The public non-listed REIT sector is in a state of flux as it makes changes to compete with institutional investors such as Blackstone Real Estate Income Trust and Rodin Global Property Trust, which are trying to make inroads in this market with lower fee structures. In response, public non-listed REITs are lowering their own fees, with some dropping below 10%, according to Summit Investment Research.
The US office vacancy rate in the first quarter made its first quarterly increase since 2010, ticking up by 0.1%, according to CoStar's State of the US Office Market Q1 2017 Review and Forecast. The office market and economy remain very good by historical standards, according to Walter Page, CoStar Portfolio Strategy director of office research, who says, "We're at the highest levels of occupied space, the highest rental rate levels ever... At this point, the risk of recession in the near term appears to be very minimal."
First Potomac is reportedly exploring a sale, according to sources. Over the past year and a half, the REIT has made progress selling its unprofitable buildings and repositioning its core holdings.
The retail environment is intimidating, with some 9,000 stores slated to be closed this year, says Store Capital CEO Chris Volk. Store Capital, whose focus is profit-centered properties, is now 85% invested in the service and manufacturing sectors with a 15% exposure in retail, but few of its stores are affected by the woes afflicting some retail chains, he says.
Technology is providing valuable support in accounting as the workload continues to grow, said Mark Patterson, vice president of tax at Duke Realty Corp. But technology can only go so far to aid compliance with REIT tax rules, and Patterson emphasized the importance of the REIT tax director staying in touch with the chief financial officer and chief accounting officer.
The House of Representatives will not be voting on a health care reform bill this week, having failed to secure the necessary votes for passage. Separately, both chambers of Congress plan to approve a one-week extension to pass a funding package for the government for the remainder of the fiscal year, which ends Sept. 30.
A council meeting this week led to the first approval in the hard-fought $400 million expansion of Bal Harbour Shops near Miami. Owner Whitman Family Development made several concessions, including providing more funding for security and a bayfront park, as well as committing to implementing paid parking.
RealtyLink LLC is planning a $50 million shopping center called The Shoppes at Whitestown in Whitestown, Ind. The project would sit on 33 acres of undeveloped property and include 275,000 square feet of retail, with space for 19 tenants.
Costco will reward shareholders with a $7-per-share special dividend totaling $3.1 billion, after beating analysts' forecast with a 6% same-store sales jump in March. The warehouse retailer's membership model brings a steady source of predictable cash flow that's rare in the industry, said UBS Group analyst Michael Lasser.
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