Real Estate News

Rishi Kapoor, CEO, Location Ventures, in front of 7233 Los Pinos Boulevard in the Cocoplum neighborhood of Coral Gables, FL (Location Ventures, Zillow)

After selling a Coral Gables spec mansion in the spring, developer Rishi Kapoor just picked up a renovated waterfront home in the city’s exclusive Cocoplum neighborhood.

A Kapoor-managed entity paid $5.9 million for a 6,069-square-foot, five-bedroom house with six and a half bathrooms at 7233 Los Pinos Boulevard, according to records. The seller, an entity managed by Emilio Antelo of Miami, bought the property in 2014 for $4.1 million.

Kapoor is CEO of Coral Gables-based Location Ventures, which is developing two co-living projects in Miami-Dade County.

Maurice and Silvia Boschetti of Boschetti Realty Group represented Kapoor. Francis Pimentel de Matos and Maria de Armas, also with Boschetti, represented the seller.

The property was listed in 2019 for $4.6 million, but was taken off the market the same year, according to Zillow. It was relisted in July for $6.8 million, and had a sale pending in September for $6.5 million that did not go through, Zillow shows.

Built in 1983, the two-story home with a two-car garage was recently renovated, the listing states. The property also has a pool and an 80-foot boat dock.

In May, Kapoor sold a non-waterfront mansion in Coral Gables for $11.8 million. Tarigh Yusufi, who works at New York-based Steadfast Capital Management, bought the two-story, six-bedroom home.

Location Ventures is redeveloping a commercial property at 1260 Washington Avenue in Miami Beach into a six-story mixed-use project. Urbin Miami Beach will have 56 hotel rooms, 49 co-living units and suites, a 104-seat restaurant, a rooftop pool deck, and micro-retail, according to records filed with the city.

Kapoor’s firm is also converting a property at 3162 Commodore Plaza in Miami’s Coconut Grove into a co-living building.

During the recent Miami Beach election, Mayor Dan Gelber’s re-election campaign received $9,000 in prohibited donations from entities managed by Kapoor. The developer was on a city list of real estate professionals barred from making campaign contributions because they have pending zoning applications or development agreements with Miami Beach.

Cocoplum has experienced its fair share of high-profile trades this year. In January, reggae star Shaggy dropped $2.2 million for a non-waterfront home. In June, developer Armando Codina and his wife, Margarita, sold a Gables Estates home to Christian Eiroa, owner of C.L.E. Cigars, for $9 million.

Also in June, MasTec CEO Jose Mas shelled out $9 million on a Cocoplum vacant lot. And in September, Bar Invest Group chairman and CEO Jacques Barbera and his wife Jeanne Barbera bought a waterfront home in the neighborhood for $16 million.

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1533 Drexel Avenue in Miami Beach (Apartments.com, City of Miami Beach Planning Department)

A real estate investor wants the price of a Miami Beach apartment building cut drastically, claiming he signed an inflated purchase contract after he was duped that the building can be rented out on Airbnb and VRBO.

Raz Ofer, through an affiliate, sued sellers Alfredo and Regina Arias, alleging that they knowingly misrepresented that their building at 1533 Drexel Avenue has a short-term rental license.

Ofer said he wants the price dropped to roughly $500,000 from the $3.3 million they had agreed to under a 2019 contract for the two-story building. Ofer, who put a $50,000 deposit into escrow, filed a lis pendens on the property, which could tie the Ariases’ hands from selling it to someone else.

The suit, filed in Miami-Dade Circuit Court on Wednesday, sheds light on the value of short-term rental licenses on multifamily real estate, and how local governments’ crackdowns on Airbnbs and VRBOs are impacting the market and deals.

“A building with a hotel license is worth two and a half times as much as a similar building without the license,” Ofer said, adding that this is because the rental income is higher. “I have an apartment building with a hotel license on Pennsylvania Avenue and today I am getting $700 a night per apartment.”

The price reduction he is seeking is equal to how much it would cost Ofer to get a license, he said.

Whether or not he can get the permit is up for dispute.

In an effort to clamp down on short-term rentals in residential South Beach, the city has banned them in certain areas. The 18-unit Drexel property is in a section where these rentals are outright banned and no waivers are allowed, according to Yisel Morales, an assistant at the Miami Beach Planning Department.

Ofer’s attorney, David Winker, countered that the ban is not set in stone and could be lifted through a citywide referendum. Ultimately, the Ariases were hoping to sell this property to an “unsuspecting buyer,” under the pretense that it has the permit, Winker said.

Michelle Marie Urbistondo, an attorney for the Ariases, said the couple did not intentionally misrepresent that the building had the license and it is outside their control whether it ultimately gets a permit.

Ofer’s “goal is to get this property for pennies on the dollar and to strong-arm my client to sell it to them for less than the agreed upon price,” Urbistondo said.

The Ariases, an elderly couple, found out about the missing license about a day after signing the contract and immediately inquired to the city about it, she said. Still, it is Ofer’s responsibility, too, to check whether the property had a permit, Urbistondo said.

The Ariases have owned the property that sits on 0.2 acres for 30 years, after buying it for $350,000 in 1991, property records show.

It is one of the many low-rise apartment buildings in South Beach that for years have been a top choice among those seeking to enjoy the beach lifestyle, yet stay a few blocks west of the iconic, loud tourist streets Ocean Drive and Collins Avenue.

Ofer first sued the Ariases in April over the same issue, but that suit was tied up in technical issues. A judge at a Wednesday hearing — held before the new suit was filed — agreed with Urbistondo that the April complaint was improperly served on the Ariases, although an official order to that effect has not been entered.

Winker, who represents Ofer in the new suit and was not involved in the April case, lists breach of contract, specific performance and fraud in the inducement counts.

This is not the first time Ofer has sued over a South Beach property he had put under contract. In 2016, an Ofer affiliate sued the owners of the building at 702 13th Street, alleging financial record discrepancies that the sellers did not clear up.That case was settled in June 2016.

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The post What’s an Airbnb worth? Suit seeks nearly $3M price drop for Miami Beach building without short-term rental permit appeared first on The Real Deal South Florida.

(iStock)

Job growth was tepid last month, with the U.S. economy adding back just 210,000 positions in November, but of note to real estate interests, construction and warehousing saw significant gains, according to the federal government’s Labor Department.

Seasonally adjusted employment in retail declined, and the leisure and hospitality sector added only 23,000 new workers.

The overall pace of hiring was slower than a consensus of economists expected, though a rise in national employment has been consistent throughout the year.

“Any way you look at it, the job market continues to improve,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association.

Hiring numbers for October and September were revised upward — a retrospective update performed each month — for a monthly average gain of 555,000 this year. A separate Labor Department survey estimated the number of unemployed people fell by 542,000 in November, lowering the unemployment rate to 4.2 percent.

Participation in the labor force remains strong as wages have risen alongside inflation. Average hourly earnings have risen by 4.8 percent over the past 12 months, according to the Labor Department. “Coupled with the still elevated number of job openings, this suggests that the economy is getting closer to full employment.

Approximately 210,000 more people work in transportation and warehousing today than did in February 2020, as consumer demand for deliveries remains robust. The industrial real estate boom has played out in countless deals across the nation. In New York City’s borough of Queens, a car dealer’s lot was sold to a logistics developer planning a mammoth vertical warehouse.

The construction industry hired 31,000 people in November, mirroring gains in the previous two months. The pace of residential homebuilding is expected to accelerate next year, according to the Mortgage Bankers Association. A shortage of affordable homes coupled with low interest rates has supported job gains in residential construction.

Leisure and hospitality, the industry hardest hit by the pandemic, employs 1.3 million or 7.9 percent fewer people than it did in February 2020, when Covid cases began to pop up on the East and West coasts.

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Audience members could be forgiven for thinking they were watching an episode of “Succession.”

Last month at The Real Deal’s big annual event in Miami, which drew more than 4,000 people, the newly appointed president of Kushner Companies, Nikki Kushner Meyer, took the stage for a talk on the outlook for development.  

Her billionaire father (and boss), Charlie Kushner, sat vigilantly in the front row, along with her mother, Seryl, and the firm’s CEO, Laurent Morali. 

There was no Kendall Roy to disrupt the meeting with blaring grunge music, but the stakes were clearly high. As they milled around the VIP room later, the family was there to cheer Nikki on, critique her performance (she did well) and make sure the next generation of leadership was intact. See photos from the event on page 68.

Stuart Elliott

Echoes of the hit HBO show abound in real estate. Even more so than the media conglomerates portrayed on “Succession,” real estate is all about dynasties. The Dursts, the Tishmans, the Rudins, the Fishers, the LeFraks, the Roses, the Zeckendorfs — throw a dart in New York City and you’ll hit a building owned by a family empire.

I tell our reporters to watch the show for the details about extreme wealth and privilege that seem so spot-on in my experience — from flying private to how the help is treated.

TRD’s upcoming book by Adam Piore about the transformation of New York real estate over the past two decades will also include my favorite real estate family drama writ large: that of the Macklowes and the Swigs. 

On his way to owning and building some of the city’s most iconic real estate, family patriarch Harry Macklowe has gotten into legal battles with his son, his ex-wife and his ex-son-in-law, Kent Swig. He even put up a giant billboard of himself and his new girlfriend outside an apartment Linda Macklowe was going to buy after their divorce trial. It’s the same scorched earth approach you see in the show. 

You’ll be able to pre-order the book at the start of the year and it will be published in April.

Meanwhile, in this issue, we’ve got some great stories, including a piece that touches on succession, albeit not of the family variety. 

KKR is one of the world’s most formidable private equity firms, etched in business lore for its audacious multibillion-dollar deals — most notoriously, the leveraged buyout of RJR Nabisco that became the subject of the book “Barbarians at the Gate.” 

In October, KKR founders Henry Kravis and George Roberts announced they were stepping down from the $400 billion company to make room for new blood. We look at what’s next for KKR after it raised $4 billion for its largest real estate fund ever and pulled off blockbuster deals like its $500 million buy of the observation deck at Hudson Yards and its $1 billion life science play in San Francisco.

The Cuomos are another dynasty worthy of the TV screen. With Andrew ousted from power, we look at the candidates for New York governor and what each would mean for real estate — including their stance on “good cause” eviction, perhaps the most dreaded piece of legislation for landlords today.

There is no doubt the real estate scions of tomorrow will face issues their forefathers never had to worry about. To wit: Check out our story on supply chain issues impacting real estate; the land grab around solar power; and how developers are increasingly targeting “high-ground” areas to build around climate change. 

Those dynastic heirs will also be on the front lines of the tech transformation of real estate — whether it’s esports companies taking a bite out of the commercial sector; the future of iBuying following Zillow’s crack-up; or the commercial real estate behemoths trying to edge into the residential space.

Enjoy the family drama and enjoy the issue.

The post Editor’s note: My “Succession” obsession appeared first on The Real Deal South Florida.

David Gebbia and renderings of the property (Realtor.com, Getty)

David Gebbia and renderings of the property (Realtor.com, Getty)

UPDATED, Dec. 3, 5:10 p.m.: The ex-husband of a Real Housewife of Beverly Hills bought a Palm Island home under construction for $5.8 million, setting a record for a non-waterfront house.

David Gebbia, ex-husband of former reality show star Carlton Gebbia, purchased the property at 254 Palm Avenue in Miami Beach from SG&LL Ventures LLC, which is managed by Shamsu Lalani, of Lalani Developers, according to records.

Mallory Mcguire with One Sotheby’s International Realty represented the seller. Katrina Campins of Campins Company LLC represented Gebbia.

Campins said Gebbia relocated to South Florida from California about a year and a half ago, adding that she has represented Gebbia’s family in multiple real estate deals. She is currently helping the family’s firm, Siebert Financial Corporation, purchase commercial property in Miami Beach.

“They love South Florida,” she said.

Gebbia and his British ex-wife were featured in the 2014 season of Real Housewives of Beverly Hills, where she proclaimed herself a witch practicing Wiccan, a nature-based pagan belief system founded in the mid-20th century. One of her fellow castmates believed her husband became ill during filming because she practiced witchcraft, according to published reports. At the time, the family lived in a Gothic mansion with a cross-shaped pool.

Gebbia filed for divorce in November 2017, and it was finalized in September 2018, after about 18 years of marriage, according to published reports.

The 4,880-square-foot Palm Island house under construction will have five bedrooms, five full bathrooms and one half-bathroom. The lot is just short of a quarter-acre, and construction is scheduled to be completed in March, according to Realtor.com.

The residential housing market on Miami Beach’s Palm Island has been red hot throughout the pandemic.

David and Leila Centner, owners of the controversial Centner Academy in the Miami Design District, were recently revealed as the buyers of a Palm Island mansion for $28.3 million.

Artefacto owner Paulo Bacchi bought a waterfront Palm Island home in October for $5.3 million.

And in September, venture capital investor Ben Ling and front-end web developer Chris Coudron paid $29.5 million for a waterfront Palm Island mansion.

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The post Real Housewife of Beverly Hills’ ex-husband buys non-waterfront Palm Island house for record $6M appeared first on The Real Deal South Florida.

“I like to say there’s two kinds of people,” Miami-Dade County Mayor Daniella Levine Cava said: “The people that already live [in South Florida], and people who want to live here.”

In the last 24 months, thousands of people have flocked to the region for its business-friendly reputation and its laid-back lifestyle. But new Floridians have found a residential market so hot it’s created a housing crunch and infrastructure issues, with overburdened roads and sewer systems.

The Real Deal brought Mayor Levine Cava, Miami Mayor Francis Suarez, West Palm Beach Mayor Keith James, Fort Lauderdale Mayor Dean Trantalis, and Boca Raton Mayor Scott Singer together on stage at The Real Deal’s 7th annual South Florida Real Estate Showcase + Forum for a panel sponsored by Lev Capital. The panel was moderated by TRD’s Editor-In-Chief and CEO Stuart Elliott.

In conversation, all of the mayors weighed options for balancing the influx of people and businesses that are keen to relocate with the needs of existing South Floridians. All were bullish on growth. “A rising tide floats all boats,” Trantalis repeated. “We have to take advantage of these opportunities while they’re there,” James said.

Still, with flip-flopping developers and issues about building safety and even political corruption, South Florida’s mayors have their jobs cut out for them. Watch the video for more on their plans for their respective areas.

The post WATCH: Five South Florida mayors discuss keeping the market hot appeared first on The Real Deal South Florida.

Rich Barton, chief executive officer of Zillow (Getty Images, iStock)

Zillow’s disastrous foray into iBuying may finally provide a silver lining to investors.

The company’s shares jumped on Friday, a day after the company said it has signed contracts to sell more than half the homes it picked up through Zillow Offers, the iBuying unit that it was forced to shutter last month. Zillow also said it will buy back $750 million of its stock and raised its fourth-quarter revenue estimate for the unit that includes iBuying by more than a third.

Zillow Offers was on the hook to sell close to 18,000 homes at the end of the third quarter, 9,790 of them in its inventory and another 8,172 in contract. It’s unclear how many homes it owns now because Zillow has scrapped at least 400 contracts despite earlier promises to honor those agreements.

The company said it’s selling homes through bulk deals with institutional investors, such as Pretium Partners, which agreed to buy 2,000 properties, as well as deals with individual homebuyers. Zillow raised its fourth-quarter estimate for the homes unit to a range of $2.3 billion to $2.9 billion, from $1.7 billion to $2.1 billion.

Zillow said it expects the closure of iBuying to be “cash-flow neutral” considering its inventory, operating and restructuring costs and Zillow Offers’ $2.9 billion in secured debt.

Still, with more cash than expected coming in, CEO Rich Barton said it was “an opportune time” to say it will repurchase $750 million of Class A and C shares. The buyback will let the company “reduce the cash balance we built up to support Zillow Offers,” said Barton in a statement.

Zillow shares tumbled 43 percent in the past two months as the company paused and then shut down Zillow Offers. Shareholders have filed at least two lawsuits seeking class-action status, accusing Zillow of misleading investors.

The stock was up 9.1 percent to $58.64 as of 2:33 p.m. EST.

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Seagis pays $30M for rental car center near FLL, plans warehouse

1700 Eller Drive in Hollywood with Seagis Property Group’s Bradlee Lord (Google Maps)

Seagis Property Group bought a warehouse development site near Fort Lauderdale-Hollywood International Airport for $29.5 million, marking its ongoing bet on the booming South Florida industrial market.

The Conshohocken, Pennsylvania-based company bought the Alamo Rent A Car-leased property at 1700 Eller Drive from Eller Drive Properties, according to a spokesperson for Vanguard Realty Advisors.

Jonathan Salk of Vanguard Realty Advisors represented the buyer and seller.

The selling entity is led by Diego and Helena Ribadeneira, Daniela Balarezo and Georgina Menendez, according to state corporate records.

Seagis wants to redevelop the property into a 199,615-square-foot warehouse, according to media reports.

The existing 48,411-square-foot building was constructed in 1974 on 4.3 acres, property records show. It is east of the airport.

Seagis has been investing heavily in South Florida industrial real estate this year, as the market has prospered during the pandemic.

In Broward County, the industrial vacancy rate dropped to 5.6 percent in the third quarter, compared to 6.8 percent in the second quarter, according to Colliers. The average asking rent was $9.68 a square foot in the third quarter, up from $9.19 during the same period last year.

Seagis, whose vice president is Bradlee Lord, bought a warehouse near Miami Gardens for $8 million in October, and a Doral facility for $19.4 million in September.

In May, Seagis bought a Medley building for $7.9 million.

The company’s total portfolio spans more than 12 million square feet across New York and New Jersey, according to its website. Its South Florida portfolio consists of more than 5.6 million square feet, according to an October news release.

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RE/MAX reaches record revenue of $91M with $25M net loss

RE/MAX CEO Adam Contos and eXp CEO Glenn Sanford (LinkedIn, eXp Realty)

Just because the third quarter was rich in revenue for some brokerages doesn’t mean profits were something to brag about.

RE/MAX revenue and the somewhat dubious metric of “adjusted EBITDA” reached all-time highs last quarter but its net profits and agent growth fell short of expectations, its holding company announced.

RE/MAX’s net income in the third quarter swung to a loss of $21.5 million from a profit of $3.6 million a year ago. Revenue rose by 28 percent to $91 million from a year earlier but was more than offset by a jump in expenses, which totaled $51 million.

The brokerage’s adjusted EBITDA reached $35 million and its adjusted earnings per diluted share was $0.71.

RE/MAX attributed the growth to the RE/MAX INTEGRA North American regions acquisition, fewer agent recruiting initiatives and increased broker fees stemming from rising home prices.

Agent count growth was 4.6 percent, just south of RE/MAX’s expectations of 5 to 6 percent in the quarter. The gain did result in a record agent count of 140,936.

Some of the brokerage’s franchisees in three of its markets — California, Indiana and New Jersey — were filled with underperformers and were ultimately terminated during the quarter, RE/MAX president Nick Bailey said.

“We had some unexpected terminations coming into Q3 that we don’t expect as much moving forward,” Bailey said. He added that pandemic lockdowns in certain countries contributed to the failure to meet growth targets.

For other brokerages, a boost in agent growth did some good. In its earnings call early last month, eXp World Holdings announced that its brokerage’s revenue had reached another all-time high of $1.1 billion.

Such gains were largely driven by agent growth, which increased 82 percent to 65,269 from the third quarter of 2020. Closed residential transactions increased 72 percent to 130,029 and transaction volume nearly doubled, rising 97 percent to $46.6 billion.

Net income for eXp increased 60 percent to $23.8 million, and gross profit increased 70 percent to $79.5 million. The adjusted EBITDA increased 6 percent to $23.1 million.

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The post Despite hot market and revenue growth, RE/MAX loses $25M appeared first on The Real Deal South Florida.

Todd Vasos, CEO, Dollar General (Dollar General, Popshelf, iStock)

Suburban shoppers beware: a Popshelf location could soon be coming to a location near you.

Dollar General is aiming to operate about 1,000 Popshelf stores by the end of the 2025 fiscal year, CNBC reported. As of late October, there are 30 locations operating in six states.

The retailer launched the Popshelf brand in 2020, aiming to draw in higher-income customers. The stores encompass around 9,000 square feet and carry more nonconsumable items, such as home decor, craft supplies and beauty products. Items are still inexpensive — most are priced at $5 or below — but not as cheap as Dollar General’s traditional offerings.

The company said its target consumers are women living in the suburbs with an annual household income between $50,000 and $125,000, CNBC reported.

Dollar General aims to open 100 Popshelf locations during the next fiscal year, including its first in Texas in the spring, according to CNBC. The company aims to open more than 1,100 stores across its various brands in the next fiscal year and plans to expand into Mexico with 10 stores by the end of fiscal 2022.

Dollar General’s attempt to scale its newest brand comes as its competitor Dollar Tree is set to pass on more costs to customers, especially in light of supply chain issues and inflation. The brand announced in late November it plans on raising the price of many goods from $1 to $1.25.

Dollar General largely bucked the brick-and-mortar retail struggles exacerbated by the pandemic, opening more than 1,000 stores in 2020 and aiming for another 1,050 new locations in 2021. The retailer also reported same-store sales growth of 16.3 percent last year.

But a drawback in demand was expected and Zacks Equity Research in April predicted a same-store decline in sales between 4 and 6 percent in 2021. According to CNBC, Dollar General said it expects same-store sales to drop between 2.5 and 3 percent this fiscal year, better than Zacks’ forecast, but enough to briefly bring down shares about 3 percent as of early Thursday.

[CNBC] — Holden Walter-Warner

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The post Dollar General to open 1k stores aimed at wealthier, more suburban shoppers appeared first on The Real Deal South Florida.

KKR’s Henry Kravis (Photo-illustration by Paul Dilakian)

There’s a particular kind of “New York is back, baby!” vibe to the Edge, the observation deck at Hudson Yards where thrill-seekers can dangle from the tip of a skyscraper 1,131 feet above the city’s new power center. 

The notion that plenty of people are willing to pay nearly $200 a pop to shake off their pandemic funk via self-inflicted vertigo is what KKR & Co. was betting on when it paid $500 million for a controlling stake in the observatory this fall.

Just below the viewing deck at 30 Hudson Yards is KKR’s headquarters, which the firm closed on in 2019. It’s the spot from which the storied private equity firm’s real estate team plots its next big move. It’s been a decade since Henry Kravis and George Roberts started a dedicated property arm, and it’s done dabbling — it now wants to establish primacy in the field. 

It’s still a pretty nascent business for them relative to the largest players,” said Patrick Davitt, an analyst at Autonomous Research. “As they scale, there’s no reason they can’t get really big.”

Truth be told, though, it’s already late to the game. Kravis and Roberts pioneered the private equity industry in the 1970s. But their biggest rival, Blackstone Group, has a 20-year head start in real estate, which it has established as a cornerstone of the modern asset management business. Through megadeal after megadeal, Blackstone has become the largest private landlord in the country.

But KKR is catching up. Last year, it agreed to pay $860 million for a Brooklyn apartment portfolio. At the start of this year, it closed on a $4.7 billion deal to buy the annuity company Global Atlantic, which means it’s now competing with insurers making big commercial mortgages. In March, it made a $1.1 billion life-sciences play in San Francisco. In September, it launched a $1 billion joint venture to invest in health care real estate. And in October, it closed its largest real estate fund, raising $4.3 billion. It’s also been buying up billions of dollars’ worth of warehouses around the country. 

Many of the private equity giants went public in the last 15 years. And the founders of these firms, who defined an industry with their audacious takeovers and personal rivalries, are handing the reins to a new generation of executives who have mostly avoided the headlines. At KKR, Kravis and Roberts stepped down in October to make way for their protégés, Joseph Bae and Scott Nuttall.

And many of those companies are now moving away from those private equity roots and pumping more of their billions into real estate, seeing incredible riches in sectors from single-family rentals to life sciences and industrial. 

But it’s not as though those businesses are controversy-free. Where private equity companies were once pilloried as corporate raiders, they’re now buying up single-family homes in the midst of a housing crisis.

Meanwhile, the big moments of distress that led to some of private equity’s biggest wins haven’t yet materialized, leaving the new leaders searching for ways to make their mark. Blackstone and other investors in single-family rentals were able to rapidly expand, for example, by buying up mortgages on foreclosed properties after the financial crisis. This time around, there’s been no similar spike in defaults.

Now KKR’s building a new identity, and its real estate arm plays a big role.

Ten years ago we mapped out a whiteboard strategy,” Ralph Rosenberg, KKR’s head of real estate, said in an interview with The Real Deal last month. “We’re now seeing the full effect of this plan — and all the hard work that went into putting in place the right foundation — come together with the acceleration of our business.”

The new gate

Hollywood is full of colorful depictions of financial titans, from Michael Douglas’ Gordon Gekko in “Wall Street” to Leonardo DiCaprio’s Quaalude-popping Jordan Belfort in “The Wolf of Wall Street.”

The actors Jonathan Pryce and Peter Dvorsky played Kravis and Roberts, respectively, in the 1993 HBO adaptation of “Barbarians at the Gate,” the seminal business book that chronicled KKR’s takeover of RJR Nabisco and cemented the firm in the public consciousness.

Rosenberg, a former Goldman Sachs partner whom Kravis and Roberts hired to start the real estate arm in 2011, wears a neatly trimmed 1980s-style beard that gives him a resemblance to Harry Ellis, the blustery Nakatomi Corporation executive from “Die Hard.” The comparison, however, begins and ends with the look.

A genial figure who preaches the gospel of KKR’s “one team” philosophy, Rosenberg, 57, comes across as humble even as he talks about the company’s grand ambitions. His goal is to make KKR a top-three company in all the sectors it plays in, ranging across 10 different investment vehicles on the debt and equity sides and with another three in the works.

The company’s real estate business has grown from $600 million drawn from its own balance sheet to $36 billion of assets under management. Its near-term plan is to double that figure over the next few years, and it sees the potential to double it again after that.

To get there, though, the company’s going to have to show results.

If you don’t perform, you’re not going to become a top player,” said Rob Lee, an analyst at KBW. “So far, so good, but you have to sustain that.”

KKR’s first two U.S. opportunistic equity funds posted net returns of 12 percent and 25.1 percent to investors, according to its most recent financial statements.

One way to track growth is through fundraising. KKR has raised six closed-end equity funds (three in the U.S., two in Europe and one in Asia) totaling nearly $13 billion since it first started raising capital for real estate in 2013, according to Preqin. That haul makes KKR the sixth most active fundraiser over the past five years. It’s helped that Rosenberg and his group have big money on speed dial.

If you’ve got a big name behind yourself, you can raise significant quantities of cash from a huge network of LPs relatively quickly and easily,” said Preqin’s David Lowery, who added that equally important is finding good deals to spend that money.

If you can find ways to deploy capital,” he said, “fundraising could accelerate quite quickly.”

Another advantage for KKR is the fact that its LPs — the pensions, sovereign wealth funds and other institutional investors it raises money from — have been consolidating the number of money managers they work with. 

That favors incumbents but leaves little room for those that can only do private equity buyouts, so KKR and its peers are trying to become more well-rounded. It’s the latest rebranding for the industry that was once called “bootstrap acquisitions” before it became “leveraged buyouts” and then “private equity.” Now, those companies want to be considered asset managers, more like the Fidelities or Vanguards of the world that serve as a one-stop-shop for investors. Except they’re chasing the higher returns found more often in the private markets. 

Rufus Hone, an analyst at BMO Capital Markets, said that stock investors prefer managers who can move money and gain insights across different asset classes and markets. 

More diversified alternative managers tend to attract premium valuations relative to single-strategy managers,” he said.

Of course, there’s one company that’s set the model.

Gray matter 

When it comes to real estate private equity, the $230 billion gorilla in the room is Blackstone, and it’s a comparison KKR is used to.

During a video presentation with Morgan Stanley in June, Rosenberg name-checked his firm’s biggest rival as he emphasized that KKR also has the firepower to make large purchases.

We are in the large-deal business. Don’t be confused,” he said, a big grin stretched across his face. “There is somebody other than Blackstone in the world that can do very large, multibillion-dollar transactions.”

Today, Blackstone is known for its industry-defining deals, such as the $39 billion purchase of Equity Office Properties and the $26 billion purchase of Hilton Hotels, but it wasn’t always that way. Jonathan Gray built up that business from a sideshow to the main attraction. Just under a third of its total assets under management are now in real estate — the same share as its private equity business — and Gray is first in line to run the company when co-founder and CEO Stephen Schwarzman steps down. 

At KKR, real estate makes up just 10 percent of the assets, and its $36 billion worth is a fraction of Blackstone’s. Rosenberg’s team isn’t under any delusion that they can grow their business sixfold overnight, but they are confident that in the next few years they can close the gap. It’s kind of like when an expansion team makes it to the postseason for the first time and puts the league on notice that there’s a new contender. 

(Click to enlarge)

The rivalry between the two companies goes way back and up to the highest levels.

Schwarzman infamously slammed KKR as a “one-trick pony” in a BusinessWeek cover story in 1998, four years after his company launched its first real estate fund. Years later, with Schwarzman having earned the tag of “poster boy for greed” from New York magazine, Kravis was reportedly deeply upset at the negative attention the Blackstone boss was bringing to their industry.

The two also sparred on the social scene. Kravis refused to attend a dinner at the New York Public Library honoring Schwarzman, who returned the favor by not inviting his rival to his 60th-birthday bash. Schwarzman reportedly explained the snub by pointing out that he had never been invited to Kravis’ apartment for dinner.

Age may have brought the temperature down somewhat: Kravis attended Schwarzman’s 70th-birthday celebration in Palm Beach, complete with acrobats, Mongolian soldiers and camels. 

But personal animosity is no reason to turn down a good business idea, and in many ways KKR is following in Blackstone’s footsteps. 

Just a few examples: Blackstone launched its publicly traded mortgage REIT, Blackstone Mortgage Trust, in 2012. KKR started its version, KKR Real Estate Finance Trust, in 2017.

In 2016, Blackstone launched Blackstone Real Estate Income Trust, a nontraded REIT that allows individual retail investors to put their money into the company’s least risky assets. KKR in May launched its version, KKR Real Estate Select Trust. 

Blackstone invests heavily in warehouses and built its own company to manage and operate those properties, Link Logistics. KKR’s warehouse management company is called Alpha Industrial Properties.

Blackstone built the largest single-family rental company, Invitation Homes, which it sold in 2019. KKR launched its single-family management company, My Community Homes, in June.

KKR is “viewed as one of the large-cap managers with an opportunity to grow their flagship equity and credit funds, and to add new strategies over time,” said Doug Weill at Hodes Weill & Associates, which advises fund managers on real estate. “Whether they’ll get as big as Blackstone … that’s a tough playbook to follow.”

A spokesperson for Blackstone declined to comment.

Room raiders

If KKR’s real estate business has a signature deal, it could be said to be its $2.2 billion sale of a portfolio of nearly 150 warehouses to Oxford Properties Group this summer.

KKR had spent three years acquiring the 14.5 million square feet of warehouses through 50 transactions in 12 major markets across the country. 

