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What Do NAFTA Negotiations Mean for Industrial Real Estate? | National Real Estate Investor
 
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Canadian Real Estate Street Smart REI   October 20, 2017   1   0   0   0   0   0
President Donald Trump recently called the North American Trade Agreement (NAFTA) the "worst trade deal in history” and said he would renegotiate or dissolve it. He also discussed the possibility of slapping a 35 percent tariff on Mexican-made products imported to the United States. These remarks were made during Canadian Prime Minister Justin Trudeau’s visit and as the fourth round of NAFTA talks got underway. Trump contends that the U.S. and Canada will be fine without NAFTA, and has indicated he would pursue a separate trade deal with either Canada or Mexico if his administration couldn't reach a deal with both nations. NAFTA essentially eliminated tariffs on products moving between the U.S., Canada and Mexico. Since it became law in 1994, the economies and logistics/supply chain of NAFTA nations have become interconnected, and interdependent, notes Jason Tolliver, vice president and expert in industrial real estate with real estate services firm Cushman & Wakefield. The complexity of these supply chains makes it virtually impossible to dissolve NAFTA without a tremendous drag on the economies of all three nations, he adds. NAFTA logistics activity has generated tremendous capital investment in U.S. industrial real estate over the last 20 years, especially along logistics/supply chain corridors and demand for space should continue to grow, Tolliver adds. But he notes that uncertainty is beginning to impede investment in this sector, as well as economic growth, which is why it’s important to get clarity on NAFTA. David Bitner, Cushman & Wakefield’s senior researcher with the...
10 Must Reads for the CRE Industry Today (October 19, 2017) | National Real Estate Investor
 
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Canadian Real Estate Street Smart REI   October 19, 2017   2   0   0   0   0   0
10 Must Reads for the CRE Industry Today (October 18, 2017) Oct 18, 2017 10 Must Reads for the CRE Industry Today (October 17, 2017) Oct 17, 2017 10 Must Reads for the CRE Industry Today (October 16, 2017) Oct 16, 2017 10 Must Reads for the CRE Industry Today (October 13, 2017) Oct 13, 2017
Blackstone Profit Tops Estimates as Real Estate Drives Gains | National Real Estate Investor
 
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Canadian Real Estate Street Smart REI   October 19, 2017   0   0   0   0   0   0
(Bloomberg)—Real estate continues to fuel gains for Blackstone Group LP, which reported a jump in third-quarter profit that exceeded all analysts’ estimates. Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, was $834.3 million, or 69 cents a share, compared with $687 million a year earlier, New York-based Blackstone said in a statement Thursday. Analysts were expecting 54 cents a share on average and 61 cents at most, according to 13 estimates compiled by Bloomberg. Gains were widespread. Blackstone’s opportunistic real estate portfolio appreciated 5.5 percent during the three months ended Sept. 30, exceeding the 4 percent rise in the S&P 500 index of large U.S. companies. Drivers included the firm’s investments in Invitation Homes Inc. and Hilton Worldwide Holdings Inc. Blackstone’s credit funds also posted gains across performing and distressed debt strategies, as did the firm’s hedge funds. Shares of Blackstone, led by Chief Executive Officer Steve Schwarzman, rose 1.3 percent to $33.94 in pre-market trading Thursday. The stock has gained 31 percent, including reinvested dividends, this year. Blackstone’s private equity portfolio gained by 3.3 percent. Analysts, who rely on moves in public holdings to help predict firm profits, have little clarity on changes in value of private assets that haven’t been sold or taken public. Part of the upside surprise came from strength in Blackstone’s private buyout holdings, which more than offset a slide in the value of its public portfolio. Publicly traded private equity firms must mark their...
Target to Remodel More Stores as It Pushes Into City Centers | National Real Estate Investor
 
