Real Estate News

Fifth Wall Ventures' Brendan Wallace and Kevin Campos (Credit: iStock)

Fifth Wall Ventures’ Brendan Wallace and Kevin Campos (Credit: iStock)

A new generation of e-tailers are looking to make their first, risky step into the world of physical real estate, and one real estate-focused venture capital firm sees an opportunity.

Fifth Wall Ventures has closed a $100 million fund to invest in such companies, the Wall Street Journal reported. The fund’s investors include public retail landlords like Acadia Realty Trust and Macerich. The fund will connect those companies with potential tenants as part of its strategy.

“What these brands are realizing is that it is so hard to grow online,” Brendan Wallace, founder of the Los Angeles-based Fifth Wall, told the Journal. “Amazon is the company that destroys brand differentiation rather than augments it.”

Physical stores also benefit from far lower return rates than online purchases, which can help boost profit margins. The wealth of consumer data e-commerce retailers have collected can also help them select better locations for their brick-and-mortar locations.

But the operation of a physical store also comes with a new set of risks, from hiring staff and contractors to ensuring that there is enough electrical capacity. “Trying a retail opportunity in New York City could literally sink a business like ours,” Taft Clothing co-founder and CEO Kory Stevens said.

With assistance from Fifth Wall’s new fund, the Salt Lake City-based men’s shoemaker was able to quickly secure a three-year lease at a building in Manhattan’s SoHo district, owned by fund investor Acadia. [WSJ] — Kevin Sun

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Ira Saferstein and Marc Roberts, with a rendering of Miami Worldcenter

Ira Saferstein and Marc Roberts, with a rendering of Miami Worldcenter

Miami Worldcenter’s master developers sold another site within their project, for $26.78 million, to a buyer that previously invested in the property.

IRR Parkway Investments LLC closed on a 1-acre site between North Miami Avenue and Ninth and 10th streets in downtown Miami, according to a press release. The property is zoned for mixed-use development within the master-planned project. Miami Worldcenter Associates, led by Nitin Motwani and Art Falcone, sold the property.

State records show IRR Parkway Investments is led by Ira Saferstein, co-owner and managing member of Titan Capital ID, real estate lenders in the New York City market; and Marc Roberts, owner of Worldwide Entertainment and Sports.

Roberts, a successful boxing promoter, was also previously an investor in the Miami Worldcenter project. After the financial crisis, he filed for personal bankruptcy, forcing him to drop his affiliation with Miami Worldcenter. Roberts is also an owner of E11even, a nearby nightclub.

Miami Worldcenter, a $4 billion project with condo, apartment, retail and hotel components, is being completed in stages. In early 2019, Miami Worldcenter Associates, CIM Group and Falcone Group completed the first building, Caoba, a 444-unit rental tower at 698 Northeast First Avenue. The Paramount Miami Worldcenter condo tower was delivered in July.

Dan Kodsi, who co-developed Paramount, launched sales in November of Legacy Hotel & Residences at Miami Worldcenter, which is expected to have 278 branded condo-hotel units and a 255-key hotel.

About 150,000 square feet of retail space has been completed at Miami Worldcenter, and retailers are expected to open in 2021.

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630 Island Drive and Mark Biondi

630 Island Drive and Mark Biondi

A trust managed by a senior vice president at Related Beal paid $19.1 million for a waterfront Palm Beach estate.

Property records show Island Drive Realty Trust, managed by Mark Biondi and John McBrine, closed on the four-bedroom, 6,902-square-foot home at 630 Island Drive. Biondi is responsible for management of Related Beal, the Boston-based real estate arm of New York’s Related Companies, according to the firm’s website.

The house sold for $2,767 per square foot.

The sellers were Steven M. Gottlieb, an anesthesiologist, and Laurie J. Raber.

Christian Angle of Christian Angle Real Estate represented both sides of the deal, according to Realtor.com.

The Everglades Island house was built in 2016 and features a library, gym, three-car garage, club room with a pool table, bar and fireplace, and a wine cellar. It sits on a nearly half-acre lot with fountains, a fire pit, loggia, pool, spa and dock.

Records show the property, which overlooks the Intracoastal Waterway, last sold for $5.6 million in 2012.

The Palm Beach luxury home market has been on fire, with two deals closing last year for more than $100 million. Just last week, developer Carl Panattoni paid nearly $29 million for an oceanfront Palm Beach estate, and a company tied to Quicken Loans and its chairman Dan Gilbert paid $24.5 million for the Palm Beach mansion at 100 El Bravo Way.

In July, a trust controlled by members of the billionaire Coleman family that founded Tiger Global Management paid $17.3 million for a waterfront estate, also on Everglades Island.

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Grant McGrail (Credit: LinkedIn, Wikipedia)

Grant McGrail (Credit: LinkedIn, Wikipedia)

A senior sales executive at WeWork resigned on Valentine’s Day, while under investigation for a romantic relationship with a team member whom he promoted, according to Bloomberg.

The struggling co-working firm was planning to fire Grant McGrail, a senior vice president of account sales and strategic alliances, for cause. Business Insider first reported the departure, but not the reasons behind it.

The human resources investigation began earlier this month after allegations were raised against McGrail.

As head of enterprise sales, McGrail had played a key role in the firm’s transition from targeting smaller startup tenants to larger firms like Microsoft and Salesforce. He first joined the firm in New York in 2017, before relocating to San Francisco.

WeWork’s work culture has come under increased scrutiny in the wake of its abandoned initial public offering and leadership shakeup.

In 2018, WeWork conducted an investigation that found credible evidence of drug use and sexual relations between co-workers, and reached a $2 million settlement with a woman who had worked in the firm’s real estate business, Business Insider reported Saturday. [Bloomberg] — Kevin Sun

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From left: Tim Elmes of Compass, Barry Minoff and 1831 Southeast 9th Street

From left: Tim Elmes of Compass, Barry Minoff and 1831 Southeast 9th Street

A pharmaceutical mogul sold his waterfront Fort Lauderdale mansion for $20.5 million, marking the highest priced residential sale in the city so far this year.

Bruce Paddock sold the 12,938-square-foot estate at 1831 Southeast 9th Street for $1,584 per square foot, records show. Barry Minoff, whose family owns Cleveland, Ohio-based Kichler Lighting, bought the property.

The sale reflects heightened demand for luxury waterfront real estate in Fort Lauderdale. Earlier this month, two houses sold in the Harbor Beach neighborhood for $8 million and $11 million.

In the latest deal, the mansion was listed for $29 million in October. It was built by Dennis R. O’Neil, the co-owner of Checkerboard Vineyards, who paid $4.6 million for the acre-sized property in 2000.

1831 Southeast 9th Street

1831 Southeast 9th Street

Built in 2010, the home has seven bedrooms and eleven bathrooms. The property also has 437 feet of deep water frontage and 170 feet of mega yacht dockage. It is in the Rio Vista neighborhood close to downtown Fort Lauderdale.

The estate boasts a fully equipped chef’s kitchen, formal dining room and a master suite with a marble bathroom. It also features limestone floors, beamed ceilings, a wine cellar, elevator and fireplace.

Tim Elmes of Compass represented the seller in the deal.

Paddock is the founder and former chairman of Paddock Laboratories, a pharmaceutical manufacturing company that he sold to Perrigo Company in 2011 for $540 million.

Minoff is the chairman of his family’s business, Kichler Lighting, which manufactured lighting. He is also an actor and starred in the 2013 movie “Exposure,” alongside Corey Feldman.

Last year, Fort Lauderdale saw a slew of high-profile deals. In June, the founder of Pet Supermarket bought the Fort Lauderdale estate of the late H. Wayne Huizenga at 1575 Ponce de Leon Drive in Fort Lauderdale for $14.3 million.

In May, used car dealer Mark and Eileen Fisher paid $17.4 million – including the buyer’s premium – for the 27-room, 17,000-square-foot mansion at 534 Bontona Avenue in Fort Lauderdale.

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Chairman of Starwood Capital Group Barry Sternlicht (Credit: iStock)

An illustration of Chairman of Starwood Capital Group Barry Sternlicht (Credit: iStock)

Troubles in the retail world aren’t going away anytime soon — and retailers have themselves to blame.

That’s according to Starwood Property Trust CEO Barry Sternlicht, who spoke at Tuesday’s fourth-quarter earnings call.

During the call, Sternlicht recounted a visit to a new clothing store on Lincoln Road in Miami. Sternlicht said he walked around the store and couldn’t find a basic item — shorts — in a medium size.

He said retailers then send customers online because “Wall Street wants to hear about their online sales. So it’s kind of a big mess.”

Sternlicht added: “Rents are lower, tenants have all the leverage. And I would say the tenants themselves have done an incredibly shitty job running their stores.”

Capital is needed to fix retail assets, he said. Though Sternlicht predicted retail’s woes would eventually stabilize, he added that landlords have to work to replace bankrupt tenants — even though there are fewer options out there.

The issues plaguing retail — from the growth of e-commerce to changing consumer preferences — have led to store closures and tenant bankruptcies.

Starwood, the real estate investment trust that is an affiliate of Miami Beach-based Starwood Capital, has also felt the impact.

In the fourth quarter, Starwood reported net income of $171.9 million, buoyed by the sale of the firm’s portfolio in Ireland for $119.7 million, and up from $140.4 million in the third quarter. Sternlicht said the sale of those overseas assets helped to offset the nearly $72 million in losses the company saw on its mall side.

For the year, Starwood reported net income of $509.7 million. That’s up from $385.8 million in 2018.

He also sought to head off any concerns about the American Dream Mall in East Rutherford, New Jersey. Starwood also holds debt on that massive property, which partially opened in the fall after over a decade of delays. Sternlicht said for that property, its debt was not underwritten as a retail loan, but as a theme park, given the mall’s experiential features, including a ski slope and roller coaster. And the Mall of America in Minnesota is collateral against that debt, further protecting Starwood’s interests, he said.

“There’s no chance that we’ll ever see a problem in that loan,” Sternlicht assured analysts on the call.

A “good outcome” for Lord & Taylor building?

Sternlicht noted another iconic property Starwood provided debt on: WeWork’s Lord & Taylor building on Fifth Avenue.

Starwood has a piece of the property’s senior and mezzanine loans. During the call, Sternlicht addressed the news that Amazon was in talks to buy the 10-story building from WeWork, which closed on the property in 2019.

The Real Deal first reported on Amazon mulling the acquisition last week, pegging the price at around $1 billion.

“We have call protection in that loan, obviously. If they [WeWork] stay…we would be really happy,” Sternlicht said. “But I think you’re going to see a good outcome there and it’s not an exposure for the company at all.”

Amazon, a year out from its decision to nix its plans to build another campus in Long Island City, already leases spaces around New York but also had reportedly been in talks to lease space at the iconic former department store last summer.

Sternlicht added that Starwood was not bullish on New York City’s office market, which he said could see expenses rise faster than rents.

The city’s office market — along with those in other major cities across the world — also has greater exposure to so-called FAANG companies, or Facebook, Amazon, Apple, Netflix and Google. Those companies, plus a few others, Sternlicht noted, are also fueling the general growth of the stock market.

“These [companies] are driving these commercial property markets, and if they get in trouble in the stock market, they will get in trouble in the real estate markets,” he said. “The markets have never been more intertwined.”

And perhaps the biggest threat to FAANG companies?

“The thing that will stop these companies is regulation,” Sternlicht said. “And that’s the hardest thing to underwrite.”

Write to Mary Diduch at md@therealdeal.com

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Realogy CEO Ryan Schneider 

Realogy CEO Ryan Schneider

Even as the housing market improved and competition grew more “rational,” Realogy Holdings said it generated $5.6 billion in 2019 revenue, down 3 percent year over year.

The company also said it lost $188 million, compared to net income of $137 million in 2018, due to accounting expenses and a tax gain related to the sale of its relocation business Cartus for $400 million.

That sale comes as the conglomerate — which operates the Corcoran Group, Sotheby’s International Realty and Coldwell Banker — works to streamline its business and reduce $3.5 billion in debt.

The company said that during 2019 it reduced net debt by $78 million thanks to cost-cutting measures implemented last year. After several years of heightened competition for agents nationwide, Realogy also said it grew its agent base by 4 percent to 52,200.

During an earnings call Tuesday, CEO Ryan Schneider said the intensity of competition for agents is becoming “more rational” with fewer sign-on bonuses as well as a wave of agents returning to Realogy brands.

“More rational doesn’t mean it’s not intense, to be blunt,” he said. “But as an industry, we’ve been competing against private capital that’s been going after market share at all costs. To see the scrutiny of those companies be stronger has helped the competitive environment.”

But Schneider also said there’s been market volatility in places like New York, where lawmakers passed a new mansion tax. In January, the Department of State issued guidance banning certain tenant-paid commission fees, though that rule has since been put on hold by a judge. “That surprised everyone, including us,” Schneider said.

“I bet on New York for the long-term as a market, but New York has been tough [with] the mansion tax, the rent thing,” he said. “Of all the geographies, it’s probably the one with the most volatility around it from those types of outside forces.”

As it wrestles with those outside forces, Realogy has worked to streamline its business and reduce debt.

In a statement, CFO and treasurer Charlotte Simonelli said the fourth quarter marked a strong close to 2019, “driven by solid performance, both financially and operationally, across the business.”

“In 2019, we demonstrated a willingness to change our business mix to optimize our capital deployment and simplify our company,” she said, “and we will remain thoughtful and deliberate in our approach as we work to build a stronger overall financial profile for Realogy.”

During the fourth quarter, Realogy had revenue of $1.3 billion, up 4 percent year over year, as transactions rose 6 percent.

Realogy stock opened at $13.32 per share on Tuesday, after a tumultuous year that saw its share price plunge to just $4.78 per share in April 2019.

Early last year, Realogy announced it would trim $70 million from its 2019 expenses. In addition to selling Cartus, it said it would shutter Climb, a San Francisco brokerage it purchased in 2016, and consolidate it into Coldwell Banker. It has since closed some Coldwell Banker offices.

It is investing in other brands, including Sotheby’s and Corcoran, the latter of which signed its first franchise agreement this month.

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Condo sales fell slightly in Miami-Dade last week, led by a closing at Terra’s Grove at Grand Bay.

A total of 91 condos sold for $36 million last week, compared to 103 units that sold for $49 million the previous week. Condos last week sold for an average price of about $400,000 or $308 per square foot.

The Grove at Grand Bay unit closed for $3.44 million, or just under $900 per square foot. Unit 602 in the south tower sold after 58 days on the market. Rhonda Rose was the listing agent and Jamie Goff brought the buyer.

The second most expensive deal was the $2.64 million closing of Jade Signature unit 505 in Sunny Isles Beach. It was on the market for 678 days, most recently with Denisse Levy. Araceli Monalli represented the buyer. The sale breaks down to $760 per square foot.

Here’s a breakdown of the top 10 sales from Feb. 16 to Feb. 22. Click on the map for more information:

Most expensive
Grove at Grand Bay Unit 602-S | 58 days on market | $3.44M | $899 psf | Listing agent: Rhonda Rose | Buyer’s agent: Jamie Goff

Least expensive
Marina Blue Unit 5408 | 77 days on market | $615K | $461 psf | Listing agent: Merve Gumusyazici | Buyer’s agent: Scott Shuffield

Most days on market
Jade Signature Unit 505 | 678 days on market | $2.64M | $760 psf | Listing agent: Denisse Levy | Buyer’s agent: Araceli Monalli

Fewest days on market
Grove at Grand Bay Unit 602-S | 58 days on market | $3.44M | $899 psf | Listing agent: Rhonda Rose | Buyer’s agent: Jamie Goff

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CEOs, developers, landlords and other industry leaders joined The Real Deal at its second-annual Future City event at Baha Mar in the Bahamas this weekend.

Proptech was top of mind as attendees gathered at a welcome reception and dinner following presentations from Patrice Derrington of Columbia University and Sam Chandan of New York University’s Schack Institute of Real Estate on Sunday evening.

Among those at the dinner included Simon Ziff, Bruce Mosler, Suzanne Amaducci-Adams, Caren Maio, Jay Parker, Rotem Rosen and Kobi Karp. Check out the slideshow above for a glimpse of the event.

Photos by Evan Gutierrez

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Dev Motwani, Johnny Allison, and 2401 West Broward Boulevard (Credit: Google Maps)

Dev Motwani, Johnny Allison, and 2401 West Broward Boulevard (Credit: Google Maps)

A company managed by Dev Motwani’s Merrimac Ventures and Hernandez Construction scored a $10.4 million loan for a self-storage and retail project in Fort Lauderdale.

Riverbend Storage Property LLC secured the loan from Centennial Bank for the four-story mixed-use self-storage facility at 2401 West Broward Boulevard. It will feature 110,698 square feet of leasable self-storage space and about 5,168 square feet of total retail on the ground floor.

Riverbend Storage Property LLC purchased the property in March 2019 for $2.5 million, records show. The building is planned to be completed at the end of 2020, according to a listing on LoopNet.

The project is across from a new Super Walmart, as well as Planet Fitness and Marshalls, and is just west of I-95.

Partners in Fort Lauderdale-based Merrimac Ventures are involved in over $3 billion of projects, including the Four Seasons Hotel and Private Residences Fort Lauderdale, The Gale Boutique Hotel and Residences, Paramount Fort Lauderdale Beach, Broadstone Oceanside in Pompano Beach and the Flagler Village Hotel, according to its website.

In April 2019, Motwani won city approval to build a 34-story, 246-unit apartment building in Fort Lauderdale that will target older tenants.

Centennial Bank is a regional bank based in Conway, Arkansas, that has become one of the more active construction lenders in South Florida. The bank is a lender to developer Moishe Mana, who is seeking to redevelop downtown Miami’s historic Flagler Street area.

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WeWork CEO Sandeep Mathrani and Adam Neumann (Illustration by Zach Meyer)

WeWork CEO Sandeep Mathrani and predecessor Adam Neumann (Illustration by Zach Meyer)

Sandeep Mathrani carved a slight figure as he took the stage to explain why he had just become CEO of a company with huge financial problems and uncertain prospects.

“I decided to take the role because, one, it had great assets,” he said, during the Global Retailing Conference at the University of Arizona. “And two, it had great people.”

The year was 2012, and Mathrani was a year into his job at General Growth Properties. GGP was the country’s second largest mall-owner but was better known for having just suffered the largest real estate bankruptcy in U.S. history.

Eight years later, Mathrani faces a familiar challenge as the new CEO of WeWork, the office-space company that last year endured the largest real estate corporate collapse since, well, GGP.

This time, however, he will need a different speech.

Instead of great assets, WeWork has more than $40 billion in liability from hundreds of leases. Offloading them won’t generate capital, as Mathrani did by selling dozens of GGP’s malls.

As for its people, few of WeWork’s executive-level employees remain from the team co-founder and CEO Adam Neumann led until his ouster last summer, and four board members have recently left or are on their way out. Thousands of staff are being laid off as the company attempts to get costs under control.

In addition, unlike with GGP, Mathrani might be arriving toward the end of the business cycle; WeWork’s office-space empire has yet to be tested by an economic downturn. It is unknown whether a recession would prompt an exodus of customers or if WeWork could parry the blow by catching enterprise firms seeking short-term, flexible leases.

WeWork lost more than $3 billion last year. Its valuation plunged by $40 billion. And its number of profitable locations remains low.

To clean up the mess — and save its $10 billion investment in WeWork — its largest stakeholder, Japanese conglomerate SoftBank Group, installed a new chairman last fall at the New York-based firm. Marcelo Claure, a former CEO of Sprint and COO of SoftBank, has taken a hands-on approach.

But with the company looking to reposition itself as a real estate business, and Claure lacking experience in the industry, a veteran of the field was needed. Mathrani was first approached to join as a board member, a person familiar with the situation said, but the discussions quickly evolved.

“He is a proven leader with turnaround expertise in the real estate industry,” Claure said in announcing Mathrani’s hiring.

Real estate leaders have lined up to echo that message.

“It’s a brilliant move by WeWork to make him the CEO,” said Charlie Kushner, chairman of Kushner Companies. “He is one of the most brilliant and talented real estate people in the industry.”

Marty Burger, the CEO of Silverstein Properties, deemed Mathrani “as good as anyone to right the ship for WeWork.”

And Ric Clark, the chairman of Brookfield Property Group, said at a Manhattan real estate luncheon that Mathrani is “the perfect guy for WeWork at this time.”

The blessing of the real estate industry is essential but not sufficient for Mathrani to succeed. With WeWork’s downtrodden workforce, tattered reputation and no clear end to quarterly losses, he faces a challenge more daunting than the one he met at GGP.

WeWork declined to comment, or make Mathrani or Claure available for an interview.

EARLY RISER

Mathrani’s path could hardly skew farther from that of Neumann, who co-founded WeWork and became a billionaire after a checkered academic career and failed ventures.

Mathrani, who is 57, was born and raised in India, attended high school in Philadelphia and earned business and engineering degrees from Stevens Institute of Technology in New Jersey. He ditched engineering for real estate after making $20,000 flipping his apartment, joined Forest City Ratner in 1994 and quickly built a reputation as a savvy retailer.

“At a very early age he was a sophisticated real estate investor,” said Anthony Orso, president of capital market strategies at Newmark Knight Frank, who met Mathrani in the early 1990s and has since done multiple deals with him.

Mathrani later turned down a job with Related Companies, according to Burger, a former executive there, and was lured to Vornado Realty Trust, where his salary reached $1 million in 2005. The following year he leased more than 1.2 million square feet of retail, according to a company filing.

Meanwhile, another company known for its retail portfolio was on a path to bankruptcy. Chicago-based GGP, under a mountain of debt, filed for Chapter 11 in 2009. Mathrani was named CEO the next year, his work at Vornado having caught the attention of the newly appointed board.

“Because [GGP] didn’t have any capital, they had not done well, and were failing, [employees] kind of accepted it as status quo,” said Mary-Lou Fiala, a former GGP board member who recommended Mathrani’s hiring. Mathrani “had to change the mindset to ‘yes, we can do this.’”

Mathrani’s moves helped raise GGP’s value by $2 billion. In his first year he sold 40 non-performing malls, generating $3 billion. Mathrani restructured a wall of debt, giving the company another decade to pay it off. He doubled down on Class A malls, sold a stake in the $5.5 billion Ala Moana mall in Hawaii, and acquired more than a dozen Sears stores.

He also turned GGP toward high-profile deals in Manhattan and away from low-slung malls. In 2014, GGP partnered with Thor Equities to acquire 685 Fifth Avenue for almost $500 million. The following year it purchased the iconic Crown Building with Wharton Properties for $1.8 billion.

In negotiations, Mathrani maintains a humble presence, say those who have done deals with him. In his first meeting with developer Michael Shvo in 2015, on a Friday afternoon at GGP’s Manhattan offices, Mathrani urged him to redevelop a section of the Crown building.

“The first sentence out of his mouth was, ‘I want you to buy the upstairs floors of the Crown building,” said Shvo.

In three hours they had drafted a $500 million deal. “We managed to get it done on a handshake,” said Shvo, “before shabbat.”

The developer called Mathrani among the “most direct, big-picture guys I’ve met in real estate.” And he was tough in the deal room. “When he got pissed,” said Shvo, “you knew he was pissed.”

By the time GGP made a splash on Fifth Avenue, Mathrani had already achieved near-celebrity status in the commercial real estate world. He earned a $39 million salary in 2015 and became a fixture of Burger’s fabled annual ski trip to Vail for real estate executives.

Kushner, a longtime friend, recalled running laps in Central Park with Mathrani before work, though he said those sessions have become less frequent with age. Kushner said Mathrani was a mentor to his son Jared, who has led multiple deals for the family business.

“Jared definitely did look up to Sandeep,” Charlie said. “Very often he called Sandeep for advice.”

At one point Mathrani even considered joining Jared — a senior adviser and son-in-law to President Donald Trump — in politics. In November 2016 he met with the president-elect at Trump Tower to discuss joining the future administration as U.S. trade representative, Women’s Wear Daily reported.

Nothing came of the meeting. But Mathrani was busy tying a bow on a refurbished GGP. In 2018 he sold the company to Brookfield Property Partners for $15 billion, a victory for a firm that had restructured $27 billion of debt. Mathrani’s personal stake in the transaction was valued at $189 million, and he joined Brookfield as CEO of its retail group.

But having tasted life as the face of a company, Mathrani resigned from Brookfield in January, in time for his next challenge.

CULTURAL REVOLUTION

Mathrani arrives at WeWork as it attempts to shed its reputation as a fast and loose startup where anything goes — and often did.

With Neumann largely controlling the company through a unique shareholder structure, his inner circle seemed to function as enablers, reaping rewards for staying in his good graces rather than protecting the company’s interests. Neumann was allowed to lease buildings he owned back to the company, sell it the trademark to the word “we” for $5.9 million and have the firm buy a $60 million private jet.

Some executives — including board member Lew Frankfort, co-CEO Artie Minson and chief legal officer Jen Berrent — received millions of dollars of low-interest loans that were later repaid with bonus payments. About $600,000 owed by Minson was forgiven.

Neumann’s self-enriching deals were undone, and the company began tamping down its notorious party culture. Last year WeWork canceled free beer and wine at its locations and ended booze-soaked corporate retreats.

Mathrani must still deal with the legacy of Neumann’s tenure, though. Business Insider reported last week that inappropriate sexual relations among WeWork’s ranks had been rampant, that its real estate division ran up huge expenses and that the company paid $2 million to a woman who made claims of drug use, sexual harrassment and pay discrimination.

It is also assessing dubious real estate bets made under Neumann. In addition to reviewing dozens of leases signed in recent months, WeWork is discussing a potential sale of its iconic Lord & Taylor building with Amazon, The Real Deal reported last week.

The property, which WeWork acquired last year for $850 million with the intention of moving its headquarters there, has divided employees; some believe WeWork overpaid by $200 million. The layoffs of thousands of employees has diminished the need for a new headquarters, and a potential $1 billion sale to Amazon would generate much-need cash.

WeWork’s changes have extended to its largest investor, SoftBank Group, which has been on an apology tour. Masayoshi Son, its enigmatic CEO, said “my own investment judgment was really bad.” And this month, he told investors in Tokyo that SoftBank has all but abandoned its $108 billion goal for a second Vision Fund after investors burned by their WeWork bets refused to commit.

Claure has installed new lieutenants to save SoftBank’s investment. In addition to Mathrani, he appointed to WeWork’s board another SoftBank executive, Kirthiga Reddy, who will be its first female member. And last week Shyam Gidumal, a former partner at EY, was announced as COO.

The new executives signal a changing guard at WeWork. Three board members left the company at the start of the year, and Frankfort is expected to leave in coming months. Co-CEOs Sebastian Gunningham and Minson are also leaving.

“Now we are a lot more involved,” Claure told CNBC this month. “What we’re not saying is that this business is a mistake.”

CAVIAR DREAMS DASHED

Mathrani must now inspire whiplashed workers whose expectations of riches gave way to a dire threat of bankruptcy. Morale was eroded further when thousands of their colleagues were sent packing.

In a notice sent in December, seen by TRD, WeWork shareholders were notified of an option to reprice their stock options at $4.13 a share — a bitter pill to swallow for those with options priced at many times that amount. Those who agreed to the option are barred from selling their shares back to WeWork at $19.19 in an upcoming tender offer.

Some shareholders also have expressed concern for the five-year plan released by Claure this month. It involves scaling WeWork up to 1,000 locations and becoming “free cash flow positive” by 2022. The measure — which WeWork defines as “adjusted EBITDA excluding non-cash GAAP straight-line lease cost” and “amortization of lease incentives” less “net capital expenditures” — is more standard than the ones investors mocked ahead of WeWork’s failed public offering last year, but it is nonetheless the kind of thing companies talk about when they do not have actual profits in sight.

Some shareholders also question why the plan is devoid of key metrics, such as occupancy rates and whether the percentage of enterprise clients is increasing or declining. The most recent figures, released in October, show WeWork’s global occupancy rate at 79 percent; enterprise companies made up 43 percent of its client base.

Just as importantly, two unmeasurable factors that gave rise to WeWork — its brand and uniqueness — have since evaporated: Its image has become a liability and it competes in an even more crowded market with newer office-space companies, including Knotel and Industrious. “How do you plan to rebuild the image of the brand?” one shareholder wondered.

Mathrani is likely to be systematic in his bid for a second turnaround. During his speech in Arizona eight years ago he told the audience that on his first day at GGP he presented a 100-day plan for the company, but was soon disabused of such ideals.

“You can’t have a 100-day plan — it just can’t exist,” he said. “No plan is done in 100 days.”

Eddie Small contributed reporting.

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Mid-market and luxury closings fueled South Florida home sales in January

Mid-market and luxury closings fueled South Florida home sales in January

Home sales jumped throughout South Florida in January, largely driven by mid-market and luxury sales. Median home prices also continued to rise in the tri-county region, according to the Miami Association of Realtors.

The strong figures reflect a similar positive trend in December, following a weak November. That month, residential sales fell in Miami-Dade, Broward and Palm Beach counties, year-over-year.

Miami-Dade
Total residential sales in Miami-Dade County rose by 15.6 percent in January, year-over-year, to 1,857. Single-family home sales increased 14.6 percent to 887, while condo sales jumped 16.4 percent to 970.

Sales of homes priced from $400,000 to $600,000 rose 32 percent, year-over-year to 194, while sales of condos in the same price range climbed 52.5 percent to 93. Single-family homes priced over $1 million jumped 34.5 percent to 78, while sales of existing luxury condos increased 6.5 percent to 49.

Single-family home sales volume totaled $472 million, up 16.1 percent. Condo sales volume rose 11.4 percent to $394 million.

Single-family home prices also continued to rise, increasing by 7.1 percent, year-over-year, to $375,000. The median price of a condo increased 6.5 percent to $245,000.

Broward
In Broward County, total residential sales increased by 6 percent, year-over-year, to 2,031. Single-family home sales rose 10.7 percent to 976. Condo sales increased 2 percent to 1,055.

