Commercial Real Estate Week in Review

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Week in Review for April 7 – 13:

- Washington, D.C.-based alternatives manager Carlyle Group prepares for an IPO, which Reuters predicts could fetch as much as $800 million. The initial public offering would bring 10% of its management company to the public.

-  The first quarter of 2012 saw a decline in U.S. CRE demand. However, analysts point out, diminishing inventory has softened the impact of this decline.

- After years of growth, big-box stores are losing their appeal for many retailers. This is a consequence of increasing online shopping, which has forced the closures of Circuit City and, more recently, Sears, Kmart, and Best Buy locations. Even retail giants like Target (TGT) and Wal-Mart (WMT) are moving toward smaller-scale retail stores.

- In Washington, D.C., upgrades to Union Station are expected to benefit the area’s nearby commercial tenants.

- JPMorgan (JPM) is expected to increase the price of its distressed CMBS, indicating an increasingly strong investor demand for these securities.

- For-profit prison operator Corrections Corp. of America considers converting to REIT status. The shift is being explored by two key stakeholders, hedgefunds Corvex Management and Marcato Capital Management. Though this move would allow access to more affordable equity capital, some speculate the change would force the firm to renegotiate contracts with some of its tenants.

- Some collateralized debt obligations (CDOs), which back certain CMBS, are currently benefiting from floating interest rates kept attractively low by their benchmarks. However, analysts warn, this situation could change.

- Hospitality REIT Pebblebrook Hotel Trust (PEB) buys San Francisco’s 108-room Milano Hotel for $30 million. The hotel will be operated by Viceroy Hotel Group.

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