Yellen: Soft inflation was biggest economic surprise | ECB's Draghi says European CRE only slightly overvalued | Blackstone, others target investors with up to $5M in assets
October 16, 2017
The daily source on REITs and real estate investment
This year's biggest economic surprise was how soft inflation turned out to be, but that is likely to change as the labor market continues to tighten, said Federal Reserve Chair Janet Yellen. The failure of prices to rise as unemployment fell below its precrisis levels puzzled policymakers and the central bank recognizes that "this year's low inflation could reflect something more persistent than is reflected in our baseline projections," she said at a banking seminar Sunday.
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The commercial real estate sector appears to be slightly overvalued in Europe, according to Mario Draghi, president of the European Central Bank. Macroprudential policy is the best solution to that, he said, adding, "I don't think we're living in a bubbly situation."
Private equity funds such as Blackstone Group, KKR & Co. and the Carlyle Group are seeking market share in the retail-investor space -- with Blackstone in particular targeting individuals with $1 million to $5 million. Spectrem Group market research shows that there are seven and a half times more US households with assets in that range than there are households with $5 million to $25 million.
As demand for data center real estate investment trust services continues to grow, stock returns -- which have been averaging 30% over the last 12 months -- are expected to continue to overperform. "We characterize the data center REIT sector as being in the second or third inning, which implies there is significant future runway for growth in the sector -- well above any other REIT product type," CyrusOne Chief Financial Officer Diane Morefield says.
Forest City Realty Trust is buying out its partner, Hearst, on portions of a four-acre mixed-use project in the South of Market district of San Francisco, also known as SoMa. The real estate investment trust is buying a site approved for a 617,900-square-foot office structure and land designated for a 288-unit apartment building.
A private equity fund managed by NRD Capital is acquiring Ruby Tuesday for $2.40 per share in cash totaling an enterprise value of about $335 million. The purchase price is a 21% premium over the restaurant chain's closing share price on Oct. 13.
Colony Capital may acquire The Weinstein Company's assets following an agreement it made to provide the company with an upfront cash infusion. The companies are discussing a sale but haven't revealed the financial details.
At least six Macy's stores will once again open at 5 p.m. on Thanksgiving to kick off the holiday shopping weekend, according to holiday deal tracker BestBlackFriday.com. The department store began opening at 8 p.m. on the holiday in 2013, as part of a growing trend to extend seasonal store hours to compete with online retailers.
Central bank leaders from around the world told delegates at a Group of 30 banking seminar in Washington, D.C., that existing economic stimulus efforts may have to remain because inflation, wages and consumer prices are still showing little sign of rising. A general brightening of global economic conditions has prompted moves to consider tapering the schemes, but several officials warned that weak inflation in particular could prompt delays.
There is disagreement between the National Association of Home Builders and the National Association of Realtors over the fate of the home mortgage-interest deduction, now up for debate as Congress considers tax reform. Usually, both groups are strongly in favor of the deduction, but now NAHB has said it is "open to the idea of broader options regarding housing tax incentives."
