Real Estate News

From left to right: Raul Munilla, Juan Munilla, Jorge Munilla, Lou Munilla, Fernando Munilla and Pedro Munilla

A prominent Cuban-American, family owned construction business headed by an FIU graduate built the ill-fated pedestrian bridge that collapsed in Miami on Thursday, killing several people.

Munilla Construction Management, founded more than three decades ago in Miami, had the contract for the $14.2 million bridge at Southwest 109th Avenue and Southwest Eighth Street. It collapsed just five days after crews lowered the 174-foot, 950-ton section of bridge into position. Reports show at least eight cars were trapped under the fallen debris. Identities of the victims have not yet been released.

The bridge was intended to create a safer passageway for students crossing Eighth Street’s seven lanes of traffic. It is part of a $124 million expansion of the campus.

The bridge after it collapsed on Thursday afternoon (Credit: Joe Raedle/Getty Images)

An investigation into the collapse is ongoing. The National Transportation Safety Board said it would send a 15-person team to help investigate the accident.

MCM is led by Jorge Munilla, who graduated from FIU’s School of Business Administration in 1997 and has been president of the firm since 1983. He and his five brothers, who also work at MCM, are the sons of Fernando Munilla Sr., who had founded a major construction company in Cuba. Today, the firm has 1,200 employees, according to Jorge Munilla’s LinkedIn page.

MCM has worked on major government contracts in South Florida, Texas and Panama, including the $128 million expansion of Terminal 4 at Fort Lauderdale-Hollywood International Airport, PortMiami’s Terminal F, and the widening and reconstruction of State Road 821. Other projects include the bridges of the Isles of Las Olas and Miami Beach’s South Pointe Park. MCM was involved in construction litigation tied to the 19-acre park that resulted in a $478,100 judgment against the firm in 2015.

MCM also has a history with President Trump’s former campaign manager, Paul Manafort. Manafort was helping China’s largest privately owned builder, Pacific Construction Group, identify U.S. construction firms it could acquire, including MCM, which has a multimillion-dollar Pentagon contract to develop a school for the U.S. Navy at Guantanamo Bay in Cuba. A photograph shows Manafort and Yan Jiehe, the billionaire who heads Pacific, with Jorge and Fernando Munilla of the Miami-based construction firm.

Records show MCM was sued earlier this month in Miami-Dade Circuit Court for alleged shoddy construction of a makeshift bridge it built at the Fort Lauderdale airport. Jose Perez sued the general contractor after he fell when the bridge “broke under the weight of the plaintiff, causing him to slip forward, fall to the floor, striking his elbow,” according to the suit, which was filed March 5.

In 2016, RJR Construction, a subcontractor, filed its second lawsuit against MCM, alleging that it breached its contractual obligations regarding work at Miami International Airport.

The company was also cited by the Occupational Safety and Health Administration for at least three “serious” violations from 2014 to 2017, according to OSHA. More information on the violations is not available online.

Members of the Munilla family were not available for comment on Thursday, as crews remained focused on rescue and recovery efforts.

MCM said in a statement on Twitter that the company “will conduct a full investigation to determine exactly what went wrong and we will cooperate with investigators on scene in every way.”

Documents show MCM gave nearly $25,000 to the six candidates running for Miami-Dade County Commission over the past two years. The firm is currently trying to win an $800 million contract to build the new I-395 bridge in downtown Miami.

In addition to MCM, FIGG Bridge Engineers designed the bridge. Cemex provided the concrete. Barnhart Crane and Rigging operated the transporters that placed the bridge on its permanent supports.

FIGG Engineering, based in Tallahassee, has designed or built bridges valued at more than $10 billion in 39 states and six countries, according to its website.

Christian Bautista contributed reporting.

(Credit: Wikipedia, Max Pixel, Pixabay)

The death of the once ubiquitous toy retailer Toys R Us is near, after the company announced it planned to close all of its 735 nationwide stores, ending months of efforts to salvage the iconic brand.

The closures include its Babies R Us brand and come six months after filing for bankruptcy in September.  Its December effort to pull itself out of bankruptcy by closing 180 stores apparently failed to help save the company, which employs 33,000 people nationwide, according to the Wall Street Journal.

Toys R Us operates around a dozen stores in the Los Angeles area, although the company already planned to close four of those in December. It has about the same number in Miami, according to its website, but none of those was on its list of 11 Florida stores planned for closure in December.

There are around two dozen stores between the New Jersey and the New York City area, according to the company. One of those, the Union Square location in Manhattan, was scheduled for closure in December.

Toys R Us said in a news release that it was discussing a sale of 200 of its top performing U.S. stores to be combined with its Canadian outfit, although didn’t specify if that discussion was related to the Larian bid.

Vornado Realty Trust, Bain Capital, and KKR & Co purchased Toys R Us in a leveraged buyout in 2005 for $7.5 billion, including $1.3 billion in equity. Toys R Us has paid out around $470 million to the firms in interest and fees since the buyout, according to reports but it has struggled to pay off its debts, which came out to around $4.9 billion as of its September bankruptcy filing.

Still, it generated more than $11 billion in revenue in the last fiscal year and a global closure would be a major blow to toy companies, according to the Journal.

A source told the Washington Post that the closures would be gradual, which could give Toys R Us time to find a buyer for some of its assets. The company called the closures “an orderly wind-down” of its U.S. business.

A group of toy manufacturers led by MGA Entertainment CEO Isaac Larian submitted a bid to buy the 82 Toys R Us stores in Canada and is interested in buying 400 stores stateside.

Toys R Us CEO David Brandon told staff on Wednesday that the company was “putting a for-sale sign on everything,” and was looking for any deal that was better than liquidation.

“Frankly, all anyone has to do is offer one dollar more,” Brandon said. [WSJ] – Dennis Lynch

Carmel Apartments and Freshwater Group’s Freddy Sayegh (Credit: Freshwater Group)

New York investment firm Freshwater Group is set to close Thursday on a $5.9 million purchase of 51-unit apartment complex in North Miami Beach, The Real Deal has learned.

The deal for the Carmel Apartments at 16700 and 16701 Northeast 21st Avenue breaks down to about $115,700 per unit. Records show the current owner, Dynamic GM LLC, paid $4.7 million for the property, or about $92,160 per apartment, in 2015.

One Sotheby’s International Realty’s Zalmy Shapiro represents both the buyer and the seller.

Built in 1966, Carmel Apartments consists of two three-story buildings with a unit mix of 34 one-bedroom apartments and 17 two-bedroom units. Monthly rents range from about $990 to $1,100 for a two-bedroom apartment.

The property is near Aventura, just west of Biscayne Boulevard and north of Northeast 163rd Street. The property is 100 percent occupied, Freshwater Group’s Joseph Sayegh said. The firm plans to upgrade the exterior of the building.

Freshwater Group is a real estate private equity firm led by Alfred Sayegh, Solomon Gadeh and Joseph Sayegh. The company started investing in New York real estate in 1994 and later expanded to Orlando, Tampa and Miami.

In November, the firm paid $7.1 million for a 57-unit, nearby vacant apartment community in North Miami. That building is now 100 percent occupied, Joseph Sayegh said.

The bridge after it collapsed on Thursday afternoon (Credit: Joe Raedle/Getty Images)

UPDATED, 3:47 p.m., March 15: The Florida International University pedestrian bridge under construction on Southwest Eighth Street collapsed on Thursday afternoon, crushing cars and killing several people.

This is the scene at @FIU after bridge collapses. Police moving the media away “just in case the rest falls down.”

— Monique O. Madan (@MoniqueOMadan) March 15, 2018

The collapse occurred at Southwest 109th Avenue and Eighth Street, according to multiple news reports. The Florida Highway Patrol confirmed there were multiple deaths, 7 News Miami reported.

Crews lowered the 174-foot, 950-ton section of bridge into position on Saturday using Accelerated Bridge Construction methods, a quicker construction process that is intended to reduce risks to workers, commuters and pedestrians. The street was reopened to traffic on Monday. Munilla Construction Management is building the 289-foot-long bridge, which was expected to be completed early next year. It was 109 feet tall and 32 feet wide, according to a press release.

FIGG Bridge Engineers designed the bridge.  Barnhart Crane and Rigging operated the transporters that placed the bridge on its permanent supports.

In a news release, FIU said it was “shocked and saddened about the tragic events unfolding at the FIU-Sweetwater pedestrian bridge” and was still gathering information about the accident. MCM said in a statement on Twitter that the company “will conduct a full investigation to determine exactly what went wrong and we will cooperate with investigators on scene in every way.”

The $14 million bridge was also slated to connect to University Bridge Residences, a student rental development planned for the northwest corner of that intersection. [Local 10] — Amanda Rabines

This is a developing story.

