Capstak's Weekly Wrap Up | August 10

by Capstak

1) Bloomberg | Fannie-Freddie Might Need $100 Billion in New Crisis, FHFA Says

According to results of a stress test released by the Federal Housing Finance Agency on Monday, Fannie Mae and Freddie Mac could need a taxpayer bailout of as much as $99.6 billion if the U.S. was hit by another recession. In 2008, the companies needed $187.5 billion in bailout money to stay afloat. Since then, they have paid taxpayers about $270 billion. The companies, which back around $4 trillion in securities, are only allowed to retain a capital buffer of $600 million each, since nearly all profits are turned over to the Treasury. Will the results of this test, prompt regulators to allow the companies to begin building capital?

 

2) Connect Media | Cannabis Company Buys CA Town, Plans Pot Paradise

In a bold move, the largest publicly-traded pot company bought an entire town, planning to transform it into a cannabis hospitality destination. American Green Inc. bought Nipton, a California “ghost town” 12 miles from the Nevada border, and about an hour from Las Vegas. While American Green is the first company to buy an entire town to use for cannabis production and recreation, it seems like a safe bet. In 2016 Colorado saw $875 million in recreational pot sales. And, that is projected to increase in 2017.

 

3) SF Chronicle | Rich SF residents get a shock: Someone bought their street

Sometimes a successful commercial real estate deal is about research, planning and execution, other times it all boils down to luck. In the case of Tina Lam and Michael Cheng, it seems to be a little of both. The couple managed to buy Presidio Terrace, one of the most desirable streets in San Francisco, for $90,000. Yes, you read that right. They bought a street, pavement, sidewalks, a string of well-manicured garden islands, the whole thing. How exactly did this unassuming couple manage to buy the main point of access to $35 million mega mansions? Well, the homeowners’ association forgot to pay the $14 yearly property tax since the 1980’s, and the city put the street up for auction seeking to recover the $994 in unpaid back taxes, penalties and interest. What does this teach us? Pay attention to your property taxes, and when in down hire a better property manager.

 

4) Bisnow | Amazon Presence Continues To Grow With 'Pending Lease' For Rainier Square

According to commercial real estate sources in Seattle, Amazon plans to occupy 12 million square feet across 40 buildings in the city by 2022.  The company has a pending lease for the entirety of the office portion of a large mixed-use structure called the Rainier Square project, which covers four city blocks. Amazon houses a huge workforce of 382,400 employees (40,000 in Seattle) and another 19,500 open positions, and that doesn’t count the robots they are planning to bring on (true story).

 

5) Mercury News | How big can Google get? Its aggressive push for elbow room in the Bay Area

While Amazon is planning to grow their Seattle footprint to 12 million square feet by 2022, it looks like Google may increase their footprint in Silicon Valley by 8-10 million square feet by the end of this year. But, don’t worry Amazon it’s not a competition. Google, which currently has 72,000 employees, 20,000 of which are in Mountain View, appears to be making room for around 31,000 more workers. While some cities would be concerned with their biggest employer expanding outside of the city, Mountain View seems to take it in stride. Mountain View Mayor, Mike Kasperzak says, “Every time I hear about Google taking space somewhere else, I say ‘Oh no, don’t leave Mountain View,’ but I also say, ‘Oh whew, that’s 5,000 Google employees that we don’t have to accommodate in here.’ The bottom line is: Mountain View remains Google’s headquarters.”

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