Real Estate News

The trend could reverse as younger people start to enter the real estate market (Credit: iStock)

The trend could reverse as younger people start to enter the real estate market (Credit: iStock)

About 37 percent of households in the U.S. are living without mortgages.

The share of homeowners paying off their mortgages has increased by 5.5 percentage points over the past decade, according to Bloomberg, citing data from Zillow. This is in part due to an aging population of homeowners, as younger Americans tend to wait longer to buy property thanks to factors like student debt and increasing living costs. The trend could reverse as younger people start to enter the real estate market.

States with cheaper houses generally have higher rates of mortgages that are fully paid. West Virginia had the highest amount of mortgage free homes as of 2017 at 54 percent, while Maryland had just 27 percent and Washington D.C. had just 24 percent.

The country’s median home price has gone up by more than 60 percent over the past 10 years. [Bloomberg] – Eddie Small

New on The Real Deal: Read our new daily digest for a roundup of all the news and deals, big or small, in New York City. Updated three times a day. 

Kobi Karp, 4750 North Bay Road

Kobi Karp, 4750 North Bay Road

Miami star architect Kobi Karp and his wife Nancy paid $8.5 million to buy another waterfront home on Miami Beach’s North Bay Road.

The couple bought a 6,574-square-foot house at 4750 North Bay Road for $1,292 per square foot, records show. The seller is tied to Romita Shetty, a principal with New York-based DA Capital, which focuses on structured credit and private investments.

The couple previously bought a home at 5328 North Bay Road for $6.55 million in February 2016, records show.

It is unclear what the Karps plan to do with their latest purchase.

The bayfront house has six bedrooms and six bathrooms. It was built in 1932 and sits on a 20,000-square-foot lot. It was last purchased for $10.5 million in 2014, records show.

Dora Puig of Luxe Living Realty represented the buyer and the seller in the transaction.

Kobi Karp leads Kobi Karp Architecture & Interior Design and has designed many high-profile buildings in the Miami area. Karp’s projects include the luxury condo developments Palazzo Del Sol and Palazzo Della Luna in Fisher Island, Four Seasons Hotel & Residences at the Surf Club in Surfside, and the 1 Hotel & Homes in Miami Beach.

In addition to their homes on North Bay Road, Karp and his wife also own properties on Allison Island and Sunset Island III in Miami Beach, records show. A new home is under construction on the Sunset Island site, Nancy Karp said.

Other high-profile homeowners on North Bay Road include JDS Development’s Michael Stern, singer-songwriter Phil Collins, and basketball stars Chris Bosh and Dwyane Wade.

Yext founder and CEO Howard Lerman paid $17 million in February for a 10,665-square-foot spec mansion at 6010 North Bay Road.

800 Brickell, Jose Lobon and Chris Lee

800 Brickell, Jose Lobon and Chris Lee

Deutsche Bank’s RREEF sold a Brickell office building to Gatsby Enterprises for $125.5 million, according to sources.

Gatsby Enterprises, a New York-based real estate firm led by principal Nader Shalom, and Master Mind LLC, led by Babak Ebrahimzadeh, closed on 800 Brickell, CBRE said. The 2-acre property includes a 209,122-square-foot office building and an adjacent 9-story parking garage. The firm declined to comment on the price.

CBRE’s Christian Lee and José Lobón represented the seller, RAR2-800 Brickell LLC. Darryl Kaplan of Darryl R. Kaplan Company represented the buyer.

The office building is 71 percent leased with about 61,000 square feet of vacant space. Isaac Shalom of Gatsby Enterprises said in a release that the company plans to renovate the exteriors and common areas, as well as bring restaurants to the building. He said that Gatsby Enterprises plans to acquire additional properties in South Florida’s urban core markets.

Gross asking rents are currently in the low- to mid-$40s per square foot, which will rise after the buyers renovate the building, Lee and Lobón said. It hit the market in early February. Miami 21 zoning allows redevelopment equal to 16.5 floor area ratio, or up to 1.4 million square feet of building area and up to 80 stories in height.

“In the long run, ultimately, it’s a development site,” Lee said.

Tenants include Anheuser-Busch, Lufthansa, Prudential, Adler Real Estate Partners and Bo Concepts.

CBRE’s Amy Julian and Andrew Chilgren worked on the deal, and Colliers International South Florida’s Steven Hurwitz and Douglas Okun helped market the property.

RREEF, an arm of Deutsche Bank, paid $111.6 million for 800 Brickell in 2015. Guggenheim Investments and Stiles Realty sold the office building at that time.

Nearby at 888 Southeast Brickell Plaza, also known as 830 Brickell, OKO Group is planning to build a high-rise, 940,000-square-foot office tower with 15,000 square feet of retail space, 490,000 square feet of office space, and a restaurant on the 53rd floor.

The Agency’s Mauricio Umansky (left) and Billy Rose (Illustration by Zach Meyer)

When Leonard Rabinowitz and Jack Friedkin left the Agency in September to join Hilton & Hyland, and Jay Harris took the same route two months later, the moves didn’t raise many eyebrows. Rabinowitz and Friedkin had been at the Agency four years, and Harris seven, but jumping ship has become more common in an era of brokerage consolidation.

But then Danny Brown, a partner at the time, left in December, setting off a chain of events more akin to an exodus.

In March, the Agency lost Cindy Ambuehl, a longtime partner, as well as David Kelmenson, a former partner at Partners Trust. The following month, managing director Don Heller left, followed by Stephen Sigoloff, director of residential estates, and most recently, top producer Dan Urbach.

Mauricio Umansky, Billy Rose and Blair Chang launched the Agency in 2011 to much fanfare. Its charismatic leaders sought to shake up the brokerage landscape with sleek branding and a star-studded approach to marketing — it was real estate, Hollywood style. “Nobody had come in to disrupt it [the business], to revolutionize it, to innovate it,” Umansky had said of the decision. The firm became emblematic of boomtown L.A. and was involved in some of the city’s priciest deals. Yet nowadays, even as the Agency celebrates new offices and throws $100,000 open-house events, a grim scene is playing out behind closed doors.

Between January 2018 and June of this year, the firm lost 45 agents in L.A. County, many of them big producers. That’s about 15 percent of the 303 agents it had in June, according to data on licensed employees from the California Department of Real Estate.

The company has been quick to fill the vacancies, adding 140 new agents in the same period. Still, that turnover is about double the number seen at Hilton & Hyland. Compass, which is around five times bigger in L.A., saw 55 agents leave during the same time.

The departures come as the Agency and Umansky fight a legal battle with the vice president of an authoritarian Central African nation over Umansky’s sale of his Malibu estate. Meanwhile, co-founder Rose stepped down as the firm’s broker of record weeks before the litigation was filed.

But brokers say it’s not just the legal drama that pushed them out. They criticize the firm’s emphasis on “sharing,” which some see as a euphemism for management piggybacking on agents’ hard-won listings.

For this story, The Real Deal interviewed many former and current Agency agents, as well as several outside industry leaders. Some think the Agency has lost its edge amidst its rapid expansion, which has seen its office count nearly triple over the past two years to 33 and its total agent roster balloon to 585. And while its founders still refer to the company as a “boutique,” it’s no longer got the small-shop feel that set it apart.

“When they had one office, that was when they really blossomed,” said Aaron Kirman, a top luxury broker at Pacific Union International, now part of Compass. “I think where they started the decline is when they started getting multiple offices. Now they have offices all over the place. At that point, it’s hard to protect the brand.”

Coming in hot

The Agency burst onto the scene as the market was bouncing back from a recession. Developers were starting to put multimillion-dollar bets on spec homes, a practice that would transform the Southern California landscape and create scores of high-priced new listings. New agents, hungry for their first million, were flocking to the action.

Umansky had established a stellar track record at Hilton & Hyland, emerging as the firm’s top producer for seven years running, while Rose and Chang were running their own top-ranked team at Prudential. In 2011, the trio created the Agency, setting up shop in a 1,800-square-foot office on Beverly Drive. The space was modest, the ambition anything but. 

“I believed that the brokerage model was sort of broken, and I thought there was an opportunity to start a company that sold real estate differently,” Umansky said. “The mission was to create a boutique firm with global reach.”

Jason Oppenheim, founder of Oppenheim Group, said the Agency was a pioneer in breaking from the “brokerage-centric model,” where the name of the brokerage mattered more than the individual agent. Calling it both “inspirational and risky,” Oppenheim said Umansky was asking people to join an Agency that “didn’t have its bearings under it.”

The gambit worked. Agents and clients were attracted to the firm’s approach, which included the market’s first luxury lifestyle newsletter.

“I remember being really impressed at the time,” said Spencer Krull, general manager at Westside Estate Agency in Beverly Hills. “Their marketing at the time was really different than what anyone else was doing. They came on the stage very strong.”

Not only did the Agency offer full marketing support to its brokers, it would promote those capabilities to potential clients to win business. It also went full-tilt on open houses, which before the firm came along were largely sedate affairs. A 2013 open house for a $29 million listing on Sunset Plaza featured celebrity chef Michael Voltaggio, $3 million worth of Lamborghinis in the driveway, a DJ and an open bar. The parties have since escalated to include champagne-pouring aerialists and pop-up breweries.

Fueled by a strong market, Umansky and other Agency brokers would also often price homes at numbers that appealed to sellers, sources said. Umansky denies such claims.

“When they got in the business, we were on an uptick,” said one broker. “You could get away with a lot of things. And they had that swagger and that hip vibe, so the timing was great.” 

Umansky also wielded a trump card few other agents could hope to: exposure on national television. His wife, Kyle Richards, had been the star of Bravo’s “Real Housewives of Beverly Hills” for a year at the time, giving Umansky and his fledgling company a free platform from which to promote their business. Former agents recall instances where Umansky and now-“Million Dollar Listing Los Angeles” stars David Parnes and James Harris would persuade clients to list with them by luring them with the prospects of being filmed for television.

“We do use television to our advantage, like all the casts of these shows,” Umansky said. “We are lucky enough that people want to pay us to be on TV, not the other way around.”

As for agents, Umansky said he “did zero recruiting.” “We wanted to be a boutique, a high-service firm, and it was more like a club that people wanted to be a part of,” he added.

Sources agree that the Agency did not “recruit aggressively” like companies do today, but said it was common for early agents to attract their friends and other high performers. Heavy hitters like Jeeb O’Reilly, Kofi Nartey, Heller, Sigoloff and Ambuehl were among the first to join.

“The thought of starting a new agency from ground zero was so exciting,” said O’Reilly, who had joined from Hilton & Hyland. “I felt we had the greatest formula. We had fabulous public relations, fabulous marketing and a great vision.”

The Agency started winning — and selling — big listings. In 2014, Umansky sold the palatial Carolwood Estate, once owned by Walt Disney, for $74 million. He was then involved in the record-breaking $100 million sale of the Playboy Mansion two years later. While Umansky was by far the biggest rainmaker at the firm, other agents made bank, too: Santiago Arana, now a partner, sold the home used in “Beverly Hills Cop” for $23 million in July 2015, two years after selling Larry David’s home in Pacific Palisades. Ambuehl landed $20 million for the home of “Full House” creator Jeff Franklin that same year. Rose broke a record in Santa Monica’s Sunset Park when he sold Ryan Phillippe’s home for $15 million.

Sharing is caring

By many accounts, the Agency’s honeymoon period lasted for just under five years. Serious issues then began cropping up.

“I couldn’t stay because they had stolen a big client from me and lied about it to my face,” O’Reilly, who left the firm in 2015 and is now at Compass, said. “When I brought it up, they just looked at me and said, ‘We didn’t know you were working with her.’’’

Other agents told a similar tale.

“Any time we would try to bring a listing, they would say, ‘You don’t need to work on this listing’ and just take every single deal out of our hands,” recalled one. Another remembers an instance when an agent mentioned an A-list celebrity client at an all-hands meeting, and the owners then went after that client. When the agent complained, they were told it would be made up to them at a later time. It wasn’t, they said.

Agents who joined the company were sold on a notion of “sharing” and “collaboration,” they said. The idea was that founders would pass on listings to rising agents for a small referral fee. For a 50-50 split, agents could also tap into a principal’s expertise to sell a listing.

But those splits didn’t always come to pass, sources said. In one instance, an agent’s commission ended up being much lower because marketing and other expenditures were taken out of the agent’s share.

“My check should have been for $100,000, but I got $5,000,” the agent said. “They were robbing us blind.” 

While Umansky said it’s “sad” people feel that way, he contends that sharing is central to the business model.

“If we were stealing clients, we would not be able to expand our business,” he said.

While the model worked for some younger agents who may not have secured a $20 million listing without Umansky’s clout and public profile, it didn’t sit well with others who now say it was a bait-and-switch structure that mostly benefited the owners.

“Between the [owners], they had tons of business,” said one former agent. “They were saying that everything was going to be a team effort, and that they were not interested in being salespeople. It ended up being complete lies.”

Umansky denied that this is an issue at the company. While he said he has heard “rumblings,” he maintained that the Agency “shares more, gives more than anybody else.” Umansky currently has 43 active listings, valued at more than $1 billion, an Agency spokesperson said. 

“When you are doing incredible stuff,” he said, “you have a target on your back.”

Supporters argue that other firms in L.A. utilize the same tactics. The broker-owner model, Oppenheim said, works because the brokerage has two sources of income: the broker’s listings and its agents’ listings.

“They’re able to leverage the ownership to bolster their own real estate business as agents,” Oppenheim said. His firm and Hilton & Hyland work in a similar way, he added.

“I think that his [Umansky’s] name on listings has actually really helped smaller agents who are looking to catapult to the next level,” said Ambuehl, who left the Agency in March. “Mauricio is not putting himself on everyone’s listings so he could be the big dog.”

Westside woes

The situation appears to be especially fraught in the firm’s Brentwood office.

Several of the firm’s former top producers who were based in that office are out. One broker described it as “an absolute mess.”

Sources cited issues with Arana, who is the managing partner at the office. They said he prioritizes selling over managing, often putting himself on listings or going after major clients.

“A lot of agents felt like the person running it was having practices that were not aligned with their interests,” said a former agent. “It’s become problematic.”

Arana rejects the idea that he is running the show — that job, he said, belongs to Doug Sandler.

“I have a managing partner title, but I wouldn’t call myself a manager because if I was then I wouldn’t be selling,” he said. Arana also develops: Two houses he built in Brentwood have sold to LeBron James and Formula One heiress Petra Ecclestone.

“The only listings that I have my name on with other agents is because they needed me to help get the deal done, or because I brought them in,” he contended.

Arana is the only Agency broker to crack the top 10 in TRD’s ranking of top brokers this year, coming in seventh with nearly $247 million in sales volume between March 2018 and February 2019. Harris and Parnes, also at the Agency, ranked No. 11 with $162 million in sales. Umansky declined to participate in the ranking.

At the Brentwood office, the Agency lost Ambuehl, Kelmenson, Heller, Sigoloff and Brown to Compass.

“I think quite honestly what’s happened to us at the Brentwood office is that Compass has a great recruiter, and they found a hole,” Umansky said. Arana is “an extraordinary leader” who “is doing none of that,” he added.

Ambuehl, who declined to comment on the Brentwood office, said that Compass, backed by SoftBank and valued last year at $4.4 billion,  is “changing the rules of the industry.”

“That’s one of the big things the Agency and other agencies are going to be faced with,” she added.

A spokesperson for Compass said the firm is “humbled” anytime an agent from the Agency chooses to join Compass but declined to comment specifically on the Brentwood hires.

The curious case of Teodoro Obiang

“Did an L.A. real estate broker shortchange the citizens of an African nation out of millions?”

On the morning of Sept. 30, 2018, peering out from the Los Angeles Times’ business section, was the above headline. In a bombshell lawsuit, Umansky was accused of intentionally selling a 15,000-square-foot mansion on Malibu’s Sweetwater Mesa Road for millions less than it was worth, in order to later personally profit from the resale. The suit claimed Umansky had partnered with the buyer in a plot to resell the home for a far greater sum.

Umansky had been tapped to sell the home after the U.S. government accused owner Teodoro Nguema Obiang Mangue, the vice president of Equatorial Guinea, of using stolen funds to purchase the property.

Within seven months of listing, Umansky found a buyer. L.A. real estate investor Mauricio Oberfeld paid $33.5 million for the home in December 2015,  and Umansky partnered with him on the purchase. However, the two resold it a year later for $70 million, more than twice what they paid, leading Obiang to sue Umansky and the Agency for damages and any profits made from the sale. Umansky maintains that he acted in good faith in the sale, which was supervised by the U.S. Department of Justice.

Western World Insurance filed a lawsuit against the Agency last August to protect itself from having to pay any damages to the seller, who was demanding that the Agency cough up $8 million for misrepresenting the value of the home. The Agency countersued, and the suit was dropped in October.

The seller has since taken matters into his own hands. Obiang filed his lawsuit in federal court in March and is suing  Umansky and the Agency for damages and any profits made from the sale. Umansky and the firm maintains that the broker acted in good faith in the sale, which was supervised by the U.S. Department of Justice.

Umansky declined to comment on how the litigation has impacted the business. It’s clear that it was a public relations hit for the firm, but brokers said that such lawsuits are part of the cost of doing business at the top of L.A.’s real estate market.

“You can’t be a successful agent and not be drawn into some type of litigation,” Oppenheim said. “It’s almost a sign of being successful.”

Rather, it’s the actions taken by co-founder Rose around the time of the lawsuit that are more alarming, industry players said.

In the weeks leading up the first lawsuit, Rose stepped down from his role as the firm’s broker of record. He tapped Michael Caruso, who had been at the Agency less than a year at the time, to replace him.

Chang, the third co-founder, has kept a lower profile than his counterparts. He has about 15 active listings ranging from $2 million to $16 million, according to the firm’s website.

While the firm maintains that Rose stepped down in order to focus on “serving his clients,” others claim it was because of the lawsuit. Or worse, they say, the firm’s lack of funds pushed him to spend more time winning business.

“Don’t you think its weird when your managing partner resigns?” said one broker. “All of a sudden he’s back selling real estate, focusing on building the brand. That’s a sign.”

“What is he so afraid is going to happen that he’s removing himself from it?” another broker said. “It raised a lot of red flags.”

Built to sell

The Agency closed $4 billion in sales volume in L.A. County in 2018, ranking fifth on Los Angeles Business Journal’s list of top residential brokerage firms. That’s about 14.2 percent higher than its volume in 2017, when it closed $3.5 billion.The firm ranked behind Compass and Rodeo Realty, but beat Hilton & Hyland and Westside Estate Agency in the ranking. A spokesperson for the Agency added that the firm closed more than 2,000 transactions last year. 

As of July 8, the Agency had 237 listings in L.A. County, according to an analysis of single-family and townhouse listings on the Multiple Listing Service. That’s nearly $1.6 billion in sales volume, which is roughly 40 percent less than Hilton & Hyland and Compass. The figure does not include off-market listings.

The Agency is actively expanding, pushing for more offices in Northern California as well as several others on the West Coast. This is at a time when luxury real estate markets are softening: In March, home prices in Southern California fell year over year for the first time in seven years, and a Douglas Elliman first-quarter report revealed that the number of luxury home sales in L.A. County dropped 31 percent year over year. Discounts on top-end estates have become standard.

Those in the business wonder whether the Agency’s flashy approach will serve it well during a slowdown.

“It’s going to be rough for them,” said one brokerage executive. “This is the first time they see a down market. I wouldn’t be surprised if they start to scale back a bit, or consolidate.”

Yet Umansky welcomes the challenge. He stressed that losing many talented agents hasn’t hurt the business, with offices running at capacity and new recruits replacing those who’ve moved on. For example, Sandro Dazzan, a former top producer at Coldwell Banker, joined to lead the firm’s Malibu office in February 2018.

“In my eyes, we haven’t lost anybody, because we have maintained the number of agents per office,” Umansky said. “Having said that, you usually see a lot of change in life during the time when markets are down.”

The firm began a franchising push a few years ago, expanding into international markets like Mexico and the Caribbean. It also has franchises in Turks and Caicos; Punta de Mita, Mexico; Victoria and Nanaimo, British Columbia; Park City, Utah; and Boca Raton and Jupiter, Florida. And it’s looking to enter markets in Tennessee and Texas, with an eye, when the “timing is right,” on the richest market of them all, New York City.

Industry veterans have questions about the firm’s endgame. Aggressive expansion like this is often a sign that the firm is prepping for a sale, they said.

“It appears as though, with all they are doing, they are setting up to sell it,” said Stephen Shapiro, co-founder of Westside Estate Agency. “I think their goal is probably to get as many satellites as they can and maybe they take whoever is ready to jump in instead of taking their time and doing it more slowly.”

Though the founders have long denied such claims, Umansky said he will consider “mergers and acquisitions.” Others point to failed 2016 discussions with New York-based brokerage Town Residential as support for the claim that the founders are looking to cash out.

Town had been in talks to potentially buy or merge the two firms. A source familiar with the deal said Town eventually pulled out after analyzing the Agency’s financials, which showed that the bulk of the business was in the hands of just a few power players. (Town ultimately closed in April 2018.) 

Umansky claims it was the other way around.

“We were in talks to acquire them, not them to acquire us,” he said.

The Agency had made less than $1 million in net income in the 36 months ending December 2014, TRD reported at the time, citing financial statements Rose filed as part of his divorce proceedings. The filings showed that during that period, Rose took home $3.63 million in personal commissions plus nearly $360,000 in net income from his ownership stake in the firm.

“If they left, the company would make no money because none of these brokers would be able to land the business they land,” a source said in reference to Umansky and Rose. “They use their star power and their stature to make them bigger, and in turn sell that back to brokers who lack confidence or a brand name.”

The Agency has also been digging its teeth into new development. In 2017, the firm took over selling condos at Greenland Group’s Metropolis development in Downtown L.A. from Elliman. It then lost that listing to Polaris Pacific this past February, though Umansky hinted there have been “discussions” to potentially revisit selling the luxury units.

Sources questioned the legitimacy of their offices outside the Golden State.

In South Florida, one broker who was involved with the company there said the founders “didn’t do their due diligence” and ended up hiring “nobodies” to run the office.

“Franchises can be difficult because it’s all based on the culture you build, and every culture is different,” said Pacific Union’s Kirman. “I think it just led to a loss of the Agency having their identity.”

But to the face of the Agency, their growth has been “incredibly slow.”

“We’re a boutique,” Umansky said. “I’ve never bought a company. I don’t have $400 million. This is real growth.”

David and Victoria Beckham with a rendering of One Thousand Museum (Credit: Getty Images)

David and Victoria Beckham with a rendering of One Thousand Museum (Credit: Getty Images)

Now that David Beckham’s Major League Soccer team has found a permanent home in Miami, it makes sense that the soccer star is on the hunt for his own abode.

David and Victoria Beckham reportedly checked out a unit at One Thousand Museum this weekend, according to the U.K. publication the Sun. The Beckhams are spending the week in Miami on vacation, and were spotted hanging out with friends Eva Longoria and Marc Anthony.

Beckham is rumored to have viewed other Miami properties in recent years, including a waterfront estate on Star Island in Miami Beach.

Half-floor units at One Thousand Museum start at $5.8 million and full-floor residences go up to more than $24 million. The 62-story tower, known for its scorpion-like curvy columns that wrap around the exterior, was completed earlier this month by developers Louis Birdman, Gilberto Bomeny, Gregg Covin, Kevin Venger and Todd Glaser.

The 84-unit luxury condo building, at 1000 Biscayne Boulevard, was the first and final residential building in the Western Hemisphere to be designed by the late Zaha Hadid.

One Thousand Museum includes a rooftop helipad, a wellness center with a gym and yoga facilities, relaxation pods and spa rooms, a sky lounge, a bank vault, a multimedia theater, an off-site beach club and 8 Juice Bar by Raw Republic.

After years of attempts, Beckham and his partners are moving forward with their plans to build a soccer stadium in Miami, redeveloping the Melreese Country Club property into a $1 billion mega mixed-use soccer complex, home to their Inter Miami CF team. [The Sun]Katherine Kallergis

Steve Mnuchin and his family’s Lenox Hill apartment

Steve Mnuchin and his family’s Lenox Hill apartment

It’s not surprising that Treasury Secretary Steve Mnuchin has a vast real estate portfolio.

The New York native and Yale graduate was born into a wealthy family and enhanced his fortune working at Goldman Sachs and OneWest, also getting into the financing of Hollywood films like “Avatar.” When he took his position in President Donald Trump’s cabinet, Mnuchin divested some of his interests, but the 56-year-old still owns at least half a dozen properties worth roughly $100 million, according to Forbes.

His most valuable property appears to be a 6,500-square-foot home at 740 Park Avenue in New York City’s tony Lenox Hill neighborhood. That property has been in Mnuchin’s family since the 1960s, when his father worked at his eventual employer, Goldman Sachs.

Mnuchin listed the apartment for $32.5 million last fall, but is now asking $29.5 million. He also owns a property in the Hamptons worth around $13 million.

In Los Angeles, he owns at least two properties — a home on Bel Air Road he purchased in 2009 for $26.5 million and another owned through an entity called “HMBAP LLC,” according to Forbes.

He sold a seven-bedroom home in Beverly Hills for $11 million in 2017, four years after he bought it for $8.9 million.

Mnuchin has also disclosed an interest in residential and commercial real estate in Scotland, where his wife Louise Linton grew up. They now live in a Washington, D.C. home Mnuchin purchased for $13 million two weeks after Trump took office in 2016. [Forbes] — Dennis Lynch 

Donald Trump and Trump National Doral (Credit: Getty Images)

Donald Trump and Trump National Doral (Credit: Getty Images)

The Trump administration has picked Trump National Doral as a finalist for hosting the world’s most powerful leaders at the G7 summit next year.

Trump National Doral, an 800-acre golf resort in Doral owned by the Trump Organization, is in the running for the meeting after the Trump administration completed site surveys of possible locations for the event, Axios reported.

President Trump has previously touted Trump National Doral in federal disclosures as the Trump Organization’s most profitable resort.

But according to a recent report by the Washington Post, overall revenue at the golf resort is down since 2015 and net operating income declined by 69 percent from 2015 to 2017.

The property is “severely underperforming” other resorts in the area, tax consultant Jessica Vachiratevanurak told a Miami-Dade County official in an attempt to reduce the property’s tax bill. She said the reason is due to “some negative connotation that is associated with the brand,” according to the Washington Post.

Trump bought the 650-acre resort in 2012 for a reported $150 million. He borrowed $125 million from Deutsche Bank and embarked on $250 million in renovations.

Prior to the Washington Post story, little was previously known about the finances of Trump Doral, which has worked to attract golfers from South America. [Axios]Keith Larsen

Beto Perez and Continuum North unit 2704 with Stephan Burke, Carol Cassis and Diana Carulla

Beto Perez and Continuum North unit 2704 with Stephan Burke, Carol Cassis and Diana Carulla

The creator of Zumba, a popular exercise fitness program, just picked up a new place to dance like nobody’s watching.

Alberto “Beto” Pérez paid $5.5 million for unit 2704 in the north tower of Continuum Miami Beach, at 50 South Pointe Drive, property records show. Investor Gregory Gould sold the three-bedroom, 2,173-square-foot unit for $2,531 per square foot.

Stephan Burke, Carol Cassis and Diana Carulla of Brown Harris Stevens Miami represented the seller. Diana Tello of Envirotek Realty brought the buyer.