Ankit Bhatt, Oxford’s director of investments, said he was impressed by the way KKR acquired the properties and then put them together into a thoughtfully constructed portfolio. Relatively few companies out there that can play that portfolio-builder role, he said.

There’s a vacuum of true national operators,” Bhatt said. “They’ve been very successful and done a great job at aggregating the portfolio.”

This is the role KKR sees for itself in the market. It can buy up properties or businesses piecemeal, then stitch them together and sell them to larger investors for what it calls a “portfolio premium.” 

KKR, which still owns about 35 million square feet of industrial property after the deal, remains active in the warehouse space, but the arena is getting very crowded.

In 2015, professional investors accounted for just about 8 percent of the purchases of warehouses in the country’s six top metros, according to Real Capital Analytics. By last year, that figure had climbed to nearly 25 percent.

In just the past year, prices have risen about 19 percent. RCA’s Jim Costello said industrial is the perfect asset class for private equity: It requires less in capital improvements than, say, an office building, and prices keep rising with increased demand from e-commerce.

The price growth at this level is indicative of investors just being hungry for assets and willing to pay up for the stability of the income stream that comes from owning the back end of the internet,” Costello said. “You kind of have to pinch yourself and ask, ‘Do we believe the math going into these price calculations?’”

Warehouses are just one component of the giant’s secular-tailwinds approach: Place big bets on life-sciences buildings, self-storage, student housing and apartments in Sunbelt states that nearly everyone agrees are as close as it gets to a sure thing.

If you look at the legacy of commercial real estate investment, up until around 10 years ago the whole world was dramatically overweight office and retail,” Rosenberg said. “We were incredibly fortunate to start our business 10 years ago with no historical exposure to these sectors, and this allowed us to build a franchise off of real estate 2.0.” 

In March, for example, KKR paid $1.1 billion to buy a 750,000-square-foot office complex in San Francisco, the second-largest market for life-sciences lab space in the country. It plans to repurpose that space for life-sciences tenants. Not only was it the second-biggest single-asset deal in the history of the Golden Gate City, it was inked at a hefty price: $1,440 per square foot. The company also picked up a stake in a 635,000-square-foot lab building in Boston’s Seaport District in September.

KKR is also buying properties in areas it thinks are seeing temporary disruptions. The Hudson Yards observation deck, for example, is a bet on tourism rebounding in New York. And last year, the company bought the $860 million portfolio of Brooklyn apartments alongside Dalan Management. It was the first major deal KKR did in the city, a market it had avoided up until that point because it thought prices were too high.

And the company is joining the single-family rental frenzy. But whereas private equity companies made a killing buying up distressed homes in the wake of the Great Financial Crisis, KKR is getting into the business while the sector is red-hot.

Don Walker, a housing analyst at John Burns Real Estate Consulting, said that could make it challenging to get the kinds of returns previous investors enjoyed.

There’s just not any opportunities to buy distressed homes anymore,” Walker said.

Succession: Season 3

KKR moved last year into its new offices at Hudson Yards, where it bought the top 10 floors at 30 Hudson Yards from the Related Companies. It’s now looking to expand its footprint there. 

(Little-known fact: Kravis and Roberts sat at a desk next to Related’s Steve Ross when they worked at Bear Stearns in the 1970s.)

The move represented a shift in the center of power for the city’s business elite. KKR had long been headquartered at the impossibly exclusive 9 West 57th Street.

Instead of rubbing shoulders with the masters of finance overlooking Central Park, KKR chose the Far West Side, where its employees and visitors now mingle with people from Facebook and CNN.

It used to be that the CEO lived on the Upper East Side and he or she would walk down Fifth Avenue into their Park Avenue skyscrapers,” said David Goldstein, a vice chair at commercial brokerage Savills. “I imagine KKR has the next set of decision-makers who are younger, perhaps a little more dynamic. Maybe they live in Tribeca. The decision-making is becoming more democratic.”

The location sets them apart. Apollo Global Management remains at 9 West, and Blackstone is staying put at its longtime headquarters at 345 Park Avenue. The Carlyle Group, headquartered in Washington D.C., is moving its New York offices to SL Green Realty’s One Vanderbilt. 

All this comes as KKR is going through a leadership change.

The ascension of Bae and Nutall, both 25-year veterans of the firm, to co-CEOs was a move several years in the making. However, people familiar with the thinking of Kravis and Roberts, who are staying on as co-executive chairs, say they plan to stay deeply involved in running the business and are downplaying any major change.

Across private equity, founders of the big firms are stepping aside to allow a new generation to take over, but it hasn’t always gone so smoothly.

At Carlyle, co-founders David Rubenstein and William Conway laid out a succession plan in 2017 that named two top executives, Kewsong Lee and Glenn Youngkin, as co-CEOs.

But Lee and Youngkin butted heads, and their internal conflict ended last year when Youngkin abruptly resigned.

A similar situation occurred at Apollo between the co-founders. Leon Black stepped down as CEO in March due to his ties to the disgraced financier Jeffrey Epstein, and it appeared that co-founder Josh Harris was in line to step into Black’s shoes. But a power struggle broke out between Harris and Marc Rowan, who ultimately won the job.

Cloud club

Kravis and Roberts made their company into a household name as one of the pioneers of the leveraged buyout business, but that was a different era. 

Blackstone supercharged its real estate business with the purchase of Sam Zell’s Equity Office Properties in 2007 for $39 billion, a move it was able to pull off through some high-wire dealing by selling off some of the biggest properties to Harry Macklowe right before the market crashed. It also bought Hilton that year, and sold the company a decade later for a $14 billion profit — one of the most lucrative leveraged buyouts of all time.

More recently, Blackstone announced it will sell the Cosmopolitan casino in Las Vegas for $5.65 billion — more than three times the $1.7 billion it paid to buy the troubled casino in 2014.

KKR’s got its own list of major league home runs. It pocketed over $7 billion on the 2007 buyout of European pharmacy company Alliance Boots, roughly quadrupling its investment when the company sold to Walgreens in 2015. 

That’s part of the reason why expectations for its real estate business are so high. KKR’s not used to being an afterthought. 

But it’s not a foregone conclusion that the private equity masters of the universe can show up with their checkbooks and muscle in on someone else’s ground.

Apollo tried to get into real estate in the 1990s when it teamed up with William Mack to launch Apollo Real Estate Advisors. That partnership ended in 2000 when Mack’s outfit spun out. Apollo relaunched its real estate group in 2008, but so far it’s underwhelmed.

KKR’s real estate arm has already surpassed Apollo’s, but that was never the goal. For KKR, anything less than being in the top three would be considered a disappointment. 

Because in high finance, just like with observation decks, being at the top matters. 

The post Levered and loaded: KKR looks to flex its real estate muscle appeared first on The Real Deal South Florida.

Boynton Beach approves 236-unit apartment project with 118 workforce units downtown

Rendering of The Pierce with Jeff Burns, CEO of Affiliated Development

Affiliated Development won approval for The Pierce, a mixed-use development in downtown Boynton Beach with 236 apartments, half of them rent-controlled workforce units.

Fort Lauderdale-based Affiliated outbid four other developers — including the Related Companies — for a mixed-use project at 115 North Federal Highway, which is owned by the city’s community redevelopment agency.

The development site is on a block bordered by Boynton Beach Boulevard on the north, Ocean Avenue on the south, Federal Highway on the east, and the Florida East Coast railroad on the west.

In their role as the CRA board of directors, Boynton Beach city commissioners on Tuesday approved Affiliated as the winning bidder in a request for proposal process to select a developer for the site, which is now a parking lot.

The four companies that competed against Affiliated in the RFP process were Related Urban Development Group LLC, U.S.A. Construction, E2L Real Estate Solutions LLC, and Hyperion Group LLC.

The CRA bought the 4.5-acre property from the Boynton Beach Congregational Church of Christ in 2018 for $3 million, according to property records.

The development site of The Pierce will be larger, though. The CRA has a contract to acquire three small properties — at 511, 517 and 529 Ocean Avenue — covering 0.4 acres on the south side of the same block. The CRA is planning to buy those properties by the end of this month and resell them to Affiliated Development, Jeff Burns, CEO of Affiliated, told The Real Deal.

“Part of the RFP was, if you want, you can include that [land] as part of your proposal,” Burns said. “So, we included it. Some people didn’t.”

Affiliated itself has a contract to acquire another property on the same block, the Ocean Food Mart at 101 North Federal Highway. Rajas Family Investments owns the retail property on the northwest corner of Ocean Avenue and Federal Highway, a busy intersection that Burns referred to as “Main and Main.”

In the RFP process, “the key component that we had and nobody else had was the Ocean Food Mart,” Burns said. Rajas Family Investments agreed to sell the property after more than a year of negotiations, he said. The deal includes payment of a lease-termination fee to the operator of the Ocean Food Mart.

Affiliated expects the cost of developing the eight-story Pierce project to total $73 million, including land costs. The company expects to pay $1 million for the site at 115 North Federal Highway, nearly $3.3 million for 101 North Federal Highway, and $3.6 million for 511, 517 and 529 Ocean Avenue.

The Pierce will blend 118 market-rate apartments and 118 workforce apartments that have lower monthly rents, and are reserved for tenants who earn as little as 60 percent and as much as 120 percent of area median income.

Designed by MSA Architects, the mixed-use development also will encompass 16,800 square feet of restaurant, retail, and office space. Seventy-nine percent of the site will be open to public use, including 150 public parking spaces.

Affiliated plans to sign a property purchase and development agreement with the Boynton Beach CRA by February 2022, complete the design and permitting phase of the Pierce project by November 2022, start construction in January 2023, and finish in July 2024.

Led by Burns and his partner Nick Roho, Affiliated Development specializes in residential redevelopment projects with a workforce housing component. For example, Affiliated won Hollywood approval in May for a subsidized plan to build The Tropic, a 208-unit rental development in downtown Hollywood where half of the apartments will be rent-controlled workforce housing units.

Affiliated also has developed subsidized multifamily projects with workforce units elsewhere in South Florida, including Fort Lauderdale, Lake Worth and West Palm Beach.

Last year, Affiliated finished raising $125 million in equity capital, mainly from public pension funds, to finance developments that include workforce housing.

[contact-form-7]

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Most everyone agreed that 2020 was, broadly speaking, one of the worst years ever. Now that we’re at the end, how should we consider 2021?

The rollout of vaccines revitalized our private lives just as it did business sectors across the nation, including real estate. The omnipresent climate crisis caused floods and fires of Biblical proportions. The reign of Cuomo came to an abrupt end. Elon Musk dumped Grimes and moved to a 400-square-foot, tiny home in Texas.

2021 can’t be encompassed in a single adjective. I’ve been sitting here trying to think of one for 15 minutes. “Buckwild” comes pretty close, but even more thorough are the stories in the December issue that not only look at the past year, but show us what dreams (or disasters) may befall us in 2022, like these:

Our cover story on KKR & Co., the storied private equity firm that has had a real estate arm for a decade, but truly burst onto the scene in October when it threw down half a billion dollars for the observation deck at Hudson Yards. The move signaled to the world that KKR is ready to bring the same energy to real estate that it has to its famed leveraged buyouts. We’ll see what rival Blackstone Group has to say about that.

Speaking of Blackstone, it’s one of two commercial behemoths diving into the residential market, where we set our scene. The investment firm, which made a killing on the homes it scooped up after the foreclosure crisis a decade ago, is now betting $6 billion that rent-to-own programs will be the next big thing. Will Home Partners of America deliver? Or will the tech-focused CoStar, already a giant of commercial real estate data, prevail in challenging Zillow’s Streeteasy as the city’s top residential listing service?

Meanwhile, Douglas Elliman is stepping out from Vector Group for its own spot on the trading floor. After netting over $70 million in losses during the first half of 2020, the company has profited consistently during the resi market’s resurgence. The ticker says “DOUG,” but the writing on the wall suggests the future of brokerages is uncertain, and selling could make Howard Lorber and his fellow investors a lot of money.

Between supply chain disruptions bottlenecking construction and energy shortages driving up landlords’ bills, it’s shaping up to be a brutal winter. A delayed shipment here or slight backlog there is surmountable. But the delicate equilibrium of the free market can only handle so much until localized issues start to have macroeconomic effects.

“The fox knows many things, but the hedgehog knows one big thing,” wrote Archilochus. Attorney, polymath and hedgehog of New York real estate Bruce Stachenfeld can quote Greek poets in casual conversation and has no tolerance for “sleazeballs, assholes and morons.” In this month’s Closing interview, Stachenfeld waxes poetic on collecting pigs and scotch, forging his own path and how he gets deals done.

All these and so much more. Subscribe today and read the new issue here.

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From left: Carlos Melo, Jose Luis Ferreira de Melo and Martin Melo of Melo Group (Melo Group, Google Maps/Illustration by Steven Dilakian for The Real Deal)

UPDATED, Dec. 3, 11:48 p.m.: The Melo Group wants to build residential high-rises with retail on a full city block in Miami’s Arts & Entertainment District, and has the property under contract for $105 million, The Real Deal has learned.

The Melo family’s development firm expects to close in mid-December on just over 3 acres between Biscayne Boulevard and Northeast Second Avenue as well as Northeast 17th Street and 17th Terrace, said Martin Melo, company principal. This will be an all-cash deal.

Martin Melo leads the company with his brother Carlos and their father Jose Luis Ferreira de Melo. The three moved from Argentina to Miami when they saw the city’s potential during a 2001 visit.

The firm’s latest purchase is a long-term investment play, as development plans are yet to be hammered out and city approvals sought. It is likely to be a project for the next real estate cycle, said Carlos Melo.

The preliminary vision is for a four-tower complex that could rise up to 60 stories with both apartments and condominiums as well as retail.

“We need to know, at the time we decide to develop, how the market is, what is possible to develop in the market, and develop what the market demands,” Carlos Melo said.

The long-term vision is in line with the Melo Group’s strategy of assembling land years ahead of construction.

The site now is home to a Burger King and a two-story mixed-use commercial building, both fronting Biscayne Boulevard, as well as a house farther west at 221 and 235 Northeast 17th Street that has been converted to commercial uses. Most of the parcels are vacant or parking lots.

The Fort Lauderdale-based selling entities are led by James Goldstein, according to records.

Michael Fay and John Crotty of Avison Young represented the seller.

The project marks the Melos’ continued investment in the Arts & Entertainment District. The firm also just scored a $21.7 million refinancing for its Second Plaza apartment tower at 222 Northeast 25th Street that was completed a decade ago, according to Martin Melo.

Previously called the Omni, the Arts & Entertainment District also is home to Melo’s Miami Plaza, Melody Tower, Square Station and Art Plaza.

More recently, Melo has turned its attention to downtown Miami, completing a pair of 52-story towers, called Downtown 5th, in August. The firm is set to close on a $250 million permanent loan on this project next week, Martin Melo said.

It is now building the Downtown 1st rental tower with the help of a $75 million construction loan obtained in November.

The company’s bet on the multifamily market comes amid high demand for apartments that is pushing up rents to unprecedented levels.

Still, Melo Group also is a major condo developer.

In the Edgewater neighborhood, just north of the Arts & Entertainment District, Melo built Aria on the Bay, a condo tower, and is now constructing Aria Reserve, a two-tower, roughly 800-unit condo development at 711 Northeast 23rd Terrace. In June, it launched sales of the first tower, with 391 units. Melo assembled the land for the project over the course of a decade.

In all, the firm has completed a total of 6,000 condos and apartments in and near Miami, with another 2,500 underway, according to a release.

[contact-form-7]

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Gomez Development scores $45M loan to build Aventura medical building

Rendering of the development site at 21291 Northeast 28th Avenue in Aventura and Gomez Development Group principal Marlon Gomez. (Gomez Development Group)

After closing on an Aventura site, developer Marlon Gomez’s firm secured a $45 million loan to build a medical office building on the property.

Miami-based Gomez Development Group plans to use the proceeds from the Parkview Financial loan to build a speculative 142,000-square-foot, seven-story project at 21291 Northeast 28th Avenue, according to a press release. The property is adjacent to Aventura Hospital and Medical Center.

A Gomez affiliate paid $19 million for the 1.63-acre site in October, according to records. The seller was Aventura Medical Center LLC, managed by Miguel Carlos Cadet, which retained an investment stake in the proposed project.

Gomez plans to break ground next year on the new building, which will also have a four-level parking garage with 346 spaces, the press release states. The developer plans to finish construction by the fourth quarter of 2022.

In a statement, Parkview Financial founder and CEO Paul Rahimian said his company provided the loan because it was a compelling financing opportunity on behalf of an “experienced local borrower.”

Gomez is currently co-developing a 425-unit multifamily building with ground-floor retail in Miami’s Spring Gardens neighborhood. Gomez and his partners Emir Dereli and Jason Susar paid $17 million for the 68,000-square-foot assemblage in 2019.

Gomez’s firm also built Fontaine Parc, a 133-unit, mid-rise apartment building in the Fontainebleau area of Miami.

Since launching a real estate debt fund in 2015, Parkview has executed more than $2.5 billion in financing for multifamily, retail, office, industrial and mixed-use projects, the release states.

The market fundamentals in and around Aventura continue to be solid, with growth from both residential and business standpoints, Rahimian added. Nearby, Rieber Development plans to build an assisted living facility with medical offices and retail, called 1212 Aventura. The developer just scored an $83.8 million construction loan for the project.

South Florida’s medical office buildings are in hot demand. In October, Forte Capital Management paid $11 million for a Hollywood medical office building adjacent to Memorial Regional Hospital South. The same month, Irvine, California-based IRA Capital picked up a single-story outpatient center in Boca Raton for $16 million.

In September, a two-story office building traded in a $17.2 million deal involving two affiliates of Montecito Medical Real Estate. And Healthcare Trust of America bought the 1905 Medical Center in Boca Raton for $50 million.

[contact-form-7]

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Trump International Hotel D.C. and Donald Trump (Getty, Trump Hotels)

Trump International Hotel D.C. and Donald Trump (Getty, Trump Hotels)

Donald Trump’s exit from his Washington, D.C., hotel could net him a nine-figure payday.

The former president could score a profit of more than $100 million from the sale of Trump International in the nation’s capital, according to the Washington Post.

CGI Merchant Group was reported last month to be in contract to buy the hotel lease for $375 million. Experts told the outlet the Old Post Office building’s historical significance, the hotel’s unique position among the city’s luxury hospitality properties and a hot hotel market likely boosted the sale price — and the former president’s potential profit.

Trump owes Deutsche Bank $170 million he borrowed for the project. He would also owe the General Services Administration part of the sales price, estimated to be less than $10 million. The Post reported the figures from financial documents, combined with the $3 million in annual rent Trump has been paying the GSA, show his profit could come out to more than $100 million.

If the sale closes, the 263-key hotel will drop the Trump name, the Wall Street Journal reported last month. CGI is reportedly working with Hilton Worldwide Holdings to have the hotel branded and managed by Hilton’s Waldorf Astoria Group.

The contracted purchase price works out to about $1.43 million per key. According to the Post, that would easily surpass the per key record set by the 2016 sale of Capella Hotel Georgetown, which worked out to $1.3 million per key.

The deal is expected to close during the first quarter of 2022.

The Trump Organization won approval to redevelop the Old Post Office building on Pennsylvania Avenue in 2012, beating out the likes of Hilton and Marriott. The company agreed to spend an estimated $200 million renovating the property.

After Trump took office the former president resigned from his companies while putting his assets in a trust run by his sons, allowing Trump to continue benefiting financially. The move sparked worries about domestic and foreign interests using the hotel after its opening in 2016 to curry favor with Trump’s administration.

In October, the House Oversight Committee released documents detailing losses of more than $70 million at the hotel during the Trump presidency. The documents also revealed a loan of more than $27 million made by one of Trump’s holding companies, as well as the $170 million loan from Deutsche Bank.

The Trump Organization previously tried to sell the lease for $500 million, though the price dropped closer to $400 million after Newmark took over marketing from JLL, which departed in the wake of the Jan. 6 attack on the Capitol.

[WaPo] — Holden Walter-Warner

[contact-form-7]

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JV buys West Palm Beach office building for $13M

District Pointe with Verdex President Rex B. Kirby, Jr. and CEO of Index Rickard Haraldsson (Verdex, Index Invest)

A joint venture between an investment firm and a construction group purchased an office building in West Palm Beach.

District Pointe LLC, a joint venture between Sweden-based Index Investments and West Palm Beach-based Verdex Construction, bought the 65,760 square-foot building at 1501 Belvedere Road for $13.4 million, according to a release. The sale comes out to $204 per square foot.

Index Investments’ North American headquarters is in Jupiter.

The building, built in 1983, was originally owned by Houston, Texas-based Rinker Materials Corp & Subsidiaries, which paid $775,000 for the property in 1979, according to records. San Pedro, Mexico-based CEMEX acquired Rinker with a $14.3 billion takeover bid in 2007, according to published reports.

A Colliers team, led by Mark M. Rubin and Bastian Laggerbauer represented Index and Verdex. Steve Hyatt and Daniel Silver of Berger Commercial Realty represented CEMEX. The deal was completed off-market.

The property has been a single-tenant building since it was built, used by Rinker, then CEMEX. The joint venture plans to remodel the building, and Verdex will be a full floor tenant, with space available for more tenants, according to a release.

This is the latest office deal in South Florida’s hot office market, despite the pandemic.

Last month, American Commercial Realty picked up a North Palm Beach mixed-use property for $36 million. Called Crystal Cove Commons, the property features 75,000 square feet of ground-floor retail next to a four-story office building.

Also in November, In separate deals totaling $49.1 million, Tricera Capital and Brookwood Financial Partners picked up two Class A office buildings in Boca Raton. Brookwood Financial, a Beverly, Massachusetts-based real estate investment firm, bought the six-story office building known as Sabre Centre I at 5901 Northwest Broken Sound Parkway for $29.1 million. Miami-based Tricera paid $20 million for Milan at Town Center at 1675 North Military Trail.

In August, Acquest Development paid $23 million for a pair of office buildings that are part of South University’s Royal Palm Beach campus. Acquest paid $15.3 million for 9801 Belvedere Road and an adjacent 3.2 acre parking lot, and $7.7 million for the building at 9901 Belvedere Road.

[contact-form-7]

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Jay Shidler, founder and managing partner, The Shidler Group, in front of 600 Sealofts Drive in Boynton Beach, FL (The Shidler Group, Sealofts at Boynton Village)

Real estate investor and philanthropist Jay Shidler, who once was Hawaii’s richest person, bought the Sealofts at Boynton Village apartments for $153 million.

His family office, The Shidler Group, bought the complex at 600 Sealofts Drive from an affiliate of Boston-based Rockpoint Group, records show.

The buyer immediately executed a lease for the Sealofts land to an entity also tied to Shidler Group.

This is in line with the Honolulu-based company’s strategy that intertwines real estate investment with philanthropy. Shidler Group puts the land of many of its multifamily properties in irrevocable trusts that then donate the ground-lease income to educational and other institutions, according to the firm’s website. Shidler Group has donated $2.1 billion from ground-lease income, including to the University of Washington’s law and medicine schools, the University of Hawaii Foundation, and the University of Hawaii’s business school, which is named after Shidler.

In 2013, Shidler ranked as the richest person in Hawaii with a net worth of $700 million, according to Business Insider.

The 433-unit Sealofts has four buildings on 19.4 acres, property records show. The deal breaks down to $353,349 per unit.

Sealofts offers one- to three-bedroom units, as well as townhouses with up to 1,700 square feet of space, according to its website. Units feature wood-style floors, stainless steel appliances and quartz countertops. The pet-friendly community has a pool, gym, yoga and Zen spaces, electric vehicle charging stations, sand volleyball court, storage spaces and a conference room.

Apartments.com lists monthly rents from $1,825 to $3,800.

Rockpoint Group, which built the community in a joint venture with Houston-based Morgan Group in 2020, scored a $66 million construction loan for Sealofts in 2019, after the joint venture purchased the site for $19.5 million in 2018.

Rockpoint Group is a real estate private equity firm co-founded by Keith Gelb and Bill Walton, according to its website. Morgan Group is a family owned firm that focuses on multifamily, developing or buying more than $3 billion of apartment properties consisting of over 20,000 units, according to its website. Led by Michael and Philip Morgan, the company currently owns or manages more than 10,000 units across Texas, California, Arizona, Colorado and Florida.

Shidler founded Shidler Group in 1972. The company has made debt and equity investments in more than 2,000 properties nationwide and has started five New York Stock Exchange-listed corporations that collectively have issued more than $20 billion of debt and equity securities, according to the firm’s website. Shidler Group also has a platform to invest in cost-burdened markets with a shortage of affordable housing.

The South Florida multifamily market has been booming, fueled by high demand that has pushed up rental rates, pricing out low- to middle-income locals.

In other recent Boynton Beach apartment deals, Blackstone bought the One Boynton apartment complex in September for $171 million.

[contact-form-7]

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(Getty)

(Getty)

Prospective homebuyers were in for some of the worst market conditions imaginable last week, according to a report from Redfin.

The number of homes on the market hit a historic low during the week ending Nov. 28, Redfin reported: fewer than 539,000 active listings, a 26 percent year-over-year decline. The previous low point this year was in February, when about 577,000 homes were for sale.

For the four-week period ending Nov. 28, active listings declined 23 percent from 2020 and 42 percent from 2019.

With demand still strong and supply low, house prices rose. The first four weeks of November resulted in a record median sale price of $360,375, surpassing the July 25 mark of $359,637. The median sale price represents a 14 percent increase year-over-year from 2020, when it was $316,000, and a 1.5 percent gain from the previous month.

Sellers are aware that the housing market is working in their favor. Asking prices for newly-listed homes in the four-week period were up 12 percent from 2020 and 27 percent from 2019.

The new month could bring even more bad news for prospective buyers.

“The number of homes for sale typically declines another 15 percent in December,” stated Redfin’s chief economist, Daryl Fairweather. “That means that by the end of the year, there will likely be 100,000 fewer homes for sale than there were in February when housing supply last hit rock bottom.”

Buyers also have the misfortune of needing to make one of the biggest decisions of their lives very quickly. In the first four weeks of November, a third of homes found buyers after being on the market for a week or less.

In the four-week period, homes were on the market for a median of 25 days. In 2020, the median was 31 days; in 2019, it was 45 days. Pending home sales were up 8 percent year-over-year and a whopping 49 percent from 2019 in the four-week timeframe.

Buyers with the ability to wait may find conditions more forgiving in the new year, although the uncertainty surrounding coronavirus and its omicron variant clouds the picture.

“I think more new listings will hit the market in the new year, but there will also be a long line of buyers who are queuing up right now,” Fairweather stated.

Buyers can also take heart in the latest S&P CoreLogic Case-Shiller U.S. National Home Price Index. While it showed U.S. home prices increased 19.5 percent year-over-year in September, there was also evidence that the monthly growth in housing prices is flattening out.

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Enterprise President and CEO Priscilla Almodovar (Getty)

Enterprise President and CEO Priscilla Almodovar (Getty)

A nonprofit playing a major role in affordable housing across the country recently closed two funds that combined for a $365 million commitment.

Enterprise Community Partners closed two funds in its Enterprise Housing Partners Funds series, which has had three dozen iterations. Both funds utilize the Low-Income Housing Tax Credit, Real Estate Weekly reported.

The $365 million was contributed by 17 investors. The funds will be used to create or preserve more than 3,500 affordable rental homes across 17 states, in 35 different properties.

“Our investors come to us with the intent to make a real impact, and with their support we are able to channel critical resources into creating and preserving thousands of affordable homes nationwide,” said Scott Hoekman, president of the housing credit investments business for the nonprofit.

According to REW, Enterprise has closed four funds this year alone, raising $800 million for almost 8,000 affordable rental homes in the United States. Its two latest funds will contribute to properties in more than a dozen states, including California, Florida, Illinois and New York. The funds are also expected to create more than 5,700 jobs and generate $146 million in income for small businesses.

In one example of the kinds of investments Enterprise makes, the nonprofit put $4.5 million into a Hudson Partners Development plan this year to construct a four-building, 88-unit apartment complex in a Schenectady, New York, Opportunity Zone. The development will offer workforce housing and more than half the project will be affordable to renters earning less than 80 percent of the median area income.

MetaProp, a New York-based venture capital firm, agreed to partner with Enterprise in 2019 to invest in startups addressing the lack of affordable housing across the country. MetaProp said the firm would invest $5 million in a 12-month span, though Enterprise’s financial commitment was not disclosed.

Enterprise says since 1982, when it was founded by the prominent builder James Rouse (the developer behind the South Street Seaport) and his wife Patty, it has invested $44 billion and created 781,000 homes across all 50 states.

[REW] — Holden Walter-Warner

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Key International, Wexford snatch Pompano Beach Marriott for $54M

Key International co-presidents Inigo and Diego Ardid, President of Wexford Real Estate Investors Joseph Jacobs and Fort Lauderdale Marriott Pompano Beach Resort & Spa (Key International, Wexford REI, Apex Capital Realty)

UPDATED, Dec. 2, 1:45 p.m.: In a $54 million deal, a Marriott-branded hotel in Pompano Beach traded for a second time in three years.

Miami-based Key International and West Palm Beach-based Wexford Real Estate Investors teamed up to acquire the Fort Lauderdale Marriott Pompano Beach Resort & Spa at 1200 North Ocean Boulevard, The Real Deal has learned. The acquisition breaks down to $246,575 per room for the 219-key beachfront hotel.

The oceanfront property sold for nearly $9 million above its previous sale price three years ago. The seller, a joint venture between Pan Am Equities and Big Move Properties, paid $45.1 million for the Marriott Pompano Beach in 2018, according to records.

Apex Capital Realty’s Miguel Pinto and Garrick Benabe represented the seller in the latest deal. Ovy Anghel, also with Apex, represented Key International.

The hotel was completed in 2013 by Carlyle Group and Urgo Hotels, three years after the firms acquired the site for $8.5 million.

Doug Levine, founder and CEO of Big Move Properties, told TRD that his firm and Pan Am were not marketing the Marriott Pompano Beach, but that Apex Capital approached them about Key International and Wexford Real Estate having an interest in acquiring the property.

“The buyer had a relationship with Marriott and had managed other Marriott properties,” Levine said. “We thought there was a good likelihood they would close. We shook hands and we closed.”

In a statement, Pinto said that there is great demand for “value-add hospitality investment opportunities” in South Florida as developers and investors are looking to reposition and upgrade waterfront properties. By revamping amenities and the food and beverage operations at the Marriott Pompano Beach, significant upside is possible, Pinto added.

Key International, led by by co-presidents Inigo and Diego Ardid, and Wexford Real Estate, led by President Joseph Jacobs, are planning a major renovation for the Marriott Pompano Beach that includes creating a new, resort-style pool deck and renovating the rooms as well as the on-site restaurant, according to a press release.

The two firms have a long-term partnership and have developed multiple beachfront properties. They currently own hotel properties in Panama City Beach, Jacksonville and Fort Lauderdale. Key International is a full-service real estate firm with over 30 years experience, and Wexford Real Estate, a Wexford Capital spin-off, has invested in excess of $650 million in equity in real estate deals since 2010, according to the release.