Single-family home sales between $400,000 and $600,000 jumped 22 percent, year-over-year, while condos in that bracket increased 5.6 percent. Luxury homes priced over $1 million climbed 24.5 percent. However, luxury condo sales decreased 10 percent.

Total volume for single-family home sales reached $480 million, a 20.3 percent increase. Condo sales volume rose by 11.2 percent to $256 million.

The median price of single-family homes increased 5.5 percent to $374,450. For condos, the median price was $170,000, up 6.3 percent compared to January 2019.

Palm Beach
Total home sales in Palm Beach County increased 25.1 percent, year-over-year, to 1,989. Single-family home sales jumped 29.3 percent to 1,094, and condo sales rose by 20.3 percent to 895.

Homes priced between $300,000 and $400,000 rose 40.2 percent to 272, while condos in that price range climbed 57.7 percent to 82. Sales of homes priced over $1 million soared 52.2 percent to 102, while luxury condo sales climbed 61.5 percent to 42.

The sales volume for single-family homes totaled $677 million, up 39.6 percent year-over-year. Condo sales volume increased 47.5 percent to $298 million.

Median prices increased 6.8 percent to $363,000 for single-family homes, and up 11.4 percent to $195,000 for condos.

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REIT stocks fall amid global coronavirus concerns (Credit: Getty Images, iStock)

REIT stocks fall amid global coronavirus concerns (Credit: Getty Images, iStock)

Real estate investment trusts were not immune from Monday’s global market sell — particularly hotel properties — a result of the growing fears surrounding the coronavirus and its potential to trigger a global economic slowdown.

The S&P 500 fell 3.35 percent and the Dow Industrial Average plummeted over 1,000 points following news that the coronavirus, which has infected over 77,000 and killed over 2,500, was expanding in Italy and South Korea.

REITs took a hit but fared better than the broader market, largely because many REITs own properties based in the U.S.

REITs do provide a margin of safety,” said Omotayo Okusanya, managing director in the equity research department at Mizuho Securities.

The news rattled global markets Monday, and investors turned to defensive sectors like gold, which reached a seven-year high.

By market close, the SNL U.S. REIT Equity Index dropped just 1.32 percent, according to data from S&P Global Market Intelligence.

The hardest-hit sector Monday was hotels, as REITs with international properties were most affected, Okusanya said.

The SNL U.S. REIT Hotel index fell 4.71 percent, with Ryman Hospitality Properties, Wyndham Destinations and Hyatt Hotels Corp. all among the firms that suffered the biggest losses.

Industrial REITs also took a hit after hotels, with the SNL U.S. REIT Industrial index 2.86 percent lower Monday, according to S&P’s figures.

Self-storage was the only asset class that was not dinged; it crept up 0.23 percent, according to S&P’s figures.

The coronavirus outbreak could have a sustained impact on global supply chains, depending on the severity. China is where the outbreak began and where most of the deaths have occurred. The virus has already taken a toll on China’s manufacturing sector — and that could trickle down to affect the margins of logistics REITs. But such properties tend to have longer-term leases that should not be impacted by temporary disruptions, Okusanya said.

Prior to Monday’s market sell off, the virus’ impact on real estate had not yet been widely felt, and there had been scattered concerns in New York City’s residential world. But the impact of the coronavirus on financial markets also pushed mortgage rates to an eight-year low, according to CNBC.

Calvin Schnure, senior economist at REIT industry group Nareit, said the full impact of the coronavirus is not fully known. He said the stock plunge to start the week was akin to the recent market volatility stemming from the trade wars with China — REITs tended to fare better then as well.

“The market is reacting to a lot of fear and uncertainty,” he said. “The U.S. economy overall will have pockets that are hurt but the REITs have a lot of domestic focus.”

Write to Mary Diduch at md@therealdeal.com

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The second year of The Real Deal’s annual executive retreat kicked off at Baha Mar Resort in the Bahamas.

Future City’s 2020 attendees — including Bentley Zhao of New Empire Real Estate, David Kramer of Hudson Companies, Doug Eisenberg of A&E Real Estate Holding, Young Woo of Youngwoo & Associates, Gil Dezer of Dezer Development and DR Dwyer of Related Companies — trickled into the resort Sunday, prepared for several days of networking and panels on the future of real estate, construction and technology.

The program began with presentations from Patrice Derrington, the head of Columbia University’s real estate program, and Sam Chandan, the associate dean of NYU’s Schack Institute of Real Estate, on the industry’s adoption of technology.

By 7 p.m., speed networking kicked off with drinks, as tech startup founders swarmed developers with pitches.

Photos by Evan Gutierrez

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7600 Fisher Island Drive and Raul Fernandez

7600 Fisher Island Drive and Raul Fernandez

A co-owner of the Washington Wizards and Washington Capitals sold his Fisher Island condo at a slight discount from its purchase price in 2005.

A company managed by Raul Fernandez sold the 4,449-square-foot unit at 7600 Fisher Island Drive for $5.95 million to Fisher Paradise LLC, which is tied to Jeremie Urbain of Aventura. The sale equates to $1,337 per square foot.

The condo, unit 7671, has five bedrooms and five bathrooms. The property was last purchased for $6.1 million in 2005, records show.

Fernandez is vice chairman and owner of Monumental Sports & Entertainment, which owns parts of the WNBA’s Washington Mystics, the NHL’s Washington Capitals and the NBA’s Washington Wizards. Fernandez is also a limited partner in General Atlantic Partners, a growth equity firm with more than $35 billion under management, according to Fernandez’s LinkedIn.

Ritzy Fisher Island is consistently ranked as America’s wealthiest zip code and can only be reached by ferry, boat or helicopter.

With limited options for new development, condos on the island command high prices. PDS Development, led by Heinrich von Hanau, completed the 50-unit Palazzo Della Luna on the Island last year. A unit at the luxury condo development sold in September for $17 million.

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From left: Ryan Schneider, Ryan Gorman, Philip White, and Pam Liebman

From left: Ryan Schneider, Ryan Gorman, Philip White, and Pam Liebman

Realogy is saying goodbye to its alphabet soup of names.

Amid a company-wide consolidation, the real estate brokerage giant is renaming NRT, the business unit that includes Corcoran Group, Sotheby’s International Realty and Coldwell Banker. The new name will be Realogy Brokerage Group.

Realogy will also rename TRG, its title insurance business, which will now be known as Realogy Title Group. It will not rename its franchise division, which is already called Realogy Franchise Group, or RFG.

The changes, which won’t affect the way the company does business, were disclosed Monday by Ryan Gorman, NRT’s president and CEO, in an email to agents viewed by The Real Deal.

“We are continuously looking for ways to simplify our business and how we communicate the services we offer,” Gorman wrote in the email. He said the renaming is part of an “effort to create consistency across business units” and will allow the company to “streamline our naming conventions to showcase a singular, strong brand.”

The NRT name dates back to the 1990s, when Realogy predecessor Cendant purchased Coldwell Banker. (In 2005, Cendant spun off its real estate holdings, which by then included the Corcoran Group.)

In a statement, Realogy stressed the new names will not change anything related to the operation of individual brands, other than how the companies appear on rankings. But CEO Ryan Schneider said the simpler names do reflect Realogy’s attempt to transform itself from a holding company to an “operator of leading residential real estate brands.”

NRT was the No. 1 brokerage in the U.S. with $176.4 billion in 2018 sales, according to data firm Real Trends. Berkshire Hathaway’s HomeServices of America was No. 2 with $135.9 billion, followed by Compass at No. 3 with $45.5 billion.

Since being named CEO of Realogy in 2017, Schneider has worked to streamline the $6.1 billion company, amid heightened competition in the industry and pressure on profit margins. He’s also steered the company through a stock market reckoning after shares plunged to just $4.78 per share in April 2019 after trading at $32.87 per share in October 2017. On Monday, shares opened at $12.61 per share.

Early last year, Realogy announced it would trim $70 million from its 2019 expenses. It has since closed some Coldwell Banker offices, and in November it said it planned to sell Cartus, its relocation business for $400 million to help pay off some $3.5 billion in debt. Last month, Realogy also announced plans to close Climb, a San Francisco brokerage it purchased in 2016, and consolidate it into Coldwell Banker. Also last month, the Corcoran Group announced a merger with Citi Habitats, although company officials said the move was not a cost-cutting measure.

The post Goodbye, NRT. Hello, Realogy Brokerage Group appeared first on The Real Deal Miami.

David Martin and Jackie Soffer, with a rendering of the project

David Martin and Jackie Soffer, with a rendering of the project

The Miami Beach Convention Center Hotel will be a Grand Hyatt when construction is completed and the massive property opens in 2023.

Designed by Arquitectonica, the 17-story, 800-room hotel will mark the first Grand Hyatt in South Florida, developers David Martin of Terra and Jackie Soffer of Turnberry announced Monday. In Florida, the brand also operates the Grand Hyatt Tampa Bay.

An elevated skybridge will link the Miami Beach Convention Center to the Grand Hyatt Miami Beach at the intersection of 17th Street and Convention Center Drive, near Lincoln Road. Construction is expected to begin in about a month, depending on permits, Soffer said. The project will go vertical in 2021.

“Hyatt was strongly interested in bringing Grand Hyatt to Miami Beach, in being part of the convention center expansion,” Soffer told The Real Deal. “And we felt it was a good match for this property and for the upscale project that we are bringing to Miami Beach.”

The nearly $400 million hotel project, to be built on city-owned land, was approved by Miami Beach voters in 2018, following years of failed attempts by other developers.

The Grand Hyatt Miami Beach development team also includes Miami Design District developer Craig Robins of Dacra, who is married to Soffer. Designers will include New York-based Stonehill Taylor, which is designing the hotel’s interior lobby, lounges, ballroom, meeting rooms, hotel rooms and all common areas; Coral Gables-based EOA, which is designing the pool deck hospitality features; and Miami-based ArquitectonicaGEO, which is creating pedestrian promenades and landscapes, according to a release.

The hotel will have 12 floors of guest rooms, two floors of meeting spaces and ballrooms, a pool deck on the fifth floor and ground-floor retail space. Other features will include bike sharing stations and ridesharing pick-up and drop-off zones.

A 288-foot-tall convention center hotel was previously proposed by Atlanta-based Portman Holdings, but the proposal failed to reach the required 60 percent voter threshold in 2016. In 2013, a proposal by Tishman Hotels to construct a convention hotel on city-owned land was killed by a court challenge.

The Miami Beach Convention Center just underwent a $600 million renovation, which was completed last year. In January, Clark Construction, the contractor on the project, sued the city of Miami Beach, alleging the city still owes about $90 million for unpaid work.

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The document threatened a lawsuit against WeWork at a time when it was still in the midst of rapid growth and fundraising (Credit: Getty Images)

The document threatened a lawsuit against WeWork when it was in the midst of rapid growth and fundraising (Credit: Getty Images)

A woman who formerly worked in WeWork’s real estate business sent a 50-page document to the beleaguered company in the spring of 2018 filled with explosive allegations of drug use, sexual harassment and pay discrimination.

The document threatened a lawsuit against WeWork when it was in the midst of rapid growth and fundraising, according to Business Insider, which obtained a copy of it.

WeWork then conducted an investigation that found credible evidence of drug use and sexual relations between co-workers, and the firm ultimately settled the woman’s claim for more than $2 million in cash, the publication reported.

Mark Lapidus

Mark Lapidus

The timing of the letter coincided with an effort to push out Mark Lapidus, one of the earliest employees at the firm and the cousin of WeWork co-founder Adam Neumann’s wife. (Lapidus and Neumann ultimately worked out an exit package that would let him keep his vested stock.)

Although the letter did not name Lapidus directly, it claimed that there were several problematic sexual relations within his division and others, and that there was widespread cocaine, Molly and Xanax use on the real estate team, which he ran until 2018. Lapidus declined to comment to The Real Deal regarding the claims.

Business Insider withheld the name of the woman who made the claims because she said she was a victim of sexual assault, something the publication was unable to confirm.

WeWork quickly went from high flying to struggling, after an attempt to go public revealed massive losses, questionable loans to executives and other red flags. After the IPO effort was abandoned, the company’s biggest backer, SoftBank, took over and has moved to turn the business around. The company recently named industry veteran Sandeep Mathrani as its new CEO. He sent Business Insider a statement saying that WeWork’s “new executive leadership has zero tolerance for such behavior.”

“It is our highest priority to ensure our employees feel safe and respected, and this starts at the top,” he said. “In this new chapter at WeWork we are fully invested in upholding a culture of integrity.” [Business Insider] – Eddie Small

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From left: Manuel Grosskopf, Edgardo Defortuna and Ritz-Carlton Residences, Sunny Isles Beach

From left: Manuel Grosskopf, Edgardo Defortuna and Ritz-Carlton Residences, Sunny Isles Beach

UPDATED, Feb. 24, 4:55 p.m.: Ritz-Carlton Residences, Sunny Isles Beach secured its temporary certificate of occupancy and can now start closings at the 52-story luxury oceanfront condo development.

Developed by Fortune International Group and Château Group, the 212-unit tower at 15701 Collins Avenue is nearly sold out and has recorded more than $150 million in pre-construction sales over the past year, according to a release. It broke ground in 2016.

Designed by architect Bernardo Fort-Brescia of Arquitectonica, the tower boasts 250 feet of beachfront and over 365,000 square feet of glass. Features include a private club level on the 33rd floor, a beachfront restaurant, pool deck, kids club, full-service spa, fitness center and wellness center.

Condo units start at $2.6 million. The project secured $212 million in construction financing for the Ritz-Carlton Residences, from Little Rock-based Bank of the Ozarks (now known as Bank OZK), one of the most active condo construction lenders in Miami.

The development group has sold out all four penthouses, totaling more than $82 million, according to the release. The penthouses feature garden terraces spanning 2,000 square feet to 4,000 square feet, private pools and summer kitchens, custom-designed Italian cabinetry and service quarters.

Fortune International Group is one of South Florida’s most prominent luxury developers. Led by Edgardo Defortuna, the group’s development projects include Jade Signature, The Ritz-Carlton Residences, Sunny Isles Beach, Auberge Beach Residences and Spa Fort Lauderdale, and Jade Residences Brickell.

The Ritz-Carlton Residences launched sales at the height of the pre-construction condo market in 2015, taking advantage of wealthy foreign buyers looking to put their money in South Florida’s luxury market. Since then, the supply of high-end condos in the wealthy city has greatly increased with projects such as the Trump Group’s Estates at Acqualina, The Regalia and PMG’s Muse Residences.

Currently, Sunny Isles Beach’s luxury condo market priced at $3 million and up has 156 months — or 13 years — of inventory, according to Ana Bozovic, founder of the Miami-based brokerage and consulting firm Analytics Miami. A healthy market has below 10 months of inventory, she said. There are currently 208 active listings priced above $3 million in Sunny Isles, according to Bozovic’s data.

Some projects are showing signs of distress due to this excess supply, such The Regalia, whose developers were forced to turn over the two most expensive penthouses after failing to pay a judgment to a former attorney.

The post Ritz-Carlton Residences, Sunny Isles Beach gets TCO, starts closings appeared first on The Real Deal Miami.

Zillow CEO Rich Barton (Credit: iStock)

Zillow CEO Rich Barton (Credit: iStock)

Zillow founder Rich Barton has become a billionaire.

The listings giant CEO hit the milestone after strong results from Zillow’s risky new instant home-buying strategy caused shares to increase by 17 percent on Thursday, according to Forbes. The share price closed at higher than $64 for the first time since June 2018, putting the value of Barton’s 15.8 million shares at just over $1 billion.

Barton owns the largest individual stake in Zillow, which he started with four colleagues from his prior company, Expedia.

He stepped down from his CEO position in 2010 and stayed on as executive chairman but returned to his CEO role last February to lead Zillow’s iBuying charge through its service Zillow Offers.

The company’s stock still struggled throughout 2019, but Zillow released the year’s full earnings report Wednesday and showed enough momentum to raise its stock price significantly. [Forbes] – Eddie Small

The post The latest real estate billionaire? Zillow’s Rich Barton appeared first on The Real Deal Miami.

Miami skyline (Credit: iStock and Wikipedia)

Miami skyline (Credit: iStock and Wikipedia)

“South Florida by the numbers” is a web feature that catalogs the most notable, quirky and surprising real estate statistics.

The Kansas City Chiefs may have scored the most points, but one could argue that Miami was the real winner of Super Bowl LIV earlier this month. A series of anecdotal and data-driven reports have confirmed the dramatic economic impact of the game and associated events on the entire region, specific industries, and individual businesses. While South Florida is no stranger to the business boom generated by Super Bowls, having now hosted the affair 11 times, there was something extra special in the air this year. (And we don’t just mean Jennifer Lopez’s halftime performance). Join us in running up the score as we present this month’s edition of South Florida by the numbers.

135: Number of condominiums that sold during Super Bowl week, an increase of 53 (or 65 percent) from the prior week. [TheRealDeal]

200: Percentage increase in Miami area condominium tour bookings during Super Bowl week, according to eight real estate professionals. Local projects hosted a variety of special soirees and events during the week to increase their exposure to area visitors, including game-watching parties, exclusive dinners with NFL legends, and panel discussions. [MiamiHerald]

$26.4 million: Anticipated total short-term rental income generated by Airbnb hosts during Super Bowl week, according to a company spokesman. Nearly 84 percent of all local Airbnb listings were booked during the weekend of the game, even with hosts charging exorbitant rate increases. [TheRealDeal]

$175.20: According to data analysis firm STR, Miami hotels’ revenue per available room (RevPAR) value during Super Bowl weekend. In addition to the average daily rate (ADR) increase of 148.5 percent, year-over-year, these figures represented the highest-performing metric levels of any Super Bowl weekend, with occupancy in the market rising 11.3 percent to 92.8 percent. [STR]

More than $200 million: Estimated value of free publicity generated via media coverage of the game and its ancillary events, according to Miami Super Bowl Host Committee Chairman Rodney Barreto. Local companies also benefited through the event’s Business Connect program, which coupled nearly 300 local minority-owned businesses with vendor contracts to provide goods and services to the game and its related events. [SFBJ]

This column is produced by the Master Brokers Forum, a network of South Florida’s elite real estate professionals where membership is by invitation only and based on outstanding production, as well as ethical and professional behavior.

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First - Little Havana rendering

First – Little Havana rendering

The developer of a planned apartment project in Miami’s Little Havana scored a $34 million loan to begin construction, as the area sees growing interest from investors.

An affiliate of the Vienna, Austria-based Premium Group secured the construction loan from Man Global Private Markets for the 194-unit apartment project at 736-760 Southwest First Street, according to a press release.

The project, called First- Little Havana, will total nearly 160,000 square feet of residential space with 7,000 square feet of ground-floor retail and 231 garage parking spaces. It is expected to be completed in 2021.

JLL’s Brian Gaswirth and Michael DiCosimo helped arrange the financing.

The development will feature a resort-style pool, fitness center, yoga studio and dog park.

The Premium Group affiliate purchased the property in 2018 for $3.7 million.

Founded in 1995, the Premium Group has a total investment value of more than €1.4 billion and has built 280 projects, according to its website.

Sitting just west of Brickell and near the Miami International Airport, Little Havana is becoming one of the next targets for investors. Unlike Brickell, most of Little Havana is zoned for medium-density development – either T4 or T5. That means that development is capped at five stories and 65 residential units per acre.

In September, Bar Invest Group sold an apartment building it built in Little Havana for $7.1 million to Beraja Investments.

Last year, Key International sold Havana Palms II, a 79-unit multifamily complex at 931 Southwest Third Street, for $10.1 million, or about $128,000 per unit.

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Maria Penaloza

Maria Penaloza

The owner of a Weston-based brokerage allegedly sent unsolicited spam text messages directing consumers to read home buying articles on her firm’s website, according to a recently filed lawsuit.

It’s the latest case brought by a pair of local attorneys targeting brokers and agents who are allegedly breaking federal law that prohibits abusing mass text messaging for unsolicited advertisements.

In the lawsuit filed in Miami federal court, seeking class action status, Palm Beach County resident Ryan Millward accuses So Flo Real Estate Group of sending him telemarketing messages without his permission in the fall and winter of last year. Millward is represented by Garrett Berg and Scott Edelsberg, both of whom have filed at least three similar complaints on behalf of plaintiffs suing brokerages in Pembroke Pines, Celebration and Naples.

In October, two clients of Berg and Edelsberg settled lawsuits they had filed against Pembroke Pines-based RE/Max Presidential and Celebration-based La Rosa Realty. Terms were not disclosed.

Edelsberg and Maria E. Penaloza, CEO of So Flo Real Estate Group, declined comment on the latest suit. Berg did not respond to requests for comment.

Millward’s lawsuit alleges that So Flo Real Estate Group violated the Telephone Consumer Protection Act by using an automated dialing system to send him a telemarketing text message without his prior consent. The complaint contains an alleged screenshot of two texts Millward received from a telephone number registered to Penaloza.

The first message, sent on Oct. 9, reads: “Hi Ryan, I found this article and I want to share it with you. Let me know what you think.” It includes a link to a blog post on So Flo Real Estate Group’s website about obtaining pre-approval for a loan as the first step in buying a home.

The second message, sent on Dec. 11, said: “Hi Ryan, guess what most Americans are saying about home ownership and check out the entire South and Central Florida housing inventory for free at www.soflorealestategroup.com.”

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Clockwise from right: Hong Kong; Columbo, Sri Lanka; and Zagreb, Croatia (Credit: Wikipedia, iStock)

Clockwise from right: Hong Kong; Columbo, Sri Lanka; and Zagreb, Croatia (Credit: Wikipedia, iStock)

It’s been quite the decade economically in many parts of the world, and it shows in the values of homes.

Home values have more than doubled over the last 10 years in eight countries and territories across the world, according to a New York Times analysis. The analysis ranked places by the percentage increase in home values over the last 10 years, five years, and one year.

Nowhere have estimated home values increased by more than in Hong Kong. A house there is likely worth 193 percent more today than it was in 2010, according to the Times. In Brazil over that period, home values have shot up 152 percent.

The other countries where values increased by more than 100 percent are Peru, Chile, Estonia, Colombia, Malaysia, and Iceland. The U.S. didn’t make the top 15 list, but its neighbor to the north has experienced a 74 percent increase in home values.

Home price growth in the U.S. slowed last year as developers continued to deliver new inventory across the country.

Homes Sri Lanka have appreciated by 66 percent over the last five years. China, Turkey, Malta, and Iceland weren’t far behind —all saw average annual increases of more than 10 percent over that period.

Many countries that saw outsized long-term gains did not rank high in appreciation over the last year. Poland, Croatia, Germany, and Puerto Rico topped that category with 11 percent increases.

Value growth seems to be most consistent in Germany, Chile, and New Zealand — they were the only three countries that were top 15 for growth for each time period. [NYT] – Dennis Lynch

The post The best real estate markets on earth over the last decade appeared first on The Real Deal Miami.

Vatican police have been raiding church officials’ offices (Credit: iStock)

Vatican police have been raiding church officials’ offices (Credit: iStock)

Dan Brown wishes he wrote this one: All the Pope’s men are descending on London over an expensive and failed real estate deal.

Vatican police raided the home and offices of Vatican state official Alberto Perlasca, who oversaw the Holy See’s European asset portfolio and was involved in the property botched deal, according to the Associated Press.

The raid comes five months after Vatican police raided several other Vatican offices. No one has been charged.

It appears the Vatican grossly overpaid for the London property at 60 Sloane Avenue in Chelsea and incurred costly fees in the process. In 2014, the Vatican Secretariat bought a 45 percent stake in the property for roughly $200 million through a fund managed by Raffaele Mincione.

Mincione had bought the office property just two years earlier for £129 million, but a few months before the Vatican’s investment, the value of the fund’s equity stake in the office building was tripled after an appraisal by CBRE.

The Vatican deal allowed Mincione to cash out more than his entire initial investment in the property, according to Financial Times. The structure of the deal meant the Vatican paid Mincione millions of dollars in fees after that point as well. Mincione said the deal was transparent and the fees were normal.

At some point, Mincione began planning to convert the office building into a residential building. He secured permits in 2016, but had to take out expensive debt following the U.K.’s vote on Brexit.

Two years later, the Vatican bought out Mincione’s share for roughly £168 million. They also took on £100 million in debt owed to a London hedge fund. Still, work hadn’t started on the conversion.

The Vatican police’s investigation in the deal was triggered when the Secretariat went to the Vatican bank to refinance the debt on the property. [Associated Press, Financial Times]Dennis Lynch

The post Vatican police raid another Holy See official over botched London property deal appeared first on The Real Deal Miami.

Compound CEO Janine Yorio and a Clinton Hill property available to users on Compound

Compound CEO Janine Yorio and a Clinton Hill property available to users on Compound

So-called micro-investing in private real estate is an increasingly accessible option for investors looking to diversify their portfolios with small dollar value investments.

Micro-investing allows investors to buy shares of properties and real estate portfolios with buy-ins as little as $5 in some cases, according to Yahoo Finance. The investments work much like real estate investment trusts, but don’t allow investors to buy in specific properties and do not require the high dollar commitments needed to participate in most REITs.

“The best portfolios are diversified, and real estate performs very uniquely, in a way that is uncorrelated to the stock market and bonds… We want to offer the same asset class at a lower price point,” said Janine Yorio, founder and CEO of the micro-investment app Compound.

Compound buys and flips properties and shares those profits with investors. The startup also brings in cash acting as a buy-side broker for purchases and charges a fee to the seller. The New York-based company offers investors the option to invest in four properties in Brooklyn, Austin, and Miami.

Portland-based CrowdStreet has a similar model — the startup allows investors to buy shares in commercial real estate in the United States. Co-founder Darren Powderly says it’s better for diversification than REITs because those investments are tied to property performance whereas REITs are subject to stock market volatility. The firm recently said it hit a milestone, with $1 billion raised through its platform.

The micro-investing model is being applied in the private equity sector as well. Startup RealBlocks, which allows investors to buy micro-shares in private equity funds using government-backed currency and cryptocurrency, raised $3.1 million in a fundraising round last year. [Crunchbase, Yahoo Finance] – Dennis Lynch

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High water levels in Lake Michigan erode a walkway and seawall (Credit: Scott Olson/Getty Images)

High water levels in Lake Michigan erode a walkway and seawall (Credit: Scott Olson/Getty Images)

Unusually high water levels and waves on the five Great Lakes are ravaging lakeside homes, infrastructure, and businesses. Some are literally washing away.

Erosion on the shores of the Great Lakes has caused tens of millions of dollars in damage across states from Minnesota to New York, according to the Wall Street Journal. Water levels are linked to above-average rain and snowfall over the last several years caused by warmer temperatures.

The U.S. Army Corp of Engineers forecasts that lake levels could remain elevated through July. If a bad enough storm hits, some shorelines can see 10- to 20-foot waves.

Locals worried their properties are spending big bucks to protect their homes. Some are literally lifting them up and moving them from the shoreline. Others are hiring contractors like Randy Vassh to build sea walls and other barriers.

“I’m just getting call after call after call,” Vassh told the Journal, who added that he’s in the market for more equipment to take on more jobs.

Michigan’s environmental agency has issued 468 permits for shoreline protection from October through December, compared to 557 for the prior 12-month fiscal year.

States and municipalities also have work on their plates. Officials in the city of Duluth, Minnesota expect it will cost $30 million to fix the shoreline, a boardwalk, and other public infrastructure that runs along Lake Superior. They’ve brought in 76,000 tons of stones for protective barriers.

Wisconsin officials estimate $30 million in damages, while Illinois officials estimate $25 million in damages. The governors of both states have declared emergencies that could bring in federal dollars. [WSJ]

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Fredrik Eklund (Credit: Getty Images)

Fredrik Eklund (Credit: Getty Images)

“Million Dollar Listings” star broker and recent Los Angeles transplant Fredrik Eklund says condominiums are the new wave in his new West Coast home, where mansions in the hills have been the default in the luxury stratosphere.

The Douglas Elliman broker told Mansion Global that new projects in L.A.’s tony neighborhoods like Beverly Hills are presenting new options for buyers. Eklund is selling units at the recently built 8899 Beverly building.

8899 Beverly

8899 Beverly

“Vertical living didn’t used to be something people understood there,” Eklund said. “The whole idea of making a decision before a building was done, and having sales galleries before the home could be seen, that’s new.”

He also thinks L.A. can outdo New York for “mega-luxury homes,” pointing to the big-ticket sales that have closed in the L.A. area recently.

Earlier this month, Amazon founder Jeff Bezos broke a national record with the $165 million purchase of David Geffen’s Beverly Hills estate (he also bought a $90 million plot of dirt). Between July and December of 2019, three mansions in L.A. County sold for at least $100 million.

The ultra high-end market ($70 million-plus) is doing well, as are homes in the low $3 million range, he said. “But the more difficult market—not that it’s bad, just tricker—is the $6 million to -$15 million market,” he told Mansion Global.

Eklund also weighed in on the proliferation of high-end amenities being offered in condos and apartments. Wellness-style amenities are becoming more popular, like IV drips and cryotherapy sessions available to residents at 40 Bleecker in New York.

As far as advice to buyers, he suggested buyers and sellers be patient and “give it some time.”

“Brokers, myself included, can be pushy, but you need to take time,” he said. “We’re in a market where you have time to come back a few times and look at a place in different lights and at different times.” [Mansion Global] — Dennis Lynch

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Boise, Idaho (Credit: iStock)

Boise, Idaho (Credit: iStock)

The shift from the nation’s top markets to secondary markets is accelerating.

Coldwell Banker’s “State of Luxury 2020” report picked out several secondary markets to watch alongside some larger markets that still have room to grow, according to Inman. The top markets to watch are Boise, Idaho; Charlotte, North Carolina; Colorado Springs, Colorado; Cincinnati, Ohio; and Fort Worth, Texas.

The list was based on an analysis of job and population growth against sales-price-to-list-price ratios, days on market, median list price, and inventory.