Gould paid $3.5 million for the Continuum North condo in 2011, records show.

Pérez created Zumba in 1999. Roughly 15 million people take Zumba weekly classes in over 200,000 locations in 180 countries, according to its website.

Pérez will be in similar company. In May, fitness expert and keto diet enthusiast Mark Sisson and his wife Carrie Sisson paid $13.25 million for a combined unit at Continuum South. That same month, an heir to the fortune of Philadelphia businessman Lewis Katz paid $6.8 million or $2,300 per square foot for unit 3707, also in the south tower.

The Continuum is undergoing an exterior renovation designed by ArquitectonicaGEO. The development was built by Ian Bruce Eichner’s Continuum Co. in the early 2000s.

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WeWork CEO Adam Neumann (Credit: Getty Images)

WeWork CEO Adam Neumann (Credit: Getty Images)

UPDATED July 19, 9:00 pm: Startups are valued by their potential to grow, and trust in the business model. In the We Company’s case, its $47 billion valuation is set to be tested by the confidence of public markets ahead of an upcoming IPO.

But the flexible office space company’s freewheeling founder and chief executive, Adam Neumann, has polarized investors, some of whom have puzzled over company decisions in recent years — the purchase of a wave pool company, launching an elementary school, and a questionable arrangement in which he acquired buildings under a personal LLC and then leased them to WeWork, the co-working arm of The We Company.

Again this week, the debate over the company’s prospects was reignited over revelations that Neumann has in recent years sold $700 million worth of WeWork debt and stock.

Since Neumann founded WeWork nine years ago, the company’s core business model — renting office space and subletting it to users at a premium — is yet to turn a profit. Last year, the company took in $1.8 billion revenue, but lost $1.9 billion.

“It’s unseemly at best for a founder executive to be walking off with all this money when the business isn’t profitable,” said R. Christopher Whalen, an investment banker and chairman of Whalen Associates. “It’s really bad optics.”

Neumann’s transactions, which were reported Thursday by the Wall Street Journal, were a combination of stocks sold and debt taken out against his holdings in the company (which were subsequently invested into real estate and startups). Axios reported Friday that $300 million was in stock sales, and $400 million in loans.

The We Company declined to comment.

Neumann’s exact stake in WeWork is unclear, but he is widely reported as the company’s largest single shareholder. The Journal reported that he controls an entity that owns about one-third of the We Company’s stock, which gives him full voting power over the company’s decisions.

Following the report, some investors told The Real Deal that Neumann’s transactions fueled uncertainty about the company’s future.

“It’s either going to be the best bet of all time, or the worst bet of all time,” one investor, who requested anonymity, said of their investment in the company.

But others said they continue to have high confidence in the business. Scott Plank, an early investor in WeWork, said he remained bullish on the startup, in part because of its support from institutional investors. “I trust SoftBank has done a great job working with Adam, and trust Adam is working in the interest of shareholders,” he said.

Plank, who was an executive at Under Armour, the clothing giant founded by his billionaire brother Kevin, added that having a financially secure chief executive is key to running a business. “Adam is bonkers for sure, but he cares about the members, and he cares tremendously about the investors,” he said.

While some critics suggested that Neumann’s sale of company stock signaled a lack of confidence by the founder in the company’s future, Kevin McNeil, of Fitch Ratings, said that Neumann’s borrowing of debt on stock demonstrated the opposite. McNeil added that the $700 million in transactions “seem in context to the overall value of the company.”

Neumann’s transactions are unusual, but it is not unprecedented for a founder to cash out ahead of an IPO. Ahead of discount marketplace Groupon’s IPO in November 2011, founder Eric Lefkofsky cashed out $300 million, against a $16 billion valuation. And Mark Pincus, the founder of social-media gaming firm Zynga, sold $100 million worth of stock ahead of an IPO that valued the company at $8.9 billion. But many investors pointed to those moves when the stocks declined.

In the meantime, another We Company executive appears to be spending big ahead of the IPO. According to Variety, the firm’s vice chairman Michael Gross recently forked out $28 million for a Brentwood tennis court estate.

Dwight Y. Angelini and the property (Credit: Google Maps)

Dwight Y. Angelini and the property (Credit: Google Maps)

Longpoint Realty Partners bought an industrial park in Miami Gardens from ProLogis for $25 million.

The Boston-based real estate firm purchased the nearly 234,000-square-foot warehouse at 1400 Northwest 159th Street for $106 per square foot, records show. The property is known as the Sunshine State Industrial Park.

The warehouse was originally built in 1969 and sits on an 11.2-acre site.

DCT Industrial Trust, which was later acquired by ProLogis, had purchased the property in 2013 from Southeastern Headquarters for $11.8 million, records show.

Longpoint Realty Partners has been expanding in South Florida.

In April, Longpoint paid $37.53 million for a Sedano’s-anchored shopping center in Pembroke Pines.

The firm also paid $21.2 million for a strip mall within the Crossroads Square Shopping Center in Pembroke Pines in November.

Last June, Longpoint bought a Publix-anchored shopping center in Boynton Beach for $9.9 million. And in late 2017, Longpoint paid $5.8 million for a warehouse in Doral.

The firm focuses on industrial and retail properties in major markets including Texas, Tennessee and Georgia, according to its website.

An aerial view of the property in the Billionaires Row area (Credit: Google Maps, iStock)

An aerial view of the property in the Billionaires Row area (Credit: Google Maps, iStock)

A wealthy Chinese woman sued the local government in Vancouver after the city charged her an “empty homes tax” of $249,000 for vacating her mansion in its “Billionaires Row” area.

The vacancy tax is part of a larger effort to address the lofty cost of housing in Vancouver. But He Yiju claimed exemption from the tax in her lawsuit because she applied for permits to redevelop her Vancouver mansion, which she bought in 2015.

Yiju’s husband is multimillionaire and Chinese parliament member Zheng Jianjiang and her estate sits in Point Grey, an exclusive neighborhood known for waterfront estates that rank among the city’s most expensive homes.

The mansion’s taxable value is $24.9 million, which served as the basis for calculating the $249,000 vacancy tax, the Vancouver Sun reported. The British Columbia Assessment Authority says the property is worth $26.7 million.

Vancouver’s vacancy tax applies to homes vacated for more than six months. The city charges the tax to encourage the rental of homes not occupied by owners.

Enactment of the vacancy tax prompted some mansion owners to rapidly rent their empty properties to avoid paying the tax. As a result, some college students rented rooms in luxurious Vancouver residences for as little as $825 USD in monthly rent.

Implemented in 2017, the “empty homes tax” is part of Vancouver’s response to high housing costs amid an influx of foreign investment in recent years and rapid gentrification of neighborhoods.

“The city is in the midst of a severe housing crisis, with one of the lowest rental vacancy rates and highest rental costs in Canada,” according to a statement by the city of Vancouver on its website. [Insider] – Mike Seemuth

An aerial of the Florida Keys (Credit: iStock)

An aerial of the Florida Keys (Credit: iStock)

Higher housing costs in the Florida Keys are pushing people into smaller living spaces.

For example, Dotti Clifford, a 61-year-old reliant Social Security, pays $850 a month for a 100-square-foot apartment that once was the front porch of a house in Key West.

Hurricane Irma added to the long-rising cost of housing in the Keys by destroying hundreds of homes in 2017, worsening the lopsided relationship of housing costs and household income.

Median monthly living expenses in Key West, (including rent, taxes and utilities) total $1,701, according to U.S. Census figures, which also show that $62,052 is the median annual ncome of a Key West household.

Tiny and exceptionally functional furnishings are part of downscaled living in the Keys. Consider Lizzie Hoke, who runs an organic food store and restaurant in Key West. Hoke rents a second-floor space in a house that measures under 200 square feet. She furnished her little space with a loft double bed that provides room underneath for storage and her desk.

“I have everything I need here,” she told the Miami Herald. “I’ve learned to relax and appreciate what I have.”

Michelle Rodriguez, 45, rents a room and a bathroom in a house in Key West for less than the typical $1,200 monthly rent for comparable quarters in the island community. She says she complies with rules set by the owner of the house, including no pets or overnight guests. “You learn to live like a teenager,” she told the Miami Herald.

In the Upper Keys, higher-priced housing encourages people with jobs there to commute from more-affordable homes in southern Miami-Dade County.

Trulia figures show that the median price of a three-bedroom house drops from $765,000 in Key Largo to $250,000 about 20 miles north in Homestead.

Hurricane Irma not only reduced the housing stock of the Florida Keys but also eliminated “some low-end housing,” compounding the challenge low-income residents face, said Rev. Kerry Foote of Burton Memorial United Methodist Church in Tavernier.

However, some new housing projects for working-class residents of the Keys have popped up, including a 16-unit attached housing development by Habitat for Humanity of the Upper Keys. “This is going to be the most affordable option in town,” Jack Niedbalski, executive director of Habitat for Humanity of the Upper Keys, told the Miami Herald, referring to the Habitat at Windley Point, expected to open next year.  [Miami Herald] – Mike Seemuth

A rendering of Reno's Neon Line (Credit: Jacobs Entertainment)

A rendering of Reno’s Neon Line (Credit: Jacobs Entertainment)

A developer is betting $1 billion on the largest development ever in Reno, Nevada, as the city reduces its economic reliance on the gambling industry.

Jacobs Entertainment Corp. plans to transform a 20-block area on the west side of Downtown Reno into a residential and entertainment district called the Neon Line District.

Colorado-based Jacobs Entertainment, led by chairman and CEO Jeffrey Jacobs, is known locally for two gambling properties in Reno, the Gold Dust West Casino and the Sands Regency Casino. According to the company’s website, Jacobs developed a similar district in Cleveland, the Nautica Entertainment Complex, which has 2 million visitors a year.

The developer has already invested more than $100 million on site acquisitions for the megaproject, which will include 2,000 residential units, restaurants, retail stores and a hotel.

The project could take as long as seven years to build. The first phase is under way: Jacobs is building the Neon Line, a walkway that will extend half a mile and will feature rotating art installations.

While the scope of the Neon Line District development might be more appropriate for a city larger than Reno, which has a population of only 249,000, the city is going through some big changes that could have big rewards for such a project.

The employment base in Reno is shifting from low-wage casino jobs to higher-paying positions with technology companies. The median household income in Reno rose 9 percent in the 2012-2017 period to $52,106. But home prices have risen even faster as tech employment expands in the Reno area. According to the Washoe County Assessor, the median home-sale price in the first quarter was $400,000, reflecting a 63 percent rise over five years.

Apple opened a data center in 2014 in downtown Reno, and then Tesla opened a factory east of Reno at a cost of $5 billion. Google recently finished building a data center at the Tahoe Reno Industrial Center.

Jacobs, too, might have plans to relocate closer to the billion-dollar project. The Wall Street Journal reported in May that he listed his nine-bedroom mansion in North Palm Beach in South Florida with an asking price of $42 million. [Wall Street Journal] – Mike Seemuth

The 25,000-square-foot home in Bel Air and Ardie Tavangarian (Credit: Hilton & Hyland and Getty Images)

The 25,000-square-foot home in Bel Air and Ardie Tavangarian (Credit: Hilton & Hyland and Getty Images)

One of Bel Air’s biggest mansions has sold for $75 million, one of the highest prices paid for a home in Los Angeles this year.

Prolific spec builder Ardie Tavangarian unloaded the massive 25,000-square-foot home to a buyer from China, according to the Wall Street Journal.

The Arya Group founder listed the behemoth abode in November for $88 million. So the sale actually represented a 15 percent discount on the original asking.

The deal comes just a couple of weeks after the $120 million sale of Petra Ecclestone’s 123-room Spelling Manor estate in Beverly Hills, which set a record in Los Angeles County. Ecclestone originally listed the palatial estate for $200 million in 2016.

The two giant sales might inject some new confidence into the L.A. luxury residential market, which has been in a recent slump. Many sellers have had to shave millions off their asking prices on properties that continue to linger on the market.

The Bel Air home, meanwhile, has all the trappings of luxury. The eight-bedroom mansion includes a movie theater, art studio, car elevator, infinity pool, and a slew of other amenities, according to the Journal. It has 20,000 square feet of additional outdoor decks.

Tavangarian said last fall he designed and built the home for his family, but decided to sell when it grew in size and scope.

Tavangarian fared better on the market than some other spec home builders in Bel Air.

Bruce Makowsky has dropped the price of a 38,000-square-foot mansion from $250 million to $150 million over the last two years. Makowsky’s neighbor, Raj Kanodia, said he’ll take offers around $120 million for a home he listed a year ago for $180 million. A Holmby Hills estate near Spelling Manor also recently hit the market for $70 million. [WSJ]Dennis Lynch

Joaquin Correa with a model of Missoni Baia.

UPDATED, July 22, 12:30 p.m.: Argentine soccer star Joaquin Correa put a condo under contract at Missoni Baia, a 57-story project under construction in the Edgewater neighborhood of Miami.

The developer, OKO Group, declined to disclose the price Correa contracted to pay but said the type of unit he reserved has been priced in the range of $1.5 million to $1.7 million.

Correa, 24, is a midfielder for Rome-based soccer club SS Lazio and has scored five goals since he joined the Serie A team last year. His team was the champion of the Copa Italia 2018-2019 tournament, during which Correa played in four matches and scored two goals.

Correa was represented by Fortune International Realty’s Tango Consulting Group, which was formed by Sergio Waissmann, Marco Francescoli and Kevin Waissmann.

He isn’t the only acclaimed soccer player who has put a unit at Missoni Baia under contract.

Colombian soccer star Miguel Borja, a professional player with the Brazilian club Sociedade Esportiva Palmeiras, recently reserved one of the 249 units in Missoni Baia, which is expected to open for occupancy in 2021.

The one- to five-bedroom condos at Missoni Baia range in size from 775 square feet to 3,788 square feet, and prices start in the $500,000s.

The project’s amenities includes a spa, an Olympic-size swimming pool, private cabanas, a children’s pool and tennis courts, a 1,700-square-foot gym and a spa for pets. – Mike Seemuth

Before demolition. the historic home at 44 Pleasant Avenue was on the market for $10 (Credit: Montclair Township, iStock)

Before demolition. the historic home at 44 Pleasant Avenue was on the market for $10 (Credit: Montclair Township, iStock)

Even when a historic home was priced for less than the cost of one month’s Netflix subscription, it couldn’t find a buyer.

Of course, the true cost of the Montclair, NJ home would have been much higher than its $10 list price, because a buyer would have had to pay to move the mansion off its 2.7-acre site.

Known as the “Aubrey Lewis House,” the mansion was built in 1906 and belonged to an esteemed citizen of Montclair for which the home was named, along with his wife Ann. Aubrey Lewis died in 2001 and his wife subsequently took control of decisions regarding the mansion.

If you want to get in on this deal, we have some bad news: given that no one wanted to buy the super cheap home, it has been demolished.

A group of developers operating as Boddie-Noell Enterprises Inc. oversaw a proposed a subdivision of the site of the mansion to build eight houses there. [NJ.com] — Mike Seemuth

Moishe Mana (Photo by Marsha Halper)

Developer Moishe Mana plans to build a mixed-use project with a logistics hub in Panama City, Panama, next to the city’s main airport.

Mana seeks to buy a large property next to Panama Tocumen International Airport for a mixed-use development called Mana Panama.

The developer discussed the project when he visited Panama as a guest at the June 29 inauguration of the nation’s new president, Laurentino Cortizo

In a press release, he described the planned Panama City project as an “aerotropolis that seamlessly integrates residential, commercial and logistics.”

His press release also stated that Mana Panama would attract transportation-driven companies that value its location as “an excellent access point to the Americas and Europe, as well as … East and South East Asia.”

Mana is founder and chairman of Mana Group, a conglomerate with more than 200 acres of urban land, 200 acres of farmland and 15 million square feet of floor space, plus holdings in agriculture, entertainment, fashion, logistics and technology.

Mana has been an active investor in such Miami neighborhoods as Wynwood, where he has been developing a trade-themed project called Mana Wynwood. – Mike Seemuth

 

Portland, Maine (Credit: iStock)

Portland, Maine (Credit: iStock)

Year-round sunshine didn’t help Florida make it to the top of this vacation rental ranking.

The states with the highest percentage of vacation homes are clustered in the Northeast, Bloomberg reported, citing a new study from investment property exchange firm IPX1031.

Maine topped the ranking, with 19.3 percent of its homes being used as vacation rentals. Vermont came in second, at 17.4 percent, followed by New Hampshire, at 11.8 percent, and Alaska clocked in at No. 4 with 10.5 percent. Florida came in sixth place, at 9.7 percent.

Few of them are in the Midwest. The study found that states with the five smallest percentages of vacation homes are Indiana (1.7 percent), Iowa (1.6 percent), Kansas (1.4 percent), Ohio (1.1 percent) and Illinois (1 percent).

The report used data from the Census Bureau, which defines vacation homes as residences “vacant for seasonal, recreational or occasional use.” The United States has 5.7 million vacation homes. [Bloomberg] – Mike Seemuth

The Baby Shark crew and West Palm Beach Lake Pavilion (Credit: Google Maps, Nickelodeon)

The Baby Shark crew and West Palm Beach Lake Pavilion (Credit: Google Maps, Nickelodeon)

Apparently inspired by the interrogators at Abu Ghraib prison in Iraq, the government of West Palm Beach is repeatedly playing the song “Baby Shark” on a public address system to discourage homeless people from sleeping at a city-owned waterfront pavilion.

The city also is blaring other irritating children’s songs to keep the homeless away from its Waterfront Lake Pavilion, which generates about $24,000 of annual income from event fees, mainly in connection with weddings.

Leah Rockwell, the municipal parks and recreation director in West Palm Beach, told Vice.com that the city wants to ensure that “people paying this money had a facility that was clean and open, and continue to use it in the future.”

Nearly 1,400 people are homeless in Palm Beach County, and West Palm Beach has the county’s largest homeless population.

A lack of affordable housing has added to the homeless population in West Palm Beach and the rest of tri-county South Florida, including Miami-Dade, Broward and Palm Beach counties.

According to the Miami Urban Future Initiative, the scarcity of affordable housing is more acute in South Florida than in New York City. [Vice.com]Mike Seemuth

César Pelli, and from left: Brookfield Place in New York, Salesforce Tower in San Francisco, and the Pacific Design Center in Los Angeles (Credit: Pelli Clarke Pelli Architects)

César Pelli, and from left: Brookfield Place in New York, Salesforce Tower in San Francisco, and the Pacific Design Center in Los Angeles (Credit: Pelli Clarke Pelli Architects)

Acclaimed architect César Pelli, whose firm designed some of the world’s most distinctive buildings, died Friday. He was 92.

La Gaceta, a newspaper in San Miguel de Tucumán, his hometown in northern Argentina, reported the news.

Pelli, who came to the U.S. in 1952 to continue his architecture studies at the University of Illinois, saw most of his success later in life, according to the New York Times. He didn’t open his own architecture firm until he was 50, when he was tapped to renovate and expand the Museum of Modern Art in Manhattan.

He founded Cesar Pelli & Associates Architects with his wife Diana Balmori, a landscape architect, and his former colleague Fred Clarke in 1977. Pelli’s son Rafael joined the firm as a partner in 2005, when the firm’s name changed to Pelli Clarke Pelli Architects.

Pelli, known for his innovative use of glass, and his firm handled design projects ranging from the Adrienne Arsht Center for the Performing Arts in Miami and Salesforce Tower in San Francisco, to the Pacific Design Center in Los Angeles and the World Financial Center in New York City, now known as Brookfield Place.

The tallest design project by his architecture firm was the Petronas Twin Towers in Malaysia, two 88-story buildings connected by a skybridge about 500 feet above ground.

Pelli was dean of the School of Architecture at Yale University from 1977 to 1984, and won the 1995 gold medal from the American Institute of Architects, among hundreds of other awards.

Within the last year, three other acclaimed architects have died. I.M. Pei, Karl Fischer and Constantine “Costas” Kondylis.

Pelli strived to reconcile the influence of modern and classic design, produced designs to satisfy building owners rather than challenging them.

Architects must deliver “what is needed of us,” Pelli once wrote. “This is not a weakness in our discipline, but a source of strength.”

[NYT] – Mike Seemuth


SEE RELATED:

I.M. Pei, who designed monuments of culture, dies at 102

Karl Fischer, known for ubiquitous, controversial designs, dead at 70

Costas Kondylis, the “developer’s architect,” dies at 78

(Credit: iStock)

(Credit: iStock)

The new owner of the Toys R Us brand will open scores of new stores this year, but only two in the United States, where the former owner declared bankruptcy in 2017.

Several former executives of Toys R Us founded Parsippany, New Jersey-based Tru Kids Brands in January, and it now manages the Toys R Us, Babies R Us and Geoffrey brands.

Toys R Us liquidated its U.S. business after its 2017 bankruptcy filing, leaving behind millions of dollars of unpaid debts. Vendors with valid claims recovered roughly 20 cents on the dollar.

But outside the United States, about 800 stores still operate under the Toys R Us brand. Tru Kids is working with partners on licensing deals to open approximately 70 new Toys R Us stores this year in Asia, Europe and India.

This year’s re-launch of Toys R Us in the United States will be limited to two 10,000-square-foot store stores in Houston and Paramus, New Jersey, according to the Associated Press. Future U.S. locations will be about the same size, Tru Kids CEO Richard Barry said.

Both new U.S. stores would have fit comfortably inside Toys R Us’ old big-box locations, which spanned about 30,000 square feet.

Tru Kids formed a partnership with a startup company called b8Ta to initiate what Barry described as a consignment model for store operations, under which toy manufacturers would pay for store space and collect all sales there. [Associated Press] – Mike Seemuth

From left: Michael Landon and Kelsey Grammar

From left: Michael Landon and Kelsey Grammar

Celebrity television star Kelsey Grammer and his ex-wife put their home on the market, and the widow of the late television star Michael Landon sold her Malibu home this week. Music mogul Dr. Dre also put his Woodland Hills manor on the market. And for something a little different: Real estate billionaire Richard Lewis bought a very pricey condominium in Beverly West. And though it isn’t celebrity-tied — as yet — spec home developer Ardie Tavangarian sold his newly built home for $75 million. 

The former estate of actor Kelsey Grammer and his ex-wife, Camille, is back on the market for $20 million. The main home spans 6,650 square feet and includes seven bedrooms, 13 bathrooms, a kitchen designed by celebrity chef Wolfgang Puck, wine cellar and two-story ballroom. Outside, the 4.8-acre grounds feature gardens, a pond, tennis court, equestrian facilities and a fruit orchard. The former couple bought the home in 1997 for $4.5 million. They sold it in 2015 for $13 million, following the divorce. 

A real estate billionaire has just bought one of the most expensive condos in L.A. Richard Lewis, president of the California division at the Lewis Group of Companies, spent $21 million for a 7,957-square-foot penthouse at the Beverly West Residences. As part of the deal, Lewis and his wife, Federica Lewis, also gave their half-floor unit at the building back to the developer, Emaar Properties. They had paid $5 million for that space in 2012. Their new pad comes fully furnished and includes three bedrooms. 

The widow of “Little House on the Prairie” star Michael Landon has sold an oceanfront home in Malibu for $15.7 million, nearly double what she paid for it four years ago. Cindy Landon listed the 6,900-square-foot home last year for $18 million. It has five bedrooms and six bathrooms, plus beach access. The buyer was a “well-known entertainer,” but her son and listing agent, Sean Landon of the Agency, declined to name the person.

Music mogul Dr. Dre has put his 16,200-square-foot residence on the market. The mansion-manor, in a gated community in Woodland Hills, is listed for $5.25 million. Dr. Dre, who famously grew up in Compton, purchased the home in 1999 — the year he released “2001” — for $2.35 million. It’s been extensively renovated since and includes eight bedrooms, 13 bathrooms, a movie theater and 150-gallon fish tank.

7801 North Federal Highway in Boca Raton (Credit: Cortland)

7801 North Federal Highway in Boca Raton (Credit: Cortland)

PGIM Real Estate and Alliance Residential sold a sprawling apartment complex in Boca Raton to Cortland and Clarion Partners for about $120 million, The Real Deal has learned.

Atlanta-based Cortland and Clarion Partners, a New York-based investment adviser, paid $312,500 per unit for Broadstone North Boca, a 384-unit apartment development at 7801 North Federal Highway. The deal, which closed on Thursday, marks one of the largest multifamily investment sales in South Florida so far this year.

It’s the fourth deal for Cortland and Clarion as partners, and the 15th property in Florida for Cortland, according to a release.

Cortland will rebrand the property Cortland Boca Raton, and the two partners plan to upgrade the units’ interiors, amenities and landscaping. The 17-acre development was completed in 2012 and has a mix of apartments, including five-story mid-rise buildings with elevators, three-story garden-style buildings and three-story townhouse-style units. Amenities include a resort-style pool, putting green, bocce ball court, playground, green space and courtyard, and a dog park with a washing station.

Monthly rents range from $1,570 to $3,914, according to Apartments.com.

The development hit the market about a year ago as part of a five-property PGIM portfolio in the Southeast, according to RE Alert. Walker & Dunlop marketed the portfolio, which had a combined value of about $415 million.

Chris Conklin of Walker & Dunlop represented the seller of Broadstone North Boca, according to the company’s website.

Cortland has invested in or managed more than 155 apartment communities with over 52,000 homes in the U.S., and Clarion has more than $50 billion in total assets under management, according to the release.

The rental market is still strong in South Florida, although rent growth is slowing in oversaturated markets like Miami’s urban core.

In May, the Blackstone Group paid $208.75 million for a pair of neighboring apartment complexes in Doral, the largest multifamily sale this year.

(Credit: iStock)

(Credit: iStock)

The affordable housing crisis in Los Angeles may have reached a breaking point with the emergence of the “vanlord.”

People in Venice have been resorting to renting space in vans for weeks at a time at a cost of $300 a month, according to the Santa Monica Daily Press. The owner, or landlord or vanlord is Gary Gallerie, who has been renting out 14 vans — most of which don’t run, according to the report. Some have been parked in front of multimillion-dollar mansions.

In L.A. County, an estimated 30 percent of the 59,000 people living on the streets stay in vehicles, tents and makeshift shelters, according to the L.A. Homeless Services Authority.

The region has been strapped with a crushing lack of affordable housing, with renters having to earn triple the minimum wage to afford the median monthly rent of $2,500. The county needs more than a half million more units of affordable housing to meet current demand, according to the California Housing Partnership.

Gary Painter, director of USC’s Homeless Policy Research Institute, told the Daily Press, “it’s not shocking that people are thinking about these makeshift solutions.”

L.A. Mayor Eric Garcetti last year committed to building emergency shelters across the city. The program, which has a $20 million budget this year and is called “A Bridge Home,” has been met with fierce resistance from property owners, developers and residents in different neighborhoods who say the shelters will raise crime and stifle growth. Some of those areas include Koreatown — which has been experiencing a development boom — along with other places like Sherman Oaks and Venice. Painter of USC said many homeowners think if that don’t provide alternatives that are better than living on the streets, those homeless people will leave. But, he added, “we don’t have evidence that actually happens.” [SMDP]Gregory Cornfield

From left: London, Shanghai and Paris

From left: London, Shanghai and Paris

Every week, The Real Deal rounds up the biggest real estate news from around the globe.

