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.
Wednesday, the Dow Jones industrial average gained 15.54 points, or 0.1 per cent, to 18,144.20. The Standard & Poor’s 500 index picked up 2.45 points, or 0.1 per cent, to 2,139.18. The NASDAQ composite lost 7.77 points, or 0.1 per cent, to 5,239.02.
Benchmark U.S. crude oil slid 61 cents, or 1.2 per cent, to close at $50.18 a barrel in New York. Brent crude, the international standard, fell 60 cents, or 1.1 per cent, to close at $51.81 a barrel in London. Wholesale gasoline fell 2 cents to $1.46 a gallon. Heating oil lost 2 cents to $1.57 a gallon. Natural gas slid 3 cents to $3.21 per 1,000 cubic feet.
Chinese currency outflows are bigger than you think: Goldman “Currency outflows from China may be far bigger than previously thought, according to investment bank Goldman Sachs. Bloomberg had previously estimated that a net $550 billion had left China between January and August. But that figure only counts funds that are converted from yuan to U.S. dollars within China and then moved out of the country. According to Goldman Sachs, savers often move yuan out of the country and then convert them to dollars in offshore markets. Those transactions haven’t been included in counts of Chinese currency outflows. Goldman Sachs estimates that these offshore deals accounted for 56 and 87 percent of all outflows in July and August.” (The Real Deal)
Fed saw no-hike decision in September as ‘close call’ — Federal Reserve officials last month kept a key interest rate unchanged but saw the decision as a “close call.” Many believed that the case for a rate hike had strengthened in recent months. Minutes of the Sept. 20-21 meeting released Wednesday showed Fed officials were inching closer to hiking rates for the first time since last December. But they decided to hold off, given that inflation was still running below their 2 per cent target and there was little sign of rising wage pressures. The minutes said that some officials believed it would be appropriate to raise rates “relatively soon” if the labor market kept improving. (Washington AP)
Clinton wants to remove 1031 Exchange “Loopholes” “Tax experts say there’s good reason the tax code lets businesses and their owners deduct losses from future earnings — it encourages investment and smooths out bumps in the business cycle. The problem is when taxpayers can use loopholes to claim larger losses on their tax returns than they suffered in reality. ‘Real estate businesses are often in a tax loss position even as they’re making money,’ Burman said. Their property can increase in value while they can claim losses from wear and tear on the buildings. And rather than pay taxes on the increases on their property, developers can trade them with other businesses for no tax liability. Clinton would limit these ‘in-kind swaps’ to $1 million in assets annually. ‘Her plan would actually have more effect on the real estate business than Trump’s plan,’ Burman said. Trump’s plan could benefit his industry and family in another way. He’d allow so-called pass-through firms to pay taxes at the lower 15 percent rate. Currently those businesses — sometimes small, but sometimes large partnerships — pay at personal income tax rates. Tax experts say business owners like the Trumps could reincorporate firms to take advantage of the clause.” (The Washington Post)
US job openings fall to lowest level in 8 months — U.S. employers posted the fewest jobs in eight months in August, a sign job gains will likely remain modest in the coming months. The Labor Department said Wednesday job openings dropped nearly 7 per cent to 5.4 million. The data adds to recent evidence that hiring may be slowing a bit from the robust pace of the previous two years. Yet the economy is still generating enough jobs to lower the unemployment rate over time. And most economists have expected job gains to taper as the number of unemployed has dwindled. (Washington AP)
C&W says industrial real estate market continued strong pace in Q3 “It was another good quarter for the industrial real estate market in northern and central New Jersey, according to Cushman & Wakefield, but with one caveat…C&W said overall net absorption reached 13.2 million square feet for the year, which is a new annual high, with one quarter still remaining in the year. Meanwhile, vacancy for warehouse space ticked down to 4.5 percent, while the total development pipeline grew to 7.9 million square feet as 1.2 million square feet of industrial product was completed during the quarter and another 1.6 million square feet broke ground. The industrial market did fail to absorb space at the same pace as previous quarters, C&W said, but it registered 1.9 million square feet of occupancy gains in Q3, mostly in the central New Jersey submarkets. Overall industrial vacancy was flat at 5 percent.” (NJBiz.com)
