Real Estate Daily News Buzz November 2, 2015
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 92.26 points, or 0.5%t, to 17,633.54. The Standard & Poor’s 500 index shed 10.05 points, or 0.5%, to 2,079.36. The NASDAQ composite index gave up 20.53, or 0.4%, to 5,053.75.
Benchmark U.S. crude rose 53 cents, or 1.2%, to $46.59 a barrel in New York. Brent crude, which is used to price international oils, advanced 76 cents, or 1.6%, to $49.56 a barrel in London. Wholesale gasoline rose 5.5 cents, or 4.1%, to $1.405 a gallon. Heating oil picked up 2.5 cents, or 1.7%, to $1.499 a gallon. Natural gas rose 6.4 cents, or 2.8%, to $2.321 per 1,000 cubic feet.
Deutsche Bank Cuts Back to Its Roots “Execution, not strategy, is the problem. So said Deutsche Bank chief John Cryan as he unveiled an overhaul that includes thousands of job cuts and no dividend for two years. Areas to be pruned back, though not cut entirely, include emerging- market bonds along with over-the-counter interest rate and credit trading. The bank will invest a little in servicing hedge funds, commercial property lending and traditional advisory work on mergers and acquisitions and equity raising.” (Wall Street Journal)
Thirty Five Years and $7 Billion Later, World Trade Center Rebuilding Expected to Finally Pay Off “The World Trade Center site will pay for itself in two decades, according to a new report by New York University. NYU’s Rudin Center, which focuses on transportation and infrastructure, released a study Thursday showing that the Port Authority of New York and New Jersey will be able to recoup the nearly $7 billion it is anticipated to invest in the rebuilding of the 16-acre site.” (Crain’s New York Business)
Detroit Natives Wary as Recovery Threatens to Push Them Out “Residents and business owners who stuck with Detroit through the economic bad times fear they could be priced out during the city’s recovery as property values and rents creep up. Detroit is among several large urban communities experiencing a mini-boom as developers see potential where there once was neglect and abandonment.” (Crain’s Detroit Business)
CalPERS Expected to Close Sale of $1 Bln Private Equity Portfolio “The California Public Employees’ Retirement System was expected to complete the sale of a portfolio of private equity interests valued at about $1 billion, according to a person with knowledge of the transaction. It’s not clear if the transaction closed yet. The sale included multiple buyers, rather than one large buyer, as has been the case with large portfolio deals recently, the person said.” (PE HUB)
Fairway Slumps as Epicure Options Grow “The New York supermarket wars are just one of Fairway’s problems. A leveraged buyout of the chain by a private equity firm has contributed to a heavy debt load of $250 million. An overambitious store-opening strategy — it vowed to open 300 stores across the country — drained its cash flow and has caused ratings agencies to downgrade its debt. Its stock has plummeted, declining 86 percent since it went public in 2013.” (New York Times)
Clues to What Makes Bill Ackman Tick Unveiled in His Family Tree “Bill Ackman didn’t let an investor’s call he had to prepare for get in the way of a family celebration. The event raised more than $2 million for the Center for Jewish History, where the Ackman family and the family of Larry Ackman’s business partner, Simon Ziff, have the genealogy institute named after them. Larry said the institute helped the Ackmans assemble an extensive family tree. Prior to working with their researchers, he’d only known details back to his grandfather.” (Bloomberg)
3.5M SF Up for Sale in Midtown East If Steering Committee Recommendations Get the OK “The owners of landmarks throughout the east side of Midtown are about to see the market open up for their 3.5 million square feet of air rights. A steering committee made up of elected officials and community groups has released its much-anticipated recommendations to rezone the Midtown East area. There will be two options for increased zoning, if the plan is approved.” (Commercial Observer)
Even Burkle Can’t Save Grocer as Fresh & Easy Falls Again “Billionaire Ron Burkle couldn’t save Fresh & Easy Neighborhood Market Inc. from joining A&P, Pathmark and Food Emporium as the newest victim of a super-heated U.S. supermarket business dominated by Whole Foods Market Inc. and Trader Joe’s Co. Burkle’s Yucaipa Cos. bought the grocery chain out of bankruptcy two years ago from Tesco Plc, the U.K.’s biggest retailer, which retained a stake.” (Bloomberg)
How Stuy Town Was Won “The agreement, touted by Mayor Bill de Blasio as a ‘great victory’ for middle class New Yorkers, is the biggest single deal to preserve affordable housing in the city’s history. It has made Blackstone, a private equity giant, a darling of tenant advocates and left-wing politicians and is, according to U.S. Sen. Chuck Schumer, ‘proof that a company can do well by doing good.’ How on earth did we get here?” (The Real Deal)
Strength of Class-B Among Main Takeaways of EQR-Starwood “The portfolio includes a mix of mid-rise and garden-style apartment buildings in five states, with major concentrations in South Florida; Denver; Washington, D.C.; Seattle; and the Inland Empire, Calif. ‘These assets would generally be described as older, mostly suburban in nature, with limited access to public transportation services,’ said EQR CEO David Neithercut on the company’s earnings call.” (Multifamily Executive)
SEC opens door to startup investing for all — A new form of crowdfunding is coming soon that will allow startups to raise money by selling stock to Main Street investors. The Securities and Exchange Commission on Friday adopted rules implementing a 2012 law that opened the door to securities crowdfunding. For years, artists, charities and entrepreneurs have used the power of the Internet to generate money for projects. Starting in mid-2016, businesses will be able to offer investors a piece of their company by legally selling stock online.