United Kingdom

The future of the Tulip Tower has wilted. London Mayor Sadiq Khan denied approval for the controversial structure, which would have been nearly 1,000 feet tall. Starchitect Norman Foster and his firm, Foster + Partners, designed the bulbous building, which New York magazine derided as “Instagram architecture at its emptiest.” In Manhattan, two Foster-designed tower projects — JPMorgan’s 270 Park Avenue and L&L Holding’s 425 Park Avenue — are under way. [Surface]

London landlords are aghast at Mayor Sadiq Khan’s call for rent controls. It was part of a series of proposals that included ending “no-fault” evictions, as well as incentives for building rentals. But the real estate industry says it will discourage investment and development in the rental sector, which has seen strong demand because many Londoners can’t afford to buy homes. [Evening Standard] 

Home prices are still headed for the bottom. The average sale price of detached homes in London was down 6.1 percent in May from the same month last year, according to Land Registry data. Sale prices for other types of London homes also fell, though not as sharply. Average sale prices dropped 5 percent for maisonettes and flats, 4 percent for semi-detached houses and 2.9 percent for terraced homes. But the average value of a London home still about twice the amount of a U.K. home. Meanwhile, the number of London homes listed for sale is 18 percent lower this year than last year because of a “protracted political hiatus.” A report by property portal Rightmove showed that the latest data on London home sales signal the market is “bottoming out.” [BBC, Homes & Property]

The Brexit-bludgeoned London office market can thank Parliament for a big new lease. As many as 1,000 administrative staff of the House of Commons will occupy 10 floors and 100,000 square feet in a building owned by the City of Westminster, a centrally located borough of London. Parliament will take the temporary office space near St. James’s Park station while a multibillion-dollar restoration of the Palace of Westminster unfolds through the mid-2020s. [The Standard]

Brazil

Brazil just saw its first real estate blockchain deal. Brazilian construction company Cyrela and a startup called Growth Tech completed a property sale via blockchain technology in 20 minutes. The process of selling a property typically takes about a month. Some developers and real estate groups have moved to adopt or invest in blockchain and other new technologies. The National Association of Realtors last month said it was investing in Propy, a real estate transaction platform. [ZDNet.com]

Canada

Toronto is about to see the largest mixed-use development in its history. The architecture firm behind Salesforce Tower in San Francisco has designed the 4.3 million-square-foot Union Park project in Toronto. Oxford Properties Group recently revealed the initial architectural designs for Union Park by Pelli Clarke Pelli Architects, led by Cesar Pelli, best known for Salesforce Tower and the International Finance Centre in Hong Kong.

France

One of the world’s most beautiful buildings was almost lost. New details regarding the devastating Notre Dame fire reveal major mistakes made during the first hour. A guard who was instructed to check for the fire first went to the wrong building — ultimately wasting up to a half-hour — and didn’t immediately call the fire department. While authorities have yet to determine how the fire started, the wasted time left firefighters with huge disadvantages. A small group was sent directly into the blaze in the attic in a final attempt to save the 850-year-old cathedral. [NYT]

Hong Kong, China

Unrest is driving away local investment. Affluent residents in Hong Kong are looking to international real estate markets as the U.S. trade war and local unrest continue. According to a new report by Savills, the number of inquiries about Hong Kong homes declined in the second quarter, triggering a 1.5 percent drop in the prices of townhouses. “The extradition bill caused some local money to look beyond Hong Kong, with Singapore favored, followed by the UK and Australia,” said Savills’ Simon Smith. [SCMP]

Hong Kong may see its first real estate IPO since 2013. China Merchants Shekou Industrial Zone Holdings is planning an $800 million initial public offering of shares in Hong Kong. China Merchants Shekou would be the first real estate investment trust to go public in Hong Kong since 2013, when Spring REIT raised $216 million in its IPO. [Bloomberg]

Hong Kong’s commercial property market is seeing a dip. Office rents and investment saw a decline in the second quarter, according to CBRE. Amid lagging demand for space, office rents dropped 0.6 percent in the second quarter compared with the first quarter. It marked the first decline since the second quarter of 2014. Q2 volume of commercial property sales fell to $2.7 billion, down 6.2 percent from the first quarter. That was the smallest quarterly transaction volume in three years. [Reuters]

Germany

Housing-strapped Germany is attracting investment from Chinese executives. In Munich, an executive of Huawei bought four apartments for more than $550,000 each, then rented them to other Chinese employees relocating to Huawei’s Munich research center. Despite its economic prowess, Germany has a worsening scarcity of housing in its seven largest cities, which together have one million fewer flats than they need. Last month, Berlin lawmakers passed a five-year rent freeze, hoping to tamp down the growing discontent among residents. [SCMP]

Netherlands

Deutsche Bank is settling bribery claims brought by an affordable housing company. The German financial giant, which is under investigation by two congressional committees and the New York attorney general for its ties to President Trump — agreed to pay 175 million euros ($197 million) to settle bribery allegations by a Dutch provider of public housing. Stichting Vestia claimed that some of its trading in derivatives through Deutsche Bank was “flawed” because the bank paid fees to a middleman who paid bribes to arrange trades on behalf of the Dutch company. [Bloomberg]

Turkey

The country’s economy could shrink this year for the first time in a decade. That contraction could add to interest in U.S. real estate among Turkish investors. The Turkish government has cut its own 2019 economic forecast to 2.3 percent growth amid the growing budget deficit. The country’s last economic contraction on an annual basis was its 4.7 percent decline in 2009. [Reuters]

Australia

The nation’s largest lender is looking to boost the economy. Commonwealth Bank of Australia is the latest of the country’s financial institutions to ease lending standards, according to Reuters. The bank will introduce a floor rate and interest rate buffer in line with government’s regulatory guidelines meant to stabilize home prices. [Reuters]

Palazzo Del Sol

Palazzo Del Sol

The family that owns one of the largest paper manufacturers in Brazil paid $7.3 million for a condo at Palazzo Del Sol on Fisher Island.

Masterpiece Property Holdings Corp., which is tied to Maria De Carvalho Klabin and Roberto Leme Klabin, bought the 3,793-square-foot condo at 7065 Fisher Island for $1,924 per square foot, records show. The development group PDS Development sold the unit.

Dora Puig of Fisher Island Real Estate, LLC represented the buyer and the seller in the transaction, according to RedFin.

The Klabin family controls São Paulo-based Klabin SA, one of Brazil’s largest pulp and paper manufacturers. The company was founded in 1899, according to its website.

The 10-story Palazzo Del Sol has 43 units on ritzy Fisher Island, which is consistently ranked as America’s wealthiest Zip code. The island can only be reached by ferry, boat or helicopter.

Palazzo Del Sol was completed in 2016 as the first condominium project to be built on the island since 2007. The tower was designed by Kobi Karp, with landscaping by Enzo Enea.

Other residents at Palazzo Del Sol include billionaire and former Hasbro CEO Alan Hassenfeld, Yard House founder and CEO Steele Platt, and former Formula One driver Enrique Bernoldi. There are four units that remain unsold, according to a spokesperson for the development.

In December, PDS Development secured a $50 million bridge loan to finance its two luxury Fisher Island condominium projects. The group’s 50-unit Palazzo Della Luna is currently under construction and is expected to be delivered later this year.

From left: Escada at Bal Harbour Shops, Pronovias on Miracle Mile, and The Casper Wake-Up on Lincoln Road.

From left: Escada at Bal Harbour Shops, Pronovias on Miracle Mile, and The Casper Wake-Up on Lincoln Road.

UPDATED, July 19, 4:50 p.m.: Despite retail turmoil across the United States, several new stores have opened or are planned in South Florida.

Aventura Mall
Hope & Henry, founded in 2016 by former Gymboree and Crazy 8 executives Matt and Marina McCauley, opened its first brick-and-mortar store at Aventura Mall. The brand offers organic cotton pieces for infants, toddlers and children, with select pieces available for adults. The store is located on the upper level of the mall.

Calzedonia, founded in Verona, Italy in 1986, offers swimwear and legwear, including hosiery and socks. Calzedonia also features beachwear including kaftans, dresses, tops, bottoms, jumpsuits and accessories. The brand has more than 1,750 shops worldwide. It is located on the upper level of the mall across from Bloomingdale’s.

ECCO opened on the lower level of Aventura Mall. The Danish shoe brand was created in 1963 by dedicated shoemakers. In addition, All Saints reopened on the mall’s lower level, and HUGO by Hugo Boss is set to reopen on the upper level of the mall’s new wing later this summer.

Lincoln Road
Casper, the sleep products company, just opened The Casper Wake-Up at 1114 Lincoln Road in Miami Beach. The store’s products including Casper mattresses, pillows, bedding, furniture and dog beds, which can be carried out or delivered.

Beachwear retailer MC2 Saint Barth, which has more than 34 stores worldwide, is opening a 748-square-foot store at 608 Lincoln Road. Terranova Corp.

President Mindy McIllroy scored the four-year lease with the retailer. The store is expected to open later this year, according to Terranova. MC2 Saint Barth will be located next to Sushi Samba.

Brandy Melville is opening its Florida flagship store at 730 Lincoln Road. The women’s apparel and accessories store has locations throughout Europe and the U.S., as well as in Hong Kong and Calgary, Canada, according to its website.

The 2,500-square-foot Lincoln Road store is under construction, and is expected to open this summer, said Lyle Stern of Koniver Stern Group.

Stern represented the landlord and David Abrams of RKF represented the tenant. 

Wynwood
Aviator Nation, a lifestyle fashion brand, signed a lease at the former Shinola location, at 2399 Northwest Second Avenue in Miami.

The 1,350-square-foot store is expected to open by January, and will mark Aviator Nation’s first location on the East Coast. The brand was created by Paige Mycoskie in Venice, California, in 2006. The store will feature T-shirts, hoodies, sweatpants, tanks, outerwear, hats and more.

Dwntwn Realty Advisors’ Joe Fernandez represented the tenant and David Spitz and Tony Arellano of Dwntwn represented the landlord, JSRE.

The asking rent was $170 per square foot, triple net, according to the brokerage.

Bal Harbour Shops
Escada opened its first concept store in the United States at Bal Harbour Shops.

The German luxury label was launched by Margaretha and Wolfgang Ley in 1978. The new store on Level 2 of Bal Harbour Shops carries the brand’s main line and sport collections, including outerwear, dresses, tailoring, casual wear and accessories.

Coral Gables
Pronovias, the Spanish bridal retailer, opened its first U.S. flagship store at 360 Miracle Mile, Terranova Corp. announced. The store spans 2,758 square feet, according to a spokesperson for Terranova. The brand was founded in Barcelona in 1922.

LaserAway, a medical spa, opened at 263 Miracle Mile. Founded by Dr. Roy S. Winston in Southern California in 2006, LaserAway specializes in laser hair removal, tattoo removal, skin care and anti-aging services. It is occupying 1,780 square feet, the Terranova spokesperson said.

Brickell
Dogtown Brickell, a pet spa, hotel and daycare center, opened on the second floor of Panorama Tower, at 1100 Brickell Bay Drive in Miami. The 85-story apartment building is the tallest residential building south of Manhattan. It was developed last year by Florida East Coast Realty.

With more than 3,300 square feet on the second floor of the tower, the Dogtown Brickell location marks Dogtown’s second location in Miami. The first is at 3210 Grand Avenue. Dogtown’s owners are Anai and Kris Fonte.

Doral
Blos Roses is opening its first shop at 8550 Northwest 53rd Street in Doral, suite B103 on Thursday. The store will be a blowdry and manicure express bar.

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Every year, MetaProp’s Zach Aarons breaks out his crystal ball, likely an app, and makes proptech predictions for the next year — and b e y o n d !

Already, it’s been a big year for proptech: Some $12.9 billion was invested in real estate tech startups, according to research firm CREtech. Having beat out record-breaking 2017, which saw $12.7 billion for the whole year, big tech changes could be coming real estate’s way.

Aarons, the co-founder and partner of the venture capital fund, has a wide and far-reaching vision for proptech from smart contracts to drones to artificial intelligence to space travel. And it might just be the year real estate fully embraces tech.

“Every other industry’s adopted it,” Aarons said. “Why not ours?”

Watch the video above to hear Aaron’s take on how proptech will transform real estate dealmaking and how — and where — developers can build.

4510 Prairie Avenue, Julian Johnston and Mathieu Massa

4510 Prairie Avenue, Julian Johnston and Mathieu Massa

Spec home builder and French restaurateur Mathieu Massa sold a waterfront home in Miami Beach’s Nautilus neighborhood for $7 million.

Massa’s 4528 Prairie LLC sold the six-bedroom, 6,291-square-foot house at 4510 Prairie Avenue, according to a press release. Massa Construction Group built the house, which was designed by Choeff Levy Fischman.

It hit the market in 2017 for nearly $8 million. Julian Johnston of Calibre International Realty represented Massa.

The two-story home features interiors by Dunagan Diverio Design Group; European oak and stone floors; designer lighting and a Lutron control system; an outdoor kitchen and dining area; lounge space and a pool.

The $7 million sale marks a record for waterfront homes on the Biscayne Waterway in Mid-Beach, according to Johnston. He declined to comment on the buyer.

Property records show Massa paid $3 million for the two lots at 4510 and 4528 Prairie Avenue in 2014. He built a spec home on the second lot in 2018, which is on the market for $7.75 million.

He also developed the spec home at 1826 West 23rd Street, which hit the market in 2017 for nearly $18 million.

Massa also owns Mr. Hospitality, which runs Baoli Miami, Marion in Brickell and El Tucan. He’s an heir to a family that founded a large tire company in Europe which eventually sold to Continental Tire of Germany in 2011, according to Massa Investment’s website.

The Real Deal’s 6th annual Miami Showcase & Forum

The Real Deal’s sixth annual Real Estate Showcase & Forum on October 17th at Mana Wynwood is set to draw yet another powerful crowd of influencers in real estate. More than 3,500+ attendees, including financiers, developers and brokers, are expected to gather for this exclusive one-day event that gives businesses a chance to connect with decision-makers who have a direct impact on their company’s growth.

Our previous showcases were sellout successes with speakers such as Richard LeFrak, LeFrak; Edgardo Defortuna, Fortune International; David Martin, Terra; Art Falcone, Falcone Group; Alicia Cervera Lamadrid, Cervera Real Estate; Gil Dezer, Dezer Development; Howard Lorber, Douglas Elliman; Robert Reffkin, Compass; Michael Stern, JDS Development Group; Mauricio Umansky, The Agency; Jules Trump, The Trump Group and many others!

Some of this year’s discussions will focus on Opportunity Zones, affordable housing, condo development, real estate technology and exploring Miami’s neighborhoods.

Douglas Elliman, Fortune International, Citibank, Brown Harris Stevens, Samsung, California Closets, Allure Development and many other brands have already signed up to sponsor the event. For information on sponsorship opportunities contact forum@therealdeal.com

Our schedule of events and list of panelists are being updated daily, so be sure to check out our event page here to get the most up-to-date info! Tickets are available for purchase here.

Barneys at 660 Madison Avenue (Credit: Getty Images)

Barneys at 660 Madison Avenue (Credit: Getty Images)

Barneys, a symbol of New York City luxury fashion, is reportedly weighing a second bankruptcy, after the retailer’s $16 million annual rent jumped to $30 million at its Madison Avenue flagship. The move comes after a city arbitrator decided last year to allow Ben Ashkenazy to nearly double the rent on the 275,000-square-foot flagship store at 660 Madison Avenue. About one-third of Barneys’ revenues comes from that store.

Ben Ashkenazy

Ben Ashkenazy

The company has hired law firm Kirkland & Ellis, consultants MII Partners and investment bank Houlihan Lokey, to consider either bankruptcy, renegotiating leases, or bringing in a strategic advisor, the New York Times reported.

“Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business,” Barneys said in a statement.

Barneys has been planning to open its first flagship store in the Southeast at Bal Harbour Shops in South Florida, which is undergoing a $400 million expansion.

Barneys’ 20-year commercial lease on Madison Avenue, which expired in January, contained a clause that allowed Ashkenazy to raise the rent to fair market value. While Barneys balks at the new sum, things could have been worse. Ashkenazy, who acquired 660 Madison in the previous Barneys bankruptcy, had originally asked for $60 million.

In March, Barneys was reportedly in talks to give up several of its floors in order to cut back on the $30 million in rent. Barneys claimed the story was false.

Peter Marino, the architect behind the Madison Avenue flagship, said that a new tenant is not likely to replace Barneys. “It’s crazy to double the rent; half of Madison Avenue is empty,” he told the Times.

The news comes at a difficult time for brick-and-mortar retail: Lord & Taylor, Calvin Klein and Saks Fifth Avenue have also closed stores. [NYT] — Georgia Kromrei

George Gleason (Credit: iStock)

George Gleason (Credit: iStock)

Bank OZK, one of the country’s most aggressive condo construction lenders, signaled in its most recent earnings report that its real estate lending growth is slowing down.

The bank’s organic loan portfolio increased 11 percent in the second quarter of 2019, year-over-year. That’s after increasing 28.6 percent in the second quarter of 2018, compared to the previous year. The Little Rock-based regional bank said in a conference call with analysts that its future loan growth is expected to slow down due to an increased amount of repayments on its real estate loans.

During the conference call, Bank OZK CEO George Gleason said the bank was surprised by how quickly some of the projects were getting repaid. In the second quarter, the bank reported repayments of $1.54 billion in its real estate lending division, up from $1.1 billion in the first quarter.

Bank OZK reported second quarter net income of $110.5 million, down 3.7 percent from the same period of 2018, partly due to these repayments.

The bank had $18.2 billion in deposits at June 30, a 1.6 percent increase from $17.9 billion at June 30, 2018.

Gleason said on the conference call that the bank is seeing fewer opportunities for construction loans in New York City since there are fewer new projects and competition from banks and debt funds is increasing.

“Lenders in certain markets are very aggressive on price,” Gleason told analysts. “We’ve been clear without exception that we are not going to sacrifice our credit standards.”

With just under $23 billion in assets, Bank OZK is one of the largest and most aggressive condo construction lenders in Miami, Los Angeles and New York City, lending at a time when other banks are pulling back.

The bank reported no major write-offs on its real estate loans in its most recent quarter. In the third quarter of 2018, the bank had to write down two real estate loans it had made about a decade ago which caused its stock to plummet that day by more than 24 percent.

Critics worry Bank OZK is being overly aggressive at a time when condo sales have slowed down in New York and Miami.

The bank’s stock was up 3 percent to $29.57 at 1:30 p.m. on Friday.

Blackstone CEO Stephen Schwarzman (Credit: Getty Images, iStock)

Blackstone CEO Stephen Schwarzman (Credit: Getty Images, iStock)

The ink isn’t dry on Blackstone Group’s $18 billion buy of a U.S. warehouse portfolio, and it’s already negotiating to sell part of it.

The company, which finished its transition into a corporation this month, is drumming up interest from potential buyers for pieces of the GLP Pte portfolio, Bloomberg reported. Prologis is in private discussions to buy one such portfolio, valued at $1 billion.

Blackstone’s $18.7 billion deal for the Singaporean company’s 179 million-square-foot warehouse portfolio is one of the largest industrial real estate deals ever.

Selling non-core or non-strategic pieces of a recently required purchase isn’t uncommon. Blackstone applied the same strategy in 2007 when it sold off parts of its $40 billion acquisition of Equity Office Properties Trust.

On the whole, the warehouse sector has seen little supply, high demand and high prices, with available industrial and logistics real estate rising slightly for the first time in 34 quarters, according to a CBRE report. Demand for warehouse and distribution reached an 18-year high in 2018.

Large owners are optimistic that there will continue to be institutional investment in industrial real estate. As Prologis negotiates for a piece of Blackstone’s new holdings, it’s also in advanced talks to buy another $4 billion portfolio from Black Creek Group which spans 37.6 million square feet.

Colony Capital is weighing the sale of its $5 billion industrial in holdings on the heels of selling another warehouse portfolio for $104.6 million. [Bloomberg] — Georgia Kromrei

Blackstone CEO Stephen A. Schwarzman, the Exchange Lofts apartments at 115 Northeast Third Avenue in Fort Lauderdale

Blackstone CEO Stephen A. Schwarzman, the Exchange Lofts apartments at 115 Northeast Third Avenue in Fort Lauderdale

An affiliate of Blackstone sold the Exchange Lofts apartment complex in downtown Fort Lauderdale for $23.2 million.

Blackstone sold the 87-unit project at 115 Northeast 3 Avenue for $266,666 per unit to Mexico City-based Hasta Capital, records show. The property totals 127,604 square feet.

Walker & Dunlop provided a $15.5 million loan to Hasta Capital to acquire the property, according to records.

In 2015, Blackstone bought the property from Greystar Real Estate Partners for $22.6 million. The original building was built in 1962 and housed the historic Southern Bell Exchange building.

Monthly rents at the complex range from $1,759 to $2,895, according to apartmentfinder.com.

Hasta Capital, led by Mark Hafner, focuses on residential and multifamily assets in Latin America and the U.S. It’s U.S. headquarters is in Lakewood Ranch, Florida, and it has acquired apartments in the Washington, D.C. metro area, Seattle, and Houston, according to its website.

Blackstone is an active buyer of South Florida real estate. A few weeks ago, the private equity firm scooped up three Broward County hotels for $43.2 million. In May, Blackstone paid $208.8 million for a pair of neighboring apartment complexes in Doral.

Here are some real estate events to look out for next week:

Host: Miami Finance Forum
Date: July 23rd
Time: 12 p.m. to 2 p.m.

The Miami Finance Forum is holding a lunch & learn event on Opportunity Zones at The Capital Grille, 444 Brickell Avenue from 12 p.m. to 2 p.m. Come to this event to learn how Opportunity Zones are having an impact on the real estate industry. Joshua Kaplan of Bilzin Sumberg will be the guest speaker at the event.

Host: ULI Southeast Florida/Caribbean
Date: July 25th
Time: 6 p.m. to 8:30 p.m.

ULI Southeast Florida/Caribbean is holding a networking happy hour event at La Estación American Brasserie, 550 Northwest First Avenue from 6 p.m. to 8:30 p.m. Attend to enjoy an evening of drinks and connecting with professionals.

To search for future industry events or browse past ones, click here. And to submit more industry events, please reach out to events@therealdeal.com.

From left: Fredrik Eklund and Stephen Kotler (Credit: Getty Images and Jeff Newton)

From left: Fredrik Eklund and Stephen Kotler (Credit: Getty Images and Jeff Newton)

UPDATED, July 18, 3:16 p.m.: On July 10, Douglas Elliman star broker Fredrik Eklund told his 1.1 million Instagram followers he and his family would be moving from New York City to Los Angeles, where the brokerage has eight offices.

“LA has some of the world’s most exciting new development projects coming,” Eklund boasted in his announcement. Within days, more than 90,000 people had liked the post.

But Eklund’s shift to the West Coast comes at a time when Elliman — a juggernaut in New York City — still trails some of its biggest competitors in sales volume in the L.A. area. It also comes as high-end home sales in L.A. have slowed, a combination of “aspirational prices” — which Elliman itself acknowledged — and ample supply spec homes that have been hitting the market.

In October, the team of Eklund — a star on Bravo’s “Million Dollar Listing New York” — and John Gomes expanded into L.A. At the time, it added four agents on the West Coast and now has 64 agents split between New York, L.A, and Miami.

In New York, the Eklund-Gomes team is a force. It closed $721 million in sales last year in Manhattan, Brooklyn and Queens, making it No. 1 in The Real Deal’s annual broker rankings. As of April 15, it had $291.7 million in listings, good for fourth on another TRD ranking. And Eklund himself is now selling a $52.7 million penthouse in the Tulip Building in New York’s Soho neighborhood, as well as a $35 million unit in the West Village.

For that kind of success on the West Coast, Eklund said he had to dedicate his time.

“To be truly successful in L.A., one of us had to spend a lot more time there setting up,” Eklund said in an email response to questions from TRD. “I’m glad to take that role.”

In the beginning

Elliman opened its first office in L.A. in March 2014, at 9440 Santa Monica Boulevard in Beverly Hills. Led by CEO of Western region, Stephen Kotler, the firm has since grown to eight offices in the county, with a total of 453 agents.

In California, it has 19 offices with 723 agents overall.

The company had a total $1.8 billion in closed sales volume for L.A. County in 2018, according to a spokesperson at the firm. The figure does not include off-market deals. That’s a small fraction of its total sales volume nationwide, which was $28.1 billion last year.

As of July 8, the firm had 171 homes on the market for a combined $1.1 billion spread across L.A., according to an analysis of single-family and townhouse listings on the Multiple Listings Service.

That’s about 57 percent less than Compass, which had 850 listings amounting to $2.7 billion in total volume. Hilton & Hyland and the Agency had $2.6 billion and $1.6 billion, respectively.

Elliman is hoping some of the million dollar man’s magic will help boost that volume: Eklund recently secured listing for an $18 million mansion in Beverly Hills. He’s also vying for a $60 million listing in Beverly Park.

“I’m already very, very busy and I don’t take that for granted,” Eklund said in an e-mail. “I don’t mind being the underdog, in fact I like it. But it’s the new development that will set me apart a bit I think. I’m already working on a couple of the best projects out there.”

Elliman’s biggest names in L.A. are the Altman Brothers, the only team in the city to have their own office.

Josh and Matt Altman, who appear on “Million Dollar Listing Los Angeles,” were also the only Elliman team to crack The Real Deal’s ranking of top brokers this year. They came in eighth place, pulling in $236.1 million off 23.5 deal sides in 2018.

The brothers also ranked as the top team in L.A. during Elliman’s annual awards celebration in, dubbed “The Ellies.” Josh Altman, regarding Eklund’s move to L.A., “happy to have him in our territory.” But he added, “as far as anyone in the business being intimidated, last time I checked sharks are the top of the food chain…”

While Eklund said he plans to “take it slow” in L.A., he ultimately wants to have what he has in New York — a 10,000-square-foot office for his team alone. But, “that takes time and patience,” he wrote. “I have a lot of people to meet and a lot to learn in California.”

Other top teams in L.A. include Pugh Tomasi & Associates, Ernie Carswell and Associates, the Chad Lund Team and Tracy Tutor Team, according to Elliman’s ranking by top gross commission.

Elliman has scored some big listings in recent months. Connie Blankenship is listing the Park Bel Air development site for $150 million. The Altman Brothers are selling a Holmby Hills mansion for $78 million and Stefani Stolper is looking for a buyer for Muhammad Ali’s former Hancock Park estate. That’s on the market for $17 million.

Going vertical

Elliman has made a recent push to expand its new development offerings, to include luxury rentals. “Vertical living is finally happening” in L.A., Eklund wrote in his July 10 Instagram post.

Jim Jacobson heads Douglas Elliman Development Marketing division in L.A, which includes 20 people.

In the fall, the team will begin leasing Astéras Kings, a 25-unit project that’s being built in West Hollywood by developer Astéras. Leasing for the one and two-bedroom units starts at around $5,500.

A rendering of the Astéras Kings development

A rendering of the Astéras Kings development

Jacobson said the division has been partnering with developers on for-sale projects for several years, making it easier to facilitate efforts on rental projects developers may be working.

And in an “adjusting” market, it also presents a way for the firm to protect itself against any decline in sales.

“If we can be successful in high-end rentals, and continue to grow that side of our business and our portfolio, we can weather the storm,” Jacobson said. “Whether that’s rentals on the high-end side, or when the market flips back again and we’re killing it on the for-sale side, we can straddle both lines very easily.”

