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 lost 46.23 points, or 0.3 per cent, to 18,479.91. The Standard & Poor’s 500 index slid 4.86 points, or 0.2 per cent, to 2,181.30. The NASDAQ composite index fell 24.44 points, or 0.5 per cent, to 5,259.48.
Benchmark U.S. crude rose $2.12, or 4.7 per cent, to close at $47.62 a barrel in New York. Brent crude, used to price international oils, gained $2.01, or 4.2 per cent, to $49.99 in London. In other energy trading, wholesale gasoline rose 7 cents, or 5.2 per cent, to $1.42 a gallon. Heating oil added 6 cents, or 3.9 per cent, to $1.48 a gallon. Natural gas rose 13 cents, or 4.9 per cent, to $2.81 per 1,000 cubic feet.
Wells Fargo fined $185 million for improper account openings — California and federal regulators fined Wells Fargo a combined $185 million on Thursday, alleging the bank’s employees illegally opened millions of unauthorized accounts for their customers in order to meet aggressive sales goals. The San Francisco-based bank will pay $100 million to the Consumer Financial Protection Bureau, $35 million to the Office of the Comptroller of the Currency and $50 million to the City and County of Los Angeles. It will also pay restitution to affected customers. It is the largest fine the CFPB has levied against a financial institution and the largest fine in the history of the Los Angeles City Attorney’s office. (AP)
Pair of Non-Traded REITs Combining in $1.4 Billion Transaction “In a further consolidation of non-traded REITs sponsored by once high-flying AR Global, American Finance Trust Inc. (AFIN) approved the acquisition of all of the outstanding common stock of sister REIT American Realty Capital - Retail Centers of America Inc. (RCA) for $1.4 billion. The two companies said the transaction creates a diversified REIT with a retail focus with an enterprise value of $3.9 billion. Together, the two firms own 494 properties totaling 20.8 million rentable square feet.” (CoStar News)
European Central Bank: Governments must do more for economy — The European Central Bank left its stimulus measures on hold Thursday and warned governments in the 19 country euro currency union that they need to do more to help the economy grow and push up inflation to healthier levels. The bank kept its key interest rates unchanged and decided against extending the duration of its existing bond-buying stimulus program. Bank President Mario Draghi seemed relatively confident about the economy and less inclined to hint at more stimulus than some analysts had expected. (AP)
Chicago’s ‘Toblerone’ Tower Will Be Highest in the World Designed by a Woman “Jeanne Gang’s glass ceiling reaches 93 stories in height. She broke that barrier when construction began Wednesday on the renowned Chicago architect and MacArthur fellow’s Vista tower, a 1,144-foot, 93-story hotel and condominium development projected to be the tallest building in the world designed by a woman. Vista would be the third-tallest building in Chicago, exceeded only by Willis Tower (formerly Sears Tower and for decades the world’s tallest building) and a relatively recent addition to the Chicago River’s edge, Trump International Hotel & Tower.” (MarketWatch)
Applications for unemployment benefits slipped last week — Fewer Americans applied for unemployment benefits last week, another sign the U.S. job market remains healthy despite a downshift in hiring last month. The Labor Department said Thursday that the number of applications for jobless aid slid by 4,000 last week to a seasonally adjusted 259,000, lowest since mid-July. Weekly claims have come in below 300,000 for 79 straight weeks, longest streak since 1970. The less volatile four-week average slipped by 1,750 last week to 261,250. The number of people collecting unemployment checks has fallen more than 5 per cent from a year ago to 2.14 million. (AP)
Kroger May Be a Buyer for Walgreens, Rite Aid Stores “Shares of Kroger were lower Wednesday. The supermarket chain has emerged as a buyer for stores of Rite Aid. The drugstore chain is close to being acquired by Walgreens Boots Alliance, but Rite Aid would have to sell off overlapping assets in order to appease regulators. Kroger looks to be the potential buyer for all of Rite-Aid's overlapping stores considering that it is well capitalized and has experience running pharmacies in its stores.” (The Street)
Commercial Real Estate: The King Kong of Category Killers “Followers of CRE quickly learned to distinguish between the top ‘A’, middle ‘B’ and bottom tier ‘C’ malls. There was also a ‘D’ category, which gallows humor quickly branded ‘death malls.’ The Reader’s Digest version of what was to come consisted of predictions that a choice few of the swankiest outfits surviving while the rest were left to rot and eventually die off, or as mentioned, come back in another form. Innovative incarnation ideas include indoor sports venues, charter schools, residential communities, movie production studios, and the king of irony, fulfillment centers for online vendors.” (ValueWalk)
