Features

More Seniors Housing M&A Activity on the Horizon, According to Capital One Survey

by Kristin Harlow October 25, 2018

CHICAGO — Some 92 percent of executives from the seniors housing and long-term care industry expect the pace of mergers and acquisitions within the sector to remain the same or increase over the next 12 months, according to newly released findings in a Capital One survey. Conversely, only 8 percent expect M&A activity to decrease. Conducted in September, the e-mail survey asked professionals to provide their 12-month outlook on a number of issues in the seniors housing space. The survey netted 147 respondents. “I was a little surprised by people expecting M&A activity to increase next year. Obviously, the market has been fairly robust for a number of years,” said Chris Taylor, managing director at Capital One Healthcare, during an interview with Seniors Housing Business at the fall conference of the National Investment Center for Seniors Housing & Care (NIC). The three-day event, held Oct. 17-19 at the Sheraton Grand Chicago, attracted more than 3,100 attendees. One possible explanation for survey respondents’ optimism over M&A prospects in the year ahead, according to Taylor, is that while it’s getting more difficult for investors to acquire Class A product in light of the compressed cap rates and rising interest rate environment, they see more …

October 25, 2018

Features Heartland Feature Archive Illinois Midwest Retail

Marry Online Efficiency With Brick-and-Mortar Retail, Say Experts at ICSC Chicago Deal Making

by Kristin Harlow October 23, 2018

CHICAGO — How retailers can best integrate online and brick-and-mortar sales as well as utilize new technology to analyze shopper activity were two of the most prominent discussion points at this year’s Chicago Deal Making & VRN Outlet Convention. The event, hosted by the International Council of Shopping Centers (ICSC), took place at Navy Pier on Oct. 17-18 and attracted more than 2,400 registered attendees. In a recently released study from ICSC, a new store opening was shown to boost a brand’s web traffic within that market by an average of 37 percent. There’s a special term for it, known as the “halo effect.” The magic formula for today’s retailers and shopping centers is to marry online efficiency with brick-and-mortar locations, according to Karen Fluharty, partner with Montville, N.J.-based Strategy + Style Marketing Group. Fluharty’s remarks came during the “Future of Outlets” session. Today, an omnichannel presence is increasingly critical to a retailer’s competitiveness. Online retailers with growing sales have started successfully transforming their “clicks” into “bricks.” Warby Parker and Bonobos are two of the most well-known online retailers with a steady expansion of physical stores. What’s beneficial for outlet centers is that nine out of 10 consumers say they …

October 23, 2018

CNBC’s Steve Liesman (left) interviews Gary Cohn on stage during the 2018 NIC Fall Conference at the Sheraton Grand Chicago. Cohn is the former president and COO of Goldman Sachs and former director of the National Economic Council.

Features

Gary Cohn Talks Economy, Trade, Term Limits at NIC Conference

by Jeff Shaw October 19, 2018

CHICAGO — Gary Cohn, a Wall Street titan who served as chief economic advisor to President Donald Trump for more than a year, has a two-word solution to America’s broken political system: term limits. “We have to come to the realization that professional politicians are not what we need in this country. We have to get to term limits because the fact that politicians are governing for one purpose and one purpose only, which is re-election, and raising money from constituents is why we end up in these horrible situations,” said Cohn, the former president and COO of Goldman Sachs, referring to the rancorous partisan climate in our nation’s capital. Cohn served as director of the National Economic Council from Jan. 20, 2017 to April 2, 2018, and played a critical role in the passage of the Tax Cuts and Jobs Act, which lowered the corporate tax rate from 35 percent to 21 percent and reduced tax rates for many Americans. “Can you imagine if you were only there for one or two terms and the campaign finance rules were different, and you knew you had a finite period of time, and this was not your professional job, and you …