Moving wealthy Angelenos to high-rises hasn’t exactly been easy, however. In Downtown Los Angeles, there’s a glut of multifamily units that are still on the market, sitting vacant as thousands of units are being built nearby.

Jacobson said some of the biggest challenges in selling high-rise buildings comes with educating the buyer that “this is the new wave of homeownership.” His team is also selective about the projects they partner with, picking developments they know they can sell.

In addition to Asteras, the development team is also selling condos at the West Hollywood Edition, built by Witkoff Group and New Valley Group. New Valley is run by Howard Lorber, chairman of Elliman. In the past, it sold Tower 1 at Greenland Group’s Metropolis project.

A rendering of the 8899 Beverly project

A rendering of the 8899 Beverly project

Eklund’s team will partner with Jacobson’s team to sell Townscape Partners’ under-construction condo project at 8899 Beverly. The upscale complex, designed by Olson Kundig, is slated to have 48 residential units, according to a representative for the project.

Eklund declined to comment on specifics, but had little doubts about its success.
This is the “best new project in L.A,” he said.

Opportunity Zones map and Bridge Investment Group chairman Robert Morse

Opportunity Zones map and Bridge Investment Group chairman Robert Morse

Everyone in real estate may seemingly be talking about Opportunity Zones, but few industry players have started closing on such projects.

That’s what makes Bridge Investment Group’s recent announcement unique. The Salt Lake City-based real estate firm said earlier this month that it has already deployed $509 million into a dozen Opportunity Zone projects in eight metropolitan areas across the country. The list of projects includes multifamily, office and industrial properties.

The Opportunity Zone program itself gives developers and investors the ability to defer and potentially forgo paying capital gains taxes if they buy and hold a property in specially designated locales, many of which are in distressed areas, for at least five years.

Large investors such as Brookfield Asset Management, EJF Capital, RXR Realty and Starwood Capital Group have raised hundreds of millions of dollars to pour into Opportunity Zones, but Bridge is one of the first to actually start buying property and putting shovels in the ground.

Bridge’s chief strategy officer David Coelho

Bridge’s chief strategy officer David Coelho

In a recent interview with the The Real Deal, Bridge’s chief strategy officer David Coelho provided a sneak peek into how the firm is investing in Opportunity Zones and dealing with a bevy of complex regulations surrounding the program.

Avoiding the “tulip craze”

The increased interest in Opportunity Zone sites has created a major problem. In an effort to reap a windfall from thirsty investors, many property owners have drastically raised the prices on properties in such zones. One South Florida developer has compared the phenomenon to the tulip mania of 1637, when the price of tulips in the Netherlands rose exponentially before collapsing.

Bridge, however, has managed to largely avoid the land speculation game. The firm, which has $16 billion in assets under management, focuses on value add opportunities by working with local partners who already have properties under their control in Opportunity Zones. Bridge then invests in those properties, often by doing deals where the underlying real estate was purchased before prices spiked in the aftermath of the Opportunity Zone legislation, which was shoehorned into the Trump administration’s 2017 federal tax overhaul.

“We are not out there actively bidding on Opportunity Zone development sites, we are primarily working with partners that have land under control,” Coelho said. “When we lose the ability to execute in that manner is probably when will stop investing in Opp Zones.”

If they’re not already too expensive, another issue with Opportunity Zones is that many are not yet development ready. This is especially true in New York City, where land prices are already high and if an investor wants to qualify for the program’s tax benefits one must either double the value of the property or have a plan for new development.

“New York is a particularly tough market,” Coelho said. “We get solicited all the time to buy land in the boroughs and that’s just something we are not interested in doing.”

Complications arise

Some developers have stayed away from the Opportunity Zone program in large part due to the thicket of regulations they must navigate to in order to qualify for tax breaks. Bridge’s Coelho said such rules make it difficult to structure deals and deploy capital into Opportunity Zone projects.

With a few exceptions, the rules require investors to deploy capital 31 months after raising it which can often be tough for real estate firms. Developers are used to coping with complications that arise and unforeseen costs that can emerge during the course of a particular project. Sometimes developers must raise more capital or change their plans.

Coelho said he has found that adding new capital is complicated if you want to bring in new Opportunity Zone funds to a project, as investors will then have to wait longer in order to reap the full tax benefits. As a result, Bridge made sure its Opportunity Zone projects were fully entitled and shovel ready before making an investment.

“The inability to fully inject equity capital at future stages means that you have to have your capital plans really planned at the front end,” Coelho said. “These deals have to be more or less packaged and ready to go.”

Bridge has invested in various Opportunity Zone sites around the country, including in Atlanta, Los Angeles, the New York borough of Queens, Sacramento, Salt Lake, the Bay Area in San Francisco, the suburbs of Washington, D.C., and Portland, Oregon.

Coelho said his firm’s Opportunity Zone deals were in places where Bridge would have already invested regardless of any special designation, using the refrain that Opportunity Zones don’t necessarily turn a bad real estate deal into a good one.

“These aren’t pioneering deals by any stretch, they are in established markets,” Coelho said.

Critics of the Opportunity Zone program worry that only wealthy developers are benefiting from its tax breaks and that the money will go toward areas that have already been developed or are gentrifying, such as former hospital site in Chicago home to a $2 billion mixed-use redevelopment project and the $4 billion SoleMia mixed-use project in North Miami.

But Coelho claims that such tax breaks give Bridge and other firms the incentive to do deals and build projects faster. While these areas may already have the attention of developers, supporters believe the advent of Opportunity Zones has helped jumpstart their development efforts.

“The Opportunity Zones initiative gives us a little bit of push to get these deals across the finish line,” Coelho said.

The We Company's Adam Neumann (Credit: Getty Images)

The We Company’s Adam Neumann (Credit: Getty Images)

Adam Neumann has cashed out more than $700 million from the We Company in advance of the company’s initial public offering.

It’s not often that private companies publicize such deals ahead of going public, according to the Wall Street Journal, and Neumann’s is one of the largest known such transactions.

Startup investors generally do not like it when founders cash out before an IPO, as it can raise questions about how confident they are in the company. But sources told the Journal that Neumann’s borrowings against some of the shares he has in the We Company could show that he is still confident about the company’s future.

The We Company, which has been bankrolled by SoftBank’s Vision Fund, was valued at $47 billion at the time of its last investment round. It’s expected to move forward with an IPO late this year or early next year.

Neumann, who co-founded WeWork nine years ago, has cashed out over the years through a mix of debt and stock sales, according to the Journal. The size of his current ownership in the company is unknown, and he’s set up a family office to invest the proceeds.

The We Company’s vice chairman Michael Gross has been spending money as well, recently paying $28 million for a Brentwood tennis court estate, according to Variety.

Other company leaders who have cashed out prior to IPOs include Zynga CEO Mark Pincus, who cashed out more than $109 million, and Groupon co-founder Eric Lefkofsky, who sold more than $300 million worth of stock in the company. [WSJ] – Eddie Small

Related Chairman Steve Ross and Time Warner Center at 25 Columbus Circle (Credit: Getty Images and iStock)

Related Chairman Steve Ross and Time Warner Center at 25 Columbus Circle (Credit: Getty Images and iStock)

There’s a funny footnote to Stephen Ross’ decision to put his Time Warner Center penthouse on the market this week for $75 million. The Related Companies founder and chairman didn’t pay a dollar for it — at least not in the traditional sense.

Sources said the penthouse was a “distribution” from the project’s development team — a partnership between Related and AREA Property Partners, which was founded by the Mack family and Apollo Global Management.

The penthouse at 25 Columbus Circle (Credit: Corcoran)

The penthouse at 25 Columbus Circle (Credit: Corcoran)

By taking a distribution instead of pocketing his share of the cash profits from the project, Ross likely avoided a hefty income tax bill.

“If you take cash profit out of the deal, you have to pay income tax on it,” said one developer, who spoke on the condition of anonymity. “If you take a unit as distribution, it’s a non-taxable event. You don’t have to pay taxes until you sell it.”

It’s a not-uncommon practice among New York City developers, and the savings can be substantial.

The top income tax rate for 2018 is 37 percent, said Pamela Capps, a tax lawyer and partner at Kramer Levin, compared to the top capital-gains rate of 24 percent. “It’s also possible that down the road they could defer the gain further by doing a 1031 exchange,” Capps said. (Ross has said he intends to purchase a condo at Related’s 35 Hudson Yards, the megaproject where Related is also moving its offices.)

At the Time Warner Center, property records show Ross, whose net worth Forbes estimates at $7.7 billion, closed on the condo in December 2006 for $0. A decade later, he transferred ownership of the unit to a corporate entity, 25PH Columbus Circle LLC. No money changed hands then either, records show, but in 2010, Ross obtained a $21 million mortgage from Deutsche Bank.

“My understanding is it is his plan to buy it,” Bruce Warwick, Related’s vice chairman, told the Observer in 2007. At the time, he said he believed Ross would pay $30 million for the pad — the price listed in the condo offering plan. There’s no paper trail for such a transaction, however, and the 2006 deed has “Box I” checked off, indicating there were “Other Unusual Factors Affecting Sale Price.”

There’s a long list of developers who live in their own buildings, including Larry Silverstein at 30 Park Place, Harry Macklowe at 432 Park Avenue, Ziel Feldman at the Marquand and Ian Schrager at 160 Leroy. Financial arrangements vary widely — and it’s not always clear whether a distribution is taken. For some developers who bought in their own buildings at the project’s inception, the profits have been handsome.

The median sales price in Manhattan rose 25 percent between the fourth quarter of 2006 and 2018, according to data from appraisal firm Miller Samuel. In the luxury market, the median sales price rose 88 percent during the same time. For what it’s worth, Ross, who is asking a whopping $9,064 a foot, is seeking a premium of 150 percent from the original $30 million listing price. The 8,274-square-foot pad has five bedrooms, a 42-foot living room and custom wood and marble flooring.

To take a unit as distribution, developers need approval from their limited partners. It’s not always possible to do and if they’re not taking a distribution, developers typically pay a “minimum release price,” which correlates to the value the lender has assigned to each unit, sources said. A handful of insiders may also buy the unit at cost.

Distributions happen more often with units that are most likely to grow significantly in value over several years. “It’s an investment vehicle,” said Ed Mermelstein, an attorney and founder of One and Only Holdings LLC, a real estate advisory firm.

Steve Witkoff, for example, shelled out $48 million in 2016 to buy five sponsor units at his 150 Charles Street, including a penthouse, four-bedroom, three-bedroom, two-bedroom and a studio, according to records. He sold one recently for $33 million.

Larry Silverstein paid $32.6 million for an 80th-floor penthouse at Silverstein Properties’ 30 Park Place in April 2018, records show. And in 2014, JDS Development Group’s Michael Stern paid $16 million for his condo at Walker Tower, which his firm developed with Property Markets Group. In June, Stern listed the pad for $28 million.

Todd Glaser with 125 Via Del Lago in Palm Beach (Credit: Realtor)

Todd Glaser with 125 Via Del Lago in Palm Beach (Credit: Realtor)

Miami Beach developer Todd Michael Glaser sold a gut-renovated Palm Beach estate for $16.1 million, property records show.

Glader’s 125 Via Del Lago LLC sold the eight-bedroom, 9,271-square-foot mansion at 125 Via Del Lago to 125 VDL LLC, which is managed by a Providence, Rhode Island law firm. It’s unclear who the true buyer is. Goldman Sachs provided a $9.72 million loan to the buyer.

Suzanne Frisbie of Premier Estate Properties was the listing agent and brought the buyer, Glaser said. The home first hit the market in October for $22.5 million and most recently was asking $17.9 million.

The non-waterfront property was first built in 1928 and designed by Marion Sims Wyeth on a 36,246-square-foot lot. Glaser redeveloped the interiors and exteriors and landscape architect Harry Nelson designed the landscaping and gardens.

The home includes three fireplaces, two galleries, an elevator, sauna, wine cellar, massage and fitness room, separate guest house, poolside cabana, full house generator and a cooling tower.

Property records show Glaser’s LLC paid $10.95 million for the estate in November 2017.

Glaser has been an active spec home builder, and recently built the 27,000-square-foot mansion at 22 Star Island for Lennar Corp. chairman Stuart Miller, a property that reportedly has a whisper price in the upper $60 million range.

The Miami Beach developer has since shifted his attention to the Palm Beach area.

In October of last year, Glaser and partners Philip Levine, Scott Robins and Jonathan Fryd paid $9 million for the site at 111 Atlantic Avenue in Palm Beach where they are building two luxury spec houses.

Apartment rent growth is slowing in downtown Miami (Credit: iStock)

Apartment rent growth is slowing in downtown Miami (Credit: iStock)

Amid an influx of new high-end apartments in Miami, rent growth is starting to slow down in downtown Miami and South Beach, according to a new report.

The report from Berkadia shows that the average monthly apartment rent in downtown Miami and South Beach rose only 0.8 percent in the second quarter of 2019, year-over-year, to $2,112. That compares to an annual increase of 2.7 percent the previous year.

The slowdown in rent price growth shows that after years of rising prices, rents are starting to stabilize in Miami amid a glut of inventory from new apartments and condos that are being rented out. In West Miami and Doral, monthly rents actually decreased 2.2 percent to $1,850, the report shows.

However, the report indicated that the average occupancy rate for apartments in South Florida remains high, at 96.1 percent.

From June 2018 to June 2019, 4,815 apartments were delivered in South Florida. Since 2014, more than 20,000 Class A apartment units have come to market in Miami, according to a TRD analysis of data from Integra Realty Resources, which creates residential reports for the Miami Downtown Development Authority. In Miami-Dade County, nearly 2,200 leases have been signed on the so-called “shadow rental market” so far this year, up from fewer than 100 shadow rentals in 2014.

Blackstone Group CEO Stephen Schwarzman (Credit: Getty Images)

Blackstone Group CEO Stephen Schwarzman (Credit: Getty Images)

Blackstone Group’s earnings declined over the past three months as distributable earnings from the firm’s real estate segment fell by nearly a quarter from the same time last year.

The firm’s overall net income for the second quarter of the year fell to $305.8 million, or 45 cents per share, a significant decline from the $742 million a year ago, executives announced on the company’s earnings call Thursday morning.

At the same time, distributable earnings rose to $708.9 million, or 57 cents a share, exceeding most analysts’ expectations.

In particular, distributable earnings from the firm’s real estate segment fell by 24 percent year-over-year to $329.3 million, while private equity, hedge fund solutions and credit segments all saw distributable earnings rise significantly.

“The past few months have been a remarkable period for Blackstone characterized by transformation and continued momentum,” Blackstone CEO Stephen Schwarzman said during the call. “In addition to our ongoing business evolution, we’ve completed our corporate conversion, and the market response, as you know, has been quite positive.”

“If we continue to grow as the reference institution in our industry and meaningfully expand our potential investment base through conversion, it’s reasonable to assume that we should close the valuation gap between our firm and other top companies,” Schwarzman added.

It was the company’s last quarter as a partnership. The alternative investment firm completed its conversion to a corporation on July 1.

Blackstone’s conversion to a C corporation, made possible by tax law changes that lowered the highest corporate rate to 21 percent from 35 percent, allows the firm to tap a more diverse pool of investors.

The company spent several weeks after its April announcement on an extensive “roadshow” to introduce or re-introduce itself to investors. “The schedule was exceptionally high quality and included over 100 institutions, more than half of which were new to the alternative sector and Blackstone, and/or were materially restricted previously from owning P2Ps,” Blackstone CFO Michael Chae said on the call.

Thanks to the conversion, Blackstone has now become eligible for inclusion in many market indices such as S&P Total Market, MSCI and CRSP, and expects to be added to those in the fall.

In the questions segment of the earnings call, Blackstone executives shared their views on impacts from broader market issues, such as the impact of the U.S.-China trade war.

“I think the good news for us is that we don’t have that many businesses in the global supply chain, either retailers or big exporters, so the impact there directly to our portfolio is not quite as significant,” COO Jonathan Gray said. “The real question is will it leak more broadly into the economy or markets.”

“So far, the more dovish tone from central banks has outweighed the slowdown from trade,” Gray added, noting that many central banks have either reduced interest rates or signaled an intention to do so in response to the slowdown in trade.

The decline in interest rates made it more challenging for Blackstone to find opportunities to deploy the capital it has raised, especially in infrastructure. “I think the good news for us is that we’re operating at a very large scale,” Gray said. “By playing where the air is thinner, which is really the strength of our infrastructure business, we’ve got a better competitive dynamic.”

The past quarter saw Blackstone make one of the largest industrial real estate deals in history, buying a 179 million-square-foot warehouse portfolio from Singapore’s GLP for $18.7 billion.

Last week, Blackstone halted all improvement works at the 11,000-unit Stuyvesant Town and Peter Cooper Village complexes in New York, saying that it was “in the process of evaluating capital investments” in the properties in light of the state’s new rent laws.

Rendering of 555 Riverhouse with Avra Jain

Rendering of 555 Riverhouse with Avra Jain

When it came to conceptualizing 555 Riverhouse, a new mixed-use project on the Miami River proposed by an Avra Jain-led development team, New York City-based architect Carlos Zapata made several site visits to soak in the maritime activities along the city’s water way.

The result is a design featuring two striking glass-and-steel buildings that resemble cargo ships weighed down by stacks of containers, Zapata told members of Miami’s Urban Development Review Board on Wednesday. “We hope [the design] captures some of the river’s character,” Zapata said. “We wanted it to feel familiar.”

Impressed by Zapata’s concept, the development review board voted 6-0 to grant seven waivers sought by Jain and her partners in order to develop the 2.3-acre property at 555 Northwest South River Drive. The development team sought permission to extend the parking component along the project’s frontage and cover it with an artistic or glass treatment and reduce parking requirements by 30 percent, among other waivers.

In June, Jain told The Real Deal she and a partnership that included tech billionaire Robert Zangrillo paid $5 million for partial ownership of the 555 Riverhouse site. Her partners also include Joe Del Vecchio and Oklahoma City developer Zerby Interests, which is the project’s majority owner. (Zangrillo removed himself from $1 billion Magic City development in Little Haiti after he was among the parents indicted in the Varsity Blues college admissions scandal earlier this year.)

Consisting of three towers of up to 12 stories, 555 Riverhouse would entail 90,000 square feet of office space, 23,000 square feet for other commercial uses, and a condo-hotel with 169 lodging units and 39 residential units that can be rented out by the owners. Amenities include a 600-foot public riverwalk and 146 feet of view corridors. According to Jain, luxury hotel brand Sixty Hotels would run the 555 Riverhouse hotel portion and the condos would be listed in the $1 million to $1.5 million range.

In addition to 555 Riverhouse, the board also granted waivers sought for the first phase of Kenect, a two-tower apartment project by Chicago developer Akara Partners, and a twin tower project proposed by Israel’s Mishorim Development Group, a publicly traded real estate company that made its first real estate play in Miami in 2016.

A rendering of Kenect

A rendering of Kenect

Kenect | Developer: Akara Partners
Kenect, designed by Perkins + Will and Stantec, will be built at the Miami Worldcenter site and features 918 units in two buildings should both phases be completed. The first phase calls for a 39-story tower with 450 residential apartments, most of which will be micro units. The building will encompass 436,258 square feet of floor area with 251 parking spaces. The second phase would be a 39-foot tower with 468 units that are bigger in size from apartments in the first tower, but still average under 1,000 square feet.

A rendering of Mishorim Towers

A rendering of Mishorim Towers

Mishorim Towers | Developer: Mishorim Development Group
Mishorim wants to build twin towers featuring 800 residential units, 120 hotel rooms, 7,100 square feet of commercial space and 264 parking spaces. One tower would measure 63 stories and the second tower would stand at 55 stories. Mishorim paid $18.2 million for the site at 555 Northeast First Street in October 2018. It is currently a parking garage.

Architect Stefan Behling (right) and Senior Director for Apple Retail and Design Chris Braithwaite talk about the Board Room, as part of Apple Carnegie Library in Washington, DC (Credit: Getty Images)

Architect Stefan Behling (right) and Senior Director for Apple Retail and Design Chris Braithwaite talk about the Board Room, as part of Apple Carnegie Library in Washington, DC (Credit: Getty Images)

Millions of people flock to Apple stores every day, and most are familiar with the stores’ signature layout and aesthetic. What’s lesser known, though, is that many of these stores contain a private “boardroom,” complete with carefully curated furniture from some of the world’s top designers.

The boardroom concept was announced by Apple’s former Retail SVP Angela Ahrendts in May 2016. Today, there are about three dozen stores around the world that were either built with a boardroom or remodeled to include one.

Closed to the public, the spaces are mainly used for private events, business meetings and Apple sessions, 9to5mac reports.

The rooms feature a mix of designer pieces and custom furniture. According to 9to5mac, which attempted to catalogue the rooms based on consultations with designers and furniture suppliers, some staples include a set of Maruni’s “Hiroshima” armchairs, as well as a choice of lamps: either the Snoopy Table Lamp in black (Achille Castiglioni), or the Atollo glass by Vico Magistretti.

In keeping with the rooms’ fresh, minimalist appearance, many feature planters with white orchids, and a small selection of vases and accessories.

The boardroom inside Apple’s Upper East Side location, which opened in 2015 in a former U.S. & Mortgage Trust, is the most unique, according to 9to5mac, because it still contains the bank’s original vault. [9to5mac] — Sylvia Varnham O’Regan

Lissette Calderon and a rendering of the project (Credit: Sonya Revell)

Lissette Calderon and a rendering of the project (Credit: Sonya Revell)

Lissette Calderon is firmly planting her flag in Allapattah.

The Miami Urban Design Review Board on Wednesday approved the developer’s second planned apartment project in the neighborhood. The proposed mixed-use development would have 323 apartments and a 336-space parking structure at 1625 Northwest 20th Street.

Known as 16 Allapattah, the 12-story project would also include 13,133 square feet of retail and 6,947 square feet of office.

Calderon’s first planned rental project is nearby, at 1569-1652 Northwest 17th Avenue. In November, Calderon’s TCG Allapattah 17 submitted a permit application for a 13-story, 192-unit apartment building on the site.

For 16 Allapattah, the design review board approved five waivers that include extending the parking structure and covering its facade with an artistic glass or architectural treatment, as well as a 4 percent increase in the building’s floor plate above the eighth story. The project also qualified for a 40 percent parking reduction as a transit-oriented development, because the site is close to the Santa Clara Metrorail Station.

A March 4 letter submitted to the city’s planning and zoning department states Calderon’s TCG Allapattah 16 is under contract to purchase the 1.6 acre site, which has a current market value of $3.9 million, per the Miami-Dade property appraiser.

In previous interviews, Calderon told The Real Deal her goal is to create a rental portfolio in emerging neighborhoods of Miami and other cities. Last September, her company Neology Life paid $61 million for the former River Oaks Tower & Marina at 1951 Northwest South River Drive, marking Calderon’s return to the Miami River where she developed her first condominium projects in the early 2000s.

Neology Life renovated and rebranded the 21-story, 199-unit building into Pier 19 Residences & Marina, also adding a private 10-slip marina, three large cabanas for residents’ use, and creating all new common areas.

Javier Lluch and Glasshaus in the Grove

Javier Lluch and Glasshaus in the Grove

The developers behind Glasshaus in the Grove secured a $13.2 million construction loan to finish building the boutique luxury condo project.

The loan was provided by Boynton Beach-based Trez Forman Capital. It was arranged by David Larson of NKF Capital Markets.

Javier Lluch and Daniel Ribeiro are developing the five-story, 23-unit condo building at 3161 Center Street that is expected to be completed by the beginning of 2020, according to Larson.

Ribeiro is the chairman of G.D8, a Brazilian development and construction firm headquartered in São Paulo. Lluch is the chairman of Miami-based Element Development.

The condo development, known for its minimalist European design, was designed by Coral Gables-based architecture firm Varabyeu Partners.

Units will range from one to three bedrooms with residences ranging from 1,080 square feet to 2,953 total square feet, including balconies and terraces. The amenities also include a zen garden, below ground parking and a rooftop pool. Units start at just under $600,000.

Trez Forman is also the lender for another condo project in Coconut Grove, Arbor Coconut Grove. The lender provided a $21 million loan in March for the 48-unit building that will be located behind CocoWalk.

From left: Colony Capital's Tom Barrack, 8250 Milliken Avenue and Lincoln Property Co.'s David Binswanger (Credit: Getty Images, Google Maps)

From left: Colony Capital’s Tom Barrack, 8250 Milliken Avenue and Lincoln Property Co.’s David Binswanger (Credit: Getty Images, Google Maps)

Colony Capital has sold a massive four-property industrial portfolio in the Inland Empire, the latest indication it is looking to sell its entire industrial holdings.

Colony sold a 745,580-square-foot portfolio in Rancho Cucamonga to Lincoln Property Company for $104.6 million. CBRE, which represented Colony, announced the deal Wednesday.

The buyer, Lincoln Property, recently put a sprawling office campus on the market for sale. Dubbed Campus @ Warner Center, the property is on the market for $215 million.

The announcement came hours after Bloomberg reported that Los Angeles-based Colony was in discussions with Eastdil Secured to market its portfolio of warehouses and last-mile logistics properties for around $5 billion. Brookfield Asset Management could be a potential suitor, according to the report.The four properties in the Inland Empire are fully leased to five tenants, including XT Green, Carpenter Technology., Pinole Valley Trucking, THMX Holdings and ConAgra Foods. The three properties in Rancho Cucamonga are located at 11600 Millennium Court, 8250 Milliken Avenue and 9160 Buffalo Avenue, while the fourth sits at 4850 East Airport Drive in Ontario.

Colony also recently sold a 2.3 million-square-foot industrial portfolio in Dallas to Nuveen Real Estate for $136 million.

If Colony was to sell off all its industrial holdings, the deal in the neighborhood of $5 billion would top the potential Prologis deal that is in the works. Prologis is in advanced talks to purchase Industrial Property Trust from Black Creek Group for $4 billion. That portfolio spans 37.6 million square feet across industrial properties in 21 states.

From left: Ivan Kaufman and Maurice Kaufman with a rendering of Esplanade (Credit: AMAC Holdings and Alt Architect)

From left: Ivan Kaufman and Maurice Kaufman with a rendering of Esplanade (Credit: AMAC Holdings and Alt Architect)

AMAC scored $69.7 million in construction financing for the long-planned Esplanade apartments near North Miami, following years of litigation with a joint venture partner.

New York-based AMAC’s Biscayne Boulevard Property Owner LLC is developing the eight-story, 402-unit multifamily building at 11150 Biscayne Boulevard.

Ocean Bank provided the financing. Holland & Knight’s Elena Otero represented the lender. Ocean Bank’s Federico Tunnermann and Rafael Gonzalez-Jacobo handled the loan.

Esplanade will be the developer’s first project in South Florida. Units are expected to range in size from 682 square feet to 1,425 square feet, Otero said. The project will also include a workforce housing component.

Anillo. Toledo. Lopez, LLC Architecture & Planning designed the apartment building.

AMAC and its partners paid $16.16 million for the vacant, 5.8-acre site in 2015. At the time, companies tied to Hamden, Connecticut-based Belfonti Companies; and Uniondale, New York-based Arbor Realty Trust; as well as AMAC Holdings, a separate entity of Arbor, were the buyers.

But the development failed to get off the ground as the partnership became embroiled in litigation with a dispute over control of the project and fighting over Belfonti’s role.

