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Monthly Archives: July 2016

CoStar’s People of Note (July 29)

It’s time to update those contact managers with CoStar’s People of Note, reporting news on significant new CRE hires and promotions. This week’s issue includes the following markets: Dallas / Ft. Worth, Washington DC, Minneapolis / St. Paul, Charlotte…

FinCEN Expands Reach of Cash-Only Real Estate Reporting Beyond Manhattan, Miami

The Financial Crimes Enforcement Network (FinCEN) is expanding required reporting for all cash real estate purchases to six new markets in California and Texas. Since earlier this year, U.S. title insurers were only required to report such deals in Manhattan and Miami.

Known as Geographic Targeting Orders (GTO), FinCEN will now temporarily require title insurance companies to identify the natural persons behind shell companies used to pay “all…

Survey: Investors Remain Optimistic About CRE Market Strength Despite Global Volatility

An overwhelming majority of investors and lenders have an overall positive view of U.S. commercial real estate market conditions, even in the face of cascading world events such as China’s economic slowdown, Britain’s vote to leave the European Union, sharply lower oil prices and volatile world financial markets, according to an annual survey and report by national law firm Akerman LLP.

Based on 189 interviews with top U.S. real estate executives…

U.K. Leads Europe’s Commercial Property Investment Slowdown in 1H as ‘Brexit’ Adds to Risk Aversion – Real Capital Analytics

The U.K. led a slowdown in commercial real estate investment across Europe in the first half of 2016. Research by Real Capital Analytics (RCA) shows that the uncertain outcome of the country’s referendum on its European Union membership added to a catalogue of risks deterring investors.

The total value of commercial property transactions completed in Europe during the first six months fell by 35% from the same period in 2015 to €107 billion, according to data compiled by RCA. The U.K. registered a 45% decline from a year earlier to €29.5 billion, as investor concerns in the run-up to the “Brexit” vote and high pricing played a part in slowing investor activity. The U.K. accounted for more than half of the total drop in investment in European commercial properties during the period.

Tom Leahy, RCA’s Director of EMEA Analytics, said: “A number of global economic, financial and social risks have made investors more cautious about where to deploy their capital allocation to European real estate after a record-breaking year in 2015. The build-up to the Brexit vote added to these concerns and was a notable brake on investment in the U.K. While it’s no surprise that Central London was particularly affected, our data indicate that the investment cycle had probably already peaked in the third quarter of 2015 and before the vote was announced.”

The value of transactions in London, which ranks second to New York in the world’s top investment destinations, fell by 52% to €14.0 billion in the first half. Pricing in the Central London office market, as measured by the RCA/PD Commercial Property Price Indices (CPPI), remained little changed on the quarter for the first time since 2012.

After the U.K., Europe’s second biggest market, Germany, suffered the most in terms of falling investment volumes, which dropped by 36% versus the first half of 2015. Of the top ten markets, France was next in terms of falling volumes, as investment decreased by 29% over the same period.

Analysis by RCA shows that there was a pullback by all categories of investor, notably by those based outside Europe. This was a marked reversal of what for several years has been one of the driving forces of European real estate investment. The data show that global capital flows went into retreat in the first half, recording the weakest total in three years in the second quarter. It was most pronounced for U.S.-based investors, whose investment fell 59% from the first half of 2015 to €11.0 billion.

It was not all gloomy for Europe’s real estate markets, however, and there were a number of bright spots. In Sweden, first half transaction volumes were up 39%, while in Poland they rose by 35%. Investment in Spain, the Netherlands and Italy in the second quarter of 2016 was up substantially on the year – by 76% in the case of Italy.

The biggest outperformer in the first half was the Swedish office market, where office transactions breached €4 billion for the first time since the previous peak of the market in 2008. A majority of this was due to the €2.8 billion acquisition of the Norrporten portfolio by listed Swedish investor Castellum.

Another highlight was the Dutch office market, where more than €2.0 billion of deals completed in the first half. The most high profile of these was South Korean fund KFCC’s purchase of De Rotterdam building for approximately €351 million, although Dutch offices also attracted eight other purchases by international investors, each of which was worth more than €100 million.

RCA’s Leahy concluded: “We appear to be entering a limbo period in which the solid fundamentals for investing in European real estate are counterbalanced by a decrease in investors’ risk appetite caused by broader concerns about economic growth prospects and geopolitical risk. The second half is likely to see a continuation of the slowdown in transaction volumes in comparison with the strong 2015, but we do not expect market activity to slow to levels seen during the last downturn in 2008-09. The Brexit vote has certainly heightened uncertainty about prospects for the U.K. market, although ‘lower for longer’ interest rates and the weaker pound will present investment opportunities for those willing to seize them.”

The European Capital Trends report also revealed:

• AXA Investment Managers’ €819 million purchase of Tour First office building in Paris’s La Défense business district was Europe’s largest single property transaction of the first half.

• Birmingham was Europe’s fourth most active market in the first half, with €2.81 billion of transactions. Notable deals were Intu Properties taking full control of the Merry Hill shopping centre and Hammerson’s purchase with CPPIB of the city’s Grand Central shopping centre.

• Eight of Europe’s 10 largest transactions by value were in the U.K., led by Mapletree Investments’ £563 million purchase of the Green Park office park near Reading.

• Italy had its second most active quarter recorded in RCA data history in April through June, with €3.14 billion of transactions. Retail properties, notably a portfolio of stores in major railway stations, made up half of the volumes.

Technology Behind Hugely Popular Pokémon Go Game Could Be Transformative for Buildings and CRE

With more than 75 million downloads since being introduced a month ago, Pokémon Go is a hot topic on traditional and social media news outlets and is seemingly in everybody’s hands. The rapid adoption of the augmented reality app by popular culture means the technology behind it is likely to go mainstream as well. And that has important implications for the real estate business as a whole.

“Pokémon Go, a game that has millions of people roaming…

CalSTRS Seeking to De-Risk CRE Portfolio Beginning with Multifamily

The nation’s second largest public employee pension fund, California State Teachers’ Retirement System (CalSTRS) said it plans to take steps to lower its risk exposure in its real estate investments in the coming year.

The $189 billion fund is planning to liquidate non-strategic CRE assets, particularly those it acquired before 2008. The fund said it also will begin to exit what has been one of the strongest performing property segments annually…

Activist Investor Takes Aim at Buffalo Wild Wings Restaurants

Activist investor Richard McGuire III, managing principal of hedge fund Marcato Capital Management, has amassed a 5.1% share of restaurant operator Buffalo Wild Wings Inc. (NASDAQ: BWLD) in the past month. The move is widely seen in part as a real estate play as the Minneapolis-based chain “owns and operates” 603 of eateries —more than half of its 1,160-plus eateries.

Many of those corporate-owned restaurants are NNN leased properties. The firm…

Under Armour Leases Former FAO Schwarz Flagship, Plans to Roll Out Brand In 600 Kohl’s Stores

Athletic apparel and sportswear maker Under Armour this week rolled out several initiatives aimed at bolstering its brand following the bankruptcy and collapse of Sports Authority, its largest customer, including a new distribution deal with Kohl’s and the lease of the former FAO Schwarz flagship store on Times Square.

Under Armour Chairman and CEO Kevin Plank confirmed during the company’s earnings call Tuesday that the company would take 53,000…

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