Editors’ Weekly News Roundup May 13 – May 17
All real estate is local, but what happens in one market may have implications that carry beyond that market. Regional stories that also drew national interest comprised three of the top five Connect CRE stories for the week ending May 18.
Leading the top five was a story reporting a temporary shutdown of construction on a mixed-use project. Such hiatuses aren’t unheard-of, but when the developer is Hines and the interrupted project is valued at approximately $4 billion, it’s news. Connect CRE readers certainly paid attention to Hines Pauses Construction on $4B Riverwalk MXU in San Diego.
The project had gotten $90 million of infrastructure work out of the way and will now be suspended until financial conditions improve. “While we don’t have a firm date for when construction will resume, we and our partners remain fully committed to the project and look forward to delivering this transformative development to the San Diego community,” according to a status report on the Riverwalk website.
Going back at least 15 years, bankruptcies among retail chains haven’t been rare, either. However, the sequence of events around Chicago-based Foxtrot’s collapse was uncommon, with the parent company first closing all locations and later filing for Chapter 7 bankruptcy. In between those two actions was a selloff, which we reported in Foxtrot Assets Sold at Auction Following Sudden Closure, our second most-read story of the past week.
Presided over by creditor JPMorgan Chase through its counsel, DLA Piper, the auction encompassed inventory and equipment at Foxtrot’s 33 locations nationwide. Put up for sale but not successfully auctioned off were the assets of the two Dom’s Kitchen & Market locations in Chicago.
Moving from a regional arena to a global one, our third most-read story reported on a Bank of America survey by way of the Financial Times. Conducted among money managers who oversee a combined $642 billion in assets worldwide, the BofA survey reported in Global Fund Managers Cut CRE Allocations to 15-Year Lowfoundthat managers are turning instead toconsumer stocks, bonds and cash.
That doesn’t mean that institutional players have given up altogether on large-scale acquisitions. As a case in point, Henderson Park and Pyramid Global Hospitality acquired the Arizona Biltmore hotel from Blackstone for $705 million. It’s Phoenix’s largest hospitality real estate deal year-to-date and Arizona Biltmore Trades for $705Mwas Connect CRE’s fourth most-read story of the week.
The transaction illustrated Blackstone’s simple formula for success: buy, fix and sell. The asset management giant spent $165 million on renovations to the 95-year-old, Frank Lloyd Wright-designed property.
Completing the top five was a story exclusive to Connect CRE. Following the Federal Trade Commission’s announcement that a ban on employee non-compete agreements would take effect this coming August, we interviewed Kent Elliott, founder and CEO of CRE executive search firm RETS Associates. Elliott’s insights were the basis of Ban on Employee Non-Compete Agreements Tips the Balance of Power.
Last week also provided another timely examination of current market conditions via a Connect webinar moderated by Steve Pumper, executive managing partner at Transwestern. The subject was distressed real estate and the questions ranged from whether distress is more prevalent today than six months ago (spoiler alert: it is) to the 12-month outlook. Pumper assembled a panel of experts on the front lines of special servicing.