Disney to invest $60B in expansion of theme parks, cruises, resorts

September 23, 2023 / no comments

The House of Mouse is going to get a lot bigger — literally.

Disney has announced plans to invest about $60 billion in the expansion of its theme parks, cruise lines, and resorts over the next decade, nearly doubling its investment in the division that serves as its primary profit source, the Wall Street Journal reported.

CEO Bob Iger and Josh D’Amaro, chief of Disney’s Parks, Experiences, and Products division, revealed the plans at an investor summit held at Walt Disney World in Orlando.

While details were scarce, Disney emphasized a focus on high-return projects, including potential additions to its U.S. and international parks and cruises. Among the possibilities mentioned were the introduction of “Frozen” at Disneyland Resort and the creation of a “Black Panther” Wakanda experience.

Disney has more than 1,000 acres of undeveloped land for park expansion to accommodate the millions of visitors that frequent its global theme parks annually. The company also intends to introduce more cruise ships and establish a new home port in Singapore.

This announcement underscores Disney’s ongoing transformation in response to changing market dynamics. Historically reliant on income from its traditional cable television business, Disney is adapting to the decline in cable customers by ramping up its thriving theme parks as its primary financial engine.

In recent quarters, the parks division’s operating income has outperformed the linear TV business by substantial margins, the newspaper reported.

Not everyone was sold on Disney’s manifest destiny plans. Despite the significant investment in parks, Disney shares dropped 3 percent in trading, possibly due to concerns about near-term cash flow issues.

Over the past few years, Disney has implemented various changes in its theme parks, such as price increases, premium add-ons, and higher concession prices, aimed at maximizing revenue per guest. However, these changes have generated complaints from some visitors, particularly annual passholders.

While the COVID-19 pandemic had initially impacted Disney theme parks, there has been notable growth at international locations, such as Shanghai Disney Resort and Hong Kong Disneyland, according to the company. Despite this, reports from July suggested that Disney parks were emptier than usual during the summer, possibly due to recent ticket price increases.

The announcement comes in the midst of a feud with Florida Gov. and presidential hopeful Ron DeSantis that started over the company’s stance on the state’s so-called “Don’t Say Gay” law that restricts the discussion of gender identity and sexual orientation in schools.

That drew DeSantis’ ire, with the state legislature voting last year to strip Disney of its special tax district, which gives the company the authority to effectively act as a local government that can issue bonds and approve building plans for its 25,000-acre theme-park complex. 

Ted Glanzer

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The Daily Dirt: What is Class A office?

September 23, 2023 / no comments

Somerset Partners and Meadow Partners handed a Class A Midtown office building to their lender, Fortress Investment Group, earlier this week.

The partnership purchased the 237,000-square-foot building in 2019 for $122.5 million. Fortress is expected to sell it for a fraction of that price. 

The story piqued my interest because it hit on something that everyone has been talking about this year: Class A office. 

The term “Class A” gets thrown around indiscriminately these days. And why wouldn’t it? The “flight to quality” narrative has dominated conversations about office buildings — insisting that Class A will survive or even thrive while Class B and C are doomed.

“Every landlord thinks they have Class A,” Related Companies CEO Jeff Blau said in June. “There is a big difference between a 50-year-old, well-taken-care-of building and a new building.”

Unfortunately for Somerset and Meadow, their tower at 300 East 42nd Street falls into the latter category. The 31-story building was built in 1964. The partnership invested millions into renovations, including a new lobby, elevators, and other amenities. But rents at the property have sat around $60 to $70 per square foot, far below the $200+ premium that top-notch office buildings — like Blau’s 30 Hudson Yards — can demand. 

So, what makes a true Class A building? Class A office should be new. If it was built before the Clinton administration, then it might be time to ask some questions. It should have the accessibility and state-of-the-art systems necessary to command above average rent for the area. And, perhaps most importantly, it should have some cachet in the market. 

With office supply and demand so out of whack, the industry should be a bit more restrictive about what it considers Class A. 

After all, Somerset and Meadow aren’t the only office landlords to throw in the towel on a “Class A” property. 

RXR’s Scott Rechler announced earlier this year that his firm would hand over several buildings to lenders, including 61 Broadway. RXR’s website describes the building, built in 1913, as “premier, Class A office building situated in the heart of Downtown Manhattan.”

It seems all of these landlords are heeding Blau’s advice to Class B owners: “Take what you can and run.”

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What we’re thinking about: What do you think makes a Class A office? Are there hard and fast rules? Or is it open for interpretation? Send a note to david.westenhaver@therealdeal.com.

Closing Time

Residential: The priciest residential closing Friday was $6.7 million for a condo at 15 Mercer Street in Soho.

Commercial: The most expensive commercial closing of the day was $20 million at a foreclosure sale for a quartet of Harlem rental properties at 110 and 120 West 116th Street, 1917 Adam Clayton Powell Boulevard and 110 St. Nicholas Avenue.

New to the Market 

The priciest residence to hit the market Friday was a condo at 760 Madison Avenue in Lenox Hill asking $32.5 million. Douglas Elliman has the listing.

A thing we’ve learned: Ellis Island was once the gateway to New York for immigrants from across the world. Now, immigration officials are calling the Roosevelt Hotel the new Ellis Island, thanks to its prominent role in the city’s effort to cope with an influx of immigrants. The hotel has become an intake center for tens of thousands of migrants and a shelter for a select few.

