Real Estate Daily News Buzz September 14, 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.

Tuesday, the Dow Jones industrial average gave up 258.32 points, or 1.4 per cent, to 18,066.75. The Standard & Poor’s 500 index fell 32.02 points, or 1.5 per cent, to 2,127.02. The NASDAQ composite lost 56.63 points, or 1.1 per cent, to 5,155.26.

U.S. crude fell $1.39, or 3 per cent, to $44.90 a barrel in New York. Brent crude, the benchmark for international oil prices, slid $1.22, or 2.5 per cent, to $47.10 a barrel in London. Wholesale gasoline lost 1 cent to $1.38 a gallon. Heating oil sank 2 cents to $1.42 a gallon. Natural gas fell 1 cent to $2.91 per 1,000 cubic feet.

The apartment markets that were hurt the most by the housing crash are now experiencing steady growth. “All of these markets now are posting very healthy job growth that is helping to stimulate solid demand for apartments,” says Greg Willett, chief economist for RealPage Inc., a provider of property management software solutions. As moving trucks continue to head South, populations in towns across the Sun Belt are growing—and apartment rents are rising. (NREI)

US budget deficit totals $107.1 billion in August — The federal government recorded a deficit of $107.1 billion in August, slightly lower than the July deficit. But the imbalance through 11 months of this budget year is up sharply from a year ago, reflecting higher spending and lower-than-expected tax revenues. The Treasury Department said Tuesday that the deficit, with just one month to go in the budget year, totals $620.8 billion, up 17.1 per cent from the same period a year ago. The August deficit was slightly lower than the $112.8 billion imbalance in July. The Congressional Budget Office last month revised its estimate for the 2016 deficit up sharply to show an imbalance of $590 billion. That was up from a March projection of $534 billion. The budget year ends on Sept. 30 and September is expected to show a surplus.

Capital, Shipping Flows Likely to Buoy Development in U.S. Southeast “Although the Federal Reserve Board is expected to raise interest rates, many macroeconomic trends continue to favor U.S. commercial real estate as an asset class, Jimmy Hinton, a managing director of research at Holliday Fenoglio Fowler—a large provider of commercial real estate and capital markets services to the U.S. commercial real estate industry—told attendees at a ULI South Carolina capital markets conference held on Kiawah Island in September.” (Urban Land Magazine)

Pay Rises for Local REIT Bosses “Rising rents and occupancies boosted the fortunes of local real estate investment trusts last year—and of their top brass, too. Six of eight Chicago-area REIT CEO’s took home bigger paychecks in 2015 than they did a year earlier, according to company proxy statements. The king of the hill by far: Sandeep Mathrani, CEO of General Growth Properties, whose total compensation jumped eightfold, to $39.2 million, from 2014. Mathrani, 54, was not only the highest-paid local REIT executive last year, but he was also the highest-paid REIT CEO in the entire country.” (Chicago Real Estate Daily)

Bubbles, Credit and Their Consequences “The collapse of an asset price bubble usually creates a great deal of economic disruption. But bubbles are hard to anticipate and costly to deflate. As a result, policymakers struggle to determine how they should respond, if at all. Evaluating the economic costs of past equity and real estate bubbles—with particular attention to how much credit grew during boom phases—can provide valuable insights for this debate. A recent study finds that equity bubbles are relatively benign. More danger comes from housing bubbles in which credit grows rapidly.” (Federal Reserve Bank of San Francisco)

CPPIB Names Head of New Real Assets Group; Private Investments Leading Joining Carlyle “Graeme Eadie was named senior managing director and global head of real assets at the Canada Pension Plan Investment Board, Toronto, which manages the assets of the C$287.3 billion ($221.1 billion) Canada Pension Plan, Ottawa, said a news release from the board. Real assets is a new department for the investment board, combining the real estate investments group with the agriculture and infrastructure groups. Mr. Eadie previously was senior managing director and global head of real estate investments.” (Pensions & Investments)

The Markets Where the Cost to Rent a Home is Rising Fastest “Rents for single-family homes are rising across the country, according to RentRange, a housing industry data provider, which has identified the 25 metro areas where the average rent rose the most in the 12 months ending June 30. Of the top 25, five are in California and five in Florida, led by Cape Coral, Fla., where single-family rents rose 26.1% over the 12-month span. In these states home sale prices are also rising faster than the national average, making it harder for would be buyers to take the ownership plunge.” (Forbes)