Belfonti sued AMAC Holdings in 2017, alleging it was improperly cut out of the deal to build the project. At the same time, Belfonti was defending against a lawsuit filed by AMAC the previous year. According to court records, AMAC owned 94 percent interest and Belfonti had a 6 percent stake when the deal closed.

In its lawsuit, Belfonti accused Kaufman and the AMAC affiliates of reneging on a signed agreement that 1st Sun and AH Biscayne would “equally share” management decisions over the project once the Belfonti affiliate acquired another 19 percent by July 2016. Belfonti alleged AMAC refused to sell it more shares to reach the 25 percent threshold.

The separate lawsuit filed by AMAC accused 1st Sun of breach of contract, breach of good faith and breach of fiduciary duty because the Belfonti affiliate had allegedly refused to sign an operating agreement giving AH Biscayne sole authority over management of the project.

Court documents show the litigation was settled in August.

South Florida skyline (Credit: iStock)

South Florida skyline (Credit: iStock)

The changes in federal tax law, which many expected would save the residential market in South Florida, appear to be having less of an impact than originally predicted.

Residential sales in oversaturated markets like Miami Beach and Fort Lauderdale reported drops in the second quarter, following a first quarter that also showed a number of sales declines, according to the newly released Elliman Reports.

“What we have is a very choppy pattern where clearly all the markets aren’t in unison,” said Jonathan Miller of Miller Samuel Inc., who authored the reports. “There are more sales, solid pricing, little or no inventory growth, but it’s choppy.”

While the tax law migration narrative is “still firmly in place,” it seems to be happening at a slower rate, Miller added.

Here’s a look at the breakdown:

Miami Beach and the barrier islands
Sales volume fell in Miami Beach and the barrier islands, which Elliman defines as Sunny Isles Beach, Bal Harbour, Bay Harbor Islands, North Bay Village, Surfside, Key Biscayne and Fisher Island.

Overall, sales dropped to 964, down 6 percent year-over-year. The median sale price was $406,000, a 7.3 percent decline, and there were nearly 20 months of supply, up 6.5 percent.

Condo sales in the beachfront markets of Miami-Dade fell by nearly 6 percent to 861; while single-family home sales also decreased by 6.4 percent to 103 closings. The median sale price of a condo fell nearly 8 percent to $350,000; the median price of a house was $1.7 million, up 12.6 percent compared to the second quarter of last year.

Despite the overall reduction in sales, two beachfront markets reported increases in closings. In Sunny Isles Beach, condo sales jumped 25.7 percent to 191. In Surfside, condo sales were flat but single-family home sales rose by about 18 percent to 13 closings.

Closings fell year-over-year in Fisher Island, Key Biscayne, Miami Beach, North Bay Village, Bay Harbor Islands, and Bal Harbour.

Coastal Miami mainland
Closed residential sales rose on the coastal Miami mainland, up 5.5 percent to 4,422. The median price for residential properties increased by 4.7 percent to $335,000. Elliman’s reports group together Aventura, downtown Miami, Brickell, Coconut Grove, Coral Gables, South Miami, Pinecrest and Palmetto Bay.

There were 2,195 condo sales, an annual increase of about 6.7 percent. The median condo price rose 6.1 percent to $260,000, up from $249,000 the year before. While the active inventory rose by fewer than 300 condos to 3,662, the months of supply fell slightly due to increased sales.

Single-family home sales increased by 4.4 percent to 2,226. The median sales price was $396,000, up 4.2 percent. More sellers listed their single-family homes, as well, and the months of supply decreased slightly due to the sales pace picking up.

Out of the submarkets that Elliman included in the mainland, Coconut Grove had a rough second quarter, with a 38.5 percent drop in condo sales, down to 16, and a 33 percent decline in single-family home sales, down to 14.

Fort Lauderdale
Condo sales tanked in the second quarter, dropping by nearly 25 percent to 605 closings. The median price of condos fell by more than 22 percent to $300,000.

At the same time, single-family home sales rose 15.6 percent to 89 closings. The median price fell slightly, by 2.5 percent, to $385,000.

The sharp decline in condo sales could be due to the fact that Fort Lauderdale condo sales surged a year prior.

Boca Raton and Highland Beach
Condo and single-family home sales increased at a modest pace in Boca Raton and Highland Beach. Nearly 900 condo units sold in the second quarter, up 4.3 percent year-over-year, while 753 houses sold, a 4.4 percent increase. The luxury market performed similarly, the reports show.

The median sale price of condos rose by 4.5 percent to $230,000, and the median price of single-family homes was up 4.4 percent to 753 closings.

Palm Beach
In the town of Palm Beach, condo sales dropped by 8.6 percent to 106 closings, and single-family home sales totaled only 31, down nearly 30 percent. The median condo price was $771,500, up 23.4 percent, and the median single-family home price totaled $5.1 million, down 4.2 percent, year-over-year.

Despite the huge percentage drop in single-family home sales, a handful of large deals recently closed in Palm Beach, including the record-setting $105 million sale of the late Terry Allen Kramer’s estate at 1295 South Ocean Boulevard.

New homes in Florida (Credit: iStock)

New homes in Florida (Credit: iStock)

This has been a rough year for Florida’s housing market.

A new report by BuildFax found that existing home maintenance construction costs in Florida increased 13 percent in June, on a year-over-year basis.

Buildfax’s CEO Holly Tachovsky said via email that natural disasters could have driven up some of the costs in Florida and made it more difficult to find workers. Nationally, she said tariffs on construction materials like steel and lumber are driving up construction prices.

Rising construction costs have become a major challenge for developers and homebuilders. Federal Reserve Chair Jerome Powell even made this point last week and suggested that Trump’s tariff and immigration policies are making homebuilding too expensive.

Nationally, single-family housing permit authorizations decreased by 2.75 percent in June, year-over-year, according to BuildFax. Meanwhile, existing housing maintenance spending decreased by 0.75 percent year-over-year.

The report did not break down specifics by region within Florida. But the construction concerns could be greatly affecting South Florida, where home prices have risen much faster than income levels. With construction costs in South Florida rising, it could make home buying even more expensive.

From left: Lendlease's Denis Hickey and Google CEO Sundar Pichai

From left: Lendlease’s Denis Hickey and Google CEO Sundar Pichai

UPDATED, July 17, 6:36 p.m. Eastern: Google has already found a partner for its most ambitious real estate project yet.

On Wednesday, Google announced that it has tapped Australia-based construction giant Lendlease to co-develop $15 billion worth of master-planned communities in Silicon Valley.

Under the terms of the agreement, Google and Lendlease will redevelop the tech company’s properties in Mountain View, Sunnyvale and San Jose, California, over the next 10 to 15 years. The firms will jointly undertake the master planning and development, which would see mixed-use communities replace office space and empty land. Lendlease is aiming to start work in 2021.

It’s part of a larger housing plan Google announced last month as an answer to the housing crisis it and other tech firms have created in Silicon Valley.

In an interview following the announcement, Lendlease’s CEO Americas Denis Hickey estimated the project will include 15,000 units of condominiums and rentals. The entire development work will see a total of 15 million square feet, not including office space.

Hickey said the Google-Lendlease team has already begun working with local governments on rezoning and master planning. The process, he said, is “well underway.” Lendlease said it was the largest deal in its 61-year history.

The search giant and the contractor are intimately familiar with one another —Lendlease in 2017 was selected to build Google’s $435 million London headquarters, which was designed by Bjarke Ingels and Heatherwick Studios and is expected to be completed in 2021. Lendlease also worked with Google on a discontinued headquarters in Sydney.

A few months ago, the tech giant poached Lendlease’s top real estate executive in San Francisco, Alexa Arena.

Lendlease is the go-to general contractor for luxury high-rise condo towers in New York City, having built Harry Macklowe and CIM Group’s 432 Park Avenue, World Wide Group and Rose Associates’ 252 East 57th Street, Vornado Realty Trust’s 220 Central Park South and Hines’ 53 West 53rd Street.

Back in 2015, the firm launched a development arm, its first New York project being 277 Fifth Avenue as part of a joint venture with the Victor Group.

The Sydney Morning Herald reported that the latest Google deal will increase Lendlease’s global development pipeline to about $70 billion.

Kathryn Brenzel contributed to this report.

Editor’s note: This version includes comments from Lendlease’s Denis Hickey.

David Richter, chief business officer of Lime (Credit: Getty Images; David Richter photo via LinkedIn)

David Richter, chief business officer of Lime (Credit: Getty Images; David Richter photo via LinkedIn)

E-scooters could mean a boost in real estate values in congested U.S. cities.

This is the assertion of David Richter, the chief business officer at e-scooter startup Lime, which has deployed thousands of scooters in cities across the country.

Speaking at a conference hosted by Fortune Tuesday, Richter said that the rise of e-scooters, coupled with an increase in bicycle use and ride-sharing, could drive down traffic from traditional car use.

In turn, urban planners could redesign neighborhoods with fewer parking spaces and less traffic, which could increase the value of real estate, Richter said, according to Fortune. Another panelist, Ken Washington, the chief technology officer of Ford, reportedly said that in San Jose, California, some new developments were being built without parking garages, as city planners focus on decongestion.

The e-scooter craze has drawn significant investment. Lime, which has raised $765 million, is now is available in 100 U.S. cities and 27 international cities. In February, the San Francisco-based startup raised $310 million in a series D funding round that valued the firm at $2.4 billion. That round was led by Bain Capital Ventures, Andreessen Horowitz and Fidelity Ventures.

But not everyone is cheering on the wave of e-scooters. In Los Angeles, a city council advisory board imposed a voluntary ban on Lime and another firm, Bird, from deploying more scooters while it determined regulations around their use. Some residents there complained about the scooters being parked haphazardly or being used on sidewalks. [Fortune] — David Jeans

Jorge Pérez with a rendering of Paraiso Bayviews

Jorge Pérez with a rendering of Paraiso Bayviews

UPDATED, July 17, 4:51 p.m.: Thirteen buyers at the Paraiso Bayviews condo tower in Edgewater are suing the Related Group for false advertising, among other counts, after the developer allegedly delivered units that were smaller than promised.

According to a lawsuit filed in late June in Miami-Dade Circuit Court, the 11 one-bedroom units purchased by the plaintiffs were missing dens that were included in marketing materials for the condos. The building is part of the four-tower Paraiso district development in the bayfront Miami neighborhood.

The plaintiffs, who include Florida companies and investors from Ecuador and Canada, are also alleging that Related delivered units with substantially less square footage than promised, and that the developer failed to notify each plaintiff that it had altered or modified the units prior to closing on their units at 501 Northeast 31st Street.

The Miami Herald first reported the lawsuit.

In a statement to The Real Deal, Carlos Rosso, president of Related’s condo development division, said the units were all delivered as sold.

“Each buyer received all the required documents, inspected their units, and chose to close. Now, nearly a year after closing on their unit purchases, the buyers raise this issue at the apparent prompting of a law firm looking to drum up a dispute,” Rosso said.

Developers often include the exterior of the walls in their square footage descriptions, which is why buyers sometimes file lawsuits. Back in 2015, a buyer at the Miami Beach Edition Residences sued over a nearly 20 percent difference in total square footage of a $12 million penthouse.

“The buyers’ counsel is using one method to measure at the time the buyers signed their purchase contracts and another method to measure at the time the buyers closed on their purchase, and he does so to make it appear that buyers received smaller units than what they purchased. They did not,” according to a spokesperson for Related.

The plaintiffs’ attorney, Steve Silverman, a partner at Kluger, Kaplan, Silverman, Katzen & Levine, told the Miami Herald that many of the buyers at Paraiso Bayviews are foreign buyers, and many closed through agents or without inspections. Silverman said the developer was obligated to provide written notice to the buyers of a material change to the units.

He compared paying for the den-less units to “going to McDonald’s and paying for a Happy Meal but not getting any French fries,” according to the Herald.

“I don’t think there’s any judge or jury who would not agree that not getting a den when you paid for a den is not a material change,” Silverman said, later adding that, “[Related] breached the contract and they are not in the position to challenge any of the conduct of the unit owners who were harmed as a result.”

The buyers said they all purchased units with one bedroom and a den on the 02, 03, 04 and 05 lines, each totaling roughly 750 square feet with dens measuring 9 feet by 5 feet and 7 inches, according to the lawsuit. But they allege they ended up getting 15 to 20 percent less space, and instead of a den, received units with a closet for the air conditioning handler, leaving no space for a sofa, coffee table and television.

Related completed the final piece of the Paraiso development, a half-acre park, less than a week before the plaintiffs filed their lawsuit. The developer began selling units at Paraiso in 2015. The four-tower, 11-acre project was designed by Arquitectonica and has about 1,400 condos within One Paraiso, Gran Paraiso, Paraiso Bay and Paraiso Bayviews, plus seven four-story townhouses.

Buyers at the Paraiso project included former Miami Marlins and currently New York Yankees outfielder Giancarlo Stanton, as well as former Yankees player Alex Rodriguez, tennis champion Arantxa Sánchez Vicario, retired San Antonio Spurs player Manu Ginóbili and DJ/producer David Guetta.

The developer financed construction of Paraiso Bayviews with a $95 million loan from Bank OZK, then called Bank of the Ozarks.

A map of the US with flags from China, Canada and India

A map of the US with flags from China, Canada and India

Foreign investment in residential real estate in the U.S. has taken a tumble.

Foreign buyers purchased $77.9 billion worth of existing U.S. homes between April 2018 and March 2019, a 36 percent decline compared to the $121 billion recorded the previous year, according to a report from the National Association of Realtors released Wednesday.

Buyers from China topped the list, outspending those from other countries for the seventh consecutive year with about $13.4 billion worth of home purchases. That still represented a sharp decline — 56 percent — from the prior year.

Canadians ranked second, spending $8 billion on residential properties last year. About 75 percent of them were the most likely to pay all cash while half of Chinese buyers paid all cash. Buyers from India spent the third most, $6.9 billion. The United Kingdom ranked fourth at $3.8 billion and Mexico was fifth at $2.3 billion.

Within the U.S., 20 percent of foreign investment was spent in Florida, which comes out to about $15.6 billion between the spring of 2018 and 2019. California attracted 12 percent of the nearly $80 billion international buyers spent, or about $9.35 billion. Texas was the third most popular state for foreigners, accounting for 10 percent of such purchases.

While Florida has been known to attract foreign and out-of-state investment due to its favorable tax laws, California is not so friendly. It has the highest state income tax in the country.

Slower economic growth worldwide and a strong dollar have contributed to the pullback, said Lawrence Yun, chief economist at NAR.

“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S,” he said in a statement accompanying the report.

The top five countries reported an annual drop in total sales volume. Chinese investment, especially, could continue to drop. The Chinese government recently cautioned students considering studying in the U.S. — who historically spend billions on homes near their schools — from studying in America. The continuing trade war between the Trump administration and China could also be a contributing factor, experts said.

Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions (Credit: iStock)

Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions (Credit: iStock)

Spurred by low interest rates, consumers are taking out more mortgages, bolstering the profits of banks’ consumer divisions. But forecasted cuts by the Federal Reserve have Wall Street trading down.

Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions, according to the Wall Street Journal. Consumer mortgages originations jumped at each of the banks, as did credit card spending.

This was largely driven by low unemployment, increased wages and the Fed’s low interest rates that have satisfied consumers who are willing to spend more.

But commercial trading business was down. Goldman Sachs, which does not have a significant consumer business, was the only bank to record a lower year-over-year second quarter profit, with a 3 percent drop in trading revenue.

In June the Fed opted to keep interest rates steady, while it considered cutting interest rates further, sparking concerns of an economic slowdown. In addition to unease about further Fed rate cuts, multiple tariff battles with China and Mexico has also unnerved traders, and contributed to the decline in Wall Street revenue.

JPMorgan’s trading revenue fell 6 percent, and its investment banking profits dropped 8 percent. The bank readjusted its net lending profits forecast to $57.5 billion, down from $58 billion for the year.

“The consumer in the United States is doing fine,” JPMorgan CEO James Dimon told analysts, the outlet reported. “The business sentiment is a little bit worse.” [WSJ] — David Jeans

Four Seasons Residences at the Surf Club

Four Seasons Residences at the Surf Club

The co-founder and former CEO of Sack’s, the largest e-commerce cosmetics company in Brazil, paid nearly $10 million for a unit at the Four Seasons Residences at the Surf Club.

Carlos Andre Montenegro and Daniela Martins Montenegro closed on unit 309 in the south tower of the development at 9011 Collins Avenue in Surfside, for $9.95 million, records show. They financed their purchase with a $7.96 million mortgage from UBS.

In 2010, Carlos Montenegro and his partners sold a 70 percent stake in their company, Sack’s, to the luxury goods conglomerate LVMH Moët Hennessy. The deal marked the entrance of Sephora, owned by LVMH, in Brazil, according to a release. Montenegro co-founded Sack’s in 2000. By the time that a majority interest was acquired by LVMH, the e-commerce company carried over 270 brands, including Chanel.

Four Seasons Residences at the Surf Club’s developer, an affiliate of Fort Partners, sold the Surfside unit to the Montenegros. The condo has four bedrooms and about 5,000 square feet of space, high-end finishes and appliances, a laundry room, den and maid’s room.

Ximena Penuela of Surf Club Realty LLC represented the developer, and Fernanda Zomignani of Berkshire Hathaway HomeServices EWM Realty represented the buyer, according to Redfin.
The Four Seasons Residences and Hotel includes a 77-room hotel and two 12-story residential towers, a Le Sirenuse restaurant and a Thomas Keller restaurant. It was completed in 2017.

Owners of units at the project include developers Richard LeFrak and Richard Ruben, former Esquirer publisher Alan Greenberg, former Publix CEO Charles Jenkins Jr., and billionaire real estate and casino tycoon Neil Bluhm.

In January, private equity firm founder Doug Kimmelman paid $35 million for a penthouse, which marked the priciest sale to date at the luxury development.

Last year, Groupon founder Eric Lefkofsky paid $30.7 million for penthouse 7 in the south tower.

Richard Lichter, founder and managing partner of private equity firm Newbury Partners, paid $5.5 million and $7.4 million for two units at the Surf Club.

Brendan Wallace (Photo by Jeff Newton)

Brendan Wallace has been everywhere these days. The co-founder and managing partner of Fifth Wall Ventures — a venture capital fund focused on bridging the gap between real estate and technology — has taken up the cause of reviving the beleaguered retail sector. And while he’s been sounding off in the media about the firm’s efforts to pair mammoth retail REITs with innovative tech and online brands, he’s also attracted the attention of the tabloids, having been romantically linked with more than one Hollywood starlet. But the 38-year-old was all business as he sat down with TRD to discuss his firm’s projects and origins.

Wallace entered the finance world with a job at Goldman Sachs and went on to join the real estate private equity division at Blackstone Group, where he would be connected to Fifth Wall co-founder Brad Greiwe. After breaking away from the firm to launch two startups, Identified and Cabify, Wallace teamed up with Grewei in 2016 to launch Fifth Wall. The Venice-based firm recently closed a $503 million fund, bringing its assets under management close to $1 billion. Its 49 partners on that fund include heavy-hitters like Macerich, Prologis, CBRE and, most recently, Hudson Pacific Properties and Related Cos. In this interview, which has been edited and condensed for clarity, Wallace chats about the future of retail, co-living and working alongside startups he’s invested in on Abbot Kinney.

Age: 38
Hometown: N
ew York City
Lives in: Venice
Family: Single, no kids

Did you always know what you wanted to be when you grew up? I went through Princeton without having a super clear-cut vision of what I wanted my career to look like. I actually worked in domestic banking in real estate at Goldman, which is how I first got my foray into real estate. I naturally gravitated towards it. Real estate is one of these industries that’s so intimate to people’s lives, and I thought that was fascinating.

What went into the decision to launch Fifth Wall? [There] is this odd slingshot effect that’s occurring right now, where the largest owners and developers of real estate in the U.S. and globally are looking to technologies and saying, “What are the synergies we can capture by adopting technology?” However, it’s not quite as simple as solving their pain points because you truly have to understand the mindset of the people that manage these real estate companies and also how they’re operated. Brad [Greiwe] and I had this experience of having worked in and experienced what it’s like to be inside a real estate company.

How did you get big names like CBRE, Macerich to invest in the first fund? It started with a fundamental belief that, if real estate organizations acted in a consortium fashion and collaborated, there were synergies that Fifth Wall and the portfolio companies would realize. That was actually a pretty novel approach. Many of these companies had tried at that point to do corporate venture capital on their own but had been plagued by the stigma associated with it. Fifth Wall was able to come to them with a product that represented the best of corporate venture capital in the sense that we could identify companies that would give them strategic value, but we were also independent.

You followed that $212 million fund with a second $500 million fund, comprising  49 partners from nine different countries. How did that come together? Our funds have always been a mix of strategic and traditional financial Limited Partners [LPs]. We started to see that Fifth Wall, as a venture fund, was realizing network effects. So we saw this opportunity to really build a large consortium — the largest consortium of corporates that have ever invested in a venture fund. The reason they’re doing that is because it’s a better model than operating independently.

We’re constantly hearing, “Retail is dead.” What are your thoughts on that? Retail is not dead — it’s changing. There will never be a 1,500-store retailer that is truly ubiquitous. You will never see a Gap again. There’s an interesting dichotomy in the sense that, yes, there is a bankruptcy that’s happening in the retail industry, but there’s also a lot of life and birth that’s happening in the real estate industry. You will see more 25 to 200-store brands that emerge as consumer choice expands.

Tell me about the retail-focused fund. It’s a consortium-based model where we brought all the largest retail real estate owners together to say, “Can we support this growing ecosystem of new brands and retail concepts that are growing and want to collaborate with large landlords?” That fund invests exclusively in brands that are opening up stores. Heyday and Untuckit [are both] digitally native brands that had been selling directly to consumers online but now have opened stores.

You recently invested in Aurora Solar, a solar software provider. What other types of companies are interesting to you in terms of their investment potential? We’ve started to look beyond the obvious opportunities to see where technologies can be very strategic to real estate owners. You have to build trust with these corporates to find those so-called “adjacent opportunities” to real estate tech. Increasingly, real estate owners are coming to Fifth Wall and asking us to help them unlock the real estate opportunities that are almost derivative opportunities from birth. We’ve seen that with co-working and co-living.

Do you think co-living will be as successful as co-working? The premise of co-living at a business model level is fundamentally the same as co-working. You’re taking an established real estate business model with long-term leases, and you’re consumerizing it. In one sense, it’s a bigger opportunity [than co-working] because everyone needs a roof over their head. In the other sense, it’s a little bit more niche in the sense that not everyone is going to want to live in a shared living space.

Neither you nor your co-founder are from L.A. Why be based in Venice — specifically Abbot Kinney? L.A. is a hub for the entertainment industry, but it’s also a hub for the real estate industry. There’s a number of our real estate partners that are based here, and technology is kind of mixing with all those industries in a unique way. Plus, I think the answer to that question is obvious if you just walk down the street.

Your company has been in the press a lot, but recently, your love life has been fodder for the tabloids. How does that feel? [Wallace was linked to actress Emma Watson earlier this year and was photographed with actress Alexandra Daddario days after TRD‘s interview with Wallace.] I don’t want to comment on that.

Rendering of Singer Island Gateway

Rendering of Singer Island Gateway

The site of a planned waterfront condo development in Singer Island sold for $13 million.

The owners of the site for the 135-unit condo project called Singer Island Gateway, at 2525 Lake Drive and 2429 Lake Drive in Riviera Beach’s Singer Island, sold the 1.84-acre property for $161 per square foot, records show.

The seller is tied to Palm Beach dentist Richard J. Lazzara, who is credited with being an innovator in dental implant procedures.

The buyer is Golden Acres Investment LP, which lists its address in Bahamas.

In 2017, Singer Island Gateway Condo received approvals from Riviera Beach to build a 259,800-square-foot, eight-story condo project and a 16-slip marina, and demolish an old condo building currently located on the property. Despite getting approvals, the $55 million condo project never went vertical.

The older condo building, Singer Island Yacht Club, is still located at the site.

It is unclear whether the new buyer will go forward building Singer Island Gateway or something else.

In recent years, developers have been targeting Singer Island for new oceanfront condominiums.

VistaBlue Singer Island, a 19-story tower with 58 units, at 3730 North Ocean Drive was recently completed by Third Palm Capital.

5000 North Ocean is currently under development by Kolter Group. The 19-story, 48-unit condo project is expected to be completed later this year.

Another condo tower, Amrit Ocean Resort & Residences at 3100 Ocean Drive will consist of an 18-story tower and a 19-story tower named Peace and Happiness with 182 condo units in total.

Disney has a sophisticated system for tracking the data of guests to its theme parks

Disney has a sophisticated system for tracking the data of guests to its theme parks

People’s data is being tracked more closely and in more places than ever before, and it’s no different at the Happiest Place on Earth.
For the last few years, Disney has been gathering reams of data from visitors to Disneyland and Disney World via smartphone apps and its MagicBand wristbands, according to the Los Angeles Times. The company tracks what rides visitors frequent, where they wander in the 85-acre park and what they spend their money on. And it does so at a pretty penny, spending over a billion to enter the data-obsessed world.

What does Mickey Mouse want with all that data? For one, it can help manage crowds. The MagicBand lets visitors reserve spots in line, which Disney said has allowed it to reduce turnstile transaction times by 30 percent and increase park capacity.

It can also inform what attractions are rising or falling in popularity. The data could even inform Disney what films to produce in the future based on the franchises waxing and waning with guests.

Disney’s programs have raised many of the same concerns about privacy that have been raised about data-tracking by tech companies like Facebook and Google. Disney CEO Bob Iger has said that the tracking programs are opt-in.

Disney’s adoption of these methods are part of a wider trend in retail and real estate. Landlords and retailers gather data, mostly from smartphone activity, to discern consumer trends and inform strategies based on those trends.

CBRE and JLL have invested heavily into new technologies to track people in office and retail spaces. CBRE buys geolocation data from companies that gather it from consumers’ mobile phones to provide to retailers.
Some co-working and co-living companies inform programming at their spaces based on visitor and resident data. Earlier this year, WeWork bought data platform Euclid to do just that, raising privacy concerns for the many companies that use the co-working giant’s spaces. [LAT] —Dennis Lynch

Fifth Wall co-founders Brendan Wallace and Brad Greiwe (Credit: Jeff Newton)

Fifth Wall co-founders Brendan Wallace and Brad Greiwe (Credit: Jeff Newton)

UPDATED, July 17, 12:31 p.m.: Venture capital firm Fifth Wall closed on a $503 million fund focused on investments in real estate technology.

Known as Fund II, it is the largest fund launched to date with a focus on real estate technology investment, the firm said Wednesday. In addition to local investors including CBRE, Cushman & Wakefield and Equity Residential, Fifth Wall attracted investors from France, Spain, the United Kingdom, Japan and Singapore.

RELATED STORY: Fifth Wall’s Brendan Wallace on how he got CRE heavyweights onboard for his $500M tech fund

The Los Angeles-based venture capital firm, which was launched in 2016 by Blackstone Group alumni Brad Griewe and Brendan Wallace, now has $1 billion under management. The firm has an ever-growing portfolio of investors, and typically directs investments to startups that can provide a service to its partners.

The firm is among the largest conduits for investment in the real estate tech space and has pooled funding for flexible office startup Industrious, house-flipping company Open Door and analytics firm VTS.