South Florida has seen other major hotel trades recently. In October, Wheelock Street Capital paid $106.4 million for The Ben West Palm Beach, a new hotel near the city’s downtown.

Last month, Menin Development picked up Crane’s Beach House Boutique Hotel & Luxury Villas in Delray Beach for $10 million. And the Finvarb Group bought The Landon Bay Harbor-Miami Beach in Bay Harbor Islands in another $10 million deal.

Also in November, Witkoff and Monroe Capital announced a massive makeover for The Shore Club in Miami Beach after acquiring the historic hotel property from HFZ Capital Group.

And in June, Pebblebrook Hotel Trust paid $270 million for the Margaritaville Hollywood Beach Resort in Broward County, marking the year’s largest investment sale.

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WeWork CEO Sandeep Mathrani (Mathrani/Wikipemedia, Getty)

WeWork CEO Sandeep Mathrani (Mathrani/Wikipemedia, Getty)

WeWork’s life as a public company is off to a rough start.

The coworking firm said Wednesday it has to revise its financial statements for three quarters after finding that it misclassified some of its public shares. WeWork disclosed that it previously counted certain shares as permanent equity, but those shares should have been called temporary equity.

WeWork also said the company’s management concluded there “was a material weakness in internal control over financial reporting relating to the interpretation and accounting” for certain parts of its shares.

The company announced the news in a filing with the Securities and Exchange Commission on Wednesday afternoon. WeWork’s shares were down 5.2 percent to $8.46 in after-hours trading.

The announcement comes about a month after WeWork merged with BowX Acquisition Corp to go public through a special purpose acquisition company. The SPAC came two years after WeWork’s previous attempt at going public failed.

Under new leadership, the company is cutting costs and trying to carve a pathway to profitability. It is also distancing itself from co-founder Adam Neumann.

The misstatement, though, is a blow to WeWork’s bid for a new identity.

WeWork said in preparation of the financial statements through Sept. 30, it reevaluated an accounting classification of the Class A common stock issued as part of units sold in the IPO by the company’s predecessor, BowX Acquisition Corp. WeWork determined that the shares include “certain redemption features” that are “not solely within the company’s control” and thus should not have been classified as permanent equity.

The mischaracterization of these shares was included on BowX’s annual report filed in 2020 as well as two quarters of BowX’s financial statements and on WeWork’s third-quarter earnings report.

WeWork said those financial statements “should no longer be relied upon.”

Earlier this month, Neumann made his first public comments since his ouster and expressed “tremendous regret” over the way the failed public offering hit employees at the firm. During the company’s 2019 IPO attempt, it came to light that WeWork had substantial losses and numerous related-party transactions.

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Deepak Khosa and the apartment complex (Cushman & Wakefield, Khosa)

Deepak Khosa and the apartment complex (Cushman & Wakefield, Khosa)

Deepak Khosa keeps stacking up South Florida apartment complexes, adding a 105-unit property in Homestead to his growing multifamily portfolio.

Khosa, a real estate investor who owns Palm Beach Gardens-based Atlantic Property Services, told The Real Deal that his company recently paid $10.6 million for Card Sound, a garden-style community at 27707 South Dixie Highway. The purchase was financed with a $7.5 million Freddie Mac loan, Khosa said via text message.

“We have seen the south part of [Miami-Dade] getting more migration due to the affordability factor,” Khosa said. “We will make significant improvements to the property.”

The deal equates to $100,952 per apartment.

The seller is Victoria One Card Sound LP, an entity whose ownership group includes Todd Linden, co-principal of Circle Capital, a Coral Gables-based real estate firm that focuses on multifamily, senior living and retail, according to its website.

In 2014, Victoria One paid $6.4 million for Card Sound, which spans 4.52 acres, records show. It is a collection of four two-story buildings completed in 1974 and renovated in 2012.

A Cushman & Wakefield team led by Calum Weaver and Robert Given represented the seller.
The deal closed at $700,000 below the $11.3 million listing price.

Card Sound is in an area of Miami-Dade experiencing one of the highest population growth rates in Florida, according to Cushman & Wakefield’s offering. In 2020, the south Dade-Homestead submarket absorbed 1,092 units, accounting for 30 percent of all apartments absorbed in Miami-Dade last year, the offering states.

After making renovations, the new owner could experience a 40 percent return on investment by jacking up rents of about $100 per unit, according to the offering. Card Sound, which is 98 percent occupied, offers modest monthly rentals at a time demand for apartments across South Florida has sent rents skyrocketing. According to the offering, rents start at $693 for a 305-square-foot studio and go up to $993 for a 625-square-foot two-bedroom apartment.

Khosa has been in acquisition mode most of the year. Five months ago, he acquired the seven-building, 57-unit Lake Arjaro Apartments in West Palm Beach for $7.9 million. In February, Khosa closed on the Seaspray Inn and Beach Resort on Singer Island for $8.1 million. He is planning on converting and renovating the 50-key hotel into a multifamily property.

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Oren and Tal Alexander; The Alexander Team at Douglas Elliman; powerhouse brokers will be metaverse’s first luxury broker team (iStock, BFA)

The metaverse is getting its first luxury brokers, the clearest sign yet that the value of virtual property may actually be real.

Oren and Tal Alexander, Douglas Elliman’s top performers for the last two years, formed a partnership with Republic Realm, the metaverse developer that paid a record $4.3 million this week for a virtual estate. They plan to develop and sell property in an “architecturally significant master-planned community” in the virtual world, Republic Realm said.

“We want to just focus on trophy properties in the various metaverses,” Oren Alexander said in an interview. Location and design will be prime considerations.

Metaverse champions say virtual property has weight even if you can’t touch it, wear it or live in it. Its value, they say, derives from the bragging rights: Not many people get to live in or even visit real mega-mansions, but everyone knows who owns them.

The arrival of a team with cachet in the world’s wealthiest real estate enclaves lends credibility to a market many still think may be just a fad — or worse, a bubble. The brothers, known as the Alexander Team, are among New York and Miami’s highest-grossing residential real estate brokers, with a client list that ranges from Ken Griffin to Kanye West.

Elliman isn’t directly involved in the deal because the Alexander brothers serve as independent contractors for the firm.

The constellation of luxury virtual properties will span The Sandbox, Decentraland and at least one other unidentified metaverse and will carry the Alexander Team branding, Oren Alexander said.

Republic Realm is best known as the creator of Fantasy Islands, an early real estate NFT project in The Sandbox and among the highest-grossing NFT ventures on record. It recently sold a virtual “mega yacht” in the metaverse for 149 Etherium, the equivalent of about $650,000 at the time.

Janine Yorio, co-founder of Republic Realm, said early investors in digital property are “pioneers and visionaries” who stand to benefit most as the metaverse expands. “They understand that if you get in early, something like the metaverse can be enormously profitable,” she said.

Demand from The Alexander Team’s existing clients and the brothers’ own interest in the metaverse’s cultural and commercial possibilities inspired the move. Alexander said he and his brother are investors in digital property themselves, and that they’lll market the newly developed mansions to the team’s real-world clients.

People inside and outside the cryptocurrency sphere see a “wide range of opportunities” in the metaverse, Alexander said.

“We believe heavily in this metaverse digital real estate world,” he said. “The world has changed, society has changed people — especially the younger generation, who are not only gaming in the digital world, but to some extent living in the digital world.”

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Richard Lampen and Howard Lorber

Richard Lampen and Howard Lorber

Richard Lampen was ready for a new assignment.

It was the spring of 2020, and Lampen had just pulled off the sale of two of Vector Group’s portfolio companies for more than $1.5 billion. But what would follow was trickier: how to get top dollar for Douglas Elliman, a traditional real estate brokerage, at the height of a pandemic that had frozen the industry.

By late 2020, however, the housing market had roared back to life and Elliman, after narrowly remaining in the black in 2018 and 2019 and racking up $74 million in net losses during the first half of 2020, was once more making money. The brokerage reported a net income of $12 million in the third quarter and has reported quarterly profits since. And investors were back, eager to pour money into brokerages that could apply technology to gain a bigger slice of the $8.5 trillion residential market.

Lampen was ready to capitalize on the moment. He had been building out Vector’s proptech arm, knowing that investors were sweet on the sector. In August, roughly a year after getting started, an independent Elliman was incorporated in Delaware.

In November, Vector announced that Elliman would be spun off as its own entity, trading on the New York Stock Exchange under the ticker DOUG. The proptech investment arm, New Valley Ventures, would be part of it. Though the spinoff was billed by Vector boss Howard Lorber as a way for the brokerage to directly tap the capital markets, many wonder whether it’s the opening move in a much bigger game — gearing Elliman up for a sale that would allow Lorber and his partners to cash out at a time when the business of brokerage is in flux.

If Elliman were to be valued at one or 1.5 times revenue, the company could fetch up to $2 billion, according to Steve Murray, a brokerage valuation consultant and co-founder at REAL Trends. That’s despite the fact that brokerages pass on most of their revenue to agents.

“There’s an opening for them to get a very premium price for that brokerage right now,” Murray said. “It’s a smart move by Howard and Richard.”

Citing an SEC-mandated quiet period, Elliman declined to comment for this story. A high-level source with knowledge of the company denied there were any plans for Elliman to be sold and said Lorber, 73, has no plans to leave or retire.

Proptech plays

Lampen, 68, is certainly battle-tested. Over nearly two decades, his mandate has been to boost profitability at Vector’s subsidiaries, and he’s done it in a way that’s often led to a sale. The type of business hasn’t seemed to matter. Lampen has been at the helm of a chain of specialty music stores, a textile company, a liquor brand conglomerate and an independent broker-dealer.

Armed with that experience, he got to work. He enlisted Daniel Sachar and David Ballard, two former colleagues with tech pedigree. They began interviewing founders and placing bets on startups they hoped could revolutionize residential real estate. Sachar, who is Lampen’s son-in-law, became the face of the venture, while Lampen handled the M&A.

The Elliman spinoff would debut with $200 million in cash on its balance sheet and no debt, compared with Vector’s $1.4 billion debt load and $207 million in cash.

Analysts that have been following Vector weren’t surprised. Oppenheimer’s Ian Zaffino called it a move he’s waited seven years for, citing Vector’s “very entrepreneurial” management and the fact that “real estate and tobacco never made much sense together.” Oppenheimer upgraded Vector’s rating on the news, as did Barclays.

Lorber would be the new company’s CEO, Lampen would be COO and Ballard CTO. Sachar would continue to helm the proptech VC arm. In September, he spoke at Las Vegas proptech conference BLUEPRINT, where he called Elliman an example of “a business that was doing very well with the way things were done for a long time” until the pandemic.

“It forced upon us, and many other businesses in our industry, the investments and innovations that were very much necessary and probably long overdue,” he said.

So far, New Valley Ventures has poured more than $7 million into 13 companies, including an electric vehicle charging company and a custom home search AI platform. Residential proptech startups may see it as an attractive partner as Elliman already has an in with many of their potential customers.

“They’re not just investing in a ton of companies off the bat,” said Jonathan Klein, a proptech consultant who was in the audience at BLUEPRINT. “They’re definitely in touch with the right sort of niche conversations.”

Worthy of consideration

By going public, Elliman might be able to take advantage of a fundamental misunderstanding of the brokerage business.

According to Murray, there’s a massive mismatch between the real-world values of brokerages and what the public markets seem to think they’re worth. He’s fielding calls from investment bankers with billions they’re looking to spend on residential brokerages that are “technology-enabled” and come with a compelling “growth story.”

It’s insane. They don’t understand the nature of our business.

Steve Murray, REAL Trends

Brokerages are typically valued at about eight times EBITDA, which should peg Elliman’s worth at about $850 million, Murray said. But public investors are willing to value brokerages on a multiple of revenue, a valuation approach that’s typical of high-growth software-as-a-service companies.

That approach, however, ignores the fact that brokerages pass on the lion’s share of revenues to their agents in the form of commissions. Simply put, $500 million of revenue for Elliman means a lot less than $500 million of revenue does for Salesforce.

“It’s insane,” Murray said. “They don’t understand the nature of our business.”

Elliman’s spinoff indicates that management believes it should be trading at a premium compared with Vector, which closed at $15.26 per share on Dec. 1, or its competitors, according to a former investment banker. At the close on Dec. 1, Compass shares were $8.64, Realogy was $14.82, Redfin at $38.16 and eXp Holdings at $34.51.

A premium share price means a company can offer fewer shares by way of payment in an acquisition, which rewards shareholders instead of diluting them. Oppenheimer pegged Elliman’s valuation post-spinoff at $12 per share, or just over $900 million, while Barclays gave a higher range of $16 to $21, which means it could be worth between $920 million and $1.7 billion.

“A cyclical stock in an up cycle can attract punchy multiples (it should ideally be reverse),” Barclays analysts wrote in their research note on the spinoff.

Once the separation is complete, Elliman will need to show investors explosive growth, and it’s likely they’ll try to do that through acquisitions. Compass went on an M&A spree after raising hundreds of millions of dollars in venture capital, buying up smaller brokerages, title insurance companies and other residential startups.

Murray said Lampen asked him to keep an eye out for good opportunities for the firm and he’s also gotten questions from brokerages about whether it’s more advantageous to market themselves to Elliman pre- or post-public spinoff. Murray’s answer is, unequivocally, after.

Elliman, like Compass and Realogy before it, is also planning to build out its ancillary businesses such as mortgage, title and escrow. For Zach Aarons, co-founder of proptech venture firm Metaprop, the convergence of business models between startup brokerages like Compass and Side (which Metaprop backs) and traditional incumbents reinventing themselves could be a concern in the long run.

“A lot of other people are rolling out a similar playbook,” said Aarons, who has taken money from New Valley Ventures for Metaprop. “That’s caused an obfuscation of people’s brands and what they stand for…. It’s like if you can go everywhere for everything, where do you start?”

Talent wars

There will also be pressure on Elliman to retain top agents and the workhorses who bring in the bulk of its revenue. At the moment, it’s hard to tell what they think because the company has them under what amounts to a gag order.

“I can’t defy the orders,” one agent said via text.

Elliman will have 10 million shares to offer as rewards to agents, employees, executives and acquisition targets starting next year. One top team at Elliman had been considering leaving the firm as of early November, sources said. When asked, all parties denied the accounts and the team leaders pointed to the coming spinoff.

“Right now is my best time at Elliman,” said one top broker. “I’m going to get a lot of shares.”

There’s an undeniable comparison to how agents viewed stock options at Compass, which made waves for luring brand-name agents with equity. The company was once valued at $6.4 billion in the private markets and went public in April, with some agents comparing their shares to Apple and Tesla stock.

As Christmas approaches I sing my favorite carol: It’s beginning to look a lot like Compass.

Leonard Steinberg, Compass

But Compass’ shares have plunged more than 50 percent since then, amid a broader market reckoning in the public markets – about half of companies that IPO’d this year at a valuation of $1 billion or higher are now trading below their listing price, according to the Financial Times.

For rival brokerage leaders, it’s a cautionary tale that underlines why cash is king. But for those that prefer upfront payment, Elliman has that covered — its new award program also includes discretionary cash awards.

Leonard Steinberg, a longtime top agent at Elliman before joining Compass in 2014, noted that the whole narrative around technology, growth and agent equity feels familiar.

“As Christmas approaches I sing my favorite carol,” he joked before breaking out into song: “It’s beginning to look a lot like Compass.”

Katherine Kallergis contributed reporting.

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Mark Zuckerberg, co-founder and CEO of Meta Platforms, Inc., in front of 1345 Crossman Avenue, one of four properties Meta leased in Sunnyvale, CA (Getty Images, LoopNet)

UPDATED Dec. 1, 2021, 6:40 p.m.: Facebook parent Meta said Wednesday it signed more than 1 million square feet of new leases in the Bay Area to reduce worker commute times.

The company has leased new space in Burlingame and Sunnyvale, spokesperson Chloe Meyere said in a statement.

“These offices will help support our employees’ evolving workforce needs and help make progress on our company’s net-zero carbon emission goal by reducing commute times and supporting local public transit infrastructure,’’ Meyere said in the statement.

People with knowledge of the deals who asked not to be named told The Real Deal that Meta leased more than 700,000 square feet in four Class A offices at 1275-1395 Crossman Avenue in Sunnyvale and almost 520,000 square feet over two existing buildings and one planned structure at 555, 567, and 577 Airport Boulevard in Burlingame.

The company didn’t disclose the locations and size of the new offices in its statement.

Meta’s lease of the four Crossman Avenue buildings, dubbed Moffett Green by owner Tishman Speyer and listing broker Newmark, is believed to be the single largest private-sector office lease in the U.S. this year, according to Tishman Speyer. It follows Apple’s lease of about 700,000 square feet in Sunnyvale earlier this year and underscores the city’s status as Silicon Valley’s preeminent office market.

The company’s lease in Burlingame adds to its existing footprint in the Peninsula city; its Oculus division pre-leased 767,000 square feet across four buildings there in 2018.

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Update: Adds Tishman-Speyer’s statement that it is the single-largest private-sector office lease in the U.S. this year.

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Joe Furst of Place Projects, Ned Grace and Damien Barr of NDT Development and a rendering of the Nora District Redevelopment (ArquitectonicaGEO, Place, Kangra)

Joe Furst of Place Projects, Ned Grace and Damien Barr of NDT Development and a rendering of the Nora District Redevelopment (ArquitectonicaGEO, Place, Kangra)

Downtown West Palm Beach’s growth has caught the eye of developers and real estate investors, but one district has been left out of the activity.

Now, this is poised to change. The city, working with NDT Development and Place Projects, wants to implement a set of building regulations aimed at breathing life into the area anointed the Nora District.

Stretching between Quadrille and Palm Beach Lakes boulevards and from Dixie Highway to the FEC Railroad tracks, the area is poised to be redeveloped in a manner reminiscent of Miami’s Wynwood Arts District.

Commissioners took the first step by voting unanimously on Monday to change the comprehensive plan, a blueprint for growth and development, for the Nora District.

Next, the state plans to review the tweaks, and if it approves them, the commission is expected to take a final vote on Feb. 7, 2022. In the meantime, the city also is working on zoning and land development rules for the Nora District.

A rendering of the Nora District Redevelopment (ArquitectonicaGEO)

NDT and Place Projects, which together own 13 acres in Nora, approached the city in 2019 to discuss how to breathe new life into the district, said Joe Furst, founder and managing principal of Place Projects.

“The city had tried before to encourage other development in the area that had not come to fruition,” he said, referring to regulations implemented over a decade ago.

Despite that effort, 39 percent of properties remain vacant, even as roughly 211 residential units and 50,000 square feet of commercial space have been built annually over the past 15 years in the rest of downtown, according to the city.

The vision for Nora is to create a multi-section neighborhood, where towers would rise in some places, and existing buildings would be preserved or renovated in others.

A rendering of the Nora District Redevelopment (ArquitectonicaGEO)

The northern section, with mostly vacant lots, is expected to see buildings of up to 20-stories at the corner of Palm Beach Lakes Boulevard and the train tracks, scaling down to 15 stories on lots to the east along the boulevard, according to the city. The height that is currently allowed is two stories along Palm Beach Lakes Boulevard and five stories along Dixie Highway.

NDT and Place Projects, which own most of the vacant lots in the northern Nora area, envision a multifamily project and potentially offices, Furst said.

The maximum proposed heights would be allowed through the transfer of development rights, including from historic buildings elsewhere in downtown. Transferring development rights means developers also would have to include affordable and workforce housing, Furst said.

But the big projects won’t be the first step by NDT and Place Projects. Instead, they would start with infrastructure improvements and repurposing the mostly vacant buildings they own along Railroad Avenue, the future main street in Nora.

The mid-section of Nora, roughly between Eighth and 10th streets and home to single-family houses and duplexes, will be preserved.

A aerial of the Nora District Redevelopment (ArquitectonicaGEO)

A aerial of the Nora District Redevelopment (ArquitectonicaGEO)

The southern section along Quadrille Boulevard could see buildings up to 10 stories, double the currently allowed height, according to the city.

NDT and Place Projects have put roughly $40 million into property acquisitions and other costs associated with drawing the Nora vision, according to Furst.

Ultimately, the Nora District could bring in other developers as well, he said.

Based in West Palm Beach, NDT’s other recent ventures include buying a West Palm Beach office tower in July with three other partners for $60.7 million. The firm is led by Ned and Sam Grace, as well as Damien Barr.

Miami-based Place Projects has ventures in Brickell, Wynwood and St. Petersburg, according to its website. It was a development partner in the 545 Wyn office building in Wynwood.

In another part of downtown West Palm Beach, Stephen Ross’ Related Companies has amassed the majority of the office towers in a bet on financial firm influx to the area. Its latest downtown project is the One Flagler office building, dubbed in real estate circles the “hedge fund tower.”

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Rendering of the 1212 Aventura mixed-use project and Rieber Development's Bernardo Rieber (Colliers, 1212 Aventura)

Rendering of the 1212 Aventura mixed-use project and Rieber Development’s Bernardo Rieber (Colliers, 1212 Aventura)

An assisted-living facility project with medical offices and retail in Aventura scored an $83.8 million construction loan.

Rieber Development is building 1212 Aventura with 163 luxury assisted-living units near Aventura Hospital and Medical Center.

The financing breaks down to a $63.5 million senior construction loan from Miami-based BridgeInvest, and a $20.3 million mezzanine loan from an overseas lender, according to the broker’s news release.

Jeffrey Donnelly and Dmitry Levkov of Colliers’ structured finance team arranged the financing.

The project also will have 29,684 square feet of retail and 25,796 square feet of medical offices, according to the release. It is under construction at 21290 Biscayne Boulevard on the southwest corner of Biscayne Boulevard and Northeast 214th Street.

The project will have a pool and gardens as well as floor-to-ceiling windows in the ALF units, according to the release. To emphasize that it will be a high-end ALF, Donnelly said in the release that the project will be “as sexy as anything one expects to see in the Miami market.”

Construction is expected to be completed in early 2023, Levkov said.

1212 Aventura is part of a larger, multi-block development that includes the adjacent Ivory 214 office building with a 100-key Hilton Tapestry Hotel. Ivory 214 and 1212 Aventura are the first two phases of the development.

Donnelly and Levkov are also working on a $29 million refinancing for the hotel, according to the release.

Rieber Development, based in Aventura and led by Bernardo Rieber, also has ventures in multifamily, office and retail, according to its website.

Its Aventura developments are part of an effort to create a medical district close to Aventura Hospital. Generally, medical offices have remained resilient to the work-from-home trend that has thrown the office market into limbo.

Buyers also are betting on medical offices. In October, Forte Capital Management bought a Hollywood building next to Memorial Regional Hospital South for $11 million.

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Blackstone's Stephen Schwarzman (Getty)

Blackstone’s Stephen Schwarzman (Getty)

The Blackstone Group reportedly picked up a portfolio of 124 properties from Cabot Properties across the United States and Europe for $2.8 billion.

The properties were sold in two deals, according to Bloomberg. One deal handed the firm 102 U.S. properties and the other 22 properties in the United Kingdom, Germany and the Netherlands. All told, the properties encompass 17.4 million square feet.

The Blackstone Real Estate Income Trust was responsible for the purchase of the American properties, while the firm’s Core+ business purchased the properties in Europe.

The investment giant said in October it had marked a record-shattering third quarter — the best in its history — led by real estate investments, which grew to $230 billion, the highest percentage increase among Blackstone’s segments.

The industrial real estate market is also coming off of a blockbuster third quarter, featuring 159 million square feet of net absorption, the highest quarterly mark since 2008 according to Transwestern.

Industrial vacancy rates across the country fell in the third quarter to 4.7 percent. Industrial strongholds like California’s Inland Empire and New Jersey’s Orange County, recorded vacancy rates closer to 3 percent. Industrial asking rents posted a quarterly high of $7.11 per square foot.

Blackstone’s ongoing industrial play has earned the firm several notable deals across the hot market.

The firm’s private REIT agreed to acquire WPT Industrial Real Estate Trust in August in an all-cash deal valued at $3.1 billion. WPT owned about 110 commercial properties in the country, including warehouses and distribution centers near Chicago, Houston and Atlanta.

This isn’t the first time Blackstone has looked overseas to fulfill its industrial appetite. In April, the firm was reportedly nearing a deal to pay $720 million for a portfolio of industrial and development sites in India being sold by Warburg Pincus LLC and Embassy Group. The portfolio spanned 3.5 million square feet of existing warehouse space with room for another 18 million.

Blackstone ultimately closed on a deal the following month.

[Bloomberg] — Holden Walter-Warner

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Miami’s tourism market is booming after a brief lockdown, but restaurants, clubs, and hotels have struggled to navigate staffing shortages.

“When the government gave out big checks, people stayed home,” Jeffrey Soffer, chairman and CEO of Fontainebleau Development said. But he doesn’t anticipate that problem lingering. “The money is wearing off. The free ride is over.”

Developers Soffer and David Grutman of GROOT Hospitality aren’t satisfied to just ride the hospitality recovery wave. Grutman’s group partnered with Pharrell Williams to open the Goodtime Hotel earlier this year, and has expanded his network of restaurants to seven dining spots in Miami. For Soffer, the time is finally here to branch back into Las Vegas, following through on a long-time plan.

Soffer and Grutman, who was once a bartender at a restaurant owned by Soffer’s father developer Donald Soffer, have worked together since the early days of LIV, when Soffer brought the younger upstart in to help manage his new club.

They sat down with The Real Deal’s Chairman and Publisher Amir Korangy at the South Florida Real Estate Showcase + Forum last month in Miami. Watch the panel above for more on their partnership and the state of the hospitality industry today.

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From left: Rich Torrisi, Mario Carbone and Jeff Zalaznick of Major Food Group along with Michael Stern of JDS Development (Getty Images, JDS Development, Google Maps)

Developer Michael Stern is partnering with Major Food Group to build a branded luxury condo tower in Miami’s Brickell neighborhood, The Real Deal has learned.

Stern’s JDS Development Group and the New York-based restaurant and hospitality group plan to build Major, a 259-unit tower at 888 Brickell Avenue, Major Food Group partner Jeff Zalaznick confirmed.

The 1 million-square-foot project will mark the first time Major Food Group expands into residential real estate. The company, led by founders Mario Carbone, Rich Torrisi and Zalaznick, has expanded rapidly in South Florida since opening Carbone in Miami Beach a year ago.

The tower is expected to include two to three restaurants, as well as bars, that Major Food Group will oversee, Zalaznick said. Condo sales are expected to launch next year.

Zalaznick called the project “a dream come true” and something Major Food Group “has wanted to do for a long time.” He and his partners plan to work on more residential projects in the future.

South Florida’s high-end residential market has been booming since the pandemic started, with new development condo sales benefiting this year from a surge in presales. Developers have rushed to launch new projects in recent months.

Studio Sofield and Ken Fulk are designing the project, according to a release. The 1,049-foot tall tower could become among the tallest in Miami, with others also planned at that height.

JDS is under contract to acquire the seven-story office building currently on the site, according to a source. Property records show Alphatur N.V. owns the half-acre lot. It is zoned for high density mixed-use development.

In addition to Carbone in South Beach, Major Food Group recently opened HaSalon nearby, and has the private ZZ’s Club in the Miami Design District. It also plans to open a Sadelle’s in the former Tigertail + Mary space in Coconut Grove, and other restaurants throughout South Florida. The company has more than 30 restaurants, hotels and clubs in the U.S. and abroad.

Stern’s South Florida projects include Monad Terrace in Miami Beach and Echo Brickell near the site of Major. Also in Brickell, Stern has approval for a 2.5 million-square-foot development with a 752-foot-tall tower with 1,000 apartments, 200 micro units, a 200-room hotel, and 250,000 square feet of office space. JDS inked a deal with the city of Miami, in which the firm agreed to build an $8 million fire station for the city on the ground floor and invest about $5 million in public benefits.

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1700 S Ocean Blvd, Palm Beach (Realtor)

An oceanfront spec mansion in Palm Beach changed hands for the princely sum of $41 million.

Ocean Villa Holdings LLC, managed by Jagbir Singh, sold the house at 1700 South Ocean Boulevard to an LLC with the same name, managed by real estate attorney Robert S. Raynes Jr, records show.

Singh founded and is the president of Sujani Enterprises, a Bernardsville, New Jersey-based company that specializes in marketing semi-finished metal products, according to Bloomberg.

The mansion was listed in December 2020 for $41.9 million. Shelly Newman with William Raveis South Florida represented the seller, and Christina Angle with Christian Angle Real Estate represented the buyer, according to Realtor.com.

Singh paid $4 million for the property in 2014, records show. In 2015, he tore down the former home on the site, which had been owned by Save-A-Pet founder and the National Republican Congressional Committee’s Congressional Medal of Distinction recipient Gertrude Maxwell Hurwitz, who died in 2011 at age 99. Singh applied to construct the new house in 2019, and it was completed this year.

The 10,586-square-foot mansion has six bedrooms, eight full bathrooms, three half-bathrooms, and 115 feet of private beachfront access. It sits on a nearly 0.75-acre lot.

Marc-Michaels design group handled interior design, while Ska Architecture was the architect. Lynn Bender Landscape Architecture was the landscape architect, and Mark Timothy was the general contractor, according to Realtor.com.

The sale underscores the ravenous demand in the luxury home market in Palm Beach. Multiple sales in November, alone, reached into eight figures.

Valerie Winchester, the widow of Walter K. Winchester, sold the mansion at 200 Clarke Avenue to Francine C. Purcell, as Trustee of the Francine C. Purcell Declaration of Trust, for $25 million.

Shirley Fennell, via a trust, sold penthouse 4 and a cabana at 2 North Breakers Row to the Turner 2021 family trust, managed by Deborah A. Turner, for $17.7 million — more than $4,700 per square foot. That sale marked a record on a total and per-square-foot basis for a Palm Beach condo.

Douglas Elliman agent Gary Pohrer went under contract to buy an oceanfront home even before his wife had a chance to look at the property, which he purchased for $5.8 million from Wolf Von Falkenburg.

Amanda and Alexander Coleman, a managing partner at Austin, Texas-based Providence Management LLC, sold 216 Angler Avenue in Palm Beach, to a Delaware LLC that shares the same name as the property for $23.3 million.

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Virtual real estate speculators notch another record deal

Decentraland, by the investment firm Republic Realm

The number of virtual real estate deals is rising as quickly as their real-world value.

Republic Realm, an investor and developer of virtual land, paid $4.3 million on Tuesday for property in The Sandbox, a popular metaverse oriented toward gaming that launched this week after four years of development, according to the website NonFungible.com.

That easily tops the $2.4 million that Tokens.com, which facilitates investment in digital assets, paid for an estate last week in Decentraland, the other dominant metaverse. Toronto-based Tokens is also building an 18-story skyscraper there to be leased for meeting, events and advertising space.

Some 4,400 sales, valued at a cumulative $70.6 million, took place in the past week in The Sandbox alone.

