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.
Friday, the Dow Jones industrial average fell 312.78 points, or 1.9%, to 16,001.89. The Standard & Poor’s 500 index fell 49.57 points, or 2.6%, to 1,881.77. The NASDAQ composite fell 142.53 points, or 3%, to 4,543.97.
U.S. crude fell $1.27 to close at $44.43 a barrel in New York. Brent Crude, a benchmark for international oils used by many U.S. refineries, fell $1.26 to close at $47.34 in London. Wholesale gasoline fell 4.7 cents to close at $1.349 a gallon. Heating oil fell 4.5 cents to close at $1.477 a gallon. Natural gas fell 0.1 cent to close at $2.563 per 1,000 cubic feet.
Discounts in U.S. Property Stocks Set Stage for Buyout Spree “Real estate investment trusts-- companies that own properties such as luxury hotels, office towers and shopping malls -- are trading at an almost 15 percent discount to what investors would pay for buildings individually, according to Green Street Advisors LLC. The gap, the biggest in five years, has been growing since May, pushing the odds of REIT buyouts to the highest since 2006, the property-research firm’s data show.” (Bloomberg)
Amazon Announcing Creation of Tech Hub in Detroit “The online retailer Amazon.com is to announce today that it plans to build a technology hub in downtown Detroit with the creation of more full-time technology jobs. Amazon currently leases space on one floor in the 150 W. Jefferson office tower downtown where about 100 employees work on software development, engineering and advertising sales. Amazon will be expanding that space to multiple floors in early 2016.” (Detroit Free Press)
Wall Street’s Big Bet on Housing Isn’t Paying Off “Earlier this week, two of the bigger residential real estate investment funds, Sternlicht’s Starwood Waypoint Residential Trust and Barrack’s Colony American Homes, announced they were merging, in part because neither of them were big enough to make it on their own. The terms of the deal should give other housing market investors pause. The merger values Colony at $1.5 billion, or about 50% of what it paid for its 18,000 homes and other assets, minus debt.” (Fortune)
Albertson’s to Raise Up to $1.84 Billion in IPO “Grocery giant Albertsons Cos. on Friday said it expects to raise up to $1.84 billion in its initial public offering, months after private-equity firm Cerberus Capital Management LP combined Albertsons with Safeway Inc. The Boise, Idaho-based company, whose store banners also include Tom Thumb and Jewel Osco, set the proposed maximum offering size in a regulatory filing after first setting its IPO in motion in July.” (MarketWatch)
Millennials Face Tough Obstacles to Buying a Home “Members of the millennial generation, most in their 20s and 30s now, are wading into the real estate market, chasing the same dream of homeownership as their parents and grandparents. But weighed down by debt — particularly student loans — paying sky-high rents that make it difficult to save, and facing limited housing stock that is pushing prices to record levels in some communities, many are finding only frustration.” (Boston Globe)
Big Chinese Developers Plans Apartment And Retail Complex in Hollywood “One of China's largest developers plans to build a $125-million apartment and shopping complex in Hollywood — marking the expansion of mainland Chinese builders in the Los Angeles area beyond downtown and Beverly Hills. Gemdale Corp. has formed a partnership with LaTerra Development of Los Angeles to erect a six-story residential and retail complex on Western Avenue near Sunset Boulevard.” (Los Angeles Times)
How a REIT King Lost His Empire “It was late October 2013 and Nicholas Schorsch was riding high. After a bruising campaign to acquire Cole Real Estate Investments, he had won his prize. The acquisition of Cole capped one of the most aggressive and feverish buying binges in retail real estate history. In just two years, one of the firms he headed, American Realty Capital Properties Inc., had made at least five major acquisitions, costing $8.8 billion in total.” (Crain’s New York Business)
Blackstone Bullish on Midtown—Despite Hudson Yards “With 6 million square feet of office space in the works at Hudson Yards alone, more and more investors are ringing the alarm bells over an oversupply that could bring down office prices across Manhattan. But not Blackstone. Although Blackstone sold three trophy office properties in Manhattan this year for a total of more than $3 billion, the private equity giant has continued to invest as well.” (The Real Deal)
Wakefern, Morton Williams Make A&P Bids “A&P on Friday disclosed that Wakefern Food Corp. has been designated as a “stalking horse” for a package of 12 A&P and Pathmark stores set for auction. Wakefern, the cooperative wholesaler behind the ShopRite brand, has bid $40 million for A&P stores in Danbury, Conn., and Lagrangeville, N.Y.; two Pathmark stores in New York (Bethpage and New Hyde Park); a Waldbaums store in Deer Park, N.Y.; and seven Pathmark stores in Pennsylvania.” (Supermarket News)
Developer to Erect Super-Pricey Condo Tower on Controversial Mosque Site Near Ground Zero “It's been four years since Manhattan developer Sharif El-Gamal shelved plans for a 15-story Islamic cultural center, near Ground Zero, that drew international debate. He's looking to attract a different kind of attention for his current project on the site. Mr. El-Gamal's Soho Properties has proposed a 667-foot condominium tower at lower Manhattan's 45 Park Place.” (Crain’s New York Business)
US consumer spending up 0.4% in August — U.S. consumer spending rose at a healthy rate in August, while income growth slowed after a big jump in July. Consumer spending advanced 0.4% compared to July, when spending also increased by 0.4%, the Commerce Department said Monday. In both months, the figures reflected strong gains in purchases of durable goods such as autos. Consumer spending accounts for two-thirds of economic activity, and the latest result supports expectations for it to remain strong in the second half of this year. That should help serve as a buffer against a global slowdown that has hurt American manufacturers.
US pending home sales fall in August — Fewer Americans signed contracts to buy homes in August, as pending sales slumped amid broader concerns about the U.S. stock market and global economy. The National Association of Realtors said Monday its seasonally adjusted pending home sales index fell 1.4% to 109.4 last month. Signed contracts to purchase homes have climbed a healthy 6.1% over the past 12 months, aided by steady job growth and low mortgage rates. The August figured indicate that home sales lack the stamina to keep accelerating. Uncertainty in the financial markets and rising prices for homes are stirring doubts about affordability for many would-be buyers. (ABC)
Alcoa splitting into 2 companies — Alcoa will split into two independent companies, separating its bauxite, aluminum and casting operations from its engineering, transportation and global rolled products businesses. The century-plus-old metals maker has been dealing with a downturn in its smelting business because of lower aluminum prices. The split will create one company focusing on upstream products, including aluminum. The other company will focus on engineered products, which includes the automotive and aerospace segments. The split is part of a wider movement by companies to spin off units in a bid to boost shareholder value. Often, the strategy helps free the stronger part of a company’s business from a weaker segment. (USA Today)