It counts most institutional real estate firms among its investors, including Hines, Hudson Pacific Properties, Lennar, Macerich and Related Companies.

Fifth Wall started raising money for the fund about a year ago, closing it just four months later, Wallace told The Real Deal in an interview. To them, the bigger the fund, the better for prop-tech.

“A lot of the advancement that’s going to occur in that sort of environment is going to be premised on these technologies gaining significant traction,” said Griewe. “The size of the pie increases. New realms of revenue will open up.”

“We can give an individual portfolio company so much access, so many introductions, that there’s no single real estate owner that can represent the kind of distribution that Fifth Wall has,” added Wallace. “And that’s not necessarily because of Fifth Wall — that’s because of the corporate LPs we’ve been able to bring together.”

Its first real estate tech fund, a $212 million raise that included only U.S.-based partners, launched in May 2017. That round included CBRE, Prologis, Hines, Lennar, Host Hotels & Resorts, Equity Residential and Macerich.

Last year, the venture capital firm launched a separate fund to target retail technology, in a round that generated $200 million.

Natalie Hoberman contributed reporting. 

South Florida (Credit: iStock)

South Florida (Credit: iStock)

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

One state’s tax is another state’s treasure (or something like that). However the phrase goes, Florida certainly seems to be reaping the benefits of new laws that are driving companies and residents of New York, California, and other tax-heavy states to seek less costly pastures in the Sunshine State. According to data from the U.S. Census Bureau, Florida received more movers than any other state in 2018, with New York’s mansion tax and new caps on tax deductions mentioned as key drivers of this “tax-odus.” But is this trend the new normal, or just a momentary uptick? Let’s explore in this month’s “South Florida by the numbers.”

10.2 percent and 3.5 percent: Respective increases in Miami-Dade County detached home sales and condo sales in May 2019, according to the Miami Association of Realtors. The association credits Miami’s lifestyle, growing economy, new tax laws and low mortgage rates for fueling recent year-over-year increases. [Point2Homes]

$235,197: Potential savings of New York residents earning $1 million by moving to Florida, according to Miami real estate developer Codina Partners in their “Unhappy New Yorkers” campaign. Income earners of $100,000 would save $24,649 by moving, and $200,000 earners would save $49,509, accordingly. [FloridaDaily]

$10.5 Million: Additional cost for a one-floor, 6,234 square-foot, 87th story New York City condo, versus a three-floor, 11,031 square-foot South Beach penthouse with a 2,000-square-foot terrace and a private pool; illustrating the vast difference in “bang for the buck” enjoyed by Miami luxury homebuyers. [BusinessInsider]

3.9 percent: Cap of New York City’s updated and progressive “mansion tax,” which went into effect this month, and applies to purchases of homes valued at $25 million or more. (3.9 percent of $25 million is $975,000.) [FoxBusiness]

$14,000: Factoring in just inflation and cost of living, (not taxes), the difference in “value” of hypothetical $100,000 annual salary in Miami versus Manhattan, according to this columnist. (Who also points out that private sector pensions and 401(k) plans are taxable in New York, adding thousands on top of those living costs.) [TheHill]

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.

Peter DiCorpo and Nathalie Rader

Peter DiCorpo and Nathalie Rader

The Allen Morris Company named Peter DiCorpo chief operating officer of the Coral Gables-based firm.

DiCorpo was previously COO of Waypoint Residential, where he managed corporate and property operations focused on rental housing, and expanded the property management division to include student housing. He was also previously president of CBRE Global Investors’ U.S. core investment platform.

The Allen Morris Company also hired Loaidyn Bolado as human resources manager.

Nathalie Rader was named general manager of The Ritz-Carlton Residences, Sunny Isles Beach, according to an announcement from joint developers Fortune International Group and Château Group. The 52-story luxury condo tower, which will include a spa, kids club, private club on the 33rd floor, a beach restaurant and more, will be completed at the end of the summer. Rader was previously general manager of The Ritz-Carlton Residences, Chicago.

Engel & Völkers tapped Cheryl Bosa to lead its sports and entertainment division in Fort Lauderdale. Bosa was an agent with Berkshire Hathaway HomeServices Florida Realty.

Karen Weller is now chief financial officer of the multifamily development team at Housing Trust Group as the company expands nationally. Housing Trust Group, led by President and CEO Matthew A. Rieger, has developed more than 7,000 affordable and market-rate units in Florida, and more than 2,000 units are in the pipeline. Weller was previously vice president of accounting for the Related Group.

The Hopkins Team, led by Dondi Hopkins, traded Coldwell Banker for Compass. The 22-agent team brought 36 listings to Compass, and will focus on west Broward County. Since the team was founded in 2006, it has closed sales totaling more than $100 million, according to a release.

Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider

Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider

UPDATE, Wednesday July 17, 6:35 p.m.: Compass is no newcomer to courtroom drama.

Since 2014, the SoftBank-backed brokerage has been slapped by 10 separate lawsuits accusing the company of engaging in aggressive tactics to expand in new markets that range from outright law-breaking to unethical behavior.

In the explosive lawsuit filed last week, Realogy accused the $4.4 billion brokerage of using “unfair business practices and illegal schemes” to gain market share and beat out its competitors before colluding to raise prices.

Within the complaint, Realogy underscored the “overwhelming number of lawsuits that have been filed by competitors across the country, all alleging similar patterns of misconduct.”

The Real Deal examined Compass’ legal track record and reached out to antitrust experts, as well as state and federal agencies that enforce anti-competitive behavior, to understand the potential fallout — and pitfalls — of Realogy’s suit.

A laundry list of litigation
Realogy’s suit is the 10th in the past five years — and the third time the national holding company, which owns and franchises traditional real estate brokerages, has initiated litigation against Compass. Here’s how the other nine suits turned out:

1 Avi Dorfman (2014)
Tech entrepreneur Avi Dorfman sued Urban Compass (as it was then known) and Reffkin for building a business using his proprietary software, and then reneging on an agreement to offer him a stake and job at Compass and buy his startup. The suit is ongoing.

2 Citi Habitats (2014)
Citi Habitats, a subsidiary of Realogy, sued Compass for allegedly hacking into its proprietary listing database at least 25 times. A judge granted a temporary restraining order to prevent Compass from entering the database. The case ultimately settled in 2015.

3 The Corcoran Group (2015)
Corcoran, which is also owned by Realogy, sued Compass (and former agents and managers) for “brazenly and intentionally” raiding the firm’s key offices on the heels of the tech brokerage hiring away more than 50 agents. The dispute was settled later that year.

4 Brown Harris Stevens (2015)
BHS sued its former Hamptons manager Ed Reale and Compass. Reale was sued for violating his non-compete agreement for the country of Suffolk, while Compass was sued for hiring Reale in spite of allegedly knowing the terms of his agreement with BHS. The matter settled in 2016.

5 Saunders & Associates (2015)
Andrew Saunders’ eponymous firm sued Compass and former vice president agent Meg Salem, alleging she stole proprietary data and joined the rival firm in a breach of contract. Days after the suit was filed, Compass booted Salem and Saunders eventually dropped charges against Compass. But in May 2016, Compass filed a third-party complaint claiming Saunders was using former agents and staffers to “blunt” Compass’ success in the Hamptons.

6 Douglas Elliman (2016)
The Howard Lorber-led firm sued Compass and then-president, now-chief evangelist Leonard Steinberg, alleging an “unlawful scheme” to poach brokers and strong arm their way into Elliman’s exclusive contracts. The case settled in 2018.

7 Zephyr Real Estate (2018)
Zephyr was granted a restraining order against Compass after it alleged Compass tried to recruit its managers as the two companies were in talks for Compass to acquire the San Francisco-based brokerage, which claims to have more than 300 agents and generate more than $2 billion in annual sales.

8 Modern Spaces (2018)
Eric Benaim’s Long Island City brokerage accused Compass of stealing trade secrets (and photos). The case was disposed later that year and spokesperson for the company said it was settled in 2019.

9 Zillow (2019)
The Seattle-based listings giant filed two lawsuits against Compass in April 2019, alleging the brokerage poached three technology executives who took confidential company data with them when they left. The suits were settled July 11, the same day the Realogy suit was filed.

“Seriously misguided?”

George Hay, a former director in the U.S. Department of Justice’s Antitrust Division, called Realogy’s complaint “just allegations” at this stage.

“Allegations are not that hard to make,” Hay, now a law professor at Cornell, told TRD. The “real underlying facts” will only come out if the case moves to discovery, he said. In the 10 cases filed against Compass and surveyed by The Real Deal, only two (Dorfman and Saunders’ cases) have gone to discovery, so it’s unlikely it reaches that stage.

Realogy says the documented history of allegations makes clear that Compass is competing “unfairly” by encouraging recruits to violate employment agreements or inciting theft.

That history doesn’t bother Eleanor Fox, an antitrust expert and professor at New York University School of Law. She said that a lengthy track record does not infer wrongdoing. (She also noted that one violation is all it takes to make a case legally viable.)

But Harry First, the former chief of the antitrust bureau of the New York Attorney General’s Office, said the string of disputes raises a red flag.

“The fact is there’s a lot of lawsuits and I’m not sure what to make of it,” he said. “Something weird is going on.”

First, who is also the co-director of NYU law school’s antitrust program, also said that accusations related to poaching could present a problem for Realogy and other brokerages.

“I would be afraid that what would be uncovered would be some underlying agreement not to poach,” he said. If an agreement not to hire among companies was uncovered, “that would be a legal problem,” he explained because “no poaching is illegal.”

In 2011, a class-action lawsuit was filed on behalf of about 64,000 employees against Silicon Valley’s biggest companies, including Google, Apple, Adobe and two subsidiaries of Disney, for an illegal no-poaching scheme that operated between 2005 and 2009. The suit sought billions in damages for lost wages due to the anti-competitive agreement. Ultimately, it resulted in a $415 million settlement amongst the companies, who now routinely pick up their opponents’ best talent with massive compensation packages. (It should be noted that the tech workers received about $5,800 apiece; attorneys received $41 million.)

Realogy argues in its complaint that its VC war chest allows Compass “make up for the losses it has incurred by grossly overpaying-and thus poaching-its competitors’ employees and independent real estate agents.”

The complaint goes on to say that Realogy believes that this “illicit growth strategy” is premised on getting competitors’ employees to breach employment agreements and share, or steal, proprietary information.

But the allegation that a company using funds from external investors to pay employees more money is illegitimate could open them up to questioning, or pique the interest of enforcement agencies to investigate what constitutes “inflated” compensation packages, according to NYU’s First.

Realogy could be “blindly tripping into an area that is of intense interest to prosecutors today,” he said. “They may all be seriously misguided in taking this on.”

Hazy enforcement

One of the key allegations underpinning Realogy’s complaint is that Compass is seeking to gain market share with the intent of then colluding to “raise its commission splits and fees and/or otherwise restrain trade.”

Realogy alleges that Compass CEO Robert Reffkin personally solicited participation in a price-fixing scheme “where the two companies would agree to
limit agent compensation and ‘compete on brand,’ but not on price.” Realogy also said that Reffkin has similarly solicited other companies to join similar agreements.

The authorities that investigate and penalize violations of antitrust laws, such as price-fixing, include the Department of Justice, the Federal Trade Commission and state-level agencies and Attorney Generals — in New York, that means the AG’s antitrust bureau.

There’s no question price-fixing, if proven, is a serious charge. But there’s a legal dispute around the attempt to fix prices, according to First. Some lawyers say that the claim that even if there is true evidence that Reffkin really did suggest fixing wages and other terms of employment, it doesn’t constitute breaking the law.

“If the competitor did not agree, it’s not price fixing,” Hay wrote in an email. “It may be evidence of bad motive but standing alone [sic] not a violation of a federal statute.” (Realogy claimed they declined Reffkin’s alleged offer.)

But the FTC could bring a case that requires Compass to “cease and desist from making these kinds of offers,” said First.

No agency has announced any investigation or enforcement action taken against Compass to date.

Both Realogy and Compass declined to elaborate on their respective legal strategies.

Correction: The status of Modern Spaces’ case against Compass was clarified; the case was disposed in 2018 and settled in 2019. The story was also updated to reflect that Dorfman’s case has gone into discovery.

New York City apartment building (Credit: iStock)

New York City apartment building (Credit: iStock)

Here’s a case for New York state’s recently-passed and highly controversial sweeping rent reform law: A new report shows that Manhattanites pay the highest prices for monthly rent in the U.S.

The average monthly rent of a Manhattan apartment totaled $4,190 in June, nearly $500 more than the next highest city, San Francisco, according to a new report from RentCafe. Boston was third at $3,509.

While the Manhattan prices were far and above the priciest, they were actually down ever so slightly — 0.1 percent — from the beginning of the year. It marked the only dip of any of the large cities RentCafe analyzed.

Overall, the U.S. average rent increased by 3.2 percent, to $1,465 in June. The reason: Rent is rising across the country as more people are choosing to rent instead of buy, according to RentCafe.

Los Angeles had the seventh highest rent at $2,508, a rise of 2.2 percent since January 2019. In Chicago, rents jumped to $1,990, an increase of 4.8 percent from the beginning of the year and in Miami, it stood at $1,713. Market pros expect that rent prices for new construction units in Miami will soon fall, amid a glut of supply of condos being rented on the so-called “shadow rental” market.

New York’s historically sky-high rent prices led to statewide legislation passed last month, which eliminated vacancy bonuses that allowed for up to 20 percent rent hikes when a tenant vacated an apartment.

Real estate lobbyists and developers argued that the law would cause developers to stop building new housing in New York City. This week, a company affiliated with J. Wasser & Company and Martin Templer said the new rent laws have made closing on two Bronx apartment buildings impossible and filed a lawsuit to try to back out of the contract.

What was the most affordable place to live, according to RenCafe? Wichita, Kansas, took the title. In June, average rent was $656 a month.

Fritz Kundrun and 4481 Garden Point Trail (Credit: Realtor)

Fritz Kundrun and 4481 Garden Point Trail (Credit: Realtor)

The retired CEO of one of the largest IHOP franchise groups came to Wellington hungry and can leave happy, now that he’s sold his 27-acre equestrian estate.

Property records show Martin B. and Marcy L. Freedman sold the property at 4425, 4481 and 4545 Garden Point Trail, plus 4414 and 4428 Palm Breeze Trail, for $11 million. The buyer is Palm Breeze Point LLC as trustee of the Palm Breeze Point Trust, and lists the address of Fritz and Claudine Kundrun.

Fritz Kundrun was CEO of American Metals & Coal International, also known as AMCI. The steel, coal and energy company has investments around the world, including mining operations in Australia, Africa and North and South America, according to its website.

Martin Freedman was CEO of IHOP franchise group FMS Management Systems, which in 2007 was acquired by Sunshine Restaurant Partners. At that time, FMS owned, operated and sub-franchised 148 IHOP restaurants in Florida and in parts of Georgia.

The Freedmans spent a combined $1.165 million assembling their Wellington property in 2000, records show. It was last on the market with David Welles of Equestrian Sotheby’s International Realty for $12 million. Tim Childers with Florida Professional R.E. represented the buyer, according to Realtor.com.

The property includes 11 oversized paddocks, a 5-acre sand exercise track, a grass jump field, pond and round pen, a 10-stall barn, a main house with four bedrooms and five bathrooms, and a separate two-bedroom, two-bathroom guest house.

It also features a four-car garage, equipment storage building, a reverse osmosis water system, and a propane-powered generator, according to the listing.

Wellington is known as the winter equestrian capital of the world. A trust linked to billionaire Bill Gates recently paid $21 million for an equestrian estate in a gated Wellington community, near his Evergate Stables property.

Paul Flanigan and an aerial photo of the site in Fort Lauderdale

Paul Flanigan and an aerial photo of the site in Fort Lauderdale

The Flanigan family that owns the seafood restaurant Quarterdeck paid $5 million to become its own landlord.

A company managed Quarterdeck partner James Flanigan bought two buildings totaling 10,000 square feet at 1035 and 1039 Southeast 17th Street in Fort Lauderdale, according to property records. One of the buildings includes a Quarterdeck and the other is a new cocktail bar called Whiskey Neat. The property includes a courtyard that connects the two buildings.

Quarterdeck is a seafood restaurant in Florida led by Paul Flanigan, part of the same family that started Flanigan’s Seafood Bar & Grill.

A company tied to long-time developer Charles Ladd Jr. of Barron Real Estate and Laurence Brokaw sold the property. The group purchased the property in 2014 for $645,000, records show and then built the buildings.

Whiskey Neat has over 200 whiskeys stocked and features 11 craft cocktails, according to a recent Sun Sentinel article.

In December, Fort Lauderdale developer Steven Hudson and Ladd completed the purchase of an assemblage in Fort Lauderdale between Federal Highway and Northeast Seventh Street with plans to bring a mixed-use project with an iPic movie theater.

The developer is planning 150,00 square feet of retail and office space and 180 luxury apartments on the site. Ladd founded Barron Real Estate in 1991 and brought a Fresh Market to Flagler Village.

Honest Buildings CEO Riggs Kubiak and Procore CEO Tooey Courtemanche (Credit: Techstars and Procore)

Honest Buildings CEO Riggs Kubiak and Procore CEO Tooey Courtemanche (Credit: Techstars and Procore)

UPDATED, July 16, 1:50 p.m.: Construction management software company Procore has acquired Honest Buildings, a startup favored among institutional developers, the companies said Tuesday.

The acquisition signals confidence in the growing construction tech sector, where major real estate players are putting their capital. Last year, investment in construction tech companies totaled $6.1 billion, almost double what was invested in 2017 and a stark rise from the $350 million invested in 2016. Already, 2019 is on track for another year of record investment with over $4 billion so far.

Procore, which last year raised $75 million in a round led by Japanese conglomerate Tiger Global Management, sells an app used by developers to track a construction project’s progress.

In a statement, Procore’s chief executive and co-founder Tooey Courtemanche said Honest Buildings’ product — an online platform that uses data to allow developers to oversee projects — will be integrated into the Procore platform to provide transparency and accessibility of information to builders.

The firms would not disclose the acquisition price.

Courtemanche launched Procore in 2002 and has over 1,000 employees. It is now valued over $3 billion and has offices in multiple countries.

Honest Buildings, for its part, has drawn big checks from some of the real estate industry’s largest figures since it launched in 2012. The firm, led by Riggs Kubiak, has raised $47 million, in rounds that included the Durst Organization, Brookfield Asset Management and Oxford Properties. In turn, the firm counts those companies as customers.

Return to this page for updates.

Correction: This story has been updated to reflect that it was Tiger Global Management which led the $75 million funding round, not SoftBank.

(Credit: iStock, Oceana Bal Harbour)

(Credit: iStock, Oceana Bal Harbour)

UPDATED, July 16, 4:10 p.m.: A South Carolina newspaper family’s trust paid $7.1 million for a condo at Oceana Bal Harbour.

The Mary Peace Sterling Family Trust bought the 3,992-square-foot unit at 10203 Collins Avenue for $1,778 per square foot, records show. The development group Consultatio Bal Harbour sold the unit.

Cory Waldman of Coldwell Banker Residential Real Estate’s Aventura office represented the buyer.

Unit 1401N has three bedrooms and four bathrooms.

In 1919, the Peace family bought the Greenville News, the largest paper for Greenville, South Carolina. The family also formed Greenville’s first radio station and TV station. The family eventually sold their media empire to Gannett in 1995 for $1.7 billion. The city’s performing arts center also bears the family name.

Oceana Bal Harbour has 240 units and an estimated sellout of $1.3 billion. The luxury condo development was built in late 2016. It was designed by Arquitectonica, and features large sculptures by Jeff Koons, which Consultatio developer Eduardo Costantini purchased for $14 million. Piero Lissoni designed the interiors.

The 5.5-acre site was formerly known as the Bal Harbour Beach Club before Consultatio USA purchased it in 2012 for $220 million. A year later, the developer secured a $332 million construction loan for the project from a group of lenders led by HSBC.

In March, a company controlled by Tatiana Panchenkova, the ex-wife of Russian oligarch and real estate tycoon Shalva Chigirinsky, sold a condo at Oceana Bal Harbour for $5.4 million.

Southern Palm Crossing with Blackstone president Jon Gray and InvenTrust Properties CEO Thomas P. McGuinness

Southern Palm Crossing with Blackstone president Jon Gray and InvenTrust Properties CEO Thomas P. McGuinness

UPDATED, July 16, 5 p.m.: The Blackstone Group sold a Costco-anchored shopping center in Royal Palm Beach for nearly $97 million, property records show.

InvenTrust Properties Corp. affiliate IVT Southern Royal Palm Beach 1031 LLC paid $96.75 million for Southern Palm Crossing. The 346,200-square-foot retail plaza at 11001 Southern Boulevard was built in 2006.

Blackstone paid $78.5 million for the 50-acre property in 2016.

Other tenants include Marshalls, HomeGoods, 24 Hour Fitness, SteinMart, Carrabba’s Italian Grill, Outback Steakhouse and Massage Envy.

CBRE Dennis Carson and Casey Rosen represented Blackstone in the sale.

Downers Grove, Illinois-based InvenTrust Properties, a retail real estate investment trust, focuses on acquiring open-air, grocery-anchored shopping centers. The firm owns and manages 73 retail properties with 12.3 million square feet of retail space, including two shopping centers in Pembroke Pines and one in Palm Beach Gardens.

With the Royal Palm Beach purchase, the REIT has now acquired more than $280 million of grocery-anchored centers so far this year. InvenTrust also recently paid $36 million for a Whole Foods-anchored retail center in a Dallas suburb for $36 million, according to a release.

Earlier this month, Blackstone made a splash in Broward County with the purchase of three hotels in Miramar and in Plantation for more than $43 million.

George Michael and Fadi Fawaz (Credit: Getty Images)

George Michael and Fadi Fawaz (Credit: Getty Images)

George Michael’s ex- Fadi Fawaz has smashed up the windows of the late singer’s home in London in a supposed attempt to renovate the property.

The 46-year-old has been living in the home, valued at $6.2 million, since finding the singer dead from heart disease in 2016, according to the London Free Press. He has ignored legal letters from Michael’s family and maintains that Michael gave him permission to live in the home before he died.

Fadi has claimed the damage done to the windows was part of a home improvement plan, but a nearby worker said he smashed them in a burst of anger.

Michael’s family is concerned the whole house will end up getting destroyed. [London Free Press] – Eddie Small

Miami condo sales rose in mid-July.

A total of 115 condos sold for $44.5 million in Miami-Dade County, up from 99 closings for $38.5 million the previous week. Condos last week sold for an average price of about $387,000 or $298 per square foot.

The priciest closing was at Bellini in Bal Harbour. Unit 1802 sold for $2.6 million, or $680 per square foot. The four-bedroom, 3,820-square-foot condo was listed with Steven Landau, who also represented the buyer.

The second most expensive condo sale was at the Santa Maria in Brickell. Unit 803 closed for $1.65 million, or $757 per square foot, after 153 days on the market. Isabel Stanzione was the listing agent and Robbie Bell was the buyer’s agent.

Here’s a breakdown of the top 10 sales from July 7 to July 13. Click on the map for more information:

Most expensive
Bellini #1802 | 559 days on market | $2.6M | $680 psf | Listing agent: Steven Landau | Buyer’s agent: Steven Landau
Least expensive
Icon Brickell #3201 | 35 days on market | $1.05M | $514 psf | Listing agent: Elena Bluntzer | Buyer’s agent: Patricia Montalvan
Most days on market
Bellini #1802 | 559 days on market | $2.6M | $680 psf | Listing agent: Steven Landau | Buyer’s agent: Steven Landau
Fewest days on market
Icon Brickell #3201 | 35 days on market | $1.05M | $514 psf | Listing agent: Elena Bluntzer | Buyer’s agent: Patricia Montalvan

HKS Capital Partners principal Ayush Kapahi and Bain Capital managing director Jeff Robinson (Credit: LinkedIn and Bain Capital)

HKS Capital Partners principal Ayush Kapahi and Bain Capital managing director Jeff Robinson (Credit: LinkedIn and Bain Capital)

UPDATED, July 16, 9:17 a.m.: Bain Capital, which is raising a new $3 billion debt fund, is teaming up with Manhattan-based SKW Funding to target $500 million in troubled real estate debt.

The new partnership will target distressed and non-performing loans across the country with a focus on the greater New York City area, SKW Funding principal Ayush Kapahi told The Real Deal.

“In this environment, it’s just faulty business plans,” that will drive acquisitions, Kapahi said, citing asset classes such as retail or high-end condos that are facing oversupply.

Recent changes to New York state’s rent-stabilization laws could also create opportunities, he added.

This is the first distressed debt joint venture for SKW. Kapahi co-founded the company in 2014 with Jerry Swartz, one of his partners at the commercial brokerage HKS Advisors and the Wrublin family’s Dalan Management. The Bain-SKW joint venture recently closed its first acquisition: a $27 million portfolio of four non-performing notes backed by a 652-unit multifamily portfolio in San Antonio, Texas.

Bain Capital, meanwhile, is reportedly raising a $3 billion special-situations fund. It closed a $3.1 billion fund in 2016.

Jeff Robinson, head of Bain’s global distressed and special situations group, said that one-off borrower-driven distressed situations and “signs of late-cycle lender fatigue” indicate there will be more opportunities to acquire non-performing loans.

And while it may appear to be a prime time for distressed acquisitions, investors have been hesitant to put their money into new vehicles.

Fundraising for distressed-debt funds totaled just $2.5 billion for the year as of late May, according to Preqin. That’s on track to fall short of the $23 billion raised last year, and far below the record $45 billion raised at the height of the last distressed-debt fundraising cycle in 2008.

Tom Carr, head of Preqins’ private debt group, said one reason for the lackluster fundraising could be that investors see other sectors like direct lending could offer better opportunities.

“But it may also be simply a case of capital buildup,” he noted when Preqin released its report in May.

Churchill Real Estate was reportedly raising a $200 million distressed funding targeting New York real estate earlier this year.

Since 2013, assets held by distressed funds grew by 19 percent, but dry powder targeting those kinds of investments swelled by 82 percent.

“Investors may be waiting for managers to put some of their $87 billion in dry powder to work before committing further capital,” he said.

Correction: A previous version of this article called the $500 million in distressed debt that Bain Capital and SKW are targeting a fund. It is a joint venture. Separately, Bain is raising a $3 billion fund, not $3.5 billion.

Verzasca Group president & co-founder Darius Kasparaitis and Le Jardin Residences

Verzasca Group president & co-founder Darius Kasparaitis and Le Jardin Residences

 

Verzasca Group’s Le Jardin Residences boutique condo project in Bay Harbor Islands is nearly complete with the majority of units presold.

Yet, in an unusual move, the project filed for Chapter 11 bankruptcy reorganization in a U.S. Bankruptcy Court last week. By reorganizing, the project’s developer hopes to close on the units as part of a complicated legal maneuver.

Verzasca Group is developing the seven-story, 30-unit Le Jardin at 1150 and 1160 102nd Street.

The development group’s bankruptcy filing is tied to a lawsuit filed in Miami-Dade Circuit Court in 2017 alleging that the group owes money on an EB-5 loan. EB-5 is a federal program that allows foreign investors the opportunity to receive a green card in exchange for an investment of at least $500,000 in an American enterprise that creates at least 10 jobs.

The manager of the EB-5 lender, La Jardin Residences Lender, led by Alexey Burya, had filed a Lis Pendens against the property. A Lis Pendens is the notice of lawsuit that claims ownership in real estate. A Lis Pendens can sometimes make it more difficult for the seller to close on a deal.