October 19, 2018

2018 Mid-Atlantic Multifamily Rent Growth - RED Capital

Content Partner Features Lument RED Capital Group

RED: Mid-Atlantic Region 2018 Multifamily Performance Update

by Jaime Lackey October 18, 2018

As the real estate cycle enters the late innings, multifamily investors increasingly are seeking alternatives to high-cost coastal metros but remain unwilling to sacrifice the property market liquidity found in the primary markets. Many are finding the right balance of opportunity and liquidity in the Mid-Atlantic States, where cap rates are often higher than in the “favored five” markets and value-add opportunities in strategically located Class B properties abound. RED Capital Research (RCR) performance models suggest that the Mid-Atlantic’s season in the sun has longer to run. Philadelphia Apartment Market Ranks Second Among the Top 50 U.S Markets for Risk-Adjusted Returns Sales of Philadelphia apartments topped $2 billion during the 12-month period ending in June, a 125 percent increase over the year-earlier period. Fund and trust buyers dominated trade, concentrating on urban mid-rise and suburban garden value-add plays at mid-5 percent to low-6 percent cap rates. Investors penciled IRRs in the mid-6 percent range for Class A assets, and the low-7 percent area for value-adds. The metro economy has performed well since 2015 — and posted accelerating gains in the spring and summer. RED Research models forecast further above-trend payroll job creation through 2019, before higher interest rates curb growth. …

October 18, 2018

Content Partner Features

A Peek Behind the Industrial Lending Curtain

by Amy Works October 17, 2018

Mastering the puzzle of a successful commercial real estate loan requires more than due diligence on the borrower. To execute a solid loan transaction, shrewd originators make sure all of the existing pieces fit together — and consider how future pieces might fit into the equation. Beyond the Borrower While the history and financial health of a borrower are top concern for originators, there are many more factors at play. “Having a strong borrower is important, but it’s also critical to research the current tenants, the leasibility of the property, the desirability of the location and the long-term activity of the market,” says Peter Margolin, commercial loan originator with Chicago-based Alliant Credit Union. He describes a recently closed loan to show how lenders analyze some of the underlying factors that drive financing packages. In April of this year, Alliant provided a $6.4 million loan to refinance a 64,637-square-foot industrial building located on Statesville Road in Charlotte, North Carolina. The borrower was a REIT that focuses on single-tenant R&D and industrial properties throughout the Southeast. Husqvarna North America, a producer of outdoor power equipment, utilizes the property as a research and development facility. Terms of the 10-year loan include five years …

October 17, 2018

Features Retail

Click and Collect: Retailers Expanding Store Pick-Up Options, Says Colliers Report

by David Cohen October 16, 2018

As e-commerce continues to grow, the number of consumers picking up online purchases in stores is increasing, according to a report by Colliers International. The share of consumers who say they regularly use “click and collect” purchasing has almost doubled over the past five years. According to the report, the percentage of consumers who say they regularly collect online orders from a physical store jumped from 17.2 percent in 2013 to 38.5 percent in 2018. There’s an additional bonus to this trend: More customers visiting stores means more incremental purchases. Colliers reports that the majority of consumers who pick up online orders from shops go on to make additional purchases in the store. On average, an additional $8.59 is spent. Across all transactions in 2017, this equated to an extra $1.14 billion spent in shops. The numbers Colliers analyzed come from the GlobalData Consumer Panel, which surveys 5,000 shoppers each year. A number of retailers, such as Walmart, have expanded their “click and collect” services in recent years, oftentimes offering customers discounts for picking up over having orders delivered. Retail On A Roll “The bad press about the nation’s shopping centers continues, but meanwhile, physical retail is on a bit of …

October 16, 2018

Conference Coverage Features Retail

InterFace Keynote Address: Panic Over E-Commerce’s Effect on Retail Real Estate is Full of Myths

by Jeff Shaw October 11, 2018

NEW YORK CITY — News headlines such as “Retail Is Dead” have painted a picture of desolation and destruction for the current state of retail real estate in the United States. However, while e-commerce “is the most discussed, it’s also the most misunderstood,” according to Melina Cordero, global head of retail research for CBRE. Cordero’s remarks came during her keynote address at the InterFace Net Lease conference held on Wednesday, Oct. 3. The ninth annual event drew 265 real estate professionals to the New York City Bar Association. Cordero listed a series of myths about retail and e-commerce that lead to apocalyptic headlines that she says are simply not accurate. Myth 1: E-Commerce is Taking Over To illustrate her point, Cordero displayed a chart tracking growth, showing e-commerce outpacing in-store sales. However, when the actual sale totals rather than growth percentages are compared, only 10 percent of retail sales are online. Furthermore, 50 percent of online retail sales go to companies with a brick-and-mortar presence. “Less than 4 to 5 percent of total retail sales are going to online-only players. This is a very different picture than what we’re usually presented,” said Cordero. She cited specific retailers who, while known …

