US GDP rises sluggish 0.7% in Q1 | Public non-listed REITs become more competitive | High-yield bonds may be peaking
April 28, 2017
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US GDP rises sluggish 0.7% in Q1
US GDP rises sluggish 0.7% in Q1
US gross domestic product rose 0.7 percent in the first quarter, the most sluggish rate since the first quarter of 2014. Reasons for the slow growth included stagnant consumer spending, lower levels of investment by businesses and reductions in federal defense spending.
Reuters (4/28),  Bloomberg (4/28) 
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Investment News
Public non-listed REITs become more competitive
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.
CoStar Group (4/27) 
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High-yield bonds may be peaking
It may be that the high-yield bond market's seven-year streak is coming to an end, with these funds experiencing $10.5 billion of outflows last month -- the highest level since December 2015, according to EPFR Global. "Valuations in high yield are at or approaching their post-crisis highs," according to a Bank of America note published this week.
Bloomberg (4/28) 
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Real Estate Marketplace
US office vacancy rate historically low despite recent uptick
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."
CoStar Group (4/27) 
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First Potomac considers a sale, sources say
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 Business Journals (tiered subscription model)/Washington, D.C. (4/26) 
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Store Capital takes well-diversified approach to market
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.
Bloomberg (4/27) 
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VP of tax at Duke Realty explains the secret to navigating complex rules
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. (4/26) 
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Attend the REIT Investor Event of the Year in NYC
REITWeek 2017: NAREIT's Investor Forum, is the best opportunity for institutional investors to connect with more than 500 REIT executives to hear their business plans via one-on-one meetings; individual company presentations; and daily luncheons and networking events. Learn more.
Policy & the Economy
Global economy isn't shaking off low inflation after all
The low inflation that has characterized a sluggish global economy appeared to be lifting over the winter months. But that now appears to have been a temporary effect of higher oil prices, and the forecast now is that the gloom will persist.
The New York Times (free-article access for SmartBrief readers) (4/26) 
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Health care vote delayed again; shutdown averted
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.
The New York Times (free-article access for SmartBrief readers) (4/27) 
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