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Canadian Real Estate Street Smart REI   October 19, 2017   2   0   0   0   0   0
(Bloomberg)—Target Corp. is stepping up its plan to remodel stores and push into more city centers, a bid to regain its cachet and fend off incursions by Wal-Mart Stores Inc. and Amazon.com Inc. The retailer now plans to revamp more than 1,000 locations by the end of 2020, part of a sweeping overhaul of its operations. The Minneapolis-based company had previously said it was remodeling 600 stores by 2019. The strategy includes opening dozens of smaller stores in places like New York, Los Angeles, Chicago and Philadelphia -- and pairing those locations with web-friendly services like same-day delivery. On Thursday, Chief Executive Officer Brian Cornell helped unveil a store in Manhattan’s Herald Square, its eighth in the Big Apple, not far from the Macy’s Inc. flagship. “Guests are rewarding us with more traffic and we’re driving increased sales,” said Cornell, a New York native, said at the event. “It’s given us confidence to move forward aggressively.” Target is opening 11 small-format stores this week to bring its total to 55, and it plans to have 130 nationwide by the end of 2019. The company also is rolling out its Restock program across the U.S. next year. That service lets customers have essentials like toothpaste delivered the next day, for a fee. Also coming next month is a new store brand: Hearth & Hand, a range of home-decor items designed in collaboration with Chip and Joanna Gaines, stars of the home-improvement reality show “Fixer Upper.” The Herald Square...
General Liability Insurance Exclusions Are Worth a Close Examination
 
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Canadian Real Estate Street Smart REI   October 19, 2017   3   0   0   0   0   0
When purchasing or renewing commercial general liability (CGL) policies there is often talk about “what is covered.” But the moral of this article is that it can be more important to discuss “what is not covered.” And by this I am referring to policy exclusions. Exclusions play a critical role in every CGL policy. When coverage is denied, it is more often than not due to an exclusion. Yet too often I find that the policy holder is unaware of the exclusion prior to the denial. I believe this calls for a shift in focus. The reason exclusions play such an important role is relatively simple. All CGL policies begin with essentially the same concept: that the insurance carrier will defend and indemnify the policy holder if he/she/it becomes legally liable for bodily injury or property damages. Because this concept affords broad coverage for a wide variety of claims, the policies typically have multiple exclusions. By carving a much narrower scope of coverage, these exclusions define the true extent of the policy.  Indeed, it is impossible to determine whether a claim is covered without proper examination of the exclusions. For this reason they deserve a significant amount of attention. To illustrate the importance of this principle, I will discuss one exclusion that has particular relevance for those in the real estate development industry: the sunset clause. The sunset clause is a clause providing that insurance coverage will cease after a specified point in time. In and of itself this...
What Will Be the Impact of Retail Landlords Taking Off Black Friday?
 
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Canadian Real Estate Street Smart REI   October 19, 2017   3   0   0   0   0   0
By now, the list of retailers that have vowed to close up shop on Thanksgiving Day is no less than 75[1]. One major landlord, CBL & Associates Properties Inc., also announced that its retail properties will go dark in the run up to Black Friday, accounting for about 62 centers. This is the second consecutive year that CBL has decided to close its malls on Thanksgiving Day, a decision that officials said was prompted in part by negative feedback from consumers and employees. “We employ about 100,000 people at the malls, including the employees of retailers, security and maintenance,” says Stephen Lebovitz, CBL’s president and CEO. “There are a significant number of people who can spend the day with families.” The decision to close stores does not mean landlords and retailers will starve their companies’ bottom lines while indulging in traditional holiday feasting. The National Retail Federation (NRF) expects 2017 holiday sales[2] in November and December to increase between 3.6 percent and 4.0 percent for total sales of $678.75 billion to $682 billion. That haul excludes sales at restaurants, as well as gasoline and automobile sales. As for Thanksgiving spending, the NRF estimates that in 2014—the most recent year for which that particular data is available—the three-year rolling average was $404, lower than the estimated three-year rolling average amount spent in 2013, $410. Over Thanksgiving weekend Black Friday remained the most popular day for shopping, as 65 percent of spending occurred on that day in 2014. Thanksgiving...
What the new mortgage rules mean for the lending market | Financial Post
 