Mack-Cali to Buy Back $250M in Debt, Refi 101 Hudson in JC “Mack-Cali Realty Corporation wants to buy back $250 million worth of high-yield debt early as part of an effort to reduce its financing costs, the real estate investment trust announced Monday. The company sent investors a tender offer to buy senior unsecured notes carrying an interest rate of 7.75 percent that don’t expire until 2019. Michael DeMarco, president of Mack-Cali, told The Real Deal that the firm plans to refinance the notes with a new $250 million mortgage on its Jersey City office building at 101 Hudson Street, at a floating rate of currently around 3 percent.” (The Real Deal)

Wal-Mart’s Market Share Gain is Target’s Loss, Analysts Say “Wal-Mart Stores Inc. is poised to “regain retail dominance,” while Target Corp. is losing share to Wal-Mart in grocery, according to Cowen & Co., prompting a Wal-Mart upgrade to outperform and a Target downgrade to market perform. ‘Bottom line, we see Wal-Mart continuing to gain share at the expense of Target and retail peers,’ Cowen wrote in a note published Monday. Cowen analysts believe Target is facing a number of challenges, notably, the lack of ‘fill-in trips’ by consumers.” (MarketWatch)

Despite Safety Push, Many Worksite Deaths Go Uncounted “In July of last year, a construction worker collapsed on a project in Williamsburg, Brooklyn, after working a full shift in sweltering heat. The death of Alton Louis, a young father, triggered action from federal workplace-safety officials, but was not probed by the city’s buildings or investigation agencies. In fact, the tragedy did not even make the city’s official tally of construction deaths in 2015. That was hardly unusual.” (Crain’s New York Business)

Vornado Closes $675M Refi of Iconic Chicago Building “Vornado Realty Trust recently announced it has completed the $675 million refinancing of theMART building in Chicago. The five-year, interest-only loan has a fixed rate of 2.7 percent. Vornado realized approximately $124 million in net proceeds after repaying the existing 5.57 percent, $550 million loan and closing costs. Also known as Merchandise Mart, the iconic art deco building located at 222 Merchandise Mart Plaza totals 4.2 million square feet of space, including approximately 3.6 million rentable square feet.” (Commercial Property Executive)

Cornerstone Puts Tower at 551 Madison Avenue Up for Sale “Asset management firm Cornerstone Real Estate Advisers, now known as Barings following a $275 billion merger Monday, is looking to sell the 150,000-square-foot office-and-retail building it owns at 551 Madison Avenue, sources told The Real Deal. The asking price wasn’t clear, but sources said Barings could be looking to get north of $180 million at a minimum. Connecticut-based Cornerstone paid $128 million in 2012 to buy the 17-story building at 551 Madison Avenue from LaSalle Investment Management.” (The Real Deal)

Wells Fargo cutting sales goals in wake of $185 million fine — Wells Fargo will cut its aggressive product sales goals for retail bankers, as it faces $185 million in fines and a damaged reputation after allegations that it opened millions of unauthorized accounts to meet those targets. The sales goals will be eliminated by Jan. 1, the San Francisco-based bank announced Tuesday. That doesn’t end the matter, though, as Wells Fargo’s chief executive has been called to appear before the Senate Banking Committee next week to answer questions about the bank’s sales practices. Wells Fargo has long been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm that did not get into the poisonous behaviour of its Wall Street counterparts. (AP)

NOTICE is hereby given that the Town of Sahuarita Planning and zoning commission will hold THE FOLLOWING public hearing on monday, october 3, 2016, at or after 6:00 p.m. to consider: A zoning code text amendment to Sahuarita Town Code Chapter 18.79 (Sign Standards), sections 18.79.030 (General Development Standards), 18.79.040 (Prohibitions), 18.79.100 (Permitted Signs by Zone), and 18.79.240 (Electronic Message Sign), the purpose of which amendment is to allow electronic message signs and providing development standards and review processes related to such signs (Case No. SA8-15-00001) The purpose of this code amendment is to allow electronic message signs, subject to certain criteria, as a part of a monument sign. The signs would be permitted in commercial zones and as a conditional use in residentially zoned areas. The public hearing will be held at the Town Council Chambers, 375 W. Sahuarita Center Way.  Interested persons may appear at the public hearing in person, by agent or attorney.  All persons will be given an opportunity to speak. For additional information, please contact Sarah More, Town of Sahuarita Planning and Zoning Division at (520) 822-8853.