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Real Estate Roundup 4.8.20

Coronavirus (Credit: California Gov)

Real Estate Roundup:

COVID-19 Coverage

  • As Fed and Treasury officials craft relief programs, some struggling retailers may be left behind because their bonds aren’t investment grade. Their fragility is what could disqualify them from the rescue. Lobbyists for retailers, which employ more than 4 million salespeople, are emphasizing the massive job losses that could occur in the absence of federal help, as well as the harm it could do to their suppliers and landlords. (WashingtonPost)
  • German sportswear maker Adidas apologized last week for saying it would stop paying rent for stores around the world forced to close by coronavirus lockdowns after a storm of criticism, saying it would pay up for April after all. Adidas was blasted on social media for its decision last week to defer rental payments and German Labour Minister Hubertus Heil called the behavior irresponsible and noted that the company had made hefty profits in recent years. (Reuters)
  • Owners of apartment buildings, mobile-home parks and even campgrounds are ineligible to participate in the Paycheck Protection Program, which is administered by the Small Business Administration. Such enterprises are in most cases deemed “passive businesses” by the agency. (TRD)
  • Values of office buildings have surged over the past decade, and are now higher relative to property income than those of other types of real estate. Office owners also tend to have more debt, in part because banks have been willing to lend more against assets they deemed safe. One risk office owners face is that companies stop signing new leases amid economic uncertainty. “You would think that the office market should be somewhat insulated. You’ve got long-term leases. But look, you have a lot of small companies that occupy buildings. Business is shut. If they’re not generating any revenues they can’t pay any rent.” (WSJ)
  • A growing number of property investors are preparing for what they believe could be a once-in-a generation opportunity to buy distressed real-estate assets at bargain prices… Many will be eyeing hotels, retail properties, mortgage-backed securities and other assets that have come under stress in recent weeks. In December, private real-estate funds that focus on opportunistic and distressed-asset investments held $142 billion in dry powder up from $94 billion in December 2008. (WSJ)
  • Paul Singer’s Elliott Management, Appaloosa Management’s David Tepper, and Howard Marks’ Oaktree are among bargain hunters circling mortgage trusts: Wall Street is on the hunt for bargains on assets that will probably gain in value once the pandemic eases. Some cash-hungry REITs have already sold mortgage portfolios at steep discounts and talks have heated up over similar deals or even equity stakes in the companies themselves. The aggressive terms come after publicly traded mortgage REITs lost more than $50 billion of market value this year. (Bloomberg)
  • Mark Calabria, who leads the Federal Housing Finance Agency, said he isn’t likely to heed mortgage companies’ calls to help ease the cash-flow crunch they are expecting when Americans who lose their jobs stop making mortgage payments. He described industry concerns as “spin,” and also said he doesn’t see it as the role of government-backed housing-finance giants Fannie Mae and Freddie Mac, which he oversees, to help the mortgage companies. (WSJ)
  • Building owners, property managers, and design firms have begun to anticipate the time when the shelter-in-place orders are lifted and people start heading back to the office. Those in the midst of planning suggest that the post-pandemic office might look radically different: Each worker will need more space: “The whole point of kinetic furniture was to bring people together… Now it has a different function: to pull people apart.” If companies do allow more of their employees to log in from home, some may consider reducing their office footprint all together. (NYTimes)

Deals 

  • Medly Pharmacy, a firm that focuses on online processing and same-day prescription deliveries, has increased the size of its new lease at Express Builders JB’s46 Cook Street in Williamsburg. The pharmacy has added 15,000 SF to its new 28,500-square-foot lease. (TRD)
  • New to the market: A block-long development site at 1 Java Street (AKA 18 India Street) owned by JZ Capital Partners + RedSky Capital has hit the market. The firms paid $83.5 million for the Greenpoint site in 2009, and were planning a 40-story, mixed-use tower spanning more that 650,000 SF with 470 rental units. (CO)

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