Secondary cities can be attractive to homebuyers for a number of reasons. They’re attractive for buyers who want to live in an urban environment but who can work remotely — they don’t necessarily need to be in the nation’s larger job centers to work high-paying jobs. Secondary markets can get buyers more real estate bang for their buck as well.

Coldwell Banker isn’t the first to see the trend toward secondary markets. Developers and investors have turned their attention toward smaller markets in search of returns as cap rates compress in the nation’s premier markets. Secondary and suburban markets have outperformed larger markets by various metrics over the last few years, like household income growth and employment growth.

Still, several larger markets made Coldwell Banker’s list. Malibu and San Diego, California; Austin, Texas; and Arlington, Virginia were picked as markets to watch. Malibu topped markets in terms of price-per-square-foot with a median of $4,269-per-square-foot. [Inman] – Dennis Lynch

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Atherton, California became the first community in the country where the average income topped half a million dollars this year. (Credit: iStock and Google Maps)

Atherton, California became the first community in the country where the average income topped half a million dollars this year. (Credit: iStock and Google Maps)

Atherton, California has topped Bloomberg’s Richest Places annual index for four years, but this year is unlike any other. And Atherton is unlike any other place in the country.

The Silicon Valley town became the first and only community in the country where average annual household income topped half a million dollars — $525,000 to be exact — since the index started in 2017, according to Bloomberg. That’s nearly $75,000 higher than the second-richest community on the list, Scarsdale, New York.

Atherton’s eye-popping household income is largely a product of the Bay Area tech boom. The town is chock full of billionaires and millionaires who amassed their fortunes in the tech industry.

A scan of the MLS revealed that the cheapest house currently on the market is listed at $2.5 million. The most expensive property on the market is listed at $32 million.
Several other Silicon Valley towns and cities made Bloomberg’s list. Two others were in the top five: Hillsborough rose to third place from fifth place last year with an average household income of $430,631, and Los Altos Hills fell one spot to fourth with an average income of $405,073.

Like Atherton and its neighbors, many of the country’s wealthiest communities are clustered around centers of economy and power — there were 12 counties across the country with at least four communities on the list.

The New York metro area comprising several counties in New York, Connecticut, and New Jersey had the most with 26. There were 16 communities in the Bay Area on the list, eight in Cook County on the list, and four in Los Angeles County.

All in all, 16 states had communities on the list. The addition of Lucas and Alamo Heights gave Texas a total of eight communities. [Bloomberg] — Dennis Lynch

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Medical staff outside of a Beijing hospital in February 2020 (Credit: Getty Images)

Medical staff outside of a Beijing hospital in February 2020 (Credit: Getty Images)

The devastating coronavirus outbreak in China is starting to take its toll on some of the country’s biggest landlords.

Measures meant to curb the spread of the deadly virus have effectively put renting on pause in some parts of the country, while some short-term rental businesses are hurting without the seasonal bumps they banked on, according to Bloomberg.

The outbreak is also affecting the housing market — year-over-year price growth was the slowest in January since July 2018.

In Wuhan, the center of the outbreak, rental management company Danke — owned by Phoenix Tree Holdings Ltd — won’t pay rent to landlords for 90 days. Landlords rent units out to the company, which refurbishes, rents and manages them. The company is offering discounts to tenants who sign long-term contracts to drum up business.

Cities outside Wuhan, the center of the outbreak, have also adopted containment measures. Some rental associations want landlords to waive rents.

Landlords in Shenzhen and Hangzhou also have to alert authorities of any tenants from Wuhan’s province living in their buildings or face penalties. In some places, landlords are responsible for screening tenants and disinfecting common areas.
Renters in some cases can’t get into their own units because of lockdowns. Long-term rental startups Ziroom and You+ have received requests for waivers and refunds because they can’t return to their units. Airbnb recently announced it would freeze all business in Beijing for two months as well.

The financial pressure on those companies could have a knock-on effect — venture capital funds managed by Tencent, Warburg Pincus, and Sequoia Capital are among the investors who have poured billions of dollars into the rental management sector over the last few years.

In the United States, Coronavirus has not yet had a significant impact on the real estate trade, The Real Deal reported earlier this month.

[Bloomberg] – Dennis Lynch

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RE/MAX CEO Adam Contos (Credit: Facebook, iStock)

RE/MAX CEO Adam Contos (Credit: Facebook, iStock)

RE/MAX Holdings is taking its latest lead generation play to the robots.

The company will launch a machine-learning app exclusive to its agents on Monday that uses machine-learning to comb through agents’ pre-existing contact lists and predict who is most likely to sell their home — and tells agents when they should reach out. RE/MAX announced the app on its fourth quarter earnings call Friday.

“Agents are losing patience on just ‘buying leads,’” said RE/MAX CEO Adam Contos during the call. “In many cases, they have the leads they need.”

RE/MAX CFO Karri Callahan

RE/MAX CFO Karri Callahan

Agents will have to pay a $49 monthly subscription fee to access the app, which will initially only be available in the U.S. On the call, RE/MAX CFO Karri Callahan said the company is subsidizing the cost of the app for agents by 50 percent.

“We think this is a really compelling opportunity… driving at the heart of lead generation,” said Callahan.

The app was built by North Carolina-based startup First, which RE/MAX acquired in late December.

The app, which was developed by First and bears its name, can search through agents’ contact list in three minutes and ascertain where they live and what property they own, its founder Mike Schneider told Inman in December.

In addition to alerting agents when they should reach out to specific contacts who are most likely to sell, the app also organizes agents’ contacts and provides reports on how much business they do within their network.

The First app is already on the market and being used by non-RE/MAX agents. Those pre-existing user contracts will expire in 2020 and going forward the app will be exclusive to subscribing agents at RE/MAX, Callahan said.

First was founded in 2016 and raised $16 million in venture capital funding. Though the financial terms of RE/MAX’s acquisition of First were not disclosed, Callahan said on the earnings call that the company paid using cash on hand and offered up equity.

The First acquisition comes amid RE/MAX’s broader push in technology investment. In 2018, it acquired booj, a web development and software firm that’s now become a platform of agents tools, including customized agent websites. Earlier this year, it announced a lead referral partnership with Redfin, which was canceled two months in.

RE/MAX noted during the call that First’s staff would be developing other tools and was part of a bigger push from the brokerage to build its “bench strength” of technologists, according to Callahan.

Overall, the company reported $68.2 million in revenue, a 34 percent increase year over year compared to 2018’s revenue of $50.8 million. The increase was attributed to RE/MAX mortgage business, Motto, and revenues from ad and marketing platform Marketing Funds, which it acquired in January 2019.

Expenses grew by 17 percent to $35.2 million year over year. Callahan explained the increase as in part due to higher equity-based compensation and increased legal costs. She noted that for 2020, RE/MAX expects a $4.5 million drag on earnings partly due to legal fees.

The company was named in two class-action lawsuits last spring alleging that the National Association of Realtors’ buyer broker compensation rules violate antitrust law.

The company’s total agent count grew 5.3 percent with the addition of more than 6,600 agents to a record figure of over 130,000.

Write to Erin Hudson at ekh@therealdeal.com

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Softbank CEO Masayoshi Son and Elliott Management Corp. CEO Paul Singer (Credit: Getty Images)

Softbank CEO Masayoshi Son and Elliott Management Corp. CEO Paul Singer (Credit: Getty Images)

SoftBank CEO Masayoshi Son will map out the company’s strategy at a New York investor meeting for the first time since WeWork’s implosion led to another huge investment in the co-working firm.

Elliott Management Corp., among others, will be waiting. The activist investor called for a buyback of as much as $20 billion of the Japanese technology conglomerate’s shares, Bloomberg reported. But Son said there was “no rush,” and that he would like to sell as little as possible.

The March 2 investor meeting is being facilitated by Goldman Sachs, and Elliott will be a topic of discussion, sources told Bloomberg.

SoftBank is still smarting from WeWork’s botched offering last year, and the $9.5 billion rescue package it coughed up for the co-working giant, with help from Goldman. Earlier this month, SoftBank said it would abandon plans to raise $108 billion for its second Vision Fund.

But the company can point to several recent developments as signs of progress for its shareholders and potential investors. After regulators approved the T-Mobile-Sprint merger, shares of Softbank rose 3.3% in Tokyo. Shares also rose after Elliott revealed a $3 billion stake in SoftBank earlier this month. Elliott has expressed reservations toward SoftBank’s overall strategy.

Elliott and Son seem to agree that Softbank is undervalued, but see eye to eye on little else, according to reports. Elliott has a track record of getting its way with companies it targets — Barnes & Noble included — but that is unlikely to happen with SoftBank, because of the outsize power Son wields. The CEO holds more than a quarter of the total shares, and any board proposal must be approved by two thirds. [Bloomberg] — Georgia Kromrei

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The Lord & Taylor building at at 424-434 Fifth Avenue and Amazon CEO Jeff Bezos (Credit: Google Maps, Getty Images)

The Lord & Taylor building at at 424-434 Fifth Avenue and Amazon CEO Jeff Bezos (Credit: Google Maps, Getty Images)

Amazon has been in talks to acquire the Lord & Taylor building, the iconic Fifth Avenue building owned by WeWork.

The e-commerce giant has been negotiating a potential acquisition of the building, six industry insiders told The Real Deal. Two sources said the deal could be valued close to $1 billion. Talks remain fluid, and a deal still faces hurdles before it can materialize.

WeWork did not respond to requests for comment. An Amazon spokesperson said in an email that the company doesn’t “comment on rumors or speculation.”

Amazon was reportedly in talks to lease the building last summer.

Such an acquisition would have significant implications for both companies. If the deal goes ahead, it could be Amazon’s largest real estate acquisition. The company is known for leasing vast spaces, not for buying office properties.

It would also cement the tech company’s presence in New York, a year after its plans to establish a second headquarters in Long Island City imploded last February.

Amazon has since leased office and warehouse space elsewhere in the city. In December, the company signed a 335,000-square-foot lease at SL Green Realty’s 410 10th Avenue on the Far West Side. It’s also been in talks to lease RXR Realty and LBA Logistic’s 770,000-square-foot logistics center in Maspeth, Queens.

For WeWork, the building is one of the last reminders of the company’s excessive spending under former CEO Adam Neumann. A sale would generate much-needed capital for the embattled company, which was taken over by its biggest backer, SoftBank, following a botched attempt to go public. Through its real estate investment arm, ARK, the company paid $850 million for the property — a figure $200 million higher than a prior valuation.

WeWork is currently undertaking a gut renovation of the 10-story, 106-year-old building, at a total cost believed to be close to $200 million. Completing the renovation is one of the conditions of a potential sale to Amazon, sources said.

The office-space firm closed on the acquisition of the building in January 2019, more than a year after it reached an agreement with Hudson’s Bay Companies to buy it. The acquisition was funded with a $900 million debt package provided by JPMorgan and Starwood. HBC maintains a $125 million preferred equity stake in the building.

Several WeWork employees expressed alarm over the deal at the time because of the high price and perceived conflicts of interest, including that one WeWork board member held interests in the buyer, seller and tenant.

The transaction was further complicated when WeWork was forced to agree to lease the entire building — a condition to satisfy lenders — after longtime occupant Lord & Taylor abandoned plans to remain in the retail portion. This created an uneasy dynamic between ARK and WeWork’s real estate team, who had to negotiate a leasing price that some believed was overpriced.

WeWork’s chairman, Marcelo Claure, this month named real estate industry veteran Sandeep Mathrani as the firm’s new CEO. He was most recently CEO of Brookfield Properties’ retail group. This week, the company tapped Shyam Gidumal as chief operating officer. He joins the firm from Ernst & Young.

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Illustration of Developer Bob Zangrillo and a rendering of the project

Illustration of Developer Bob Zangrillo and a rendering of the project

Developer Bob Zangrillo, who is embroiled in the college admissions scandal, is no longer an investor in a mixed-use project planned for the Miami River.

Zangrillo, a Silicon Valley investor who’s known in Miami for spearheading development of the $1 billion Magic City project in Little Haiti, has exited the Miami River project. Avra Jain and her partners, including Joe Del Vecchio, are developing the 555 Riverhouse project along with majority owner Zerby Interests out of Oklahoma City.

Zangrillo reportedly stepped away from the Magic City development after he was indicted, among other parents, in the Varsity Blues college admissions scandal that became public last year. But social media posts on Zangrillo’s Instagram account suggest he is still involved in Magic City.

Zangrillo, a Miami Beach resident, is founder and CEO of Dragon Global.

More recently, Zangrillo was tied to an alleged website scheme that promised government services such as renewing a driver’s licenses or helping with public housing. His lawyers have denied those allegations.

Jain confirmed that Zangrillo will not be an owner in the Miami River project. Zangrillo became involved in the site in 2016. “Bob Zangrillo was not a managing partner nor has he been involved in the day-to-day,” Jain said, declining to comment further. Zangrillo did not respond to requests for comment.

A deed recorded in 2017 revealed Jain and Zangrillo’s partial ownership of the Hurricane Cove property, at 555 Northwest South River Drive.

The 555 Riverhouse project, designed by architect Carlos Zapata, calls for a Sixty Hotels-branded 175-key hotel, 39 Sixty Hotels-branded condos, and about 140,000 square feet of creative Class A office space, Jain previously said. The site has about 585 feet of riverfront. Construction has not yet begun, and the property is still operating as a marina and boatyard.

The entire project, including land costs, entitlements and financing, was previously valued at about $200 million.

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Alex Sapir (Credit: iStock)

Alex Sapir (Credit: iStock)

Sapir Corp.’s CEO Baruch Itzhak is leaving the Israeli company.

Itzhak will resign effective May 20, according to a document filed with the Tel Aviv Stock Exchange. He is joining the Property & Building Corp. as CFO, he confirmed. PBC is one of the top real estate companies in Israel, according to its website. Its U.S. subsidiary — run by Eli Elefant — owns the iconic HSBC Tower at 452 Fifth Avenue in Manhattan.

Itzhak worked for Sapir Corp. beginning in June 2018, according to a spokesperson.

In a statement, Alex Sapir, chairman of Sapir Corp., wished Itzhak and his family “a smooth relocation back to Israel and success in the future” and said that the company is in talks with potential successors.

Sapir Corp. owns properties in Miami and New York City. The company, which is publicly traded in Israel, recently announced a sales team for Arte by Antonio Citterio, a boutique luxury condo project in Surfside, Florida. Sapir has only sold three units at the project, two of which were to his mother and sister, and the third that sold to his business partner, Gerard Guez. Along with its Chinese partners, Sapir Corp. also owns a 1.47-acre development site north of downtown Miami that the partnership is looking to sell. That property is in an Opportunity Zone.

In December, Sapir Corp. reported third quarter net losses of 18.28 million shekels, the equivalent of $5.26 million. The company’s NoMo Soho hotel at 9 Crosby Street in New York reported net operating income of $4.2 million for the nine-month period ending on Sept. 30, which marked a 28.6 percent annual decline in income compared to the same period in 2018.

Correction: An earlier version of this story incorrectly identified Itzhak’s title. 

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Brookfield's Ric Clark (Credit: Getty Images)

Brookfield’s Ric Clark (Credit: Getty Images)

Ric Clark is stepping back from his day-to-day duties at Brookfield.

Ben Brown (Credit: Brookfield)

Ben Brown (Credit: Brookfield)

Clark will serve as a senior adviser and remain chairman of Brookfield Property Group, Brookfield Property Partners and Brookfield Property REIT, Commercial Observer reported. Ben Brown, who currently oversees the Toronto-based firm’s New York City and Boston portfolio, will take over as head of Brookfield’s Northeast region.

In a memo to Brookfield staffers obtained by CO, Clark expressed emotion at pulling back from the company where he has spent much of his career.

“When I joined Brookfield, the real estate group was largely comprised of a small North American office portfolio and a few dozen people,” he wrote. “Today, we are not just one of the world’s largest and widest reaching real estate companies, we are the industry standard.”

Clark has been at Brookfield and its predecessor firms since 1984.

Brookfield Property Partners became the largest commercial landlord in New York City in 2018, when it acquired the Forest City Realty Trust for $6.8 billion in 2018. Last year, it sold much of its massive Putnam rental portfolio to L+M Development Partners and Invesco under an affordability agreement. The firm was the second most active developer in New York City last year. Its major projects include Manhattan West, a 1,350-unit Bankside project in the South Bronx and trio rental towers at Greenpoint Landing.

The firm has also made some more controversial plays during Clark’s tenure. Brookfield is still defending its 2018 purchase of the Kushner Companies 666 Fifth Avenue, which it intends to renovate and reposition. [CO] — Georgia Kromrei

The post Brookfield’s Ric Clark steps back from day-to-day role appeared first on The Real Deal Miami.

Bob Gordon with 2401 Solar Plaza Drive (Credit: Redfin)

Bob Gordon with 2401 Solar Plaza Drive (Credit: Redfin)

A political power couple from New Jersey sold their lakefront Fort Lauderdale home for $5.5 million.

Property records show Robert and Gail Gordon sold the five-bedroom, 5,482-square-foot house at 2401 Solar Plaza Drive to a Maryland LLC.

The buyer, RRBLVD LLC, is tied to Richard M. Kremen, a DLA Piper shareholder. Kremen focuses on insolvency cases, including Chapter 11 bankruptcies and receiverships, according to the law firm’s website.

Robert Gordon was a New Jersey state senator between 2008 and 2018, and is now a commissioner on New Jersey’s board of public utilities. He is also a real estate development consultant. Gail Gordon is an attorney with Florio Perrucci Steinhardt & Fader, and previously worked for former Pennsylvania governor and United States Attorney General Richard Thornburgh, as well as for Governor Chris Christie.

According to property records, a company led by Robert Gordon paid $950,000 in 2017 for the 7,500-square-foot lot in Fort Lauderdale. The couple completed the house last year.

The property fronts Sunset Lake and includes a new seawall, concrete dock, pool, grill and fire table, according to the listing. The home features an open floor plan with a wet bar, theater, floating glass staircase, a master suite with a private balcony, two laundry rooms, a three-car garage with car lifts, and an extra kitchen.

The house sold for about $1,003 per square foot. It was listed with Tim Elmes of Compass. Burton Horwitz of Keller Williams Realty Boca Raton brought the buyer.

A number of luxury homes have sold in recent months in Fort Lauderdale. Just this week, two houses sold in the Harbor Beach neighborhood for $8 million and $11 million.

A waterfront mansion featuring a full stock trading room at 220 North Compass Drive also sold in recent days for $11.5 million. And earlier this month, the owner of a crane company picked up a waterfront mansion in Fort Lauderdale at 2300 Aqua Vista Boulevard for $12.2 million.

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From left: Ollie co-foudners Andrew and Chris Bledsoe

Ollie co-founders Andrew and Chris Bledsoe

The co-founders of Ollie, a co-living startup, have left their roles at the firm, The Real Deal has learned.

Chris Bledsoe, CEO, and Andrew Bledsoe, COO, left the company last month. An Ollie spokesperson confirmed the brothers were no longer managing the company, and said the two will continue to advise the company as members of the board.

“Ollie is grateful for the vision and dedication provided by Chris and Andrew since the company’s inception,” the spokesperson said in a statement.

The spokesperson declined to say what prompted the co-founders’ exits. Neither responded to LinkedIn messages seeking comment.

Gregg Christiansen, a board member, will lead Ollie as president, a move supported by the board and the departing co-founders, the spokesperson said. The company did not specify if a search was underway for a new CEO and COO.

Christiansen, who has previously held roles at Northwestern Mutual and Fortress Investment Group, more recently launched a real estate investment firm, Cedar Hall Capital. He joined Ollie’s board in 2017, and was appointed president of the firm last month, according to his LinkedIn page.

The idea for Ollie was born of out Andrew finding a way to split up his one-bedroom apartment in the Financial District into smaller rooms, according to the firm’s website. From there, the Bledsoe brothers launched Ollie in 2012 as a firm that provides micro-units in rental buildings with hotel-style features such as cleaning, linens, internet service and community events.

But the firm has had trouble attracting significant investment. They raised $15 million in 2018 from the Moinian Group, Aviva Investors and others. But talks for a $50 million funding round led by student housing operator EdR never manifested.

The co-living model has had mixed results. WeWork launched its own co-living business, WeLive, but so far has opened only two locations, and wound back plans to open more. Common, a New York-based firm led by Brad Hargreaves, has seen more success and raised $63 million, according to Crunchbase. Others, including Bedly, have shuttered altogether.

Some landlords have bet big on Ollie. Simon Baron Development and Quadrum Global, which partnered on a 43-story rental building at 29-22 Northern Boulevard in Long Island City, allocated 14 floors to co-living units to be managed by Ollie. The project, known as ALTA LIC, opened to residents last year and charged between $1,376 to $1,880 a month for Ollie’s co-living units.

“ALTA LIC is the cusp of what I think will be a major disruption in the rental market,” Chris Bledsoe told the Wall Street Journal in 2018.

Ollie has two locations in New York, and one in Pittsburgh, according to the company website. More locations in Boston and Los Angeles are slated to open in 2021. But the firm has also struggled to expand at scale, in part due to the challenges of waiting for residential developments to come online — the ALTA LIC took four years to develop.

Write to David Jeans at dj@therealdeal.com

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Wawa at 3288 South Military, Palm Springs

Wawa at 3288 South Military, Palm Springs

Tampa-based Brightwork Real Estate sold a property leased to Wawa, the popular convenience store and gas station, at 3288 South Military Trail in Palm Springs for $7 million. 3288 Military Trail LLC, an Illinois company led by Ana Crisan, purchased the property.

The Palm Springs Wawa was one of the chain’s first stores in South Florida and sits on 1.8 acres.

Palm Springs is a village that is located between Lake Worth and West Palm Beach in Palm Beach County.

Wawa is a chain of more than 800 convenience stores and gas stations in Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Florida, and is known for its hoagies.

The Wawa, Pennsylvania-based company is moving into South Florida at a rapid pace and said it expects to have more stores in Florida than Pennsylvania or New Jersey.

In June, Banyan Development sold a Wawa location in Delray Beach for $6.84 million. In April, two principals of Coral Rock Development Group and a partner sold a Wawa property in Cutler Bay for $5.7 million.

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340 East 51st Street and from left: Ofer Yardeni, Alex Rodriguez and Adam Modlin (Credit: Getty Images, Google Maps)

340 East 51st Street and from left: Ofer Yardeni, Alex Rodriguez and Adam Modlin (Credit: Getty Images, Google Maps)

Yankees superstar Alex Rodriguez and his partners scored their first real estate purchase together for $66.25 million, The Real Deal has learned.

The retired Yankees slugger, real estate investor, entrepreneur and broadcaster partnered last year with broker Adam Modlin and Ofer Yardeni’s Stonehenge NYC with plans to buy $1 billion worth of value-add multifamily real estate in New York City.

A-Rod Corp, Stonehenge NYC and Modlin Group paid $707 per square foot and about $581,000 per unit for the 114-unit building at 340 East 51st Street, known as the Allen House. The 14-story building was completed in 1965 by the London family, according to a release. The family sold the building.

The Midtown East building will be rebranded as Stonehenge 51, and the partners plan to lease rentals for periods of six months or more through the Stonehenge Reserve program, and offer fully furnished units.

David Krantz and Paul Leibowitz of Savills brokered the sale. Stonehenge sourced the deal, led the due diligence, and will manage the business plan and budget for the building.

Modlin, Rodriguez’s personal broker, introduced him to Stonehenge CEO Yardeni in Miami in December 2018. Six months later, the trio announced a partnership to buy rental buildings and condos in the Big Apple.

Yardeni said last year that the partners will be tapping their personal networks to raise about $500 million and then leverage that to buy $1 billion worth of multifamily properties.

Stonehenge owns and manages 19 apartment buildings with more than 2,800 units, according to the company.

Rodriguez founded his Miami-based Arod Corp in 2003. Since then, the firm has purchased over 15,000 apartments across the U.S., deploying hundreds of millions of dollars on real estate and investing in a number of ventures, including Sonder, Snapchat and NRG eSports.

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Here are a couple of real estate events worth checking out next week:

Host: Connect Media
Date: Feb. 26
Time: 1:30 p.m. to 6:30 p.m.

Connect Media is holding its Connect South Florida event at the Rusty Pelican on Key Biscayne, 3201 Rickenbacker Causeway, from 1:30 p.m. to 6:30 p.m. This event will provide networking sessions and discussions on how market activity is shaping the economic forecast for 2020. Speakers include Michael Fay of Avison Young and Robert Kaplan of Cushman & Wakefield.

Host: Common
Date: Feb. 28
Time: 12:30 p.m. to 6 p.m.

Common is hosting its Miami Co-living Summit at EAST, Miami, 788 Brickell Plaza, from 12:30 p.m. to 6 p.m. Come to this event to network and hear discussions that address questions concerning affordability, investment, and development in the co-living space. Carlos Bureno of Nuveen Real Estate and Susan Vercauteren of Bank of America will be among the speakers at the event.

To submit more industry events, please reach out to events@therealdeal.com.

The post Mark your calendars: These are South Florida’s top real estate events next week appeared first on The Real Deal Miami.

Jake Vogel and the upper penthouse 6201 at Brickell Flatiron (Credit: Facebook)

Jake Vogel and a rendering of Brickell Flatiron (Credit: Facebook)

A Chicago marine executive closed on his $13.3 million penthouse in Brickell.

Jake Vogel, president of Polaris Boats, bought upper penthouse 6201 at Brickell Flatiron. The 64-story, 527-unit condo tower at 1000 Brickell Plaza was completed late last year. Ugo Colombo’s CMC Group developed the skyscraper.

Vogel plans to use the Miami condo as his second home, according to Cervera Real Estate. Karen Elmir of Cervera’s The Elmir Group represented Vogel along with Brett Firestone of Florida Capital Realty. Adriana Brito of Fortune Development Sales represented the developer.

Rendering of the penthouse (Credit: Alexis Cogul Lleonart of Doo Architecture)

The deal sets a record for condo sales in Brickell since 2007, the developer said. The all-time record is held by the $13.9 million sale of a five-bedroom unit at The Bristol Tower, another CMC project in Brickell.

The six-bedroom, 7,850-square-foot penthouse has six-and-a-half bathrooms, a den, family room, office and a rooftop deck with a pool, summer kitchen and changing rooms. The unit has ceilings of more than 20 feet tall and elevator access to all three levels.

The price breaks down to $1,694 per square foot.

In December, CMC Group paid off its $236 million construction loan for Brickell Flatiron. Colombo’s next project is likely Onda, an eight-story condo development he’s planning to build in Bay Harbor Islands with Valerio Morabito.

Rendering of the penthouse (Credit: Alexis Cogul Lleonart of Doo Architecture)

Architect Luis Revuelta designed the Brickell tower, and Massimo Iosa Ghini designed the interiors. The building features a 64th-floor amenities rooftop with a spa, pool and gym, a lap pool and children’s pool on the 18th floor, movie theater, billiards and cigar room, wine cellar, and electric car charging stations.

A London-based Japanese restaurant concept is expected to open in the ground-floor retail space. CMC sold 24,800 square feet of the ground floor and mezzanine level space to Avi Dishi and Haim Yehezkel for $22.5 million. The buyers, who closed on the space last year, are still pursuing a lawsuit against CMC that alleges the developer changed the design of the commercial space.

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Carl Panattoni, Raymond G. Perelman and 965 North Ocean Boulevard in Palm Beach (Credit: Panattoni, PennToday, and Google Maps)

Carl Panattoni, Raymond G. Perelman and 965 North Ocean Boulevard in Palm Beach (Credit: Panattoni, PennToday, and Google Maps)

Developer Carl Panattoni paid $28.57 million for an oceanfront Palm Beach estate, property records reveal.

The Perelman family trust, previously controlled by the late Raymond G. Perelman, sold the five-bedroom, 7,705-square-foot home at 965 North Ocean Boulevard. The price comes out to about $3,700 per square foot.

The deal is the most expensive residential sale to close so far this year in Palm Beach.

Perelman, who died in May, was founder, chairman and CEO of RGP Holdings, a private holding company composed of a vast array of manufacturing, mining, and financial interests. Along with his wife, Perelman was a well-known philanthropist in Philadelphia and Palm Beach.

Panattoni, the buyer, is chairman and founder of San Francisco-based Panattoni Development Company. The commercial real estate company focuses on office and industrial, and is one of the most active private industrial developers in the United States, according to its website.

In 2018, Panattoni and his wife Mary Jane paid $18 million for a home fronting the Everglades Golf Club in West Palm Beach.

His new Palm Beach home sits on a 1.24-acre property. Records show that Perelman paid $4.1 million for the property in 1992. The house was built in 1978.

The luxury residential market in Palm Beach has been on fire, with a number of records set in 2019.

Just this week, a company tied to Quicken Loans and its chairman Dan Gilbert paid $24.5 million for the Palm Beach mansion at 100 El Bravo Way.

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Kevin R. Kreutzfeld of Premier Estate Properties and 1408 West Lake Drive

Kevin R. Kreutzfeld of Premier Estate Properties and 1408 West Lake Drive

A new waterfront house in Fort Lauderdale’s Harbor Beach sold for $10.9 million, marking the second luxury home sale this week in the upscale neighborhood.

A company managed by Leslie Melamed of Delray Beach sold the 7,653-square-foot estate at 1408 West Lake Drive for $1,424 per square foot, records show. Albert Lepage bought the house.

Lake Worth-based Wightman Construction completed the home in 2019. It has six bedrooms, eight bathrooms and features a master suite with lounge fireplace, a spa-like bath and a private waterfront terrace. It also has an entertainment club room with a sky deck, a pool, summer kitchen and 100 feet of deepwater frontage on Lake Sylvan.

It was last listed for $11.5 million in December.

The listing agent was Kevin R. Kreutzfeld of Premier Estate Properties, and the buyer’s agent was Kent McIntyre of Douglas Elliman.

The property last traded for $800,000 in 2017.