Victor Kalman Rones, an attorney for the EB-5 lender, declined comment.

By filing for bankruptcy, Xavier A. Franco of Coral Gables-based McArdle, Perez & Franco, who represents two affiliates of Verzcaza Group, said the development group can expedite closings free of disputed claims and “fully and completely satisfy all of its allowed, legitimate creditors.”

But in an unusual twist, the project is actually not insolvent. It has $27.5 million in assets and only $7.1 million in liabilities, including a $5.9 million loan on the property, according to its bankruptcy filing.

Court documents also show that 18 out of the 30 units have already presold. Franco said the project has also received a temporary certificate of occupancy.

The South Florida Business Journal first reported the news about the bankruptcy filing.

Hamid Moghadam of Prologis and Dwight Merriman of Black Creek Group (Credit: iStock, Prologis and Black Creek Group via Twitter)

Hamid Moghadam of Prologis and Dwight Merriman of Black Creek Group (Credit: iStock, Prologis and Black Creek Group via Twitter)

Prologis is in advanced talks to acquire a $4 billion warehouse portfolio, a month after getting outbid by Blackstone in a far larger industrial deal.

Investors are increasingly drawn to warehouse properties, which attract major e-commerce firms, and are typically shielded from drastic market swings. In the fourth quarter of 2018, warehouse vacancy rates were at 7 percent, the lowest point since 2000, during the dot-com boom.

This portfolio, Industrial Property Trust, spans 37.6 million square feet across industrial properties in 21 states, and houses tenants including Amazon and FedEx, according to Bloomberg.

Black Creek Group listed the portfolio in February, and said it is 96 percent leased, with no occupant accounting for more than 3 percent of annual rents. The outlet reported the deal could be announced as early as this week.

San Francisco-based Prologis, which is one of the largest real estate investment trusts in the U.S. — and valued at $51 billion — has eyed multiple large-volume portfolios in recent years, with limited success. In April last year, it acquired DCT Industrial Trust Inc., a 21 million-square-foot warehouse portfolio, for $8 billion.

Last month, Blackstone outbid it for the U.S. operations of GLP, a Singapore based investment trust. Blackstone ended up paying $18 billion in a deal that amounted to one of the largest real estate transactions in history. [Bloomberg] — David Jeans

Alex Rodriguez and Grove at Grand Bay (Credit: Getty Images)

UPDATED, July 15, 10:32 p.m.: Retired Yankees slugger Alex Rodriguez is moving his investment company’s home base to Terra’s Grove at Grand Bay.

On Friday, Rodriguez’s A-Rod Corp closed on space totaling 12,700 square feet at the luxury Coconut Grove condo development, said Erin Knight, executive vice president of Monument Capital Management. Monument is one of the companies under the A-Rod Corp umbrella.

The Grove at Grand Bay acquisition includes roughly 2,500 square feet of ground-floor space that A-Rod Corp will use for its own events and rent out as an event venue, Knight said. A-Rod Corp and Newport Property Construction will be relocating from Coral Gables, while Monument will be moving from Blue Lagoon.

David Martin’s Terra completed Grove at Grand Bay, two 20-story towers with 98 condo units, in 2016. The condo project, at 2675 South Bayshore Drive, was designed by Danish architect Bjarke Ingels.

Andrew Gurewitsch, Max Lescano and Tyler Zimmer of Windsor Realty Partners represented Terra in the sale to Rodriguez’s corporation.

In addition to real estate, Rodriguez’s umbrella company also invests in sports and wellness, media and entertainment, and venture capital. It recently participated in a $210 million funding round for Sonder, a San Francisco-based startup with a platform that leases apartments and transforms them into furnished short-term rentals.

While Rodriguez’s company is based in Miami, it also has offices in Los Angeles and New York. It owns stakes in more than two dozen companies, according to a release.

In April, Monument Capital Management said it closed its first multifamily fund with $21 million in equity. At the same time, it launched a $50 million fund focused on workforce Class B and C housing across the country.

Knight said that A-Rod Corp is bullish on Coconut Grove, and plans to build out the office space by the first quarter of next year. The office, on an undisclosed floor, will feature wraparound balconies.

Philip Levine and the property at 2215 Northwest First Place (Credit: Getty Images)

Philip Levine and the property at 2215 Northwest First Place (Credit: Getty Images)

Developer and former Florida gubernatorial hopeful Philip Levine listed a block-long development site in Wynwood for $25 million.

Levine, a real estate investor and a former Miami Beach mayor, is looking to sell the properties at 2215 Northwest First Place, according to a Loopnet listing. The site includes a building known as the “Whale & Star” building.

Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors are the listing brokers. The assemblage covers the land between 22nd and 23rd streets east of Northwest First Place, and includes the 27,000-square-foot building that can be repurposed from flex warehouse space to retail space, marketing materials show.

The site, near 1-800-Lucky, the Butcher Shop and El Patio, can also be developed into a 132-unit residential project or a 265-key hotel with a retail component.

The land – roughly 38,500 square feet – is asking about $650 per square foot and the existing building is on the market for $912 per foot. The flex warehouse space was renovated to feature Class A gallery interiors.

Records show that Levine’s Baron Wynwood LLC paid $5.85 million for the properties in 2012. The west side of that block is owned partially by a partnership between Redsky Capital and JZ Capital Partners. The block also has another assemblage owned by 144 Investments Corp. Goldman Properties owns the block immediately west of Levine’s assemblage.

As development ramps up in Wynwood, the neighborhood’s business improvement district board is working on a streetscape and tree canopy master plan, designed by ArquitectonicaGeo, that could include a bicycle and wellness loop, pocket parks, lush landscaping, and more woonerfs — a Dutch-inspired shared street design aimed at slowing down traffic. A woonerf has been proposed for the street fronting the Levine properties.

Last year, Levine and his partner Scott Robins submitted a permit for a hotel and residential development at 35 Northwest 27th Street in Wynwood, months after the two investors sold a major retail portfolio they had developed in Miami Beach’s Sunset Harbour neighborhood for nearly $69 million. The buyer was Asana Partners, a Charlotte, North Carolina-based real estate investment firm.

Robins said he is not involved in the ownership of the assemblage on Northwest First Place.

Levine could not immediately be reached for comment.

Levine also owns real estate in Miami Beach and Manhattan, according to his financial disclosures. The former Miami Beach mayor lost the Democratic primary to former Tallahassee Mayor Andrew Gillum, who then ran against and lost to Ron DeSantis for governor of Florida in November.

From left: Jonathan Gray of Blackstone Group, Geoff Palmer of G. H. Palmer Associates, and Jeffrey Gural of Newmark Knight Frank and GFP Real Estate (Credit: Getty Images)

From left: Jonathan Gray of Blackstone Group, Geoff Palmer of G. H. Palmer Associates, and Jeffrey Gural of Newmark Knight Frank and GFP Real Estate (Credit: Getty Images)

As the campaign season heats up, a preliminary list of second-quarter Federal Election Commission contributions reveal a number of real estate executives and developers made donations of varying amounts.

The Real Deal gathered the data from the FEC’s website and ordered the donations by dollar amount, from highest to lowest. The data does not include state and local contributions, and only captures donations filed before Friday, July 5. The final deadline to file donations is July 15.

Topping our list, Los Angeles developer Geoffrey Palmer of G.H. Palmer Associates donated $106,500 to the Republican National Committee in April. It’s unclear if it was a new donation, however, because the filing indicates it was transferred from Trump Victory, a joint fundraising committee between the Trump campaign and the RNC.

Palmer is one of President Trump’s biggest donors and previously gave millions to Rebuilding America Now, a political action group founded to support Trump’s 2016 campaign.

Earlier this year, a class-action lawsuit was filed against Palmer’s company, accusing it of illegally keeping thousands of security deposits from tenants. TRD reported that more than two dozen tenants had previously sued Palmer for unwarranted charges. Palmer could not be reached for comment.

The second-highest donor was South Florida-based commercial real estate developer Murray Goodman, who donated $58,900 to the RNC. In 2013, Goodman’s daughter, real estate broker Marley Goodman Overman, married husband Brett Overman at Trump’s Mar-a-Lago Club.

In addition to Los Angeles and South Florida real estate heavyweights, the list also shows a number of donations out of New York.

Among them, Blackstone Group president and COO Jonathan Gray donated $35,500 to the Democratic Congressional Campaign Committee. In 2016, The Real Deal reported that Gray, the former head of real estate at Blackstone, met with Trump to discuss joining his administration as treasury secretary, despite supporting Hillary Clinton’s campaign. He later withdrew himself from consideration, telling CNBC: “It was an honor to be considered for Treasury secretary but I still have much work to do at Blackstone.”

Blackstone declined to comment on Gray’s latest donation. Gray has previously donated to Democratic Reps. Seth Moulton and Jared Polis (who is now Colorado’s governor); as well as Sens. Michael Bennet, Cory Booker, Chuck Schumer and Ron Wyden.

Also in New York, Newmark Knight Frank and GFP Real Estate’s Jeffrey Gural donated $35,500 to the Democratic Senatorial Campaign Committee, FEC filings show. Dennis Herman, chairman of the Beekman International Center, donated the same amount to the RNC.

In Chicago, real estate investor Harry Langer made six donations of $2,800 each to the Club for Growth, a fiscally conservative political action group.

7100 West Commercial Boulevard and 7200 West Commercial Boulevard (Credit: Google Maps)

7100 West Commercial Boulevard and 7200 West Commercial Boulevard (Credit: Google Maps)

In life, three things seem certain: death, taxes and investor demand for medical office space.

A company managed by North Miami real estate investor Allen Chelminsky bought two medical office buildings in Lauderhill for $5 million, records show.

The 33,290-square-foot properties are at 7100 West Commercial Boulevard and 7200 West Commercial Boulevard. J & J Properties, managed by John Ekstrom of Coral Springs and Jeth Battisto of Boca Raton, sold the commercial development for $150 per square foot.

The Class B office development was built in 1985 and house doctors’ offices, records show. The properties were last purchased for $2.5 million in 2002, records show.

Chelminsky’s family owns a portfolio of apartment buildings throughout Miami-Dade County. In June 2018, Chelminsky sold an apartment and commercial complex at 14560 Northeast Sixth Avenue in North Miami, consisting of 82 apartments and a 15,000-square-foot commercial building, for $13 million.

A number of medical office buildings have traded hands in South Florida over the past few years for prices that are significantly above their last sale prices. Some of the demand could be due to the aging population of baby boomers who need more medical care. Medical office buildings are also seen as recession-proof and a safe bet for investors looking to buy real estate near the end of the cycle.

In May, the Toledo, Ohio-based investment firm Welltower purchased a 54,484-square foot medical office building at 2901 Coral Hills Drive in Coral Springs for $18.35 million.

(Credit: iStock)

(Credit: iStock)

A sluggish housing market is receiving a much needed jolt from Hispanic first-time home buyers.

The homeownership rate for Hispanics grew more during the past several years than for any other race or ethnic group, including whites, according to the Wall Street Journal. Since 2015, overall homeownership rate has risen 3.3 percentage points.

During the past decade, Hispanics made up 63 percent of new U.S. homeownership, despite only accounting for 18 percent of the total U.S. population, according to the National Association of Hispanic Real Estate Professionals.

Homebuilders and brokers are increasingly relying on Hispanic buyers, since housing demand has slowed down considerably due to the rising costs of single-family homes. In April, home price growth slowed to its lowest level since 2012.

Yet these affordability concerns that are hurting the broader housing market are also impacting Hispanic homebuyers. While 4.6 million Hispanic millennials make enough money to buy a home in their neighborhoods, most won’t get past the down payment or a simple lack of inventory, according to a study by the Urban Institute.

At the same time that Hispanics are making up a larger share of the market, the homeownership rate among the African American community has fallen 8.6 percentage points since its peak in 2004.

Some analysts say black communities have struggled to recover financially since the housing crisis, which has made it more difficult to buy a home, according to the Journal. [WSJ] — Keith Larsen

Neiman Marcus CEO Geoffroy Van Raemdonck (Credit: Getty Images)

Neiman Marcus CEO Geoffroy Van Raemdonck (Credit: Getty Images)

Neiman Marcus closed on a $37.38 million loan from Credit Suisse for one of its South Florida stores as the high-end retailer struggles to regain its footing.

The company secured the financing on July 3 for its Shops at Merrick Park location, at 390 San Lorenzo Avenue in Coral Gables, less than a month after Moody’s Investors Service upgraded Neiman Marcus Group’s probability of default rating.

Neiman Marcus could not immediately be reached for comment.

The loan agreement is part of a multistate mortgage, and it extends the credit agreement between Neiman Marcus and lead lender, Credit Suisse.

In May, when Moody’s upgraded the retailer’s probability of default rating, it wrote, “the company’s successful completion of the term loan amendment extending the term loan maturity, issuance of new second lien notes, and exchange offer for its senior unsecured notes provides Neiman more time to improve its business, but we expect free cash flow to be negative as leverage remains at unsustainable levels. The risk of a future distressed exchange remains elevated,” according to a release.

Neiman Marcus, with at least 135,000 square feet at the Shops at Merrick Park, has been an anchor since the upscale outdoor shopping mall was completed in 2002. Brookfield Properties acquired the property at 358 San Lorenzo Avenue when it took over General Growth Properties in 2018. Nordstrom and Equinox Fitness also anchor the mall, which has 742,871 square feet of retail space and 98 retailers, according to Brookfield’s website.

Neiman Marcus Group, based in Dallas, Texas and led by CEO Geoffroy Van Raemdonck, has 42 locations nationwide, including one at the Galleria at Fort Lauderdale and another at Bal Harbour Shops.

Whitman Family Development recently closed on a $550 million loan from MetLife for Bal Harbour Shops, as the high-end shopping center undergoes a major expansion. Barneys New York will also open its first flagship in the Southeastern United States at Bal Harbour Shops.

In Manhattan, Neiman Marcus recently opened its 188,000-square-foot shop at Hudson Yards.

Jeffrey Epstein and Little St. James Island (Credit: Getty Images; Little St. James via Navin75/Flickr)

Jeffrey Epstein and Little St. James Island (Credit: Getty Images; Little St. James via Navin75/Flickr)

Jeffrey Epstein liked to call his Caribbean island of Little St. James Little St. Jeff’s. Locals gave it another, far darker name: “Pedophile Island;” and sometimes, “Orgy Island.”

The financier, who has been charged with trafficking girls as young as 14, would come to his island as an escape from his daily life, according to Bloomberg. A former employee told the site that he would host young women on the island and bring them over on a 38-foot boat he named the Lady Ghislaine.

Epstein bought the island for $7.95 million in 1998 and spent millions more developing it with roads, palm trees and villas. He owns another private island dubbed Great St. James as well, along with Manhattan and Palm Beach mansions, a Paris apartment and a New Mexico ranch.

A commercial plaza on St. Thomas is home to at least five Epstein entities, including companies that hold his Gulfstream jets, Financial Trust Co. and a data mining company called Southern Trust Co. Epstein transferred his business operations to the U.S. Virgin Islands about 20 years ago.

Epstein used to visit his place in the Virgin Islands two or three times per month for Zen-like retreats, according to the report. Employees were not supposed to let Epstein see them while they were there.

He was also very interested in “pirate treasure,” the former staffer told Bloomberg. He would pay $100 for an old rum bottle, $500 for a broken plate that was more than half intact and $1,000 for an unbroken plate.

Epstein is now being held at New York’s Metropolitan Correctional Center. A federal judge is scheduled to hear his bail request on Monday. [Bloomberg] – Eddie Small

Robert Matthews and 101 Casa Bendita

Robert Matthews and 101 Casa Bendita

UPDATED, July 15, 10:16 a.m.: Just a few years ago, Palm Beach’s high society packed the sprawling waterfront estate at 101 Casa Bendita to attend galas and charity events hosted by the town’s hotshot developer Robert Matthews.

But the mansion has remained empty since Matthews was convicted in a federal court of defrauding foreign EB-5 investors in a failed Palm Beach condo-hotel project known as the Palm House Hotel. And on Friday, Matthews and his wife’s former estate sold for $30.2 million to Vahan and Danielle Gureghian, a couple who run a charter school business.

The deal came about after a court-ordered auction to sell the property in March fell through. Bidders were required to make bids of at least $31 million to qualify, but no bid reached that level. The home was then taken over by its mortgage lender DB Private Wealth Mortgage in April.

In total, the mortgage company claims it was owed about $31 million from Matthews and his wife Maria. The mortgage company first tried to foreclose on the house in 2017, but Matthews’ lawyers were able to postpone that foreclosure auction.

Matthews, who was previously a developer in Connecticut, was referred to in local publications as a real-life Jay Gatsby. He held lavish parties and collected antiques that included an original Bill of Rights. He was once considered the state’s most eligible bachelor.

The 12,077-square-foot mansion was used by Matthews as a way to show that he was a successful businessman and entrepreneur, according to civil complaint by EB-5 investors in Palm Beach County.

The home has six bedrooms and a pool. It sits next to an estate that was previously owned by Tommy Hilfiger.

Ashley McIntosh, Gary Pohrer and Vince Spadea of Douglas Elliman represented the buyers in the latest sale.

Matthews purchased the property in 2006 for $14.9 million and built the estate the same year.

The buyers of 101 Casa Bendita are both attorneys in Philadelphia. Vahan Gureghian is also the founder and CEO of CSMI, a charter school management company, and Danielle is executive vice president and general counsel at CSMI, according to the company’s website. The couple recently sold an estate at 1071 North Ocean Boulevard Trust for $40 million.

Matthews pleaded guilty in April in federal court to money laundering and tax evasion charges for defrauding foreign EB-5 investors in the Palm Beach condo-hotel project.

Matthew’s wife Maria “Mia” Matthews, an actress, also pleaded guilty to tax evasion in federal court in Bridgeport, Connecticut.

EB-5 is a federal program where investors can get a green card in exchange for investing at least $500,000 in a U.S. enterprise and creating at least 10 jobs. The development group was able to solicit more than $45 million of EB-5 money for the Palm House development.

The development group assured investors that the project would be completed in less than a year and that their money would be protected in an escrow account with a bank. It also claimed that Donald Trump, Bill Clinton and Celine Dion would be on the condo-hotel’s advisory board.
In reality, no such advisory board existed and much of the money was instead diverted for the personal use of the Matthewses, according to federal prosecutors.

Uchi and Wynwood 25

Uchi and Wynwood 25

UPDATED, July 18, 10 a.m.:

Uchi and Favorite Tahini | Wynwood
Two restaurants inked leases for space at Wynwood 25, a newly completed apartment development at 240 Northwest 25th Street. Related Group and East End Capital are the developers.

Uchi Miami, led by chef Tyson Cole, is taking 5,500 square feet. The famed sushi restaurant is based in Austin. Tahini Street Food, a Middle Eastern restaurant based in San Diego, is leasing 2,000 square feet, according to a release. Sara Wolfe of Koniver Stern Group represented Uchi Miami. Richard Skulnik, Lindsay Zegans and Beth Rosen at RIPCO are handling leasing for Related and East End.

Wynwood 25 has 289 rental apartments and 31,000 square feet of ground-floor retail.

Wabi Sabi by Shuji | Wynwood
Wabi Sabi by Shuji, led by chef Shuji Hiyakawa, is opening at 2700 North Miami Avenue in Wynwood. The Japanese donburi restaurant is leasing space in the Cynergi Lofts at Wynwood building, where Jimmyz Kitchen was previously located.

Hiyakawa will also open a small, 28-seat restaurant with restaurateur and art dealer Alvaro Perez Miranda this fall with another Wabi Sabi inside.

Margot Natural Wine & Aperitivo Bar | Downtown Miami
Gabe Orta and Elad Zvi, co-founders of Bar Lab, are planning to open Margot Natural Wine & Aperitivo Bar in the fourth quarter of this year. The wine bar, designed by Danya Hachey of MaD Artistic, will open at the Ingraham Building at 21 Southeast Second Avenue.

The duo also partnered with Timon Balloo to open Balloo: Modern Home Cooking at the Ingraham Building this summer and will open a third concept in next winter in the Ingraham Building, as well.

Real estate investor Shai Ben-Ami will partner with both tenants on ownership and buildout. Felix Bendersky of F+B Hospitality Brokerage, and Mika Mattingly and Soleil Mershon of Colliers International South Florida represented the landlord, and Ben-Ami represented the tenants.

Matchbox and Big Buns Damn Good Burgers | Fort Lauderdale
Thompson Hospitality of Washington, D.C., signed two leases at PMG’s X Las Olas development. Matchbox and Big Buns Damn Good Burgers are scheduled to open along the riverfront in mid-2020.

Tricera Capital and Dev Motwani’s Merrimac Ventures arranged the leases. Matchbox is taking 4,500 square feet and Big Buns Damn Good Burgers is leasing 1,500 square feet.

X Las Olas will have two residential towers with 1,200 units, 17,000 square feet of ground-floor retail space, and 30,000 square feet of co-working space above the retail on the second and third floors.

Carrot Express | Coral Gables
Carrot Express opened its fifth South Florida location at 259 Miracle Mile in downtown Coral Gables. Terranova Corp. brokered the five-year lease deal for 1,686 square feet, according to a spokesperson.

Regina’s Grocery | Miami Beach
Regina’s Grocery is opening at Urbanica The Meridian Hotel in Miami Beach. Urbanica The Hotels’ owners Diego Colmenero and Charlie Porchetto inked a deal to bring the New York City deli to 418 Meridian Avenue in South Beach. Regina’s Grocery will have about 250 square feet.

Icebox Cafe | Hallandale Beach
Icebox Cafe is planning to open at 301 Northeast Third Avenue in Hallandale Beach, the Hallandale Beach Community Redevelopment Agency announced.

Poki Bowl and Nacion Sushi | Kendall
Two new food and beverage tenants are leasing space at the Palms at Town & Country in Kendall. Poki Bowl is leasing 1,532 square feet and Nacion Sushi is taking 5,485 square feet.

Brendan Fisher with The K Company represented Poki Bowl. Angela Baez Baez with Sharpline Realty represented Nacion Sushi. Nicole Townsend of Weingarten Realty represented the landlord.

Weingarten Realty Investors paid $285 million for the open-air shopping center in 2016. It’s anchored by Dick’s Sporting Goods, Nordstrom Rack and Total Wine.

Power was restored after a blackout enveloped the West Side of Manhattan. (Credit Gabriela Bhaskar | New York Times)

A power outage Saturday night on the West Side of Manhattan dimmed the bright lights of Times Square, knocked out traffic signals at intersections and temporarily trapped people in elevators and subway cars.

Most theaters canceled performances of Broadway shows, and patrons illuminated darkened bars and restaurants with the glow of their cell phones as they drank and dined.

Electrical power started to return around 10 p.m. and was fully restored by midnight.

Con Edison said the power failure began at 6:47 p.m. and affected 73,000 customers for at least three hours, primarily on the West Side of Manhattan from Fifth Avenue to the Hudson River and from 72nd Street to the west 40s.

The electric utility company said the power failure appeared to stem from a substation on West 49th Street, and the impact spread to six power sectors.

Con Edison chairman and CEO John McAvoy said the cause of the power outage may have been mechanical failure but said the cause would remain unknown until the utility finishes investigating the incident.

Gov. Andrew Cuomo said an explosion and a fire at a substation led to malfunctioning and a loss of power at other substations.

While campaigning in Iowa, presidential candidate and New York City Mayor Bill de Blasio said neither terrorism nor criminal activity caused the power outage.

Civilians and police officers combined their efforts to direct traffic at intersections.

The Metropolitan Transportation Authority said the power outage affected New York City’s entire subway system.

Ellie Shanahan, 23, told the New York Times that the darkened intersections were shocking, but “people seemed to know what to do. Everyone was being polite, even though there were no lights to tell us when to go.”

Theaters canceled performances of such Broadway shows as “Aladdin,” “Harry Potter and the Cursed Child,” “Hadestown” and “Moulin Rouge! The Musical.”

Outside some theaters, performers gave impromptu performances on sidewalks. Cast members of “Waitress,” “Hadestown” and “Come From Away” sang songs from their shows.

Carnegie Hall canceled all performances Saturday night, and Lincoln Center canceled a performance by the Mark Morris Dance Group.

Madison Square Garden canceled a performance by recording artist Jennifer Lopez after the building lost power during her fourth song.

The power outage Saturday night happened exactly 42 years after the longer-lasting 1977 blackout in New York City. [New York Times]Mike Seemuth

A glamping tent in Mount Maunganui, New Zealand (Credit: iStock)

Glamping is becoming increasingly popular among wealthy homeowners (Credit: iStock)

Wealthy homeowners are increasingly turning to a new form of getaway, and it doesn’t require them to leave their property.

Glamping — or glamorous camping — is becoming more and more popular among America’s wealthy, according to the Wall Street Journal. The high-end tents, which can sell for up to $30,000, even make a great guest home on some estates, homeowners told the Journal.

The increasing popularity of luxury camping has spawned a whole industry. Glamping Hub, an Airbnb-like service, has 21,000 hosts offering luxury camping on their properties. Luxury camping resorts are popping up in the West, and there’s a company, Under Canvas, that manages luxury campsites in eight national parks.

In New York, Terra Glamping this year is bringing an upscale campsite to the Hamptons, and another developer has raised funds to bring a similar setup to the Rockaways.

Glamorous camping is not necessarily a new concept, even if the word “glamping” only made it into the dictionary in 2016. In 1520, King Henry VIII of Britain and King Francis I of France set up in regal camps for a countryside jousting tournament. Ottoman Empire sultans were also known to bring “richly embroidered” tents to some excursions, including military campaigns, according to the Journal.

[WSJ] — Joe Ward

Ohio SERS is moving money from real estate to infrastructure (Credit: iStock)

Ohio SERS is moving money from real estate to infrastructure (Credit: iStock)

Ohio’s school cafeteria workers, principals, and school bus drivers are bullish on infrastructure investment. Real estate, not so much.

The Columbus-based School Employees Retirement System of Ohio pension fund pans to invest $100 million in the 2019-2020 fiscal year and all of that will go toward infrastructure, according to IPE Real Assets.

Over the next 12 months the $14.3 billion pension fund plans to increase the share of infrastructure investments in its real assets portfolio from 17 to 21 percent. The rest of that portfolio is made up of real estate investments.

Ohio SERS membership is open to people working in education apart from teachers, including school administrators, teaching assistants, and bus drivers. The fund has over 239,000 members.

Ohio SERS has been moving capital from real estate to infrastructure over the last three years. A recent report by the pension fund’s board says it expects infrastructure investments to generate 8 to 10 percent returns.

Pension funds are constantly tweaking their portfolios. In April, the Los Angeles County Employees Retirement Association announced it would shed $1 billion in real estate as part of a restructuring of its portfolio.

The pension fund will maintain its current mix of real estate investments, which is heavier on industrial and specialty types like student and senior housing and light on office and retail, according to IPE. [IPE Real Assets] – Dennis Lynch 

Jeffrey Epstein (Credit: Daily Beast | Getty)

Federal prosecutors apparently aren’t rushing to seize the Palm Beach mansion that convicted sex offender Jeffrey Epstein has owned for nearly 30 years.

Federal prosecutors may seize a New York mansion from Epstein after hitting the billionaire with a new indictment on sex trafficking charges last week.