It may be too soon to say if the speculative frenzy surrounding digital real estate — conceived by futurists and crypto specialists as the mall, playground and meeting place of the future — is a bubble or the start of a whole new asset class. Virtual land within many emerging metaverses is still significantly underdeveloped.

Republic Realm will partner with Atari, the seller and one of the earliest and largest landholders in The Sandbox, to co-develop the property, which includes several parcels, including a 24-unit-by-24-unit estate that’s among the largest in the virtual world. Each one-by-one plot is the real-world equivalent of 96 meters by 96 meters in length and 128 meters in height.

Republic Realm, perhaps best known as the creator of the Fantasy Islands NFT project, a luxury, master-planned real estate development in The Sandbox, doesn’t yet have firm plans for its new purchase. Janine Yorio, co-founder of the company, said any project will probably be aimed at play-to-earn games in which players compete for cryptocurrency.

Yorio’s company also developed a shopping mall in Decentraland called Metajuku, where it currently leases space to digital-only fashion brands DressX and Tribute Brand. Rent is based on a percentage of sales of NFTs such as digital wearables.

“People have forgotten that the metaverse has to be entertaining,” Yorio said. “It’s not just about making money. It’s about making content that makes people want to come back over and over and over again, like social media does.”

Before venturing into financial technology, Yorio spent several years as a portfolio manager at NorthStar Realty Finance, where she specialized in hospitality. Building an entertainment venue in the metaverse is like building a great hotel, she said.

“It’s not enough to put a pool in a bar. You have to have events, the right music, the right people showing up, and designers that make you feel cool,” she said.

Digital property has attracted more than just gamers and the crypto rich. Hedge funds, family offices and other traditional real estate market investors are also scouting the market, Yorio said. They typically find the metaverse easier to understand than crypto finance.

“There are so many crypto projects, it’s very hard to figure out what their business model is and why the token should be valuable,” she said. “This is much easier for people to wrap their head around.”

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(iStock/Illustration by Kevin Rebong for The Real Deal)

(iStock/Illustration by Kevin Rebong for The Real Deal)

UPDATED Dec. 3, 2021, 3:11 p.m.: It’s enough to make any consumer watchdog suspicious.

Agents’ commissions across more than 10,000 Northeast home sales examined by the Consumer Federation of America were highly uniform, the group revealed Tuesday.

“Uniform rates are strong evidence of industry price setting,” said Stephen Brobeck, a senior fellow at the organization. “And if prices are being set, it’s important to understand why, so that effective measures can be taken to increase price competition.”

Not only do agent commissions not vary much, but they are higher in the U.S. than just about any other developed nation. Agents usually earn 5 to 6 percent of a home sale price, a rate that has remained consistent for decades.

Using multiple listing service data, the nonprofit analyzed home sales in 21 eastern U.S. cities. Brobeck said getting the data was a challenge for the watchdog group, which aims to get home sale commission figures for the other half of the country as well.

At least 84 percent of buy-side rates were the same in cities like Atlanta, Baltimore, Columbus and Hartford, Connecticut. Uniformity was even greater in Grand Rapids, Michigan; Memphis, Tennessee; Roanoke, Virginia; and Minneapolis: At least 93 percent of buy-side commission rates were the same.

The findings come just two weeks after the National Association of Realtors board announced plans to require multiple listing services to display a listing broker’s offer of compensation for each active listing on its consumer-facing websites (such as Zillow and Streeteasy) and other MLS feeds.

While NAR’s efforts put buyer agents on notice and could reduce steering, it wouldn’t change rate competition as sellers continue to pay buyer-agent commissions.

Sellers pay commissions for both the listing agent and buyer’s agent, which means buyers have no discretion to negotiate commissions. Though sellers can, they virtually never do out of fear that brokers will steer clients to other properties if the rate is too low.

Still, the brokerage industry’s primary trade group argues that commissions are competitive.

“The market decides commission rates,” a NAR spokesperson said in a statement. “Commissions are — and have always been — negotiable, while consumers have the choice of whom they want to pay and how they want to pay them.”

Nonsense, the consumer group says.

“The only effective way to allow price competition would be to uncouple or untie the commissions so that sellers pay only listing-agent commissions while buyers only pay buyer-agent commissions,” Brobeck said.

The watchdog’s hope is that the change would foster negotiations between buyers and agents, encourage negotiation of listing-agent commissions, and free up discount broker sites like Redfin from having to offer buyer agents 2.5 to 3 percent commissions.

Uncoupling would likely lower the prevailing 5 or 6 percent commission rate to 3 or 4 percent, Brobeck said. That would reduce total annual commissions from about $100 billion to roughly $70 billion or $80 billion and make homeownership more affordable, he added.

Others aren’t so sure. Commissions have edged down in recent years to a new low of 4.94 percent in the U.S., according to Real Trends, and the brokerage industry argues that if buyers had to pay the buyers’ agent commission on their own, it would shut more of them out of homeownership.

“Forcing buyers to take on the additional out-of-pocket expense would cause added financial hardship and could freeze out many from the market entirely, particularly first-time and low- and middle-income homebuyers,” the NAR spokesperson said, adding that the expense could also stop homebuyers from seeking help from an agent.

But Brobeck said that cost would be offset because sellers would accept a lower bid, knowing they don’t have to give the buyer’s agent a cut.

“The buyers’ agent commission is usually added to the sale price of a house, so buyers will not have to pay in gross any more money, even if they don’t negotiate commissions down with their buyer agent,” Brobeck said.

This article has been updated with comments from the National Association of Realtors.

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Despite all the talk about the onslaught of tech workers moving to Austin, San Francisco residents moving out of state were most likely to look in Seattle. (Getty)

Despite all the talk about the onslaught of tech workers moving to Austin, San Francisco residents moving out of state were most likely to look in Seattle. (Getty)

San Francisco has more homebuyers looking to leave the area than any other metro in the country as remote work sets off a national game of musical chairs in the most-expensive urban markets.

Nationwide, about 30% of buyers were looking to relocate in the third quarter of 2021, according to Redfin data gleaned from searches by about 2 million of its users. That is down from the peak of 31.5% in the first quarter of this year but still higher than before the pandemic, when the rate was around 25%.

Nearly 32,000 more Redfin users were looking to leave San Francisco than move there in October of 2021, about 6,000 higher than at the same time one year ago. However, Redfin data shows that San Franciscans are also searching more within the city than they were a year ago, so the portion of local users searching elsewhere actually dropped slightly year over year—to 22.4% in 2021 from 23.6% in 2020.

“Dense, expensive cities often experience the biggest exodus of residents—a trend that has intensified during the pandemic as more Americans have been able to move to more affordable places thanks to remote work,” according to the Redfin report.

Second-place Los Angeles had a net search rate outside the city of more than 26,000 homebuyers in October 2021, up 10,000 from one year earlier. The city’s percentage of local homebuyers searching elsewhere was also up to 19.2% in 2021 from 17.8% in 2020.

New York City had the highest percentage of locals looking to move out in October 2021 at just over 26 percent, and had a net rate of 17,000 homebuyers searching outside the city; it also had the highest percentage one year ago when nearly 35 percent of local homebuyers were looking elsewhere. Denver and Detroit also had more than a quarter of homebuyers looking to relocate in October 2021, though the net rate of buyers was much smaller—fewer than 2,000 more were looking to leave than come in in both markets.

In all markets where homebuyers are most interested in relocating, they were inclined to move somewhere nearby and less expensive. San Francisco buyers’ top destination was Sacramento, contributing to the 41 percent of searchers from outside the state capitol looking to buy there in October 2021, down from almost 50 percent one year ago. Despite all the talk about the onslaught of tech workers moving to Austin, San Francisco residents moving out of state were most likely to look in Seattle.

Price increases in Seattle may be contributing to the 9,000 looking to leave in 2021 versus only 1,100 in 2020. Those searching outside Seattle are primarily targeting Los Angeles but also represent the biggest out-of-state interest in Sacramento.

While Seattleites arrive, Angelenos are primarily considering San Diego and Phoenix, but are also the top out-of-market online shoppers in Las Vegas and Dallas. New Yorkers are most interested in moving to Philadelphia, though there is a growing interest in Miami and Atlanta. New Yorkers make up the biggest percentage of out-of-market shoppers in both those Southern markets and Miami in particular has shot up in interest with nearly 7,000 in net homebuyer interest from outside in 2021—the most in the country—versus about 2,200 in 2020.

Redfin Chief Economist Daryl Fairweather said in the report that with remote work becoming permanent in many places, the listing site is expecting to see an ongoing interest in relocating nationwide. But with those who moved from more expensive locations earlier in the pandemic already pushing up housing prices in their newly adopted cities, she said, “what will likely change are the places people choose to relocate to.”

“Popular Sunbelt migration destinations including Phoenix, Atlanta and Austin will probably fall out of favor as skyrocketing home prices have rendered them less affordable,” she said. “Northern cities like Columbus, Harrisburg and Indianapolis will likely rise in popularity as homebuyers seek better bang for their buck.”

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Two Roads, Alpha Blue score $122M construction loan for West Palm Beach condo project

Forté at 1309 South Flagler Drive with Two Roads Development’s Chair and Senior Partner James Harpel and Alpha Blue Ventures’ Marius Fortelni and Scott Maslin ( Two Roads Development and Alpha Blue Ventures)

Two Roads Development and Alpha Blue Ventures scored a $121.5 million construction loan for their luxury condominium tower in West Palm Beach.

The development duo are planning the 24-story waterfront Forté at 1309 South Flagler Drive, overlooking the Lake Worth Lagoon and Palm Beach. Little Rock, Arkansas-based Bank OZK provided the financing, according to a news release.

Forté will have 41 large condos, with two units per floor spanning three to four bedrooms and 4,200 square feet to 8,400 square feet, according to the release. A six-bedroom, 8,900-square-foot penthouse will have a 2,000-square-foot private rooftop deck with a pool, summer kitchen and cabana bath.

Pre-construction sales have reached 60 percent, with prices from $6.7 million to more than $30 million, according to the release. The majority of buyers are from the U.S., as has been customary since the onset of the pandemic.

A wave of foreign buyers is expected to return to major markets like South Florida, following the lifting of the travel ban for 33 countries on Nov. 8. Still, this could change again, in light of the Omicron variant, as restrictions have already been imposed on travelers from South Africa and surrounding countries.

The Arquitectonica-designed Forté will have a second-story pool deck with a 75-foot lap pool, heated spa, and an outdoor dining and lounge area, as well as a third-story health and wellness space with a steam room, sauna and private treatment rooms, according to the release.

Other amenities include a dining room for up to 24 guests, theater, card room, business center and two fully furnished guest suites for family and friends.

Interiors, designed by Jean-Louis Deniot, will include private elevator foyers, at least 1,000 square feet of outdoor living space per unit and at least 10-foot high ceilings.

Construction is expected to start in December and be completed in 2024.

Two Roads, with offices in Miami and West Palm Beach, is a real estate development, financing and marketing firm led by James Harpel, according to its website.

Last year, Two Roads completed the 57-story Elysee condo tower in Miami’s Edgewater neighborhood.

Alpha Blue, with offices in New York and Palm Beach, buys, develops and manages real estate in New York and South Florida, according to its website. It was formed by the joint venture between Marius Fortelni, whose previous endeavors included building and operating a large multinational cement distribution and development company in Africa and Saudi Arabia, and Scott Maslin, founding member of Woodglen Investments.

The Bristol, a 25-story, 69-unit waterfront condo tower at 1100 South Flagler Drive, developed by Flagler Investors, led by Al Adelson and Gene Golub, was completed in 2019, and marked the first new luxury condo building in West Palm Beach in a decade.

The Forté condo project reflects West Palm Beach’s continued growth, with its downtown quickly morphing into a major office market targeting financial firms.

Stephen Ross’ Related Companies is the largest office owner downtown, recently embarking on the construction of One Flagler.

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Vanilla Ice and Mark Alfieri

Vanilla Ice and Mark Alfieri

Vanilla Ice is back with a brand new show.

The South Florida-based rapper, actor and professional home flipper is partnering with BrandStar Studios to launch “The Vanilla Ice Home Show,” The Real Deal has learned.

The show, based in South Florida, is expected to be picked up by a network by the second quarter of next year. Vanilla Ice, whose real name is Robert Van Winkle, said each season will be 13 episodes long, and the show will rely heavily on virtual and mixed reality technology.

The focus will be on renovating parts of high-end celebrity homes, including kitchens, bathrooms and closets, and showing viewers how to complete a more approachable renovation for average homeowners. It will be produced by Deerfield Beach-based BrandStar Studios. Van Winkle’s construction partner, Wes Kain, is also working on the show, according to a release.

“We’ll showcase some of the luxury Palm Beach and South Florida billionaire kitchens,” said Van Winkle, who lives in Manalapan.

Mark Alfieri, CEO of BrandStar and co-executive producer of the series, said BrandStar made a multimillion-dollar investment in the studio’s in-camera production technology, which speeds up the production process. It’s the same technology that Lucas Films used for the first season of “The Mandalorian,” Alfieri said.

The first episode of Vanilla Ice’s new show will focus on renovating celebrity restaurateur and television host Guy Fieri’s outdoor kitchen, and then showing viewers how to do a similar project in a more affordable way. To speed up the process, the show will complete the project virtually first, he said.

“We’re going to use this virtual world to speed up the construction process … Instead of sitting there and watching us hammer some nails and waste time,” Van Winkle said.

The “Ice, Ice Baby” rapper has been in the home flipping business for nearly 30 years, he said, and he starred in “The Vanilla Ice Project” on the DIY Network for 10 seasons.

His new show will showcase cutting-edge smart home features and gadgets, like an LED backsplash that can have the appearance of marble, or a wallpaper television mounted on the wall. “You’re not going to see anything in this show from aisle 10,” he said. “It’s more informative and really takes the people on a journey through the latest and greatest home tech, home design.”

Van Winkle has renovated homes for the ultra wealthy in South Florida, where he hasn’t had to worry about meeting a budget.

“As a builder, I love that,” he said. “It inspires me to go out and find the greatest and coolest things I can.”

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Miami-Dade County Mayor Daniella Levine Cava in front of a rendering of the planned 550-home project at the previous Calusa Country Club site (Getty Images, GL Homes)

UPDATED, Dec. 1, 10:35 a.m.: Miami-Dade County was slapped with an ethics complaint over its approval of a controversial plan for a large housing community on a West Kendall golf course that was meant to be preserved as green space.

Developer GL Homes wants to build a 550-home gated community on the Calusa Country Club, a 169-acre golf course on the southwest corner of Southwest 88th Street and 127th Avenue in a suburban, unincorporated part of the county.

The complaint, filed on Tuesday with the Miami-Dade Ethics Commission, is over the county’s approval of a rezoning that allows for the project.

Specifically, it alleges that the Nov. 17 hearing by the Miami-Dade County Commission, which was sitting as the zoning board, was improperly noticed. County code dictates the meeting is to be advertised in a newspaper at least 14 days in advance, a requirement that Miami-Dade is accused of violating.

“The notice requirements are very clear, and to me it seems like they didn’t follow them,” said Amanda Prieto, who filed the complaint and heads the Save Calusa group of residents who oppose the project. “The reason the newspaper notice was so important is because the only other notice is a mailed notice, but that only goes to a half a mile from the golf course itself. So that does not cover the entire community.”

The county said it complied with all noticing requirements.

The vote originally was scheduled and noticed for Oct. 20, but canceled at a meeting on Oct. 19 when it was announced the new meeting will be on Nov. 17. A second newspaper ad was not required, but the county still issued courtesy electronic and mailed notices to residents. The e-notice was sent to those who registered to receive alerts about the issue.

Still, the e-notice was less than 14 days prior to the meeting and had inaccurate information, said David Winker, the attorney who represents Prieto.

The county counters that an e-notice also was sent on Oct. 19 and that there was no inaccurate information in the e-notices.

He said a lawsuit premised on the same issue is also expected to be filed in the coming days.

Although the ethics complaint, as well as the impending lawsuit focus on a technicality, they mark the latest chapter in a decade-long tiff over development of the golf course.

The course, at 9400 Southwest 130th Avenue, has been closed since 2011 and is in the heart of the Calusa neighborhood, a single-family residential area with 2,074 homes.

The Save Calusa residents’ opposition group argues that development would increase traffic on already congested streets, put more of a strain on overcrowded local schools and wipe out the little remaining green space and wildlife habitat left in West Kendall. The fight is bolstered by the support of well-known local wildlife expert Ron Magill, also the communications director for Zoo Miami.

Miami-Dade County Mayor Daniella Levine Cava declined to veto the commission’s Nov. 17 vote. But she imposed more stringent environmental reviews that will be required before a project can proceed. Levine Cava directed the county’s environmental resource department to complete its own surveys, including to determine the existence of a bird rookery, in addition to overseeing GL Homes’ own survey.

The course was meant to remain untouched until 2067 under a land covenant signed years ago.

The only way the covenant could be lifted is if at least 75 percent of owners of homes directly surrounding the course, or the “ringlot” owners, agreed to lift the covenant. This threshold was surpassed when 123 out of the 146 ringlot owners accepted a $300,000 payment in 2019 and 2020 by the previous golf course owner in exchange for signing away the covenant. In October 2020, the county commission, sitting as the zoning board, officially voted to lift the covenant.

Facundo Bacardi, a member of the rum empire family hailing from Cuba, had been pushing to lift the development restriction since he bought the Calusa course in 2003 for $2.3 million.

GL Homes, based in Sunrise, bought the course in February for $32 million, with Bacardi owning a stake in the future project venture.

Magill, who technically is a county employee in his role at Zoo Miami, has been vocal about the issue. “Developer dollars and lobbyists are driving the decisions,” he said on the Dan Le Batard Show.

Building out Calusa also embodies the balancing act Miami-Dade is faced with in the booming housing market: Allowing more home construction to quench the high demand that has pushed up prices to unattainable levels, while tempering issues of congested roads and environmental concerns of building out the dwindling amount of open space.

Dick Norwalk, of GL Homes, said at the November county commission meeting that the project is a scaled-down version of a previous plan for 1,000 houses.

In a statement, he called the opposition’s impending lawsuit an attempt to delay the project.

“The county is best suited to address their rules and procedures with respect to noticing a hearing,” he said. “There was a full chamber for the hearing, indicating that the community was well aware that the item was coming up for a vote.”

GL Homes hopes to start building in the first half of 2022 and finish the community in 2026 or 2027.

This story was updated to clarify the county’s response.

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The year-over-year rise in home prices was just below the 19.8 percent annual rise in August. (iStock)

The year-over-year rise in home prices was just below the 19.8 percent annual rise in August. (iStock)

U.S. home prices remain significantly higher than a year ago, but the growth is easing and perhaps even ending, according to new figures.

U.S. home prices increased 19.5 percent year-over-year in September, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index released Tuesday. The year-over-year rise in home prices was just below the 19.8 percent annual rise in August.

“If I had to choose only one word to describe September 2021’s housing price data, the word would be ‘deceleration,’” said Craig Lazzara, managing director at S&P Dow Jones Indices.

September’s modest decrease in price growth compared to August is another indicator of slowing growth for buyers and sellers after four straight months of record-setting, increasing growth.

Two other Case-Shiller indices told a similar story. The 10-city composite rose by 17.8 percent on an annual basis, less than the 18.6 percent growth year-over-year in August. The 20-city composite rose by 19.1 percent, less than August’s 19.6 percent.

Month-over-month, the national index increased 1 percent before seasonal adjustment and 1.2 percent after seasonal adjustment. All metro areas in the 20-city index reported month-over-month increases after seasonal adjustments.

Lazzara pointed to buyers’ responses to the coronavirus pandemic as a reason for the housing market’s rise. But he said he is awaiting more data to determine if homebuying plans accelerated or location preferences have changed.

In September, Phoenix saw the highest year-over-year gain in home prices for the 28th consecutive month: 33.1 percent. Tampa placed second with 27.7 percent growth year-over-year, while Miami was third with a 25.2 percent rise.

The South (24.3 percent) and Sun Belt (24.2 percent) saw the strongest price growth among regions, all of which reported double-digit gains.

In total, Case-Shiller’s National Index is 46.9 percent higher than its previous peak in July 2006. The 10-city composite is 27.8 percent higher than the old peak, while the 20-city composite is 34.2 percent above its former apex.

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Inset: Jay Philip Parker, Alicia Cervera Lamadrid, Edgardo Defortuna

Inset: Jay Philip Parker, Alicia Cervera Lamadrid, Edgardo Defortuna

UPDATED, Dec. 2, 12 p.m.: Art Basel Miami Beach, the art fair of art fairs that has grown into a weeklong affair with ancillary shows and events, is back for the first time since 2019. And the real estate industry expects to take advantage of the influx of high net worth individuals in town to buy pricey art.

Developers and brokers are hosting pop-up art exhibits at their sales centers, launching sales for new projects, sponsoring fairs, and hosting cocktail parties for potential buyers and real estate agents. But many say they are being selective about the events they plan to host.

“What we really focused on this year is putting our agents and projects in front of the discerning clientele at Art Basel,” said Jay Parker, CEO of Douglas Elliman Florida. “It seems like people are anxious to travel, to be around others, to buy everything, including art. I’m thinking it’s going to be a really, really powerful year.”

Delfin Finley Photos by Joshua White

Miami Art Week, which includes Basel, Art Miami, Red Dot, Spectrum and many other shows, is returning weeks after the U.S. travel ban on 33 countries was lifted, resulting in a boost in interest in South Florida, where restrictions have been scarce throughout the pandemic. Even the advent of the omicron variant is not expected to be a deterrent.

Public art displays and exhibits abound throughout Miami Beach and Miami. In the Miami Design District, outdoor installations include two oversized sculptures wearing Louis Vuitton’s spring/summer collection within an oversized chess game designed by the late Virgil Abloh. Nearby, Chanel commissioned a sculptural labyrinth designed by artist Es Devlin with light and audio recordings, as well as more than 1,000 plants, shrubs and trees that will be replanted in Miami-Dade County.

To boost exposure to the growing pipeline of new condo projects, developers and other industry leaders are hosting invitation-only events.

On Tuesday, developer Carlos Rosso and Standard International Executive Chairman Amar Lalvani hosted a preview of their recently launched Standard Residences at the Standard hotel in Miami Beach.

Douglas Elliman is again sponsoring Art Basel Miami Beach, with a showcase of properties in the Collector’s Lounge where VIP attendees of the fair can gather.

Zandile Tshabalala, Naila and I, 2021 Acrylic on canvas. Courtesy the artist and Galerie Nagel Draxler

Zandile Tshabalala, Naila and I, 2021
Acrylic on canvas. Courtesy the artist and Galerie Nagel Draxler

Elliman also moved its annual champagne toast to the newly completed Canopy Park at David Martin and Russell Galbut’s Five Park project, and will host a small event at a listing at the Zaha Hadid-designed One Thousand Museum, Parker said.

Galbut, Martin and Elliman Chairman Howard Lorber will have at least one other event at Canopy Park: a cocktail party and three-course dinner by a Los Angeles-based chef to launch Cultured Magazine’s December issue.

Berkshire Hathaway HomeServices EWM Realty is a sponsor of Art Miami, which is being held in a temporary structure on the former Miami Herald site, just north of the Perez Art Museum Miami. The brokerage, previously a Christie’s affiliate, has long sponsored the art fair on the Miami mainland.

William Kentridge, Goat, 2021

One Sotheby’s International Realty is hosting an exhibit at its Miami Beach office along with the Women Photographers International Archive, as well as other events where its agents, their clients and more than 50 Sotheby’s affiliates can attend.

Property Markets Group will have a private cocktail party at the 11,000-square-foot sales gallery in downtown Miami for the Waldorf Astoria Residences Miami on Friday evening. The invitation-only event will host three wealth management family offices alongside PMG’s partners, according to a spokesperson for the project.

EDDIE MARTINEZ, Untitled 2006, Acrylic on canvas 30 by 40 in. 76.2 by 101.6 cm (MI&N 17456)
© Eddie Martinez Courtesy of the artist and Mitchell-Innes & Nash, NewYork

Bel Invest, the developer of the Diesel-branded condo building in Wynwood that recently launched sales, will have an art exhibit by rapper and art collector Westside Gunn, with artwork by Mariella Angela and Isaac Pelayo, kicking off with an invite-only on Thursday evening event at the project’s sales center, followed by public viewing through Sunday.

Moishe Mana, one of the largest private landowners in downtown Miami and Wynwood, is hosting his annual birthday party. This year, Mana’s birthday bash is at the old RC Cola Plant at 550 Northwest 24th Street in Wynwood on Saturday night.

Rodrigo Pimenta, Broken Whisper

The return of Art Week comes as the spotlight on Miami has intensified during the pandemic. South Florida has seen a huge boost in real estate purchases by out-of-state buyers, with companies relocating from high-tax markets such as California and New York. On top of that, major restaurant groups have also expanded to Miami.

“In my experience Art Basel and Art Week are times of great celebration in our city,” said Alicia Cervera Lamadrid, managing partner of Cervera Real Estate. “The [real estate] business is usually done in the weeks after.”

TomorrowLand

Tech firms, many of which have moved or opened Miami outposts, are joining in on the Art Week action, adding to an already action-packed week.

“You’re competing with so many other events,” said Christine Martinez de Castro, who oversees sales and marketing for Ugo Colombo’s CMC Group. “People are having to choose between four, five, six events. If you do too much it gets lost in the shuffle.”

Jaume Plensa
Sophia in White, 2016

CMC, which is developing Onda Residences in Bay Harbor Islands, is opting to forgo hosting any major events. Instead, the sales team will focus on networking at art fairs and other events. Sales have been brisk at a number of new developments, which is likely one reason some firms are being more discerning. At Onda, presales have exceeded 60 percent since launching earlier this year.

“Obviously, we all want to capture the attention of the people coming for Art Basel,” said Fortune International Group CEO Edgardo Defortuna, whose firm is handling sales of Onda, among other projects. “It’s a tug of war, in a sense.”

Fortune is expected to soon launch sales of the Ritz-Carlton-branded towers in Pompano Beach, where it is partnering with Oak Capital to develop the site. A number of other launches are in the works, sources say, as Miami’s new development condo market continues to see high demand.

“Our agents have candidly been so busy,” Parker of Elliman said. “I don’t think this week is any busier than any other week, except it’s an opportunity to engage with new prospective clients, and we use this as a showcase to do that.”

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Last-mile facilities dominating industrial real estate

Distribution facilities (iStock)

The last mile of the delivery chain is proving to be the most valuable one for industrial properties.

A majority of U.S. industrial leasing during the third quarter involved parties hunting for less than 100,000 square feet, according to JLL data reported by the Wall Street Journal. The outlet noted that the size of the properties likely indicates a last-mile facility.

The value of such facilities is increasing as demand grows for quicker deliveries and supply wanes for warehouses, which are often closer to major cities. Interest in real estate during the e-commerce boom stretches beyond the final mile of the delivery journey, though.

JLL recorded industrial rents were up 7.1 percent in the third quarter year-over-year, while vacancy rates hit a record-low of 4.3 percent across the country, the Journal reported. Certain markets are seeing even less availability, including Los Angeles and New Jersey, which both sported vacancy rates below 2 percent.

The pandemic sparked a surge in the last-mile facility market as consumers turned from shopping in brick-and-mortar locations to demanding speedy delivery.

Overall, industrial real estate is the gift that keeps on giving. The third quarter shattered records across the industry, Transwestern said in a recent report.

The sector logged 159 million square feet of net absorption during the third quarter, the highest quarterly total in 13 years. Net absorption for the past year surpassed 500 million square feet for the first time in a 12-month period, according to Transwestern.

The boom in the industry is led by Amazon, which a recent analysis by The Real Deal showed had doubled its facilities footprint across North America since the onset of the pandemic.

Data from supply chain firm MWPVL International showed the tech behemoth expanded its portfolio of warehouse, distribution, data center and last-mile properties in the U.S. and Canada to more than 410 million square feet from around 192 million square feet it held in 2019.

[WSJ] — Holden Walter-Warner

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Landlords were less likely to respond to renters they thought were African American or Latino. (iStock)

Landlords were less likely to respond to renters they thought were African American or Latino. (iStock)

New research outlines how landlords are more likely to ignore renters they perceive as African American and Latino, perpetuating a cycle of residential segregation and diminished income mobility for tenants of color.

The National Bureau of Economic Research examined more than 25,000 interactions between fictitious renters — identified by white, Black or Hispanic-sounding names — and 8,476 property managers in the country’s 50 largest cities. In a working paper reported by Bloomberg, the study found renters with white-sounding names received a 60 percent response rate.

Meanwhile, those with Latino-sounding names received a 57 percent response rate. Those with African American-sounding names fared even worse, receiving a mere 54 percent response rate.

A cycle of low response rates contributes to residential segregation, as Bloomberg noted that renters of color were up to 17 percent less likely to live somewhere where they failed to receive a response.

The study also broke down the cities where renters of color were more likely to face discrimination. Black renters faced the most discrimination in Chicago, Los Angeles and Louisville, while Latino renters faced the most discrimination in Louisville, Houston and Providence.

Housing discrimination goes beyond the rental market. A recent Freddie Mac study of 12 million appraisals found a gap between valuations of homes in mostly Black and Latino areas and those in white areas.

Freddie Mac’s research found that 15.4 percent of homes in mostly Latino areas and 12.5 percent of homes in mostly Black areas were appraised below the contract price. Only 7.4 percent of homes in mostly white neighborhoods were appraised the same way.

Additionally, a recent investigation by Markup in conjunction with the Associated Press, found that lenders were more likely to deny home loans to borrowers of color due to a bias hidden in mortgage algorithms.

[Bloomberg] — Holden Walter-Warner

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Sergio Pino of Century Homebuilders Group and the church (Century Homebuilders, Facebook via St. James Evangelical Lutheran Church - MIAMI FL)

Sergio Pino of Century Homebuilders Group and the church (Century Homebuilders, Facebook via St. James Evangelical Lutheran Church – MIAMI FL)

In the rush to build apartments to capitalize on the hot market, developers are competing for increasingly scarce buildable sites. No ground is sacred – not even a church.

Sergio Pino’s Century Homebuilders Group wants to redevelop the St. James Evangelical Lutheran Church building in Coral Gables with multifamily units and space for behavioral therapy school Crystal Academy, which now leases the building, Pino said. St. James no longer uses the property but also leases it to other religious groups.

Pino, through an affiliate, bought the 1.5-acre property at 110 Phoenetia Avenue from St. James for $9.8 million, records show.

The preliminary plan is for a 10-story apartment building with roughly 200 units and a one-story building for Crystal Academy, Pino said. If approved, construction could start in 2023 and be completed in mid-2024.

A project application has not yet been submitted to the city.

Crystal Academy provides occupational, language, physical, music and art therapy, as well as academic help to children diagnosed with impaired cognitive functions, according to its website.

Pino worked with the school principal on the plan for the new Crystal Academy building.

“We actually became close and committed to not only build the multifamily component, but to make sure we keep the school on the site with the park and parking for whatever their necessities are,” he said.