Fort Lauderdale’s luxury home market is seeing heightened interest as more wealthy buyers from the Northeast are buying homes and moving to Florida due to the tax advantages.

Earlier this week, an auto dealer picked up a new waterfront home for $7.8 million at 22 Isla Bahia Drive in Fort Lauderdale’s Harbor Beach.

A waterfront mansion in Fort Lauderdale featuring a full stock trading room at 220 North Compass Drive also sold this week for $11.5 million.

Earlier this month, the owner of a crane company picked up a waterfront mansion in Fort Lauderdale at 2300 Aqua Vista Boulevard for $12.2 million.

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From top left, clockwise: Wynwood 28, the Allapattah apartment building, Miami Riverside Center, and the Target-anchored mixed-use project in Miami’s Overtown

From top left, clockwise: Wynwood 28, the Allapattah apartment building, Miami Riverside Center, and the Target-anchored mixed-use project in Miami’s Overtown

The Miami Urban Development Review Board approved a slate of mixed-use and multifamily projects that could add nearly 2,000 new apartments and more than 700,000 square feet of office and retail space between the Miami River in downtown Miami and North Miami Avenue in Wynwood.

One development, Block 55, initially faced derailment, however, when the first board vote ended in a tie. But it was later approved. A partnership between The Swerdlow Group and Terra is proposing the mixed-use project featuring 402 market-rate apartments, 154 affordable senior housing units and roughly 350,000 square feet of Class A retail space anchored by a Target. The Swerdlow Group won a request for proposals from the city’s Southeast Overtown/Park West Community Redevelopment Agency for the property at 249 Northwest Sixth Street.

Block 55 also calls for a public promenade along Northwest Seventh Street with retail, restaurants and a city of Miami NET office which drew criticism from board chairman Willy Bermello. He proposed the developer enhance the pedestrian experience of the promenade by creating grand entrances. Board member Jesus Permuy didn’t like the massing on the upper floors of the 240-foot-tall building. When the board voted on a motion for denial, it resulted in a tie.

An assistant city attorney informed board members that a tie vote meant Block 55’s application would have to be continued to the next meeting. Jeffrey Bercow, an attorney for Block 55, said any delay in approving the project would result in killing it. Bercow and another developer representative said a non-approval meant their client could not close the deal with the CRA.

“We have a required closing date in March,” Bercow said. “If we have to come back to the UDRB that means we don’t get final resolution until 30 days beyond our closing deadline.”

The board ended up rescinding its denial vote and approving Block 55 with conditions that incorporated Bermello’s suggestion and the developer agreed to break up the massing of the upper floors with an architectural element.

The following projects were also approved:

  • Wynwood Haus. A 224-unit multifamily building with 5,200 square feet of retail at 1765 North Miami Avenue developed by TSG Group and Lineaire Group. The development site is located in an Opportunity Zone. The developers paid $5.9 million for the property last year.
  • Miami Worldcenter block E: A 52-story apartment tower with 560 units and 3,100 square feet of commercial space developed by Lalezarian Properties. The Long Island-based firm purchased the 2.5-acre site for $43 million last year from Miami Worldcenter developers Nitin Motwani and Art Falcone. It is located at Northwest Eighth Street between North Miami and Northeast First avenues.
  • Wynwood 28. A 230,131-square-foot mixed-project developed by Block Capital Group and Kushner Companies. Located at 127 Northwest 27th Street, Wynwood 28 would feature 15,797 square feet of commercial/retail space, 44,637 square feet of office space, 40 residential units, 232 parking spaces and 19 bicycle spots.
  • Allapattah apartment building. An eight-story, 116-unit residential building proposed by Pointe Companies. The 168,000-square-foot project would also include roughly 7,700 square feet of retail space, 3,220 square feet of office space, 129 parking spaces and bicycle parking. The site is located at 2323 Northwest 36th Street in Allapattah.
  • Riverside development. A 1.3 million-square-foot project divided into a 20-story office building and a 38-story residential tower proposed by The Adler Group. The development would rise at 444 and 460 Southwest Second Avenue, the current site of the city of Miami’s administrative complex. Adler’s Lancelot Miami River LLC has an agreement to develop and manage the property on city-owned land, which includes a new administrative headquarters. The residential portion will have 430 units.

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WeWork COO Shyam Gidumal (Credit: Getty Images)

WeWork COO Shyam Gidumal (Credit: Getty Images)

Fresh off announcing its new CEO, WeWork has hired Shyam Gidumal as its chief operating officer.

Gidumal spent eight years working in consumer products and retail at Ernst & Young before departing in June 2019, according to his LinkedIn page. He began his career at Boston Consulting Group, where he made partner.

Sandeep Mathrani

Sandeep Mathrani

The announcement comes on the heels of WeWork hiring real-estate veteran Sandeep Mathrani as its new CEO. Mathrani, the former CEO of Brookfield Properties Retail, replaced two interim CEOs who had been in place following the dramatic exit of Adam Neumann in October 2019.

“Shyam has been an invaluable partner to me for many years during critical business inflection points, helping to focus operations and organizations including at Vornado, and repositioning companies for effective growth,” WeWork CEO Sandeep Mathrani said in a statement Thursday.

“Having him as a partner in managing our business that spans 37 countries will be a significant boon to our operations and executive team.”

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Rendering of the project

Rendering of the project

Time Equities released details of its mixed-use project near downtown West Palm Beach.

The New York-based firm began construction of CasaMara, an apartment and retail development at 3111 South Dixie Highway. It’s the site of a recently demolished office building.

The project is south of downtown West Palm Beach, in the El Cid neighborhood. As planned, CasaMara will have 300 Class A apartments with a 16,000-square-foot clubhouse and 16,000 square feet of retail space along South Dixie Highway. The retail portion will be called The Plaza at CasaMara, according to a press release.

Records show that a Time Equities affiliate paid $17.5 million for the property in 2006. M&T Bank is financing the project.

The 10-acre property will have seven low-rise buildings designed by MSA Architects with interiors by ID & Design International. The Plaza will have on-street parking, landscaping and a corner park.

Apartments will range from studios to three-bedroom units, and the amenities will include a resort-style pool with cabanas, a pool pavilion building with grilling stations and a water wall, a Jacuzzi, co-working lounge, fitness center, dog park, game room, club room, and children’s amenities.

Lincoln Property Company will handle leasing and marketing of the apartments, while Avison Young is the leasing brokerage for the retail. Don DeWoody of Avison Young said in the release that the firm is looking for retailers of wine, furniture, design, coffee and more.

The retail component is expected to open in the spring of next year.

In 2015, Time Equities planned to build five 15-story condominium buildings on the site. But the planned condo development drew opposition, and Time Equities halted work on the project last year before West Palm Beach city commissioners could consider whether to approve or reject it.

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Compass CEO Robert Reffkin and Avi Dorfman (Illustration by The Real Deal)

Compass CEO Robert Reffkin and Avi Dorfman (Illustration by The Real Deal)

It looks like Avi Dorfman, who is suing Compass to be recognized as a co-founder, will get his trial after all.

In an attempt to avoid a courtroom faceoff, the SoftBank-backed firm had appealed an October ruling by a New York judge, who granted Dorfman a trial. But an appellate court judge has just denied the appeal.

“The documentary evidence in the record shows that Dorfman actually performed at least some of the alleged actions which this Court exempted from the statute of frauds,” read the Feb. 20 decision. “Specifically, he developed materials to secure financial backing from investors — including Goldman Sachs — and the deposition testimony and email evidence showed that Dorfman introduced and recruited Paul Goudas to Urban Compass.”

In its motion for summary judgement, Compass claimed that Dorfman worked with CEO Robert Reffkin and Chairman Ori Allon prior to October 2012, when the company wasn’t yet incorporated. In denying the motion, the court ruled that by that time, Reffkin had signed nondisclosure agreements on behalf of Compass, and he and Allon were “actively engaging potential investors.”

Representatives for Compass and Dorfman didn’t immediately comment on the decision.

Dorfman sued Compass in 2014, alleging he helped CEO Robert Reffkin work out the concept for Compass but was later cut out. He is seeking an estimated $200 million-plus stake in Compass, which is valued at $6.4 billion after raising $1.5 billion from investors, including SoftBank.

In October, Judge Andrea Masley granted him a trial. “The record is clear that they exchanged, among other things, emails that set forth offers and counteroffers as to how Dorfman would be compensated as a ‘founding team member,’” she wrote at the time.

But Compass has characterized the suit as opportunistic. In a motion for summary judgement, it said that Dorfman “spurned multiple offers” to work for Compass and “now seeks a do-over of that decision, claiming he should be awarded tens of millions of dollars in equity in Compass far in excess of what he could have earned if he had actually chosen to join that venture.”

Although the original suit did not specify damages, it could be up to $200 million or more based on various estimates.

A 2017 report by one of Dorfman’s experts found he is entitled to 5.96 percent to 6.91 percent of Compass equity. The conclusion was based on a capitalization table provided by Compass during discovery, in addition to Reffkin and Allon’s stock agreements. According to the cap table, Reffkin and Allon each got just over 3 million shares, or 25.3 percent, of Compass equity in 2012.

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Tom Cabrerizo of CFH Group and 10791 North Kendall Drive

Baptist Health South Florida sold an apartment complex in Kendall for $16.9 million, a slight discount from its purchase price in 2007.

Baptist Health sold the 100-unit complex at 10791 North Kendall Drive for $169,000 per unit, records show. CFH Group, led by Tom Cabrerizo, purchased the property.

The apartments were built in 1968 and sit on 3.8 acres. The complex offers one- and two-bedroom apartments. It was last purchased right before the recession for $17.5 million in 2007, records show.

CFH Group is a Miami-based real estate development and property management company with a portfolio of nearly 6,000 multifamily units and more than 500,000 square feet of commercial property throughout the Southeast, according to its website.

Baptist Health, the Miami-based non-profit healthcare organization, has been buying real estate throughout South Florida. In January 2019, Baptist acquired a former Toys “R” Us in Royal Palm Beach for $15.8 million.

Baptist is also partnering with Belmont Village Senior Living to build a luxury senior living facility on a 2.8-acre site at 250 Bird Road in Coral Gables. The site was previously home to a planned luxury condo development to be called The Collection Residences.

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Leslie Wexner is stepping down as CEO of L Brands as Victoria’s Secret nears deal to go private (Credit: Wikipedia Commons, iStock)

Leslie Wexner is stepping down as CEO of L Brands as Victoria’s Secret nears deal to go private (Credit: Wikipedia Commons, iStock)

Leslie Wexner has agreed to sell his controlling stake in Victoria’s Secret to a private equity firm and to relinquish his roles chairman and CEO of L Brands, the chain’s parent company.

According to the Wall Street Journal, which first reported the deal, Sycamore Partners will purchase 55 percent of the company and take it private.

The deal values the struggling business at $1.1 billion, a striking fall from its peak valuation of $29 billion in 2015.

Known for its sexy image and focus on “angels,” the lingerie chain has struggled to maintain relevance in the #MeToo era and battled slowing sales as the wider retail industry reckons with a slew of bankruptcies and store closures. In October, Victoria’s Secret announced it would close more than 53 locations across the country. Fifty employees were also laid off that month.

As the company’s performance dwindled, Leslie Wexner faced mounting scrutiny for his close ties to sex offender Jeffrey Epstein, whom he had hired years earlier as a personal adviser. Epstein took his own life in August while in jail awaiting trial.

The 82-year-old Wexner announced his departure from the company he founded in 1963 in a memo to staff Thursday, according to the Journal.

“I’ve thought about where I fit in the picture,” he wrote. “In keeping with this same thoughtful examination, I have decided that now is the right time to pass the reins to new leadership.”

He is expected to continue serving on L Brands’ board. [WSJ] — Sylvia Varnham O’Regan

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Dan Gilbert and 100 El Bravo Way (Credit: Getty Images and Realtor)

Dan Gilbert and 100 El Bravo Way (Credit: Getty Images and Realtor)

A company tied to Quicken Loans and its chairman Dan Gilbert bought a Palm Beach mansion for $24.5 million, marking the entity’s second home purchase this week.

EL Sueno LLC, managed by Michelle M. Porter, sold the 10,843-square foot estate at 100 El Bravo Way for $2,259 per square foot, records show. Golden Crate LLC, which lists its address as the Detroit, Michigan offices of Quicken Loans, purchased the house. A document filed with the city of Palm Beach is signed by Matthew Rizik, the CFO of Gilbert’s holding company, Rock Ventures.

The home was last purchased for $20.3 million in 2017. It was built in 1922. The house has seven bedrooms and nine bathrooms.

Suzanne Trapani Frisbie of Premier Estate Properties listed the property.

Earlier this week, Golden Crate LLC purchased another home in Palm Beach at 670 Island Drive for $18.8 million.

Quicken Loans is a mortgage company based out Detroit, Michigan. In 2017, the company became the country’s largest residential mortgage lender. It is also the country’s largest lender of FHA loans and has dominated the residential mortgage market as banks have retreated from the market.

Gilbert is also the majority owner of the NBA’s Cleveland Cavaliers.

A majority of the priciest home sales in the tri-county region in 2019 were on the barrier island of Palm Beach. At the top of the list was the $105 million purchase of the 10-bedroom estate at 1415 South Ocean Boulevard by billionaire hedge funder Steven Schonfeld and his wife Brooke.

The post Company tied to Quicken Loans buys Palm Beach estate for $25M appeared first on The Real Deal Miami.

The Eddington House cafe in Shanghai

They would be known to each other only by their noms de guerre: Mecky, Mr. Xu, Julie, Mr. Li, Richard, Jenny and Big Sis.

When the seven EB-5 investors gathered at the Eddington House cafe in Shanghai, known as a favorite haunt of the essayist Eileen Chang during the pre-revolutionary era, it was the first time any of them had met in person — although they had been in contact on WeChat for months.

For privacy, they swore one another to secrecy. Some were concerned about the political atmosphere in China. Expressing a desire to emigrate could be problematic, especially for those with high-level government connections.

The urbane Chinese citizens were all members of a group that called itself EB5 Association of Investors, or EB5AI, which formed last spring to represent the interests of investors lobbying for EB-5 reform. On a Saturday afternoon in late October, The Real Deal met with seven of them in Shanghai to learn about their experiences with the federal program and their thoughts on what was to come.

Each had invested $500,000 — with that money going into a wide variety of projects across the United States — and they all faced a common dilemma: a decade-long backlog. Following a few boom years in the mid-2010s, the expected wait time for a Chinese investor who applies for an immigration visa through the EB-5 program today has ballooned to 16 years, according to the latest statistics from the U.S. State Department.

This situation has been damaging for all segments of the EB-5 food chain, including real estate developers and intermediaries in the States, who are now facing additional pressure from federal rule changes introduced late last year — upping the minimum investment required, and restricting areas where that minimum applies.

“The business has really declined substantially as a result of the situation with the backlog, because Chinese investors are not coming forward, and they always provided the bulk of the people,” said Ira Kurzban of Miami-based immigration law firm Kurzban Kurzban Tetzeli and Pratt, who filed a class action lawsuit on behalf of EB-5 investors against the Department of State in 2018, challenging federal policies that have contributed to the backlog.

EB-5 industry insiders in the U.S. have been able to find powerful allies such as Sen. Lindsey Graham, who is co-sponsoring a bill to ease some of the new restrictions. But the tens of thousands of backlogged investors in China — the ultimate source of billions of dollars for the U.S. real estate industry each year — have found themselves in a dreadful position half a world away, and with few options at their disposal.

So when TRD proposed meeting with some of them in person, many were eager to take the opportunity, but with some reservations. For this reason, the investors are referred to here by either their surnames or Western first names they’ve adopted, and some information that might lead to the identification of individual investors has been omitted. This is their story.

“We’re the elite”

While other EB-5-focused interest groups have been formed by regional centers in the U.S., the members of EB5AI saw their group’s role as representing investor interests in particular, which might not always be in line with the intermediaries who invested their money on their behalf. For the investors, the first order of business was to dispel what they saw as likely misconceptions about Chinese participants in the EB-5 program.

“We’re not tuhao,” the investor who called herself Jenny said on behalf of the group — using the Chinese term for a type of extravagant nouveau riche that had emerged during the country’s economic reform, often through unscrupulous business practices or government ties.

“We’re the elite,” Jenny added, pointing to the fact that all investors present had received a university education. She herself was a retired engineer.

“More importantly, the majority of us identify with American values and would like to establish roots there,” said Xu, who works as an executive at a multinational corporation in Shanghai. “Why else would we choose to leave our homes for such a distant, foreign land?”

A win-win?

Chinese interest in the EB-5 program began to skyrocket in 2014, the same year the Canadian government put an end to its own decades-old Immigrant Investor Program. Canada’s Ministry of Finance had found that the program “significantly undervalued” permanent residence in the country without generating economic returns.

Emigration agencies in China, for whom the Canadian program had long been a cash cow (it had its own six-year backlog of 65,000 pending applications at the time of its cancellation), quickly pivoted south to the United States, just as American real estate developers were facing a financing crunch in the wake of the Great Recession.

“The program became a way to help builders get money, which became very tight after 2008,” said Kurzban, the immigration lawyer. “It was kind of a perfect situation in which all three sides [developers, investors and intermediaries] benefited.”

The investors who spoke with TRD in Shanghai were all part of this wave, which lasted from 2014 through 2017. Xu recalled first hearing about the EB-5 program around 2008, but had no interest in pursuing it at the time. Only in 2015, amid “fluctuations” in his work situation, did he consider a move to the U.S., where he had studied in the late 1990s.

Jenny, who decided to invest in EB-5 in 2014 and spent a year choosing the right project, had heard stories about “really rich” Chinese investors who had gone the EB-5 route before it was cool. But she said most have since given up U.S. residency to avoid being taxed on their worldwide income.

Hudson Yards

For several of these investors, obtaining U.S. residency for their children was a key consideration. Jenny’s son had stayed with a host family in Virginia during high school, and had become very attached to the American lifestyle. “They were a Korean-American family,” Jenny recalled. “Very nice people, they fed him so well!”

Julie, an architect and mother of two who traveled from Hangzhou for the meeting, had a similar motive. Her elder son stayed first with a family in Chicago for a year, and then with a family in Oregon. And Li, a small-business owner, has a daughter who is studying film in Los Angeles, not far from the project that he invested in.

Compared to other means of obtaining residency in the U.S., the EB-5 route appeared to present a number of advantages.

First of all, investors could apply for residency without already being in the U.S. — not a bad arrangement for someone with a well-paying urban white-collar job or private business in China.

Secondly, in contrast to the lottery system that is used to select H-1B visa applicants, the EB-5 program appeared to offer greater certainty — for a price.

“Chinese investors in particular were drawn to the EB-5 program because it enabled them to obtain green cards in an expedited manner for their families,” said Pierre Debbas, a partner and founding member of real estate law firm Romer Debbas LLP.

“Many of these investors wanted their children to attend college in the U.S., thus making the program more appealing compared to perhaps similar programs in other countries,” he added.

For comparison, the U.K.’s investor visa program requires a minimum investment of 2 million pounds, while its Australian counterpart costs 5 million Australian dollars (about $3.4 million). And while Canada’s national investor visa program has been abolished, the province of Quebec offers a similar deal for an investment of 1.2 million Canadian dollars.

Compared with these options, the EB-5 program’s $500,000 threshold seemed like a real bargain — and a much more attainable goal for upper-middle-class Chinese investors.

From boom to boom

In retrospect, a large chunk of the EB-5-driven real estate development boom in the U.S. was driven by an even more dramatic real estate boom (or bubble, some might say) in China — specifically, the market for residential real estate in China’s major cities.

Apartment prices in cities like Shanghai and Beijing have more than doubled over the past decade, and urban homeownership rates in China are among the highest in the world, at around 90 percent. Faced with limited investment alternatives, ownership of second or even third homes — often left empty — has also become increasingly common.

Emigration-minded urban middle-class Chinese were in the perfect position to benefit from this boom, and the relatively low investment threshold of half a million dollars — unchanged since 1990 — meant that many investors were able to secure the necessary EB-5 funds just by cashing out of their apartments.

With the exception of one investor who sourced funds from his family business, the group that met with TRD all funded the bulk of their investments by either selling or taking out mortgages on their homes.

While sourcing funds, the investors also set out to find a migration agent and select a project to invest in. Most went with one of the big franchises in the business — Huijia, Wailian and Shimaotong, to name a few.

But Mecky, an engineer turned housewife, relied on the services of an acquaintance — a former journalist who changed careers to become one of the hundreds of mom-and-pop EB-5 migration agents operating in China at the time. Migration consulting had become a very lucrative business, with agencies pulling in as much as 40 percent of each investment’s value in fees.

The investors took varied approaches to selecting their projects. Richard, a small-business owner with many relatives in the U.S., and Xu both became investors in the poster child of the EB-5 boom, the Related Companies’ Hudson Yards megadevelopment.

Richard was able to secure a 4 percent interest rate for his investment, and he made a point of inspecting the site in person on a visit to New York City. Xu, meanwhile, agreed to make a no-interest investment.

Jenny, who spent a full year searching for a project to invest in, even sent her son to examine a site in New Jersey. She eventually settled on a hotel development in a different part of the country altogether.

Big Sis chose an infrastructure project, the construction of a connection between the Pennsylvania Turnpike and I-95, and said the fact that it was a government project — with what was at times portrayed as a “government guarantee” — contributed to the decision. “It seemed a bit too good to be true,” she noted.

With their investment funds secured and deployed, all the investors had to do was wait. But none expected to wait so long.

A spokesperson for the regional center behind the Pennsylvania Turnpike project said every investor received a private memorandum and limited partnership agreement that clearly explained “the nature of the investment.”

The Delaware Valley Regional Center spokesperson also noted that the “Pennsylvania Turnpike Commission borrowed a total of $383 million” and that the project’s senior debt is “rated A+ by S&P.”

Moment of truth

Jenny, the retired engineer, first heard about the EB-5 visa backlog in fall 2017, at a Mid-Autumn Festival gala hosted by her migration agency, Shimaotong.

“The young lady at the agency office called me several times to remind me to attend,” she recalled. “Looking back, I feel like there was something she really wanted me to know, something that she couldn’t tell me directly.”

After meeting with fellow EB-5 investors at the event, she realized the severity of the situation.

“I had looked at how long people who invested before me had had to wait, and just assumed that that would be my wait time as well,” she said. Other investors said that they had a similar mindset.

In fact, the pipeline of Chinese investors waiting to apply for immigration visas had already been clogged up for years by that point.

Rendering of Four Seasons Cayo Largo in Puerto Rico

The “final action date” for mainland Chinese EB-5 investors was Nov. 22, 2014, as of this January, according to the U.S. State Department’s latest monthly visa bulletin. That means someone who invested on that date, just a few months into the boom, might have become eligible to apply for an immigration visa only recently, more than five years down the line.

Data disclosed by U.S. Citizenship and Immigration Services in 2018 in response to a Freedom of Information request shows that 109 visa applications submitted by mainland Chinese citizens in 2014 were still pending four years later. That number ballooned to 710 in 2015, 2,444 in 2016 and 3,621 in 2017.

But in 2017, people still held out hope. “A lot of investors were looking for signs of reform,” Richard said, noting many people were confident that new legislation would resolve the backlog before it got out of hand.

American promoters of EB-5 projects warned hesitant investors that the cost of investment would go up soon (as did eventually happen in late 2019), and argued that it was better to secure a spot in the line now than to wait for the backlog to be cleared later.

At this point, Chinese investors had already sunk an estimated $16 billion into the EB-5 program, much of which will eventually need to be redeployed into other ventures in order to keep the investments “at risk.” 

“There were a lot of silly people with money to spare who fell victim to a fallacious way of thinking,” Xu said, including himself in this criticism. “And some people got lazy and decided they’d just wait in line and see what happened.”

“By 2018 I realized the backlog was a serious issue, and by 2019 I started to think it might be an unsolvable problem,” he added.

The way migration agencies handled the slow-brewing crisis exacerbated matters. Xu observed that “the agencies were clearly trying to split investors up” and prevent them from organizing.

While things were going well, many agencies had set up groups on WeChat to share project updates with investors. Some U.S. developers also set up Chinese-language WeChat accounts and arranged face-to-face meetings with investors. But the transparency started to slip as more and more investors began asking questions about the backlog.

Big Sis, the investor in the Pennsylvania Turnpike project, was added to a WeChat group with more than 500 people, which had been set up by the agency handling her investment.

“People kept asking for more information about what was going on, and the agency kept saying, ‘It’s too soon to tell for sure,’” she recalled. “Then one day they finally admitted that there was a serious problem, and they deleted the group the next day.”

The EB-5 endgame

Making significant changes to 30-year-old immigration legislation from the other side of the world is a tall task, but the members of EB5AI have identified a few courses of action.

West Hollywood Marriott Edition Hotel

The first is lobbying for legislative changes, a cause that individual investors can contribute to either by donating funds or by taking the fight to social media. As TRD has previously documented, large numbers of investors have taken to tweeting memes at U.S. politicians in an effort to draw attention to their plight.

The Chinese government’s censorship of the internet makes this slightly trickier, but motivated investors can easily learn to circumvent it with a VPN. And if they happen to work for a foreign company that has unfettered access to the World Wide Web, they can simply tweet on the job.

The second approach is as American as apple pie: suing. Xu, for example, has thrown his support behind Kurzban’s class action lawsuit against the U.S. State Department, which, if successful, would achieve some of the main goals of legislative reform.

“We’re hoping that one way or the other, we’ll get rid of counting derivatives, which is kind of a ridiculous practice that’s made up by the State Department,” Kurzban said, referring to the department’s practice of counting family members toward the annual visa quota, instead of just the primary applicant-investors themselves. “I don’t think the statute says what the government is saying it says.”

The class action has already faced one setback, as a judge denied the plaintiffs’ motion for a preliminary injunction and temporary restraining order against the State Department in December 2018. The court has yet to make a decision on the department’s motion to dismiss the case outright.

“It’s difficult to predict, but it doesn’t look completely positive,” Kurzban said. “But if we don’t prevail, we’ll appeal it.”

Meanwhile, the investors said they expect many more EB-5 lawsuits to surface in the coming year. Given the five-year term typical of EB-5 investments, 2020 is a year in which large numbers of investors will likely begin demanding their money back.

“If it’s no longer possible for us to get residency, then my bottom line is that I absolutely want my investment back,” said Li. “Emigrating to America was a dream of mine, but if that can’t happen, I might just go back to my home village” in southern Zhejiang province, he added.

Investors noted that the uncertainty around the backlog had made career and family planning impossible, as parents faced the possibility of receiving U.S. residency while their children had already “aged out.”

“There’s no clear way forward, and no way back either,” Li said.

At the same time, EB-5 intermediaries and Chinese migration agencies have both moved on to newer, easier targets. While regional centers are increasingly sourcing funds from Vietnam, India and Latin America, Chinese migration agencies are now trying to sell prospective emigrants on other “golden visa” programs around the world, everywhere from St. Kitts and Nevis to Vanuatu.

Greece, which established an investor visa program in 2013, was recently one of the top destinations for Chinese investors looking for European residency. And following the recent economic crash in neighboring Turkey, agencies have begun touting that country as a cheaper alternative.

“As far as I can remember, this is the first time Chinese migration agencies have tried convincing people to move to a country with an active war raging on its borders,” said EB-5 industry observer Connor Chen, who runs the widely read EB5Sir blog.

For their part, however, the EB5AI investors who met with TRD said they had never considered emigrating anywhere besides the U.S. “Canada, New Zealand and Australia all just seem too small,” Richard quipped.

Others in the group echoed that sentiment.

“When we chose to invest in the EB-5 program, we were assured by the fact that this was a federal program operated by a well-run government whose values we admired,” Julie said. “For many of us, the mismanagement of EB-5 has led to a lot of disappointment and disillusionment with the United States.”

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Chad Carroll, Mariana Trentini, and Fabio Lopes, and Christopher Burch with 5050 North Bay Road

Chad Carroll, Mariana Trentini, and Fabio Lopes, and Christopher Burch with 5050 North Bay Road

UPDATED, Feb. 20, 11:35 a.m.: The founder of a Brazilian food company sold his waterfront mansion on North Bay Road to fashion executive and investor J. Christopher Burch.

Property records show SPN Florida LLC, led by Salvador Paoletti Neto, sold the 10-bedroom, 7,746-square-foot house at 5050 North Bay Road for $14.2 million, a loss from the previous sale about six years ago.

Burch is founder and CEO of Burch Creative Capital, co-founder of Tory Burch LLC and ex-husband to Tory Burch. His New York-based firm invests in apparel and accessories, snack foods and more.

The North Bay Road property is not the first Miami Beach home for the fashion mogul. In August, he sold the waterfront home at 5111 Pine Tree Drive for $10.7 million.  Fabio Lopes of Coldwell Banker, who represented Burch in his latest purchase, said that Burch plans to make minor improvements to the property and live in it. Burch “loved the bones of the house,” Lopes said.

Paoletti Neto, the seller, founded Quero Alimentos, which he later sold to Heinz Brasil, and is vice president of Heinz Brasil’s board of directors, according to published reports. In 2011, Heinz purchased an 80 percent interest in Quero Alimentos, which makes tomato sauces, condiments, spices and more.

The North Bay Road property includes a three-car garage, a guest house, summer kitchen, pool and oversized dock, according to the listing. It also has 10 bedrooms, 11 bathrooms and two half-bathrooms. The house was on the market with Chad Carroll and Mariana Trentini of Douglas Elliman.

The house, which sits on a 32,085-square-foot lot, hit the market in 2015 for $33 million, and was later relisted, most recently for $16.5 million.

5050 North Bay Road

Records show the property last sold in 2014 for nearly $18 million.

Last year, retired Miami Heat player Dwyane Wade listed his home nearby at 5980 North Bay Road for $32.5 million.

In January, a waterfront lot at 4424 North Bay Road sold to Jennifer Taplin Sazant and Neil Sazant for $7 million.