115 Ocean Boulevard, agents Lucrecia Lindemann, Alexander Goldstein and Melissa Barragan

Billionaire developer Sonny Kahn just paid $14 million for an oceanfront teardown next to his home in Golden Beach.

The 42,750-square-foot property at 115 Ocean Boulevard was originally listed for $24.9 million, which means it sold for a 44 percent discount off the asking price. It was later reduced to $19.9 million. Lucrecia Lindemann and Melissa Barragan of Dezer Platinum Realty represented the seller, and Alexander Goldstein of Miles Goldstein Real Estate represented the buyer.

Records show EJNRA Ltd., managed by Kahn, bought the 7,500-square-foot home from Piacere Ocean LLC, which is controlled by attorney Irina Nemtsev on behalf of Rafail Meerovitsch.

Kahn co-founded Crescent Heights, a Miami-based development company, with Russell Galbut and Bruce Menin. The company is a prolific developer in Miami and Miami Beach, as well as in Los Angeles, Seattle and Chicago. In Miami Beach, Crescent is currently developing the Wave, a mixed-use project at 600 and 700 Alton Road.

Kahn and his wife, Suzanne Passi Kahn, own the home next door at 105 Ocean Boulevard in Golden Beach, according to property records. They paid about $6.6 million for that property in 2009. It includes a 5,200-square-foot home that was built in 1956 on a nearly 18,000-square-foot lot.

Together, Kahn now owns nearly 1.4 contiguous acres on Golden Beach and more than 210 feet of oceanfront. They also own a waterfront mansion on North Bay Road in Miami Beach.

Residents of Golden Beach, an exclusive waterfront enclave in north Miami-Dade with access to a private beach, include the likes of Bruce Weber, Tommy Hilfiger and Mexican billionaire Carlos Slim.

Kahn’s assemblage is one parcel home away from Regalia, a 39-story luxury condo tower in Sunny Isles Beach that was completed in 2014.

(Credit: Paragon Coin, Max Pixel)

You could call it a green space.

A company that wants to use the blockchain to legalize cannabis worldwide is creating a coworking space in Hollywood strictly for small companies and freelancers working in the legal pot industry.

Paragon is aptly calling its new space the Paragon Space, which will be located at 1459 Tamarind Avenue near Sunset Boulevard.

The space will only be accessible to companies and individuals that own Paragon’s cryptocurrency, PRG Coin, according to Curbed. Paragon also said on its website that it’s paying for the space in cryptocurrency. Customers will be buying snacks from its vending machine exclusively with PRG Coin as well.

Paragon created the space because it said marijuana industry startups have a hard time renting office or desk space at traditional spaces, according to Curbed. They also have a hard time buying space for a decent price.

Paragon plans to open the Paragon Space on July 1.

California’s recreational use marijuana laws went into effect in January, which allows adults to consume it recreationally and also legalized industry businesses, but Paragon is focused on cannabis’ medical uses.

According to its website, Paragon wants to “foster a community dedicated to the worldwide legalization and systematization of cannabis,” using the blockchain to create a network and record for growers, suppliers, doctors, and patients. One app in the works allows users to track a marijuana product back to its grower. [Curbed] — Dennis Lynch 

4995 Hammock Lake Drive and Andy Ansin

Developer Andy Ansin, son of media billionaire Edmund Ansin, just sold a spec home he co-developed with Jomed Construction for $7.9 million.

Property records show Hammock Lake LLC, led by Andy Ansin and Jomed, sold the seven-bedroom, roughly 11,000-square-foot mansion at 4995 Hammock Lake Drive to a trust controlled by attorney Scott J Perdigon. The 4995 Hammock Lake Drive Trust financed the deal with a $5 million mortgage from Iberiabank.

Dennis Carvajal of One Sotheby’s International Realty represented the buyer and seller, according to a spokesperson. It hit the market in 2016 for $9.25 million, which means it sold at a 15 percent discount, and was later relisted for nearly $8.5 million in February.

The lakefront estate sits on a 40,500-square-foot lot with an infinity edge pool and Jacuzzi, a guest home, home theater, outdoor fireplace, wraparound terrace and summer kitchen. Hammock Lake is west of the Old Cutler neighborhood.

Edmund Ansin owns South Florida television station WSVN-Channel 7. Andy Ansin runs the Miramar Park of Commerce, a business park with five million square feet of industrial space. Last week, the Ansin family paid $14 million for a nearly 29-acre development site in Miramar with no immediate plans for the land.

Andy Ansin also paid $8 million in 2015 for a waterfront lot on Sunset Island I in Miami Beach.

Lisa Neumayer, Jean Francois Roy, Anthony Graziano, Patrick Campbell, Jay Jacobson

Rising construction costs are challenging the feasibility and affordability of some multifamily developments in South Florida, a panel of real estate professionals said Wednesday.

“Even on jobs where we bought the land 10 years ago – which is almost free compared to what prices are now – we are having a hard time getting the numbers to work,” said Patrick Campbell, a vice president of Miami-based Related Group, citing a scarcity of labor.

The cost of construction materials has been stable over the last four years, but President Trump’s new tariffs on imported steel and aluminum “is only going to change that,” Campbell said.

Other developers have said that Miami’s hurricane regulations, which require concrete and rebar (which is usually domestically sourced) rather than steel beams for construction, will buffer the higher costs of imported steel.

“Even though we’re building in the best neighborhoods, and we get the best rents and have the best prices, there is only so much [cost] pressure that the market can sustain,” he said during a panel discussion on rental housing development at the W Fort Lauderdale, sponsored by Bisnow.

“The number one issue that all subcontractors have is labor. You can’t hire anyone,” said panelist Jay Jacobson, president and CEO of Coconut Grove-based Eden Multifamily. Construction subcontractors “have got more work than they can handle.”

The scarcity of construction talent includes such professionals as architects, mechanical engineers and electrical engineers, Jacobson said. For the rental housing market, scarce labor means “rents are going to have to increase, because the [price of] the whole delivery supply chain is going up,” he said.

Jacobson said higher tariffs will raise the cost of aluminum windows that Eden Multifamily imports from Colombia. He said his company also is bracing for higher construction prices due to limited supplies of gypsum, a key ingredient in sheet rock: “Between now and the end of the year, sheet rock pricing is going up 30 percent.”

Jacobson dismissed as outdated an old rule of thumb that people should pay no more than 30 percent of their income on housing: “People will be paying 40 to 45 percent of their income for a place to live.”

Newly built rental housing usually is priced “at the higher end of the rent spectrum,” said panel member Anthony Graziano, senior managing director of Integra Realty Resources. “Construction costs dictate those rents, so developers reach for the top of the market.”

Facing high construction costs, some developers are counting on future rent growth to make rental housing developments profitable, Graziano said, calling this approach risky.

“The difficulty we see developers bumping up against now is: the deal doesn’t work now, so they forecast and see if it works two or three years from now,” he said. “That’s when you get into dangerous territory.”

Ben Carson (Credit: Getty Images)

When news broke last month that the Department of Housing and Urban Development had ordered a $31,000 dining set for Secretary Ben Carson’s office, his defense was that he didn’t know about the purchase. But newly uncovered emails show that’s not true.

One August email from a HUD staffer to Carson’s assistants refers to “printouts of the furniture the Secretary and Mrs. Carson picked out.” The emails were obtained by American Oversight, a left-leaning watchdog, CNN reported.

HUD ordered the dining set without asking for the approval of the House oversight committee, which is required for this kind of expenditure if it tops $5,000. Carson later canceled the order.

“Mrs. Carson and the secretary had no awareness that the table was being purchased,” HUD spokesperson RAffi Williams told CNN last month. But confronted with the emails, he now told the news organization: “When presented with options by professional staff, Mrs. Carson participated in the selection of specific styles.” [CNN] Konrad Putzier

Zillow’s Spencer Rascoff

Zillow Group’s market cap crossed the $10 billion threshold for the first time amid strong profits.

The Seattle-based firm, which runs several real estate listing sites, including StreetEasy, made $1 billion in revenue last year. Since March 1, its stock was up by 10 percent. “They’re showing that the business model can be profitable,” real estate technology consultant Mike DelPrete told Inman.

As of Tuesday, Zillow’s shares traded at $57 each — a combined $10.5 billion.

StreetEasy, the New York-centric residential listing website owned by Zillow, began charging agents for rental listings last year. It also rolled out its controversial premier agent feature, which allows agents to pay to put their name next to online listings.

Zillow, led by CEO Spencer Rascoff, is also battling Rupert Murdoch’s and the CoStar Group for supremacy in the listing market. [Inman]Konrad Putzier

400 Royal Palm Way and Crocker’s Partners Angelo J. Bianco

Crocker Partners just sold an office building on Palm Beach’s Bankers Row to a local investor for $14.75 million, property records show.