Century Homebuilders, based in Coral Gables, is among the wave of developers seizing on the robust rental market fueled by high demand and increasing rents.

“We are actively looking to put more multifamily in our basket. It’s income producing and booming right now,” Pino said. “So many people are moving to Miami. There is a shortage of rentals, condos. We are selling homes left and right.”

Miami ranked seventh highest in the U.S. for rents in November, with the median rent for a one-bedroom apartment reaching $2,170. That’s a 4.4 percent increase, month-over-month, and a 24.7 percent hike, year-over-year, according to a Zumper report.

Pino’s firm is not the only one developing on a church site. Stephen Ross’ Related Companies is building its 25-story One Flagler office tower in downtown West Palm Beach next to the First Church of Christ Scientist, after buying the site for $20.1 million in July. The church will be preserved.

Century Homebuilders recently finished its 850 Le Jeune project with 230 apartments near Miami International Airport.

It is about to start building a 107-unit apartment project at 390 Bird Road in Coral Gables, and also is in permitting for 675-unit development in Doral, Pino said.

Coral Gables is seeing some of the apartment development rush. Ubiica and Maven Real Estate are planning a multifamily project on an assemblage at 130, 152 and 160 Almeria Avenue. An office building at 152 Almeria will be demolished once leases run out.

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Newest unicorn is property-services startup Lessen

Lessen CEO Jay McKee and Fifth Wall managing partner Brendan Wallace (LinkedIn, Fifth Wall, iStock)

A historic year for proptech fundraising has produced another unicorn.

Lessen, a real estate management platform that connects property owners and operators to electricians, cleaners and other service providers, raised $170 million in a Series B round, pushing its total funding so far to $214 million — nearly quadruple its previous fundraising — and valuing the two-and-a-half year-old company at more than $1 billion.

Proptech venture capital firm Fifth Wall, which led Lessen’s $35 million Series A round in June, returned to lead the new round. Khosla Ventures, General Catalyst and Navitas Capital were also repeat investors.

The Series B was oversubscribed, Lessen CEO Jay McKee said, and the company plans to detail additional investment from special purpose vehicle partners before the end of the year.

Lessen’s fundraise comes at a pivotal time for the U.S. housing market, with an unprecedented combination of high demand and low supply driving home prices to record highs as developers, owners and operators grapple with labor shortages and supply chain disruption.

“Lessen is seeing a difficult hiring environment, complicated materials procurement system, and increased appetite for portfolio scaling all at the same time,” McKee said by email.

McKee’s experience is not limited to tech. He previously founded the single-family rental company Colony American Homes, which merged with a Starwood Capital Group affiliate in 2015.

Scottsdale, Arizona-based Lessen’s client base, which spans 30 U.S. markets, includes large multifamily and single-family rental REITs, who use the platform to source more than 2,000 plumbers, electricians, cleaners and other servicers. Users can manage multiple work orders as well as bill and analyze data from previous jobs.

McKee said Lessen’s transparency, comprehensive data and ability to “optimize workflows” improve the “timing, quality and pricing of jobs,” and set the platform apart in a crowded field.

“We believe that we are approaching the property-services industry in a unique way that combines tech and field delivery in a way that no one has done before,” McKee said.

Lessen, which also has offices in Seattle and Miami, plans to launch its platform nationwide soon and triple its employee count in the coming months, McKee said. “Eventually, we believe there is opportunity for international expansion,” he said.

Proptech investors have produced a few unicorns over the last year. The most recent was Place, a technology and business services platform for agents, which achieved a $1 billion-plus valuation with its first funding round this month.

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Homebuilder sells his waterfront Boca manse for $22M

250 NE 5th Ave, Boca Raton and Morris Flancbaum, president of Colts Neck Associates (Realtor, Colts Neck Associates)

A luxury homebuilder and his wife sold a waterfront Boca Raton mansion for $22 million.

Morris Flancbaum, president of Colts Neck, New Jersey-based custom homebuilder Colts Neck Associates, and his wife, Susan Rizzuto, sold the waterfront home at 250 Northeast Fifth Avenue. The buyer is 250 NE 5th Avenue Land Trust, with attorney Gregory S. Gefen as trustee, records show.

The 10,538-square-foot mansion, with seven bedrooms and a four-car garage, sold off-market, according to Realtor.com.

The home was originally built in 1962 and renovated in the early 2000s, records show. It sits on a 1.62-acre lot and features marble floors, a private dock in a no wake zone, summer kitchen and wine room.

Flancbaum and Rizzuto bought the home in 2019 for $16.5 million, and held homestead exemptions on the property, records show.

Flancbaum’s company specializes in waterfront development, and has created custom home communities in several cities in New Jersey, including Marlboro, Colts Neck, North Howell, Brick, Manalapan, Millstone and Toms River, according to the company’s website. It also built the CuisinArt Resort & Spa in Anguilla in the Caribbean.

The $5.5 million two-year price boost for his Boca Raton mansion reflects surging demand for waterfront homes, as the uber wealthy continue to move to South Florida.

Earlier this month, former race car driver Jeff Gordon’s former Boca Raton mansion went on the market for $42 million. Gordon owned the 16,500-square-foot mansion from 1997 to 2003.

In August, billionaire Mets owner Steven Cohen bought a 31,000-square-foot, seven-bedroom estate for almost $22 million near Boca Raton. It had sold several months earlier for $19 million.

Also in August, another professional race car driver, Jason McCarthy, and his wife, Newsha McCarthy, bought an 11,753-square-foot Boca Raton mansion for $19 million.

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Developer Thomas Conway and the Little River location (Google Maps, Qualcon)

Developer Thomas Conway and the Little River location (Google Maps, Qualcon)

A mixed-income apartment project with commercial space could be on tap within an Opportunity Zone in Miami’s Little River neighborhood.

Developer Thomas Conway, through one of his Qualcon affiliates, is seeking zoning and land-use changes for the site of a former AT&T telecommunications facility that is steps from The Citadel food hall.

The Miami Planning, Zoning and Appeals Board is expected to consider Qualcon Little River Active Zone Business’ application on Wednesday. The vote would be a recommendation to the commission, which has the final say.

(Google Maps)

(Google Maps)

The rezoning and land-use changes are for 1.4 acres of the 2.2-acre site at 8038 Northeast Second Avenue and 165 Northeast 80th Terrace. It would pave the way for up to 150 units per acre, more than the currently allowed 65 per acre, according to city records.

The move comes nearly two years after Conway’s Qualcon Real Estate Fund bought the site as part of a $25 million purchase of eight commercial buildings and over 1 million square feet of land across South Florida from defunct BellSouth Telecommunications.

Qualcon Real Estate Fund counts Kevin Levine, Andrew Stone, Petra Capital Management and New York-based Tall Pines Capital, led by Emanuel Stern and Bradley Settleman, as investors.

Qualcon Little River Active Zone Business, which owns the Little River site, filed a record with the city in May that also lists Stone, Levine and Stern as its investors, as well as a slew of others, each owning less than a 4 percent stake.

The mixed-income apartment project initiative marks the neighborhood’s budding growth as the next hot real estate frontier in Miami. It also speaks to the area’s low- to mid-income residential base.

About 37 percent of area residents were below the poverty line last year, according to the city’s planning department’s analysis of the project. The department recommended approval.

Little River, just north of quickly redeveloping Little Haiti, has seen several of its older buildings retrofitted into retail and dining space, with Conway playing a role in the area’s emergence.

In 2015, he and his partners completed the refurbishment of a former Bellsouth headquarters building into MADE at The Citadel co-working space. The property is at 8325 Northeast Second Avenue, across the street from the food hall.

Conway also was an investor in The Citadel, but no longer is involved.

In other big Little River investments, Miami-based MVW Partners just secured Adventurous Journeys Capital Partners as a majority investor in a 24-acre portfolio, which includes restaurant and office buildings. The properties also are in an Opportunity Zone, the federal program that incentivizes investment in economically struggling areas.

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(Murano at Portofino)

(Murano at Portofino)

Fewer condos sold during Thanksgiving week in Miami-Dade County, compared to previous weeks.

Condo sales dollar volume for the week totaled $86.8 million, about half of that recorded the week before. Sales reached 159, versus 234 the previous week.

Condos sold for an average price of about $546,090, down from $731,000 the week prior.

The top sale was a $4.5 million closing at Murano at Portofino in Miami Beach. Unit 1802 traded for more than $1,700 per square foot. Stacy Robins represented the seller, and Daniel Snyder represented the buyer.

The second most expensive sale occurred at the Ritz Carlton Residences in Sunny Isles Beach. Unit 2503 at 15701 Collins Avenue traded for $2.6M, or just under $1,800 per square foot. Geane Brito was the listing agent and Diana Shay was the buyer’s agent.

Here’s a breakdown of the top 10 sales from Nov. 20 to Nov. 28

Most expensive

Murano at Portofino, 1000 South Pointe Drive, unit 1802, 14 days on the market | $4.5M | $1,719 psf | Listing Agent: Stacy Robins | Buyer Agent: Daniel Snyder

Least expensive

Gran Paraiso, 480 Northeast 31st Street, unit 3707, 62 days on the market | $1.3M | $785 psf | Listing Agent: Leila Abou Jokh | Buyer Agent: Melanie Hyer

Most days on market

Ritz Carlton Residences, 15701 Collins Avenue, unit 2503, 468 days on the market | $2.6M | $1,797 psf | Listing Agent: Geane Brito | Buyer Agent: Diana Shay

Fewest days on market

The Ocean Club, 781 Crandon Boulevard, unit 805, eight days on the market | $2.4M | $1,155 psf | Listing Agent: Daniel Gaviria | Buyer Agent: Maria Pares

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Secratary of the Treasury Janet Yellen (Getty, iStock)

Secratary of the Treasury Janet Yellen (Getty, iStock)

States struggling to keep rent relief efforts alive could soon benefit from a Treasury Department plan to reallocate funds.

Rental-assistance money would be shifted from municipalities with unused funds to those who desperately need it, the Wall Street Journal reported. Officials didn’t specify to the Journal which states and municipalities would gain and lose funds, nor how much would be reallocated.

The initial reallocation is set to be unveiled early next month, the Journal reported. More than $800 million could be on the move, both between and within states, as a network of more than 450 organizations and agencies are responsible for distributing aid.

Some rural states are among those that haven’t distributed much rent relief at all. Montana only distributed 11 percent of its $200 million pot by Sept. 30. North Dakota distributed only 4 percent by the same time.

Other states are set to shut down rent relief programs due to dwindling funds. Oregon and Texas are closing their programs off to new applicants and officials believe California and Illinois could fall in that line soon, according to the Journal.

New York’s portal for emergency rental assistance stopped accepting new applications as of Nov. 14. Gov. Kathy Hochul said the state had earmarked nearly all of its $2.4 billion in available funding and requested another $996 million from the Treasury Department.

Up to $20 billion of the $47 billion authorized by Congress for rent relief could be spent by the end of the year. Another $5 billion to $10 billion could be pledged to specific tenants and landlords, according to the Journal.

Only the first $25 billion authorized by Congress will be reallocated beginning in December. The other $21.6 billion in funds reportedly won’t be reallocated until March at the earliest.

Rent relief can be used by tenants for back rent, future rent and utilities. The assistance option was one major measure taken by the government to avoid mass evictions, as well as an eviction moratorium that expired earlier this year.

[WSJ] — Holden Walter-Warner

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Traffic was up 47.5 percent from last year, when coronavirus restrictions and concerns were more rampant. (iStock, Getty)

Traffic was up 47.5 percent from last year, when coronavirus restrictions and concerns were more rampant. (iStock, Getty)

Even after the peak of the pandemic, Black Friday no longer appears to be the saving grace of retailers around the country.

Retail traffic in the United States dropped 28.3 percent from 2019’s holiday, according to preliminary data from Sensormatic Solutions reported by CNBC. The data show traffic was up 47.5 percent from last year, when coronavirus restrictions and concerns were more rampant.

Sensormatic still predicts that Black Friday will mark the biggest in-store shopping day of the calendar year. But increased online shopping activity and supply chain concerns have shifted customers’ shopping timelines earlier in the season.

In-store traffic on Thanksgiving Day itself was also down drastically from 2019, Sensormatic data revealed. The 90.4 percent drop in two years was likely furthered by the closure of some stores on the third Thursday, including Target, which announced its locations would be closed for all future Thanksgivings.

While Black Friday in-store traffic rose year-over-year, the day’s online sales fell from 2020, according to Adobe Analytics data reported by CNBC. The $8.9 billion recorded this year fell just short of last year’s $9 million, a record for the day. The decline marked the first ever recorded by Adobe.

Customers spent $5.1 billion on Thanksgiving Day online, Adobe recorded, approximately flat from last year’s sales numbers.

Monday should mark a banner day for online retailers, as Cyber Monday has become a shopping holiday across the country. Adobe is forecasting sales on Monday to range between $10.2 billion and $11.3 billion, CNBC reported.

Last year’s holiday shopping was hampered by the pandemic. Despite falling case counts from the pandemic’s peak and widespread vaccinations, emerging concerns about the omicron variant cast a cloud over this year’s shopping holiday.

However, Sensormatic’s senior director of global retail consulting told the outlet he doesn’t think the variant is spelling doom and gloom just yet.

“If you start seeing outbreaks in the U.S., the thing that I think would drive [traffic down] would be if governments and communities start locking down again,” Brian Field told CNBC. “Otherwise, I think the trends will be very similar to what we expect them to be.”

[CNBC] — Holden Walter-Warner

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Terranova scores $55M refi of Miracle Mile portfolio in Coral Gables

Stephen Bittel with 220 Miracle Mile, and 300 Miracle Mile properties (Terranova)

Terranova Corp. secured a $55 million refinance of its Miracle Mile portfolio in downtown Coral Gables, as the firm continues to take advantage of low interest rates.

Miami Beach-based Terranova, led by Chairman Stephen Bittel, received the financing from City National Bank. The debt consolidates and replaces loans from three lenders on 14 properties, Bittel said.

The closing occurred about a month after Terranova refinanced its Marshalls/Lincoln Eatery building in Miami Beach with a $23 million loan, also from City National Bank.

The $55 million loan is backed by properties that include 220 Miracle Mile, 300 Miracle Mile and 253 Miracle Mile. The 220 Miracle Mile property could eventually be redeveloped into a hotel, but Bittel said those plans are on hold for now.

“The money will be used to repatriate some of our capital to accommodate tenant improvements and return some of our originally invested capital,” he said. His company has been taking advantage of “historically low interest rates,” he added.

Last month, Terranova paid $8.7 million for the retail buildings at 232 and 330 Miracle Mile, which are leased to the Greek restaurant Kaia and Gabriella Arango Couture. The commercial real estate firm also paid $6 million for the corner building at 300 Miracle Mile, previously occupied by California Pizza Kitchen. Terranova also owns properties at 308, 348 and 360 Miracle Mile.

Earlier this year, Terranova and its partner Terra sold a nearly 24-acre development site in Doral to logistics real estate investment firm GLP Capital Partners for $55 million. The partnership sold the industrial property for $15 million above its $40 million purchase price in 2018.

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California falling short in creating affordable housing, new ‘report card’ shows

Housing construction in the Bay area (iStock)

California cities and counties didn’t permit nearly enough housing last year to keep pace with the state’s production goals, and much of what they approved wasn’t affordable to most residents, a new “report card” shows.

Jurisdictions reported issuing about 109,000 housing permits last year, about three-quarters of what they would have needed to issue to meet state mandates to provide housing for people of all income levels. More than 70 percent of those permitted units would be affordable only to higher-income households, while the rest are in reach for those making moderate and low incomes, according to the Southern California News Group’s third annual housing permit report card.

Out of 538 jurisdictions in California with housing mandates, only 20 are on track to meet their goals in every affordability category for the current cycle, the news group reported. Most earned C’s and D’s in the latest report card, with twice as many F’s as A’s.

“California has underproduced housing for decades,” Adam Wood, a vice president at the Building Industry Association of Southern California, said. “If we went on a building spree, it would still take years to catch up; we have dug ourselves such a deep hole.”

The report card is based on numbers reported by jurisdictions showing how many units they permitted through the end of 2020. Cities and counties statewide needed to approve 940,000 homes by the end of last year to keep up with the state’s Regional Housing Needs Assessment mandates, which determine how many new residences are necessary for different parts of the state in cycles that begin every four to eight years.

Yet those jurisdictions have collectively added about 740,000 homes, or less than 80 percent of the statewide goal. Of those, they’ve permitted just 18 percent of the target number of units affordable to those making very low incomes, 26 percent of the target number of low-income units, and 56 percent of the target for moderate-income ones. In contrast, they’ve OK’d 16 percent more above-moderate-income units than they’ll need to meet their final goals for that category.

Click here to read more about the Southern California News Group’s report card and its 10 main takeaways from this year’s report.

[The Mercury News] — Matthew Niksa

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From top: Silver Court mobile home park at 3170 Southwest Eighth Street, Sunnyside/West Haven mobile home park at 6020 Southwest Eighth Street (Marquis Property Company)

A Malibu-based real estate firm paid $50 million to acquire two mobile home parks on Southwest Eighth Street in Miami, marking the end of a decades-long family ownership of the properties.

1989 Sunny Court LLC, an affiliate of Marquis Property Company, bought the Silver Court park at 3200 Southwest Eighth Street and the Sunnyside/West Haven mobile home park at 6020 Southwest Eighth Street, according to the brokers involved in the deal.

The buyer plans to continue operating the properties as mobile home parks, co-listing agent Alex Suarez of Global Investments Realty said.

Two companies led by Marc Levin, Sharon Asbel and Michele Levin sold the two properties. The Levin family also sold a Hialeah property at 3586 Northwest 41st Street earlier this year for close to $12.8 million, records show. They owned the two Eighth Street trailer parks for more than 60 years.

Joel Rodriguez of Global Investments Realty co-listed the property with Suarez. Fred Afif and Louis Erice from KW Commercial represented the buyer.

Orlando Cecilia of Tobin & Associates was Marquis’ attorney on the deal, and Anthony De Yurre of Bilzin Sumberg was the sellers’ legal counsel.

The deals give Marquis Property Co. nearly 17 acres fronting the highly trafficked Eighth Street. Silver Court, in Miami’s Little Havana neighborhood next to Caballero Rivero Woodlawn North cemetery, totals 9 acres. Sunnyside/West Haven totals 7.9 acres and is in West Miami.

Marquis, led by chairman Zan Marquis, has owned multifamily, office, retail and industrial real estate in California, according to the firm’s website.

Investors and developers have been buying up mobile home parks throughout South Florida for years, especially as there is less developable land available. The properties offer a form of affordable housing that is disappearing in cities across the country.

In August, Lennar Homes sold a former mobile home park in Homestead for $23.2 million, $6 million less than the price the company paid for the property last year.

[contact-form-7]

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Sam Nazarian (Getty, iStock)

Sam Nazarian (Getty, iStock)

A 37-year-old woman is facing up to 20 years in prison after duping investors — including Sam Nazarian — out of millions for a resort in Coachella that never even broke ground.

Serena Shi pleaded guilty to wire fraud after tricking investors out of $23 million for down payments on condos, a pot the Los Angeles Times reports she instead used for a slew of lavish personal expenses, including travel, cars and clothing.

Shi spent three years swindling investors, who were buying into a supposed resort project in the desert.

Among those caught up in the con was SBE founder Sam Nazarian, who the Times reported met with Shi in October 2015. Nazarian signed a “letter of intent” to build and operate the condo and hotel resort, dubbed Hyde Hotel & Residences Coachella Valley.

“Let’s get a press release out ASAP!!!” Nazarian said after the meeting in an email to SBE’s development team, according to the Times.

A release dated Oct. 27, 2015, describes the project as the result of a partnership between SBE and Shi’s Global House Buyer set to open in early 2017.

As described in the release, the “destination lifestyle resort” was expected to feature 350 rooms and a number of amenities, including suites with private plunge pools. But the project never materialized and Nazarian told the Times his company was “taken advantage of.”

Shi instead pocketed cash from EB-5 investors from China, which she spent on travel, clothes, meals and other lavish personal expenses, according to authorities. Shi told investors that her development company owned 47 acres for the project and had obtained necessary government approvals for the project, which had broken ground.

Shi did manage to buy part of the necessary land for $2.6 million, according to the Times, but not all 47 acres. James Clark, a former consultant to Shi, said Coachella wouldn’t issue building permits without proof of land ownership.

Her spending eventually drew the ire of Clark, who figured she was misappropriating investment money and tried to confront her. Clark later warned others on the development team about his concerns. A financial advisor also alleged fraudulent real estate books were being kept by Shi.

Shi was arrested in June 2020 on wire fraud charges. After being freed on bail, she was arrested again after prosecutors determined she was trying to secure travel documents under a fake name. Under terms of her plea agreement, Shi won’t ask for less than two years in prison, though she faces up to ten times as much under the maximum penalty.

[LAT] — Holden Walter-Warner

[contact-form-7]

The post Coachella resort fraudster duped Sam Nazarian appeared first on The Real Deal South Florida.

From left: Chris Bosh, Jimmy Butler, Orlandus Andre Branch III, and Joey Bosa (Getty Images)

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

Perfectly in sync with South Florida’s red-hot real estate market, all three of the region’s active sports teams are enjoying consistent, sustainable success at the time of this writing. The Florida Panthers have one of the NHL’s best records, the Miami Heat are winning big despite injuries and the league’s toughest schedule, and even the erratic Miami Dolphins are victors of four straight games, with an outside chance at the playoffs. But when it comes to “home” venues, do the area’s top athletes dominate their closing tables with as much skill and talent? We explore that in this month’s “South Florida by the numbers.”

$7.1 million
Price netted by Miami Heat forward Jimmy Butler in the recent sale of his Pinecrest mansion: a five-bedroom, two-story, 8,958-square-foot home he purchased for $4.6 million in 2019. (Master Brokers Forum member Michael Martinez represented Butler in the deal.) [TheRealDeal]

50
Jersey number worn by Miami Dolphins linebacker Andre Branch while playing for the team from 2016 to 2019. The former NFLer recently sold his Miami Beach home for $6.3 million after purchasing it for $3.5 million in 2019, setting the record for the highest priced non-waterfront sale in that particular neighborhood, according to his agent. [TheRealDeal]

6,494
Square footage of the Fort Lauderdale mansion recently sold by Florida Panthers defenseman Keith Yandle for a cool $6 million, after purchasing it for $4.6 million in 2016. The five-bedroom, five-and-one-half-bathroom home also features an elevator, putting green and 100 feet of water frontage with a 10,000-pound boat lift. [TheRealDeal]

$1,058
Price per square foot of a waterfront Fort Lauderdale home recently purchased by Los Angeles Chargers star defensive end Joey Bosa for $5.8 million. The South Florida native (and son of former Miami Dolphin John Bosa) is the NFL’s second-highest paid defensive player, and only paid the seller $300,000 more than the home’s 2020 purchase price. [TheRealDeal]

192 percent
Listing price increase (compared to its last sale price) of a North Bay Road mansion formerly owned by Miami Heat legend Chris Bosh. The waterfront Miami Beach estate was sold by Bosh earlier this year for $14.4 million, and was listed by its current owners in October for $42 million. The seven-bedroom, nearly 12,400-square-foot mansion was developed in 2009 on a 24,000-square-foot lot, and includes an infinity-edge pool, boat dock, outdoor kitchen, gym and guesthouse. [TheRealDeal]

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.

The post South Florida by the numbers: Winter sports heat up market appeared first on The Real Deal South Florida.

Eric Hassberger and Matthew Vander Werff with an aerial of the property

Eric Hassberger and Matthew Vander Werff with an aerial of the property

Little River developer and landlord MVW Partners secured a majority investment from a real estate firm that focuses on Opportunity Zone projects.

Adventurous Journeys (AJ) Capital Partners, based in Nashville, Tennessee, acquired the majority ownership of the 24-acre portfolio MVW has assembled in Miami’s Little River, according to Matthew Vander Werff, co-founder of MVW, and Eric Hassberger, president of AJ Capital. They declined to disclose additional information about the investment.

The neighborhood, north of the Miami Design District and the MiMo Historic District, has attracted significant investment in recent years. The former ArtCenter/South Florida, now called Oolite Arts, is building its $30 million headquarters in Little River.

MVW’s portfolio includes more than 320,000 square feet of commercial space in Little River, leased to tenants such as Sunny’s Someday Steakhouse, Center for Subtropical Affairs, the software company YellowPepper and others. The properties are in a designated Opportunity Zone, a federal program that provides tax incentives to developers and investors that invest in such areas.

AJ Capital is investing more than $1.1 billion in seven Opportunity Zone projects in Nashville, Miami, Portland and New Orleans, according to its website. The company, led by founder and CEO Ben Weprin, was a former co-owner of the Raleigh Hotel in Miami Beach. It has more than $3.6 billion in real estate investments across 45 markets.

In addition to Little River warehouses that MVW has converted into office and retail, the company secured approval this year for an apartment building with about 270 units, Vander Werff said.

Ray, a New York-based real estate venture led by founder Dasha Zhukova, will partner with MVW and AJ Capital to build and design the Ray-branded apartment building. MVW rezoned the development site, home to warehouses and other commercial buildings, to allow for up to 10 stories in height, the South Florida Business Journal reported.

AJ Capital Partners and MVW will also continue to redevelop existing properties in the portfolio, according to a release. The companies will also develop about 100,000 square feet of retail, office and parking in Little River, the principals said.

“We have a pretty long track record of doing historic renovations where appropriate,” said Hassberger of AJ Capital. “We were very early investors in the Fulton Market in Chicago. We saw similar dynamics in Little River.”

[contact-form-7]

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Deconstruct Podcast

Earlier this month, Zillow quit the iBuying business. The firm said it would stop flipping homes, citing heavy losses, and would lay off 25 percent of its staff.

Reporter Erin Hudson has been documenting exactly what happened at Zillow and the subsequent fallout of the firm’s abrupt retreat.

On this week’s episode of TRD’s podcast, “Deconstruct,” Hudson speaks to Sean Black — part of the team that founded Trulia, which sold to Zillow for $2.5 billion in 2015 — about what he thinks the consequences of Zillow’s decision will be for the iBuying industry.

You’ll also hear from Rick Palacios Jr., who leads research at John Burns Real Estate Consulting and believes iBuying is here to stay.

Listen and subscribe on Apple, Spotify, or wherever else you listen to podcasts.

Next week, “Deconstruct” will look at the booming housing market in the Hudson Valley — the flood of New York City residents relocating upstate and how local brokerages are adapting. You won’t want to miss it.

[contact-form-7]

The post Now streaming: TRD’s podcast on Zillow’s iBuying collapse appeared first on The Real Deal South Florida.

Boca Raton office buildings sell in separate trades for $49M

Tricera Capital led by Ben Mandell, bought Milan at Town Center at 1675 North Military Trail, and Beverly, Massachusetts-based Brookwood Financial Partners, led by Chairman and CEO Thomas Nicholas Trkla, bought Sabre Centre I at 5901 Northwest Broken Sound Parkway. (Marcus & Millichap, Tricera Capital, Brookwood Financial)

In separate deals totaling $49.1 million, Tricera Capital and Brookwood Financial Partners picked up two Class A office buildings in Boca Raton.

The transactions are the latest big ticket deals in the red hot office market in Palm Beach County.

A team led by Douglas Mandel with Marcus & Millichap brokered both deals. Jonathan More, also with Marcus & Millichap, arranged $41.3 million in combined acquisition financing, according to a press release.

Sabre Centre I

Brookwood Financial, a Beverly, Massachusetts-based real estate investment firm, acquired the six-story office building known as Sabre Centre I for $29.1 million, the release states. An affiliate of Boca Raton-based commercial real estate firm Grover Corlew sold the property at 5901 Northwest Broken Sound Parkway within the Park of Broken Sound.

In 2006, Grover Corlew paid $21.5 million for the 6-acre site, according to records. The 103,022-square-foot building, completed in 1986, overlooks the Old Course at Broken Sound Club, a golf course that hosts the PGA Tour’s Charles Schwab Cup Championship, the release states. The building also serves at the headquarters for Gift of Life, a bone marrow and stem cell registry.

Milan at Town Center

Miami-based Tricera paid $20 million for Milan at Town Center at 1675 North Military Trail. The seller is a Verona, New Jersey-based entity managed by Alan Rosilli, Randall Rosilli, Robert Ferrara and Michael Buckworth.

The 66,206-square-foot building was completed in 2008 and is adjacent to the Town Center Mall and Boca Center. The seven-story building includes a four-story parking garage, the release states.

Comerica Bank occupies a full floor and has a branch on the first floor, with legal and professional tenants in the building, the release states.

In a statement, Ben Mandell, co-founder and managing principal of Tricera Co-founder, said the firm plans to add significant value and increase leasing velocity at Milan at Town Center with hands-on management and strategic property upgrades.

Tricera intends on renovating the building’s lobbies, common corridors, restrooms and building systems, Mandell said. The company also plans to create an entire floor of move-in ready spec space to accommodate tenants looking to move to the area quickly.

Over the summer, Tricera teamed up with New England Development, NDT Development and Rockpoint Group to buy the One Clearlake office building in downtown West Palm Beach for $61 million.

Other real estate investors wheeling and dealing for office properties include American Commercial Realty. The Palm Beach Gardens-based firm recently acquired a mixed-use project with a four-story office building for $36.1 million.

Last month, Jordan Capital AM acquired Palm Gate Plaza, an office and retail center in West Palm Beach, for $12.4 million. In another deal, Irvine, California-based IRA Capital paid $16 million for a Boca Raton outpatient center.

[contact-form-7]

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Wyndham Grand in Hollywood by Sharon Sharaby

Wyndham Grand in Hollywood by Sharon Sharaby

Jewish tourists who want to visit the Seminole Hard Rock Hotel & Casino in Hollywood will be able to stay at a kosher hotel directly across the street starting next year, and they may have another kosher option near the tribal resort by 2024.

The 100-room Wyndham Dolce Kosher House Hotel will have a “Sabbath elevator” that automatically stops on every floor, negating the need to operate it, among other features designed to appeal to observant Jewish guests.

The boutique hotel also will have a rooftop restaurant that complies with Kashrut dietary restrictions as well as touchless room service provided by a robot.

Sharon Sharaby, one of the developers of the Wyndham Dolce Kosher House project, said some Florida hotels provide kosher services during Jewish holidays, but his will be the only one to cater to observant Jewish people year-round. “Nobody does it 365 days a year,” he said.

Sharaby said his kosher accommodations will appeal to Jewish travelers who love casinos more than beaches. “There are people who look at casinos like the ocean: They want to wake up in front of a casino,” he said.

Under construction since June, the grand opening of the seven-story Wyndham Dolce is scheduled for October of next year, said Sharaby, who is developing the hotel with his partner Guy Levintin through their Boca Raton-based company, BSD Capital LLC.

At about the time the Wyndham-flagged kosher hotel opens at 5350 State Road 7 in Hollywood, BSD Capital expects to break ground on another one at a site two blocks north at 5300 State Road 7 as part of a mixed-use development with 64 condominium units.

