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SoftBank may invest another $1B in WeWork; Strada targets $1B in developments

Commercial real estate

* SoftBank Technology Corp. is in discussions with WeWork Cos. Inc. to potentially add $1 billion or more to the $1.5 billion investment it intends to inject into the coworking giant in 2020, the Los Angeles Times reported, citing people briefed on the matter. As part of the deal, SoftBank will acquire WeWork stock at a reduced per-share price.

The sources noted that the talks are at an early stage, and the investment boost is one of several options being considered. SoftBank may decide against investing in WeWork altogether, the report noted, citing the sources.

* California State Teachers' Retirement System injected $300 million into Strada Investment Group LLC, an investment that could result in $1 billion worth of new multifamily development, the San Francisco Business Times reported. The developer will use the money to build apartments in top-tier West Coast cities, including a mixed-use project being developed at the Lake Merritt BART Station in Oakland, Calif., which has an estimated cost of between $400 million and $500 million.

* New York State Common Retirement Fund approved $300 million for JP Morgan's JPM Star Lake Fund III, which aims to target core and noncore U.S. office, industrial, retail and apartment investments for gross levered returns of 9% to 11%, and $200 million for Ellis Partners LLC's EPNY Ventures I, which will target core office, industrial and retail assets in the San Francisco Bay Area for gross returns of 8% to 10%, IPE Real Assets reported.

* Alaska Retirement Management Board is planning to transfer assets or reinvest capital elsewhere to end $833.5 million of real estate separate accounts with Sentinel Real Estate Group, UBS Asset Management Inc. and LaSalle Investment Management Inc., IPE Real Assets reported. The fund's $175 million Sentinel account holds three properties, while its $535 million UBS account holds 11 properties. The LaSalle account holds two properties worth $123 million.

* Sackato Society is proposing New York City's "First 5-Star Detox & Rehab facility" at The Feil Organization Inc.'s property at 140 W. 57th St. on Billionaires' Row in Midtown Manhattan, Bloomberg News reported, citing a proposal submitted by the firm to Community Board 5. The owner originally cleared the property of office tenants to convert it into a condominium project, which did not pan out.

The 14-story property has about 76,000 square feet of space up for rent and has a Morton Williams supermarket at its base, the news outlet reported, citing a fact sheet from the landlord.

* The Related Cos. LP's Related Fund Management LLC is close to securing a nearly $190 million financing package from Dougherty Funding to begin construction on the Eleven on the River site in Minneapolis for a 41-story condominium tower with 118 units, Star Tribune reported. The project will be co-developed by Ryan Cos. and Luigi Bernardi of Arcadia LLC.

* The Wall Street Journal featured a report on SoftBank-backed real estate technology company Urban Compass Inc., d/b/a Compass, which has faced a wave of executive departures in the past 18 months, including its CFO, chief marketing officer, chief technology officer, general counsel, head of product, chief people officer and most recently COO Maelle Gavet.

SoftBank is already in damage control mode amid WeWork's CEO departure and IPO delays.

* Office landlords are worried about the potential loss of a voracious customer in WeWork, which increased its occupancy 73% year over year as at June-end in Manhattan alone, accounting for 6.8% of Manhattan leasing activity in 2018, and 5.2% so far in 2019, Bloomberg News reported, citing CBRE data.

The delayed IPO of the coworking giant has increased the risk on billions in new loans, and if WeWork were to scale back its leases, owners of older office buildings would be hurt the most amid competition with newer products, according to the publication. A representative for WeWork declined to comment, Bloomberg noted.

* The New York City Council approved a bill to increase the penalties for harassing tenants of commercial buildings to a range of $10,000 to $50,000 from a current range of $1,000 to $10,000, The Real Deal reported. The bill lists 13 actions that qualify as harassing tenants, including using force, making threats and interfering with a tenant's business with unnecessary construction. The transgressors can also face court-ordered rejections of construction permits by the Department of Buildings.

* Crescent Heights Inc. is planning to develop a mixed-use project between Northeast 29th to 32nd streets in Miami's Edgewater neighborhood that will involve 800 residential units and over 600,000 square feet of retail and office space, The Real Deal reported. The company has purchased several parcels to be put together for the assemblage for a total of $44 million.

* City commissioners of Pompano Beach, Fla., imposed a six-month moratorium on accepting applications and issuing permits for self-storage developments in the city, with Vice Mayor Barry Moss decrying the "hulking buildings that occupy a great deal of space and employ a handful of people," The Real Deal reported.

* Developers filed plans for the construction of Riverside Residences multifamily building at a 40,752-square-foot site owned by affiliates of Beztak Properties at 407 and 419 Riverside Drive in Pompano Beach, Fla., the South Florida Business Journal reported. The building will have 42 units and 65 parking spaces in 10 stories.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng jumped 0.37% to 26,041.93, and the Nikkei 225 rose 0.13% to 22,048.24.

In Europe, around midday, the FTSE 100 was up 0.99% to 7,362.13, and the Euronext 100 climbed 0.70% to 1,089.32.

On the macro front

The GDP report, the international trade in goods report, the jobless claims report, the corporate profits report, the retail inventories report, the wholesale inventories report, the pending home sales index, the EIA natural gas report, the Kansas City Fed manufacturing index, the Fed balance sheet and the money supply report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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