15 Years After 9/11, Larry Silverstein Finally Recreated WTC “While Larry Silverstein was still in the process of acquiring the Twin Towers in early 2001, the then 69-year-old was walking along Madison Avenue when he was struck by a vehicle, breaking his pelvis. He called his team into the hospital and asked his doctors to cut the painkillers. ‘Because he was bidding on the World Trade Center, he had to be lucid,’ remembered Mary Ann Tighe, the chief executive officer of the tri-state region of CBRE. It would be difficult to think of a more troubling omen of what was to come.” (Commercial Observer)
Consumer borrowing grows by $17.7 billion in July — American consumers increased their borrowing in July, though the category that includes credit cards grew at the slowest pace since February. The Federal Reserve said Thursday that consumer borrowing rose by $17.7 billion in July, up from a $14.5 billion increase in June. Revolving credit, which covers credit cards, rose by $2.8 billion, down from $9.2 billion in June and least since February’s $2.2 billion. The category that includes auto and student loans increased by $14.9 billion, up sharply from June’s $5.4 billion gain. (AP)
If It LEEDs, It Bleeds (Money) “As far as trends among residential developers go, hyping an apartment building with its LEED certification may be going the way of the fedora. While buildings like Forest City Ratner’s 369-unit 80 DeKalb in Fort Greene and AvalonBay Communities’ 823-unit tower at 214 Duffield Street in Downtown Brooklyn were built to LEED status, others are more frequently shunning the design cabal and trailblazing their own sustainability standards.” (The Real Deal)
How Macy’s Store Closures Could Help Gap “Speaking at the Goldman Sachs Global Retailing Conference on Wednesday, Gap Inc CEO Art Peck suggested that the Macy’s closings could allow the company to exit malls that aren’t that attractive. The company, which operates the Old Navy and Banana Republic brands in addition to its namesake brand, has co-tenancy clauses in its contracts with mall operators like Simon Property Group and General Growth Properties that allow it get a cut in rent or break a lease, if an anchor tenant closes and traffic drops.” (Fortune)
US average 30-year mortgage rate declines to 3.44 per cent — Long-term U.S. mortgage rates edged lower this week. As rates remain at historically low levels, homeowners taking advantage of the chance to refinance their mortgages have pushed up refinancing activity. Mortgage giant Freddie Mac said Thursday the average for the benchmark 30-year fixed-rate mortgage declined to 3.44 per cent from 3.46 per cent last week. The average rate is down from 3.90 per cent a year ago, and is close to its all-time low of 3.31 per cent in November 2012. The 15-year fixed mortgage rate eased to 2.76 per cent from 2.77 per cent.
Developer Pitches Alternative to Affordable-Housing Units at Chelsea Project “The developer of a project in Chelsea floated a compromise at a City Council hearing Wednesday that would exclude its mixed-use development from complying with a de Blasio administration policy passed last year. Instead, Acuity Capital Partners has offered to provide money to build affordable housing in other parts of the city. The proposed 66-unit development, along West 18th Street between Fifth and Sixth avenues, has become one of the first battlegrounds of Mayor Bill de Blasio's new policy designed to spur the creation of lower-cost housing.” (Crain’s New York Business)
Divorce, Real Estate Style “Six months into 2016, and 57 years into his marriage, billionaire real estate mogul Harry Macklowe reportedly told his wife, Linda, that he would be leaving her for 60-year-old Patricia Landeau, his French girlfriend of two years. Landeau, who Macklowe was allegedly hiding in Macklowe Properties-owned 737 Park Avenue, was also married. For whatever reason, Macklowe decided that then was the time to publicly say ‘bonjour’ to a new life, ruffling socialite feathers in the Hamptons via his appearances with his new amour.” (Commercial Observer)
Can Bill Ackman Fix Chipotle? “Chipotle Mexican Grill Inc. has built a reputation over the years for being an atypical restaurant company. Bill Ackman is about to find out that it’ll be an atypical target for an activist investor. Ackman is one of Wall Street’s best-known activists. This week, as my colleague Lisa Jennings reported, Ackman’s Pershing Square Capital took a 9.9-percent interest in Chipotle. The move promises more headaches for the big burrito chain as it works to recover from the steep sales decline that has followed its food-safety crisis last year.” (Nation’s Restaurant News)