—— PE Reserves Cash to Buy Distressed Commercial Properties; US Large Urbans Quickly Lose Middle-class Families; Microsoft to Not Join OpenAI Board Amid Scrutiny; Travelers Avoid Paris Ahead of Olympics Game; Jersey City Attracts Increasingly More New Yorkers; Tesla Becomes Biggest Holding of ARKK
1. PE Reserves Cash to Buy Distressed Commercial Properties
Distressed investors are eyeing a prime opportunity to acquire troubled US real estate assets amidst a continuing crash in the commercial property market.
Private equity firms are already positioning themselves to capitalize on the situation. Approximately 64% of the $400 billion in dry powder reserved for property investment is targeted at North America, the highest proportion in two decades, according to Preqin data.
There are concerns that this strong US focus might mean other parts of the world won’t attract the same level of demand, potentially delaying the resolution of troubled loans and properties elsewhere.
Private equity firms are eager to take advantage of significant discounts in the US, where office values fell by nearly a quarter last year, more than in Europe, following the pandemic-induced shift to remote work. The Mortgage Bankers Association reports that almost $1 trillion of debt linked to commercial real estate will mature in the US this year. Rising defaults as borrowers struggle to repay these debts will create more opportunities for buyers of distressed assets.
“Compared with the Savings & Loans crisis and 2008, we’re still in the first or second innings when it comes to troubled assets,” said Rebel Cole, a finance professor at Florida Atlantic University who also advises Oaktree Capital Management. “There’s a tsunami coming and the waters are pulling out from the beach.”
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2. US Large Urbans Quickly Lose Middle-class Families
Families are still leaving large US cities, with the number of young children in New York City dropping by almost a fifth since the beginning of the pandemic, according to an analysis of the latest census data.
Since April 2020, the under-5 population has declined by 18% in New York, 15% in Cook County (which includes Chicago), and 14% in Los Angeles County, according to a report by the Economic Innovation Group (EIG).
The research, based on US Census Bureau data released earlier this month, highlights how major cities are still dealing with the after-effects of the pandemic, which triggered an exodus of urban residents to smaller cities, suburbs, and rural areas. Although the rate of small children leaving is slowing, the continued loss of families underscores the risk of an “urban doom loop” as cities struggle to retain one of their most crucial demographics.
In total, about 800,000 people moved out of large urban counties last year, twice the pre-pandemic rate, according to EIG. This movement, combined with lower birth rates, has led to a significant decrease in the number of young children in major urban counties. Birth rates in these areas have fallen at twice the rate of those in rural areas over the past decade or so, EIG found.
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3. Microsoft to Not Join OpenAI Board Amid Scrutiny
Microsoft Corp. and Apple Inc. have unexpectedly abandoned plans to take board roles at OpenAI, highlighting the increasing regulatory scrutiny over Big Tech’s influence on artificial intelligence.
Microsoft, which invested $13 billion in OpenAI, will withdraw from the board, as stated in a letter to OpenAI that Bloomberg News reviewed. Apple was also slated to take a similar role, but an OpenAI spokesperson confirmed that the startup will no longer have any board observers following Microsoft’s exit.
Regulators in both Europe and the US had raised concerns about Microsoft’s influence over OpenAI, prompting one of the world’s most valuable companies to demonstrate that it’s maintaining an arm’s-length relationship. Microsoft has incorporated OpenAI’s services into its Windows and Copilot AI platforms and, like other major US tech firms, is relying on the new technology to drive growth.
“Over the past eight months we have witnessed significant progress from the newly formed board and are confident in the company’s direction,” Microsoft wrote in the memo. “We no longer believe our limited role as an observer is necessary.”
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4. Travelers Avoid Paris Ahead of Olympics Game
Paris is unexpectedly proving unpopular among wealthy tourists ahead of the upcoming Olympics this summer, with visitors worried about navigating the city by car.
According to UMIH Prestige, which represents luxury hotels that charge at least €800 ($865) per night, demand for stays at high-end hotels in the French capital has plummeted before the Games, which begin on July 26 and run until August 11.
Bookings for the last week of June and most of July are down between 20% and 50% compared to the same period last year, the organization reported. “In 24 years I’ve never seen this,” said Laurence Bloch, deputy general manager at the Plaza Athénée on Avenue Montaigne, where guests pay €2,500 or more for stylish rooms near Chanel and Christian Dior stores.
Concerns about traffic congestion due to temporary Olympic installations have reduced occupancy to as low as 15% for some July dates, she added.
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5. Jersey City Attracts Increasingly More New Yorkers
The pool at Hudson House, a luxury building in SoHo West, was bustling with people swimming, tanning, and working on laptops under the scorching sun on a recent Thursday afternoon.
Contrary to initial assumptions, they’re not in Manhattan but in “South of Hoboken” in New Jersey—a fresh branding attempt by real estate agents pitching Jersey City as the “sixth borough of New York.”
This concept is a hard sell for many New Yorkers who can’t shake off the Jersey jokes and view relocating across the Hudson River as a downgrade from Manhattan’s culture and buzz. However, with nearly a 50% increase in new housing units completed from 2019 to 2023, the move-to-Jersey-City campaign has gained traction. Almost 30% of the area’s population arrived in 2021 or 2022, according to data from financial information provider SmartAsset.
It’s not just the budget-conscious seeking more space who are making the move. Increasingly, more New Yorkers are trading coveted NYC zip codes for high-end finishes, extensive amenities, and New Jersey’s slightly lower cost of living.
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6. Apple to Boost iPhone 16 Shipments
Apple Inc. plans to ship at least 90 million iPhone 16 devices in the latter half of this year, relying on AI services to boost demand for its new lineup after a challenging 2023.
The company informed suppliers and partners that it is targeting approximately 10% growth in shipments of new iPhones compared to their predecessors, according to a person familiar with the matter. This comes after shipping about 81 million iPhone 15s in the second half of 2023.
Apple is confident that the addition of some Apple Intelligence features to the iPhone 16 will help drive demand when the model goes on sale later this year, said sources with knowledge of the situation, who asked to remain anonymous because the projections are private.
These goals indicate that Apple anticipates a stronger 2024, despite competition from other AI-enhanced smartphones by rivals like Samsung Electronics Co. and Xiaomi Corp. Apple is also benefiting from an easier comparison, having faced a tough second half of 2023 — particularly in China, where Huawei Technologies Co.’s Mate 60 Pro attracted local consumers with its advanced, made-in-China 7-nanometer processor.
Wall Street analysts have expected iPhone revenue to decline in the second half of calendar 2024.
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7. Tesla Becomes Biggest Holding of ARKK
The significant rebound in Tesla Inc. shares over the past few months has propelled the electric-vehicle maker to its highest-ever weighting in Cathie Wood’s flagship $6.2 billion exchange-traded fund.
Tesla now accounts for 15.4% of the ARK Innovation ETF (ticker ARKK) after surging more than 80% from its 2024 low in April, according to Bloomberg data. This substantial weighting persists even after the fund has reduced its positions in Elon Musk’s company in recent weeks. This level of investment signifies the strongest confidence in the stock in the 10-year history of the disruptive tech fund, as analyzed by Strategas Securities.
Tesla has consistently been one of Wood’s high-conviction holdings and reclaimed the top spot in ARKK in April, surpassing Coinbase Global Inc. The ETF’s second-largest holding is Roku Inc., making up about 9.1% of the fund, while Coinbase ranks third at around 8.5%.
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本文内容来自《Financial Times》、《Bloomberg》，以及《The Real Deal》等多家财经新闻媒体。