October 11, 2018

Features

To What Degree Did Hurricane Florence Impact September Jobs Report? Economists Weigh In

by Jeff Shaw October 9, 2018

The national unemployment rate fell two-tenths of a percentage point to 3.7 percent in September, the lowest level since 1969. That’s the same year that Apollo 11’s lunar module, Eagle, carrying U.S. astronauts Buzz Aldrin and Neil Armstrong landed on the moon. Employers added 134,000 jobs in September, according to the Bureau of Labor Statistics (BLS), well below economists’ expectations of 180,000. But the effects of Hurricane Florence that struck the Carolinas during the month, plus worker shortages in some industries, likely were factors, according to knowledgeable observers. Despite the less-than-expected increase in September, job gains have averaged 190,000 per month over the last three months after revisions, reports the BLS. To get a better perspective on what the latest jobs data means for commercial real estate, REBusinessonline.com reached out to two economists: Ken McCarthy, principal economist and head of applied research for the Americas at Cushman & Wakefield; and Ryan Severino, chief economist for JLL. What follows are their written responses to questions posed by REBusinessonline.com. REBusinessOnline: Hurricane Florence affected parts of the East Coast during September. To what degree did the hurricane cause the monthly gains in nonfarm payroll employment to fall short of expectations? Ken McCarthy: First, I …

October 9, 2018

Features Retail

Mattress Firm Files for Bankruptcy Protection, Will Close Up to 700 Stores

by Taylor Williams October 5, 2018

HOUSTON — Mattress Firm has filed for Chapter 11 bankruptcy protection as part of the Houston-based retailer’s plan to restructure its balance sheet and ultimately close up to 700 stores across the country. The U.S. Bankruptcy Court in Delaware has appropriated approximately $250 million in debtor-in-possession financing to Mattress Firm to support the company’s operations during the Chapter 11 proceedings. Mattress Firm has also received commitments for $525 million of senior secured credit facilities to support its post-bankruptcy operations. The company expects to complete the restructuring process within the next 60 days. Mattress Firm currently has more than 3,000 stores in the U.S., and will remain the largest specialty mattress retailer in the country following the Chapter 11 proceedings. The company will close 200 underperforming stores immediately and then will determine the fate of the remaining 500 stores in the coming weeks. According to Jeff Green, partner with Hoffman Strategy Group, one positive aspect about the Mattress Firm locations are that they are typically on the pad of a shopping center, which makes them more visible and therefore more valuable. However, the chain is significantly overbuilt given the company’s “propensity to locate stores too close to existing stores and the …

October 5, 2018

Conference Coverage Features Multifamily

InterFace Panel: Technology Can Optimize Multifamily Lease Renewals

by Taylor Williams October 4, 2018

DALLAS — Multifamily development in the United States has been on a tear over the last five years, increasing competition for renters and making lease renewal rates a casualty of war. According to an August report from rentcafe.com, American multifamily developers delivered about 318,000 new units in 2017, more than double the deliveries from five years earlier. New multifamily construction between 2014 and 2016 averaged about 275,000 new units per year. That’s more than double the yearly average of 136,000 units per year that were delivered during the down years of 2011 through 2013. In addition, according to the National Apartment Association (NAA), the U.S. will need to add about 4.6 million new units by 2030 to keep up with demand. In most urban markets, this pace of development has either led to concessions or discounts on rent. This problem is compounded by the fact that in high-growth markets, renters usually have access to newer, competing multifamily product within a few miles. So long as they’re willing to move, renters can in theory receive new rounds of concessions from year to year. To recoup income lost from concessions, as well as to post strong occupancies if a property is put …

October 4, 2018

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