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Canadian Real Estate Street Smart REI   October 18, 2017   6   0   0   0   0   0
Borrowers who don’t meet the lending criteria of Canada’s big banks for home loans may turn to credit unions and private lenders under tougher mortgage rules released by the country’s banking regulator, according to RBC Capital Markets. While the final rules have a “very minor negative impact” to large Canadian banks, the changes are more negative for non-prime lenders such as Home Capital Group Inc. and Equitable Group Inc. due to the stress tests and ban on bundling of mortgages, RBS analysts Darko Mihelic and Geoffrey Kwan wrote in a note to clients. The Office of the Superintendent of Financial Institutions released final rules targeting borrowers in the uninsured mortgage market, making it more difficult for those with more than a 20 per cent downpayment to qualify for home loans. The measures, known as B-20 guidelines, require lenders to test a borrower’s ability to pay at the greater of the Bank of Canada’s five-year benchmark rate or 2 percentage points higher than the offered mortgage rate starting in January. “This is likely to lead to a significant number of non-prime borrowers to either defer purchasing a home or seek out a mortgage from lenders such as credit unions/caisse populaires” and, failing that, a mortgage investment corporation or private lender, the RBC analysts wrote. Alternative lenders fell in Toronto trading, with Equitable falling 1.6 per cent and Home Capital declining 2.3 per cent at 12:58 p.m. trading. Canada’s eight-company S&P/TSX Commercial Banks index rose 0.3 per cent. Dampen...
Private Equity Looks to Challenge Airbnb With Vacasa Deal | National Real Estate Investor
 
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Canadian Real Estate Street Smart REI   October 18, 2017   4   0   0   0   0   0
(Bloomberg)—Vacasa LLC, an online vacation rental company, raised $104 million from a group of private equity firms looking to build up a challenger to Airbnb. The Portland, Oregon-based startup said it received funding from Riverwood Capital, Level Equity, NewSpring Capital and other backers. The investment, led by Riverwood, nearly doubled the startup’s valuation from the previous round, said two people familiar with the deal. The company declined to disclose the valuation. Investors were eager to put money into a business that could become a stronger competitor to Airbnb and then perhaps one day be an acquisition target, said one of the people, who asked not to be identified because the process is private. Airbnb Inc., Expedia Inc. and Priceline Group Inc. have been buying up home-rental startups in the last year or so. The high-end rental business is a key growth area for the travel industry. Companies are seeking to boost profits by targeting wealthy travelers. In February, Airbnb purchased Luxury Retreats, which offers tools similar to Vacasa for managing vacation properties remotely. Vacasa’s website lets homeowners rent and promote their homes, and connects them with maintenance and cleaning services. Customers can book those properties through the site. The company was founded in 2009 but hadn’t sought capital from investors until recently. Vacasa secured its first round of funding last year, about $40 million. The company has grown quietly across the U.S. and abroad, and its smaller size helps the startup avoid much of the regulatory scrutiny that plagues...
How resilient is Canadian housing to a U.S.-style crash? Plunging oil prices? Here’s the CMHC stress test result Post
 