Kinsale Partners LLC, led by Palm Beach investor Thomas C. Quick, paid about $520 per square foot for the four-story, 28,550-square-foot office building at 400 Royal Palm Way.

The tony strip of land along Royal Palm Way is home to a number of major banks and financial institutions. At 400 Royal Palm Way, tenants include the Palm Beach Daily News and the Palm Beach Chamber of Commerce. It’s 65 percent occupied, Quick said.

The Corcoran Group also recently inked a lease within the building and will be moving in soon, according to the Palm Beach Daily News.

Records show Crocker Partners paid $11.35 million for the two-parcel property in 2004. It sits on nearly an acre of land on the southwest corner of Royal Palm Way and Cocoanut Row.

The Quick family is well known in Palm Beach County and New York, where Quick’s father, Leslie C. Quick, co-founded the discount brokerage firm Quick & Reilly. In 1997, the company was acquired by Fleet Financial Services for $1.6 billion. It later merged with Bank of America in 2004.

His real estate holding company, First Palm Beach Properties, bought an assemblage of historic commercial buildings with business partner Michael McCloskey in 2012, and owns the building at 625 Flagler Drive.

HFF’s Hermen Rodriguez, Ike Ojala and Tracey Goo represented the seller.

In October, a Rhode Island real estate investment company paid $9.2 million for a nearby office building.

South Florida with Colombian flag (Credit: Wikimedia Commons, Pixabay)

Colombians continued searching for Miami homes in January, according to a new report from the Miami Association of Realtors.

Potential buyers from Colombia again led a ranking of foreign nationals searching for South Florida homes using the association’s website, with 12.6 percent of the total, up from 10.5 percent the previous month. The list also includes Venezuela with 9.5 percent and Canada with 7 percent.

Foreign investment in residential real estate in South Florida totaled $7.1 billion last year, up nearly 15 percent from the previous year’s $6.2 billion. Colombian and Canadian home buyers tied for the third-most international home purchases in South Florida last year with 9 percent, each.

Check out the full list for January:

  1. Colombia: 12.6%
  2. Venezuela 9.5%
  3. Canada 7.0%
  4. Brazil 5.8%
  5. Argentina: 5.0%
  6. India: 4.1%
  7. Peru: 3.9%
  8. Spain: 3.2%
  9. Philippines: 3.1%
  10. Dominican Republic: 2.7%

Within the U.S., those most interested in buying residential real estate in South Florida were from Texas, North Carolina, California, New York and Georgia, according to the report.

209 West Jackson Boulevard, Chicago, IL (Credit: Google Maps)

South Miami-based Market Street Real Estate Partners is buying a 143,000-square-foot office building in downtown Chicago, entering a new market as it continues to expand its nationwide portfolio.

Market Street, an investment and management company, is expected to acquire the vintage brick-and-beam building for about $24 million, according to Crain’s Chicago Business. The seller, Michigan-based Farbman Group, had acquired the property in 2011 for $13.1 million. It is located at 209 West Jackson Boulevard.

The 12-story building’s net operating income last year was over $1.5 million, up from just over $900,000 in 2015. Its space is 89 percent leased, to 19 different tenants. The largest is payroll firm ADP, which has 23,000 square feet.

In Chicago’s Loop submarket, its proximity to major development may push the property’s value higher in the coming years, if the office market continues to hold strong.

Nearby Willis Tower, the city’s tallest building and among its top tourist destinations, is undergoing a $500 million renovation overseen by its owners, the Blackstone Group. That could boost traffic to 209 West Jackson’s retail space, which includes two fast food eateries.

The property is also a short walk from Chicago’s Old Main Post Office, a hulking, long-vacant 2.5-million-square-foot building being developed into Class A office space by New York-based 601W Companies. That site featured prominently in Chicago’s bid to become the host city for Amazon’s second headquarters.

In addition to Market Street’s two office properties in Miami, its portfolio includes others in California, Texas and Pennsylvania. [Crain’s] — Scott Klocksin

The Real Deal’s fourth annual South Florida Real Estate Showcase and Forum is shaping up to once again be the biggest industry event in the region. Mark your calendars for Thursday, October 25 and join us at our new location at Mana Wynwood for a full day of programming, networking and viewing the latest real estate projects and products.

Our 2017 event featured a roster of key players in the South Florida real estate market including Miami Mayor Francis Suarez, Moishe Mana, Douglas Elliman Florida’s Jay Parker, Kobi Karp and many more. We are already working on our 2018 panelists so please stay tuned for updates.

Every year our Miami event attracts over 4,000 of South Florida’s top real estate insiders from every facet of the industry. Be sure to save the date as tickets will go on sale soon!

Renderings of the Sherry Frontenac

The Sherry Frontenac, a post-war modern hotel in Miami Beach, is getting a poolside makeover.

On Monday, the Miami Beach Historic Preservation Board approved a request allowing the hotel owner to build a new deck with a concrete canopy, underground parking and a rooftop dining area for the property at 6565 Collins Avenue in North Beach.

S.F. Land LLC can now demolish the existing pool deck and cabanas, as well as tear down parts of a three-story pedestal that houses the lobby to make room for new elevators. The historic preservation board also unanimously approved 12 waivers and variances involving the property’s rear and side yard setbacks to accommodate the new pool deck and cabana area.

Originally designed by famed Miami Beach architect Henry Hohauser, the Sherry Frontenac consists of two nine-story towers sitting on opposite ends of a three-story pedestal where the lobby and a gallery are located. The towers feature a “saw-tooth” design that gives the hotel’s 330 rooms a corner location with maximum light and ocean views.

“We believe that the design we have put forward is consistent with the historic nature of the building,” the hotel owner’s attorney Monika Entin told board members. “We believe that it actually creates a better condition in the rear than what exists now.”

S.F. Land, which is managed by Perri Stern and John and Ira Sussman, has been renovating the Sherry Frontenac since 2015, according to a Jan. 5 letter the company submitted to the city. That year, the historic preservation board approved a request to add balconies and larger windows along the east sides of the towers.

Now, S.F. Land wants to move forward with revamping the pool deck and cabana area by elevating it so that there is a clear path from the hotel lobby, through the pool section, to the beach. Plans and renderings submitted by project architect Jose Gomez show hotel owner is proposing a concrete canopy structure with post-war modern elements to provide a breezy cover for the cabanas. Shaped like a U, the structure would run along the perimeter of an infinity pool and is surrounded by lush open green spaces with trees.

The renovations are necessary for the Sherry Frontenac to remain competitive and make it a place people want to visit, Entin said. “It is one of the most beautiful buildings that is still around,” she said. “The lobby is incredible.”

Raising the pool deck will also allow the owners to add underground parking to the property, Entin said. In addition, S.F. Land wants to add elevators to the third-story pedestal that will transport guests to a renovated roof deck with a restaurant.

8 West Rivo Alto Drive, Jeff Miller and Allison Turk

A newly built Venetian Islands home just sold for $17 million, marking the second-highest sale on the chain of man-made islands. Still, it represented a near 25 percent drop from the asking.

A company led by Ken and Lisa Rosen sold the 7,100-square-foot waterfront house at 8 West Rivo Alto Drive to an undisclosed buyer, said Brown Harris Stevens Miami’s Jeff Miller. Ken Rosen is founder and CEO of Infinity Sales Group, a telecommunications and broadband services company based in Boca Raton.

Miller listed the property in August for $22.5 million and reduced the price to just under $20 million in December. Allison Turk of EWM Realty International represented the buyer. Turk and Miller declined to comment on the buyer’s identity, but Turk said the family had been looking to buy a property in Miami for years.

The deal, which closed Tuesday, is second in price to the $22 million sale of the 11,600-square-foot spec mansion at 212 West Dilido Drive, which closed in February 2017. Miller said the West Rivo Alto sale is the most expensive on the Venetians to ever close on a per-square-foot basis, at nearly $2,400 a foot.

The Rosens build the home for themselves, but decided to sell it last year. Property records show they paid $6.7 million for the 12,900-square-foot lot on the southwest point of Rivo Alto island in 2014.

Ralph Choeff of Choeff Levy Fischman designed the home, which features an elliptical staircase with a 300-square-foot skylight, smart home technology, oak flooring, a glass elevator, pool and more than 100 feet of waterfront.

28 West Dilido Drive (Credit: Pixabay

Call it a diamond in the rough.

A company controlled by the founder of the Evergreen Life Insurance Group, Allan Rosenzweig, just sold a waterfront home on the Venetian Islands in Miami Beach for a $2.15 million loss.

The buyer of the $7.85 million property was View 28 LLC, led by diamond mogul Fabrice Finkelstein of the Belgian diamond family, property records show. The home at 28 West Dilido Drive spans about 3,700 square feet and sits on a 13,400-square-foot waterfront lot. It was built in 1933.

