10 Must Reads for the CRE Industry Today (July 6, 2016)

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1. Which U.S. Banks Could Brexit Hurt Most? “The ‘too big to fail’ money center banks Bank of America (BAC) , Citigroup (C) , JPMorgan Chase (JPM) and Wells Fargo (WFC) will soon report earnings for the second quarter. It may be too soon for these banking giants to show any adverse effects of the United Kingdom's referendum to leave the European Union. However, guidance may reflect potential exposure to Brexit. Both Wells Fargo and Citigroup are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. According to SNL Financial, U.S. banks including Citigroup, JPMorgan and Bank of America are exposed to Brexit risk as shown in regulatory filings of financial data at the end of 2015. Banks must report exposures that exceed certain thresholds for deposit balances, securities, federal funds sold, and loans. The counter-party risk that is monitored includes banks, government agencies, insurance companies, investment banks and pension funds. S&P Global Market Intelligence analyzed this data to assess the exposure following the Brexit vote.” (The Street)
2. Trump's Favorite Real Estate Will Get Swallowed by the Ocean “The Guardian commissioned Coastal Risk Consulting to perform a risk analysis of Trump’s south Florida properties, and the future is, not surprisingly, bleak. South Florida faces some of the highest projected rates of sea level rise of any coastline, anywhere—up to 81 inches (205 cm) by 2100, according to NOAA. Many neighborhoods and beaches in the Miami metro area are now forced to deal with tidally-induced flooding on a regular basis. The danger posed by sea level rise is so clear that south Florida mayors and other elected officials are actively charting out survival and retreat strategies…Further south in Hollywood, Trump’s luxury condos are unlikely to fare much better: Bolter’s modelling suggests Trump’s Hollywood condos could be turned into islands for up to 140 days a year by 2045, cut off from the low-lying A1A coastal road because of tidal flooding and storm surges.” (Gizmodo)
3. 10 most expensive cities in America to have a child “Where you live has a huge impact on what it will cost to give birth. In cities across the nation, the cost for giving birth averages $8,775 for a routine vaginal delivery and $11,525 for a cesarean section, according to a report released by health care technology firm Castlight Health, which examined millions of medical claims, as well as information from insurance providers. These costs include prenatal office visits, required ultrasounds, delivery, hospital stays and one visit after delivery. In some cities, it costs drastically more. Giving birth is most expensive in Sacramento, Calif., costing $15,420 for a routine vaginal delivery and $27,067 for a cesarean. In San Francisco, the second most expensive place to give birth, it costs $15,204 for a routine vaginal delivery and $21,799 for a cesarean.” (MarketWatch)
4. Apollo Funds Engaged to Buy Diamond Resorts “Four months after establishing a committee to explore strategic alternatives to maximize shareholder value, Diamond Resorts International Inc. has found an alternative, and it’s a good one. The timeshare resort company has entered into an agreement to be acquired by affiliates of certain funds managed by Apollo Global Management LLC for $2.2 billion. David Palmer, CEO of Diamond Resorts, said in a prepared statement, ‘We have built a solid business focused on operational excellence, hospitality, and customer satisfaction, the result of which has been stellar financial results and strong cash generation. This transaction is an excellent outcome for our shareholders.’ Formed in 2007, Diamond Resorts is a noted player in the hospitality and vacation ownership industry, and it has the global resort network to prove it. The company’s 420-property, 13,000-unit portfolio of vacation destinations spans 35 countries, including the U.S., Canada and Mexico, as well as countries in Central America, South America, Europe, Asia, Australasia and Africa.” (Commercial Property Executive)
5. Ventas to acquire Wexford's real estate “Ventas Inc. said Tuesday will acquire the real estate assets of Wexford Science & Technology, whose properties include the @4240 building at Cortex in St. Louis. The $1.5 billion cash deal is for substantially all of Wexford's real estate assets from affiliates of Blackstone Real Estate Partners VIII LP, Ventas said. The portfolio of 23 properties totals 4.1 million square feet of space that are 97 percent leased, according to Chicago-based Ventas. Baltimore-based Wexford redeveloped @4240, formerly a telephone repair facility, as offices and science labs at the Cortex technology district. Ventas said as part of the acquisition it will enter into a long-term management agreement with Wexford.” (St. Louis Post-Dispatch)