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Canadian Real Estate Street Smart REI   October 18, 2017   6   0   0   0   0   0
The country’s largest mortgage default insurer, which backs almost $500 billion in loans, says anti-globalization threats are an increasing fear so it has added those concerns to its ongoing stress tests. Canada Mortgage and Housing Corp., which protects financial institutions in the case of consumer default and is 100 per cent backed by Ottawa, said in a release Wednesday that it looked at anti-globalization, earthquakes, a steep oil price fall and a U.S.-style housing correction to see how its insurance portfolio would hold up. It did not look at a combination of any of those scenarios. The verdict is a U.S.-style correction would be its worst scenario for its insurance program with a cumulative loss of $217 million from 2017 to 2022 which would come on top of a need for the Crown corporation to suspend its dividends to Ottawa. CMHC paid Ottawa a special dividend of $4 billion in June because of excess capital and issued a $240 million dividend in August. In all of its worst-case scenarios, CMHC would suspend dividend payments which would allow it to keep its capital levels above what is required by the Office of the Superintendent of Financial Institutions. “We seek out extreme almost unimaginable situations and ask ourselves ‘what if’. That is the goal of our stress testing,” said Romy Bowers, chief risk officer of CMHC, said in a conference call with journalists. “Stress testing is not a forecast or any form of prediction.” With trade wars a possibility,...
News Canadian Real Estate Magazine   October 18, 2017   5   0   0   0   0   0
The Montreal Census Metropolitan Area (CMA) saw a 9% year-over-year rise in total home sales during the third quarter of 2017 (up to 8,845), according to new data from the Greater Montreal Real Estate Board (GMREB). This represented the best Q3 sales result in Montreal since 2009 and the 14th straight quarter of increases, according to the Board, which derived the statistics from the Centris® provincial database. In terms of asset classes, condominiums posted the largest sales increase (+18%) at 3,043 units sold, establishing a new Q3 sales record for this property type.Sales of single-family homes and plexes (2 to 5 dwellings) also showed notable growth at 5% and 8%, respectively. As for median prices, single-family homes and plexes across the CMA both experienced an increase of 5%, up to $320,500 and $479,000, respectively.Condominium median values showed relative stability, growing by a modest 1% to $253,000. Active listings in the CMA declined for the 8th consecutive quarter, falling by 14% year-over-year (down to 24,640 properties available for purchase). “The real estate market is continuing its strong momentum.We are clearly in a seller’s market for single-family homes and plexes in most areas of the Montreal CMA, while the condo market is returning to balanced territory,” GMREB’s board of directors president Mathieu Cousineau said.“In one year, the
News Canadian Real Estate Magazine   October 18, 2017   5   0   0   0   0   0
In an announcement late last week, the British Columbia Real Estate Association indicated an increase in the province’s home sales numbers and market valuation in September. The BCREA figures showed that a total of 8,340 residential unit sales were recorded by the Multiple Listing Service last month, representing a 9.9% year-over-year increase.This is despite a 13% year-to-date decline in home sales, down to 81,608 units. Meanwhile, total sales value amounted to $5.8 billion, up by 30.2% from September 2016.The average MLS residential price stood at $693,774, having increased by 18.5% from the same time last year. On a seasonally adjusted basis, B.C.residential sales grew by almost 5% from August, according to BCREA chief economist Cameron Muir. “Total active listings on the market continue to trend at 10-year lows in most B.C.regions, limiting unit sales and pushing home prices higher,” Muir stated, as quoted by the Vancouver Sun. However, Muir cautioned that “while the economic fundamentals support elevated housing demand, rising home prices are eroding affordability, particularly for first-time buyers.” The results of a survey by Royal LePage came out on the same day as the release of the BCREA’s numbers.The study found the median price of a condominium rose by 17.6% from September 2016 to $622,392, while the cost of a two-storey
News Canadian Real Estate Magazine   October 18, 2017   3   0   0   0   0   0
The Scarborough subway extension doesn’t seem to generate much support outside of Toronto’s eastern suburbs and City Hall, but one Durham Region brokerage owner believes that Toronto’s most immediate eastern suburb is the right place for the city’s next below-grade transit project. Dan Plowman, owner of Dan Plowman Team Realty Inc., believes Scarborough is the right place to build a subway extension because it will service all of Durham Region – and, in the process, put property values on an upward trajectory. “Scarborough is already growing, but I know for a fact there’s already talk of people buying near where the subway is supposed to go simply because of the subway,” said Plowman.“There’s already a frenzy.When you bring something on this magnitude to an area, you will increase property values.” He added that Scarborough still has more developable land than Toronto does, and the result would homes sprouting en masse around a subway line. “You have to look at areas that came after subway stops,” he said.“You’d see the homes increased drastically after the infrastructure came into play.You already had massive growth in Scarborough, and there’s still a lot more land than downtown pockets and it will fill up.” Toronto is a world-class city with a world-class skyline – not to mention world-class gridlock
Institutional Investors Raise Their Targets for Real Estate Allocation
 
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Canadian Real Estate Street Smart REI   October 18, 2017   6   0   0   0   0   0
A new report[1] put together by Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates, a global real estate advisory firm, found that institutional investors continue to increase their targets for real estate investments, in spite of facing some challenges. Institutions’ target allocations to real estate averaged 10.1 percent this year, up from 9.9 percent in 2016, the report’s authors found. In 2018, target allocations will likely rise to 10.3 percent, survey respondents indicated. Thirty percent of survey participants increased their target allocations to real estate in 2017[2], while 18 percent decreased their allocations.   Most of the decreases could be attributed to the endowments and foundations space, perhaps due to the difficulty of achieving the necessary yields, which average 9.5 percent, the report’s authors speculate. Public pension plans have kept their target allocations largely flat with last year’s levels, while private pension plans, insurance companies and sovereign wealth funds have increased allocations[3]. Public and private pensions and insurance companies target real estate returns of under 8.00 percent.   However, actual allocations have trailed set targets by about 100 basis points, with 60 percent of surveyed institutions reporting they were underinvested compared to targets. Last year, the figure was 50 percent. Overall view of the opportunities present in the real estate sector has reached a five-year low in 2017, according to the survey’s “conviction index.” The index measures investors’ view of opportunities from a risk/return perspective on a one-to-10 scale. In this...
Value-Add Investors Weigh Capital Options Estate Investor
 