The recorded selling price is a far cry from its previous price of $10 million in April. Rosenzweig, who previously founded the South African international tax firm, Intertax, bought the property a little less than a year ago from Alain Berdouare, the brother of Chicken Kitchen founder Christian de Berdouare.

The Di Lido Island property hit the market in September, asking $11.45 million with listing agent Dora Puig of Luxe Living Realty, according to Puig was not immediately available to comment. shows the property was listed for about six months as a potential tear-down with approved plans for a six-bedroom home designed by SAOTA Architecture & Design.

Finkelstein heads his eponymous Belgian corporation that oversees a number of different companies including Finkelstein Diamonds. His company also has commercial and residential real estate arms, as well as a water distribution company, Cartier and Piaget distributors and a valet parking and related services company, according to its website.

This was not his first pricey home purchase in the area. In 2016, he paid $6.6 million for a home on the neighboring San Marino Island, which he sold earlier this month for $8.2 million.

(Credit: Pixabay, Wikimedia Commons, PxHere, CMS Wire)

The new GOP tax law is widely considered a win for high-earners, but it’s not clear if real estate brokers and their firms will also benefit from a hefty deduction granted to pass-through businesses.

The so-called pass-through deduction has been billed as a boon to independent contractors, including Uber drivers and freelancers, but its application to real estate agents remains murky. If a broker makes less than $157,500 a year (or $315,000 if filing as a married couple), he or she will automatically qualify for the 20 percent deduction. Of course, brokers selling luxury real estate in cities like New York City, Miami or Los Angeles, likely make significantly more than that, so additional restrictions apply.

“For brokers, it’s a little bit of a mixed bag,” said Aaron Lerner, a senior tax manager at Eisner Amper. “You have a situation where the income limits, before you even look at the other limits, is sort of low.”

Above that income threshold, two main hurdles stand in the way of brokers securing the deduction, Lerner said. The first is the exemption of “specified service businesses,” which the law defines as those that provide “services in the fields of health, law, accounting, actuarial sciences, performing arts, consulting, athletics, financial services, brokerage services or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.” The definition of “brokerage” here is nebulous, said Michael Greenwald, partner and leader of the corporate and business tax practice at Friedman LLP. It’s unclear if the law is referring to just financial brokers or “anyone who brokers anything,” he said.

Brokers also often market themselves based on their knowledge and experience in a given neighborhood or with a particular asset type. Thomas Gallagher, a partner at Philadelphia-based law firm Cozen O’Connor, notes in a January article released by his firm that advertisements for high-producing teams — think the Eklund-Gomes Team or Alexa Lambert Team — basically “scream reputation and personal skill.” He said some brokers may be advised to change their marketing strategies to increase their chances at qualifying for the deduction.

The Internal Revenue Service is expected to issue additional guidelines for the tax law in June. If it’s ultimately determined that real estate brokers provide a “specified service,” the deduction won’t be available to any broker who makes $207,500 or more ($415,000 for joint filers). Greenwald said brokers should probably wait to see what the IRS releases before shifting advertising strategies.

“Until we get more guidance, I would caution people not to do anything,” he said. “I would hate to think someone’s changing their behavior or significantly altering their business based on speculation.”

He also noted that the deduction, which becomes effective in 2018, expires in 2025 so businesses shouldn’t get too dependent on the extra cash.

The second hurdle is arguably even greater. To determine the limitation on deductions for individuals making more than $157,500, a formula primarily involving W-2 wages (limited to the greater of 50 percent of these wage and the sum of 25 percent of W-2 wages and 2.5 percent of the unadjusted basis of qualified property) is used. For most real estate brokers, who file taxes as independent contractors and file a 1099 form rather than a W-2, that limitation formula likely means that they won’t get a deduction.

Outside the deductible, the new tax law is expected to impact homes sales. According to the Wall Street Journal, this spring could be one of the slowest selling seasons in recent years, due in part to the law’s cap on mortgage-interest deductions and on state and local tax deductions. Still, Michael Graves, a broker at Douglas Elliman, noted that the tax law has been good for business, given its perks for high net-worth individuals.

“The really important thing for those of us who work in the high-end of the market, is that our clients are being positively affected by this,” he said. “If you are a volume broker, doing deals south of $3 million, you are probably taking a hit.”

Steven Klein, a partner at Miami-based Gerson Preston, said that he’s working with various real estate professionals to determine the best way to structure S-Corporations and other entities to maximize their deductions.

“There’s a lot to do with real estate clients,” he said. “The benefits can be great, but the pitfalls are there if you don’t structure things properly.”

Pointe 1801, Southpointe and Pointe Broward and Avison Young’s David Duckworth (Credit: Avison Young)

A portfolio of three office buildings in Plantation just hit the market.

Brokers David Duckworth, John Crotty and Michael Fay of Avison Young are listing the property unpriced. But the $43 million sale of a nearly 240,000-square-foot office park in February could provide insight into the price. That property sold for $180 per square foot. At that price per square foot, the TA Realty buildings could sell for about $46.3 million. They could also sell individually.

TA Realty owns the 257,000-square-foot office portfolio. The Boston-based asset manager paid at least $41 million for the buildings in 2007.

The portfolio includes Pointe 1801, a 99,000-square-foot office building at 1801 Northwest 66th Avenue. The property was recently renovated and is fully leased to tenants like Envision Healthcare Corp. Southpointe, the second building at 7901 Southwest Sixth Court, spans nearly 80,000 square feet and is 98 percent leased. And the third building, Pointe Broward, a 78,000-square-foot office building at 8211 West Broward Boulevard, is 79 percent leased to a majority of law firms and accounting firms, according to a press release. The office building includes an adjacent parking garage.

Plantation has become one of Broward County’s booming suburban markets for corporations looking to avoid the congestion of downtown Fort Lauderdale, attracting companies like Virgin Voyages, American Express and Motorola.

John Wijtenburg

Colliers International South Florida brought on John Wijtenburg to focus on hotel and resort investment sales in Florida. Wijtenburg, a vice president, is joining the team of Colliers’ executive vice president Rich Lillis. He was previously with InSite Group as ‎director of business intelligence and analytics.

Diana Ibarria was promoted to senior vice president of sales at CC Homes. Her experience includes positions at Westbrooke Homes and Standard Pacific Homes. She was previously senior vice president of CC Homes’ Naples division.

Commercial broker Steve Paige joined Reichel Realty & Investments as executive director, focusing on office, industrial and retail sales and leasing in Palm Beach County. He was previously with NAI/Merin Hunter Codman.

Jaime Sturgis’ firm Native Realty brought on R. Bruce “Buzz” Smith. His experience includes nearly 30 years at Stiles Realty and more recently the Rotella Group. At Native Realty, Smith will focus on investment sales and corporate relocations. Sturgis launched the Flagler VIllage-based brokerage in May after leaving Metro 1.

EWM Realty International hired eight associates at its Coral Gables/South Miami office: Julian Acosta, Carolina de Cardenas, Marcelo Pizzato Dante, Stephanie Perez Harris, Maria Ines Marta, Jennifer Wackenhut, James Wheeler and Katie M. Wheeler.

Sara M. Hernandez, senior vice president and business development team leader at Coconut Grove-based Biscayne Bank, was installed as 2018 president of CREW-Miami. The organization’s new executive board also includes President Elect Keren Marti of First American Title Insurance, Treasurer Rosa Bravo of Morrison Brown Argiz and Farra, Secretary Andres Rodriguez of ADC architects, and Governance/Parliamentarian Gayle Bainbridge of Global Risk LLC.

Auberge Resorts Collection named Tim Arnold as general manager of Auberge Beach Residences & Spa Fort Lauderdale, a 171-unit luxury condo development in Fort Lauderdale Beach.

Bahia Mar Fort Lauderdale Beach – a DoubleTree by Hilton, promoted Lisa Namour to general manager. The property is part of developer Jimmy Tate’s Bahia Mar redevelopment, a $500 million mixed-use project.

Rivergate KW Residential hired Stephanie Brown as senior vice president of client services.She was previously director of business development for the Rainmaker Group.

Manuela Barson joined BGI Capital as it expands into Palm Beach County. Barson will lead the Palm Beach division of the firm, focusing on providing traditional, specialty and bridge financing.

Aztec Group hired Brell Tarich as a senior associate. He was previously with Rialto Capital.

Former Broward County attorney Joni Armstrong Coffey joined Akerman LLP’s Land Use and Development Practice as a partner in the Miami and Fort Lauderdale offices.

Marquis Bank is expanding into Broward County with a loan production office and new branch in downtown Fort Lauderdale. Steven Sanzone left Stonegate Bank to lead the new team, and is joined by senior vice president and commercial lending officer Mark Huard, banking center manager Jerry Grace and commercial loan assistant Hazel Acea.