In August, a California buyer purchased the waterfront spec mansion at 6360 North Bay Road for $23.85 million and a lot next door at 6342 North Bay Road for $11.55 million. The combined price marked a record for the year in Miami Beach.

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Ken Griffin and Calvin Klein’s Hamptons compound (Credit: Getty Images, Google Maps)

Ken Griffin and Calvin Klein’s Hamptons compound (Credit: Getty Images, Google Maps)

Billionaire Ken Griffin has added another property to his ever-expanding luxury portfolio.

The hedge funder, who famously dropped $238 million on a penthouse apartment at 220 Central Park South, is in contract to buy a compound in Southampton that belongs to Calvin Klein, according to the Wall Street Journal.

Klein purchased the original property at the site in 2003 for almost $30 million. The seller was Francesco Galesi, a real estate executive.

After a gut renovation, Klein decided to demolish the distinctive home and start from scratch. His modernist creation was “all about the views,” he said in a 2015 interview.

The home, which wasn’t officially on the market, could be worth as much as $100 million, sources told the Journal.

The deal is yet to close. When it does, it will add significant value to Griffin’s already enormous portfolio of luxury properties.

The Citadel founder and CEO owns properties in London, Los Angeles, Chicago and Miami. His recent $99 million purchase in Palm Beach brought his total investment in the area to $350 million. [WSJ] — Sylvia Varnham O’Regan

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CrowdStreet CEO Tore Steen (Credit: iStock)

CrowdStreet CEO Tore Steen (Credit: iStock)

CrowdStreet said it has raised over $1 billion for commercial real estate deals through its online crowdfunding platform.

The milestone comes as the crowdfunding industry continues to mature, with some startups falling away and others facing troubles with underperforming assets.

Crowdstreet offers several tools to allow people to invest in commercial real estate, an industry that historically requires deep pockets to get into. CrowdStreet’s online marketplace launched in 2014, and the Oregon-based firms says it has over 80,000 investors and 193 operators and developers that have used it.

In 2019, the company raised over $500 million for 111 offerings, it said. One of the projects funded through the platform was Phoenix Development Partners’ 349-room dual-branded Hilton in downtown Chicago. For that deal, 200 investors poured in more than $10 million for the building’s redevelopment, according to CrowdStreet.

CrowdStreet last year also locked down $12 million in Series C financing, upping its total fundraising to $25 million.

A bevy of crowdfunding companies came on the scene around 2013, when a shift in U.S. securities law made it possible to expand crowdfunding for certain types of investments. For commercial real estate, the change was seen at the time as a way to make the investment class more accessible to a bigger pool of investors.

The wave of startups attracted venture capital financing that has since tapered. Some companies, like Fundrise, in the years since have shifted their models away from crowdfunding. Others, like the popular platform RealtyShares, stopped operating.

And another platform, Prodigy Network, which raised money for its own developments, faces investor lawsuits over mismanagement of funds.

Write to Mary Diduch at md@therealdeal.com

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Jeffrey Soffer and Fontainebleau Miami Beach

Jeffrey Soffer and Fontainebleau Miami Beach

Jeffrey Soffer wants to build a new garage at Fontainebleau Miami Beach, with top-floor ballrooms.

The proposed garage will be strictly for employees, which means hotel guests will continue to valet at the entrance of the storied resort.

Miami Beach’s land use committee on Thursday recommended the project after hearing details about the new structure, which would be built on an existing surface employee lot on Collins Avenue between 43rd and 44th streets. The new building would connect to the existing hotel property via an elevated pedestrian bridge 27 feet above the street.

The garage, which went from having 500 spaces to 400 spaces, would also include new ballrooms on the top floor so the Fontainebleau Miami Beach can better compete with other South Florida resorts such as Trump National Doral Miami for conventions and corporate events, said Mickey Marrero, a lawyer representing Soffer’s Fontainebleau Florida Hotel LLC.

“The initial primary goal was to address an operational need,” Marrero told the committee. “We are very low in ballroom space and meeting room space. We are losing business to competitors throughout South Florida.”

At the same time, Fontainebleau Miami Beach would no longer request the city of Miami Beach subsidize the cost of employee parking in municipal garages near the hotel, Marrero said.

That appealed to commissioner Ricky Arriola, one of the committee members. “It will address issues I have with the city subsidizing the largest employer in the city for their own employee parking,” Arriola said. “Getting those employees in their privately owned garage I think is a big win for us.”

The proposal presented to the committee differs from when the Fontainebleau Miami Beach first initiated discussions with city officials about a new garage and pedestrian bridge six months ago. According to a September 2019 city memo, valet traffic was going to be moved off the resort to the garage.

That is no longer the case. “Anyone who comes to the hotel will be coming through the main drop-off,” Marrero said. “No one will be dropped off at the new location.”

Project architect Don Wolfe showed committee members preliminary sketches and a rendering that depicts a boxy building with an all glass facade with a pedestrian bridge that also features all glass walls. “It is a very minimalistic modern piece of architecture,” Wolfe said.

The development site is about one block south of the iconic, Morris Lapidus-designed hotel, and is directly adjacent to Soho Beach House and Four Points By Sheraton Miami Beach.

Miami-Dade property records show Fontainebleau Florida Hotel LLC purchased the five parcels that make up the surface lot in 2005 for $13 million.

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Zillow CEO Rich Barton (Credit: iStock, Getty Images)

Zillow CEO Rich Barton (Credit: iStock, Getty Images)

After betting heavily on iBuying, Zillow Group’s revenue more than doubled in 2019 to $2.7 billion, the company said Wednesday.

Just 20 months after buying its first home, the Seattle-based listings giant said revenue from its Homes segment topped $1.365 billion in 2019, compared to just $52.4 million in 2018.

But the company also lost $305.4 million last year, including $101.2 million during the fourth quarter. By comparison, Zillow lost $119.9 million last year.

Overall, Zillow reported fourth-quarter revenue of $943.9 million. Homes accounted for $603.2 million of revenue, up 57 percent from the prior quarter.

During the fourth quarter, Zillow said it purchased 1,787 homes and sold 1,902 homes. It has 2,707 homes in its inventory.

Premier Agent, Zillow’s lucrative agent advertising feature, pulled in $233.5 million in fourth-quarter revenue, up 6 percent year over year.

This story will be updated with further details from Zillow’s earnings call.

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CEO of Amherst Holdings LLC Sean Dobson

CEO of Amherst Holdings LLC Sean Dobson

In an effort to expand its already large portfolio, Amherst Holdings is acquiring heavily indebted single-family landlord Front Yard Residential Corp. in a $2.3 billion deal.

The acquisition will bring the total number of homes in the New York-based investment firm’s portfolio to over 36,000 rental homes. Amherst plans to integrate Main Street Renewal Brand, which will help integrate property management operations.

“Scale in this industry is very important,” president of Amherst Residential, Drew Flahive, told Bloomberg. “It has a lot of knock-on benefits in terms of our cost to deliver services, which ultimately means we can deliver better products inside the home and better customer service to the tenant.”

Front Yard’s portfolio includes over 15,000 rental homes across the country, which is largely in the Rust Belt, the Sun Belt and the South. Front Yard, which recently settled a lawsuit with an activist shareholder, has about $1.6 billion in debt, meaning the market value of its portfolio is roughly $609 million.

The deal indicates investors still see big potential in the suburban rental market, which has been seen as a risky investment for much of the decade.

Still, large financial firms like Blackstone Group have shown that it’s possible to effectively manage massive portfolios of rental properties. The company invested heavily after the foreclosure crisis and is one of the largest private landlords in the world.

The Real Deal reported in July 2019 that the suburbs were making a comeback. Fourteen of the 15 fastest growing cities in the U.S. were suburbs of major cities due to the cost of living skyrocketing in some cities.

Since news of the deal broke, Front Yard’s shares jumped 11 percent to $12.52 as of 9:46 a.m. in New York, according to Bloomberg. [Bloomberg]Jacqueline Flynn

 

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22 Isla Bahia Drive and Steven Romaniello

22 Isla Bahia Drive and Steven Romaniello

An auto dealer picked up a new waterfront home in Fort Lauderdale’s Harbor Beach for $7.8 million.

The 7,286-square-foot house at 22 Isla Bahia Drive sold for $1,070 per square foot to Greg Shottenkirk, the head of the Shottenkirk Automotive Group. 22 Isla Bahia Drive LLC, managed by Rick Cole of Norton Virginia, sold the property, records show.

The house has five bedrooms, six baths and two half-baths with a library, gym, club room and bar. It also has an outdoor entertaining area with a large covered patio, summer kitchen, patio bar, pool and spa. The property has 100 feet of water frontage.

Shottenkirk Automotive has locations in California, Texas, Georgia, Illinois and Iowa.

The home was built in 2019. The property last sold for $2.3 million in 2017, records show.

Steven Romaniello with Florida Luxurious Properties represented the seller and the buyer in the latest deal.

Fort Lauderdale’s luxury home market is seeing heightened interest as more wealthy buyers from the Northeast are buying homes and moving to Florida due to the tax advantages.

Earlier this week, a waterfront mansion in Fort Lauderdale featuring a full stock trading room at 220 North Compass Drive sold for $11.5 million.

Also earlier this month, the owner of a crane company picked up a waterfront mansion in Fort Lauderdale at 2300 Aqua Vista Boulevard for $12.2 million.

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From left: Phil Gutman, Camilo Lopez and Herve Barbera, with Ofizzina

From left: Phil Gutman, Camilo Lopez and Herve Barbera, with Ofizzina

Real estate investment firm Bar Invest Group is choosing to buy instead of rent.

The Brickell-based company, led by Jacques and Herve Barbera, paid $3 million for three office condos at Ofizzina, a luxury office building in Coral Gables. Bar Invest plans to move its headquarters to the over 4,000-square-foot space at Ofizzina, at 1200 Ponce de Leon Boulevard, according to Phil Gutman, president of Brown Harris Stevens Miami.

TSG Group and BF Group developed the 54-unit, nearly 100,000-square-foot building, securing its temporary certificate of occupancy in August 2018, and completing the building in March. Brown Harris Stevens was hired last summer to take over sales of the then-remaining 12 units.

Seven units are now left, with prices ranging from $1.3 million to $3.5 million. The building features a fitness center, rooftop terraces and electric car charging stations. About 3,300 square feet of ground-floor retail is available for lease, and Gutman said the developers are in talks with restaurants and coffee shops to take the space.

Bar Invest purchased units on the 11th floor of the 16-story building. The company manages a portfolio of properties across the U.S., and has invested in more than 1,500 residential units and 600,000 square feet of retail, according to a release.

Other buyers at Ofizzina include technology companies, real estate family offices and financial firms. Some developers in the Aventura market have also built office condos this cycle, though Ofizzina is one of the only new developments in Coral Gables.

“We’ve noticed a huge surge of people not only relocating to the Gables but also deciding it’s no longer worth it to rent office space, and they’d rather own it,” Gutman said.

In May, Bar Invest paid $59 million for an apartment complex in Lauderhill.

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Bed Bath & Beyond CEO Mark Tritton (Credit: Getty Images, Mike Mozart via Flickr)

Bed Bath & Beyond CEO Mark Tritton (Credit: Getty Images, Mike Mozart via Flickr)

Bed Bath & Beyond will spend $1 billion on upgrading its stores and lease buybacks in an attempt to turn around the business after an underwhelming holiday season.

The company announced Tuesday it will spend $400 million on store remodelling and supply chain upgrades, according to CNBC. It has allocated a further $600 million to for share repurchases and debt reduction.

New CEO Mark Tritton, who joined the company in November, told CNBC that the retailer had a “track record” of poor investments.

It is reportedly planning to remodel about 25 locations this fiscal year. The company’s portfolio totals about 1,500 stores, including its other brands Christmas Tree Shops, World Market and buybuy Baby.

The company announced this week it had sold PersonalizationMall.com, a platform that sells gifts to 1-800-Flowers.Com for $252 million. The deal followed a sale-leaseback transaction last month with an entity linked to Oak Street Real Estate Capital, which generated $250 million in proceeds.

As of the end of November, Bed Bath & Beyond reported close to $900 million in cash and cash equivalents, according to CNBC. It is expected to release fourth-quarter and full year earnings on April 15. [CNBC] — David Jeans

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From left: Howard Sands, Scott Tracy, and Kenton Wright

From left: Howard Sands, Scott Tracy, and Kenton Wright

Walgreen Company sold a store in Boca Raton to a Los Angeles-based investment group for $9.15 million.

Deerfield, Illinois-based Walgreen sold the 15,785-square-foot store at 21880 South State Road 7 to Corporate Partners Capital Group for $579 per square foot, records show.

The 2.1-acre property last sold for $2.4 million in 2000. The pharmacy store was built later that year.

Howard Sands, Scott Tracy, and Kenton Wright are the founding directors of Los Angeles-based Corporate Partners Capital Group. The investment firm specializes in the acquisition and operation of single-tenant, net-leased commercial real estate.

With stable, recurring cash flow and a single tenant, Walgreens-leased properties are often seen as a safe bet for investors.

Last year, investor Sam Herzberg sold a Walgreens-leased property on the corner of Collins Avenue and Fifth Street in Miami Beach to Allied Partners for $33 million.

But Walgreens announced in August that it planned to close 200 stores in the U.S. following “a review of the real estate footprint in the United States.”

In October, the company sold its Delray Beach store for $6.54 million.

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China’s home-price growth slows to 18-month low amid concerns over coronavirus (Credit: iStock)

China’s home-price growth slows to 18-month low amid concerns over coronavirus (Credit: iStock)

Home prices in China are the latest economic metric to take a hit as the country battles to contain the coronavirus outbreak.

China’s National Bureau of Statistics reported the average price of new homes in 70 Chinese cities increased 6.45 percent from January 2019, the slowest rate of growth since July 2018, the Wall Street Journal reported.

But home-price growth is expected to slow further as the full effects of the coronavirus on the economy are yet to be realized.

“There will certainly be a nationwide large-scale price reduction in February,” said Zhang Dawei, a Beijing-based analyst for Centaline, according to the Journal.

Home sales in the country are believed to have plummeted as much as 90 percent, following the lockdown last month of Wuhan, the capital of Hubei province where the virus was first reported.

More than 70,000 people have been infected with the virus — called COVID-19 — and more than 2,000 have died. The vast majority of cases are concentrated on the Chinese mainland. Experts note that as far as the United States is concerned, the common flu is a much more widespread and deadly disease than coronavirus appears to be. [WSJ] — David Jeans 

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Niki Higgins of Douglas Elliman and 220 North Compass Drive (Credit: Douglas Elliman and Trulia)

Niki Higgins of Douglas Elliman and 220 North Compass Drive (Credit: Douglas Elliman and Trulia)

A waterfront mansion in Fort Lauderdale featuring a full stock trading room sold for $11.5 million.

Kerstin & Neil S. Schneider sold their 12,530-square-foot estate at 220 North Compass Drive for $917 per square foot. The Schneiders sold the property to Christopher and Stephanie Chen, who own the primary care provider ChenMed.

Niki Higgins of Douglas Elliman represented the seller in the deal.

The home’s stock trading room features 10 monitor screens, a news ticker and two internet providers, according to the listing. The six-bedroom, seven-and-a-half bathroom house also features a movie theater, chef’s kitchen built for four chefs, a dog spa, two laundry rooms, a wine cellar, and a library with a built-in closet humidor with a complex control system for cigars.

The estate has 250 feet fronting the Intracoastal Waterway and another 111 feet fronting a deep-water canal.

The house was built in 2005. The Schneiders purchased the property for $2.1 million in 1999.

Fort Lauderdale and Boca Raton’s luxury housing markets are seeing heightened demand. Earlier this month, the owner of a crane company picked up a waterfront mansion in Fort Lauderdale at 2300 Aqua Vista Boulevard for $12.2 million.

In October, Sebring car dealer Alan Jay Wildstein paid $6.5 million for a home at 500 Southeast 10th Street.

And in June, the founder of Pet Supermarket bought the Fort Lauderdale estate of the late H. Wayne Huizenga at 1575 Ponce de Leon Drive in Fort Lauderdale for $14.3 million.

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It’s a good time to be an industrial broker. Just ask them. (Credit: iStock)

It’s a good time to be an industrial broker. Just ask them. (Credit: iStock)

Jeremy Liebler spent four years working in sales and marketing at Ford Motor Company before he made the switch to real estate. He could have looked for work as a junior staffer on a top-agent team, where someday he might appear on an episode of “Million Dollar Listing: New York.” Or he could have put in the grueling hours needed to one day broker a trophy office tower deal in Manhattan, a la Darcy Stacom or Doug Harmon. But he chose what has traditionally been a far-less glamorous option.

Jeremy Liebler of JLL

Jeremy Liebler of JLL

“It really seemed like industrial had the most runway and growth,” said the 29-year-old JLL broker, “so I thought that would be a good place to be for a few years – for at least the five-year plan.”

Liebler is among the growing contingent of brokers in the tri-state area who are eschewing the flashier, more traditional corners of brokerage that had long been the training grounds for thousands of ambitious agents. Instead, they’re touring warehouses in gritty corners of New York, New Jersey and Connecticut; frantically texting investors of all shapes and sizes; and closing deals in under a week.

From left: Blackstone's Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

From left: Blackstone’s Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

Few things are more exciting in real estate than money, and for many brokers, industrial is where the money is.

Joshua Kleinberg of Cushman & Wakefield

Joshua Kleinberg of Cushman & Wakefield

“Who would have thought some young kids out of college would come in and say, ‘We’re going to be industrial brokers in the outer boroughs,’” said Joshua Kleinberg, an industrial broker at Cushman & Wakefield. “Five years ago, those guys were all wanting to be retail brokers. Before that, they were all wanting to be office brokers. The young guys coming out of college right now all want to be industrial brokers.”

Need for Speed

Thomas Donovan of B6 Real Estate Advisors

Thomas Donovan of B6 Real Estate Advisors

Thomas Donovan, a vice chairman at B6 Real Estate Advisors with years of experience marketing industrial properties, was at a low-slung, 5,000-square-foot warehouse in Woodside, Queens in January 2018 when he got word from the client: name the seller’s asking price so the investors could close as soon as humanly possible.

“They waived all due diligence and just said, ‘I’ll close it next week as long as I know it’s mine,’” he said. “The 5- to 10,000-square-foot spaces for sale were that hard to come by.”

Moving that quickly is oftentimes the only way a company can ensure it gets the industrial property it really wants, brokers said.

Adam Citron, an industrial broker at JLL, said high demand has made it much more common for buyers to settle on their third or fourth choices for warehouses.

“It doesn’t always mean it’s the fourth best out of four choices,” he said. “It just means that new opportunities come along often, but they also are leased or sold just as often.”

This happened last year when a large New York City-based nonprofit hired JLL to find a suitable industrial space. While JLL was ultimately able to find something for the nonprofit, it took several failed efforts.

“There was likely a minimum of three other pursuits that had not gone the way that we wanted them to go, given market availability,” he said.

Pound the pavement, cash the check

High demand has changed the range of the client base and the pace of deals, but brokers still rely primarily on tried-and-true techniques – door knocks, phone canvassing and existing client referrals – to land assignments and win new business.

CenterPoint CEO Bob Chapman, 101-01 Avenue D (top) and 103-00 Foster Avenue (Credit: Google Maps)

CenterPoint CEO Bob Chapman, 101-01 Avenue D (top) and 103-00 Foster Avenue (Credit: Google Maps)

And the brokers make their money in fairly standard ways as well, earning fees and commissions that top out around 5 percent, but tick down on much larger deals.

Industrial developers rely on broker counterparts to not just know the market, but to understand supply chains and potential new uses of space.

“We’re getting more sophisticated tenants, and the leasing process has also gotten more complicated, so we’re busier,” said Kleinberg. “We’re dealing with more institutional ownership.”

The rise of the industrial broker coincides with the phenomenal growth of e-commerce and the need for “last-mile” warehouses on the edges of major urban centers.

In 2014, national sales volume for industrial assets was $50.4 billion, according to research by Newmark Knight Frank. In 2019, that number exploded to $112.1 billion. Locally, demand has also roughly doubled. In 2014, industrial volume in the New York metropolitan area was $4.6 billion, but it rose to $8.4 billion last year, according to Newmark.

New York City alone saw $1.7 billion worth of deals across 296 industrial properties last year at an average price of $393 per square foot, which all marked significant increases from 2018, according to Cushman & Wakefield. Vacancy rates for industrial properties in the outer boroughs were all low during the year’s fourth quarter, ranging from just 3.1 percent in Staten Island to 5.4 percent in the Bronx, the firm reported.

The vacancy rate in Long Island was similarly low in the fourth quarter at 4.8 percent, and it was even lower in New Jersey at 2.8 percent, according to Cushman. New Jersey’s Middlesex County saw the most leasing activity by a wide margin at about 13.3 million square feet.

The trend has extended far beyond the New York metro area. Availability rates for industrial space across the country was just 7.2 percent as of the fourth quarter of 2019, according to CBRE.

Brad Pope of JLL

Brad Pope of JLL

“Twenty-five years ago, it wasn’t a very sexy topic,” said Brad Pope, a JLL industrial broker based in Atlanta. “[But] there’s always demand where there’s money, so if there’s money to be made, people will show up.”

You can call it the Amazon effect. The online retail giant’s insatiable desire for warehouse space has helped transform a formerly niche market into one that young brokers cannot ignore, according to Pope.

“I just fell into this business by accident,” he said. “Today, pretty much every business student in college is aware of Amazon’s supply chain. It just wasn’t the case 25 years ago.”

Kevin Dudley of CBRE

Kevin Dudley of CBRE

However, those trying to break into the industrial brokerage game might now find themselves caught in a catch-22, according to Kevin Dudley, an industrial broker at CBRE. They want to put together industrial deals because industrial properties are so popular, but because industrial properties are so popular, they will likely have a harder time finding vacant assets to sell.

“It’s a tough industry to break into right now because the vacancy rate in top markets like New Jersey is below 2 percent,” he said. “When I started, we were at like 9 percent in New Jersey. There was a lot of opportunity.”

And it isn’t just younger brokers who are paying more attention to the industrial market these days. Kleinberg said he now faces competition for properties from companies both large and small, which was not the case at the beginning of his career.

“When I started, the JLLs weren’t showing my properties,” he said. “Now, from the mom and pops to the multinational companies, everybody wants a piece. Everybody wants to get involved with industrial.”

No end in sight

Most industrial brokers did not solely attribute the popularity of warehouse properties to the e-commerce boom, noting that other factors ranging from a strong economy to a lax regulatory environment compared to other types of properties played a role as well.

But there was near universal agreement that it had given a massive boost to the industry. This is especially true given that online retailers generally need a very large amount of space compared to other types of clients, according to Pope.

Prologis CEO Hamid Moghadam and 18-51 Flushing Ave. (Credit: Google Maps, iStock)

Prologis CEO Hamid Moghadam and 18-51 Flushing Ave. (Credit: Google Maps, iStock)

“It takes two-and-a-half to three times the amount of warehouse space to support the same sales to consumers on the e-commerce model versus the brick and mortar model,” he said, “so as e-commerce takes a larger and larger share of retail sales overall, the demand for warehouse space increases exponentially.”

E-commerce has shifted the way companies view industrial properties as well, brokers said. They are no longer just looking for a property where they can store their goods but for a property that will serve as a key asset in their business model.

“People aren’t just looking for warehouses,” Dudley said. “They’re looking for things like network optimization and supply chain and how that fits into the whole piece.”

“If you can’t deliver your goods to anywhere in the world for a reasonable cost in a timely fashion,” he continued, “then it doesn’t matter how great of a product you have.”

Kyle Eaton, an industrial broker at Newmark, said he is “100 percent busier” today than he was even just a few years ago, and while e-commerce may not be the only reason for this, he expects the sector to stay busy for the foreseeable future.

“As long as people are shopping online and e-commerce stays healthy,” he said, “this is going to continue.”

The post Why all the kids suddenly want to become industrial brokers appeared first on The Real Deal Miami.

Renderings of the project

Renderings of the project

UPDATED, Feb. 21, 1:30 p.m.: A Dania Beach project that began as a recording studio development has morphed into a boutique hostel with a small studio inside.

City commissioners are expected to consider site plan approval for the 16-unit hostel at 1518 Southwest Second Avenue at one of their two regular meetings in March.

Architectural firm Walters-Storyk Design Group (WSDG) designed the on-site recoding studio within the planned hostel said Norman Smith Becerra, a Miami-based commercial real estate agent and consultant working with Gabriel Rydz, the owner of the development site in Dania Beach.

Renderings of the project

Renderings of the project

WSDG is an architectural acoustic consultant and media systems engineer with overseas offices in Basel; Berlin; Belo Horizonte, Brazil; and domestic offices in Highland, New York; New York City and Miami. Projects listed on WSDG’s website include a Miami recording studio called Dream Asylum; Sonastério Studios in Belo Horizonte and Katara Studios in Doja, Qatar. Also listed are three studios in New York City: a Food Network studio, a podcasting facility called Stitcher Studios, and the Jazz at Lincoln Center complex,.

Smith brought WSDG together with Rydz, who acquired the 13,000-square-foot Dania Beach development site in February 2018 for $268,500.

Rydz was “focused in the beginning on a recording studio,” Smith said, but he changed the project to a hostel with a small ground-floor recording studio at the suggestion of WSDG, which had designed something similar in Mexico. Combining a hostel with a recording studio instead of developing a studio alone will “give the investors a little more return,” Smith said.

WSDG would play a continuing role in the operation of the hostel and recording studio by helping to attract recording artists to the property, he said.

In addition to an on-site recording studio, the hostel’s amenities would include a pool and gym. Nightly rates for hostel rooms probably would range from $250 to $300, Smith said. The eight second-floor rooms would have balconies and the eight first-floor rooms would have enclosed terraces.

The 18-month construction phase of the hostel project could start by the end of 2020. A rental house that occupies the development site would be demolished.

Smith said the hostel project would be a debt-free development funded by a group of investors from Argentina, Rydz’s home country.

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Jared Kushner and Jho Low (Credit: Getty Images)

Jared Kushner and Jho Low (Credit: Getty Images)

Two years ago, the Netflix documentary series “Dirty Money” trained its sights on Donald Trump in an episode it called “The Confidence Man.” This time around, it’s staying in the real estate world and in the family.

The show will devote an episode of its second season to Jared Kushner, President Trump’s son-in-law and former CEO of Kushner Companies, according to the Hollywood Reporter. “Dirty Money” will also look into the 1MDB scandal. Federal authorities say Malaysian financier and current fugitive Jho Low, and his associates, used money from a Malaysian sovereign wealth fund to buy more than $1.7 billion worth of real estate, yachts, jets and jewelry.

“Dirty Money” will investigate Kushner in an episode titled, “Slumlord Millionaire.” The 1MDB episode is called “The Man at the Top.” Other episodes in the season will examine Wells Fargo, the life cycle of gold, and corruption and regulatory wrongdoing within one of the largest global plastics producers, according to the report.

The Kushner episode will focus on tenants of the real estate developer and landlord who are speaking out against the company.

Kushner Companies did not respond to an email seeking comment.

Kushner family patriarch Charlie Kushner has been at the helm of the firm since his son, Jared, the former CEO, left to work as a senior adviser in President Trump’s administration in 2017.

The firm has been pushing into suburban multifamily markets, and last year paid $1 billion for a portfolio of 6,000 rental apartments in Maryland and Virginia from private-equity firm Lone Star Funds.

Critics have accused the Kushners of having conflicts of interest regarding Jared’s government job and his family business, the firm has run into other troubles.

In 2018, the company was cited for falsifying construction paperwork and failing to identify that rent-regulated tenants lived at 17 Kushner properties undergoing extensive renovations in New York City.

The year before, Kushner Companies and its affiliates in Maryland were found to have sought the civil arrest of more than 100 former tenants since 2013, making the firm the most frequent user of that strategy for debt collection.

The company has also been hit with a class-action lawsuit alleging illegal deregulation and, in separate cases, compensated tenants for rent overcharge.

The series is produced by Alex Gibney’s Jigsaw Productions, says it will tell the “untold stories of scandal, financial malfeasance and corruption.” [The Hollywood Reporter] — Erin Hudson

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Keller Williams' Josh Team (Credit: Keller Williams)

Keller Williams’ Josh Team (Credit: Keller Williams)

After purging its roster of non-performing agents, Keller Williams said its 2019 sales volume rose 5.7 percent despite the lower headcount.

The Gary Keller-led company, which is the largest franchise brokerage in the U.S., said agents closed more than 1.13 million transactions in 2019, up 3.4 percent year-over-year. Sales volume rose to $351.2 billion, up from $332.4 billion in 2018.

But as of Dec. 31, 2019, Keller Williams said it had 169,317 agents worldwide. In the U.S. and Canada, its roster of agents totaled 159,372, slightly lower than the 159,447 agents it had as of Jan. 31, 2019.

Austin-based Keller Williams reported its earnings at “Family Reunion,” an annual company-wide event that took place this year in Dallas.

An internal report, obtained by Inman, showed that KW’s agent count dropped over the past four months for the first time since 2012. A spokesperson chalked up the drop to “natural attrition,” but it also coincides with an effort by KW to remove ghost agents (those who hang their license but do little else) from the roster.

At Family Reunion, the company also said agents who leave to join a competitor will not take part in the company’s lifelong profit sharing program. The new policy, which will not be applied retroactively, was voted on after a task force of top producing agents and market center heads examined the program amid losses to rivals, including eXp Realty. Last year, CEO Gary Keller suggested agents who left KW for eXp should repay $1 million in profit share.

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Armando Codina and his daughter, Ana-Marie Codina Barlick and Beacon Logistics Park

Armando Codina and his daughter, Ana-Marie Codina Barlick and Beacon Logistics Park

Cargill signed a lease for 70,000 square feet at a new industrial park in Hialeah.