Valeant cutting ties with Philidor — Valeant Pharmaceuticals, a company that has come under intense scrutiny for its drug prices, has cut ties with Philidor following accusations that it was a “phantom pharmacy” used solely to artificially boost sales. Valeant said Friday that the mail-order pharmacy has informed the company that it will shut down as soon as possible. The imminent end of Philidor comes just hours after the nation’s two largest pharmacy benefit providers, CVS Health and Express Scripts, said that they had ended all interactions with the company citing its business practices. UnitedHealth Group conducted an audit of Philidor in late 2014 and began cutting ties with the company “in the interests of our customers.”
Fed official: Central bank has made no decision on rate hike — A voting member of the Federal Reserve cautioned Friday that the Fed has yet to decide when to raise interest rates even though it issued a statement this week that said a rate hike was possible in December. John Williams, president of the Fed’s San Francisco regional bank, said he wants to study more economic data in coming weeks before deciding whether the economy is strong enough for the Fed to raise its key short-term rate from a record low. Williams said the Fed decided to say it could decide at its next meeting to avoid surprising investors.
China’s new baby policy lifts kid stocks, sinks condom maker — Shares of companies that make diapers, baby strollers and infant formula got a boost Friday from China’s decision to scrap its one-child policy. But for the maker of a popular brand of condoms, it was not the brightest of days. Investors are betting on a bump in sales for companies with child-related businesses after China’s Communist leaders announced that all married couples would be allowed to have two children. The economic waves travelled as far afield as New Zealand, where the currency of the dairy exporting country surged. But shares of Japanese condom maker Okamoto Industries Inc., a favorite of Chinese visitors to Japan, slumped 10 per cent in Tokyo.
US stocks slip but finish month with biggest gain in 4 years — The stock market drifted lower Friday but finished October with its biggest monthly gain in four years. U.S. government economic data released Friday and earlier this week suggests the economy is still sluggish, stuck in a pattern of gradual but uneven growth it has followed since the Great Recession. But the outlook for future growth improved and fears waned that a slowing Chinese economy would send the U.S. economy into a tailspin. Strong corporate earnings in some sectors, like health care and telecommunications, also helped propel the market all the way back to positive for the year after a swoon in August and a rocky September.
US consumer spending records weakest gain in 8 months — Consumer spending in September posted the smallest gain in eight months, a sign that shoppers grew cautious at the end of the third quarter. Americans increased their spending just 0.1%, the Commerce Department said Friday, the weakest showing since they cut spending in January. Income growth inched up 0.1%, which was the smallest amount in four months. Still, spending totals can be influenced by price changes, and falling gasoline costs last month were a big reason for the weaker spending figure. Adjusted for inflation, consumers spent 0.2% more in September.
US paychecks rise at modest 0.6 per cent pace in 3rd quarter — U.S. workers’ paychecks grew at a moderate rate over the summer, showing little sign of accelerating from the sluggish growth that has persisted since the recession ended. The employment cost index, which tracks wages, salaries and benefits, rose 0.6% in the July-September quarter from the April-June quarter, the Labor Department said Friday. That is stronger than the second quarter’s 0.2% gain. Yet in the past 12 months, pay and benefits have risen just 2%. That’s below the 3.5% to 4% typical of a healthy economy.
Chevron cutting up to 7,000 jobs as oil profits shrink — Chevron is cutting up to 7,000 jobs, or 11 per cent of its workforce, the latest indication of the toll that low oil prices are taking on the industry. The two biggest U.S. oil companies reported huge profits for the third quarter. Chevron Corp. said Friday that it earned $2 billion, and Exxon Mobil Corp. earned more than $4.2 billion. But those profits are down sharply from a year ago. Chevron’s profit was 64% lower than last year’s third quarter; Exxon’s profit fell 47%, its worst third quarter since 2003.
Fed looks at way to shift big-bank losses to investors — Federal regulators are proposing that the eight biggest U.S. banks build new cushions against losses that would shift the burden to investors. The Federal Reserve’s proposal put forward Friday means the mega-banks would have to bulk up their capacity to absorb financial shocks by issuing equity or long-term debt equal to prescribed portions of total bank assets. The idea is that the cost of a huge bank’s failure would fall on investors in the bank’s equity or debt, not on taxpayers.
HP, a Silicon Valley icon, is ready for its break-up — One of the nation’s most storied tech companies will split in two this weekend, another casualty of seismic shifts in the way people use technology. Hewlett-Packard was an early pioneer of what became the model for Silicon Valley startups: Founded in 1939 by two Stanford graduates in a garage, HP was long celebrated for its engineering know-how and laid-back corporate culture. It made hefty profits as it grew into a multinational giant. But after struggling to keep pace with recent trends like the rise of smartphones and cloud computing, HP’s board decided to create two smaller companies, each with a narrower focus.