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10 Must Reads for the CRE Industry Today

1. Odds for interest rate hikes plunge after major jobs report miss “The probability for a June rate hike plummeted Friday after a major miss in the May jobs report. The Labor Department report said U.S. economy added just 38,000 jobs, far below economist estimates of 162,000. Prior to the jobs report, the CME Group FedWatch tool of market sentiment saw a 21 percent chance of a June rate hike. Those odds dropped to 4 percent after the employment report. Federal Reserve policymakers meet June 14-15 to decide on whether to increase the central bank's key interest rate for only the second time in a decade.” (CNBC)

2. Canadian Pension Fund Moving $18 Billion Real Estate Portfolio from External Managers to Private Subsidiary Calling it a natural evolution ahead of scaling up its real estate investment on a global scale, Victoria-based British Columbia Investment Management Corp. (BCIMC) will take its $18 billion (US$13.8 billion) real estate portfolio away from three external advisors and give it to a new private company it created called QuadReal Property Group. QuadReal will be owned by BCIMC with an independent board of directors to oversee its operations. The large Canadian pension fund has given its new real estate subsidary a mandate to acquire more real estate in Canada and to expand in the US, Asia and Europe. BCIMC provides investment management services to the province’s public sector pension plan and trust, as well as to insurance fund clients.” (CoStar Group)

3. Wal-Mart says it is 6-9 months from using drones to check warehouse inventory “Wal-Mart Stores Inc said Thursday it was six to nine months from beginning to use drones to check warehouse inventories in the United States, taking a step closer to using the technology to compete better with rivals. In October 2015, the world's largest retailer applied to U.S. regulators for permission to test drones for home delivery, curbside pickup and checking warehouse inventories as it planned to use drones to fill and deliver online orders. Federal regulators are still considering rules for commercial operation of drones that would be involved in package delivery - viewed as the next frontier for big retailers such as Walmart and Amazon Inc. Walmart's Vice President of Last Mile and Emerging Sciences Shekar Natarajan demonstrated the use of drones to reporters in one of the company's regional distribution centers.” (Reuters)

4. McDonald’s wants more change, reportedly closing in on deal to move HQ into Chicago “A shift to all-day breakfast may not be the only move for a McDonald’s Corp. that’s trying to modernize and stay competitive among increasingly conscientious eaters. The fast-food chain is reportedly nearing a deal to relocate its global headquarters from suburban Chicago to the city’s downtown, with rethinking its facilities and drawing fresh talent on its revitalization menu. McDonald’s was close to securing a move out of a sprawling campus in west suburban Oak Brook, which houses some 2,000 employees and includes its Hamburger University training facility, to downtown Chicago last year but did not follow through. Now, the restaurant is near a deal to shift its headquarters to Oprah Winfrey’s former Harpo Studios complex in the city’s popular and growing Fulton Market district just west of the Loop, Crain’s Chicago Business reported, citing people it described as familiar with the situation. McDonald’s has not confirmed specific talks but said earlier this year it had launched another downtown location search.” (MarketWatch)

5. CMBS Late Pays Rise for Third Month “CMBS delinquencies continue to trend in the wrong direction, although from a historical perspective they’re a fraction of what they were at the high point of late-pays among securitized loans. Trepp LLC said Thursday that the delinquency rate had ticked upward by 12 basis points to 4.35% as May ended, marking the third consecutive month of upward movement. The 12-bp increase was the biggest in the past three months. March saw late-pays creep up by seven bps, while April’s rise was limited to a single point. However, the delinquency rate remains 105 bps below the year-ago level, as well as 599 bps lower than the all-time high of 10.34% reached in July 2012.” (Globe St.)

6. Skanska’s Largest Project Takes Flight “It is the largest public-private partnership in the United States and after some delays, the $4 billion redevelopment of New York’s LaGuardia Airport Central Terminal B is finally taking off. The final lease agreement and financing were closed this week between LaGuardia Gateway Partners and the Port Authority of New York and New Jersey and construction will begin immediately. LaGuardia Gateway Partners is a consortium of Vantage Airport Group, Skanska Infrastructure Development and Meridiam as project sponsors and co-investors with Vantage managing operations. Skanska and Walsh Construction form the design build joint venture with HOK and WSP|Parsons Brinckerhoff advising on design. The PANYNJ gave its authorization for the 35-year lease with LGP in March, leading the way to this week’s closing on the final agreement and funding plan.” (Commercial Property Executive)

7. Is One World Trade Center hot? Financial services firm's move there signals yes “The financial services firm Ameriprise Financial is moving to One World Trade Center as leasing for the tower finally gains momentum. The Minneaoplis-based company, which is currently located nearby at 7 World Trade Center, will take 37,000-square-foot on the 78th floor.  The deal brings the occupancy rate at the 104-story tower to nearly 70%. Ameriprise is the second financial services firm to lease space at the tower in the past year.” (Crain’s New York)

8. Banning Ranch developer allowed environmental degradation to site “In 1998, Aera and two other companies were the subject of a U.S. Environmental Protection Agency administrative order demanding an end to the dumping of concrete rubble and dirt on Banning Ranch wetlands in violation of the Clean Water Act.   Three years later, the Santa Ana Region Water Quality Control Board ordered Aera and others to clean up the wetlands fill, as well as soil that was contaminated when workers disposed of liquid oil waste in unlined pits. In 2011 and 2015, the California Coastal Commission issued consent orders—again naming Aera and others—stemming in part from what the commission said was the illegal mowing and clearing of native vegetation on the site, including coastal sage scrub habitat for the gnatcatcher, which is listed as threatened under the Endangered Species Act. Aera has long held a 50% interest in Banning Ranch, but the company does not own the mineral rights nor has it been involved in oil operations at the site. As a landowner, it is nonetheless legally liable for environmental violations. ‘We had absolutely no knowledge that it did happen,’ Aera Vice President George Basye said of the dumping.” (Los Angeles Times)

9. 446-Unit Houston Community Changes Hands “Jeronimo Hirschfeld, developer & CEO of Miami-based One Real Estate Investment, recently acquired a 446-unit multifamily community located in Houston. With a price tag of $20.3 million, the 21-acre Village at Uvalde asset was purchased from West Second Street Associates LLC. Stuart Kapp, partner at Proskauer Rose, assisted with the transaction. Located at 250 Uvalde Road, Village at Uvalde features one-, two- and three-bedroom floorplans with unit sizes ranging between 660 and 1,158 square feet. Community amenities include controlled access, three swimming pools, five laundry facilities and 900 parking spaces. According to Yardi Matrix, rents at Village at Uvalde range between $555 for a one-bedroom apartment and $859 for a three-bedroom apartment.” (MultiHousing News)

10. Hilton Plants $272M Flag in Cleveland “Hilton Worldwide brings its Hilton flagship brand to Cleveland, Ohio, for the very first time with the opening of Hilton Cleveland Downtown, a towering 600-key convention center hotel. Owned by Cuyahoga County, the premier property cost $272 million to develop. Cleveland may not be at the top of the list of secondary markets right now, but Hilton had good reason for raising its flagship flag in the Buckeye State’s second-largest city. ‘Cleveland is in the midst of a renaissance. It’s become a destination for food, travel, arts and culture,’ Teri Agosta, general manager, Hilton Cleveland Downtown, told Commercial Property Executive. ‘Hilton saw this project as an opportunity to participate in a booming market.’” (Commercial Property Executive)

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