125 Greenwich Street, Madison Square Park Tower, 1 Seaport and Howard Lorber (Credit: Douglas Elliman and Getty Images)

Douglas Elliman chief Howard Lorber earned $10.6 million last year — a modest drop following a year in which the residential brokerage struggled with profitability.

Lorber’s haul included a base salary of $3.198 million, plus a $3.157 million bonus. His total compensation dropped $425,000 from 2016, when he pocketed $11.059 million, according to a proxy statement filed Monday by Elliman’s parent company, Vector Group.

The Elliman chairman is among real estate’s highest-paid executives. General Growth Property’s Sandeep Mathrani took home $12.2 million in 2016 and Vornado Realty Trust’s Steven Roth pocketed $11.151 million that year, according to the most recent filings for those companies.

Lorber’s payday for both 2016 and 2017 fell well short of the $42.54 million he banked in 2015 — though the majority of that compensation was in the form of stock awards that vest gradually over time.

As of Jan. 1, Lorber’s base pay was bumped up to $3.25 million.

Like prior years, his perks in 2017 included a company car and driver; $7,500-per-month stipend for lodging and business expenses; two club memberships and use of the company plane.

The filing also disclosed that Lorber’s son, Michael Lorber, an agent at Douglas Elliman, made $786,754 as a broker in 2017.

Howard Lorber is Vector’s fifth-largest shareholder with 7.6 million shares — or 5.6 percent — of the company’s stock, according to the proxy statement. Shares closed at $21.18 on Monday.

Elliman sold $26.1 billion worth of real estate last year, up 6.1 percent from 2016. But it was a tough year for the firm — and other residential brokerages — because of a slowdown in new development closings. For the full year, the company’s revenue rose 7 percent to $722.3 million. Net income rose 1.4 percent to $21.4 million.

“I would not say it was a stellar year,” Lorber said during Vector’s March 1 earnings call, during which he attributed the higher sales volume to Elliman’s acquisitions of Los Angeles-based Teles and Boston-based condo specialists Otis & Ahearn.

He also highlighted the impending sale of 701 Seventh Avenue, where Vector’s New Valley subsidiary is a part owner with Steve Witkoff, Ian Schrager, Winthrop Realty Trust, along with Maefield Development and Fortress Investment Group. In February, Maefield and Fortress signed a contract to buy out their other partners in a deal that values the property at $1.53 billion.

“That will show good returns,” Lorber said on the call. “We’ll probably slow down on the new investments, but we have a lot of product that should get monetized this year and in the next year.”

Penthouse 1617 at 1 Hotel & Homes

Dallas developer Joe Beard just closed on a new penthouse at 1 Hotel & Homes South Beach, about a month after selling his penthouse at the W South Beach.

Beard’s Westdale LLC paid $5.6 million for unit PH-1617, according to a spokesperson for the development. The developer, a joint venture between LeFrak and Starwood Capital Group, sold the three-bedroom, 2,781-square-foot unit. The condo also features a 255-square-foot terrace, a den and three-and-a-half bathrooms. Brazilian designer Debora Aguiar designed the fully furnished unit.

The buyer is managed by Beard, Westdale Real Estate Investment Management’s CEO. In January, Westdale W LLC sold penthouse 2 at the W South Beach for $8.7 million to plastics executive David Berges, former head of Hexcel.

In the 1 Hotel & Homes sale, Luis Gonell of Engel & Völkers Miami represented the buyer. Tracy Galya of Douglas Elliman represented the developer.

1 Hotel & Homes, at 102 24th Street, launched condo sales in 2013, and opened in 2015. The developer registered to sell its remaining units in New York a year later.

From left: Jonathan Gray and Rockpoint’s Bill Walton

An investment fund controlled by Blackstone Group bought a passive, minority stake in Rockpoint Group, the company announced Tuesday.

Terms of the deal weren’t publicized. The vehicle that made the investment, Blackstone’s Strategic Capital Holdings Fund, falls under the private equity firm’s hedge fund business.

The Boston-based real estate investment firm Rockpoint quietly emerged as one of New York’s most active real estate investors over the past few years.  In recent months, the fund manager agreed to buy the Starrett City complex in Brooklyn with Brooksville Company for $905 million and closed on the $465 million purchase of 1700 Broadway.

In a statement, Blackstone’s newly appointed president Jonathan Gray pointed out that his firm has already worked on several real estate deals with Rockpoint. Scott Soussa, who heads Blackstone’s Strategic Capital Group, called Rockpoint a new “strategic partner.”

Chinese sovereign wealth fund China Investment Corporation (CIC) also just sold its 9.9 percent stake in Blackstone, the Financial Times reported. CIC had paid $3 billion for its stake in 2007.

Elin Nordegren (Credit: Realtor, WIkimedia Commons)

Elin Nordegren, the Swedish model once married to golfer Tiger Woods, has listed her mansion in North Palm Beach for $49.5 million.

Nordegren built the 23,000-square-foot home at 12520 Seminole Beach Road after paying $12.25 million for the property in 2011 and tearing down its nearly 18,000-square-foot home. She purchased the property following her much-publicized $100 million divorce from the golfer.

A spokesperson told the Wall Street Journal that Nordegren was selling in order to downsize.

Cristina Condon, Todd Peter and Frances Peter have the listing, according to the Journal.

The palatial home, with 11 bedrooms, 15 bathrooms and three half-baths, was completed in 2014. It features numerous rooms with retractable glass walls, a roof deck, wine cellar, theater, two kitchens, and a gym. Along with a pool, the home has 200 feet of ocean frontage, according to the Wall Street Journal. There’s also a putting green and a basketball/pickleball court. A separate guest house includes two separate apartments, each with a kitchen and living room.

Nordegren has two children with Woods, to whom she was married for six years, and is currently studying for her master’s degree in psychology, according to the Wall Street Journal. [WSJ] –– Dennis Lynch

250 Collins Avenue (Credit: 250collins)

UPDATED March 13, 6:45 p.m.: Fresh from undergoing a multi-year renovation, a 27-unit apartment building in Miami Beach’s South-of-Fifth neighborhood just sold for $14.6 million, property records show.

The developer, TwoFifty Collins LLC, managed by Alessandro Renzetti, listed the property at 250 Collins Avenue for $22 million with Gary Hennes Realtors in 2016 – meaning the building sold at about a 33 percent discount off its original asking price.

Records show 250 Collins Propco LLC, led by Miami-based investor Gonzalo Manuel Chueca Peirote bought the property. It traded hands for about $541,000 per unit. Peirote financed the deal with $9.25 million loan from Emerald Creek Capital 3 LLC. Marcus & Millichap Capital Corp. said it arranged the financing.

Online marketing materials show Cushman & Wakefield’s Calum Weaver and Perry Synanidis had the most recent listing. The property is listed on the firm’s website under the international hospitality brand The House Residence, with the option to convert the building into a hotel, apartments, short-term rentals, a condo-conversion and condo-hotel.

Neither Weaver or Synanidis were immediately available to comment.

Last May, Renzetti’s request to change the property’s designation to allow for both condominiums and short-term rental hotel use was approved by the Miami Beach Historic Preservation Board.

The building was designed by the late architect Gene Baylis, and was built in 1959. Units average about 700 square feet, and offer one-, two- and three-bedroom floorplans. Features include renovated kitchens, a third-floor glass penthouse level and a fourth floor rooftop pool and sundeck.

A nearby four-story, mixed-use building is on the market and is expected to sell for up to $20 million. A company tied to Russell Galbut and Sonny Kahn’s Crescent Heights listed the property in October.

Richard Meier (Credit: Getty)

Five women say architect Richard Meier sexually harassed them, marking him as one of the first famous architects to be accused of such misconduct in the wake of the Harvey Weinstein scandal.

Four women who worked for Meier — who won the Pritzker Prize in 1984 — and another who met him while he was working on the Getty Center in Los Angeles accused him of inappropriate behavior, the New York Times reported. The accusations include forcibly trying to kiss one of the women, exposing himself, grabbing an employee’s underwear and asking an assistant to undress.

Meier has taken a six-month leave as a result.

“I am deeply troubled and embarrassed by the accounts of several women who were offended by my words and actions,” he said. “While our recollections may differ, I sincerely apologize to anyone who was offended by my behavior.”

Two of the women who worked for him said Meier exposed himself to them when they were sent to his New York apartment. Stella Lee told the Times that she arrived at his apartment in 2000 to find her boss wearing only a terry cloth bathrobe that exposed his penis. Alexis Zamlich, who did not speak to the Times due to a confidentiality agreement, received $150,000 to settle her claims that Meier exposed himself to her at his apartment, the paper reported.