Stanley Black & Decker buying Newell tools unit for $1.95B — Tool company Stanley Black & Decker Inc. is buying Newell Brands’ tools division for $1.95 billion in cash. The unit includes the industrial cutting, hand tool and power tool accessory brands Irwin and Lenox. Newell Brands Inc. announced recently that it will be selling several divisions as part of a consolidation move. This is Stanley Black & Decker’s first major acquisition since 2013. The transaction is expected to close in the first half of 2017. (New York AP)
Jim Beam union workers in Kentucky vote in favor of strike— Whiskey workers at two Jim Beam distilleries in Kentucky have threatened to walk off their jobs as efforts to ratify a new contract soured ahead of a deadline. Members of the United Food and Commercial Workers Local 111D voted Tuesday evening in favor of going on strike. The current contract runs through Friday, and Beam Suntory officials said production continued as usual Wednesday. The classic American whiskey brand is owned by Suntory Holdings Ltd., a Japanese beverage company. The company said it was trying to understand the reasons the proposal was turned down. (LOUISVILLE, Ky. AP)
Tesla, SolarCity shareholders to vote on merger next month — Tesla Motors CEO Elon Musk faces a referendum next month, as shareholders decide whether to support his vision and combine Tesla with solar panel company SolarCity Corp. Tesla and SolarCity announced Wednesday that shareholders will vote on the controversial proposal Nov. 17. It’s a proposal that would unite two companies on shaky financial ground as they plow into relatively new markets. One makes electric cars, the other installs solar panels. Neither is profitable. (PALO ALTO, Calif. AP)
Strata Equity Group Buys Southeast Residential Portfolio for $720M “Strata Equity Group acquired the 24-property Southeast Residential Portfolio (SERP) from an affiliate of DRA Advisors LLC for more than $720 million. CBRE Capital Markets facilitated the sale, which ranks as one of the largest multifamily transactions in 2016….SERP consists in 6,294 units located in suburban areas throughout 13 metros in Georgia, North Carolina, Tennessee and South Carolina. ‘We believe the long-term fundamentals of the apartment sector, particularly Class B product, remain healthy. Our investment in SERP reinforces that belief,’ Scott Wittman, Strata’s director of Investments, said in a prepared statement. The buildings were completed between 1985 and 2000, with 72 percent of the units being two- and three-bedroom apartments and a larger-than-average unit size of approximately 1,100 square feet. SERP has a long track record of rising rents and consistent occupancy. Over the last three years, net rental income has increased 12.2 percent, while averaging 95.3 percent occupancy.” (MultiHousing News)
LA Council approves a massive overhaul at Paramount Studios “Paramount Studios, the last major film studio based in Hollywood, is in for pretty thorough makeover after the LA City Council approved a plan Tuesday that will add nearly 1.4 million square feet of new floor space to the historic complex. Paramount has been hoping to redevelop its campus for some time, first unveiling plans for a 25-year overhaul back in 2011. The project approved by the city Tuesday calls for the demolition of more than 500,000 square feet of sound stages and office space that currently occupy the site. This will be replaced with numerous new structures, including a 150-foot office tower (five feet taller than the studio’s iconic water tower). Originally, plans called for the tower to reach 240 feet, but the city’s planning commission nixed that idea, siding with local residents who complained that the tower’s height would be wildly out of step with the surrounding area. Commissioners also rejected Paramount’s proposal to top the tower with a digital sign. According to the LA Times, the studio has also agreed to pay $475,000 to neighboring Council District 4 in order to address traffic issues raised by the project.” (Los Angeles Curbed)
Vornado’s LA selloff is part of company’s larger effort to slim down: Analysts “The sale of Vornado Realty Trust’s last remaining Los Angeles property will be another step towards consolidation and simplification for the New York-based REIT, sources told The Real Deal. The company’s decision to sell off the 43,000-square-foot Class A office property at 800 Corporate Pointe in Culver City is in line with its recent attempts to refocus its attention on New York office deals and tie up loose ends on anything that’s distracted from its core focus. ‘Roth is trying to simplify the company, make it more manageable, more focused and easier to understand,’ said Sandler O’Neill analyst Alex Goldfarb of the company’s CEO Steve Roth. ‘Having two or three random investments in L.A. doesn’t help that at all.’ As Vornado looks to refocus on New York, there is no competitive advantage to keeping property in L.A, Goldfarb said.” (The Real Deal)