Bearing the upscale Wyndham Grand brand, the second kosher hotel would have 200 rooms and would allow owners of the 64 condos to offer their units for short-term rentals through Wyndham’s reservation system.

The Wyndham Grand would be part of a mixed-use development with 50,000 square feet of office space, 26,000 of retail space, 13,000 square feet of event space, and two restaurants. The mixed-use project is pending city approval. It could be completed by 2024, Sharaby said.

Located directly across State Road 7 from the Wyndham Dolce site and two blocks south of the site of the Wyndham Grand project, the Seminole Hard Rock Hotel & Casino is the primary off-site amenity, not a competitor, Sharaby said.

The Seminole Hard Rock has 194,000 square feet of gaming space, more than 150,000 square feet of meeting space, and a 7,000-seat theater that draws such entertainers as Dave Chappelle, Eric Clapton, Kevin James and Alicia Keys. The Hard Rock hospitality and entertainment complex also has about 1,200 hotel rooms. But the Wyndham Dolce will charge much less for overnight stays, Sharaby said.

“The Hard Rock right now is $500 to $600 a night. That’s a basic, standard room,” he said. “We’re going to be at $180 to $200 a night.”

[contact-form-7]

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The Watermark at Brooklyn Heights (Watermark at Brooklyn Heights)

Most people like to vacation in places that feature indoor pools, spa facilities and restaurants that provide a choice of gourmet meals every night.

And others like to retire there.

To cater to those seniors, a new batch of assisted living facilities have opened around the county that turn the concept of a nursing home on its head, the New York Times reports.

In Brooklyn Heights, the former Leverich Towers Hotel — a 16-story Romanesque Revival structure with Venitian-influenced towers designed by the same architecture firm that drew up plans for Lord & Taylor and Saks Fifth Avenue stores in Manhattan — is now home to the Watermark, where residents can eat, swim and relax while a team of caretakers makes sure every day is better than the last.

The Watermark and other upscale retirement homes such as the Sunrise at East 56th and Inspīr Carnegie Hill are catering to the so-called “silver tsunami” of baby boomers who are still active but would love to kick back with a good book atop a tower with views of the Brooklyn Bridge and the Manhattan skyline a few nights a week.

Looking for a bite to eat? The Watermark has a choice between a high-ceiling, 140-seat dining room that serves Kobe beef, a fresher-baked pastry cafe and smoothie bar, or a gastropub featuring exposed brick and a pizza oven.

Over at the Inspīr, there’s a Yamaha grand piano and Seguso chandelier in the lobby, a 17th-floor wraparound terrace with bistro and lounge, and a 23rd-floor penthouse with views of the East River.

Of course, there is a price for all this luxury. Most assisted living facilities can run about $4,000 a month, the Times reports, fees that can sometimes be supported by Medicare. But “private pay” facilities such as these get no such government subsidy and can range from more then $8,000 to almost $30,000 a month (with some also asking for one-time, five-figure membership fees).

Still, rooms are available. The Times says the Watermark has 30 residents living there and can hold 245 more, while the Inspīr can add on 155 more residents to the 60 that live there so far.

Guess it’s time to start saving to make those golden years truly golden.

[contact-form-7]

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The mansion used as a setting in the film “House of Gucci.” (Airbnb)

Now you, too, can rent the House of Gucci — before it’s available on-demand.

The Italian mansion pranced around in by the likes of Lada Gaga, Adam Driver, Salma Hayek and Jared Leto in the just-released film “House of Gucci” will be available for a one-person, one-night stay in March through the apartment rental service Airbnb.

The New York Post reports a night in the Lake Como home, known as Villa Balbiano, can be scored by one lucky renter on March 30, 2022, for the Gucci-esque price of $1,125 (airfare not included).

If you make the cut, you can stay in the 16th-century mansion that has famously hosted high society — and high ranking members of the Catholic Church — for dances, banquets and festivals while it was the home of Cardinal Angelo Maria Durini in the 1700s, the Post reports.

The home includes a large garden that has been celebrated by Britain’s Society of Garden Designers, a private pier and boathouse on the lake, and an outdoor swimming pool (which we’re guessing will be closed in December).

The interior of the home includes six suites with “opulent marble bathrooms,” according to the Post, as well as 17-century frescos painted by Agostino Silva and the Recchi brothers.

In the new movie based on the book by Sara Gay Forden, the villa plays the part of Gucci family patriarch Aldo Gucci’s (Al Pacino) home. The film centers on the life of Patrizia Reggiani (Gaga), who married into the family, triggering a headlong spiral of betrayal, revenge and murder. Driver plays her husband, Maurizio Gucci, in the Ridley Scott-directed drama that also stars Jeremy Irons.

The setting may be spectacular, but reviews of the film have been atrocious. The New York Times said it is missing “a strong idea and a credible reason for existing,” while the Post’s headline didn’t mince words, claiming “Lady Gaga and her terrible move are shallow.” If you’re still interested in checking it out, the trailer is embedded below.

The chance to book the home begins at high noon on Dec. 6, according to the Airbnb listing.

[contact-form-7]

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Austin, Texas saw pricing of 5 to 9 percent above asking in the first six months of the year. (iStock)

Austin, Texas. (iStock)

Everything’s bigger in Texas, and the price of a home in Austin is no longer an exception.

The capital of the Lone Star State has fast become one of the hottest places to live in the country, and with 180 new residents moving to the city every day in 2020, prices of homes in its metropolitan area are skyrocketing, the New York Times reports.

The cost of housing in the city of Austin reached a median sale price of $535,000 in October, about $95,000 higher than last year, and more than twice the price it was back in 2011, when $216,000 got you a place of your own, according to the Times. The cost of rent has naturally followed home prices up, as apartments with less than 900-square-foot of space are now going for $1,600 a month.

That demand has driven a building boom in and around the city, including the neighborhood of Montopolis in Easy Austin, a historically Black and Latino which has unobstructed views of the ever-changing skyline. There, the Times reports construction workers transform trailer park homes, older housing and dive bars into expensive apartments, trendy bistros and yoga centers.

“You drive down a street one day and all of a sudden you’re thinking, ‘What happened to the apartment building that stood there last week?’” Heather K. Way, a law professor at the University of Texas who worked on a gentrification study commissioned by the city, told The Times.

Just 10 years ago, the so-called liberal haven in a conservative state was listed by Forbes as one of the country’s least expensive cities. Now, a forecast put together by the real estate company Zillow tracking affordability says Austin will, but the end of the year, surpass Miami, New York City and Boston as the least affordable metropolitan area outside California.

The boom hasn’t come without consequences: The Times reports there are fears of the displacement of low-income residents in a city where about 13 percent of the population lives below the poverty line, and a lack of affordable homes is being blamed by some for the appearance of homeless encampments under highways and outside City Hall. This year, after voters approved a measure banning public camping, some of those areas have been cleared by the city.

[contact-form-7]

The post In 10 years, homes in Austin, Texas go from bargain-basement to sky-high appeared first on The Real Deal South Florida.

Making money moves: Cardi B buying up real estate

Cardi B and her property in the Dominican Republic (Getty, Airbnb, Celebrity Brokers Antonio Khoury and Brandi Hunter)

When rapper Cardi B isn’t busy busting up the Billboard Hot 100 chart, she’s putting together a real estate portfolio that she would probably describe as “okurrr.”

Realtor.com reported that the 29-year-old has been involved in at least four significant real estate purchases in recent years as her career took off. The purchases range from family homes to potential overseas investment opportunities.

In September, Cardi B dropped $5.85 million for a nine-bedroom, nine-bathroom home in Tenafly, New Jersey. The price was only the start: The New York Post says she plans to spend $1 million of improvements to the home, which already includes a swimming pool, tennis court and movie theater.

Further away from her New York hometown, Cardi B and her husband, Migos rapper Offset, went in together on an Atlanta area home as a joint Christmas present in 2019. It’s not clear how much they paid for it, though Realtor.com reported the last listing price to be almost $5.8 million.

The five-bedroom home spans 22,000 square feet and sits on a 5.8-acre property. Amenities include a game room, bar, wine cellar and shooting range.

Offset recently gave Cardi B a six-bedroom mansion in the Dominican Republic, which has been valued at $1.5 million. Cardi B expressed excitement about the home on social media, as well as saying she wanted to invest in short-term home rentals in the Dominican Republic and other Caribbean nations.

Cardi B also reportedly bought her mom a home in New Jersey for $1.5 million in 2018. The eight-bedroom spread includes a home theater.

While Cardi B seems to have her hands in many different real estate pots, the music business appears to be working out too. Her debut album topped the Billboard 200 and was certified triple platinum. She also has a Grammy award and was named Woman of the Year by Billboard in 2020.

[Realtor.com] — Holden Walter-Warner

[contact-form-7]

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New York Governor Kathy Hochul touring construction in the subway (Getty)

New York Governor Kathy Hochul touring construction in the subway (Getty)

Gov. Kathy Hochul is looking to get the Second Ave. Subway project back on track.

Hochul said on Nov. 23 that work on the project’s next phrase is “ready to go,” according to the New York Post. She spoke with reporters after touring a tunnel linked to the uber-expensive project.

“We still need to get the approvals,” Hochul said in reference to the MTA’s application for federal funding. “Our application’s in. We’re ready. If we get the approval in 2022, we’re ready to start.”

The MTA submitted a grant application for federal funding in 2018. The Post reported that then-President Donald Trump expressed support for the project, but left the grant application untouched, as has President Joe Biden’s administration. Democratic Sen. Chuck Schumer is among those looking to pull funds from the bipartisan infrastructure package.

The first phrase of the project opened up in 2017 after 10 years of construction. Expanding the Q train to 96th Street cost $4.45 billion, the most expensive subway project in city history. Hochul said the expansion supported about 200,000 riders before the pandemic, the Post reported.

As for the second phase, 16 blocks of existing tunnel will be used to extend the line another three stops to 106th Street, 116th Street and 125th Street.

Acting MTA Chairman Janno Lieber testified in front of the State Assembly on Tuesday, professing that the MTA is 18 months behind schedule on the $55 billion program.

This phase is expected to cost $6.29 billion, but Hochul said costs are piling up as the federal funding application goes unanswered.

“Lost time means more money,” Hochul said. “If this had started in 2019, if the Trump administration had not delayed it, if the money had been there … it would’ve cost less.”

The subway line extension is expected to serve 123,000 daily riders, an official told the Post.

[NYP] — Holden Walter-Warner

[contact-form-7]

The post Hochul promises Second Avenue Subway work to advance in 2022 appeared first on The Real Deal South Florida.

Leon Black and Debra Black with the townhouse (Getty, Beauchamp Estates)

Leon Black and Debra Black with the townhouse (Getty, Beauchamp Estates)

Leon Black, the founder and former CEO of Apollo Global Management, bought an opulent apartment in London’s Belgravia neighborhood.

Black bought the 7,500-square-foot unit for $28 million from the estate of Kathleen DuRoss Ford, the widow of Henry Ford II, according to Dirt. Black was forced out of his hedge fund last year after his close ties to Jeffrey Epstein were revealed through an independent review.

The review found he paid Epstein $158 million for tax and estate planning from 2012 to 2017, according to Reuters. Two women have also accused Black of sexual assault at Epstein’s homes, including the model Guzel Ganieva.

Ganieva sued Black in a New York state court in June, accusing him of rape and abuse during their six-year-long relationship. She also claims Black tried to get her to have sex with Epstein. He denied Ganieva’s allegations and sued her, alleging extortion.

Black’s new London home dates from the 1820s and spans the ground and lower floor unit of a low-rise building. It also includes an attached mews house, or carriage house.

The house has three reception rooms, seven bedrooms and eight bathrooms. The home is lavishly decorated in listing photos from Beauchamp estates. Many rooms have colorful wallpaper, Persian rugs and chandeliers.

(Beauchamp Estates)

(Beauchamp Estates)

The rear of the home opens to a patio garden. The mews house could be expanded by another 600 square feet. The cellar could also be expanded to connect to the main house.

The home sits on the north side of Eaton Square, the largest garden square in London and easily one of its most storied. It was developed by the Grosvenor family, which was behind the development of much of Belgravia in the early 19th century.

Past residents of Eaton Square include Sean Connery, Andrew Lloyd Webber, former Prime Ministers Neville Chamberlain and Stanley Baldwin and royals Aga Khan and Queen Wilhelmina of the Netherlands.

[Dirt] — Dennis Lynch 

[contact-form-7]

The post Former Apollo CEO Leon Black buys $28M London townhouse appeared first on The Real Deal South Florida.

Mindspace founders Dan Zakai and Yotam Alroy. (David Garb for Mindspace)

Israeli shared-office space provider Mindspace has secured $72 million to help fuel its expansion in Europe, the United States and its home country.

The fundraising round was led by Harel Insurance Investment and Financial Services to help Mindspace, which manages 1 million square feet of office space in 32 branches across 17 cities and seven countries, continue to expand during a difficult time in the commercial real estate market when it added new locations in London, Tel Aviv and Philadelphia.

“Mindspace is experiencing an impressive growth momentum and high demand in all its locations,” said Dan Zakai, the company CEO who co-founded it with Yotam Alroy. “We successfully faced the many challenges of COVID. Today, our locations are almost at full occupancy and the current investment led by Harel Insurance and More Provident Funds is intended to fulfill the rising demand in the market and to launch new locations in partnership with landlords worldwide.”

Mindspace provides offices with amenities such as lounges, fully equipped kitchens and meeting rooms, the company said. It claims to have 95 percent occupancy in Israel and Germany while keeping its pre-pandemic pricing in place.

The company has signed six management agreements in the last two years, creating partnerships inspired by the hotel industry that it says allows greater flexibility and profitability for the landlord in today’s tough market.

Harel invested $30 million, and Sami Babkov, said it was money well spent.

“This investment is an expression of confidence in the flexible workspace model,” he said in a press release in which he claimed the move showed “confidence in Mindspace’s experienced and professional management team.”

Ori Keren, CIO at More Provident Funds, which also contributed funds along with Shalom Meckenzie, Arkin Holdings and other existing investors, concurred.

“In a short time, the company managed to create new standards in the market, to build high loyalty among its customers and is experiencing steady growth,” he said.

[contact-form-7]

The post Mindspace gets $72 million induction to continue shared-space expansion appeared first on The Real Deal South Florida.

Jared Kushner (Getty)

Jared Kushner (Getty)

Jared Kushner, who worked closely with Arab states on behalf of the US government and his father-in-law, then-President Donald Trump, is looking to the Persian Gulf to raise money for his new investment firm — a move that has ethics watchdogs on high alert.

The New York Times reports that Kushner, the former CEO of Kushner Properties and husband of Trump’s daughter, Ivanka, has sought investments from such sovereign wealth funds as those in Saudi Arabia, the United Arab Emirates and Qatar to finance his Miami-based investment firm, Affinity Partners, which he established after Trump lost his re-election bid.

The inquires have raised ethical questions considering Kushner is attempting to enlist the help of foreign officials he had dealt with as an employee of the US Government less than a year ago — on top of the fact Trump is hinting he’ll run again for president in 2024.

“When former White House officials start cashing in their time served with our government by cozying up to monarchs, it turns the stomach a bit. Is it illegal? No,” Nick Penniman, the head of Issue One, a good-government organization in Washington, told the Times. “Is it swampy and seemingly hypocritical? Yes.”

The Times reports that Kushner was shot down by Qatar and the UAE, but got luckier with the Saudis, who have a $450 billion Public Investment Fund that could add a considerable chunk of change to his coffers.

Before working for former President Trump, Kushner ran his family’s real estate company, where he famously purchased 666 Fifth Avenue in Manhattan for $1.8 billion in 2007, just before the recession hit. He was also the owner and publisher of the New York Observer for 10 years.

While on the White House staff, Kushner worked on deals known as the Abraham Accords which sought to open diplomatic relationships with Israel and Arab states.

Kushner isn’t the only Trump official to turn to countries in the Persian Gulf for financing. Former Treasury secretary Steven Mnuchin has obtained investments from the Qataris, the Emiratis and the Saudis, the Times reports.

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Chinese President Xi Jinping (Getty)

Chinese President Xi Jinping (Getty)

Chinese regulators are easing some restrictions on bond sales by real estate firms and developers, though they aren’t pulling back entirely.

The goal: limit credit to overleveraged borrowers without cutting off loans entirely, the Financial Times reported, citing Zou Lan, head of financial markets at the People’s Bank of China.

“We have instructed major banks to keep real estate loan issuance steady and orderly,” Zou said.
Chinese developers have borrowed so much money in the last few years that regulators worry that a credit crisis could drag down the economy as a whole.. By some estimates, a third of all economic activity in China is related to real estate, the FT said.
In January, the People’s Bank of China began limiting loans to developers and homebuyers.

But the government has focused mostly on reeling in developers. In August, the government forbade private equity funds from investing in residential development, cutting off a major source of cash.
Evergrande has been the poster child for the property sector’s debt crisis. Many believe the government will allow it to go bankrupt. Other companies are also facing liquidity issues.

The mortgage lending market has also opened up. Lending increased 1 percent year-over-year last month, the first gain in four months. The time to review a mortgage has also halved to less than three months from about six months in September.

Buyers are holding back, however, as prices sank in recent months and buyers expect them to fall further. That could be a challenge for developers.
Either way, regulators aren’t ready to go hands off just yet, one Beijing-based policy advisor said.

“All of our previous attempts to regulate the real estate market have failed because we exited halfway through overhauls,” the advisor said. “This time, the central government is determined to stick to the plan.”

[FT] — Dennis Lynch 

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(iStock)

For decades prior to World War II, Los Angeles County’s Palos Verdes Peninsula was home to a thriving Japanese-American agricultural community. Only one such farm remains today, and it isn’t long for this world.

The Ranchos Palos Verdes City Council has voted to terminate the lease on Hatano Farm, a 5.5-acre cactus and flower farm that sits on city-owned land, according to the L.A. Daily News.

The termination stems from an agreement with the federal government in the 1970s that turned the land over to the city. The pact requires that the city convert the property for public recreation. Sensitive to the area’s history — notably, the fact that most of the farms in the area were wiped out when the families that ran them were sent to internment camps in the 1940s — the city has been slow to enforce the agreement, according to the Daily News.

Prior to World War II, an estimated 200 Japanese-American families operated farms on the peninsula. Many never returned after their release. The City Council’s decision means that the peninsula’s last remaining Japanese-American-founded farm will be no more.

Hatano Farm gets its name from its founder, James Hatano, who was not a farmer on the peninsula before the war. Instead, he arrived after the war, during which he served in the U.S. Army.

The land was originally owned by the Army, but was transferred to the new town of Rancho Palos Verdes in the 1970s as part of a wider government program to offload land to local municipalities.

The city wanted to keep Hatano Farm in operation, so it put off forcing out Hatano, who died in 2015.

The situation became more complicated when Hatano wanted to retire in the 2000s and hand over the farm to his protégé, Martin Martinez.

The city agreed to lease the farm to Martinez, but the National Parks Service caught wind of the situation and said it could take the property if the city failed to meet its obligations under the decades-old deal.

The city has yet to decide what to do with the property, but staff have recommended a handful of options, including turning it into a community garden, a native plant and seed nursery, a kitchen-to-garden operation or restoring the land to its natural habitat.

[LADN] — Dennis Lynch

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South Korean President Moon Jae-in says housing failures are his biggest regret

South Korea’s President Moon Jae-in (Wikipedia, iStock)

In his first live town hall since late 2019, South Korean President Moon Jae-in said his biggest regret is failing to fix the nation’s housing shortage.

“I have apologized for the real estate issue several times, but looking back, I think it would have been better if we had put in a little more effort, especially into housing supply,” Moon said, according to Korea JoongAng Daily.

Moon took office in 2017 and ran in part on a platform addressing the nation’s housing crisis.

Home prices and rents have been rising for years. Prices in the capital, Seoul, jumped 58 percent from the beginning of Moon’s presidency through this spring and things are only getting worse.

In the first nine months of 2021, nationwide home prices jumped 12 percent. That’s a more drastic spike than even in 2006, when the nation’s market had been considered the most overheated, according to the Korea Herald.

Moon said it would have been helpful to have begun implementing some real estate policies earlier.

He regretted not being able to provide enough opportunities for “ordinary people, young people and newlyweds to buy their own home,” and said that the shortage and high housing costs bring a “sense of deprivation to the public.”

Last year, the national government launched an ambitious plan to convert empty hotels and office buildings into more than 100,000 residential units over the next two years.

Prior to that, the government eased building height limits and converted some military properties into residential neighborhoods.

In March, a scandal erupted when it became public that at least 10 government officials bought land that the government later said it would develop with housing. The inside information allowed them to buy for much cheaper than they could after the announcement.

[Korea JoongAng Daily] [Korea Herald] — Dennis Lynch

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(iStock)

Average monthly rents rose by 13 percent since last year, with the bulk of the price surges recorded in popular metro areas, according to a new report from Redfin.

The report pins the average monthly rent nationwide in October at $1,858, a 12.5 percent year-over-year rise from 2020. Average rent in October in 2020 was only $1,651, but has been rising ever since.

Some metros are seeing sharper rent increases than others. Three markets in Florida — West Palm Beach, Fort Lauderdale and Miami — have all seen the average rent rise a whopping 36 percent year-over-year.

Areas in the New York metro area are experiencing similar growth. In New York City, Long Island’s Nassau County and New Jersey’s Newark, average rent rose 31 percent year-over-year. Those three markets, as well as New Brunswick, New Jersey, average the highest rent in the nation at $3,665.

Several other major markets have also seen sizable year-over-year rent increases. In Chicago, average rent is up 11.1 percent to $2,450. In Los Angeles, rent has increased 14.4 percent to $3,415, one of the highest in the nation. In San Francisco, rent is up 6.7 percent to $3,314.

Rising rents can contribute to issues around inflation and reflect the crunch of housing shortages in fast-growing areas, Redfin Chief Economist Daryl Fairweather said in the report.

There is one major metro in the United States that can celebrate a year-over-year decline in rent: St. Louis, Missouri saw a 3.6 percent downtick to an average rent of $1,447 per month. Meanwhile, San Antonio has the lowest average rent among the major markets at $1,258.

Good news may be on the way for renters, however. Despite the sizable year-over-year gains in the market, the average rent across the nation is only up 0.8 percent month-over-month — the smallest increase in eight months — in a possible sign of a slowdown among the national rent hikes.

Homebuyers have also faced pricey changes this year, as Redfin reports median monthly mortgage payments were up 3.2 percent month-over-month in October. The figure marks the biggest increase since April and an increase of 16.9 percent for mortgage payments year-over-year.

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Decentraland

Decentraland

The burgeoning digital real estate market is heating up.

A virtual “estate” in Decentraland, one of the two dominant metaverses, changed hands on Nov. 23 for a record sum — the equivalent of $2.4 million at the time.

Tokens.com Corp., via its subsidiary Metaverse Group, paid 618,000 MANA — the native Decentraland cryptocurrency — for 116 parcels comprising some 6,090 square feet in the virtual world.

The estate, in Decentraland’s Fashion District, is now worth much more, thanks to a 35% increase in the value of MANA overnight. Cryptocurrencies are notoriously volatile, but the market overall has trended up since the summer. MANA has increased in dollar value by more than 65 percent over the last week, and by more than 550 percent over the last month, according to crypto marketplace Coinbase.

Decentraland, like other metaverses, is still largely undeveloped. But investor interest in the metaverse has grown in recent months as retail, gaming and media companies like Facebook have staked claims in virtual worlds. As the number of participants has multiplied, value has coalesced around estates and other plots located near highly-trafficked public squares and emerging commercial enterprises like casinos.

Speculators say digital real estate can serve a variety of purposes, from retail showrooms, to event spaces and virtual offices.

Decentraland

Decentraland

Toronto-based Tokens.com, a publicly traded company that facilitates investment in digital assets, plans to develop the Decentraland estate for staging fashion shows with clothing brands, the company said in a release. Luxury brands such as Louis Vuitton, Gucci and Burberry have already entered the metaverse through designer NFTs — unique digital assets secured by blockchain technology.

In September, Tokens.com paid roughly $2 million for a 50% stake in a portfolio of digital real estate owned by Metaverse Group, with plans to spin it off as the world’s first metaverse REIT.

Tokens.com is led by co-founder and CEO Andrew Kiguel, a former real estate investment banker.

The Sandbox, another dominant metaverse oriented toward gaming, is set to launch Nov. 29 after four years in development. SAND, the native currency of the virtual world, is up more than 800% in the last month.

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Former Newmark brokers Christopher Cowan, Shane Ozment, and Terrance Hunt (CoStar)

Three former Newmark brokers who jumped ship to CBRE are fighting back against the enforcement of a non-compete agreement that they claim is destroying their careers.

Denver-based brokers Terrance Hunt, Christopher Cowan and Shane Ozment — who specialize in multifamily sales — are appealing an injunction issued by a New York judge in July that prevents the trio from providing brokerage services in Colorado for one year.

“There’s almost no injunction that’s more severe,” Theodore Boutrous, the attorney representing the brokers, told an appellate court during a Nov. 18 hearing.

The agreements in question were signed in 2014, when BGC Holdings, Newmark’s then-parent company, acquired Apartment Realty Advisors of Colorado, one of the region’s most prominent multifamily investment brokerages. Newmark spun off from BGC in 2018.

Hunt, Cowan and Ozment — who each owned a small share of Apartment Realty Advisors — signed agreements stating that they would not work for Newmark’s competitors nationwide for two years if they left the company before October 2021. If they left after that, the non-compete period would be reduced to one year. In exchange, the brokers collectively received $1.5 million for their shares when the acquisition was completed, Newmark claims.

Newmark sued the brokers in May, shortly after they decamped for CBRE, alleging breach of contract. CBRE was initially named as a co-defendant, but was later dropped.

The brokers countersued, alleging that they received only $142,000 each for selling their shares. In any event, Newmark made more than enough to cover the payment from the brokers’ deals during their six and a half years with the firm, they argued, asserting that the non-compete pact was unreasonable and was voided by a subsequent 2018 agreement with Apartment Realty Advisors.

New York state Supreme Court Justice Barry Ostrager ultimately upheld the non-compete with the preliminary injunction, though he shortened its term from two years to one, and shrank its geographical scope from nationwide to Colorado.

Cantor Fitzgerald’s David Paul, the attorney representing Newmark, told the appellate court that the fact that Ostrager modified the non-compete requirements in favor of the brokers “underscores that he exercised his discretion soundly and that there is no abuse of discretion in this case.”

Appellate judges typically render a decision in six to eight weeks.

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Michael Huffington and the condo building (Getty, Eighty Seven Park)

Michael Huffington and the condo building (Getty, Eighty Seven Park)

Arianna Huffington’s ex-husband and former U.S. House Representative Michael Huffington sold his Miami Beach condo for $11.4 million, more than a year after he acquired it for $7.5 million.

Huffington, via a trust, sold unit 1601 at 8701 Collins Avenue to Nancy Peretsman and Robert Scully, who are married, property records show. He sold it for $3.9 million, or more than 50 percent, over what he paid for it in August last year.

The 3,162-square-foot condo sold for $3,605 per foot. It has four bedrooms, three full bathrooms and one half-bathroom, according to the listing. The building was completed in 2019 and is adjacent to the site of the collapsed Champlain Towers South in Surfside.

(Eighty Seven Park)

(Eighty Seven Park)

Huffington’s Eighty Seven Park condo was on the market for nearly seven months. Harlan Goldberg with Bespoke Real Estate represented Huffington. Frank Kissel BHHS EWM Realty represented the buyers, according to Realtor.com.

Scully is a founding partner of New York investment banking firm Scully Brothers & Foss, according to the New York Times. Scully, who also advised the government on rescuing Fannie Mae, Freddie Mac and American International Group in the wake of the 2008 financial crisis, retired from Morgan Stanley after 34 years on Wall Street that year, the Wall Street Journal reported.

The developer of Eighty Seven Park, a partnership led by David Martin’s Terra, was recently sued by some of the victims, alleging that the development team ignored warnings about the damage the tower’s construction was causing to the Champlain Towers South feet away.

In September, Miami-based Slow Emotion, led by Giovanni and Stefano Giusto, sold unit 602 at Eighty Seven Park, marking the first deal in the luxury high-rise since the deadly collapse of its neighbor in June. That deal broke down to $3,949 per square foot.

In early June, Novak Djokovic sold his Eighty Seven Park condo for $6 million, and in May, Condé Nast chairman sold his unit for $6.2 million.

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Sahm Adrangi, founder and CIO, Kerrisdale Capital Management LLC (The Carroll Group)

Investment firm founder Sahm Adrangi paid $15 million for a waterfront home on the Venetian Islands in Miami Beach.

Adrangi, founder and chief investment officer of Kerrisdale Capital Management, closed on the acquisition of the four-bedroom, 5,330-square-foot house at 21 East San Marino Drive, according to property records obtained by The Real Deal.

Adrangi relocated to Miami Beach last year, public records show. His firm moved its headquarters from New York, another example of companies and their executives making a bet on the Sunshine State. Kerrisdale managed about $750 million as of April, according to Adrangi’s biography.

John Hilliard and Christine Bruce sold the Venetian Islands home to Adrangi’s Red Marine Trust. Hilliard owns Hilliard Bruce Vineyards in California, according to his LinkedIn.

Chad Carroll and Eli Faitelson represented the buyer and seller in the deal.

The house was designed by Peter Bohlin, an award-winning architect also responsible for the Apple Store on Fifth Avenue in New York and Bill Gates’ mansion in Medina, Washington. The Miami Beach property has 100 feet of water frontage and a 23-yard second-floor lap pool that hangs over the back yard overlooking the water, according to the listing.

The Venetian Islands, a chain of man-made islands in Miami Beach and Miami, have attracted a number of tech investors. Ed Lando, co-founder of the gifting app Goody, recently paid $15.1 million for a waterfront home on Rivo Alto. That island is also home to PayPal co-founder Peter Thiel, who last year paid $18 million for two adjacent waterfront mansions.

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From left: David Lloyd and Johan Kriek, retired tennis players and lead developers of Adrenaline World (Adrenaline World, iStock)

In separate decisions earlier this week, the Westlake City Council approved a family entertainment venue and a shopping center inside Minto Communities’ 50-acre master-planned business park, Westlake Landings, in western Palm Beach County.

The two projects are among a string of developments in the pipeline for the fast-growing, five-year-old city that spans roughly 3,800 acres. So far, Westlake has approved 4,500 homes and more than 2.2 million square feet of commercial space, according to a press release. It’s being led by master developer Minto.

The projects include a 140,000-square-foot outdoor shopping plaza on a 20-acre site Publix acquired from Minto for $9.1 million. In another deal, Minto sold 63 acres for $10.2 million to homebuilder Label & Co. where the company is building 204 new homes.

Adrenaline World
The City Council approved a site plan for Adrenaline World, an amusement park with indoor and outdoor recreation venues on 14.4 acres in Westlake Landings, a 50-acre site at 16610 Town Center Parkway North, near Seminole Pratt Whitney Road between Southern Boulevard and Northlake Boulevard.