Judi Shade Monk said that he grabbed her underwear through her dress at a holiday party held by the firm. Laura Trimble Elbogen, his 24-year-old assistant, said he invited her to celebrate her new job at his apartment during her first week in 2009. He allegedly showed her naked photos of women at his apartment and then asked her to undress. Instead, she left the apartment.

Carol Vena-Mondt, a furniture designer who worked on the Getty in the 1980s, said she was invited by Meier to what she thought was a dinner party, but she turned out to be the only guest. She said the architect tried to kiss her, dragged her down a hallway and then pushed her onto the bed, despite her objections. She pushed him away and ran to her car.

Meier designed 173 and 176 Perry Street in Manhattan and On Prospect Park in Brooklyn. In South Florida, he designed the Four Seasons Private Residences at the Surf Club. He was also recently tapped to design 685 First Avenue for Solow Properties.

With Meier taking a six-month leave, four associate partners will manage day-to-day operations of the New York headquarters: Vivian Lee, Reynolds Logan, Bernhard Karpf and Dukho Yeon. Michael Palladino, a partner who runs the company’s LA office, will oversee all operations and projects.

Another big real estate figure was accused of sexual misconduct in November. Celebrity hotelier André Balazs was accused of groping at least four women. [NYT]Kathryn Brenzel

Jugofresh in Coral Gables (Credit: Wikimedia Commons)

Jugofresh is no more.

Owner Matthew Sherman announced the cold-pressed juice company shut down on Tuesday, closing all of its stores and ending its partnership with Whole Foods Market.

Sherman wrote in an email blast that his “lack of experience and rapid expansion are what ultimately led us to close.” The company grew quickly in its six years,  with up to eight locations in South Florida and shops at Whole Foods Markets in downtown Miami, Fort Lauderdale, Coral Gables and others. “When you sign a deal with a large company it is difficult to maintain a clear brand message,” Sherman said.

In 2015, he sold the Biscayne Boulevard site in MiMo that he had planned to redevelop. Sherman made a $440,000 profit in two years, selling the building at 7501 Biscayne Boulevard for $1.4 million to developer Alex Karakhanian.

In his email, Sherman also cited rising retail rents and competition from online retailers. At the company’s flagship Sunset Harbour store, revenue dropped from $3.2 million in 2013 to $870,000 in 2017, he said. Competition also grew, with new juice bars popping up in Miami Beach, Brickell, Wynwood and downtown Miami.

Sherman could not immediately be reached for comment.

Rendering of Aventura Mall’s three-level, expansion wing and Aventura Slide Tower. Turnberry Associates’ Jackie Soffer and Simon Property Group’s David Simon

The Soffers and Simon Property Group are seeking $2 billion to refinance Aventura Mall.

The loan, if granted, will be used to pay off a $1.2 billion commercial mortgage-backed securities loan that the joint venture between Turnberry Associates and Simon Property secured in 2013. An additional $167.4 million in financing was used to fund the construction of a newly-built 175,000 square-foot wing, according to Trepp.

The 2.9 million-square-foot mall at 19501 Biscayne Boulevard is anchored by Macy’s, JCPenney, Nordstrom and Bloomingdale’s.

Turnberry announced it was expanding Aventura Mall in 2014 to include a three-story retail wing and parking garage. In 2016 the owners closed on a $213.5 million mortgage to expand the upscale shopping center. The mall first opened in 1983, then doubled its size in 1997 and in 2007.

Simon Property Group has a 33.3 percent interest in the mall’s ownership. Turnberry owns the remaining 66.7 percent, Turnberry also manages the property.

The mall just announced six new luxury retailers, including CH Carolina Herrera, Furla, Bond No. 9, John Hardy, Daoro and Djula, according to a press release. Other existing stores include Gucci, Louis Vuitton, Givenchy, Cartier, Tiffany & Co., Apple, Anthropologie, H&M and Zara. [Trepp] – Amanda Rabines

Gerri and Stephen Helfman and a rendering of their proposed house

UPDATED March 13, 2:15 p.m.: Despite objections from a prominent historic preservation group, a Miami land use attorney and his wife will be allowed to tear down a 1920s three-bedroom house and replace it with a three-story modern mansion in Miami Beach’s South-of-Fifth neighborhood.

The Miami Beach Historic Preservation Board on Monday voted unanimously to authorize the demolition of the existing property at 819 Second Street, which was condemned by the city’s building official in 2015 following a fire that caused extensive damage. Two months ago, the board delayed its vote over concerns that the ultra-modern mansion land use attorney Stephen Helfman and his wife, former television anchor, Gerri Helfman want to build lacked features that paid tribute to nearby Art Deco properties.

The Helfmans needed the board’s approval because the existing dilapidated, scorched house was designated as a “contributing structure” to the Ocean Beach Historic District in 1995. The board also approved two variances for the Helfmans.

“I was very critical of the design last time,” said boardmember Nancy Liebman. “I think you have gone a 1,000 miles better than what you had brought to us.”

The board gave the Helfmans the green light even though Daniel Ciraldo, executive director of the Miami Design Preservation League, argued that some portions of the existing house could be saved and renovated. He said the league also opposed the new building proposed by the Helfmans because it required the demolition of an historic structure.

“We don’t think this is honoring the neighborhood at all or preserving the historic structure,” Ciraldo said. “We think you should deny this application.”

At one point the hearing got very contentious when Stephen Helfman accused Ciraldo of misrepresenting claims that he did not want to show the property to the preservationist. “He refused my invite to come into the home and he rejected it,” Helfman said. “We did not disregard the Miami Design Preservation League.”

Ciraldo refuted Helfman’s claim. Boardmember Jack Finglass also chastised the couple. “Frankly I am insulted by the tone that the Helfmans have taken in these proceedings,” Finglass said. “I don’t think the questions about preserving the building are out of character.”

The Helfman’s revised plans show their architects toned down the new building’s exterior color from a medium gray to beige and off white, reduced the amount of solid concrete at the ground level, replaced a hedge in the front yard with landscaping that doesn’t exceed 36 inches in height, replaced a concrete wall on the north and east of a proposed roof deck with wood and glass railings and a property fence that pays homage to the existing structure.

Following the hearing, Stephen Helfman said he was satisfied with the outcome, but he declined to comment on Ciraldo and Finglass. “We are extremely pleased,” Helfman said. “We are going to build a beautiful home and be a part of this community for a long time.”

According to a hardship statement the Helfmans submitted, they bought the 1923 house in the South-of-Fifth neighborhood from Bank of New York on May 24, 2017 for $785,000.

As quickly as condo sales rose, they fell. Miami-Dade recorded a big drop in condo sales volume last week.

Only 106 units sold for a total of $37 million, a dramatic decline from the previous week’s $146 million sales volume for 193 units. Condos last week sold for an average price of about $350,000 or $275 per square foot.

The most expensive sale was at Apogee in Miami Beach. Unit 1203 traded hands for $7 million after about three months on the market. The three-bedroom, 3,100-square-foot condo was listed with Nelson Gonzalez. Eloy Carmenate brought the buyer.

The second priciest condo closing was farther north in Aventura. Hidden Bay unit 2508 sold for $1.05 million. It was listed with Shemer Goldberg for 392 days before it sold. Pascal Lasry represented the buyer.

Closing prices in the top 10 deals ranged from about $550,000 to $7 million.
Here’s a breakdown of the top 10 sales from March 4 to March 10. Click on the map for more information:

Most expensive
Apogee #1203, Miami Beach | 95 days on market | $7M | $2,256 psf | Listing agent: Nelson Gonzalez | Buyer’s agent: Eloy Carmenate

Least expensive
L’Excellence #1903, Miami Beach | 44 days on market | $550k | $404 psf | Listing agent: Mickael Lancri | Buyer’s agent: Mickael Lancri

Most days on market
Jade Brickell #1208, Miami | 776 days on market | $762k | $391 psf | Listing agent: Diego Arnaud | Buyer’s agent: Michael Schnabel

Fewest days on market
Continuum North #CAB2, Miami Beach | 0 days on market | $900k | $464 psf | Listing agent: Julian Johnston | Buyer’s agent: Julian Johnston

Stephen Zack and 5310 North Bay Road

A prominent attorney just closed on a waterfront mansion in Miami Beach.

Property records show civil trial lawyer Stephen N. Zack of Boies Schiller Flexner LLP paid $8.55 million for the six-bedroom, 8,100-square-foot home at 5310 North Bay Road. Unique Melo Holdings Inc., led by Priscilla Nogueira Alves Melo, sold the property.

Zack was the youngest person and first Hispanic lawyer to lead the American Bar Association as president, according to his company bio.

His new Miami Beach estate features a home theater, a 5,000-bottle wine room, pool and Jacuzzi. It was built in 1950 and has been renovated since then. The property last traded hands for $9.1 million in 2010, which means it just sold at a slight loss.

