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Four missing words in the new tax law mean fewer aging restaurants will get renovated this year, the Wall Street Journal reported. A tax-law goof put restaurants in a pickle, and some companies are postponing some of those projects as the retail, restaurant and commercial-real-estate industries push Congress to correct an inadvertent omission. As intended, the new tax law would have let restaurants and other companies deduct their renovation costs immediately, rather than over many years, providing an incentive to do such work. President Donald Trump recently praised immediate write-offs for these and other capital investments as “maybe the most important element” of the tax law. Instead, as written, restaurants and other companies must depreciate building-renovation costs over 39 years — a less favorable rule than existed before Congress changed the law. Under the prior law, a company making a $100 renovation could deduct the costs over 15 years, for a present-value equivalent of $84.38, according to a Tax Foundation analysis. The goal of the new law was to allow a full and immediate $100 deduction. Instead, with the deductions stretched out over 39 years, that same company can now deduct only $42.12 in present-value terms. Companies such as Stage Stores Inc., Texas Roadhouse Inc. and Publix Super Markets Inc. have all signed a letter urging Congress to act, warning of delays in construction projects rippling through local economies. But the change would likely require 60 votes in the Senate, where Republicans have just a 51-49 majority. The process of fixing this flaw and other technical problems in the law is moving slowly, weighed down in part by lingering partisan bitterness over the crafting of the tax law, which passed without a single Democratic vote.

A Qatari state-owned company has taken over New York’s Plaza Hotel, according to the operator of the historic property, Bloomberg News reported. Katara Hospitality, Qatar Investment Authority’s hotel division, completed the purchase on July 2, according to a representative for Accor SA, which was told of the ownership change. Katara acquired 100 percent of the property from its majority owner, Sahara India Pariwar, as well as minority owners Ashkenazy Acquisition Corp., Kingdom Holding Co. and Sant Singh Chatwal. The transaction was valued at $600 million. The Plaza, which opened 111 years ago, is known as the fictional home of children’s book character Eloise and has been featured in films such as “Home Alone 2” and “North by Northwest.” Among its prior owners is President Donald Trump, who was forced to sell it more than two decades ago as part of a bankruptcy. 

Many landlords are pushing to eliminate or narrow the co-tenancy clauses in leases for smaller stores in the wake of mass department-store closings, Bloomberg News reported. “Most retailers based in a mall do live or die based on an anchor,” said Andy Graiser, co-president of A&G Realty Partners, a commercial real-estate adviser. “Certain retailers are going to have a risk if certain anchors go away.” The past couple of years have brought hundreds of department-store closings. This is the result of of liquidations (Gordmans and Bon-Ton Stores Inc.), restructuring by struggling chains (Sears Holdings Corp. and J.C. Penney) and pullback by relatively healthy operators seeking to downsize their store presence (Macy’s, which is closing underperforming stores). While retailers are still flocking to the high-income “A” malls that make up about a third of enclosed centers, lower-tier properties are often struggling to replace lost merchants, sometimes turning to non-traditional tenants such as urgent-care centers. Landlords are now routinely pushing to chisel away co-tenancy provisions when leases come up for renewal, said Ivan Friedman, head of RCS Real Estate Advisors, a New York consulting firm. That wasn’t the case even a couple of years ago. That will have consequences, such as leading to fewer lease renewals, said Kent Percy, a managing director at consulting firm AlixPartners. “They could lose the whole inside of the mall,” he said. Many of those interior tenants have already suffered mightily, leading to bankruptcies like Gymboree Holding Corp. and Rue21 Inc., which reorganized with fewer stores. Percy and others did note that even robust co-tenancy clauses offered limited protection for tenants; landlords are inclined to push back on any legal lease-breaking, and the cost of battling them can be prohibitive. Read more.

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

The Mortgage Bankers Association said that total mortgage application volume decreased 0.5 percent on a seasonally adjusted basis compared with the previous week, CNBC.com reported. Volume was 13.5 percent lower than the same week one year ago. Applications to refinance a home mortgage fell 2 percent for the week and were 28 percent lower than the same week one year ago, when interest rates were lower. The refinance share of mortgage activity decreased to 37.2 percent of total applications from 37.6 percent the previous week. More than half of all homeowners with a mortgage today have rates below 4 percent, according to CoreLogic. Home equity lines of credit are increasing as refinances decrease. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.79 percent last week from 4.84 percent the previous week, with points decreasing to 0.41 from 0.42 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

The amount of occupied retail real estate in 77 major U.S. metropolitan areas dropped by 3.8 million square feet (350,000 square meters) in the second quarter, the largest decline since 2009, according to a report released yesterday by researcher Reis Inc., Bloomberg News reported. Shuttered stores once occupied by the company, now in bankruptcy proceedings, helped drive the national retail vacancy rate to 10.2 percent, up two-tenths of a percent from the first quarter and the highest level since 2014. “The Toys ‘R’ Us store closings impacted the second-quarter statistics more than any other retailer has in any quarter over the last nine years,” wrote the authors of the report, who tracked more than 80 Toys “R” Us Inc. store closings in over 40 metros during the quarter. Overall, 55 metros, or 71 percent of those surveyed, saw an increase in vacancies in the quarter. Among those with the biggest jumps were Little Rock, Arkansas; Fairfield, Connecticut; and Long Island, New York. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

United Capital Real Estate Development Corp. has emerged as a third suitor for the New York Plaza hotel, according to court filings, Bloomberg News reported. United Capital Real Estate is suing Subrata Roy, chairman of Sahara India Pariwar, as well as its U.S. entity, the property’s majority owner, alleging that they breached an agreement by seeking a separate deal, and fraudulently induced United to enter into contracts, show proof of funds and place money in escrow, according to a complaint filed in New York state court on June 22. United Capital Real Estate is seeking damages of $1 billion plus interest and attorney costs. The complaint says it was also in contract to buy Sahara’s 85 percent stake in the Dream Downtown hotel, located between New York’s Meatpacking and Chelsea neighborhoods. It also says the sales included so-called "drag along" rights in which minority owners of the properties would have their rights extinguished, beyond receipt of proportionate net proceeds. Roy himself signed two separate contracts on Feb. 19 and Feb. 27 on behalf of Sahara, the complaint says. Sahara has been attempting to sell its stake for years amid troubles for Roy, who served jail time and has been ordered by the Indian government to return billions of dollars to investors. The hotel has a long string of prior owners including now-President Donald J. Trump, who married his second wife Marla Maples there, and who was also forced to sell it to a group including Alwaleed more than two decades ago as part of a bankruptcy proceeding. Much of the hotel portion of the building was later converted to condominiums by another owner, Israel’s Elad Group. The hotel is managed by Fairmont Hotels & Resorts, a unit of France’s Accor SA.