Forbes looks at the relationship between REITs and interest rates. Leasing out federal land could be a lucrative move for the U.S. government, according to Business Insider. These are among today’s must reads from around the commercial real estate industry.
- Federal Persecutors Step Up Probe of Land Deal Pushed by Wife of Bernie Sanders “A half-dozen people said in interviews in recent days that they had been contacted by the FBI or federal prosecutors, and former college trustees told The Washington Post that lawyers representing Jane Sanders had interviewed them to learn what potential witnesses might tell the government. The investigation centers on the 2010 land purchase that relocated Burlington College to a new campus on more than 32 acres along Lake Champlain.” (Washington Post)
- REITs Have Complicated Relationships Status with Interest Rates “Many investors associate REITs with interest-rate risk. As an income-oriented sector, REITs can be negatively affected by interest-rate increases in a similar vein to fixed income. As interest rates rise, all else being equal, the income produced by REITs at the current stock price is worth less, and so prices generally fall in order to increase the yield of those stocks relative to other income producing instruments. Note the qualifier ‘all else being equal.’” (Forbes)
- Startups Help Landlords Turn Apartments into Hotel Rooms “A handful of startups are betting they can help apartment-building owners convert empty units into hotel rooms, a controversial practice that could help landlords generate more revenue. The rise of home-sharing services such as Airbnb Inc. has been a boon for owners of single-family homes looking to make extra money.” (Wall Street Journal, subscription required)
- Jared Kushner Tried and Failed to Get a Half-Billion-Dollar Bailout from Qatar “NOT LONG BEFORE a major crisis ripped through the Middle East, pitting the United States and a bloc of Gulf countries against Qatar, Jared Kushner’s real estate company had unsuccessfully sought a critical half-billion-dollar investment from one of the richest and most influential men in the tiny nation, according to three well-placed sources with knowledge of the near transaction. Qatar is facing an ongoing blockade led by Saudi Arabia and the United Arab Emirates and joined by Egypt and Bahrain, which President Trump has taken credit for sparking. Kushner, meanwhile, has reportedly played a key behind-the-scenes role in hardening the U.S. posture toward the embattled nation.” (The Intercept)
- Leasing Out Federal Land Could Provide Free Money for All Americans “The US government owns over $150 trillion of federal land and resources. Most of it is unused and sitting idle. If you divide $150 trillion by America’s 325 million citizens, you get nearly a half-million dollars per person. If the US could just figure out how to monetize that federal land and distribute its equity equally, Americans could forever overcome poverty, healthcare issues, and the impending “robocalypse” — where increasing automation replaces tens of millions of human jobs.” (Business Insider)
- Columbia Teams with Allianz Real Estate in New JV to Acquire Class-A Office Property“Seeking to acquire more office properties in its core markets without resorting to issuing stock or raising leverage, Columbia Property Trust (NYSE:CXP) has formed a joint venture with Allianz Real Estate to pursue Class-A office acquisitions in certain U.S. markets. The two investors have initially contributed three of their respective properties to the joint venture with a combined gross asset value of $1.26 billion.” (CoStar News)
- Retailers Tap Consultants to Wiggle Out of Mall Leases “Consultants who help store owners wring concessions from landlords are seeing brisk business these days, another ripple of the shifting retail landscape across the U.S. economy. The rise of online shopping and changing consumer preferences are forcing retailers to rethink virtually all aspects of their operations.” (Wall Street Journal, subscription required)
- Alexander & Baldwin to Convert to a REIT, Hires New CEO “Alexander & Baldwin, one of Hawaii’s largest owners of commercial real estate, said Monday that it is converting to a real estate investment trust and has hired an experienced REIT executive to serve as the Honolulu-based company’s chief financial officer. Alexander & Baldwin had been evaluating the conversion since last fall and reported spending a total of $14.3 million on the process, as of the end of the first quarter. The board of directors voted unanimously on Monday to approved the conversion, the company said.” (Pacific Business News)
- One Way to Hedge Against Retail REITs “In my recent newsletter I explained that one way to hedge against retail REIT exposure is by investing in shares of industrial REITs. As I mentioned, there is a risk-reward tradeoff associated with hedging—it reduces risk but there is a cost for the so-called ‘insurance.’ It’s kind of like buying flood insurance for your house. The monthly payments add up over time, yet it certainly beats the headache if there is a total wipeout scenario.” (Forbes)
- Here’s Where Amazon Is Planning to Open its Next NYC Bookstore “Jeff Bezos: Alexa, find me a space in Soho to open another Amazon bookstore in New York City. Alexa: Finding 72 Spring Street. Sources tell The Real Deal that the e-commerce colossus will be taking the 7,354-square-foot space between Crosby and Lafayette Streets, currently home to a pop-up store for bra maker Aerie. The retail spot at 72 Spring includes 5,200 square feet on the ground floor and 2,154 square feet in the basement. It wasn’t immediately clear whether a lease has been finalized yet.” (The Real Deal)