Douglas Elliman’s Darin Tansey  and Brett Harris were the listing agents. One Sotheby’s International Realty’s Robert Evangelista brought the buyer, according to

The home has been on and off the market since 2014, when it was first listed for a whopping $21 million. The property was reduced to nearly $11 million in September.

In January, J. Crew Chairman Mickey Drexler paid $13.7 million for the waterfront property next to his at 4462 North Bay Road. That too sold for a big discount off of its original $25 million price tag.

Peter Hennessy and Shawn Mobley with Cushman & Wakefield’s headquarters at 1290 Sixth Avenue

Cushman & Wakefield fired former executive Peter Hennessy two weeks ago after the veteran broker penned an angry email directed at a high-ranking company officer over a new belt-tightening policy, multiple sources told The Real Deal.

In an email chain on which 20 to 30 of the firm’s top brokers were discussing a new policy that severely limits travel expenses, Hennessy took aim at Shawn Mobley, Cushman’s newly-minted CEO for the Americas. It’s not clear what exactly Hennessy wrote, but multiple people who read the email described it as “excessive” and “harsh.”

Soon after, Hennessy got pink-slipped. The broker couldn’t be reached for comment, and a spokesperson for Cushman said “we have no further comment at this time.”

The manner in which Cushman let other top executives and brokers know of the firing was nearly as surprising as the initial termination, several employees at the company said. They asked to remain anonymous because they were not authorized to discuss the firing publicly.

In an email sent to a select group of about 20 high-level employees, tri-state CEO John Santora, wrote: “At Cushman & Wakefield, we believe in working collaboratively, displaying high ethical behavior and treating fellow employees and clients with the utmost respect,” Commercial Observer reported.

An employment attorney who was not familiar with the specifics of this case said that statement appeared to open more questions than it answered.

“The reason a company might want to criticize someone on the way out is to distance it from the underlying conduct. But when you make it so ambiguous and vague instead of sending a message it creates more questions about what happened,” said Brian Heller, a partner at the firm Schwartz Perry & Heller.

Multiple people familiar with the series of events that led to Hennessy’s termination said the new policy puts stringent limits on the costs brokers can expense to the company for travel – not just cross-country flights and hotel rooms, but also local travel like taxis and Ubers.

Sources said it’s something that a number of brokers are displeased with, but Hennessy was said to have made his objections personal toward the Chicago-based Mobley, who had previously led Cushman’s eastern region before he was promoted in November to replace outgoing Americas CEO Tod Lickerman.

Hennessy’s choice of words and conduct were described as inappropriate for a subordinate to address a member of the C-suite. Insiders at the brokerage speculated that Mobley may have been trying to assert his new authority with a headstrong broker. Several sources at the company also said Hennessy had a reputation of sometimes being combative.

Hennessy had previously been president of the New York tri-state region for DTZ, and joined Cushman through the companies’ merger in 2015. He believed he was in the running for a more senior position at the new, bigger Cushman, sources told TRD.

Mark Maurer contributed reporting.

Bainbridge Coral Springs and Richard Schechter (Credit: Bainbridge Companies)

Bainbridge Companies is cashing out on its recently completed 250-unit multifamily complex in Coral Springs.

Property records show an affiliate of the Wellington-based developer sold Bainbridge Coral Springs for $71.7 million to Morris Coral Springs Associates LLC, an entity of Morris Companies, based in New Jersey.

The complex at 10820 and 10890 West Sample Road traded hands for about $287,000 per unit. Records show Bainbridge paid $8.5 million for the 9.6-acre property in 2015, and financed construction with a $37.5 million loan from First Citizens Bank and Trust Company.

Bainbridge Coral Springs is just west of Coral Springs Drive, off West Sample Road, and sits adjacent to the Coral Springs Country Club and Golf Course.

Apartments feature one- to three-bedroom floor plans with stainless steel appliances. Amenities include a pool deck with cabanas, fitness center, clubroom, arcade, reserved garage parking, a pet friendly walking space and a courtyard with outdoor kitchen grills.

In August, Bainbridge bought a Delray Beach rental community for $102.5 million. The trade marked one of the largest investment sales in the tri-county region last year.

Records show Morris Companies financed the Coral Springs deal with a $35.3 million loan from Principal Life Insurance Co. The firm declined to comment. Morris specializes in retail and industrial development and has developed or acquired 3 million square feet of retail space in New York, New Jersey, Pennsylvania and Florida, according to its website.

Rendering of the project

A joint venture between Eden Multifamily and Cypress Equity Investments paid $12 million for the development site of a planned apartment tower in downtown Fort Lauderdale.

Property records show SE 2nd Street Owner LLC sold the 1.55-acre property at 419 Southeast Second Street to Edengate Las Olas LLC, an affiliate of CE Development Partners. The partnership is planning a 32-story, 347-unit rental building with ground floor retail space and an adjacent parking garage, according to a press release.

The sale to Eden sparked a lawsuit between the seller and its neighbor. SE 2nd Street Owner LLC sued FTL 500 Corp, alleging the neighboring property owner tried to block the sale of the vacant lot and future development plans for the property, court records show. FTL 500 allegedly missed its deadline to bid on the property. As a result, the seller had to extend the closing on the property, and Eden insisted on a price reduction to $12 million from $13.8 million.

The deal closed on March 9. The buyer financed the sale with a $9.17 million mortgage from Pacific Western Bank.

CE Development Partners plans to break ground on the building during the fourth quarter of this year. It will have wraparound balconies, floor-to-ceiling glass, exercise facilities, a golf simulator, yoga studio, Peloton facility, a bicycle storage and repair shop and delivery lockers.

A number of luxury rental projects are in the pipeline in downtown Fort Lauderdale. Last month, Elevate Partners closed on an $80 million construction loan for 4 West Las Olas, a 25-story, 260-unit luxury apartment building at 305 South Andrews Avenue.

Prive at Island Estates and BH3’s Charlie Phelan, Greg Freedman and Daniel Lebensohn and Gary Cohen

Developers of the completed Privé at Island Estates have agreed to collect a $21.6 million settlement from the Williams Island Property Owners Association, ending years of litigation over the construction of the luxury two-tower condo complex in Aventura.

Williams Island Property Owners Association had filed suit in 2013, seeking to stop the development. A jury in Miami-Dade Circuit Court on Jan. 30 awarded Gary Cohen and BH3 $26 million. He ruled that the association breached a 1982 agreement requiring that it not object or oppose future developments by Cohen on the 84-acre Williams Island. In addition to the $26 million, the association would have had to pay several million dollars in interest.

The $21.6 million settlement — plus nearly $2 million in attorneys’ fees — means each Williams Island condo unit owner will have to pay an average of $12,000 as part of the settlement. There are 1,975 unit owners. Williams Island Property Owners Association will not be able to further appeal the case.

The 150-unit Prive at Island Estates, at 5000 Island Boulevard, is 75 percent sold, with closings beginning in January. Condos range from 2,500 to 6,200 square feet and are priced from $2.3 million to $8.6 million.

Glen H. Waldman, who represented Privé’s developers, along with attorneys Eleanor Barnett and Jeff Lam, all of Waldman Barnett, called it “an amazing settlement.” He added, “when you have the other side agree — without exhausting their rights of appeal or exhausting post-trial motions —  to pay over 80 cents on the dollar of a jury verdict, it’s almost unprecedented.”

Jeffrey T. Foreman, lead lawyer for Williams Island Property Owners Association, did not respond to email and voicemail requests for comment. His partner, Richard Critchlow, declined comment.

Documents show Williams Island Property Owners already paid $1 million to Privé and $80,000 to Cohen’s trust at the signing of the settlement late last week. The remaining $20.52 million is due on March 30.

The association is initially drawing on funds borrowed from a bank, and members have not yet decided if they will repay the loan in one lump sum or over time. A meeting of unit owners is scheduled for Thursday evening.

The settlement comes nine months after Miami-Dade Circuit Judge William Thomas, who presided over the case, dealt a blow to the association’s complaint and a separate lawsuit filed by the Island Estates Homeowners Association, which represents another group of nearby homeowners. Thomas ruled the statute of limitations had long expired for both associations to challenge a vested rights determination agreement.

Williams Island Property Owners’ Association originally sued the city of Aventura, Cohen and Prive Developers LLC, a partnership between BH3 and Cohen, in April 2013. The Island Estates group sued in October 2013 and filed a separate complaint a year later, accusing the city of allowing BH3 to build an illegal sidewalk that encroached on homeowners’ properties. A judge ruled in favor of Island Estates in October.

In the Williams Island case, Cohen and the Williams Island Property Owners Association were bound by a 1982 settlement agreement between the original developers of the luxury enclave in which neither party would interfere with new projects. Williams Island Property Owners Association violated the agreement by filing its lawsuit and encouraging Island Estates Homeowners Association to also sue Privé’s developers, Waldman said previously.