Prosecutors seek permission to seize property Epstein allegedly used to commit crimes. They charged Epstein with paying underage girls to perform sexual acts at his Manhattan and Palm Beach homes.

The indictment identifies his 21,000-square-foot Manhattan townhouse at 9 East 71st Street as a home owned Epstein’s company Maple Inc. and valued at $77 million.

But the indictment unsealed Monday includes neither the address nor a legal description of his Palm Beach mansion, raising questions about whether the new charges will lead directly to a government seizure of the estate at 358 El Brillo Way, near President Donald Trump’s Mar-A-Lago.

The Palm Beach mansion is owned by Epstein-controlled Laurel Inc. and valued at $12.5 million for tax purposes. Epstein bought the two-story residence in 1990 for $2.5 million.

Miami-based criminal defense attorney Brian Tannebaum said the absence of detailed information about the Palm Beach mansion in the indictment may indicate that federal prosecutors are hesitant to seize and try to sell the waterfront estate.

“It’s a lot easier to sell a Ferrari or jewelry or a collection of wine than a multimillion-dollar house,” Tannebaum told the Post. “A home is a risk to forfeit.”

The federal government usually will put detailed information about a property in an indictment when it wants to seize that property as part of a criminal case, former federal prosecutor Bruce Zimet, now an attorney in private practice in Fort Lauderdale, told the Palm Beach Post.

Zimet also told the Post that the absence of details about the Palm Beach mansion in the new indictment of Epstein by federal prosecutors in the Southern District of New York “might be an indication they’re trying to segregate the New York case from the Florida case.”

More than a decade ago, federal prosecutors in Florida entered into a controversial non-prosecution agreement with Epstein. He pleaded guilty to two prostitution charges in 2008 after Alex Acosta, then the U.S. Attorney in southern Florida, agreed to end a federal investigation of him.

Epstein then served 13 months of an 18-month sentence and retained ownership of his home in Palm Beach, and during his sentence, he was allowed to leave his cell at the Palm Beach County Jail for 12 hours a day, six days a week.

Acosta resigned Friday as Secretary of Labor amid widespread criticism of his decision to end a federal investigation of Epstein in exchange for his guilty pleas. [Palm Beach Post]Mike Seemuth

(Credit: iStock)

(Credit: iStock)

Earlier this year, a San Francisco coder set out to create an outdoor co-working space that charged $2.25 an hour. The catch? It was comprised of a table and chair, set up on an empty parking lot.

While the cost of co-working has yet to reach the levels of WePark, as the operation was named, it has been becoming more affordable as of late, Bisnow reported.

Amid a drastic spike in supply, average desk prices fell by 5 percent in the 18 largest cities for flexible office space in 2018, according to a new report by Instant Group.

The drop in price was most pronounced in Chicago, where prices fell by 17 percent. In San Francisco and Los Angeles, prices dropped by 12 and 11 percent, respectively. In New York, where the average price of a desk circles around $1,060 per year, prices only shrunk 4 percent.

Co-working spaces have been multiplying in almost every city. New York posted the largest growth with a 21 percent spike in supply, followed by San Francisco and London. In L.A., the growth was more constrained at 10 percent.

Still, co-working companies in L.A. have been largely leading office leasing in the region. In the first quarter, WeWork alone signed leases spanning 319,000 square feet. That pushed its overall L.A. footprint to 2 million square feet. Last year, WeWork became the largest office tenant in Manhattan, and as of May of this year, it was on track to do the same in Chicago.
[Bisnow] — Natalie Hoberman

Virgin Trains USA, formerly known as Brightline, may double the number of South Florida train stations it operates to six.

Virgin Trains USA may identify three more South Florida locations for new train stations this year.

Virgin Trains, formerly known as Brightline, said in a June 28 filing that it wants to increase ridership by opening new stops in addition to its downtown train stations in Miami, Fort Lauderdale and West Palm Beach. The company did not identify any possible locations for new stations.

The Sun-Sentinel also reported that officials of Virgin Trains and the city of Hollywood have met recently, and the passenger train operator will meet this month with city officials in Boca Raton.

At the city government’s request, Hollywood city officials met with representatives of Virgin Trains and discussed the proximity of downtown Hollywood to the railroad that the passenger train operator uses.

City government spokeswoman Joann Hussey told the Sun-Sentinel that the city “welcomes the idea of passenger rail with a stop in downtown Hollywood.”

Boca Raton city council members also have expressed interest in having a new Virgin Trains station in their city. The potential site is in area in downtown Boca Raton several blocks west of Mizner Park.

Earlier this year, the passenger train operator said it was considering new station locations at Port of Miami and Fort Lauderdale-Hollywood International Airport.

Virgin Trains also has considered adding a stop in Aventura, according to Steven Abrams, executive director of the Tri-Rail commuter train service.

Virgin Trains spokesman Michael Hicks declined to say whether the company is conditioning approval of new station sites on municipal incentive offers. “We aren’t getting into details about additional locations at the moment,” he told the Sun-Sentinel.

The company is now developing an expansion of its service from South Florida to Orlando International Airport and a planned station near Disney World, which is roughly 20 miles west of the Orlando airport. [Sun-Sentinel]Mike Seemuth

John Grunow Jr. and Ocean Reef Club

The developers of a condominium at the Ocean Reef Club near Key Largo borrowed $74.5 million to finance construction of the 48-unit project.

Long Island, New York-based ACRES Capital provided the construction loan for the condo project, called Residence Club at Ocean Reef.

The borrowers include John Grunow III and John Grunow Jr. of The Grunow Group and former Trammel Crow Residential executive Ronald Terwillger. Their partners in the project include Martin Levine of Redwood Real Estate Group.

Residence Club at Ocean Reef is designed as a three-building complex spanning 103,700 square feet at 1 Golf Village Drive at the Ocean Reef Club, a gated, 2,500-acre community just north of Key Largo.

Owners of the one-, two- and three-bedroom condo units will have access to the 18,000-square-foot private clubhouse at Ocean Reef Club and the community’s golf course and marina.

The developers have advanced the Residence Club at Ocean Reef, which would be built on the site of a 1970s condominium, despite initial opposition from eight owners of homes in the Ocean Reef Club community. [Commercial Observer]Mike Seemuth

Memphis earns the top spot as the best city for saving (Credit: iStock)

Memphis earns the top spot as the best city for saving (Credit: iStock)

Experts say you should squirrel away six months’ worth of expenses as a contingency for losing a job or a medical emergency. But in New York, it would take someone half a lifetime to save that much, according to a new study.

The average New Yorker would have to save for 521 months – or more than 43 years – to save up a roughly $30,000 six-month emergency fund, according to the personal finance site Bankrate.

That puts the Big Apple among the worst cities for those looking to save.

Bankrate ranked U.S. cities by the amount of time required to save a six-month emergency fund, based on housing costs and other expenses including groceries, medical care, utilities and transportation.

The best city for saving is Memphis, where a six-month emergency fund would require 11.6 months of saving, followed by Cincinnati (12.6 months), Cleveland (12.8 months), Pittsburgh (13.1 months) and Detroit (13.3 months).

In four California cities – Los Angeles, San Diego, San Francisco and San Jose – the time required to build a six-month emergency fund is immeasurable.

Bankrate used data from ATTOM Data Solutions, the Cost of Living Index compiled by the Council for Community and Economic Research and the U.S. Census Bureau. [CNBC] – Mike Seemuth

Kanye West (Credit: Getty Images)

Kanye West (Credit: Getty Images)

Jesus walks, but Luke Skywalker talks, at least for Kanye West when it comes to affordable housing.

The rapper-turned-aspiring real estate mogul is reportedly leading the development of an affordable housing project with a “Star Wars” theme at a secret California forest location.

Forbes reported that the recording artist, entrepreneur and designer is working with a team to design prefabricated shelters as affordable housing, possibly for homeless people.

West wanted an austere design for shelters inspired by the childhood home of Skywalker, the main protagonist in the multibillion-dollar “Star Wars” franchise.

With Forbes editor Zack O’Malley Greenburg in tow, West drove his Lamborghini to see prototypes inspired by a hut where Skywalker grew up on the fictional desert planet of Tatooine, as seen in the 1977 film “Star Wars Episode IV – A New Hope.”

Forbes published neither photos nor the location of the prototypes, but Greenburg described the trio of prototypes as “structures that look like the skeletons of wooden spaceships.”

Greenburg, a former child actor, also reported that near the mysterious prototypes “at a bungalow in the woods,” he and West encountered a four-person team preparing to meet the following day in San Francisco with potential investors in the affordable housing project.

West, 42, has previously expressed appreciation for “Star Wars.” For example, in his 2013 song “Guilt Trip,” West sings, “Star Wars fur, year I’m rockin’ Chewbacca.”

West, who last year sold a Soho condo in New York for a loss, announced in early 2018 that he would form his own architecture firm. In June 2018, renderings of West’s prefab models were released by his California-based Yeezy Studio to the Architect’s Newspaper.

“Star Wars,” however, does not seem to have guided the design of the $20 million home where West and his wife, Kim Kardashian, live in Los Angeles, which has what the enigmatic entertainer calls “wabi-sabi vibes.” [Forbes] – Mike Seemuth

Arcadia Group CEO Philip Green (Credit: Getty Images, Wikipedia, Pixabay)

Arcadia Group CEO Philip Green (Credit: Getty Images, Pixabay, Wikipedia, Walterlan Papetti)

Mounting allegations of sexual harassment, bullying and abuse are threatening to topple British retail mogul Sir Philip Green, as the female entrepreneurs and celebrities who once powered his Topshop clothing brand turn away.

Green, the billionaire chairman of Topshop parent company Arcadia Group, faces misdemeanor assault charges in Arizona for allegedly groping and making lewd comments to a Pilates instructor, who called him “the British Harvey Weinstein,” according to Bloomberg. She joins five former employees who accused him last year of sexual harassment and abuse. He has denied their claims.

Green faces the allegations at the height of his ongoing effort to save his retail empire from insolvency. Last month he reached an agreement with landlords to slash rents while laying off some 1,000 workers and closing almost 50 of the company’s 566 stores, including all 11 American Topshop locations. He also injected about $500 million into Arcadia company directly, mostly to shore up its ailing pension fund.

The high-end Topshop clothing brand owes some of its success to model Kate Moss, who designed 14 lines of clothing for the store starting in 2007, and Beyoncé, who partnered with Topshop to sell an active wear line in 2016. Both women have ended their business relationships with Green.

And this year, both Topshop fashion director Maddy Evans and Karren Brady, the chairwoman of the holding company that owns Arcadia, bolted from the firm.

Now, even after Green’s latest cash infusion, some analysts say he may have no choice but to sell or break up his company, as it struggles to keep pace with online retailers and direct competitors like Primark and Boohoo.

[Bloomberg] — Alex Nitkin

From left: London, Shanghai and Paris

From left: London, Shanghai and Paris

Every week, The Real Deal rounds up the biggest real estate news from around the globe.

United Kingdom
The falling pound, which hit its lowest level in two years, could make property in the U.K. more attractive to foreign buyers. The currency has shed about 2 percent of its value since Prime Minister Theresa May announced her resignation, and now, currency markets anticipate the Bank of England will lower interest rates to boost the sluggish British economy. Boris Johnson, the front-runner in the race to replace her, may support a no-deal Brexit, a move that could also see ripple effects in the economy and beyond.

A London flat once owned by Artemis Onassis, sister of billionaire Aristotle Onassis, hit the market for the first time in nearly 30 years, according to Mansion Global. The asking price is £25 million, or $31.2 million, for the five-bedroom property on Grosvenor Square in the upscale Mayfair area of London. Wetherell is the listing broker for the property, which hit the market last month. It is believed that Onassis owned the flat in the 1960s and ‘70s. [Mansion Global]

While Brexit hangs over the British housing market, rents in the United Kingdom are rising at their fastest pace in two years, PropertyWire reported, citing data from private banking firm Kent Reliance. In London, rents are at their highest since 2015. The value of the private rented sector in the UK rose by £6 billion, or $7.5 billion, in the last 12 months as rental inventory growth slowed and home prices fell. [Property Wire]

China
Two leading commercial banks in Hong Kong reduced their valuation of pre-owned homes in several areas by as much as 3.6 percent. That could leave some homeowners underwater, with mortgage loan balances that exceed their property value, according to the South China Morning Post. HSBC and Bank of China reduced used-home valuations in New Territories and Kowloon after massive street protests over a controversial extradition measure erupted there last month. JLL on Tuesday published a forecast that the median home price in Hong Kong will decline by 5 percent in the second half. Knight Frank issued a similar forecast in May. This comes a greater slowdown in Chinese firms investing overseas. The pullback by Chinese investors in the U.S. and European markets followed restrictions imposed by the Chinese government.  [SCMP]

Chinese millionaires — once one of the largest foreign investment groups in U.S. real estate through residential and commercial purchases and the EB-5 cash-for-visa program — are disappearing. The number of Chinese millionaires fell 5 percent to 1.2 million last year and the value of their financial assets declined by $500 billion, Paris-based consulting firm Capgemini SE reported. The report is a sign that the slowest economic growth in 25 years is pinching the wealthiest segments of Chinese society. That financial setback for Chinese millionaires was a major factor in a $2 trillion drop in personal asset value last year among the richest people in the world. [WSJ]

Trust companies in China’s shadow-banking industry that finance apartment, factory and highway construction are seeing more than 280 billion yuan —$40.7 billion — at risk of default, the Wall Street Journal reported, citing Moody’s. Though that accounts for only a fraction of the sector’s total assets, it’s a 90 percent increase from a year ago. Clients are facing difficulties refinancing because of a restriction on nonbank lenders. Nonbank lenders in the U.S., meanwhile, are boosting their mortgage lending, using credit lines from some of the country’s biggest financial institutions. [WSJ]

Singapore
British billionaire James Dyson bought the highest-priced apartment in Singapore, where his company plans to manufacture electric cars, Reuters reported. He is among the more than 2,500 billionaires worldwide as of last year, including more than 700 in the U.S. and 100 in New York City. Dyson reportedly paid S$73.8 million, or $54.2 million, for the three-story, five-bedroom penthouse with a 600-bottle wine room atop the tallest building in Singapore. Dyson, the 72-year-old inventor of the bagless vacuum cleaner, has attained permanent resident status in Singapore, according to media reports. A Brexit supporter, Dyson in January announced a relocation plan that would move the headquarters of his company from Britain to Singapore. [Reuters]

Portugal
The parliament of Portugal passed a new law that provides citizens a legal right to housing. The progressive action has no equivalent in the U.S. For the Democratic presidential candidates’ debates last month, housing policies varied dramatically, but no one was pushing for a similar concept. Under the Basic Housing Law, the Portuguese government serves as “the guarantor of the right to housing.” The law requires the government to present its inaugural national housing policy to the parliament next year and to include special protections for the old, the young, people with disabilities, and families with young children. The new law is a legislative response to a lack of affordable housing in Lisbon, the capital, and in other parts of the country. [CityLab]

Brazil
Traffic congestion and rising rents are creating new opportunities in large Latin American cities to build tiny, centrally located apartments as small as 10 square meters – about the size of a vehicle parking space. So-called mico-apartments are also gaining popularity in the U.S., though its version of micro is substantially larger. In Chicago, developer Cedar Street Companies advertises studios measuring less than 300 square feet each. In Brazil, architects are designing micro-apartment buildings with expansive common areas for socializing. Tenants “sleep in their apartments, but the rest of the building is part of their house, too,” The Brazilian project is legally required to have units that measure at least 11 square meters. Similar projects are under way in middle-income and upscale neighborhoods in Buenos Aires. [BBC]

Michelle Obama rented out the Shark House (Credit: Getty Images)

Michelle Obama rented out the Shark House (Credit: Getty Images)

The Obamas might be leaving the swamp and heading for the hills.

Former First Lady Michelle Obama spent some time in the Hollywood Hills this week to possibly look for a new home for her and former President Barack Obama, TMZ reported.

After his second term in the White House ended, the Obamas decided to stay in Washington, D.C., until their daughter Sasha graduated from high school, which she did last month. Wasting no time, Michelle Obama rented a 12,000-square-foot spec home built by Ario Fakheri. It’s known as the “Shark House” for its open-air aquarium with small sharks.

TMZ reported that she was possibly checking out the neighborhood, including the Shark House, which is for sale for $23 million. It’s at the north end of the Bird Streets north of the Sunset Strip. The three-story home has seven bedrooms, 12 bathrooms, two pools, a wellness center and a movie theater.

The Obamas will likely be happy to learn about the stalling high-end market in Los Angeles, including in the Bird Streets. In fact, the price tag for the Shark House has been cut by 35 percent. It first hit the market for $35 million one year ago. It was relisted for $29 million last December, and now it has another $6 million cut.

The locale would be particularly convenient considering the Obama’s deal to produce several projects with Netflix, which owns a massive new Hollywood office. Also, when the home was relisted in December, the seller added a two-year private jet membership.

Tomer Fridman and Kurt Rappaport have the listing. [TMZ]Gregory Cornfield

American Landmark CEO Joe Lubeck and the Miami skyline (Credit: iStock)

American Landmark CEO Joe Lubeck and the Miami skyline (Credit: iStock)

American Landmark Apartments and its equity partner Electra America are betting big on multifamily investments in the Southeast.

The two firms just closed on a multifamily fund of $462 million this week and are seeking to raise $500 million in another fund.

The closed fund totaled 37 multifamily assets with 12,600 units in the Southeastern United States. Out of the $462 million raised, $392 million has already been invested, according to a release. The company focuses on buying Class B and Class A-minus multifamily properties in the Southeast, including Florida, North Carolina, Tennessee and Texas.

American Landmark and Electra America CEO Joe Lubeck said via email that he is primarily investing in secondary markets in places like Nashville where there is strong growth in both population and jobs and a need for workforce housing.

The company buys apartments, then adds value to them by renovating or updating them and improving services and amenities, with a goal of increasing the return to investors, Lubeck said.

Investors in Electra America’s first two funds include private investors, as well as institutional investors such as the Israeli investment firm Psagot Investment House and Bank Leumi, a large Israeli bank. In total, American Landmark’s portfolio of 28,000 apartment units are valued at roughly $4 billion, according to the release.

Yet, the company avoids apartments in central business districts where there is a great deal of new construction and buildings, according to Lubeck.

In downtown Miami there has been a huge influx of new apartment buildings and rents are now averaging around $2,000 a month for Class A apartment buildings.

From 2014 through 2018, more than 20,000 Class A apartment units came on the market in Miami, according to a TRD analysis of data from Integra Realty Resources, which creates residential reports for the Miami Downtown Development Authority.

“We do think the price points in downtown areas in South Florida are starting to reach their limits for the average resident,” said Lubeck.

But demand for workforce housing and Class B properties remains high. Investors are paying high prices for apartments in Broward and Palm Beach County suburbs due to this supply shortage.

In May, American Landmark paid $91.5 million for a 448-unit apartment complex in Boca Raton at 10235 Boca Entrada Boulevard. It also bought two apartment complexes in November — one in Royal Palm Beach and one in Plantation — for a combined $105 million.

Electra America is based in Lake Park, Florida and is the American subsidiary of Israel’s Electra Real Estate, which is publicly traded on the Tel Aviv stock market.

(Credit: iStock and chart via MarketWatch)

(Credit: iStock and chart via MarketWatch)

After Federal Reserve Chairman Jerome Powell hinted at an impending interest rate cut, stock indexes hit record highs Thursday — and real estate is going along for the ride.

At a congressional hearing this week, Powell said global uncertainty “strengthened the case for a somewhat more accommodative policy.”

The Dow climbed after, closing at an all-time high of over 27,000 Thursday. The S&P 500 also set a record, closing at 2999.91. The Real Estate Select Sector SPDR Fund, an index which tracks real estate management and development companies as well as REITs, saw a midweek uptick following Powell’s comments. (This followed a gradual selloff after the Fed’s June policy meeting, in which officials signalled possible interest rate cuts, and another sharp drop off last week after the jobs report was released.)

John Guinee, a REIT analyst at Stifel, explained the selloff and subsequent rally as a simple, consensus rule: “REITs do well in a declining interest rate risk-off environment. Conversely, they do very poorly in a risk-on rising interest rate environment,” he said.

“This feels very much like the second quarter of 2016, which was pre-Brexit,” he added. “Essentially you’ve got a lot of things on peoples’ minds worldwide and income-oriented hard asset stocks do well and where REITs are right now does not surprise us one bit.”

The broader situation is a bit of a contradiction for real estate — the potential for a near-term rate cut means the Fed isn’t confident in the economy but lower rates mean cheaper debt. It’s also an about-face from the Fed’s previous plans to raise rates this year.

REIT analysts say that the strong economic data — an increase of the consumer price index in June and strong July jobs report — and the expectation of rate cuts bode well for REIT stocks. The industry has already seen a strong year on the stock market, with a quarter of the 32 real estate companies on the stock market in June reaching their highest levels of the year.

“If you look at jobs, what businesses are doing, what consumers are doing, everything is still positive,” said Alexander Goldfarb, an analyst at Sandler O’Neill, “but the longer you go in an economic cycle, you’re going to have normal oscillation of economic data, and not everything is going to be great all the time.”

“So the market is grappling with that,” he continued, “but with interest rates going lower and real estate fundamentals remaining healthy, then the stocks are going to do well, and you’ve seen that.”

Goldfarb said that compared to the beginning of the year, when it was widely believed the Fed would look to hike interest rates, “the backdrop is more favorable” now for REITs.

John Kim, a REIT analyst at BMO Capital Markets, said the year has exceeded his expectations with the availability of cheaper capital, a good economy and now the prospect of lower interest rates.

“Entering the year we thought there would be refinancing that would be more expensive, certainly real pressures on cap rates going forward,” he explained.

Kim admitted that the Fed’s concerns about a coming recession was on his mind, but he maintains confidence in REIT stocks.

“I certainly fear that’s going to slow down but the fundamentals for most asset classes are kind of peaking or near their peaks,” he said.

Kim described the risk-reward ratio for REITs as “pretty compelling” for investors and attributed that in part to supply for most asset classes has been “relatively in check.”

Guinee said most people would describe the overall U.S. equity market as stretched “because there are so few other opportunities out there that make sense.” And within that market, REITs are known as “very defensive,” he added.

But what if interest rates don’t get cut? “We think it lasts until it doesn’t,” said Guinee.

Marcelo Tenenbaum and Jorge Savloff with the current building next to a rendering of the project

Marcelo Tenenbaum and Jorge Savloff with the current building next to a rendering of the project

Blue Road’s plans to convert a 34-unit South Beach apartment building into a 116-room hotel hit a snag after the project failed to get the minimum votes needed from the Miami Beach Historic Preservation Board.

The board voted 4 to 3 this week to approve an amended version of Blue Road’s plans to turn the 61-year-old Park Terrace Apartments at 355 19th Street into the more contemporary Park Avenue Hotel.

However, because the building falls into a historic district, Blue Road needed five affirmative votes from the historic preservation board to obtain the demolition permits needed to move forward. Following the vote, the board “continued” the item until Sept. 9.

It’s the second time the project has been continued. The board previously continued the project at its May 14 hearing after board members expressed another set of concerns over the proposed hotel’s design.

“They have to do their job. We have to do our work. We will find a compromise,” Marcelo Tenenbaum, a principal of Blue Door, told The Real Deal after the vote.
The project’s architect, Luis Revuelta of Revuelta Architecture International, admitted he was surprised.

“I think we came today with a high level of confidence that we were going to get approved,” Revuelta said.

But the three dissenting board members — Nancy Liebman, Jack Finglass, and Kirk Paskal — expressed concern that not enough of the original 1951 post-World War II structure was being preserved or utilized in the new hotel’s design. Under the project’s latest plans, 70 percent of the original building would be demolished.

“This is something I would expect from a more, non-historic district,” Paskal said. “A way to pay homage to something by leaving a little piece.”

Tenenbaum and Blue Road co-principal Jorge Savloff paid $14.27 million for the two-story, 22,000-square-foot apartment building in March 2018. The structure is two blocks away from the newly renovated Miami Beach Convention Center as well as the site of a future 800-room Miami Beach Convention Center Hotel that will be co-developed by David Martin and Jackie Soffer.

Revuelta presented plans for a five-story 44,466 square foot complex that included a rooftop pool deck and two outside elevator towers. It was a smaller version than what was proposed in May, and now includes a garden courtyard instead of a below grade parking area. The remnants of the original apartment building would be transformed into a hotel lobby and gym.

Liebman disapproved of the design, saying that it didn’t belong in a historic district. She also ridiculed the notion that a 116-room hotel is “boutique” as Blue Road portrayed it. “This looks like a giant box,” Liebman said.

Blue Road’s attorney, Alfredo Gonzalez, insisted that a hotel needs at least 100 rooms to “make it in today’s market.”

“A boutique hotel has to have 100 rooms?” Liebman said while rolling her eyes. “Only in Miami Beach. Save it. I can’t support this today or tomorrow.”

After the Liebman-Finglass-Paskal side won, Reveulta asked for instructions. Finglass replied that the developer should strive to use more of what’s already present. “You’ve got a huge historic piece over here. Make use of it,” Finglass told Revuelta, later adding: “We’re trying to save the historic district, not block or restrict anything. Use what you’ve got to make the district matter.”

Revuelta told TRD that he tried to address the issues raised during the May 14 meeting. “I thought we had done everything possible to react to staff and board comment,” he said, “and there is no way we can make this only two stories. It kills the deal.”

“We need a bigger scale to address food and beverage, to address operations,” Tenenbaum further explained.

Nevertheless, Tenenbaum is determined to solve “the conflict of different ideas” and come up with a design that works. “We will be back in September and we will try to do some adjustments and, hopefully, they will approve.”

David Siddons

David Siddons

UPDATED, July 12, 10:13 p.m.: Less than a month after EWM Realty International announced it was rebranding, a longtime broker left to join Douglas Elliman, The Real Deal has learned.

David Siddons, previously a vice president at EWM, moved to Elliman with his five-agent team after nine years with the Coral Gables-based brokerage. Last year, the Siddons team sold more than $81 million.

In June, EWM, the top brokerage in Miami-Dade based on sales volume, became Berkshire Hathaway HomeServices EWM Realty. Ron Shuffield, president and CEO, said in a statement that the brokerage enjoyed working with Siddons and looks forward to cooperating with him on future deals.

Siddons said he’s been approached by other firms over the years, but that Elliman, where he began his career in 2008, was his first choice. He said he was looking for “fresh energy.”

“The thoughts of moving [brokerages] had already been in my mind,” Siddons said, but added that he wasn’t as familiar with the Berkshire Hathaway brand as he was with Elliman. “I just felt like in the luxury sector for New York and L.A., Douglas Elliman is stronger.”

Most of the group’s sales are in Coconut Grove and Coral Gables, with others in Miami Beach, Pinecrest, Palmetto Bay, Fort Lauderdale and elsewhere in Miami-Dade. He said properties in the $2 million to $5 million range are “the bread and butter of our business.”

His team includes agents Stefania Cambarau, Cristiane Buzolin, Elaine Tatum, Fernanda Zomignani, Marianela Figueredo and marketing director Loes Franquinet.

Siddons is joining Elliman’s Coral Gables office at 1515 Sunset Drive, which opened earlier this year.

In March, Judy Zeder’s team left EWM Realty International after about 16 years to join Jill Hertzberg and Jill Eber’s group at Coldwell Banker.