In Jewelers Row in Philadelphia, Condo Plan Worries Preservationists “Among the oldest diamond districts in the country, the Jewelers Row section of this historic city has been a part of the engagement stories of couples in the region for generations. In the district, artisans and retailers have sold gems and jewelry since the mid-19th century, making it an unlikely cause for preservationists in the city, who in recent decades have focused on bringing new life to abandoned buildings. A plan by Toll Brothers City Living, a developer, to make way for 80 new residential units on the 700 block of Sansom Street, the center of Jewelers Row, is challenging some of the district’s businesses and is shifting priorities for activists in the city. Toll Brothers plans to demolish five three- and four-story buildings erected in the late 19th and early 20th centuries to build a 16-story condominium tower. It has promised to preserve the appearance of the street by building a new facade on the site of the demolished buildings. Demolition is scheduled to start in mid-2017, and construction is expected to take about two years.” (The New York Times)
Drybar’s Alli Webb On The Secrets To Her Blowout Chain’s $100 Million Success “As recently as seven years ago, longtime hairdresser Alli Webb was driving around Los Angeles in her 2001 Nissan Xterra, braving traffic to visit clients of her mobile blow dry service Straight at Home.Her trajectory since then has been staggering by any measure. Webb opened the first Drybar salon in Brentwood, Calif. in early 2010 with the help of a $250,000 investment from her brother. Today, the styling chain — it famously offers ‘no cuts, no color, just blowouts’ — comprises 65 salons across the U.S. and Canada. This year, Drybar is on track to do $100 million in revenues, up from $70 million in 2015 and $20 million in 2012, when Forbes first profiled Webb.” (Forbes)
Ross Stores continues aggressive expansion “The new locations round out the company’s expansion plans to add approximately 90 locations in 2016. ‘We entered two new states in October, with stores in North and South Dakota, and continued to expand dd’s Discounts by opening its first location in Colorado,’ said Jim Fassio, president and chief development officer. Looking ahead, Ross continues to see plenty of opportunity to expand its store base across both new and existing markets, and ‘remains confident that over the long-term, Ross Dress for Less can grow to 2,000 locations and dd’s Discounts can become a chain of 500 stores,’ Fassio said. The company currently operates 1,342 Ross locations in 36 states, the District of Columbia and Guam, along with 193 dd’s Discounts stores in 15 states.” (Chain Store Age)
Wells Fargo CEO John Stumpf steps down amid sales scandal — Wells Fargo’s embattled CEO John Stumpf is stepping down as the nation’s second-largest bank is roiled by a scandal over its sales practices. The San Francisco bank said Wednesday that Stumpf is retiring effective immediately and also relinquishing his title as chairman. It had earlier announced that Stumpf, the bank’s CEO since 2007, will forfeit $41 million in stock awards. Wells Fargo’s chief operating officer, Tim Sloan, will succeed Stumpf as CEO. Stephen Sanger, the bank’s lead director, will serve as the board’s non-executive chairman. (New York AP)
Closed US restaurants, damaged homes: Matthew may cost $10B — For a storm that inflicted less damage than many had feared, Hurricane Matthew nevertheless impaired or destroyed more than 1 million structures, forced businesses from Florida to North Carolina to close and put thousands temporarily out of work. In many affected areas, small-business owners were still assessing the damage. All told, the storm probably caused $10 billion in damage, according to an estimate from Goldman Sachs. Insurance companies will likely be liable for about $4 billion to $6 billion of that total, according to an estimate Saturday by CoreLogic, a real estate data provider.
Samsung sends fire-proof boxes for Galaxy Note 7 returns— Samsung Electronics said Wednesday it is sending fire-resistant packages to its customers in the U.S. as a precaution against possible fires or explosions from Galaxy Note 7s they return to retailers. Samsung is offering the prepaid shipping boxes as an option for U.S. consumers who purchased the phones on its website. Consumers who purchased their Note 7 phones from mobile carriers should visit the carriers’ websites for recall instructions. The company is discontinuing the Note 7 phones after two recalls and many reports of fires. Samsung must now deal with receiving back more than 1.5 million Galaxy Note 7 phones. (SEOUL, South Korea AP)