6. Related projecting $1.7B sellout at 15 Hudson Yards “The Related Companies is seeking a $1.74 billion sellout at 15 Hudson Yards, one of the largest condominiums hauls ever recorded in New York City. The New York state Attorney General’s office approved Related’s condo offering plan June 2, meaning the building is now able to launch sales. The 88-story tower is slated to have 285 market-rate condos and 106 affordable units. The condo with the priciest sellout currently on the market is Vornado Realty Trust’s 220 Central Park South, with a projected sellout of $3.1 billion. A spokesperson for Related was not immediately available for comment on the specific unit prices.” (The Real Deal)
7. Pattern Energy Plans $269M NM Purchase  “San Francisco-based Pattern Energy Group has agreed to acquire interests in the 324-megawatt Broadview wind power facility outside Clovis, N.M., and an independent 35-mile transmission line for $269 million when the wind farm begins commercial operations next year. Pattern Energy will acquire the interests from its sister company Pattern Energy Group LP, a leading global power developer which operates as Pattern Development and has an extensive development pipeline. Pattern Energy has the right to make the first offers on Pattern Development’s projects. Pattern Development has closed financing and is beginning construction on Broadview, which is expected to begin operating in early 2017.” (Commercial Property Executive)
8. Charleston Area Gets First Luxury Condos Since ’07 “Tides IV, a Mt. Pleasant, S.C., luxury condominium from East West Partners, has now sold 32 of 54 residences for an average sales price of almost $1 million. The project is expected to be complete and open in early fall of this year. The luxury condominium market has blossomed in many other cities. But Tides IV is the first such project in the Charleston market since 2007-08. East West Partners reports there are no towering skyscrapers in Charleston for a number of reasons, including geography and regulatory statutes. That has left the luxury condo market dormant.  ‘There’s a little history to it, East West Partnership managing partner Miller Harper told MHN. ‘There were three very well-constructed condominium buildings along the waterfront in Mt. Pleasant before the recession. And they were called the Tides Community. Due to timing and more, 50 of the 120 residences remained unsold as the recession set in. Along with our partners, we got involved in repositioning those units in 2012 and 2013…We saw there was a pent-up demand for this lifestyle,” he continued. “Since no condominiums have been completed since 2007-08, we acquired the site next to those three buildings along the waterfront in Mt. Pleasant and began building Tides IV.” East West Partnership officials particularly liked the fact that in addition to Charleston residents seeing Tides IV as a primary residence, buyers from outside the area would be attracted to the development as vacation and retirement destinations. ‘It had all those drivers that attract us to what we call ‘urban resorts,’ Harper said.” (MultiHousing News)
9. Caruso taps Middlebrook to lead new innovation division  “Heralding it as first for real estate development companies, Caruso Affiliated CEO Rick Caruso announced the formation of a Strategic Development and Innovations division focused on helping retailers harness new technologies serve a complex and fluid customer base. ‘In a world that is changing so rapidly, we need an executive focused on long-term thinking, one that is not consumed by the crisis of the week, someone who observes trends in a wider visionary perspective,’ Caruso said. That someone is Caruso veteran Matt Middlebrook, executive VP of development the last five years and one-time deputy mayor of communications and policy under Los Angeles Mayor James Hahn. Middlebrook told Chain Store Age that no technology will go un-investigated during his tenure. He says Caruso has already been considering advanced parking technologies, geo-fenced loyalty rewards, enhanced security and safety initiatives, and advanced mobile technologies covering shopping assistance, delivery, payments, and smart home features. In his new undertaking, he will be collaborating with academics and online retailers, as well as tech companies.” (Chain Store Age)
10. Berkshire Group Lands 292-Unit Chicago Tower “The Berkshire Group has acquired Eight O Five N. LaSalle—a 32-story, 292-unit multifamily tower in Chicago’s buzzing River North district—from Smithfield Properties. Financial terms of the transaction have not been disclosed. The Berkelhamer Architects-designed tower features penthouse, studio, one- and two-bedroom units ranging from 538 to 1,350 square feet, according to data collected by Yardi Matrix. The building includes 4,000 square feet of retail space, 108 parking spaces and is conveniently located near train and bus lines. Amenities include a rooftop terrace with a swimming pool and green roof, fitness center, clubhouse, high-speed internet, private balconies and terraces and floor-to-ceiling windows.” (MultiHousing News)