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Canadian Real Estate Street Smart REI   October 18, 2017   6   0   0   0   0   0
The search for yield in a slowing market has investors shifting their focus to more lucrative value-add and opportunistic projects. And, so far, there appears to be plenty of capital to back those strategies. Buying stabilized assets at this stage of the market is a bit like buying a bond, notes Joe Franzetti, a senior vice president at Berkadia Commercial Mortgage. “So for buyers that are looking for out-sized returns, they are going to look at value-add situations where there is an opportunity to increase cash flow and increase value,” he says. Projects run the gamut from assets that need a facelift or expansion to a complete redevelopment or adaptive reuse. Debt funds are often taking the lead on providing capital for these value-add deals[1]. “There is a tremendous amount of debt funds and mortgage REITs who are really focused on value-add situations,” notes Franzetti. He estimates that there are nearly 80 different entities that are willing to lend on this type of product, and many are aggressively trying to find deals that work or fit their specific business model. Multifamily investors have the advantage[2] of being able to access capital through Fannie Mae and Freddie Mac. Both agencies have value-add programs with fixed-rate and floating-rate debt that provide pretty attractive financing, notes Jeff Erxleben, an executive vice president and regional managing director at debt and equity provider NorthMarq in Dallas. Commercial value-add projects are a slightly different story, because they don’t have Fannie and Freddie as a backstop providing additional...
What Sets Seattle’s Apartment Market Apart? Estate Investor
 
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Canadian Real Estate Street Smart REI   October 18, 2017   9   0   0   0   0   0
Multifamily developers have been very busy in Seattle, especially in the core sub-markets around downtown. But thanks to affordability and strong job growth—including in the city’s core—few new apartments are sitting vacant and rents continue to rise. “Performance remains terrific, despite all the new product that has been added to the stock,” says Greg Willett, chief economist with RealPage, which provides property management software and solutions for commercial and multifamily properties. “Lots of places register very solid expansion of downtown jobs, but Seattle’s urban core growth rate is in a whole different category.” Vacancies shrink in Seattle Despite all the new construction, the percentage of vacant apartments has fallen on average. Currently, vacancy is at 4.6 percent, down from 4.9 percent at the end of 2016, according to New York City-based research firm Reis Inc. “Seattle has seen a lot of construction, but demand has stayed even with construction, so Seattle has not seen any vacancy rate increase,” says Barbara Byrne Denham, senior economist with Reis. Seattle’s economy is strong—but not strong enough to account for how well the apartment sector is doing there. The number of jobs in the Seattle area has grown steadily, increasing by 2.5 percent since last year. That puts Seattle at number 20 out of the 82 metro areas tracked by Reis. Seattle is doing better than the U.S. overall, where the number of jobs is now just 1.6 percent higher than it was the year before. Seattle is also...
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Harvey Makes Trump Rethink Draining Swamp at Key Housing Agency
(Bloomberg)—The long-term recovery for thousands of Texans...
 
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The Top 10 Cities with the Highest Commercial Property Taxes | National Real Estate Investor
Property taxes that are rebounding along with...
 
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Category: News
Real estate bonds are on the verge of shaking...
Queens Waterfront Site Astoria Cove is Going for $350 million
Astoria Cove, a 2.2-million-square-foot Queens waterfront property,...
 
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Fiery Toronto real estate heats up surrounding markets
Category: News
Increasing home prices in the GTA are having a...
New development in market popular among investors
Category: News
Is this traditional student rental market ready for luxury...
Grow-op case stirs anger amongst landlords
The ruling in favour of a tenant that...
 
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Fed Taper Brings Risk to Mortgage Bonds Unseen in Treasuries | National Real Estate Investor
(Bloomberg)—For all the talk that Janet Yellen’s...
 
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Don’t blame foreign investors for impacting the...
 
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