Elsewhere in New York

— U.S. Sen. Bob Menendez of New Jersey was indicted Friday on charges of bribery. Prosecutors said Menendez and his wife accepted cash and gold from Egyptian officials in exchange for political favors. In 2020, Menendez allegedly pushed then-Secretary of State Mike Pompeo to intervene in negotiations around key foreign policy issues for Egypt. Authorities found $100,000 in gold bars and $480,000 in cash at Menendez’s home.

— Mayor Eric Adams ignored requests from city regulators to disclose the identities of suspected political supporters who raised over $300,000 from 500 donors without proper disclosure, according to The City. This violated campaign finance laws aiming for transparency. The city’s matching funds program added $522,000 in public funds to Adams’ 2021 campaign.

— Congestion pricing is still a ways away — the program will begin in May. But the MTA announced Wednesday that it will not be increasing its bus service to make up for the expected spike in demand, Gothamist reported. That’s because bus and subway ridership are still well below pre-pandemic levels, and congestion pricing is unlikely to change that, officials said. The policy goes against past examples of successful congestion pricing programs, like London’s, which paired the driving tax with an increase in bus service.

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Tampa Bay Rays, Hines building $1.3B stadium replacement

September 23, 2023 / no comments

The ending of a stadium saga prolonged for years is set to bring a new sporting venue and thousands of housing units to St. Petersburg.

This week, Major League Baseball’s Tampa Bay Rays announced a plan to replace outdated Tropicana Field with a new stadium as part of a broader development, the Wall Street Journal reported. A private-public funding partnership will fund the ballpark. Hines will be the site developer.

Next to the site of Tropicana, the stadium will have many hallmarks local fans have become accustomed to, including a fixed-roof dome, though it will also have windows to allow natural light into the Rays’ playing surface for the first time. The smaller 30,000-seat capacity could make poor attendance less glaring for the franchise.

The city of St. Petersburg and Pinellas County are on the hook for $600 million of the $1.3 billion development. Rays ownership is responsible for the rest, planning to raise money through either private fundraising or the sale of partial ownership stakes in the team.

The stadium is a critical development for the team and its fans. The rest of the project, however, may have a larger impact.

The development site is 86 acres and the projects will deliver nearly 8 million square feet of space, serving as Tampa’s largest mixed-use development ever. 

The project is slated to deliver 6,000 housing units, 20 percent of which will be designated for affordable or workforce housing (and about half of those will be for seniors). There will be 1.4 million square feet of commercial office and medical space, 750,000 square feet of retail space and 750 hotel rooms.

Additionally, there will be 100,000 square feet of entertainment space — including a concert venue — 50,000 square feet of civic space, up to 100,000 square feet of conference and meeting space and 14 acres of public open space.

Read more

New York

Related, Sterling to develop Queens soccer stadium

Los Angeles

Anaheim and the Angels could meet for stadium negotiations

San Francisco

Clock ticking on Oakland A’s $12B stadium project at Howard Terminal

Construction on the development is expected to begin next fall, though the public entities still need to go through an approval process expected to start this fall. The first phase of development, including the opening of the new ballpark, is expected by the start of the 2028 MLB season.

Buzz about the Rays’ future has been palpable for years. Solutions as extreme as a split of games between Florida and Montreal had been pitched. This resolution is a positive one for local fans, as opposed to what has happened in the Bay Area, where a long-running stadium dispute appears set to swing the Oakland Athletics to Las Vegas.

Holden Walter-Warner

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Landmark Properties plans 28-story student apartments in Philadelphia

September 23, 2023 / no comments

A national student housing developer is planning to construct a 28-story apartment building for Temple University in Philadelphia. 

Landmark Properties’ project at 1518-28 North Broad Street, opposite the Sullivan Progress Plaza Shopping Center, is expected to feature 142 multifamily units and 147 group-living units, totaling 868 beds, the Philadelphia Inquirer reported. Additionally, the development will provide 78 underground parking spaces, 21,000 square feet of retail space, and a public plaza around the entrance.

It will offer amenities such as a dog-washing station, a gym, study rooms, and a roof deck with a pool. The development will also include 100 spaces for bike parking.

At a recent neighborhood meeting, the community expressed support for the project, as it offers an opportunity to draw students away from residential areas dominated by row houses, potentially reducing issues related to student behavior and partying.

The university, which owns a ground lease on the land, sought a developer to concentrate more of the student population along Broad Street.

Georgia-based Landmark recently entered the Philadelphia market with projects like the Standard, a 19-story building with 280 units, and The Mark, a 34-story tower with 263 multifamily units and 127 group-living units. 

While Landmark primarily targets student renters, their buildings are open to a mix of graduate students and nonstudents.

The new project is Landmark’s first venture into North Philadelphia. 

The building’s design comprises an 11-story base that covers most of the lot, and a 28-story highrise that occupies two-thirds of the base. Outdoor amenities, including the pool, will be located on the remaining third of the base not supporting the highrise.

Other developers, like Bart Blatstein, have also expressed intentions to continue the multifamily building trend around Temple University, with plans for a 15-story, 245-unit apartment building at 1600 North Broad Street, near the Pearl movie theater.

Ted Glanzer

Read more

Austin

Villas starts 30-story UT student housing 

Texas

Hotel, multifamily planned in College Station

National

Student housing holds promise for CRE

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