- Vornado to Spin Off DC Portfolio in $8.4B Merger with JBG “Calling it a 'key milestone' in its value creation strategy, Vornado Realty Trust is spinning off its Washington, D.C.-area portfolio and merging it with The JBG Cos. in what will be a regional commercial real estate 'powerhouse' worth $8.4 billion. In the tax-free spin-off, Vornado will merge the business known as Vornado/Charles E. Smith with the operating company and certain assets of JBG, a leading Washington, D.C., real estate company that controls more than 22 million square feet of urban-infill commercial and multifamily properties and a valuable land bank for future development. The combined company will be named JBG Smith Properties and will the largest, market-leading, best-in-class, pure-play Washington, D.C., real estate company with 79 assets, including 50 office properties totaling about 11.8 million square feet. It will also own 18 multifamily properties with 4,451 residential units and 11 other properties in some of the region’s top submarkets including Crystal City, Pentagon City, the Rosslyn-Ballston Corridor, all in Virginia, and Bethesda, Md.” (Commercial Property Executive)
- Economy Watch: Construction Spending Drops in September “The Census Bureau reported on Monday that U.S. construction spending during September came in at an annualized rate of $1,150 billion, or 0.4 percent below the August total. The September 2016 figure is also 0.2 percent below the September 2015 total, the bureau said. Both private spending and public spending decreased in September. Spending on private construction projects was down 0.2 percent month-over-month, while public construction spending dropped even more, by 0.9 percent. Private construction spending gained 2.4 percent for the year, but public construction dropped by a sizable 7.8 percent. Spending on power, public safety, transportation, water and sewage projects all dropped by double-digit percentages since a year ago. In the private sector, spending on new multifamily projects gained 2 percent for the month and 9.1 percent for the year, while single-family spending barely moved for the month (up 0.1 percent) and lost 2.9 percent for the year.” (MultiHousing News)
- State Treasurer, State of Michigan Boosts Stake in Apollo Commercial Real Estate “State Treasurer, State of Michigan increased its position in Apollo Commercial Real Estate Finance (NYSE:ARI) by 28.5% during the second quarter, according to its most recent 13F filing with the SEC. The firm owned 2,980,768 shares of the real estate investment trust’s stock after buying an additional 661,768 shares during the period. State Treasurer State of Michigan owned approximately 4.42% of Apollo Commercial Real Estate Finance worth $47,901,000 at the end of the most recent quarter. Several other hedge funds also recently made changes to their positions in ARI. Renaissance Technologies LLC raised its position in shares of Apollo Commercial Real Estate Finance by 3.5% in the first quarter. Renaissance Technologies LLC now owns 1,352,600 shares of the real estate investment trust’s stock worth $22,047,000 after buying an additional 46,200 shares during the period.”
- Discount grocery Aldi heads into wealthier areas “Are suburban consumers ready to give up the familiar grocery experience for bare-bones stores where they have to do their own bagging and leave a quarter deposit for a shopping cart? That’s what Aldi and other deep-discount chains are betting as they make a big expansion push across the U.S. Up until now, the German chain and competitors like Lidl and dollar stores have mostly attracted cash-strapped customers. Now they’re moving into wealthier areas as Americans of all stripes get more budget-conscious and their traditional low-to-middle-income niche gets crowded with competitors. Aldi is going even further in appealing to upscale tastes by stocking some fancier goods, such as organic foods.” (MarketWatch)
- Texas mall re-do to include a performing arts center “Starwood Retail Partners’ $100 million renovation of The Shops at Willow Bend in Plano, Texas, will add genuine life to its re-imagined entertainment component. North Texas Performing Arts and its Plano Children’s Theatre will make its new headquarters in a 23,000-sq.-ft. space at the mall, which is also getting eight chef-driven restaurants and a 30,000-sq.-ft. fitness center. ‘By bringing the theatre to the center, we’re not only forging a closer connection with the community, but also a connection with education and the arts,’ said Ed Coury, Starwood senior VP and director of leasing. ‘The Children’s Theatre has been a great influence on the lives of kids in the area for 25 years. We estimate that 200,000 people will come to the center to attend shows or wait for their kids while they’re rehearsing.’ Coury says the theatre group, which was extended a reduced rent, will re-brand itself as the Willow Bend Center for the Performing Arts.” (Chain Store Age)