The international food conglomerate, ranked as the largest privately-held corporation in the U.S. by Forbes, inked a lease at Codina Partners and USAA Real Estate’s Beacon Logistics Park, according to Armando Codina, executive chairman at Codina Partners.

Cargill has 160,000 employees in 70 countries in the food, agriculture, financial and industrial industries. The company will use more than half of the space – over 35,000 square feet – for freezer space.

The remainder will be used for office and cooler storage, according to a press release. Cargill’s Beacon Logistics Park location will be in building E. The 146,000-square-foot warehouse has a non-shared truck court, depth of 160 feet and a 60-foot speed bay.

Sebastian Juncadella of Fairchild Partners, the exclusive leasing agent for Beacon Logistics Park along with Jose I. Juncadella, represented the developers in the lease with Cargill.

Codina said the lease marks the first that the developers are announcing, and that they have been focused on finding credit tenants.

The industrial park will have more than 1.3 million square feet once it’s completed. It’s in a foreign trade zone, which means that international shippers can reduce, defer or in some cases, eliminate U.S. Customs duties with import and export activity. The property is also near major highways and Miami International Airport.

The industrial market in South Florida has outperformed other sectors due to the rise in e-commerce. Rental rates and land prices have skyrocketed in recent years.

Codina Partners assembled the 72 acres for Beacon Logistics Park in two deals, spending $28 million for 55 acres in late 2016 and $9.9 million to acquire 17 acres in early 2018.

Building F, a 147,000-square-foot building, was recently completed at the industrial complex.

The project marks Codina’s return to the industrial market after more than a decade. Codina Partners developed Downtown Doral, a mixed-use project with residential, retail, office and a school. The company partnered with Jim Carr on a residential portion of the project.

“It feels great to be back in the industrial space,” Codina said.

The post Biggest private corporation in US inks lease at Beacon Logistics Park appeared first on The Real Deal Miami.

Clockwise from the top left: Bellagio Las Vegas, Blackstone's Jon Gray, Embassy Office Parks in Bangalore, Blackstone's Ken Caplan, Stuyvesant Town, and  Blackstone's Kathleen McCarthy (Credit: Blackstone, Embassy Office Parks, Wikipedia)

Clockwise from the top left: Bellagio Las Vegas, Blackstone’s Jon Gray, Embassy Office Parks in Bangalore, Blackstone’s Ken Caplan, Stuyvesant Town, and  Blackstone’s Kathleen McCarthy (Credit: Blackstone, Embassy Office Parks, Wikipedia)

Until about a decade ago, Blackstone Group derived most of its profits from traditional private equity. But following a dramatic expansion into real estate driven by CEO-in-waiting Jonathan Gray, massive property deals are now the company’s calling card.

With an estimated real estate portfolio of $325 billion, Blackstone is now the world’s largest real estate company, according to Fortune.

Of that total, $163 billion comes from Blackstone’s own real estate equity capital — which has multiplied eightfold since the company went public in 2007 — while the rest is financed with debt.

As rising property values and a slowing economy have made it harder to find high-yielding deals, Blackstone is increasingly investing in unglamourous assets such as warehouses and rental properties in the world’s “knowledge centers” — rapidly gentrifying cities like New York, London, Berlin and Stockholm.

Blackstone’s real estate investments are classified into two basic types — riskier “opportunistic” funds with average annual returns of around 15 percent, and more conservative “Core+” funds with returns around 10 percent.

The firm’s relationships with large institutional investors have given it a significant advantage when pursuing massive deals. Last year, it closed on a record $20.5 billion opportunistic fund known as Blackstone Real Estate Partners IX (BREP IX), which co-invested in the firm’s $18 billion industrial portfolio acquisition from GLP last June.

“If a $20 million office building is for sale, you might have 20 bidders,” Blackstone’s head of Americas acquisitions Tyler Henritze told Fortune. “When it’s a $20 billion deal, the competition is a lot more limited.” [Fortune] — Kevin Sun

The post How Blackstone became the world’s biggest landlord appeared first on The Real Deal Miami.

670 Island Drive and Paul Shiverick (Credit: Getty Images) 

670 Island Drive and Paul Shiverick (Credit: Getty Images)

Hedge funder Paul Shiverick and his wife sold their Palm Beach home on Everglades Island for $18.8 million.

The 5,009-square-foot house at 670 Island Drive sold for $3,753 per square feet to Golden Crate LLC of Palm Beach. The sale reflects growing interest in Everglades Island, on the west side of Palm Beach on the Intracoastal Waterway.

The home was listed for $21 million earlier this year. Built in 2014, the house has five bedrooms, seven bathrooms and two half-bathrooms.

The property was last purchased for $5.7 million in 2012.

The house sits on 0.4 acres and is surrounded by a 900-square-foot central courtyard that has fountains and water views. The home also has a pool and a private dock with a boat lift.

Shiverick is the co-founder of Seminole Management Company and co-chairman of the Cancer Research Institute. The hedge fund specializes in trading value stocks, according to the Wall Street Journal.

Palm Beach’s Everglades Island has seen a number of high-end sales recently. In September, the widow of an heir to the Colgate-Palmolive fortune sold her estate at 655 Island Drive for $12.68 million. In February of 2019, Malasky Homes sold a 5,769-square-foot spec home at 608 Island Drive on Everglades Island for $15.5 million, or about $2,695 per square foot.

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André Duek and Carolina Lara with Daniel de la Vega

André Duek and Carolina Lara with Daniel de la Vega

One Sotheby’s International Realty closed on the acquisition of Duek Realty, a boutique firm focused on Brazilian buyers, The Real Deal has learned.

Duek Realty, owned by André Duek and Carolina Lara, will become the Duek Lara Group by One Sotheby’s and will work out of the Aventura and Boca Raton offices, said One Sothey’s President Daniel de la Vega. Duek’s office at 12000 Biscayne Boulevard, near North Miami, will close.

The acquisition adds 17 agents to One Sotheby’s, and comes about three months after the brokerage acquired the 100-agent Treasure Coast Sotheby’s, active in the Vero Beach and Melbourne markets.

Duek Realty was founded in 2012 and has closed about 1,500 deals in total. One Sotheby’s has worked with Duek Realty as the co-broker on a number of new development sales, de la Vega said.

“Brazilians love [new development] because it gives them an opportunity to put money little by little, [with] time to plan, and a selection of what to pick from,” Lara said.

While Latin American investment in Miami real estate has slowed in recent years, Brazil ranked as the top country buying South Florida homes in 2018, representing 12 percent of all foreign purchases of homes in the tri-county region that year, according to the Miami Association of Realtors.

According to Duek, the firm has closed about 200 deals per year in the last three years, with an average price of about $800,000, depending on the market. Both Duek and Lara are from Brazil, but they said they provide “full service” for foreign nationals, resulting in repeat business from clients.

“They need way more than just purchasing the property, from buying the cellphone to opening a new business,” Lara said.

Brazilians are buying more condos now and fewer vacation homes than before, she said, with many families looking to relocate permanently to South Florida in markets like Pembroke Pines and Boca Raton. Duek handles deals in the tri-county area, de la Vega said.

The firm was approached by two other brokerages but only negotiated with One Sotheby’s, according to Duek. Seth Kaufman, managing broker of One Sotheby’s, first reached out to Duek about a year ago.

De la Vega said that while there are opportunities for more acquisitions, “we’ve turned down many acquisitions where we believed that the ownership group was not right for One Sotheby’s.”

In TRD’s most recent ranking of residential brokerages in Miami-Dade, released in September, One Sotheby’s ranked No. 1, closing $1.46 billion in sales volume between mid-2018 and mid-2019.

The firm has bought seven companies in the last two years, and de la Vega said that growth via acquisition is “one of the main reasons we’ve been able to be competitive.”

The post One Sotheby’s acquires brokerage with Brazilian reach appeared first on The Real Deal Miami.

Rendering of MedSquare Place, Alberto Pérez, and Jorge Navarro

Rendering of MedSquare Place, Alberto Pérez, and Jorge Navarro

A senior living project planned for Miami’s Westchester neighborhood is advancing to the next phase.

AJP Ventures plans to break ground on MedSquare Place, a mixed-use development with a senior living facility and medical office space, in April. The developer secured approval from Miami-Dade County last month, according to Greenberg Traurig. Greenberg shareholder Jorge Navarro represented the developer.

The project, at 9101 Southwest 24th Street in Miami, will replace a former AT&T building. MedSquare Place will have about 37,000 square feet of medical office space and 86 active adult, independent living units, according to a press release. Amenities for the residents will include a gym, an outdoor vita fitness trail, private dining with nutrition dining packages and concierge services.

The residential units will range from 750 square feet to 1,020 square feet, with rents starting at $2,750 a month. The monthly rents include dining and utilities.

AJP Ventures, led by Alberto J. Pérez, is working with Live Oak Bank, a Wilmington, North Carolina-based lender with a senior living lending platform, to finance the $29 million development.

Pérez said in the release that there’s an “immediate demand for an active senior lifestyle community” in Westchester, with many seniors looking to retire close to their children and families.

The building that is currently on the property will be demolished beginning in April and construction on the new project is expected to begin by the late summer. The project would be completed in the summer of 2021.

AT&T sold the former Bellsouth building to Coral Way Real Estate Partners earlier this month for $7.8 million, records show. The buying entity is controlled by Pérez and Juan Carlos Mas, chairman of the Mas Group.

Pérez and Mas have partnered on real estate projects in the past, including a $40 million office development near Baptist Hospital’s main campus in Kendall.

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Keller Williams CEO Gary Keller

Keller Williams CEO Gary Keller (Credit: Keller Williams)

Keller Williams is cutting off associates who dump the franchise brokerage.

Effective April 1, the company’s lifelong profit sharing program will not be available to associates who leave to join a competitor, Inman reported. The vesting period for associates to receive profit sharing has also increased from three consecutive years to seven consecutive years.

The changes were made by the company’s International Associate Leadership Council meeting on Feb. 15, during its annual “Family Reunion” conference in Dallas.

The new policy was voted on after a task force comprised of top earners and market center owners presented its findings on the program, for decades a cornerstone of Keller’s culture. The changes begin April 1 and will not be applied retroactively.

Keller’s current pyramid-based profit sharing model allows associates who are with the company for over three years to collect a portion of their former market center’s profit for life. Market centers grab a bit over 50 percent of the profit, and the sponsored associates split the remainder with their sponsored associate, up to seven levels of the pyramid. Keller Williams has dispersed over $1 billion in profits since 1997, the brokerage claims.

The change comes after KW CEO Gary Keller took a swipe at agents who’d left for virtual brokerage eXp Realty and reaped $1 million from the franchisor’s lifelong profit sharing program. Keller suggested eXp give him back the money.

According to Inman, an internal report on the previous year’s results showed that Keller Williams’ agent count declined for four consecutive months at the end of 2019 for the first time since 2012. [Inman] — Erin Hudson

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Condo sales in Miami-Dade County rose back up again during the second full week of February.

A total of 103 condos sold for $49 million last week, compared to 79 units that sold for $29 million the previous week. Condos last week sold for an average price of about $479,000 or $348 per square foot.

The top deal was the $5.95 million sale of Oceanside unit 7671. The Fisher Island condo spent 139 days on the market before it sold for $1,209 per square foot. The listing agent was Rose Bauer, and the buyer’s agent was Karla Abaunza.

Farther north, in Bal Harbour, was home to the second most expensive condo sale of the week. Oceana Bal Harbour unit 1102 traded for $3.65 million, or $1,553 per square foot. It was on the market for 194 days. Joelle Oiknine brokered both sides of the deal.

Here’s a breakdown of the top 10 sales from Feb. 9 to Feb. 15. Click on the map for more information:

Most expensive
Oceanside #7671 | 139 days on market | $5.95M | $1,209 psf | Listing agent: Rose Bauer | Buyer’s agent: Karla Abaunza

Least expensive
Yacht Harbour #1F | 216 days on market | $1M | $415 psf | Listing agent: Maria Elena Chiappy | Buyer’s agent: Jill Balli

Most days on market
Majestic Tower at Bal Harbour #1707 | 421 days on market | $2.15M | $1,000 psf | Listing agent: Graciela Barron | Buyer’s agent: Sara Smith

Fewest days on market
Williams Island #2409/2410 | 9 days on market | $1.5M | $548 psf | Listing agent: Robert Auerbach | Buyer’s agent: Joel Matus

The post Fisher Island sale trumps all Miami condo sales last week appeared first on The Real Deal Miami.

Macy’s Herald Square (Credit: iStock)

Macy’s Herald Square (Credit: iStock)

Could real estate development be any harder than retail these days?

Macy’s is about to find out.

Macy’s is planning to tack on 1.5 million square feet of office space to its famous Herald Square location in Midtown Manhattan. But the troubled retailer, which recently announced a restructuring plan, could be facing an uphill battle, Bloomberg reported.

That’s because the proposed 800-foot-tall office tower would need a rezoning — a notoriously complex, often political process that can stall or stop the best laid plans.

“It could take years to get it to final conclusion,” City Council member Keith Powers told Bloomberg.

Plans for the project came to light in April 2019, when Bloomberg reported that the 161-year-old department store had held talks about the office tower with New York City officials.

Macy’s, which like many department-store chains has been struggling with declining sales, earlier this month said it plans to shut 125 of its weakest stores — a fifth of its portfolio — and slash 2,000 jobs. The retailer also said it would test a new strategy of having smaller stores in strip malls.

These moves, coupled with its proposed office skyscraper, are expected to lead to $1.5 billion in savings a year through 2022. [Bloomberg] — Mary Diduch 

The post Macy’s new skyscraper in NYC missing one key thing appeared first on The Real Deal Miami.

Alex Sapir’s sales team (from left: Mick Duchon, Eloy Carmenate, Tara West, Alex Sapir, Oren Alexander, Jay Philip Parker, Dean Bloch)

Alex Sapir’s sales team (from left: Mick Duchon, Eloy Carmenate, Tara West, Alex Sapir, Oren Alexander, Jay Philip Parker, Dean Bloch)

UPDATED, Feb. 19, 10:02 a.m.: Developer Alex Sapir named his sales team for Arte by Antonio Citterio, a luxury condo development in Surfside. Douglas Elliman’s Oren Alexander, Tara West, Eloy Carmenate, Mick Duchon and Dean Bloch are leading sales of the 12-story, 16-unit condo building at 8955 Collins Avenue.

Citterio, an Italian architect, is designing the project along with Kobi Karp. The building received its temporary certificate of occupancy late last year. Elliman took over sales at Arte from Corcoran Sunshine in November. Prices start at $7.9 million.

Caroline Cheng returned to Franklin Street as director of retail leasing services in the company’s Miami office. Cheng was previously corporate real estate manager for Checkers and Rally’s Drive-In restaurants. Before that, she worked at Franklin Street, Brookfield Properties and Global Franchise Group.

Suffolk hired Ann Klee as executive vice president. Klee was previously vice president of Boston development and operations at GE, where she oversaw the search for GE’s new headquarters and its move to Boston. At Suffolk, Klee will be responsible for leading the company’s presence on a national scale.

Peter D. Sheridan joined JLL as an executive vice president. The industrial broker leads a team responsible for overseeing the leasing of 5 million square feet of Class A distribution and manufacturing space in South Florida. Most recently, Sheridan was senior director of leasing and development for Liberty Property Trust. He also previously worked for JLL as part of the agency leasing team in South Florida.

Anthony Seijas is now a principal at Altis Cardinal, focused on expanding the company’s multifamily platform. Anthony Seijas’ experience includes more than 26 years at Lennar Corp., where he was a regional vice president overseeing homebuilding operations in South Florida, and at Rialto Capital Advisors, a former Lennar subsidiary.

Adam Starr was hired as managing director of NAI/Merin Hunter Codman. Starr will specialize in the sale and leasing of office and industrial properties throughout south Palm Beach and Broward counties. He’s worked on deals totaling more than 15 million square feet of buildings.

Nick Quay joined Avanti Way Realty as a real estate agent.

Eyzenberg & Company opened a new office in Florida, marketing the third location for the commercial real estate investment firm. Eyzenberg & Company opened an office at 800 Brickell Avenue, just as the company arranged a bridge loan for a mixed-use project in Daytona Beach.

David Geller is now chief operating officer at Anatomy, a South Florida-based gym. Anatomy has locations in Miami Beach and near Midtown Miami and plans to open at Regatta Harbour in Coconut Grove.

Interior designer, furniture designer and space planner Alan David Cohen merged his team with Janine Geller, his business partner and stepdaughter. Geller is now creative director of Design House.

Jordan Nicholson joined Katz & Associates as a sales associate handling tenant and landlord representation. Nicholson previously interned for the firm.

The Mager McQueen Group joined Compass. The 10-agent team, led by Ann McQueen and Jeff Mager, will work out of Compass’ Fort Lauderdale and Hollywood offices. They previously owned their own firm, Elite Coastal Properties.

Daniela Rendon is now an in-house sales executive at 57 Ocean in Miami Beach. Fortune Development Sales is handling the project’s sales and marketing. Rendon was previously an agent at The Estates at Acqualina.

Driftwood Acquisitions & Development rebranded to Driftwood Capital. The company is looking for deals in the $30 million to $150 million range for development and acquisition. Its mezzanine lending division is issuing loans in the $3 million to $50 million range.

An earlier version of this story incorrectly described that Eyzenberg & Company’s role in a bridge loan. 

The post Movers & Shakers: Sapir announces sales team for Surfside project, Franklin Street taps retail head & more appeared first on The Real Deal Miami.

(Illustration by Daniel Gray-Barnett)

UPDATED January 7, 11:45 a.m.: At the corner of Malaga Avenue and Ponce de Leon Boulevard, work crews recently topped off a Class A office building and an apartment tower that make up the first phase of the Plaza Coral Gables, the largest commercial project in the city’s history. Agave Holdings, a commercial real estate firm that includes the family behind the Jose Cuervo spirits brand, is making a $600 million gamble that Coral Gables can absorb 2.25 million square feet of new construction that entails a 242-key hotel, 174 apartments, 161,000 square feet of retail space, roughly 450,000 square feet of office space and more than 2,000 parking spaces.

In a city that once kept a tight leash on development, Agave’s gargantuan complex would have been enough for one cycle. Instead, the City Beautiful is in the midst of a boom that is adding roughly 1,500 apartments, approximately 800 hotel rooms,  more than 500,000 square feet of office space and more than 300,000 square feet of retail by 2022. Other developers such as NP International, Terranova Corporation and Hersha Hospitality are building large and medium-scale mixed-use projects incorporating hotels and apartments in a 1.5-square-mile area between U.S.1 and Miracle Mile, representing nearly $1.5 billion in new construction.

It’s a development wave predicated on attracting new residents, corporate tenants and travelers who want to avoid the traffic-congested confines of downtown Miami, its neighboring Brickell district and unincorporated south Miami-Dade. The Real Deal interviewed brokers and developers in Coral Gables to find out how each market segment will be able to absorb so much new inventory in a two-year window.

Taking office

The Plaza Coral Gables project is already having an impact on local office leasing, according to Maggie Kurtz, a senior vice president with CBRE’s Miami office. Agave Holdings’ high asking rates for the 290,000 square feet of office space due for early-2020 completion come at a time when rates are already rising due to a number of office building sales in the past year, she said.

“They are quoting $55 to $57 a square foot,” she said of Agave’s project. “As a result, others that were quoting around $40 are now quoting $48 to $50.”

According to an Avison Young market report from the third quarter of 2019, the local office leasing rate averaged $40.34, while downtown Miami’s rate hit $42.96 and Brickell’s was $47.31.

Historically, Coral Gables is one of the healthiest office markets in South Florida, Kurtz said.

“The Gables has always fared well and has one of the lowest vacancy rates,” she said. In the third quarter of 2019, that rate was 8.2 percent, compared to 9.2 percent in Brickell and 19.6 percent in downtown Miami, the Avison Young report found.

But Kurtz is concerned that new Plaza Coral Gables office space may overtake demand. “It’s a decent amount of office space to come online at the same time,” she said.

Still, Coral Gables is an attractive city for owners of small to medium-sized companies relocating their businesses. Two local office buildings CBRE handles leasing for have seen an uptick in leasing by financial services and law firms that have left Miami’s central business district. “They are tired of the traffic and the high rents,” Kurtz said.

In addition, more wealth management firms from the Northeastern U.S. are relocating to Coral Gables. “It all has to do with our beautiful weather, and the taxes are just too much in New York and Connecticut. It is as simple as that,” Kurtz said.

Phil Gutman, president of Brown Harris Stevens’ Miami office, has noticed a similar trend at the office condo project Ofizzina at 1200 Ponce de Leon Boulevard, where the brokerage is handling sales.

“We started with CEOs who live in Coral Gables who were fed up with the traffic situation in downtown and Brickell,” he said. “Now we are getting people from New York who have figured out the ramifications of tax reform has made Florida a much more attractive place.”

The multifamily way

A steady rise in the local population has kept multifamily developers confident about their projects. In the first 10 months of 2019, more than 34,300 individuals migrated to Miami and Coral Gables. That’s nearly 5 percent more than in the same period in 2018, according to a third-quarter multifamily report from Berkadia.

Over that same time period, developers delivered 797 apartments in Coral Gables, while the market absorbed 680 units, or 85 percent of them, Berkadia found. The average monthly rent in Coral Gables was $1,892, the third highest among 22 South Florida submarkets.

Considering that employers also added 15,200 jobs to local payrolls in 2019, developers like Henry Torres, principal of the Astor Companies, believe multifamily projects will continue to be a sure bet.

“These are people who don’t want to drive to work,” he said. “They want to be able to get to their jobs in 10 minutes or less.”

Astor developed the 227-unit Merrick Manor condominium at 301 Altara Avenue. Due to the slowing luxury condo market, the firm converted 50 of the units into rentals.

“We leased all of them within a couple of months after listing them,” Torres said. “A lot of people are still hesitant to buy, but they will rent a nice condo fairly quickly.”

NP International is more than a year into construction of Gables Station, a transit-oriented development near U.S. 1 and Ponce de Leon Boulevard with 444 apartments, 66 hotel rooms and 20,000 square feet of retail. One of the project’s three structures will house 400 beds managed by Ollie, a company that provides co-living studios and shared suites with hotel-like services. Just a few blocks south on U.S. 1, the firm is also building Paseo de la Riviera, an apartment-and-hotel project spanning 2.66 acres.

The neighborhood amenities of Miracle Mile and the Shops at Merrick Park are sweeteners for renters seeking a relatively low-key central location, Torres said.

“There are three different golf courses and everything is close by, including the airport,” Torres said. “And it’s not the hustle-bustle of downtown Miami, where you stand in traffic for 20 minutes to travel three blocks.”

Resto-retail

Coral Gables has been teaming with new restaurants and casual dining spots ever since the completion of a Giralda Avenue pedestrian mall.

Close to a dozen more new eateries have opened in storefronts along Giralda and Miracle Mile, with nearly a dozen more slated for 2020 openings, said Venny Torre, a custom home developer who is president of the Coral Gables Business Improvement District, or BID.

According to Colliers International’s Q3 South Florida retail report, Coral Gables has a retail vacancy rate of 3.7 percent, compared to 11.3 percent in Brickell and 22 percent in downtown Miami. The averaging asking rent of $49.51 is about $20 cheaper than Brickell but $3 more expensive than downtown Miami.

The streetscape project, coupled with a BID marketing campaign promoting downtown Coral Gables, has helped property owners along Miracle Mile and Giralda fill empty spaces, Torre said.

“A lot of developers are seeing the benefits,” he said. “There is more activity and people downtown. You see it just driving by Miracle Mile.”

Meanwhile, projects like the Plaza Coral Gables will bring in entertainment-style retail that will attract more people to the city’s downtown, Torre said. For instance, bowling and entertainment company Pinstripes has inked a lease for 30,000 square feet on two stories of the project.

“There is already a great amount of employment downtown that is driving development,” Torre said. “You already have a good number of people who work and live here. It is only going to get bigger.”

Correction: This story has been amended to reflect that some retailers previously reported as opening on Giralda and Miracle Mile are not yet opened.

The post Can Coral Gables absorb all the new development underway? appeared first on The Real Deal Miami.

Moishe Mana photographed at the former RC Cola Plant in Wynwood (Photo by Mary Beth Koeth)

Moishe Mana sits down at the head of a conference table in his Wynwood office and immediately slips off his Louis Vuitton shoes, leaving his bare feet to just brush the tile floor.

“It is crazy, you know. Like I was in Colombia now, I was walking barefoot on the beach for three days,” said Mana, who has a habit of smiling while he talks. “I need to take the shoes off everywhere I go.”

Mana is a spiritual person. He’s not just developing a mixed-use project, he is “building an ecosystem.” His plan is not just a vision, but rather a “philosophy.” More important than financial returns, his ambitious new facilities will bring value to a society at a time when he believes we are threatened every day by what he considers “dangerous policies from President Trump.”

His goal is to make Miami a thriving startup and tech hub like his hometown of Tel Aviv, a place at the forefront of art, culture and innovation. But after five years of amassing older downtown properties, Mana’s master plan has yet to take off. Now he’s seeking a $400 million to $500 million capital raise for his companies, from family offices and high-net-worth individuals.

Part of downtown is arguably in worse condition than when Mana started buying years ago, as his buildings are showing signs of disrepair and many remain vacant.

“I love the fact that someone has plans because the area has terrific potential,” said Crescent Heights CEO Russell Galbut,  who is co-developing an Airbnb-branded condo tower nearby in downtown. “We already own some property in the area and know that with more developers present, more can happen.”

As those banking on this project continue to hope for a groundbreaking, some wonder if his project will ever come to fruition.

Developer David Arditi said he’s been following Mana’s plans closely, and that the information surrounding them “isn’t perfect and the timing of the project seems rather uncertain.”

Mana’s vision is unclear even to savvy Miami real estate developers who have studied the area.

“I don’t know if it’s any clear plan. I’m confused,” said Harvey Hernandez, who developed the condo tower Centro in the Flagler area. “It’s unfortunate because he owns so much real estate downtown. Executing that plan would create so much value downtown with what everyone is trying to create.”

To be sure, Mana has had remarkable success in nearly every aspect of his career. He fought off the Mafia to build a moving and storage empire in New York City. He helped revitalize the city’s Meatpacking District, and he created a burgeoning art community in Jersey City by converting warehouses into over 2 million square feet of studio, exhibit and archive space.

But if Mana is unable to get the capital and start delivering soon, he may have missed his chance to develop, considering that the real estate cycle is coming to an end. More so, the challenges in downtown Miami, including major permitting issues, appear to be too great even for Mana to overcome on his timeline.

Downtown distress

Mana likes to talk — especially about things other than real estate. That’s because to the 63-year-old, the way that developers have been speaking is entirely backwards.

“For me, the building is not important. It’s not the content of the building but content within the buildings, and that’s what’s going to make the neighborhood sustainable,” said Mana.

His downtown vision involves creating co-working and co-living components, a hotel, food hall and public gathering spaces. In theory, this “ecosystem” will provide young professionals with almost anything they would need.

So far, Mana has amassed nearly $375 million worth of properties downtown totaling over 1.3 million square feet of buildings on about half a million square feet of land. He is by far the area’s largest private landowner, according to an analysis by The Real Deal.

The historic section of downtown is faced with a growing homeless population and a lack of public bathrooms, resulting in the human feces often found on the sidewalks.

“Downtown has forever been an area of the city that watched other neighborhoods develop but was never redeveloped itself,” architect Bernard Zyscovich, who is designing Mana’s projects, said.

Mana feels bad for business owners who are suffering, but he argues that he’s not to blame and that the problems existed before he showed up. “Actually, I’m the savior here,” he said.

After years of starts and stops, lags in communication with the public and increased pressure to actually break ground on something, the Mana Group finally unveiled a construction timeline for downtown Miami in late October 2019. At a community meeting, maps and renderings designed by Zyscovich Architects highlighted 11 buildings between Southeast First Street and North Miami Avenue that would be delivered between the first quarter of 2021 and the fourth quarter of 2024.

Mana’s first project will be renovating the 166,365-square-foot, circa-1980 office building at 155 South Miami Avenue, which will be home to Miami International University of Art and Design as well as a startup hub.

Mana’s team has also been working behind the scenes to get the $22.5 million renovation of the sidewalks, parking spaces and streetscapes of Flagler Street back on track. The city, Miami-Dade County and the Downtown Development Authority are funding the new version of the project. The City Commission approved the last piece of funding to redo the streetscape in July.

Not leaving anything to chance, Mana paid for the redesign after the first version fell apart and the city fired its contractor, FH Paschen. Only one block was completed, and construction is expected to restart after the Super Bowl is hosted in Miami next year.

(Click to enlarge)

Mana’s biggest hurdle for the project will likely be the problem that plagues many other developers: the building and permitting process, which is known to take forever in the city of Miami due in part to insufficient city staff.

Gary Ressler, a downtown Miami landlord, said a bar seeking to open in his building has been waiting on the city for 18 months. A Bank of America ATM has taken more than a year and a half to get a permit, he added.

“[Mana] has plans, so far aspirational, but he has plans,” Ressler said. “Will the city get out of the way and make it happen?”

City Commissioner Ken Russell said the city has done everything it can for Mana to pull the trigger, in part by speeding up the process with a new online permitting system. He also said the city has invested in initiatives to help with homelessness, graffiti and general upkeep.

Mana said he’s beginning to grow impatient because he’s aware that it will take a long time to develop downtown. He calls Miami “one of the most difficult cities that I encounter as far as approval permits.”

“I’m getting antsy myself,” he said.

Missed opportunities

On top of the issues with permitting, Mana has missed out on opportunities to bring in commercial tenants.

He says he wants the right type of tenants that go along with his so-called ecosystem. But it’s hard to deny that the real estate cycle in Miami is at the tail end. The high-end residential market — generally the first to show signs of distress in the real estate market — is languishing.

At the end of the third quarter of 2019, there was almost an eight-year oversupply of condos in downtown Miami priced at over $1 million, according to Analytics Miami, a Miami-based brokerage and consulting firm. This represents the second-worst condo resale market in Miami, after the Edgewater neighborhood — just north of downtown.

