent theft. The rollout follows a successful pilot program. Four years ago, the discounter decided to remove the workers at the front of the store and relocated them to other areas.