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Fed likely to Hold Off on Second Rate Hike… Maybe
The Fed is expected to hold off on a second rate hike and pursue a less aggressive rate-hike schedule. Despite lingering fears of recession in 2016 and the recent 6.5% decline in the S&P, the housing market is solid shape, buoyed by a 5.8% increase in home prices.
2015 Was a Record Year for Real Estate M&A
M&A transactions saw a particularly big year in 2015, doubling last years totals with 34 transactions totaling $79.3B.
The biggest deal of the year came from the lodging sector, with Marriott International’s November acquisition of Starwood Hotels and Resorts. Weyerhauser and Plum Creek Timber’s $12B merger marked the largest REIT deal, and Blackstone was, unsurprisingly, the most active M&A participant last year with their $8B takeover of BioMed Realty, their $6B acquisition of Strategic Hotels and Resorts, and their $2B acquisition of shopping center REIT Excel Trust.
2016 may be heading in the same direction, as rumors are swirling that Brookfield Asset Management is considering an acquisition of General Growth Properties (GGP). Brookfield already holds a 34% stake through various interests, and may make a play for the rest. GGP’s market cap is valued at $24B.
10 Hudson Yards is All Booked Up
Deputy Mayor Dan Doctoroff’s two urban policy companies, Intersection and Sidewalk Labs, will be leaving the iconic Woolworth Building to move into a 67k SF space on the 26th and 27th floors of 10 Hudson Yards. Doctoroff was partly responsible for rezoning Hudson Yards in the first place.
Blackstone’s Q4 Profits Drop 70%
Blackstone’s Q4 profit fell 70% from the same point last year as its investments tanked during the quarter, dropping from from $1.45B to $435M.
"It's just noise," Blackstone president Tony James said, unphased, during a conference call. He says the markdowns aren’t permanent and the company will get eventually its returns.
Blackstone’s biggest public stake, Hilton Worldwide Holdings, has seen a 22% decline, amounting to a $2.3B loss for the asset manager. Blackstone’s oil unit, GSO Capital, took the hardest hit of all its branches as oil prices have dropped, with profits plunging a whopping 87%.
Citi Buys Back HQ from SL Green for $2B
After selling its Tribeca HQ to a partnership between SL Green and Ivanhoe Cambridge for nearly $1.6 in 2007, Citigroup has exercised their option to reacquire their home base for $2B.
SL Green bought Ivanhoe out in 2014 to take full control of ownership, and therefore stands as the sole seller.
The option on the property was part of Citigroup’s $1B lease renewal of their 2.7M SF back in 2013.
Circuit City is Coming Back
After declaring bankruptcy, Circuit City will opening its first store in Dallas this June. The company's new model will involve opening smaller stores (2k to 4k SF) in “affordable yet densely populated real estate markets."