A bizarre attack on a major mortgage company, an about-face by the Federal Reserve and a luxury retailer is coming to San Francisco. From the wild and wooly world of real estate, here are the Hits and Misses for the week of April 1-5.
Miss: A Strange Hit-Job Against UWM. Perhaps the weirdest story of the week involved the hedge fund Hunterbrook Capital, which created a news site to publish a story alleging that United Wholesale Mortgage operated a “steering enterprise” with “captive” brokers that ran afoul of federal racketeering laws and other provisions. At the same time, the hedge fund shorted UWM’s stock while going long on its rival Rocket Companies – and it teamed with the litigation firm Boies Schiller Flexner LLP to bring a lawsuit against UWM. From both a journalism and a financial services perspective, Hunterbrook Capital’s actions were bizarre – UWM CEO Mat Ishbia referred to this odd endeavor as “unethical.” While the hedge fund plans to make trades based on the articles by its news site, at the moment the UWM hit-job is its sole story.
Miss: Is the Fed Changing Direction? Anyone who believed Federal Reserve Chairman Jerome Powell’s hints of three rate cuts later this year had the proverbial rug pulled out from under them when other central bank leaders began to downplay that likelihood. Atlanta Fed President Raphael Bostic stated earlier this week that only one rate cut was possible this year while Minneapolis Fed President Neel Kashkari speculated there would be no cuts this year without inflation going into further decline. And Federal Reserve Governor Michelle Bowman went further by wondering aloud if another rate hike was needed to curb inflation – yes, a rate hike. One has to question whether the folks at the Fed talk to each other, let alone plan their messaging before going on microphone.
Hit: Good News from San Francisco. The best commercial real estate news of the week was the announcement that the luxury Italian jewelry and accessory designer Bulgari is taking over a 9,000-square-foot retail site in San Francisco’s Union Square neighborhood. At a time when too many prominent retailers have abandoned San Francisco because of the city’s rising crime and deteriorating quality of life, having Bulgari opening a large new store is extraordinary. Will this be the beginning of the city’s return to normalcy? Only time will tell, but praise goes to the commercial property owner and developer Grosvenor for pulling off this accomplishment.
Miss: A Retail Chain Shuts Down. The worst commercial real estate news of the week was the announcement by discount retailer 99 Cents Only Stores that it was closing all of its 371 stores and winding down its business operations in Arizona, California, Nevada, and Texas. 99 Cents Only Store is the second discount retailer this year to face financial tumult – last month, Dollar Tree Inc. announced plans to close 1,000 stores operating under the Dollar Tree and Family Dollar brands. Let’s hope these are isolated cases and not the beginning of a dismal trend in commercial real estate.
Miss: Squatters Don’t Matter to the White House. The Biden administration is not interested in helping homeowners whose properties are being taken over by squatters. During a White House news briefing, Press Secretary Karine Jean-Pierre ruled out federal input by stating, “My understanding is that this is obviously a local issue.” When asked if the administration would support a federal law similar to the one passed last week in Florida that would enable law enforcement to immediately remove squatters from private property, Jean-Pierre evaded the question by declaring, “I’m not going to get into hypotheticals from here.” Thanks for nothing, Karine!
Hit: Bringing New Housing to Navajo Nation. One of the most intriguing stories of the week involved Navajo Nation’s granting of $74 million to ZenniHome, a producer of sustainable manufactured housing. The grants include $50 million from the Navajo Nation’s Community Housing and Infrastructure Department to provide a minimum of 250 ZenniHome units to high-need residents across the Navajo Nation, while $24 million from the American Rescue Plan Act will be used to expand ZenniHome’s production at the former Navajo Generating Station site by building a second factory. Navajo Nation President Buu Nygren declared this partnership will enable homes to be “built on Navajo, by Navajo and for Navajo.” Considering the sorry state of housing and employment in Navajo Nation, this is a big step in the right direction.