Adrenaline World is the brainchild of David Lloyd and Johan Kriek, retired British tennis players who have become developers. The entertainment complex will feature a 92,773-square-foot indoor recreation building with an arcade, virtual reality games, themed climbing structures, a trampoline park, laser tag arenas, miniature golf and party rooms, the release states.

Adrenaline World will also have an outdoor electric Go-Kart track, a dinosaur park, splash pad, rope course and cloud climb.

Shoppes of Westlake Landings
The city council also approved the site plan for the 23,000-square-foot retail center on seven acres to be developed by Konover South. The project consists of two multi-tenant buildings and a separate space for quick-service restaurants. Konover is expected to acquire the site from Minto by the end of the year.

The Deerfield Beach-based commercial developer has signed leases with Verizon Communications, Go Green Dry Cleaner and Sauced BBQ and Whiskey Shack, the release states. Konover South is also negotiating agreements with hamburger concepts, a smoothie shop, dental practice, and fitness studio.

Construction on Adrenaline World and Shoppes of Westlake Landings is scheduled to begin in 2022.

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At The Real Deal’s seventh annual Miami event on Nov. 10, brokers at the top of the residential market sparred over the best strategies for snagging clients and listings in an inventory crunch.

The panel, sponsored by Sabal Luxury Builders and moderated by TRD’s Katherine Kallergis, featured Douglas Elliman brokers Dina Goldentayer and Oren Alexander, Dora Puig of Luxe Living Realty, Corcoran’s Julian Johnston, and Jeff Miller of One Sotheby’s International Realty. The five agents regularly sell multimillion-dollar homes to the hordes of high-net-worth individuals flocking to Florida for tax, lifestyle and Covid reasons. Increasingly, those homes are off the water as waterfront lots become unavailable, and brokers have had to get creative.

And while the group seemed to acknowledge that it’s important to get along, it was clear that the competition is tough in such a hot market. Panelists were quick with jabs and willing to get cutthroat. “I don’t think that kindness is that important right now,” Goldentayer said.

With limited inventory, buyers are willing to purchase homes sight unseen. “There is just no inventory,” Johnston said. “I’ve had 20 brokers come up to me asking, ‘Do you have anything?’” The agents noted the importance of both pocket listings and even the old art of door knocking.

Now that the U.S. travel ban is lifted, the panelists acknowledged that they expect a renewed surge in buyers from Latin America and Canada, as well as a continued influx from New York and even California. With so little inventory, where will all those new Floridians go? Watch the video above to find out.

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Ivanhoé Cambridge's Nathalie Palladitcheff and Greystar's Bob Faith with the InTown Apartments at 1900 Southwest 8th Street, Miami (Ivanhoé Cambridge, Greystar, InTown Apts.)

Ivanhoé Cambridge’s Nathalie Palladitcheff and Greystar’s Bob Faith with the InTown Apartments at 1900 Southwest 8th Street, Miami (Ivanhoé Cambridge, Greystar, InTown Apts.)


With a $104.8 million purchase, a Canadian real estate development firm is the new owner of the InTown apartment complex in Miami’s Little Havana neighborhood.

An affiliate of Ivanhoé Cambridge picked up the two-tower, 15-story multifamily project at 1900 Southwest Eighth Street, according to records. The purchase is part of the firm’s $3.6 billion deal to acquire a 10,000-unit portfolio from Greystar.

In 2016, Greystar bought the 492-unit complex for $88.8 million from Coral Gables-based developer Astor Companies, which completed the project the same year, according to records. Astor converted the development from a condominium to a multifamily project following lackluster sales reservations.

Ivanhoé Cambridge, led by President and CEO Nathalie Palladitcheff, honed in on 30 properties in growth markets in the Sun Belt and coastal suburbs when it made its blockbuster purchase. The deal also included Ivanhoé Cambridge’s recent $73.5 million purchase of the 225-unit Avana Bayview complex and a nearby urgent care center in Pompano Beach.

Charleston, South Carolina-based Greystar, one of the largest multifamily real estate firms in the world, originally planned to sell the properties one at a time. Instead, the company decided to offer the entire package to one buyer and capitalize on the booming multifamily market. In August, Ivanhoé Cambridge came out on top after three rounds of bidding.

Greystar also recently offloaded another South Florida property that was not part of the Ivanhoé Cambridge package. In May, Greystar sold the 279-unit Satori Apartments in Fort Lauderdale to Bell Partners for $99.5 million.

Based in Montreal, Ivanhoé Cambridge has an interest in more than 1,100 buildings worldwide, focusing on industrial and logistics office, residential and retail, according to its website. In South Florida, Ivanhoé Cambridge has a 42.7 percent ownership interest in the Mary Brickell Village shopping center in Miami. In 2015, the firm sold a majority stake to Rockpoint Group for $113.5 million in a deal to recapitalize the open-air retail center that was completed in 2008.

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Compass broker Chad Carroll in front of 631 Hibiscus Drive (Compass/Illustration by Steven Dilakian for The Real Deal)

Compass broker Chad Carroll sold his waterfront Hallandale Beach home for $5.4 million, marking a record for the city.

Carroll, a top South Florida real estate agent, sold the six-bedroom, seven-and-a-half-bathroom house at 631 Hibiscus Drive to Doron Topaz, property records show. Carroll brokered both sides of the deal, according to a spokesperson.

The 5,829-square-foot home, in the Golden Isles neighborhood, hit the market in April for nearly $5.5 million. Carroll paid $3.2 million for the 0.3-acre property in 2016, the same year the house was completed.

The Hallandale Beach home features a gourmet kitchen, three large terraces, laundry rooms on each level, a three-car garage and a dock that fits up to a 75-foot boat, according to the listing.

The previous Hallandale Beach record was $4.8 million for a property that traded in December 2020.

Carroll and his team joined Compass last year. Prior to Compass, he had been with Douglas Elliman since early 2009. This year, as the residential market in South Florida has seen record sales and dollar volume growth, Carroll has brokered deals totaling more than $700 million, according to his spokesperson.

Other top South Florida agents have bought and sold homes over the past few months.

In Palm Beach, Elliman broker ​​Gary Pohrer sold his home for $7.3 million in July and paid $5.8 million for another house. And Dina Goldentayer, also with Elliman, bought Terra developer David Martin’s Miami Beach home for $8.9 million.

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Jeff Bezos, founder and executive chair, Amazon (Getty Images, iStock/Illustration by Steven Dilakian for The Real Deal)

From a real estate point of view, Amazon has certainly lived up to its name this year.

Since the start of the pandemic, the e-commerce behemoth has expanded its portfolio of warehouse, distribution, data center and last-mile properties across North America to more than 410 million square feet.

But where exactly are these facilities located?

The Real Deal created an interactive map that pinpoints all the facilities that Amazon planned to open this year, using data from supply chain firm MWPVL International. Users can zoom in for information on a single site or zoom out for a big-picture view on where Amazon grew.

Click on a region to dive into it. Then tunnel down to individual facilities, where you can see each one’s address, when it was scheduled to open and how Amazon intends to use it.

At the end of 2019, the Seattle-based firm had around 192 million square feet of warehouse, data center and distribution space across the U.S. and Canada, according to financial reports. Amazon added about 101 million square feet in 2020 and a further 119 million square feet of space this year.

That space consists of 432 new facilities across 42 states and Washington, D.C. — a total of around 119 million square feet. Read more about that here.

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David and Celia Centner with the Palm Island mansion (Getty, Compass)

David and Celia Centner with the Miami Beach mansion (Getty, Compass)

David and Leila Centner, owners of the controversial Centner Academy in the Miami Design District, are the buyers of a Miami Beach mansion that traded in August for $28.3 million, The Real Deal has learned.

A company led by Armando Simosa sold the waterfront Palm Island home to a trust, records show. Sources confirmed the buyers are the Centners.

A month earlier, the couple sold two waterfront properties on Pine Tree Drive in Miami Beach to billionaire Rockstar Energy Drink founder Russell Weiner for $35.1 million.

The Centners received national media coverage when they threatened to fire teachers at their Centner Academy if they received a Covid-19 vaccine before the end of the 2021 school year, the New York Times and other news outlets reported. The school also required students who received the vaccine to quarantine for 30 days, but ended up walking back on that decision, according to Local 10. For its anti-vax reasoning, the school cited false information about vaccines which has been debunked by the Centers for Disease Control and Prevention.

Leila Centner did not immediately respond to a request for comment.

The eight-bedroom, seven-and-a-half-bathroom mansion, spanning nearly 11,000 square feet, sits on a double lot. It includes a home theater, chef’s kitchen and a separate pool house with double cabanas and a full gym, according to the listing.

Liz Hogan of Compass represented the seller, and Oscar De La Rosa of Endeavor represented the buyers, according to Realtor.com.

De La Rosa, a Hialeah city council member, is the stepson of Hialeah’s mayor-elect Esteban “Steve” Bovo. The Centners hosted a campaign fundraiser for Bovo at their Centner Academy, the Miami New Times reported.

The Palm Island sale was recorded in the Multiple Listing Service as $30 million, which could include commissions or other fees. The county recorded the price at $28.3 million.

Hogan, a top agent at Compass who has been involved in a number of deals on Palm Island, declined to comment on the deal. De La Rosa also declined to comment.

The 1.4-acre Palm Island property was listed just before the pandemic briefly shut down business in South Florida, and it returned to the market earlier this year for $29.9 million.

It previously sold for $14.2 million in 2011, records show. A small portion of the house was built in 1925 and the majority was added in 2003.

The Centners’ neighbors on Palm Island include venture capital investor Ben Ling and his partner, front-end web developer Chris Coudron, who paid $29.5 million in September for the waterfront mansion at 135 Palm Avenue. In August, former boxing champion Floyd Mayweather Jr. bought a mansion on the island for $18 million.

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AMLI Residential Chairman and CEO Gregory Mutz with the site (Google Maps, AMLI)

AMLI Residential Chairman and CEO Gregory Mutz with the site (Google Maps, AMLI)

With one apartment building at Midtown Miami under its belt, AMLI Residential is planning another major multifamily project in the neighborhood.

An affiliate of the Chicago-based luxury apartment developer bought a 1.84-acre site at 3001 Northeast First Avenue for $30.5 million, records show. The seller is Midtown Development, headed by Midtown Miami master developer Alex Vadia. The company paid $5.4 million for the site in 2011.

Robert Given with Cushman & Wakefield represented Midtown Development.

AMLI, led by Chairman and CEO Gregory Mutz, can build a project of up to 451,469 square feet and 389 apartments, according to an assignment of development rights. Once the project is completed, AMLI would transfer 28,000 square feet of leasable retail space to Midtown Development. It has the right of first refusal to buy it if Vadia’s firm decides to sell it.

The proposed project would be about a half a block from AMLI Midtown Miami, a gargantuan 719-unit apartment complex at 3000 Northeast Second Avenue that opened last year. In 2015, AMLI paid Midtown Development $55 million for the 6.6-acre site.

Monthly rents range from $2,040 to $6,884 for studios to three-bedroom units, according to Apartments.com

AMLI Residential is among several developers building new apartment projects in Midtown Miami, Wynwood and Edgewater, at a time when South Florida’s multifamily market is experiencing record demand and rising rents due to the state’s population growth. Kushner Companies and PTM Partners are developing a three-tower, 1,300-unit phased project at 2000 Biscayne Boulevard.

Rilea Group, led by owner and CEO Alan Ojeda and President Diego Ojeda, bought a development site at 56 Northeast 29th Street in June for $22 million. The company plans to build a 225-unit, 12-story multifamily building called Mohawk at Wynwood. And Wood Partners is developing Yard 8, a 387-unit apartment complex at 2901 Northeast First Avenue.

Vadia remains active in Midtown Miami with other projects. His company recently partnered with The Standard hotel group and Rosso Development, led by Carlos Rosso, to build a 12-story, 225-unit branded condo project designed by Arquitectonica and Urban Robot. Midtown Development is also seeking approval from the city of Miami to increase the height of a proposed mixed-use tower site at 3501 Northeast First Avenue.

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(iStock)

(iStock)

Turkeys haven’t yet hit ovens, but this year’s investments in the proptech sector have already broken the industry’s record.

The sector received $9.5 billion from investors and venture capital as of mid-November, according to CB Insights data reported by the Wall Street Journal. That figure breaks the record previously set two years ago, when $9 billion was raised in 2019.

The record fundraising also marks a rebound from 2020, when the pandemic forced some landlords to turn away from proptech desires for cost-cutting needs. Only $8.1 billion was raised last year, an 11 percent decline from 2019, according to CB Insights.

There are multiple factors bringing proptech investors back to the table. Technology is an increasingly attractive asset for landlords and tenants looking to provide efficiency and security for office occupants returning from the pandemic. Proptech investors can see high returns on low interest rates and commercial real estate sales are through the roof as owners plot a post-pandemic future.

Proptech fundraising rounds are seemingly everywhere.

Commercial real estate data crowdsourcer CompStak said earlier this month it raised $50 million in a recent fundraising round. The firm previously raised about $14 million in a Series B round in 2019. Its Series C fundraising, led by Morgan Stanley Expansion Capital, will help scale product and marketing teams, as well as roll out new products.

In August, Divvy Homes raised $200 million in equity financing, bringing the company’s valuation up to $2 billion. The startup helps renters become homeowners by buying homes and charging rent while allowing customers to save towards buying the homes themselves.

Beyond fundraising, Proptech M&A is also having a banner year. As of the end of August, there had been transactions totaling more than $18 billion in 2021, setting the sector up to easily surpass the $21.9 billion of M&A transactions in 2020.

[WSJ] — Holden Walter-Warner

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From left: Robert Rivani, principal, Black Lion Investment Group and Rick Baer, president, American Commercial Realty in front of Crystal Cove Commons (Black Lion Investment Group, LinkedIn/RickBaer)

UPDATED, Nov. 23, 6:30 p.m.: In a deal that closed at roughly $9 million below listing price, American Commercial Realty picked up a North Palm Beach mixed-use property.

The Palm Beach Gardens-based commercial real estate firm paid $36.2 million for a 7.9-acre site at 1201 U.S. Highway 1. Called Crystal Cove Commons, the property features 75,000 square feet of ground-floor retail next to a four-story office building built in 1982, records show.

The seller is Black Lion Investment Group, a Beverly Hills, California-based commercial real estate firm led by Robert Rivani.

The property was originally listed in October 2020 for $44.8 million by another brokerage. JLL’s Eric Williams represented Black Lion in the sale.

Black Lion still is making a hefty return on its investment, selling the site for $22 million above the price it paid five years ago. In 2016, Black Lion bought Crystal Cove for $14 million, records show. Rivani’s company “invested millions of dollars into capital improvements” at the 120,474-square-foot complex between 2017 and 2019, according to a press release.

Crystal Cove is home to a diverse mix of dining outlets, fitness centers, and offices of high-end services and medical providers, the release states. Tenants include Stormhouse Brewing, Cod & Capers Seafood Marketplace & Café, Cucina Cabana, Horizon Yacht USA and Fuse Speciality Appliances.

American Commercial Realty was founded in 2002 by President and COO Richard Baer. Before forming his real estate firm, Baer was vice president and director of real estate for Pompano Beach-based Baer’s Furniture Company. He oversaw an expansion of the furniture business from five stores and one warehouse in two counties to 14 stores and four warehouses throughout South Florida, according to American Commercial’s website.

Palm Beach County has experienced an uptick in office building trades recently. Last month, an affiliate of Atlanta-based investment management firm Jordan Capital AM paid $12.4 million for Palm Gate Plaza, an office and retail center in West Palm Beach. Irvine, California-based IRA Capital bought a Boca Raton outpatient center for $16 million. And in a $23 million deal, Trian Partners acquired an office building in Palm Beach.

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Residential sales rose only in Miami-Dade County, according to reports. (iStock)

Residential sales are showing signs of a slowdown, at least compared to last year, as inventory of single-family homes is running dry in this banner year for South Florida real estate.

In Miami-Dade and Broward, closed sales in the first 10 months of the year surpassed all of 2020, according to reports from the Miami Association of Realtors. In Palm Beach County, condo sales did the same. Median prices are on the rise across counties and property types.

Home sales in October totaled $5 billion for the tri-county region, marking an annual increase compared to October 2020. Residential sales rose only in Miami-Dade County, the reports show.

Miami-Dade
Residential sales increased 8.8 percent in October, year-over-year, to 2,978 closings, thanks to a big bump in condo closings. Single-family home sales declined 12.4 percent to 1,161, while condo sales rose 28.8 percent to 1,817.

Compared to October 2019, pre-pandemic, residential sales increased 26.5 percent, with single-family home sales up 1.3 percent and condo sales up 50.3 percent.

Fewer single-family homes are hitting the market, down nearly 2 percent, year over year to 1,593, while new condo listings grew by 1.4 percent to 2,429. Overall inventory of both condos and single-family homes decreased significantly, down 45.4 percent and 26 percent, respectively.

The median price of a single-family home rose 12.6 percent to $490,000, and up 21.9 percent for condos to $326,790.

Total dollar volume came out to $1.9 billion, with single-family dollar volume rising 1.3 percent to $1 billion, and condo dollar volume up 74.2 percent to $957.6 million.

Broward County
In Broward, residential closings dropped 8.5 percent to 2,967 compared to October 2020. Single-family home sales decreased 16.3 percent to 1,386, and condo sales fell slightly, by 0.3 percent to 1,581.

New listings of single-family homes dropped 18.5 percent to 1,986, and new listings of condos fell to 2,003, a 9.2 percent annual drop. Overall inventory of single-family homes decreased 32.9 percent to 2,198 last month. Condo inventory decreased 54.6 percent to 7,720 listings, according to the reports.

Prices rose for both houses and condos. The median price of a single-family house surged by 17.8 percent to $489,000. For condos, it jumped 20.6 percent to $227,950.

Dollar volume in Broward County totaled $1.3 billion, with single-family home dollar volume inching upward by $1 million, or 0.1 percent, to $912.4 million. Condo dollar volume increased 21.7 percent, year-over-year, to $468.9 million.

Palm Beach
Palm Beach County experienced a 13.1 percent drop in residential sales last month, to 2,809 closings, which the Realtors’ association attributes to a lack of inventory and the comparison to 2020, another record year.

Single-family home sales decreased 19.1 percent to 1,471, while condo sales fell 5.4 percent to 1,338. New listings of single-family homes decreased 17.3 percent to 2,049. New listings of condos declined 16.6 percent to 1,509. Inventory of single-family homes decreased 46.5 percent, year-over-year, to 2,212, while condo inventory decreased 64.4 percent to 1,917.

The median price of single-family homes totaled $500,000, a 19 percent increase compared to October 2020. The median price of condos rose to $237,000, a 12.3 percent annual increase.

Total dollar volume amounted to $1.7 billion, with single-family dollar volume dropping 7.2 percent to $1.2 billion, and condo dollar volume rising 6.9 percent to $471.2 million.

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Travis Soukup and Yongxing Deng with Fifth Wall’s Brendan Wallace (Aloft/Zack Phillips, Jeff Newton, iStock)

A shortage of home appraisers is bottlenecking the housing market, delaying closings and putting buyers at risk of missing out on low interest rates.

Backed by millions in fresh funding, one newly launched company believes it can come to the rescue.

Seattle-based appraisal startup Aloft closed a $20 million Series A round led by proptech-focused venture capital firm Fifth Wall, the company announced Thursday.

The Series A brings Aloft, founded last year, to $25 million in total funding, which will be used to invest in its technology and expand its U.S. operations, including its workforce of appraisers and technology engineers.

In addition to Fifth Wall, Aloft’s backers include VC firms Andreessen Horowitz and MetaProp, Zillow and Pacaso co-founder Spencer Rascoff, Built CEO Chase Gilbert and Doordash executive Gokul Rajaram.

“We often don’t see companies with the type of breakout potential that we saw in Aloft, and it really was a perfect fit for Fifth Wall’s continued work around the digitization of the residential real estate process,” said Fifth Wall partner Dan Wenhold.

The appraisal market is ripe for disruption, Wenhold said, pointing to its aging workforce. More than 70 percent of appraisers are 51 years of age or older, according to a report from the Appraisal Institute, with the number of new licensees unable to keep pace with those retiring out of the profession.

“When you layer on the total addressable market size here, you start to understand that this is really a category that is prime for a new technology-enabled entrant to build the next billion-dollar-plus real estate technology business,” Wenhold said.

Fifth Wall trusted Aloft’s co-founders, Travis Soukup and Yongxing Deng, given their background in real estate and technology. The VC firm had previously worked with Soukup while he was the West Coast regional director at Clutter, another Fifth Wall portfolio company.

“Together, they both have a really unique combination of not only understanding the types of technology and systems that need to be built, but also the way that the real estate industry has struggled to find the right technology-enabled solutions provider around appraisals,” Wenhold said.

With capital and the right partners on the strategic side of things, Wenhold said Fifth Wall hopes to build a future with Aloft that will take its services beyond its current markets in the Pacific Northwest, starting with Texas in the first quarter of next year.

“We really think there’s an opportunity here to create a national brand around an appraisal company,” Wenhold said.

The backed-up buying process

As of 2018, there were roughly 78,015 appraisers in the U.S., reflecting an annual decrease of about 2.6 percent since 2013, according to the Appraisal Institute. As low interest rates and high mortgage application volume helped fuel the hot housing market over the past year, the dwindling number of appraisers found themselves unable to keep up with demand.

“It’s basically a shitshow right now,” said Melissa Cohn, a regional vice president at William Raveis Mortgage. “There’s not enough appraisers out there to do the work that we have today, especially in faster moving marketplaces.”

Michael Vargas, who oversees 20 appraisers as president of Vanderbilt Appraisal Company, said hiring new ones is a slow process.

“I would hire 10 appraisers today, if I could find them,” Vargas laughed. “If you have 30 percent more mortgage volume and you need 30 percent more appraisers, there’s a big lag of experience and licensing requirements to staff up.”

It used to take five to seven days to get the appraisal process done for a client. The greater volume of work means it now takes about three weeks, he said.

In some states, including Florida, transactions are typically signed with 30-day closing periods, Cohn said. It takes about a week to order an appraisal, leaving appraisers with three weeks to get a home inspected, receive a report back, correct any errors and have a bank approve the report and close the deal.

“It’s good news for the real estate market that there’s this much activity, but on the other hand it creates a logjam in the mortgage application and approval process,” Cohn said.

One of Cohn’s clients paid three times the standard appraisal fee in hopes of getting the process done in a week for a home that went into contract at $5 million.

Without ample time to research, the appraiser valued the home at $3.8 million, Cohn said. When the client went to another appraiser and gave them enough time to complete the process, the home was found to be valued at $5 million.

Buyers typically have a lock-in period for mortgage interest rates, which can be subject to change if a deal doesn’t close in time, Vargas said.

“They could close at a higher interest rate than they have hoped,” Vargas said. “That’s why it’s important from the mortgage perspective to get it done within two weeks to make sure you have all the documents.”

Aloft’s not-so-secret weapon: Tech

These compounding issues drove Soukup, Aloft’s CEO, and Deng, its head of product, to launch the startup earlier this year.

“The current home appraisal process is inefficient and lacks consistent quality, which creates issues for people trying to close a real estate transaction,” Soukup said.

It’s an issue that Fifth Wall’s partners know well, with Wenhold calling it a chokepoint for direct lenders, homebuilders and single-family rental firms.

While many appraisers operate as sole proprietors, Aloft’s technology seeks to bring appraisers together to standardize data collection and generate faster appraisal reports. Such strategies have helped the startup reduce appraisal turn times by 70 percent, it said.

“The typical appraiser is doing everything themselves,” Soukup said. “[Aloft] decouples some of those tasks.”

As the startup develops more sophisticated tools, its goal is to have engineers help appraisers automate data collection and dispatch inspectors when it’s time to assess properties.

“We typically look at the financial returns profile of the company and we look at the strategic value of a business to our network of limited partners and existing portfolio companies,” Wenhold said. “Aloft really had a strong value proposition to both.”

The company has also been building tech for lenders, including tools that can provide more transparency on the status of a given appraisal.

While Aloft can’t speed up the two-year certification process for new appraisers, it aims to bring new professionals into the industry through Aloft University, an educational program for trainees, according to Soukup.

In the meantime, “We’re hiring,” Soukup said.

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Amazon founder Jeff Bezos (Getty)

Amazon founder Jeff Bezos (Getty)

Amazon knew what it had to do.

E-commerce was booming. People were ordering more items online than ever before — everything from groceries to medication to sweatpants. Warehouses were going to run out of space.

Amazon had to make that someone else’s problem. So it went on a buying and leasing spree.

“We are on track to double our fulfillment network over the two-year period since the pandemic’s early days,” Amazon CFO Brian Olsavsky said last month on an earnings call, adding that the firm expects its 2021 portfolio additions to exceed last year’s.

And it has.

The Seattle-based behemoth has expanded its portfolio of warehouse, distribution, data center and last-mile properties across North America to more than 410 million square feet, according to an analysis by The Real Deal of data from supply chain firm MWPVL International.

That’s about double the amount of office space in Midtown Manhattan, or almost 60 percent of all the warehouse and distribution space in the entire Chicago market.

At the end of 2019 — before the pandemic — the firm had around 192 million square feet of warehouse, data center and distribution space across the U.S. and Canada. Amazon added about 101 million square feet in 2020 and this year has added at least 119 million through September, according to the data and financial reports.

Amazon’s own disclosures and recent purchases also point to a shift in its commercial real estate strategy.

Since 2019, the firm has increased its real estate buys, signaling a pivot toward owning more of its own warehouses and distribution hubs. Last year the firm increased its owned square footage of warehouse, fulfillment and data center space across North America by around 50 percent — adding 2.9 million square feet to bring its total to 8.5 million.

Although leased facilities still made up over 97 percent of Amazon’s real estate at the end of last year, the mix is changing.

In the past few months, Amazon has spent heavily to acquire office campuses, development sites and other vacant land across the U.S. for potential redevelopment into warehouses and distribution centers.

The firm did not respond to questions and a request for comment.

Amazon’s frenzied push to add warehouse and distribution capabilities has been spurred by the pandemic’s effect on e-commerce.

“While we’ve been chasing demand for the last two years, we’re running at about 100 percent all of last year,” Olsavsky said on the earnings call. “We are just now getting caught up on space for inventory.”

Shifting strategy

Owning real estate is a change for the e-commerce giant. In 2019, insiders, competitors and analysts told TRD that Amazon was purely focused on leasing — “it allows them to be in more spaces, more quickly,” one analyst said.

But, after the pandemic hit and industrial rents started to soar, Amazon may have looked to switch its strategy. Sources familiar with Amazon’s balance sheet and operations say it might be more comfortable owning real estate now.

When companies become more confident about what their long-term asset portfolio will be, they are more inclined to purchase property, one of those observers said.

When Amazon began a growth spurt six or seven years ago, the firm wasn’t really sure what its portfolio was going to look like. A source said there’s more certainty now.

In August, Amazon paid $85 million to buy a 133-acre site in Sunrise, Florida, where it plans to build a fulfillment center. A month later, Amazon said it would build a distribution center on almost 60 acres of undeveloped land it bought in Pleasanton, California.

In October, Amazon bought an office and research complex totaling 395,000 square feet for $123 million. This month, it bought a 30-acre Orange County, California, campus, with around 640,000 square feet of offices, for $165 million. No redevelopment plans have been filed for any of these deals.

Exactly how much distribution hub and warehouse space Amazon has added this year is unclear. Amazon breaks down real estate in terms of leased and owned square footage in its annual reports, released in February, but not in quarterly releases.

Spending through the roof

The expansion has come at a cost: Amazon spent almost $60 billion on capital expenditures last year to purchase and lease property and equipment, as well as sell and buy securities. In 2019, the firm spent around $24 billion on those categories.

The acquisitions were fueled by a major uptick in operations, the firm said. Amazon reeled in $66.1 billion in cash flow from operations last year, most of which came from consumers, sellers and other businesses — a massive jump from $38.5 billion the year prior. On the earnings call, executives called the increasing demand to shop online unprecedented.

Expanding its footprint so rapidly has also forced Amazon to hire hundreds of thousands more workers. In the past 18 months, the firm said, it has added 628,000 employees across the world — including more than 150,000 in the U.S. to support seasonal demand from October through December.

Expansion points

Amazon isn’t slowing down. The firm has announced plans to build 86 facilities next year and five are already scheduled to open in 2023, according to MWPVL International data.

But it’s not just planning for a year out. For its warehouse development in Pleasanton, the firm is hoping to finish by 2024 or 2025, adding it would continue to ramp up operations in the Bay Area.

“We seek to expand our fulfillment network to accommodate a greater selection and in-stock inventory levels and to meet anticipated shipment volumes,” the firm said in an earnings report for the third quarter.

Amazon’s 119 million new square feet this year consists of 432 facilities across 42 states and Washington, D.C., according to the MWPVL International data. The company added no space in South Carolina, Hawaii, Maine, Montana, Rhode Island, Vermont, West Virginia and Wyoming.

It focused on a handful of states for its planned distribution centers. California will get the most this year, 51, while Texas will get 45, Florida 38 and New York 27.

The average size of a new Amazon facility was around 316,000 square feet, with the most popular type of center being a delivery station — a last-mile center that holds and distributes small packages. Usually, these are built out around bigger cities.

A “significant” part of Amazon’s capital investments since the pandemic “has been to support those efforts in middle and last-mile capacity,” Amazon’s director of investor relations, Dave Fildes, said on an earnings call in July. “That work is not done yet.”

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From left: Joe Sitt, chairman, Thor Equities, and Remy Jacobson, principal, J Cube Development (Thor Equities, Getty Images, LoopNet/Illustration by Steven Dilakian for The Real Deal)

A New York-based real estate firm and a cryptocurrency entrepreneur want to unload retail buildings in Miami’s Design District.

In separate listings obtained by The Real Deal, New York-based Thor Equities is seeking at least $32 million for its Stefano Ricci-occupied store at 120 Northeast 39th Street. And Remy Jacobson placed a vacant historic building at 4141 North Miami Avenue on the market with an asking price of $12 million.

Jacobson and his brother, Marc-Jean, own RealIT, a crowdfunding platform that allows cryptocurrency investors to invest in real estate assets across the U.S., according to the company’s website. Jacobson also heads Aventura-based J Cube Development.

The formerly distressed properties are hitting the market at a time when land prices and rents in the Miami Design District are hitting record highs, as the luxury fashion and dining neighborhood rebounds from the pandemic.

120 Northeast 39th Street

(Source: LoopNet)

An offering memorandum by listing brokerage DWNTWN Realty Advisors shows Stefano Ricci has nine years left on its lease for the 4,700-square-foot single-tenant flagship space. The Italian luxury clothing retailer is paying $1.4 million in annual rent from September through August 2022, with increases of 3 percent every year, the memo states. The property, which is adjacent to Louis Vutton and Ermengildo Zegna in the heart of the district, is encumbered by a $16 million loan.