“This massive buildup past $500K is a sign that the neighborhood did not live up to promise and hype,” said Ana Bozovic, the founder of Analytics Miami.

The few other developers near the major thoroughfare of Flagler Street have been able to bring in new tenants while many of Mana’s buildings remain empty and neglected. He also bypassed large commercial tenants like WeWork, which leased the entire Security Building on Northeast First Avenue in late 2017 and remains there today.

Mana shows no regrets, saying, “Only time will tell if I was right or wrong.”

Who is Moishe Mana?

This isn’t the first time Mana has had doubters. The developer was raised in a rough neighborhood of Tel Aviv to parents who emigrated from Iraq. After dropping out of law school in Tel Aviv, he moved to the United States in 1983 in pursuit of a better life.

He began by washing dishes and occasionally sleeping on park benches in New York City before saving up enough money to buy a moving van. He started Moishe’s Moving Logistics with a goal of breaking up the heavily unionized moving business through lower prices and cheaper labor.

Moishe’s Moving rose to become one of the largest moving and storage companies in the tri-state area, reportedly upsetting John Gotti and the Gambino crime family, who had power over the unions.

In an interview with the Israeli newspaper Haaertz, Mana said Gotti once called him.

“He said, ‘You’re stepping on our toes, taking our livelihood.’ I replied, ‘I live at 201 West 21st. If you want to kill me, come over now and we’ll get it over with,’” Mana told the outlet.

Gotti backed away, but Mana’s real prize was the collection of storage facilities and warehouses he started amassing along the way. In 1998, his real estate portfolio totaled more than 1.5 million square feet in the New York metro area. Soon thereafter, he began to redevelop space in the neglected Meatpacking District.

Mana found a niche in converting old warehouses into art communities and studios. He was able to do this successfully in Jersey City with Mana Contemporary, and he was one of the first to capitalize on this in Wynwood, building his massive Mana Wynwood complex, which he opened in 2010.

“We want to make it interesting and affordable,” Mana said in 2015. “The magic of South Beach is over, and the movement is now toward downtown and the Brickell areas.”

It wasn’t until 2014 that he was introduced to downtown Miami and saw its potential. To Mana, a contemporary-art lover, it was an opportunity to take the city’s most historic properties and breathe new life into them.

“It was 12 o’clock at night. A friend of mine took me to show me a building somewhere in downtown, and I’m driving and my head was spinning. I said, ‘What is going on here? Why is it so quiet? Why is it so locked down?’” said Mana. “It was something I felt in the air for whatever reason. Maybe it reminded me of the old Tel Aviv neighborhood.”

Shai Ben-Ami, a real estate investor and restaurateur, introduced Mana to his colleague Mika Mattingly, then a commercial agent with Sterling Equity Realty. (Mattingly would go on to broker nearly all of Mana’s roughly 50 purchases in downtown, fending off other agents who were hungry to score a piece of Mana’s buying frenzy.)

“It took him 20 minutes with us in downtown to realize he would spend two, three hundred million dollars,” said Ben-Ami on a walking tour of the neighborhood’s bars.

Mattingly, now at Colliers International, remembers vividly Mana’s local shopping spree. “He would buy buildings without even looking at them. It was a crazy time,” she said.

Time crunch

Mana has spent a fortune acquiring properties in downtown Miami, and he claims that up until this point he has provided all of the equity for these projects along with debt financing from banks and nonbank lenders.

For the downtown properties where Mana is a registered agent, he has secured at least $137 million in loans along the way, according to an analysis of property records and loan documents by The Real Deal.

Mana admits that getting investors to believe in his vision has been difficult. Because of that, he is working with smaller lenders such as Conway, Arkansas-based Centennial Bank to finance some of his projects. The bank provided $51 million in loans to two of Mana’s downtown properties and Mana Wynwood. He also relied on the Puerto Rico-based Doral Bank, which collapsed in 2015 amid allegations of fraud and whose Florida branches were taken over by Centennial. (In 2011, a top executive brought in to clean up the bank was killed in a drive-by shooting in San Juan).

Mana has also gotten loans from JP Morgan, Bank Leumi and Miami developer Sergio Rok.

Another one of Mana’s lenders is Ladder Capital Finance, which provided Mana with a $7 million loan from in 2015 that was paid off in 2016, records show. The nonbank lender gained a reputation as a lender of last resort and was used by President Trump during his development days when other banks turned him away, according to Crain’s New York.

The bigger issue for Mana, though, is the capital raise, which will cover all of his projects, not just his downtown project.

Mana’s team insists that it would be difficult to get a large institutional partner like BlackRock to invest in the project, since they believe these firms will be too constraining on what Mana is trying to do. The question now becomes whether Mana will meet his capital raise, given how vast his plan is and the problems plaguing some of his projects.

In the meantime, Mana said he will continue with bank financing.

“It became very complicated because it’s not a simple business plan. It’s a million arms, you know, a million businesses within them, and how do you put it together? How do you educate the investor?” Mana asked. 

99 problems and downtown is just one

Mana’s Instagram portrays him as a renaissance man, akin to Elon Musk, who is spearheading dozens of groundbreaking ventures at the forefront of innovation. Untethered by a partner or children, he’s frequently on the go, traveling the world over. One day Mana’s in Saudi Arabia in front of a helicopter, claiming he’s helping the Saudis with arts and entertainment. The next, he’s meeting with the president of Panama to connect the country with Asian investment. On some days, he even checks in on his avocado packing and distribution facility in Cali, Colombia.

The question for potential investors is, how big a priority is the downtown Miami project for Mana?

In Miami, at least, his company’s bigger long-term challenge might be in Wynwood, where Mana sought to break ground on a massive 10 million-square-foot trade center connecting China and Asia with Latin America, North America and the Caribbean.

That project has been put on hold, Mana’s people say.

“The issue we’ve had in Wynwood is we’ve focused so heavily on finding an institutional partner from China and then the impact on the trade war and the setback that happened,” said Teddy Ward, Mana’s chief of staff. “I don’t think anyone could have anticipated how dramatically the tide turned on that.”

Mana’s mind is wandering with ideas on how he wants to change the world. But one thing he makes clear is that he is not going to flip his downtown properties.

“Try me,” said Mana, seemingly agitated by the question. “I’ve been approached many times. I don’t even want to discuss price, because it’s something that’s part of a legacy. It’s not for sale. It’s a commitment. I want to see it through.”

The post Will Moishe Mana’s downtown dream ever become a reality? appeared first on The Real Deal Miami.

(Credit: Google Maps)

Pier 1 Imports is officially bankrupt, more than a month after the retailer began closing hundreds of stores.

The Texas-based home goods chain, which filed for Chapter 11 bankruptcy Monday in the Eastern District of Virginia, said it intends to use the move to sell the company.

The announcement comes after Pier 1 in January began closing 450 stores, including all of its locations in Canada, after the firm’s fiscal third-quarter sales sank 11.4 percent from the year before.

“We have worked to establish an appropriately sized and profitable store footprint, operating structure and merchandise assortment that will enable Pier 1 to better serve our customers across store and online channels,” Robert Riesbeck, who became CEO in September, said in prepared remarks. “Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company.”

For some industry watchers, the move does not come as a surprise. S&P Global Ratings last year downgraded the credit rating of the retailer, which had been shuttering stores piecemeal, to CCC- from CCC+.

Pier 1 said it also has a commitment for about $256 million in debtor-in-possession financing from Bank of America, Wells Fargo National Association and Pathlight Capital.

The company’s expected deadline for bids, which has to be approved by a court, is March 23. It said it plans to keep its remaining stores open and website up.

In January, the retailer still had 950 locations. On Monday Pier 1 said it has closed or started to close 400 stores and was looking to sell two distribution centers.

Write to Mary Diduch at md@therealdeal.com

The post Pier 1 files for bankruptcy, seeks sale appeared first on The Real Deal Miami.

Grove Central

When Pebb Capital principal James Jago attended Tulane University in the early 2000s, he lived in “a dumpy house” with three roommates.

But now, college students increasingly have the option to live off-campus in luxury student housing loaded with amenities like resort-style pools with cabanas, coffee bars, game rooms, movie theaters and fitness centers with yoga and indoor cycling studios. In Miami, near Florida International University and the University of Miami, developers are building high-end housing for affluent students. And when those students depart for the real world, they don’t want to downgrade their living arrangements.

“Students graduating have high expectations,” Jago said.

Therefore, Boca Raton-based Pebb Capital is investing in co-living developments, the grown-up version of dorm living that is taking off in South Florida. Pebb has injected $10 million into Property Markets Group’s 1,200-unit X Las Olas development, currently under construction in Fort Lauderdale, and plans to invest in the firm’s X project at 400 Biscayne Boulevard in downtown Miami.

Jago and other developers are betting on Florida’s growing population of recent graduates and those new to the workforce — specifically, those in the 25-to-35-year-old range — who want to live in the urban cores but can’t afford to pay sky-high rents. In the co-living buildings, renters pay about 20 percent less than they would for a studio apartment, but developers make more by fitting more bedrooms in one unit.

RELATED STORY: WATCH: Developers and co-living operators shed light on the growing industry

Typically housing three to four tenants, co-living units feature bedrooms that are much smaller than those in traditional apartments, but each usually has its own bathroom. 

And to sweeten the deal for tenants, co-living projects offer a slew of amenities. X Miami in downtown Miami boasts a gym, dog park, screening lounge, co-working lab and pool deck that’s known to host frequent pool parties. Cocktail bar Jaguar Sun is located in its lobby.

“What co-living does is it enables the elevation of their standard of living for young professionals. You can lower your monthly [cost] by renting a bedroom. It creates a sense of community,” Jago said.

Brian Koles, director of brand and marketing for Miami X developer PMG, said that while “we build buildings to make money, we firmly believe that it can be a win for everyone.”

PMG is the biggest developer of rent-by-the-bedroom apartment housing in South Florida and was the first to open a large-scale project when it delivered X Miami in 2018. The 32-story, 464-unit tower is now 97 percent leased.

Only 20 percent of PMG’s co-living projects — the three- and four-bedroom units — are actually reserved for co-living, Koles said. That allows renters to “graduate” from leasing bedrooms to their own units as they get promotions or move in with significant others.

Now that X Miami has been up and running for over a year, PMG is launching a division to expand across the country. The venture, called Society, includes X Las Olas, 400 Biscayne, a Wynwood project, one in Phoenix and another in Orlando. All five buildings will be branded Society. (See sidebar.)

But Koles and PMG will soon have some competition from another local developer who sees similar opportunities in the micro-apartment format. Miami-based Terra Group and Grass River Property, currently developing 401-unit Grove Central, inked a deal to bring in national co-living startup Common to manage a portion of the project — 22 units with 106 bedrooms.

“Co-living is supposed to garner more revenue in less space but at the same time deliver an affordable rent that is below the AMI [area median income] of a neighborhood,” said Terra Group president David Martin.

Co-living also allows multifamily developers to differentiate themselves from the competition, said Luis Flores, an attorney at Saul Ewing Arnstein & Lehr whose clients include PMG.

Even Richard Branson, who’s known to look into the future for his next big idea, will brand a Virgin hotel and residential tower with 150 furnished micro and co-living rental units, which will start at under 400 square feet. Scheduled for a 2023 delivery, the Brickell project is expected to break ground in 2020.

Startups surge

The affordability crisis nationwide and in Miami specifically creates an opportunity for builders and startup operators of co-living, who have been flocking to the region. According to an exclusive report from the Miami Herald, an October 2019 study by Florida International University’s Jorge M. Pérez Metropolitan Center found that more than half of cost-burdened renters — households that spend more than 30 percent of their income on rent — are spending more than 50 percent of their paychecks on rent.

Common Coliving Melrose

Startups like Common and Ollie are eager to swoop in with solutions. The two co-living operators have expanded throughout the U.S. and are now signing local long-term lease deals with apartment landlords and developers.

“You have a lot of supply that’s really geared toward luxury renters. It’s clear that there is really a need for affordable housing,” said Brian Lee, senior director of real estate at Common.

New York-based Ollie, which has raised $15 million, will manage 400 beds in one of three buildings at Gables Station, NP International’s mixed-use project in Coral Gables. Life Time Fitness is opening at the development, which will include about 120,000 square feet of retail space. (Read more about the project on page 46.)

Led by founder and CEO Brad Hargreaves, Common rents out rooms in furnished, shared apartments on flexible lease terms in 32 locations in New York City, Chicago, Los Angeles, San Francisco, Oakland, Seattle and Washington, D.C. It signs leases for ground-up new developments and will also work with owners of existing buildings to convert larger two-bedroom units into three-bedrooms, and so on.

It then leases out bedrooms for rents that are 15 to 20 percent below what a studio in the same neighborhood is being marketed for. Rents in Miami will start at about $1,000 a month, Lee said. Common uses technology that generates leads, matches roommates and schedules tours.

The company sells annual memberships to residents who can transfer between properties if they’re moving to another city with Common locations. It has more than 1,000 members, according to a spokesperson.

In October, Common investor Six Peak Capital announced it had hired Cushman & Wakefield to raise $1 billion in debt and equity to fund its expansion of co-living in the U.S. Common has raised over $65 million since it was founded in 2015, from investors that include Norwest, Maveron, 8VC and LeFrak.

Common has yet to open a location in Miami, but it has about 800 bedrooms in the local pipeline. It’s also negotiating deals for roughly 2,500 bedrooms throughout South Florida.

The startup’s first location will open in late 2020 or early 2021 in a cluster of homes in Little Havana that will total 130 bedrooms.

At Terra and Grass River Property’s Grove Central, where Common is leasing a small portion of the apartment component, workforce housing apartments and retail space are also part of the mix. The development features easy access to the Coconut Grove Metrorail station.

Construction at Grove Central is expected to go vertical in the second quarter of next year. Martin said the developers worked with Common to design the units with smart kitchens, shoe and shirt storage, suites for couples, efficient bathrooms and “as much community space as possible.”

The project will have theaters, gyms, lounges, co-working space and coffee shops in addition to the retail space that’s already planned.

‘Urbin’ infill

Though it’s more common in European markets, co-living is still a fairly new asset class in the U.S., so Terra said it is testing the market by leasing only 10 to 15 percent of the units to Common. Cities also have different caps on how many unrelated families can live in one housing unit, or do not allow co-living at all.

“It’s a test, but it’s also what I think works,” Martin said. “Traditional apartments have a certain cap rate. For co-living, there has not been that much trading. We don’t really understand how the capital markets are going to treat it.”

Martin is also an investor in Urbin, a co-living, co-working and wellness real estate platform led by developer Rishi Kapoor, the CEO of Miami-based Location Ventures. The company is moving forward with a co-living project at 1234 to 1260 Washington Avenue in Miami Beach after the City Commission there passed legislation allowing co-living in November 2019.

Urbin has raised $85 million in funding from the Murphy family of Coastal Construction, former NFL player Jonathan Vilma, Rudy Touzet of Banyan Street Capital and others. At least three locations are in the pipeline for South Florida, and Kapoor said he hopes to open 100 locations in the coming decade.

Mitash Kripalani, director of investment services at Colliers International South Florida, is listing the 61-bedroom building at 800 South Dixie Highway for sale. Location Ventures took it over two and a half years ago, renovated it and put an ad up on Craigslist to rent out the bedrooms, geared toward attracting students from the University of Miami. Kapoor said he used the building as a model for Urbin.

Co-living projects are in some cases getting “higher rents than Class A product in Brickell” because developers are able to rent a bedroom out for $1,300 a piece, according to Kripalani.

“Some people say it’s a fad,” Kripalani said. “But I think as rents grow, if you’re a young millennial and you want to live downtown for [$1,300] a month, your best option is co-living.”

The post Developers are banking on co-living, but will it catch on? appeared first on The Real Deal Miami.

The Obamas and 79 Turkeyland Cove Road (Credit: Getty Images, Zillow)

The Obamas and 79 Turkeyland Cove Road (Credit: Getty Images, Zillow)

Former President Barack Obama and First Lady Michelle Obama recently closed on an $11.75 million, 6,900-square-foot estate in Martha’s Vineyard, making it the priciest post-presidential pad in history.

But the Obamas are only the latest former first couple to retire to comfy confines after moving out of 1600 Pennsylvania Avenue. In 2008, George W. and Laura Bush snapped up a Dallas property just after the Dow Jones tanked.

Bill and Hillary Clinton paid $1.7 million for a home in toney Chappaqua, N.Y., in 1999. That positioned Hillary Clinton for her successful Senate campaign. More real estate purchases were to come for the Clintons.

George H.W. Bush and Barbara Bush retired to their sprawling estate in Kennebunkport, Maine; while Ronald and Nancy Reagan moseyed on back to their “Ranch in the Sky” in California.

Jimmy and Rosalyn Carter returned to their longtime, modest ranch-style house in Georgia, after he lost his re-election bid in 1980.

And what is now the most expensive post-presidential property once belonged to one of the most infamous presidents. Richard and Pat Nixon retreated to their home in San Clemente, California, after he resigned amid what would have been certain impeachment in the House of Representatives and potential conviction in the Senate.

Barack and Michelle Obama

Barack Obama's new home on Martha's Vineyard

The Obamas’ new home on Martha’s Vineyard

The former first couple’s 29-acre spread on the moneyed Massachusetts island was actually snagged at a 20 percent discount from its asking price. The listing had been slotted at $14.9 million. The Obamas actually rented the estate before deciding to buy.

Their new residence at 79 Turkeyland Cove Road has a pool and an outdoor stone fireplace surrounded by lush hydrangeas. The seven-bedroom home also has high-vaulted ceilings with exposed beams and a massive kitchen — as well as a private beach. In 2017, an Obama family spokesperson denied a rumor that the couple had been eyeing two much larger parcels on the island owned by Caroline Kennedy and her husband.

George W. and Laura Bush: Dallas

George W. Bush's Preston Hollow home

George W. Bush’s Preston Hollow home

In 2008, just days after the Dow Jones fell 777 points, Laura and George W. Bush paid $3 million for an 8,501 square-foot pad in an upscale North Dallas neighborhood. The house is on a quiet cul-de-sac on a 1.13-acre lot, with an outside fireplace and a separate servant’s quarters.

The former first couple spend most of their days in the ultra-chic Preston Hollow neighborhood, near Dallas Mavericks owner Mark Cuban. He bought the Texas Rangers from Bush and other investors in 1988. Another neighbor was oil magnate and corporate raider T. Boone Pickens, who lived there until his death in September.

Separately, the Bushes owned a home in the Texas hill country near Crawford. It was 43’s favored retreat during his presidency. The couple rarely spends time there now, according to reports.

Bill and Hillary Clinton: Chappaqua, N.Y.

The Clintons' Chappaqua home (Credit: Getty Images)

The Clintons’ Chappaqua home (Credit: Getty Images)

In 1999, the Clintons bought a 5,300-square-foot home at 15 Old House Lane, in Chappaqua, New York, for $1.7 million. The purchase was made as Bill Clinton was leaving the White House and Hillary Clinton was planning her Senate run.

In 2000, the Clintons bought another multimillion-dollar home, this one in the nation’s capital. The $2.85 million, 5,500-square-foot home on “Embassy Row” has seven bedrooms, a den, and a pool on grounds surrounded by trees.

But the couple apparently liked Chappaqua, an exclusive neighborhood near where New York Gov. Andrew Cuomo shared a home with now-ex and celebrity chef Sandra Lee. In 2016, the Clintons purchased a second house on Old House Lane in Chappaqua, for $1.16 million. The 3,631-square-foot home sits on 1.6 acres and boasts three bedrooms and four baths, with a chef’s kitchen and a fireplace in the family room.

George H. W. and Barbara Bush: Kennebunkport, Maine

The main home on the Walker's Point compound (Credit: Wikipedia)

The main home on the Walker’s Point compound (Credit: Wikipedia)

When George H.W. and Barbara Bush left the White House in 1992, they returned to their home in Kennebunkport, Maine. The former president purchased the estate from his father in 1977.

The compound, called “Walker’s Point,” was built by his grandfather, David Davis Walker, in the 1870s. The New England-style house sits on nine acres and has nine bedrooms, a library, kitchen and dining room, numerous patios and decks, a private beach and a tennis court. The parcel was assessed at $13.1 million in 2018, according to Kennebunkport tax records.

Ronald and Nancy Reagan: Simi Valley, California

Rancho del Cielo

Rancho del Cielo

The couple purchased this massive, 688-acre estate in 1974 for $527,000. They swiftly named the retreat “Rancho del Cielo,” or “Ranch in the Sky.” The Simi Valley ranch overlooks the Santa Ynez Valley and boasts views of the Pacific Ocean. The 1,600-square-foot house has two bedrooms, a large living room and kitchen. But the real draw is the land — filled with hardwood trees and ponds where the couple would canoe.

It was also the place where the former president conducted official state affairs when away from the White House — and entertained heads of state and VIPs, including Queen Elizabeth II and Prince Philip, former Soviet leader Mikhail Gorbachev and former British Prime Minister Margaret Thatcher.

Jimmy and Rosalyn Carter: Plains, Georgia

Jimmy Carter's Georgia home (Credit: Library of Congress)

Jimmy Carter’s Georgia home (Credit: Library of Congress)

The couple’s post presidential pad has also been their only home, for almost 60 years. The Carters have owned the 1961 Ranch-style house at 209 Woodland Drive since it was built. The modest, 4,000-square-foot abode has four bedrooms and 3 bathrooms, according to Zillow. The Zestimate for it was pegged at around $200,000.

Richard and Pat Nixon: San Clemente, California

La Casa Pacífica (Credit: Wikipedia)

La Casa Pacífica (Credit: Wikipedia)

Richard Nixon purchased his 9,000-square-foot home for $1.4 million in 1969. It sits on 5.45 acres.

Combined with the other buildings, the estate had a total living space of 15,000 square feet, including Nixon’s ocean-view office, a swimming pool, an illuminated tennis court and a greenhouse. Nixon called the expansive estate “La Casa Pacífica.”

The property has been listed for as much as $75 million — the asking price it reached in 2015 — and was discounted to $57.5 million earlier this year.

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Presidential elections affect the residential sales market significantly (Credit: Getty Images, The White House)

Presidential elections affect the residential sales market significantly (Credit: Getty Images, The White House)

Who will be president come January? It’s the biggest question of the year — and a thorn in the side of brokers, who regard uncertainty as an enemy of sales.

“Election years are always the toughest years because people are hesitant,” said Stephen Kliegerman of Halstead Property Development Marketing. “They’re waiting to see an outcome.”

But do elections really influence the market?

Yes, according to a data analysis produced for The Real Deal by Miller Samuel CEO Jonathan Miller, who examined co-op sales in New York City between 2008 and 2019.

The analysis found that sales between June and October are as much as 12.7 percent weaker in presidential election years than non-election years, until they recover in November and December to levels seen in the beginning of the year.

It is impossible to pinpoint the influence of an election, given all the other factors at play — Barack Obama was elected in the midst of the nation’s worst economic downturn in 80 years, for example — but the analysis found election cycles consistently coincided with declines in sales, then upticks after the election, regardless of who wins.

“Anecdotally, I’ve seen this for decades,” Miller said. “I recalled seeing it beginning with the financial crisis.” This was the first time he had tested the trend using data.

To conduct the analysis, Miller first measured the average period between contract signings and closing dates for co-op purchases over the past seven years, and found it to be 90 days.

He then counted back 90 days from all the co-op closing dates he had collated, to create a picture of contract signings between 2008 and late 2019. (Miller excluded condos because the periods between contracts and closing in new developments can vary widely.)

The results compared the three presidential election years to the other eight years. From June through October in election years, sales grew progressively weaker compared with non-election years. The biggest difference was in September, when sales volume was 12.7% lower.

As the presidency is decided, buyers appear to regain confidence and return to the market. “Beginning in November during an election year, sales overpower their non-election year counterpart, with the release of pent-up demand occurring well into the spring,” Miller said.

In a separate analysis, he found that sales volume was higher between January and May in non-election years, then reversed course in the second half of the year. The studies looked at the number of sales, not at prices.

The residential market is no stranger to political instability. In recent years, a trade war with China, Albany’s rent reforms and the impeachment of President Donald Trump have all played out on the backdrop of a luxury sector in crisis.

Global politics have also played a role: Capital controls established by the Chinese government are widely blamed for a significant decline in Chinese investors in New York City.

This week, legal arguments at the impeachment trial wrapped up, with a conviction looking out of reach for Democrats. At the same time, Iowans gathered to select their choice for the Democratic nomination in an eagerly anticipated caucus.

For many Americans — especially brokers — November cannot come soon enough.

Write to Sylvia Varnham O’Regan at so@therealdeal.com

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Minneapolis tops the list of best places to recover from divorce (Credit: iStock)

Minneapolis tops the list of best places to recover from divorce (Credit: iStock)

Just got out of a divorce? Here are the best and worst cities to get back on your feet.

Right off the bat, cross off New York City. A LendingTree study on post-divorce economics and relationship prospects across the U.S. gave New York the lowest score of all of the nation’s 50 largest metros, according to the New York Times.

LendingTree gave each city three scores based on data about divorced people. One is economic and includes median income, homeownership rates, and the cost to rent.

The other two were relationship based. One looked at the local dating pool and gender balance of the city. The “remarriage risk” category factored in the percentage of divorced people in the city and the number who had been married at least three times. More of either lowered the city’s score.

Minneapolis topped the list with excellent economic prospects and low remarriage risks. Milwaukee and Detroit followed behind. The top 10 included just two cities on the East Coast — Providence, Rhode Island and Hartford, Connecticut. Las Vegas was the city furthest west in the top 10. Denver, Pittsburgh, Cleveland, and Kansas City all made the top 10.

New York scored poorly across the board. A low economic score isn’t surprising given the cost of renting and owning in the city, although New Yorkers might disagree about the health of the city’s dating pool.

Divorcee-unfriendly economies also held down Riverside, California; Virginia Beach; and Sacramento. Shallow dating pools and remarriage risks were a factor in low scores in Memphis, Raleigh, Charlotte, Richmond, and Dallas. [NYT] — Dennis Lynch

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Sidewalk Labs CEO Dan Doctoroff and a rendering of the tower (Credit: Sidewalk Labs/Michael Green Architecture and Gensler)

Sidewalk Labs CEO Dan Doctoroff and a rendering of the tower (Credit: Sidewalk Labs/Michael Green Architecture and Gensler)

Alphabet’s architecture and design arm has unveiled a proof of concept for what could be the world’s tallest mass-timber high-rise.

Sidewalk Labs, headed by former Deputy Mayor Dan Doctoroff, released digital models, diagrams, and other design materials this week for its 35-story Proto-Model X planned in Toronto, according to Dezeen. Mass-timber construction means that the primary load-bearing structure is made of wood, which is not as strong as traditional structural materials like concrete and steel, but is considered more ecological.

That has limited the height of mass-timber structures — the tallest buildings of this type in the world is 18 stories and is located near a lake just north of Oslo. The 280-foot-tall Mjøstårnet tower uses a type of laminate wood compressed into load-bearing beams, according to CNN.

The Proto-Model X’s load bearing system is a timber “exoskeleton” façade, used because a timber core would have taken up too much floor space inside the building. The building wouldn’t be considered mass-timber had Sidewalk Labs used a steel or concrete system, a design that’s allowed for the thousands of glass-façade buildings built around the world over the last several decades.

In that way, the Proto-Model X has more in common with the early exterior load-bearing skyscrapers of the early 20th century than it does with anything built in the last 70 years.

The wooden skyscraper concept isn’t new and is gaining popularity with designers and builders around the world for its eco-friendliness and attention-grabbing nature.

A 174-foot-tall wooden student housing tower with a concrete and steel frame will open in Vancouver this year. The 276-foot-tall HoHo Vienna opened in Austria recently, according to CNN.

Locally, architecture firm SHoP unveiled plans in 2015 for a 10-story timber building at 475 West 18th Street, but scrapped the design a year later over poor market conditions and city regulations. Flank is currently building a pair of wood-and-brick structures in Williamsburg, Brooklyn. The commercial buildings at 320 and 360 Wythe Avenue are the first wooden structures built in the city in nearly a century.

[Dezeen, CNN] — Dennis Lynch

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Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Green makes green, apparently.

Investors can’t get enough warehouse, retail, and land in states that have legalized recreational cannabis use, according to a National Association of Realtors study first reported by Yahoo Finance. NAR surveyed 600 commercial brokers across the country last fall for the study.

Generally, the study found that demand was higher for those property types in states that legalized before 2016 than states that legalized after 2016 and demand was higher in both those categories than in states where cannabis use is illegal.

Investors have poured money into real estate in states with legal recreational use. Some investment firms are opening offices and making moves in states where legalization seems on the horizon.

Warehousing is especially hot. It’s used both for storage and growing cannabis. Compared to 2017, last year demand increased for warehouse space in 42 percent of markets where recreational cannabis has been legal for more than three years — Colorado, Oregon, Washington, and Alaska.

Demand increased 34 percent in states that legalized cannabis post-2016. Demand in states without recreational legalization increased by 18 percent. Disparities in demand for land and retail storefronts between those states was less dramatic.

Katie Barthmaier, CEO of cannabis-focused real estate investment trust Green Acreage, said that higher values correlate with higher barriers for entry.

“It is very important to understand the supply and demand, and the regulatory dynamic, in each state. Focusing on states with higher barriers to entry makes a license more valuable and makes that real estate more valuable,” she said. [Yahoo Finance] — Dennis Lynch

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Adam Neumann and some of the properties, Museum Place and 225 West Julian in San Jose 

Adam Neumann and some of the properties, Museum Place and 225 West Julian in San Jose

Adam Neumann’s New Year’s resolution might have been to clean out his real estate portfolio. He’s now sold off his stakes in development properties in San Jose.

The former CEO of WeWork sold his personal stake in six properties in the Northern California tech hub that were supposed to be part of WeWork’s “future of cities” program, according to Bloomberg. His holdings could have been worth as much at $150 million.