- Public and private institutions kicked off $4.6B in construction projects last year: report “Public and private institutions initiated $4.6 billion worth of construction projects last year, the highest seen in New York City since at least 2009. According to the latest report by the New York Building Congress, construction projects started by public and private institutions — including schools, hospitals, cultural facilities and courts — reached a seven-year high last year. Project starts increased by 22 percent from 2014, when $3.8 billion worth of projects were started. The report also notes that public and private construction starts totaled $26.1 billion over the last eight years — from July 2008 to June 2016. Of that volume, $9.6 billion was for school projects and $8 billion was for hospitals and healthcare facilities. Construction starts in the first half of 2016, however, only reached $1.4 billion, less than half of the construction started during the same time period last year. But, according to the report, last year’s numbers were boosted by the construction of a few major projects, like the Memorial Sloan Kettering Cancer Center on the Upper East Side.” (The Real Deal)
- New laws could unlock tens of thousands of apartments “The city has been pushing development on recalcitrant communities while ignoring policy solutions that could ease the housing crisis without costing a dime, housing experts said Tuesday at a Crain's panel discussion. The city is on track to reach 9 million people by 2040, which translates into a need for 350,000 more apartments. While the de Blasio administration has called for new towers around transit nodes, panelists said allowing more basement apartments and moving tenants into appropriately sized units would house many additional New Yorkers... Legalizing so-called granny flats was mentioned in Mayor Bill de Blasio's housing plan in 2014, but has taken a backseat to other policy objectives. While the proposal faces opposition, notably in Queens, Perine believes the process should be part of conversations about how the city could make housing more affordable by occupying and developing units more efficiently.” (Crain’s New York)
- How housing would fare under Clinton, Trump “Unlike the candidates' housing policies, the housing market's issues are clear. How will the next administration tackle reforming mortgage giants Fannie Mae and Freddie Mac? They still back the bulk of the mortgage market and are highly profitable, but they are still under government conservatorship, paying the U.S. Treasury Department every cent of profit. How do we bring private capital back to the mortgage market? How do we manage the enormous growth of nonbank lenders, which now make up more than half of all new originations? How do we insure safety for borrowers who use these lenders? And how do we create more affordable housing, both rental and owned, for underserved communities?” (CNBC)
- Influx of foreign dollars continues to power commercial real estate “Look at the biggest commercial real estate deals across the country. The odds are high that investors from overseas purchased these key office towers, retail centers or apartment projects. And the importance of foreign capital to the U.S. commercial real estate market is only increasing. Midwest Real Estate News recently spoke with Greg Warsek, senior vice president and senior regional manager with the Chicago office of Associated Bank, about how important foreign dollars have become to the health of the local real estate market.” (Realestatejournals.com)
- Vornado post-Roth? “‘Don’t be jerky,’ Steven Roth told Gary Barnett. ‘It’s not even close.’ Sitting among other industry titans at Bloomberg LP’s headquarters last spring, Roth was in full troll mode. Barnett had dared to suggest that One57, his cathedral for the 0.1 percent, was better than Roth’s luxury condo tower in the works at 220 Central Park South. And when Jeff Blau spoke about the upcoming condos at Hudson Yards, Roth quipped that his firm, the Related Companies, was ‘selling to the suckers.’ Of his lender at 220 CPS, the Vornado Realty Trust chairman and CEO said: ‘I’m in the suck-up business to the Bank of China.’ The chiefs of public companies tend to be careful to a fault about what they say in public. Not Roth, who is one of the last in a line of brash hustlers running blue-chip real estate investment trusts — very much in the vein of Sam Zell, whom he’s referred to as a “bald-headed chicken fucker.” At the same time, Roth has shown remarkable patience in turning Vornado, once a developer of New Jersey industrial properties and strip malls, into the $40 billion behemoth, with more than 30 million square feet of New York City holdings, it is today.” (The Real Deal)
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