Devlin Marinoff with DWNTWN Realty Advisors did not immediately respond to a request for comment. A Thor Equities spokesperson declined comment.

In January, Wellington Trust sued affiliates of Thor Equities, Chairman Joe Sitt and Stefano Ricci in Miami-Dade Circuit Court to foreclose on the loan, which at the time was $17 million. Last year, Thor Equities sued Stefano Ricci over $133,000 in alleged unpaid rent.

On Sept. 17, Miami-Dade Judge Charles Johnson approved a loan modification agreement that included a stipulation for Thor Equities to resume monthly payments the same month and pay $1.5 million in “default amounts,” according to court records. The landlord and Stefano Ricci are also in settlement negotiations, court filings show. The tenant also paid $1.9 million into the court registry that was disbursed to Thor Equities in October. A source told TRD that Stefano Ricci is current on its lease.

Thor Equities purchased the property in April 2014 for $9.5 million, records show.

4141 North Miami Avenue

(Source: LoopNet)

Four years after obtaining approvals from Miami’s Historic and Environmental Preservation Board to renovate a mid-century modern office building with glass panels, a rooftop terrace and other improvements, Jacobson told TRD that he doesn’t spend enough time in Florida to move forward with the redevelopment project.

The property has 15,901 square feet of rentable space, is shovel ready, qualifies for historic tax credits and is located in an Opportunity Zone, according to the listing by Porosoff Group, of Compass Commercial. Opportunity Zones are federally designated areas that offer tax breaks on capital gains to investors who fund projects in those areas. Jacobson’s entity, Design 4141, paid $10.5 million for the site in 2016, records show.

Jacobson, who tapped Shulman & Associates to design the redevelopment project, had planned to offer about 6,100 square feet of retail space on the first floor for a restaurant, art gallery or store. The second and third floors would have had 4,400 square feet of office space each. And the 4,000-square-foot rooftop terrace would have been an event space.

“It is a gorgeous property in a beautiful location,” Jacobson said. “I bought it before Opportunity Zones were approved, so I couldn’t take advantage of it. But others can, so that adds value to [the property].”

He also said that the buyer who completes the project will get $1.3 million in historic tax credits.

In May of last year, Conway, Arkansas-based Centennial Bank sued Jacobson and his brother, alleging they were in default on $8.4 million in loan payments. The complaint accused the Jacobsons of failing to meet the bank’s request to provide more equity to pay for construction costs.

Two months later, U.S. District Judge Ursula Ungaro dismissed the lawsuit after the Jacobsons filed a motion that argued the action was not supposed to be filed because Florida Gov. Ron DeSantis had instituted a moratorium on foreclosures.

Arthur Porosoff with Porosoff Group said the building would be an attractive flagship store for a luxury retailer, noting the property is near the site Restoration Hardware is leasing from Apollo Commercial Real Estate Finance and Comras Company.

“I suspect we will get a ton of activity and we will get a bidding war,” Porosoff said. “We priced it right.”

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Palazzo Della Luna

Palazzo Della Luna

This week’s condo sales numbers rose in Miami-Dade County compared to previous weeks.

The top sale was a $10 million closing at Palazzo Della Luna on Fisher Island. Unit 6833 traded for more than $2,100 per square foot. Dora Puig represented the seller and buyer.

The second most expensive sale occured at Fendi Château in Surfside. Unit 901 at 9349 Collins Avenue traded for $9.3 million, or $2,226 per square foot. Matias Alem was the listing agent and Steven Pesso was the buyer’s agent.

Condo sales dollar volume for the week totaled $171.2 million, more than double compared to $82.2 million the week before. Sales totaled 234, compared to 158 the previous week.

Condos sold for an average price of about $731,000, up from $520,000 the week prior.

Here’s a breakdown of the top 10 sales from Nov. 14 to Nov. 19.

Most expensive

Palazzo Della Luna, 6800 Fisher Island Drive, unit 6833 | 160 days on market | $10M | $2,102 psf | Listing agent: Dora Puig | Buyer’s agent: Dora Puig

Least expensive

Trump Royale, 18201 Collins Avenue, unit 1109 | 136 days on market | $3.1M | $766 psf | Listing agent: Heloisa Arazai | Buyer’s agent: Marcela Ubfal

Most days on market

Palazzo Della Luna, unit 6833 | 160 days on market | $10M | $2,102 psf | Listing agent: Dora Puig | Buyer’s agent: Dora Puig

Fewest days on the market

57 Ocean, 57725 Collins Avenue, unit 1603 | 1 day on market | $6.7M | Buyer’s agent: Alexandra Hughley

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Illustration of Zillow CEO Richard Barton (Getty, iStock/Illustration by Kevin Rebong for The Real Deal)

Illustration of Zillow CEO Richard Barton (Getty, iStock/Illustration by Kevin Rebong for The Real Deal)

Zillow is facing two class-action suits for allegedly misleading investors and failing to inform them in a timely manner about the struggles of its iBuying business.

More lawsuits may be forthcoming as Zillow does damage control in the wake of closing Zillow Offers, through which it used a proprietary algorithm to buy and sell thousands of homes. The company shuttered its iBuying business in early November just after apparently pausing it. It laid off a quarter of its staff as it canceled Zillow Offers, citing the unreliability of its model for forecasting home prices.

“Put simply, our observed error rate has been far more volatile than we ever expected possible, and makes us look far more like a leveraged housing trader than the market maker we set out to be,” Zillow CEO Rich Barton said at the time.

It’s not clear that its real-time pricing was accurate either, as accusations flew that Zillow was overpaying for homes.

The federal lawsuits, filed Nov. 16 and Nov. 19 in Seattle, are similar, and both seek class-action status on behalf of shareholders who acquired the stock between Feb. 10 and Nov. 2.

Both lawsuits accuse the company of drumming up positive sentiment about its iBuying activities with “materially false and/or misleading statements” in the months before it closed the operation, and of failing to disclose “material adverse facts” surrounding them.

The suits name co-founder and CEO Richard Barton, CFO Allen Parker and COO Jeremy Wacksman as defendants alongside the company.

“We are aware of the lawsuit filed yesterday and are currently reviewing it. As a general practice, we do not discuss pending litigation,” a Zillow spokesperson said by email.

Zillow’s stock price has fallen by nearly 50% since late October, when it first revealed the challenges within its iBuying business. It is common for shareholders to seek redress after a public company’s stock falls steeply in value.

Zillow’s board of directors made the decision to “wind down” Zillow Offers “in light of home pricing unpredictability, capacity constraints and other operational challenges faced by Zillow Offers that were exacerbated by an unprecedented housing market, a global pandemic and a difficult labor and supply chain environment,” the company said in a third-quarter filing.

Attorneys representing the lead plaintiffs for the two lawsuits, Dibakar Barua and Steven Silverberg, could not be reached for comment.

Earlier this month, New York City-based Pretium Partners inked a deal for 2,000 of the nearly 10,000 homes Zillow acquired through its iBuying activities for an undisclosed price.

Zillow has said it will sell the rest to all types of buyers, from individuals to institutional investors.

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The report shows the small uptick among single-family homes, townhomes, condominiums and co-ops. (iStock)

The report shows the small uptick among single-family homes, townhomes, condominiums and co-ops. (iStock)

Existing home sales rose monthly for the second straight month — barely.

Sales of existing homes rose 0.8 percent month-over-month in October to a seasonally adjusted annual rate of 6.34 million, according to the latest monthly report from the National Association of Realtors.

The report shows the small uptick among single-family homes, townhomes, condominiums and co-ops. The figure also marks the second straight month of growth following September’s monthly existing home sales jump of 7 percent.

Despite these gains, sales were still 5.8 percent lower than last October’s seasonally adjusted rate of 6.34 million.

The increase in sales can be attributed to widespread work anywhere policies, which have also increased sales volume in some parts of the country, Yun said.

“Record-high stock markets and all-time high home prices have worked to significantly raise total consumer wealth and, when coupled with extended remote work flexibility, elevated housing demand in vacation regions,” Yun said.

About 1.25 million units were for sale at the end of October, which is down 0.8 percent from September and down 12 percent from a year ago.

It would take 2.4 months to sell all unsold units at the current pace of sales, the same as in September but faster than October 2020, when it would have taken 2.5 months to sell.

“Home sales remain resilient, despite low inventory and increasing affordability challenges,” said Lawrence Yun, NAR’s chief economist. Fast rising rents and consumer prices are likely encouraging prospective buyers seeking a fixed consistent mortgage payment, Yun added.

Individual investors and second home buyers purchased 17 percent of the homes for sale in October, up from 13 percent in September and 14 percent in October of last year.

The median existing home price for all housing types was $353,900, up 13.1 percent from last year’s $313,000 price tag. The 116 months of year-over-year increases marks the longest running streak on record.

Properties sat on the market for about 18 days in October, up from 17 days in September and down from 21 days in October last year. About 82 percent of homes sold in October were off the market before the month was over.

The Midwest and South saw month-over-month growth in sales, with sales increasing by 4.2 percent and 0.4 percent, respectively. The Northeast saw sales decline by 2.6 percent and the West saw sales hold steady from the previous month.

All major U.S. regions saw sales decline from last year.

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Renderings of the Enclave at Boca Harbour (Mizner Development, iStock)

Mizner Development launched sales of a boutique single-family home project in Boca Raton.

The 10-unit development, called Enclave at Boca Harbour, is planned for the property at 5801 and 5805 Northeast Seventh Avenue and 690 Jeffery Street. Douglas Elliman agent Katia Reisler and Tangent Realty Corp. agent Jared Niles are co-listing the units, according to the project’s website.

Property records show an affiliate of Mizner Development, led by Avi Stern, paid close to $2.2 million for the assemblage of land in early 2020.

Stern was allegedly one of three real estate investors involved in a major scheme to rig online public foreclosure auctions between 2012 and 2015. He pleaded guilty in 2018 to felony charges of bid rigging tied to the property auctions in Palm Beach County, according to the Department of Justice. Stern was sentenced to a three-year probation, which he began in February 2019, along with a $32,800 fine and $160,000 in restitution. Court records filed earlier this year show his probation period was terminated early.

Stern is also CEO of MIA Real Holdings LLC, his LinkedIn shows.

His Boca Raton houses range in price from nearly $1.6 million to $1.9 million, and from 2,516 square feet to 3,232 square feet. They will have two-car garages and pools, according to the website.

Construction is expected to begin in January and be completed by December of next year, according to a source familiar with the project. The site is across the street from the waterfront, where canals connect to the Intracoastal Waterway.

Boca Raton is in the midst of major development. Condo sales grew 19 percent in the third quarter of this year, to 1,027 closings, according to a Douglas Elliman report of Boca Raton and Highland Beach residential sales. Single-family home sales, meanwhile, fell by nearly 16 percent, to 737 closings in the third quarter.

GL Homes recently closed on the acquisition of the Boca Raton Municipal Golf Course, a 190-acre, city-owned golf course where it plans to build more than 500 homes.

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An earlier version incorrectly described the type of homes sold. 

The post Avi Stern’s Mizner Development launches sales of Boca homes project appeared first on The Real Deal South Florida.

TRD’s podcast Deconstruct on what’s next for Surfside

TRD’s South Florida team has chronicled the aftermath of the tragic Surfside condo collapse in South Florida for months.

This week, as debates continue over the future of the site and how best to honor victims and compensate their families, our podcast shines a light on the stalking horse bidder for the property, Dubai-based developer Damac Properties.

On part two of a three-part series that digs into the collapse and what it means for real estate, TRD’s Suzannah Cavanaugh speaks with South Florida reporter Lidia Dinkova about who exactly Damac is and why the firm is bidding $120 million for a site that most local developers won’t touch. Who supports Damac’s proposal? Who is against it? Listen to find out.

Dinkova also talks to a survivor of the collapse, Steve Rosenthal, as well as Martin and Pablo Langesfeld, the family of Nicole Langesfeld and her husband, Luis Sadovnic, who lost their lives when the building fell in June.

Deconstruct is streaming on Apple, Spotify and wherever else you listen to podcasts.

Next week, we’ll be looking at the unfolding fiasco at Zillow and what it means for the future of iBuying.

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The post Now streaming: TRD’s podcast Deconstruct on what’s next for Surfside appeared first on The Real Deal South Florida.

Compass CEO Robert Reffkin (compass.com, iStock, Illustration by Kevin Cifuentes for The Real Deal)

Compass shares fell to a new low, dropping below $10 for the first time on Monday.

The stock opened at $10.39 before dropping to $9.58 by 2 p.m. It’s the lowest the brokerage has traded and is 52 percent below the company’s debut price on April 1 on the New York Stock Exchange after its initial public offering.

Compass dipped down to $10.74 in October, after its lockup period ended in late September, terminating trading restrictions from its IPO on 200 million shares. But the stock had recovered by Nov. 1 and Compass was trading at just over $13.50 before it began to fall.

As the price plummeted this month, the company reported a net loss of $100 million in the third quarter as expenses increased year-over-year by 53 percent. It also wrapped up a long-standing dispute with tech entrepreneur Avi Dorfman, recognizing his role in founding the company and settling out of court last week.

Compass’ biggest backers, SoftBank Group and Discovery Capital, appear to be holding on for the ride. The most recent filings with the U.S. Securities and Exchange Commission show that neither investor has reduced their stake in the brokerage as of Sept. 30.

Jason Helfstein at Oppenheim, which has a buy rating on Compass, said Monday’s drop below $10 was largely a function of President Joe Biden renominating Jerome Powell as chair of the Federal Reserve.
“Rising interest rates [are] bad for real estate and bad for high growth tech companies,” he said. “If you look at the performance today, that’s what’s performing the worst.”

Redfin is down 4 percent today, while eXp Holdings’ shares were down 4.5 percent. Fathom, another discount brokerage, is trading 3 percent below its last close, while Realogy and Dougla Elliman’s parent, Vector, is up almost 70 and 25 basis points respectively after falling earlier in the day.

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Carroll Organization CEO Patrick Carroll and 5750 Lakeside Drive in Margate (Carroll Organization, Apartments)

Carroll Organization CEO Patrick Carroll and 5750 Lakeside Drive in Margate (Carroll Organization, Apartments)

Eight months after buying a Margate apartment complex, Lynd Living flipped the property for $66.5 million, roughly $15 million more than its previous purchase price.

Hampton Beebe, a commercial broker with Newmark who handled the listing, told The Real Deal that Atlanta-based Carroll Organization bought the 280-unit Aqua Villa at 5750 Lakeside Drive.

“It was more of an off-market deal,” Beebe said. “We had a short list [of buyers] that we went to.”

Lynd Living CEO David Lynd

In March, Lynd Living, a San Antonio, Texas-based multifamily investor, paid $50.7 million for the garden-style apartment complex previously known as The Lakes at Margate, according to records. The deal equated to $181,071 per unit. Completed in 1987, the 14-acre community has one-, two- and three-bedroom units, a clubhouse, two pools, a gym and a cyber café.

Carroll paid about $237,500 per unit for the latest deal. The firm has acquired over $7.8 billion in commercial real estate since it was founded in 2004 by CEO Patrick Carroll, according to its website.

In a statement, Lynd Living CEO David Lynd said the time was right given the hot multifamily market in South Florida, noting that rents at Aqua Villa jumped by more than 20 percent since the company bought the property in March. In addition, Lynd Living achieved its projected five-year net proceeds for investors and partners, Lynd said.

Lynd Living originally had the property under contract last year, but the company and the previous owner, Denver-based Grand Peaks, agreed to extend the closing after Lynd’s equity partner backed out. Lynd Living tapped crowd-sourced equity to help fund the purchase of Aqua Villa, according to a press release.

Lynd spent $4 million in renovations and upgrades, including the addition of chef’s kitchens to three-bedroom units, the release states.

Carroll’s acquisition is the latest in a flurry of big-ticket multifamily deals this month, as institutional investors wheel and deal for a slice of South Florida’s booming rental market. Demand is pushing rents up as much as 24 percent in parts of the tri-county region.

Schweb Partners recently paid $35.4 million for the 160-unit Oakwood Apartments in Lake Worth Beach, or $221,250 per apartment. In Pompano Beach, Ivanhoe Cambridge acquired the 225-unit Avana Bayview complex for $73.5 million, or $326,667 per unit. The deal was part of a $3.6 billion portfolio purchase from Greystar.

In Miramar, AvalonBay Communities shelled out $133 million for a 380-unit community called Ansca, or $350,000 per apartment. And in Delray Beach, TA Realty acquired the 172-unit SofA apartment complex for $82.8 million, or $481,105 a unit.

Beebe said even bigger deals are in the pipeline before the year is over. “There are some deals that will be closing in the next couple of weeks that are just astonishing,” he said.

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The post Lynd Living flips Margate apartment complex for $67M appeared first on The Real Deal South Florida.

From left: Andrew Zobler, founder and CEO, The Sydell Group, and Todd Michael Glaser, renowned real estate developer, in front of 4640 North Bay Road (The Sydell Group, Nelson Gonzalez Luxury Real Estate)

Developer Todd Michael Glaser flipped Billy Joel’s former Miami Beach home in eight months.

Glaser, who along with his wife, Kim, paid $5 million for the waterfront house at 4640 North Bay Road in March, just sold it for $6.8 million, marking a 36 percent difference in price. The Glasers flipped the home to hotelier Andrew Zobler, property records obtained by The Real Deal show.

Zobler is founder and CEO of the New York-based Sydell Group, which was a partner in the NoMad hotel in New York along with billionaire Ron Burkle. The property made headlines when it closed at the start of the pandemic, and it is now expected to reopen as the Ned, a Soho House property, with Sydell Group recently exiting its investment, Bloomberg reported.

The company’s other properties include the Freehand hotels in Miami Beach, New York, Los Angeles and Chicago, according to Sydell’s website.

Nelson Gonzalez with Berkshire Hathaway HomeServices EWM Realty represented the Glasers. Florian Jouin and Ray De Leon of One Sotheby’s International Realty represented the buyer.

Gonzalez and Glaser previously owned the property.

In 2005, the two sold the 2,015-square-foot house to Joel for $3.3 million. The singer-songwriter and composer sold it a year later for $3.6 million to Toronto financier Ron Schmeichel, and it changed hands over the years.

More recently, Glaser planned to invest up to $1.5 million to renovate the home, but only furnished it and completed cosmetic repairs including painting it, Glaser and Gonzalez said. Kim Glaser helped stage the furniture.

The house, with three bedrooms and three and a half bathrooms, was built in 1935 and includes a pool, dock and 60 feet of water frontage.

(Courtesy of Nelson Gonzalez Luxury Real Estate)

(Courtesy of Nelson Gonzalez Luxury Real Estate)

(Courtesy of Nelson Gonzalez Luxury Real Estate)

Sales of high-end homes have soared in Miami Beach and other coastal markets in South Florida, with inventory reaching new lows for waterfront properties, in particular.

Gonzalez said the house received four offers when it was listed in May, but did not reach an acceptable price.

“The frenzy that was the first quarter of this year is not quite there, but frankly speaking, that was not sustainable. It was basically out of control. Now it’s still very active but more normalized,” Gonzalez said. “We are still getting multiple offers on homes.”

Recent deals on North Bay Road include Philip and Phyllis Mirmelli’s sale of their waterfront home at 6500 North Bay Road to Michelle Simkins and Jason Rubell for $10.8 million, and trial attorney Steve Zack’s $13.6 million sale of his waterfront property at 5310 North Bay Road. Chicken Kitchen founder Christian de Berdouare and former TV journalist Jennifer Valoppi sold a spec mansion, also on the water, at 5004 North Bay Road for $29.5 million in September.

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The post Miami Beach state of mind: Hotelier buys Billy Joel’s former waterfront North Bay Road home appeared first on The Real Deal South Florida.

(iStock)

As the housing sector grapples with widespread affordability and supply issues, an alternative is gaining ground: manufactured homes.

According to the Census Bureau, home manufacturers are expected to deliver more than 100,000 new homes for the first time since 2006, the Wall Street Journal reported. The homes are assembled in a factory before they’re installed on-site, offering some practical advantages to traditional home construction.

Manufactured homes are proving to be much cheaper than those constructed on-site, which is part of why they’re emerging as a potential housing solution. In 2020, the average home built on-site reportedly sold for $392,000, or $309,000 when excluding underlying land costs. Manufactured homes without land were averaging $87,000 the same year, according to the Journal.

While manufactured homes can be a cheaper alternative, their limited financing options create a different set of problems for homeowners.

According to the Journal, families in manufactured homes were twice as likely to fall behind on rent or mortgages during the pandemic. Approximately 19 percent of all manufactured-home owners were behind in the last quarter.

The manufactured home industry has its own roadblocks. For starters, some jurisdictions don’t allow for manufactured houses due to zoning codes that conflate them with trailer parks. Additionally, the factories that manufacture homes are facing the same supply chain issues as the rest of the housing construction industry and larger economy.

These types of homes represent approximately 9 percent of new single-family construction, the National Association of Homes Builders reports.

Still, the more affordable alternative could provide a path to homeownership to those blocked out by the hot housing market. According to the Journal, only 21 percent of new site-built homes sold in September sold for less than $300,000, still a considerable premium of last year’s average manufactured home sale.

[WSJ] — Holden Walter-Warner

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The post Manufactured home construction projected to hit 15-year high appeared first on The Real Deal South Florida.

13900 Northeast Third Court and 18905 Northeast 25th Avenue (Google Maps)

13900 Northeast Third Court and 18905 Northeast 25th Avenue (Google Maps)

The Claridge House and Regents Park at Aventura nursing homes in north Miami-Dade County sold for a combined $33.4 million.

Englewood Cliffs, New Jersey-based CareRite, through affiliates, bought half of the ownership interest of each facility, records show. Two other entities, each managed by Bent Philipson of Spring Valley, New York, bought the remaining stakes in both nursing homes.

Claridge House Associates and Regents Park at Aventura Associates, managed by Jack Rajchenbach, were the sellers.

In the bigger deal, the 241-room Claridge House at 13900 Northeast Third Court near North Miami traded for $17.5 million. The 64,276-square-foot building was constructed in 1985 on 3.7 acres, according to property records.

The 180-room Regents Park at Aventura at 18905 Northeast 25th Avenue sold for $15.9 million. The property was built in 1987 on 3.6 acres, records show.

Nursing homes, assisted living facilities and memory and rehabilitation centers in Florida are a popular class of real estate for investors, in light of the state’s reputation as a magnet for retirees.

CareRite, co-founded by principal Mark Friedman, has been betting on Miami-Dade nursing homes this year. The company has facilities in New York, New Jersey, Tennessee and Florida, according to its website.

In July, CareRite bought the Coral Reef Subacute Care Center nursing and rehabilitation facility for $35 million.

In Palm Beach County, Lone Star Funds bought a senior living complex in Palm Beach Gardens and another senior living complex near Boca Raton in June for a combined $57 million.

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The Oakwood Apartments at 2425 Second Avenue North in Lake Worth Beach (Google Maps)

The Oakwood Apartments at 2425 Second Avenue North in Lake Worth Beach (Google Maps)

Schweb Partners bought the Oakwood Apartments in Lake Worth Beach for $35.4 million.

Records show that One Real Estate Investment, through an affiliate, sold the townhouse rental community at 2425 Second Avenue North to Schweb Partners.

The 160-unit complex was built in 1993 on 12.6 acres, property records show.

The deal breaks down to $221,250 per unit.

Oakwood Apartments offers four-bedroom townhouses at rents ranging from $1,860 to $2,015 a month, according to Apartments.com. Amenities include a pool and gym.

One Real Estate Investment bought the property for $25.6 million in 2018, records show.

Miami-based One Real Estate, led by Jeronimo Hirschfeld, is a property investor and manager, focusing on multifamily in the Southeast U.S. and Texas, according to its website. Its portfolio spans 5,098 units across 20 properties, with $800 million in asset value.

One Real Estate co-developed the 12-story Wynwood Square mixed-use building with Los Angeles-based CIM Group. The project in the Wynwood Arts District includes apartments, retail and offices.

Schweb Partners is a real estate firm based in Jackson Township, New Jersey.

Developers have been targeting Lake Worth Beach in recent months. In August, the city approved Office America Group’s proposed Deco Green, a 127-unit multifamily project with retail, offices and green space in Lake Worth Beach.

In May, the city approved the 230-unit Advantis apartment project, which will have a cluster of four residential buildings that will range from three stories to five stories.

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From top left: Renderings of Plum Market and the Tamarac Business Center near Boca Raton (Meyer Media, Plum Market/Illustration by Steven Dilakian for The Real Deal)

Sprouts Farmers Market I Shadowwood Square near Boca Raton

The Shadowwood Square shopping plaza (Courtesy of Terrranova Corporation)

Organic grocer Sprouts Farmers Market is opening in a 25,837-square-foot space at the Shadowwood Square shopping center near Boca Raton. The lease is for 15 years, according to the retail plaza’s owner.

The opening date will be announced in 2022.

Miami Beach-based Terranova, led by Stephen Bittel, owns the 220,426-square-foot Shadowwood shopping center at 9789 Glades Road.

Other tenants include Bed Bath & Beyond, Old Navy and Regal Cinemas.

The deal shows that despite the pandemic’s effects on the retail market, grocery stores have remained resilient.

Plum Market I Aventura

Rendering of Plum Market (Courtesy of Plum Market)

Organic grocery store Plum Market is opening its first Florida location in a 22,600-square-foot space at Aventura Plaza.

Paco Diaz of CBRE represented the grocer in the lease.

Based in Farmington Hills, Michigan, Plum Market is known for its natural and locally sourced items. Aside from organic groceries, it offers alcohol and chef created cuisine, according to a CBRE news release. It has more than 25 locations across Michigan, Illinois, Indiana, Ohio, and Texas, and it is opening in Hollywood, California and Washington, D.C. Matt Jonna is co-founder and CEO.

Aventura Plaza is a 90,000-square-foot shopping center at 17801 Biscayne Boulevard. Built in 1972, the property’s tenants include Ace Hardware, My Gym Aventura and Anthony’s Coal Fired Pizza, according to the release. The landlord is Sam Management.

Medify Air, Wheel Pros, The Lotus Group I Tamarac Business Center

Rendering of the Tamarac Business Center (Courtesy of Meyer Media)

Air purifiers and filters producer Medify Air, wheels and tires company Wheel Pros, and smoking accessories company The Lotus Group leased space at the Tamarac Business Center.

The recently completed two-building industrial park is now fully leased, according to the owner’s broker.

Chris Metzger and Rick Etner Jr. were part of the Cushman & Wakefield team that secured the leases on behalf of Tamarac Industrial Venture. The entity is a joint venture between Coconut Creek-based Butters Construction and Development and an institutional capital partner.

Medify Air moved into a roughly 115,115-square-foot space in an expansion from its existing Deerfield Beach location. Bob Schneiderman of Colliers represented Medify Air in the lease.

Denver-based Wheel Pros will move into roughly 40,171 square feet of warehouse and distribution space in the first quarter of 2022. The company designs, markets and distributes branded aftermarket wheels, and also distributes performance tires and accessories, according to a release. Reid Bassinger of Lee & Associates represented Wheel Pros in the lease.

The Lotus Group is moving its headquarters to a bigger, 25,020-square-foot space at Tamarac Business Center starting in the first quarter of 2022. The space also will be a warehouse and distribution facility for Lotus. Founded in 1991, Lotus offers lighters, cigar cutters, gift sets, humidors, cigar cases, ashtrays, humidification accessories and butane gas. It was self-represented in the lease deal.

The three companies’ leases are for the Tamarac Business building at 6801 North Hiatus Road. The 180,306-square-foot property was completed this year with 32-foot clearing heights, LED lights, 44 dock-high doors, two ramps, and a 54-foot by 42.5-foot column spacing, according to the release.

The second building, at 6901 North Hiatus Road, was leased to an e-commerce tenant this year. The Cushman & Wakefield team closed that deal as well.

The deals speak to the strength of the South Florida industrial market, with soaring rents amid high demand.

Best Buy I Seagis Dania Beach Cottage

Seagis Dania Beach Cottage industrial-office property (Courtesy of Berger Commercial Realty/Corfac International)

Best Buy Stores leased the Seagis Dania Beach Cottage office-industrial property.

The 1.9-acre property at 2765 Southwest 36th Street has a 7,737-square-foot building, which breaks down to a 1,737-square-foot office and a 6,000-square-foot warehouse, according to the landlord’s broker. The warehouse is fully air-conditioned with three grade-level drive-in doors. The site has a large parking lot with storage.

Best Buy Stores plans to use the property for storage and vehicle parking.

Jonathan Thiel and Keith Graves of Berger Commercial Realty/Corfac International represented Seagis Property Group’s affiliate that owns the real estate. Will Falero and Jeremy Scheck of Colliers represented the tenant.

Seagis, based in Conshohocken, Pennsylvania, has been betting on South Florida industrial properties, underscoring the market’s continued growth amid high demand and low supply.

In October, Seagis paid $8 million for a Miami Gardens warehouse. This came on the heels of the company buying a logistic company’s Doral facility for $19.4 million in September.

Records show Seagis bought the Dania Beach industrial-office property for $2.8 million in August.

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Kyle and Marissa Van Noy (Getty)

Kyle and Marissa Van Noy (Getty)

Kyle Van Noy may be best known for mowing down running backs on the gridiron, but the two-time Super Bowl champ has also launched a lucrative side-hustle in real estate.

The veteran NFL linebacker and his wife, Marissa, have made almost $2 million buying, renovating and selling homes since 2015, the Wall Street Journal reported. More profits could be coming, as the home-flipping couple has two additional renovation projects underway.

Professional athletes’ lives are often nomadic, with trades and contract signings forcing them to move on a near-annual basis. Marissa has used the opportunity to launch a career, forming the Three Golden Cranes design firm with her mother and sister.

The couple began flipping homes in 2015, feeling jaded after the value of a property they were renting kept rising during Van Noy’s tenure with the Detroit Lions. They seized the opportunity to buy a townhouse in Utah, where they went to college, for $300,000. According to the Journal, they spent $50,000 on renovations before selling it two years later for $450,000.

In 2017, after Van Noy was traded to the New England Patriots, the family bought a 2,600-square-foot home in Canton, Massachusetts, for $600,000. After another $50,000 in renovations, it sold last year for $800,000.

Van Noy then signed a four-year, $51 million contract with the Miami Dolphins and bought a home in the Southwest Ranches neighborhood for $2.58 million, according to the Journal. After spending $250,000 on renovations, the couple suddenly found themselves in a position where they needed to sell after Van Noy was released by the Dolphins and returned to the Patriots on a new, two-year contract.

According to the Journal, they sold it this past June to a player for the NBA’s Philadelphia 76ers for $3.5 million.

Professional athletes are often pushed towards renting, rather than buying, due to the uncertain trajectories of their careers. By living in the houses they’re flipping and successfully turning a profit, the Van Noys are finding a way to turn the circumstances in their favor.

“It works for someone who has to pick up and go all the time,” Van Noy told the Journal.

[WSJ] — Holden Walter-Warner

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