Colony NorthStar forecloses on Tharaldson hotel portfolio | Green PACE loans see higher-than-expected default rate | Singapore Exchange exec praises REITs' yield
August 15, 2017
The daily source on REITs and real estate investment
Colony NorthStar has executed a consensual foreclosure on the $1.3 billion Tharaldson limited-service hotel portfolio, which consists of 148 properties. "At a basis of $92,000 per key and a 9% debt yield as the June 30, 2017, on depressed financial results, we are optimistic about the ultimate prospects for this investment," Colony NorthStar CFO Darren Tangen says.
Get your employer to fund your MBA A number of variables factor into the decision to pursue a degree, but many prospective students cite cost as the single largest barrier to earning a degree. Download this white paper to find out what tuition benefits your employer may have and how to ask for help if they don't usually offer this assistance.
Loans under the Property Assessed Clean Energy program, or PACE, have seen a high number of defaults, despite claims to the contrary by lenders. The Wall Street Journal analyzed tax data in 40 counties in California and found that approximately 1,100 borrowers have missed two consecutive payments this year, compared with 245 over the previous year.
Singapore REITs are an interesting asset class that delivers more than the average rental yield, according to Chan Kum Kong, Singapore Exchange's head of research and products. Rental yield is around 3%, dividend yield is about 6% to 7% "and from a tax standpoint, it's very efficient because it's tax exempt for both local and foreign individuals," he said.
Despite a negative year-to-date return of 11.7% for regional mall REITs, chief executives say they are well positioned to deliver value to investors. "The recapture, redevelopment and re-tenanting of department store boxes is what we do," says GGP CEO Sandeep Mathrani.
Signs are pointing to a lackluster remainder of 2017 for office sales, following a 2% drop in deal volume for the first half of the year, according to Real Capital Analytics' figures. "There's still so much uncertainty around the economic policy picture, and if investors sell, they need to have a redeployment strategy," says David Bitner of Cushman & Wakefield.
Haendel St. Juste, an analyst for Mizuho, says retail REITs are fundamentally a better investment when focused on strip centers rather than enclosed retail centers. He believes retail centers have a higher occupancy cost and more apparel exposure.
Continental Europe is a potentially undervalued market, says Jay Leupp of Lazard Asset Management. He is also bullish on Hong Kong and China, while highlighting promising emerging markets such as the Philippines.
US retail sales rose 0.6% in July from the previous month, the biggest monthly surge this year as consumers boosted spending in a variety of outlets, including department stores and building-supply chains, according to the Commerce Department. Nonstore sales surged 1.3%, fueled in part by Amazon's Prime Day sales event.
Investors drove up the costs of three-month Treasury bills to their highest level since 2008 at a recent sale as lawmakers face a deadline on the debt limit. The US has never defaulted on its debt and it is unlikely to do so, but after President Donald Trump said the government "needs a good 'shutdown,' " investors aren't taking chances.
Traders are reacting to July's weak inflation numbers by scaling back bets the Federal Reserve will increase interest rates again this year. The federal funds futures market indicated a 37.4% chance Friday of a rate increase in December, down from 46.8% the week before, according to CME Group.