Neumann invested in the properties as part of a development plan spearheaded by Urban Community, a development company led by former eBay exec Gary Dillabough and developer Jeff Arrillaga. Urban Community will continue to develop the roughly two dozen properties it owns in the city, which are mostly office properties.

In documents related to WeWork’s nixed initial public offering, the company called the Neumann’s personal investment a “first step in pursuing the [WeWork’s] vision for the future of cities,” although little has come out about that strategy since the IPO push fell apart.

Nuemann has also looked to offload some of his residential properties since leaving his post as CEO last fall. This week he listed his six-bedroom triplex penthouse in Manhattan’s Gramercy Park for $37 million.

Meanwhile, his family office is reportedly in talks to take part in a $4 million convertible note in a mortgage servicing startup called Peach Street Inc. (the firm has yet to launch).

Urban Community is now partnering with Westbank, Peterson Group, and OPTrust on at least some of the development projects, starting with the Bank of Italy building in downtown San Jose. Urban Community looks to lure companies from San Jose’s business and technology parks into the city center. [Bloomberg] — Dennis Lynch

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Greystar CEO Bob Faith and the Parkside Place Apartments in Cary, North Carolina (Credit: Greystar and Apartments)

Greystar CEO Bob Faith and the Parkside Place Apartments in Cary, North Carolina (Credit: Greystar and Apartments)

Greystar CEO Bob Faith says he’s “very bullish” on the multifamily sector and so are investors, whether or not the economic cycle is past its peak.

When asked if the South Carolina-based firm was looking to increase exposure to the sector or raise more funds for multifamily investments, Faith told Bloomberg that “capital is hungry for yield” and multifamily offered stability going into a downturn.

“When you go into a recession, people still have to live somewhere, and so you might not like the price you get but you can always fill up a rental residential and that’s the great thing about the asset class,” Faith said.

Broadly speaking, suburban and small city multifamily markets in the U.S. are expected to outperform large cities this year. Cities like Austin, Atlanta, and Boston are expected to top larger markets including New York and Los Angeles this year. 2019 was the worst year for New York’s multifamily market since 2011.

Vacancy nationwide is expected to rise as developers keep up a strong pace of development they’ve maintained since 2016. Rent growth is expected to slow.

Faith said that Greystar, which has $14 billion under development (and $36 billion in assets under management), remains focused on major cities and large universities for student housing investments. Speaking about investing in smaller cities late in the cycle, Faith said that there’s some risk where “you just don’t have the scale in those markets that you do in the big cities of the world.”

“The challenge for that it doesn’t take many assets to get your supply and demand out of whack in a smaller city and that’s what you have to watch for,” he said. [Bloomberg] — Dennis Lynch

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A rendering of the new REI headquarters in Seattle (Credit: NBBJ)

A rendering of the new REI headquarters in Seattle (Credit: NBBJ)

Consumer outdoor equipment retailer Recreational Equipment Inc., or REI, is building a headquarters outside Seattle befitting its outdoorsy business.

The 380,000-square-foot main office building features outdoor staircases and bridges, oversized sliding doors to let in air, and is built around two courtyard full of plants native to the region, according to the Wall Street Journal. Architecture firm NBBJ designed the building, which is orientated to maximize sunlight through its mostly glass façade.

“You can’t really be in the building anywhere without having a visual connection to the outdoors,” said firm partner Mindy Levine-Archer.

Work started in 2018 and REI expects it to be completed by May. The company currently has four offices across the Seattle area and plans to consolidate with its new headquarters in Bellevue. It’s located in the 36-acre Spring District, a transit-oriented development in the city, on the site of a former agricultural community, according to the Journal.

The company also wants to build an indoor marketplace open to the public on the eight-acre headquarter site. REI’s Nikki Easterday said that the complex is designed with outdoor space for employees to camp and test out new branded gear.

REI has 162 stores across 39 states and plans to open its first outpost in South Florida this fall. [WSJ] — Dennis Lynch 

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Around 27 percent of homeowners who responded to a Bankrate study said they don’t know what the interest rate is on their home (Credit: iStock)

Around 27 percent of homeowners who responded to a Bankrate study said they don’t know what the interest rate is on their home (Credit: iStock)

Mortgage rates hit a three-year low earlier this week, so is it time to refinance? That’s a tough question for one in four homeowners who don’t even know what their current rate is.

Around 27 percent of homeowners who responded to a Bankrate study said they don’t know what the interest rate is on their home, according to Fox Business. A third of homeowners between age 29 and 39 didn’t know their rate and 23 percent of people aged 56 to 74 don’t know their rate, the survey found.

The 30-year fixed-average fell to 3.45 percent this week, nearly a full percentage point below this time last year, and the lowest rate since the fall of 2016.

The lack of knowledge of some homeowners could lead to serious financial consequences for them. Around 11 million people could refinance their mortgages at current rates and save an average of $268 per month. Homeowners with adjustable-rate mortgages could find themselves unprepared for hikes.

Mortgage rates rose through 2018 as the Federal Reserve raised their benchmark interest rate, which heavily informs mortgage rates. That worried builders, who figured higher rates would discourage buyers, particularly those who live in areas with historically high home prices like Los Angeles.
The Fed steadied and then began dropping its interest rate last summer, bringing down mortgage rates with it. The benchmark rate has been 1.55 since November.
Buyer sentiment has been strong this winter, prompting more open houses than usual across the country. Low rates are expected to drive strong activity in the typically slow first quarter. [Fox Business] – Dennis Lynch

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Renderings of the penthouse and Fredrik Eklund (Credit: Four Seasons Private Residences Fort Lauderdale)

Renderings of the penthouse and Fredrik Eklund (Credit: Four Seasons Private Residences Fort Lauderdale)

The developers of the Four Seasons Fort Lauderdale are hoping some star power will help them sell a penthouse for what would be a record price in the Broward County city.

Fredrik Eklund of Douglas Elliman’s Eklund-Gomes team was hired to list the penthouse, a five-bedroom, six-bathroom unit with 19,000 square feet of indoor and exterior space. The penthouse is the most expensive residential listing in Fort Lauderdale.

“I like to set records, what can I say?” Eklund said. “All jokes aside, there hasn’t really been anything like this in Miami, in Fort Lauderdale. There’s hardly anything like this in New York or L.A. either.”

Eklund-Gomes opened an office in Miami Beach last year.

The Fort Lauderdale unit will have a 7,000-square-foot rooftop with a pool and putting green, a fitness center, home theater and wine-tasting space with temperature-controlled storage. Tara Bernerd designed the penthouse. Eklund is listing the unit with his business partner John Gomes, and Pietro Belmonte, who is also on their team. The project is expected to be delivered next year.

The penthouse will have more than 12,000 square feet of interior space, which means the price comes out to over $2,900 per square foot. Eklund called it a “mansion on top of a five-star hotel.”

Fort Partners is developing the 22-story oceanfront luxury condo and hotel development at 525 North Fort Lauderdale Beach Boulevard. In December, Fort Partners closed on a $210 million construction loan for the project from Madison Realty Capital, a New York-based construction lender.

When completed, the Four Seasons Hotel and Private Residences will include 148 guest rooms and 83 condos ranging in size from one- to four-bedrooms. Prices start at about $4 million.

Amenities include two pools with luxury cabanas, a beach butler service, a spa and yachting services.

Nearby, the Related Group, Fortune International Group and the Fairwinds Group developed the two-tower waterfront Auberge Beach Residences & Spa, which set new records for condo sales in Fort Lauderdale.

Fort Partners also built the Four Seasons Residences at the Surf Club in Surfside. Buyers there include former Miami Dolphins head coach Don Shula, developer Richard LeFrak, and billionaire real estate and casino tycoon Neil Bluhm.

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Neil Shekhter (Photos by Kevin Scanlon)

UPDATED, 8:05 a.m., Feb. 5:  Successful immigrants and developers share at least one quality: optimism, an unshakeable belief that there is a better life to be had in a new country … or a new building.

Ukrainian-born Neil Shekhter, founder and CEO of Santa Monica-based NMS Properties, is relying on that buoyant attitude to lift him and his family past the sort of setback that might have crushed another entrepreneur. As a successful developer with a portfolio of 2,200 residential units and 30 buildings, NMS went in search of financing in 2010. Shekhter ultimately found a willing partner in AEW Capital, a real estate investment manager, and they put together a nine-building portfolio in Santa Monica that they owned in common.

Six years ago, Shekhter attempted to exercise what he believed was a clause in the contract with AEW that allowed him to buy it out for $106 million. AEW executives disagreed and litigation ensued, with AEW ultimately winning a messy court fight rife with charges and countercharges of fraud and forgery. The decision allowed AEW to dispose of the entire nine-building partnership for $430 million.

All his appeals exhausted, Shekhter, his sons and wife have thrown themselves back into NMS and currently have at least two Westside properties under development — an 89-unit apartment complex at 11001 Pico Boulevard and a 40-unit mixed-use development in Santa Monica. According to the developer, more projects are in the offing.

It’s quite a comeback, but perhaps not any more remarkable than a young Jewish refugee’s realization of the American dream in what he still regards as “the best country in the world.”

Shekhter’s family immigrated to the United States in 1979, part of a wave of newcomers fleeing the then-Soviet Union’s endemic anti-Semitism. Since the Soviet authorities allowed exiting Jews to take only $200 apiece with them, the Shekhter family’s travel and resettlement in a tiny apartment on Ogden in West Hollywood was financed by Jewish communal organizations.

Shekhter attended L.A. City College and Santa Monica College to improve his English. Later on, he acquired an auto repair facility near Pico and La Brea and began driving a cab at a time when the occupation was so popular among recent Russian Jewish immigrants that the taxi stand at the Century Plaza Hotel was known as “Little Odessa.” He then began employing other cabbies and running a maintenance facility in Los Angeles.

Shekhter also became an active day trader, working the markets until 1 p.m. and then managing his real estate business in the afternoon. After the tech bubble burst, he moved away from stocks and cabs and into managing a growing property portfolio, mostly on the lucrative Westside.

NMS was the result, and despite the AEW debacle, that undiminished optimism leads him to believe “our best years are ahead of us.”

You grew up in Ukraine in the former Soviet Union. What prompted you to come here? I was only 16 at the time. It was my mother’s and grandparents’ decision. In August of 1979, we left the Soviet Union. We received refugee status because we’re Jewish, and in the Soviet Union they persecuted Jews. Even from the time I was in school, the kids would try to pick fights and they would make fun just because of your ethnicity. Being a Jew in those days in the Soviet Union, you didn’t get many opportunities in life. Most Jews picked up and left. Some went to Canada or Australia. But the majority went to Israel or the United States.

When did you decide to get into real estate? When I came here, I used to work in a store on Fairfax Avenue. The people who owned the store were two Holocaust survivors. They told me that they owned an apartment building and that the building provided a nice source of income for them. That was my first thought about being in real estate. Fast-forward to 1982. We bought our first house in West Hollywood on La Jolla Street. It was a duplex. Then in 1985, I bought my first income property around Pico and La Brea.

You started acquiring additional properties? I always saved money and invested it in real estate because I felt that as you get older, you pay off your loan and retire. That was kind of the dream. I bought my first apartment building in Beverly Hills. As I was buying other buildings, I thought that one day I would want to develop properties myself. I bought my first lot in Northridge next to a building I already owned. In 2003, I had my first building with 26 units. After that, I started developing on the Westside only.

What prompted you to reach out to AEW to get the infusion of capital? In 2010, we were in a recession and I was looking for ways to grow my portfolio. At the time, I owned several development sites. I was looking to leverage the market. The idea was to get somebody who would invest money with us, get a nice return and then get out.

When did you decide to exercise the repayment clause? The deal was they were supposed to receive 1.75 times the investment or 24 percent per year — whichever was greater. The language was in our JV agreement. Through the years, [AEW executive] Eric Samek always confirmed to me that that was the deal verbally. We would even joke about it. Then in 2013, when I sent them a letter telling them that we wanted to buy them out, that’s when things went bad.

How did they react? At that time, I didn’t know that the attorneys I hired did not make sure the agreement was ironclad. So when we sent them a letter telling them we were going to buy them out, first they didn’t respond. Then they told us, “That’s not the deal.” After that, things started going south. They started to treat us differently. All of a sudden, they ordered an audit. They started to look to see if they could find anything that we did wrong. The auditor discovered that we actually did something wrong. Somehow we did not report 32 cents. I realized at that point that things were not going well for me. They weren’t settling with me based on our agreement. So after that, litigation started.

Shekhter with the family dog, Blanco

They claimed you falsified documents? Correct. They said a lot of things about me. That was their tactic. They also said we misappropriated funds and all kinds of other stuff. None of it was true. They were never able to prove anything at a trial. The mistake I made was I started this whole litigation with a solo-practitioner attorney who was not equipped to deal with a case like that. That was the biggest mistake I made — plus the mistake I made myself, which was destroying my hard drive.

Why did you destroy the hard drive? They got an order from the judge saying they could copy any and all records from any and all media that we have, including my home computer. I didn’t want them to copy certain things on my computer because it had nothing to do with our business developing nine properties. So I deleted certain things.

You deleted personal files? Yes, I did it. I’m not disputing it. I wanted to protect the privacy of my family, and to me, that was important. I kind of regret it, of course, because that made my whole case much worse. Because now the court saw that I did something wrong. The litigators that AEW hired knew how to play this game, and I didn’t.

What did you go through personally during that period? It was very tough. You can’t conduct business the normal way anymore, because the lenders now look at you in a different light. The banks told me: “Until this litigation is over, we’re not going to do business with you because you’ve been alleged to have done all these things. We don’t know if you did it or not, but until it’s resolved, we can’t do any business.” So that pretty much just puts you almost out of business.

Were you surprised how ugly things got in court? Listen, if I could take everything back, I would never file a lawsuit. I would never be in litigation, because I learned a lot from this. I learned that in court, you never know what’s going to happen. One party can talk a judge into certain things and make them believe certain things. Then your life is basically in a judge’s hands. I never saw a jury in any of the litigation. I never got a jury trial. There was some kind of bench proceeding. That’s as far as this case went.

What prompted you just to walk away from those properties? It was a lot of money, more than $400 million. It was for the business and for my family. It not only took a huge toll on my family — my children and my wife. I just decided that we are — thank God — healthy and we know what we’re doing. By being able to go back out and do business the normal way, by being able to get normal loans, by dealing with normal banks. The money that we will make every year far outweighs what we were fighting over. If you’re going to fight over a dollar, but you’re going to lose a dollar every year because of it, it’s not worth it. You have to move on.

When you first emerged from that, how many properties did you have left? How did you start rebuilding your life and your portfolio? As this litigation was ongoing, our lives were not put on hold. We still continued business. The difference was the cost of financing was a lot more expensive. We were still able to develop; we were still able to buy. Our team has properties today under construction in several cities. Business goes on, and today we’re happy that now the litigation is behind us. Right now, we have a lot of nice projects in Santa Monica and the Westside. And you will see some of them under construction. Some are going to start this year and next year. A lot more than we lost, let’s put it this way.

What’s your biggest regret from that time? I will tell this to anybody: When you go into a partnership, make sure you get the best representation money can buy. And even then have someone else double-check it. The biggest regret is that I did not have the best people representing my interests. That backfired on me in a big way. So it’s hard when you spend so many years building something, and then you lose it all.

Did you ever get angry? Yes. I would be lying to say that I wasn’t. It’s very hard when people do things like what happened to me. I come from a different world. In my world, the way I was raised, shake hands, and to me, that’s a deal. In this country, sadly enough with all the lawyers, people create documents 5 to 10 inches thick. And they can bury a couple words in there that will change your whole life. And people don’t realize until it hits them.

What advice would you give other people facing hard times? My advice would be never to lose faith. Always fight for what you believe. Sometimes you have to step back and think what’s the best way to move forward. Sometimes that means you have to give something up to move forward. If you have to take three steps back to be able to take nine steps forward, then that’s what you have to do. So that’s what I did. I don’t regret it. Life goes on. We have a great team, and we’ll be able to do great things.

Are you optimistic about the future? Very optimistic. That’s my personality. To be a good developer, you have to be an optimist. It is hard not to look back. When you work so hard and lose it all, it’s not that easy. It is what it is. It’s life. I guess that’s the way it was meant to be. There’s nothing I can do about it. Just look to the future.

Edited and condensed for clarity.

Correction: An earlier version of this story said Shekhter worked as a day trader until 1 p.m. and then returned to his cab business in the afternoon. He had left the cab business by then and went to work in the afternoon managing his real estate business. 

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Adam Neumann and 78 Irving Place (Credit: Getty Images and StreetEasy)

Adam Neumann and 78 Irving Place (Credit: Getty Images and StreetEasy)

Former WeWork CEO Adam Neumann has listed his six-bedroom triplex penthouse for $37.5 million.

The listing price is $2 million more than what Neumann paid for the 7,880-square-foot luxury condominium at 78 Irving Place in 2017, when his wealth ballooned with WeWork’s success.

It is among several pieces of real estate he is looking to offload since the company he founded imploded last year. On Thursday, Bloomberg reported that Neumann had sold his majority stake in a San Jose real estate portfolio where plans previously called for WeWork to lease space there.

After WeWork encountered widespread governance issues and a failed attempt to go public, scrutiny turned toward Neumann, who was eventually ousted from the company in October. He was paid a $180 million consulting fee by SoftBank, WeWork’s largest investor, and still holds shares in the company valued close to $1 billion.

Neumann still owns a portfolio of luxury properties across the country, from the Bay Area to the Hamptons. It was reported last year that Neumann was denied by several co-op boards in the city following publicity about WeWork’s implosion.

The Gramercy Park triplex features a sweeping spiral staircase, chandeliers and ultra-modern finishes, according to a listing on Compass’s website. The 14-unit building was converted from rentals to condos in 2016 by Silverstone Property Group.

Bloomberg first reported that Neumann was looking to sell the apartment in December. The listing went live on Thursday. Compass broker Nick Gavin is marketing the property. He did not respond to a request for comment.

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Columbia Property Trust CEO & President E. Nelson Mills and 101 Franklin Street (Credit: Google Maps)

Columbia Property Trust CEO & President E. Nelson Mills and 101 Franklin Street (Credit: Google Maps)

Columbia Property Trust’s funds from operations slid in 2019 from the year before.

The office real estate investment trust in its fourth-quarter earnings package Thursday said its normalized FFO for the year came in at $174.3 million, down from about $184 million in 2018.

The FFO for the year worked out to $1.50 per share, which Columbia noted was in line with its guidance, which had been raised. In 2018, the full-year per-share figure was $1.56.

For the quarter, the firm’s normalized FFO was $39.9 million, a drop from $45.2 million in the third quarter of 2019.

The firm also reported strong leasing activity, notching a 97.1 percent lease rate in 2019. And in the fourth quarter it bought back almost $33.5 million worth of stock.

Columbia’s CEO, Nelson Mills, called 2019 a “banner year” for the firm, which had recently capped off its merger with Normandy Real Estate Management. The partners in the fourth quarter closed on 101 Franklin Street, also known as 250 Church Street — a 235,000-square-foot office building in Manhattan under redevelopment.

That acquisition also gave Columbia a minority stake in Normandy and L&L Holding Company’s Terminal Warehouse project in West Chelsea. Columbia will co-manage the property with L&L, Mills said during an earnings call.

Columbia Property Trust also bought 201 California Street in San Francisco in the last few months of the year, shelling out about $239 million for the 252,000-square-foot building.

Write to Mary Diduch at md@therealdeal.com

The post Columbia Property Trust reports strong leasing activity in Q4 but stock edges down appeared first on The Real Deal Miami.

David Martin, Russell Galbut, and a 500 Alton rendering (Credit: The Next Miami)

David Martin, Russell Galbut, and a 500 Alton rendering (Credit: The Next Miami)

The city of Miami Beach has reached a truce with developers David Martin and Russell Galbut that allows the duo to move forward with their planned luxury condo project at 500 Alton Road.

After a contentious back-and-forth with Galbut over the city’s monetary demands, Miami Beach commissioners approved a settlement agreement that allows the developers to exclude stairwells, elevator shafts and mechanical chutes in calculating the floor-to-area ratio of the proposed 44-story tower, known as Park on Fifth.

At the same time, the elected officials voted in favor of a measure that would preclude Galbut and other builders on Miami Beach from seeking the same interpretation for other projects in the city.

In exchange for dropping a legal challenge of its own Board of Adjustment, the city is getting a reduction in the number of maximum units from 410 units to 330 units, and Park on Fifth’s developer will not change the height and floor massing of the new building.

Martin, president and co-founder of Terra, and Galbut, co-founder of Crescent Heights, also agreed to cover any cost overruns for the city’s planned $9.6 million pedestrian bridge over the MacArthur Causeway; bump up the completion date of a planned public park; and provide a letter of credit to ensure the project gets done. They also agreed that they would not seek the same FAR interpretation for other Miami Beach projects they are involved in.

“It’s time to realize this is a bargain of a lifetime,” Galbut told city commissioners. “There is no other way for you to accomplish these goals. You are getting the entire park almost immediately. The pressure on the developer is overwhelming.”

In addition, the developers agreed to pay $270,000 for the city’s legal fees connected to the related legal challenge of Miami Beach’s own Board of Adjustment’s ruling in favor of Martin and Galbut in November, plus another $200,000 for any future legal challenges brought by other zoning applicants.

But the city wanted $750,000 for its defense fund

When city commissioners pushed for money, Galbut threatened to end all further discussions when Mayor Dan Gelber asked him to continue negotiating with the city’s private lawyer Jeffrey Bass.

“There is no need for us to step outside and talk,” Galbut said. “Either we get it done today or we don’t get it done….We agreed to pay the $270,000 because David Martin begged me to, even though it went against my principles.”

Ultimately, Galbut and city commissioners agreed the developers would kick in $300,000 for its FAR legal defense fund in addition to the $270,000 to end the current litigation.

In December, the city sued the Board of Adjustment to overturn its decision that sided with the Park on Fifth development entity. The board’s interpretation of city code is that mechanical chutes, elevator shafts and stairwells are not part of floor-to-area calculations, which set off alarm bells at Miami Beach City Hall that new project developers would seek the same accomodation.

Park on Fifth is located on the former site of South Shore Hospital. The shell of the main medical building stood for more than a decade between 5th and 6th streets on Alton Road while Galbut submitted various redevelopment proposals to the city. It was demolished in April shortly after Galbut and Terra announced the companies were teaming up to build Park on Fifth.

Miami-Dade property records show a $90 million deed transfer in September from 500 Alton Road Ventures Inc., a company managed by Crescent Heights executives, to TCH 500 Alton LLC, a holding company managed by Terra and Crescent Heights entities.

The post Miami Beach, Crescent Heights, Terra agree to settle dispute over floor-to-area calculations appeared first on The Real Deal Miami.

Ben Carson wants religion to help homeless

Ben Carson wants religion to help homeless

Homelessness in Los Angeles is a crisis that has vexed government officials for years but Housing and Urban Development Secretary Ben Carson said Thursday he might have the answer: Religion, and the expansion of federal faith-based programs.

In remarks at the University of Southern California Sol Price School of Public Policy and Schwarzenegger Institute for State and Globe Policy, Carson moved to ease federal rules governing faith-based programs, and said homelessness in the U.S. could be solved if “every church, synagogue, and mosque adopted one homeless person.”

The assertion punctuated a speech during a conference addressing homelessness in California, which has shot up in recent years amid skyrocketing housing costs, long standing municipal laws that constrain new development, and programs such as the city of L.A.’s Measure HHH that have been slow to get off the ground. There are about 155,000 homeless people in California today, according to HUD, and 59,000 in L.A. County alone, per the L.A. Homeless Services Authority.

The conference included other big other names such as Arnold Schwarzenegger, the former two-term California governor, who in remarks lamented the ubiquity of homeless from “Los Angeles to San Francisco to the Central Valley,” and how Venice’s famed Muscle Beach was now teeming with homeless.

Carson took centerstage as the political figure with the present-day ability to change homeless policy. The HUD secretary, though, did not criticize or provide housing and development policy analysis regarding how the state of California and cities including L.A. are handling homelessness. Instead, he repeatedly returned to faith-based programs in which federal money is siphoned to social service groups with religious affiliations.

In fact, the one policy proposal Carson brought with him to L.A. was a regulatory change regarding the White House Office of Faith-Based and Neighborhood Partnerships, which the George W. Bush administration adapted into federal law by executive order in 2002 (then under the moniker, Faith-Based and Community Initiatives).

The Obama administration changed the office’s rules in 2010 with a directive that anyone benefiting from faith-based financial assistance must be made aware of the religious affiliation of the organization providing aid and be given the option of an alternative, non-religiously affiliated provider.

Carson’s proposal — put into the Federal Register Thursday — would simply nix Obama’s change, and return to the Bush administration’s language, deleting “requirements that faith-based organizations provide notices not required of secular organizations.”

As with most proposed federal regulatory changes, a review process now begins with a 60-day comment period.

Carson’s speech comes three weeks after he met with L.A. Angeles Mayor Eric Garcetti to discuss federal solutions to L.A. homelessness. That meeting resulted in no aid announcements or new policy proposals, though Garcetti generally referred to the “additional resources” of Carson’s support in a public statement following the meeting.

If Carson has been cautious in dealing with L.A.’s homeless crisis, his boss is more forceful, at least rhetorically.

In remarks last September, President Donald Trump excoriated L.A. and San Francisco for letting homeless people live on “our best highways, our best streets, our best entrances to buildings…where people in those buildings pay tremendous taxes, where they went to those locations because of the prestige.”

The post HUD Secretary Carson: Religious orgs should rescue homeless appeared first on The Real Deal Miami.

Renderings of the project with Yair Levy

Renderings of the project with Yair Levy

Developer Yair Levy is moving forward with plans to renovate a building in the heart of downtown Miami’s jewelry district, as development begins to ramp up in the area.

Levy, who acquired the Metro Mall Miami building about two years ago, broke ground on a $35 million renovation of the circa-1926 building. It’s expected to be completed by the spring of next year, according to a release.

Levy’s Time Century Holdings LLC paid $14.5 million for the 225,000-square-foot building at 1 Northeast First Street in July 2018.

A former Manhattan developer, Levy was permanently banned in 2011 by the New York state Attorney General’s office from selling condos and co-ops in the state. He rose to real estate prominence through several high-profile residential condo conversions in New York before the last recession.

The four-block jewelry district is home to more than 500 jewelry stores and generates more than $1 billion in sales annually. Across the street from Metro Mall is the historic Seybold Building, a centerpiece of the jewelry district.

The Metro Mall’s renovation is designed by architect Kobi Karp. The building has already been gutted, and Levy plans to “bring the building back to its glory days,” he said in a statement. The developer has also signed leases with unnamed jewelry stores “who realized they and their customers deserve better,” he added. The retail space is now 40 percent preleased.

The building’s new floor plans will include space for jewelry wholesalers, stores, craftsmen and repair services, according to the release. Four stories will be set aside for retail and wholesale space, and the four additional floors will be office space. The building will also have a three-story atrium, glass storefronts and valet parking.

Moishe Mana is the largest landlord in the Flagler Street area of downtown. The downtown Miami investor has amassed at least $375 million worth of properties downtown totaling over 1.3 million square feet of buildings, over the past few years. Mana is now seeking to raise $400 million to $500 million in capital for his companies, from family offices and high-net-worth individuals, to finance his developments.

The post Diamond in the rough? Downtown Miami Metro Mall to get $35M makeover appeared first on The Real Deal Miami.

From left: Amy Brandt and Dennis Gilmore

From left: Amy Brandt and Dennis Gilmore

Title insurance giant First American has reached a deal to buy housing tech company Docutech for $350 million.

The deal should close by the end of March, and Docutech’s current management team, including president and CEO Amy Brandt, will stay on board to lead the company, according to HousingWire.

Companies including CoreLogic, Ellie May and Roostify use Docutech’s services, which include eSign and eClosing technology. First American made the acquisition with an eye on moving toward completely digital mortgages and closings.

The title insurance company said in a statement that its Docutech acquisition will allow it to more effectively provide lenders with “end-to-end digital mortgage and settlement services” and strengthen its relationship with the firms that already use Docutech products.

First American is one of the “big four” title insurance companies that has long dominated the industry. Fidelity National Financial and Stewart Information Services, two of the others, were expected to merge in a $1.2 billion deal but called off the deal last year in the face of opposition from the Federal Trade Commission.

Title insurance companies in New York have faced a whirlwind of conflicting court rulings over the legality of strict new regulations on the industry from the state’s Department of Financial Services in recent years. The latest ruling from the state appeals court determined that the ban on companies wining and dining their clients would remain in effect. [HousingWire]Eddie Small

The post First American to buy Docutech for $350M appeared first on The Real Deal Miami.

Here are two real estate events coming up next week:

Host: Bisnow
Date: Feb. 19
Time: 7:30 a.m. to noon

Bisnow is hosting its Wynwood and Allapattah Expansion event at the Hyatt Regency Miami, 400 Southeast Second Avenue, from 7:30 a.m. to noon. This event will provide networking opportunities along with discussion on the major projects reshaping Wynwood and Allapattah. Speakers include Yori Bernstein of Wynwood Equity Partners and Michael Lirtzman of Sterling Bay.

Host: CREW Fort Lauderdale/Boca Raton
Date: Feb. 19
Time: 11:30 a.m. to 1:30 p.m.

CREW Fort Lauderdale/Boca Raton is hosting its monthly luncheon at Morton’s Steakhouse in Fort Lauderdale, 500 East Broward Boulevard. This event will be focused on celebrating women’s history with speaking appearances from leaders in the industry. Ginger Martin of American National Bank and Mary Harris of Berger Commercial Realty will be speaking at the event.

To submit more industry events, please reach out to events@therealdeal.com.

The post Mark your calendars: These are South Florida’s top real estate events next week appeared first on The Real Deal Miami.