“These three lawsuits really hurt us,” he said previously. “Instead of being able to obtain a conventional loan at a 5.5 percent interest rate for a project that was awesome in terms of loan to value and contracts already in place, we could only get vulture funding at a 15 to 18 percent interest rate.”

As a result, the developers had to pay roughly $21 million in interest, Waldman had said. The ongoing litigation also put a cloud over the project that resulted in delays in selling out units. “Buyers were scared,” he said previously. “Brokers testified that they wouldn’t even go to the project. We should have sold out two years ago.”

Litigation between Prive’s developers and other homeowners continues, Waldman said. No trial date has yet been set.

Steve Wynn (Credit: Getty Images)

Wynn Resorts has secured an $800 million line to credit to pay for a multibillion-dollar settlement regarding one of its founders.

The company, which is undergoing a leadership shakeup due to a separate sex scandal and ensuing stockholder revolt, closed a 364-day term loan from Deutsche Bank. Wynn Resorts plans to use the proceeds from the financing, as well as cash on hand, to pay a $2.6 billion settlement to Japanese pachinko magnate Kazuo Okada, who once owned half the company. The settlement is unrelated to the sexual misconduct allegations involving its founder, Steve Wynn.

Last week, Wynn Resorts and Okada’s Aruze USA, a subsidiary of Universal Entertainment Corporation, settled a lawsuit that has lingered since 2012. The dispute stemmed from the forced redemption of Aruze’s 25.5 million shares of Wynn common stock. Okada was pushed out after the FBI launched an investigation into his firm’s possible violations relating to the Foreign Corrupt Practices Act.

Aruze’s stake in the company now has a value of around $4.9 billion.

The settlement came as Wynn Resorts dealt with the fallout from sexual misconduct allegation against its founder Steve Wynn. In January, the Wall Street Journal reported the story of a manicurist who claims that Wynn forced her to have sex with him. More accusers then came forward, with details of encounters stretching back to the 1970s. The newest allegations involved two massage therapists who claim that Wynn coerced them into performing sexual acts more than 50 times between 2006 to 2009.

Wynn resigned last month as chairman and chief executive of the company that bears his name. He was followed out the door by two board members, Ray Irani and Alvin Shoemaker, who announced their departure last week. Wynn has denied the allegations against him, describing the claims of his accusers as “preposterous.”

The accusations have led to several lawsuits from stockholders, who claim that the company engaged in a coverup of Wynn’s alleged misdeeds. Massachusetts pension fund Norfolk Retirement System, Pennsylvania-based Operating Engineers and Construction Pension Fund and investors John and Joan Ferris are the plaintiffs in class action suits against Wynn.

The $2.6 billion agreement settles all claims between Wynn, Aruze and Universal. The settlement, which covers the principal amount from the promissory note and interest, must be paid by March 31.

Renderings of 188 Aventura Centre (Credit: Modis Architects)

A joint venture just won approval for a nine-story office complex that will rise near Aventura, set to break ground soon, The Real Deal has learned.

The developers: BM2 Realty, MG3 Developer Group, Scheck Group and Solomon Capital Management will build 188 Aventura Centre, a 290,000-square-foot office building.

The project, which just received site approval from the City of Miami, will include about 53 office condos and 11,000 square feet of retail space.

The joint venture paid $4.85 million in 2016 for the site at 18801 West Dixie Highway. It was previously the site of a 9,345-square-foot church building, and sits just west of the Town Center Aventura shopping center.

The building, designed by Modis Architects, will include a lounge deck on its sixth floor equipped with a bar, ping-pong table, TV and an outdoor terrace for owners.

Ezequiel Baredes, CEO of BM2 Realty, said 188 Aventura Centre is more than 50 percent pre-sold. Each partner company involved will be moving its headquarters office into the building.

The project will be self-financed and is estimated to cost about $45 million, according to Baredes. The developers plan to break ground within the next three months, and aim to complete the project by the end 2019, Baredes said.

Driverless car (Credit: GM/Cruise)

The mass adoption of driverless cars could shift some of the traditional rules that govern real estate values, particularly those concerning access to mass transit.

Fully driverless cars are heading to California’s streets in April, following state approval, so that future could be a lot closer than it seems.

Having a driverless option could make using — and living and working near — mass transit less appealing to those with access to the technology and the means to afford it, according to a Forbes report. Driverless buses and smaller shuttles could make it easier for people to get to less transit-heavy areas as well, potentially boosting the property values there and encouraging development.

Driverless cars that can drop passengers off and head elsewhere could also reduce the need for on-site parking and developers’ requirement and expense to provide it. That means that space can be allotted for more profitable uses, like retail or residential space.

A report by consulting firm McKinsey & Co. estimates that driverless vehicles could reduce the need for parking nationwide by 61 billion square feet, which would greatly impact supply, particularly in urban areas where parking takes up prime real estate.

Development and the adoption of driverless technology will likely speed up in California in the near future, thanks to a regulation passed by the Department of Motor Vehicles last month that greatly loosened rules for operating them.

The new regulations now allow companies to operate on public roads without a safety driver in the car, according to Recode. Come April, they’ll only need a remote operator outside the car who can manually take control when necessary. So get ready for the sight of a car passing by without anyone in the driver’s seat. [Forbes] — Dennis Lynch 

1690 Northwest North River Drive and 1251 Northwest 36th Street

Two development sites on the Miami River and in Allapattah sold to developer Enrique Manhard and real estate entrepreneur Spencer Waxman, respectively.

Property records show Mapocho Development LLC sold the 1.55-acre waterfront lot at 1690 Northwest North River Drive to River and 16th Property LLC for 6.4 million. The buyer is controlled by Manhard, a developer in Hallandale Beach.

The site is zoned T6-8 O, which means it can be developed into at least an eight-story building with 150 units per acre, under Miami 21 zoning. The seller is controlled by Agustin Salas, an associate principal at Stantec. The property last traded for $5.8 million in 2005. It’s just west of the River Landing project, a mixed-use development that will include a riverfront park, 475 apartments and 426,000 square feet of space for retail stores and restaurants.

Manhard, an Uruguayan investor, is leading development of MG 100 Tower, a proposed mixed-use project with nearly 300 residential units on Federal Highway in Hallandale Beach. Estrella Perez of EP Realty Group Inc. represented the buyer and Paul Silverstein represented the seller.

Over in Allapattah, a company tied to hedge funder and real estate entrepreneur Spencer Waxman paid $6 million for a building at 1251 Northwest 36th Street. Centennial Express Inc. sold the 33,000-square-foot building to Edenderry Properties LLC, led by Spencer and Bettina Waxman.

The building sits on a 1.7-acre lot and is 78 percent leased to tenants that include Palm Medical Center and the Social Security Administration.

Cushman & Wakefield’s Miguel Alcivar, Dominic Montazemi, Tony Jones and Frank Begrowicz represented the seller and Scott Sime of Sime Realty Corporation represented the buyer, according to a press release.

The property could be redeveloped into a transit-oriented project in the future. It’s zoned T5-L, a type of limited mixed-use development, and T6-8 O, the same as the Miami River property.

It’s north of Robert Wennett’s assemblage and the Rubell Family Collection’s planned new art museum at 1100 Northwest 23rd Street. Other investors in the Miami neighborhood include Michael Simkins, and commercial broker Lyle Stern.

Ed Morse Cadillac of Delray Beach (Credit:

UPDATED March. 12th, 3:35 p.m.: Auto titan Edward “Teddy” Morse III just scored $114.3 million in financing for 10 of his dealerships in Florida.

Midvale, Utah-based Ally Bank is the lender, according to property records. The bank assumed a $95 million mortgage from Bank of America in 2015 and increased the loan to $114.3 million. It covers dealerships in Brandon, Tampa, Lakeland, Port Richey, Delray Beach, Riviera Beach, Fort Lauderdale, Sunrise and Lake Park.

“The timing was right, with rates on the rise, to lock in a fixed rate,” Teddy Morse, Chairman and CEO of Ed Morse Automotive Group said via email. He added the company is planning to expand.

After his father’s death in 2016, Morse took over his family’s dealership company, founded by his grandfather in 1963. In 2016, the company recorded $1.3 billion in sales, making it one of the largest car dealers based on sales volume.

In January, Terry Taylor, head of Daytona Beach-based Automotive Management Services, picked up a dealership in Royal Palm Beach for $44.7 million. A month before, Orlando-based Greenway Automotive Group, paid $6.2 million for a warehouse near Deerfield Beach.

During the next two years alone, 187 skyscrapers are expected to pop up across the globe — each of which will rise 820 feet in the air. As developers look to build taller and taller, some elevator companies are exploring ways to revolutionize vertical travel.

A recent report by Bloomberg examined new technologies addressing speed, capacity and, in some cases, direction in skyscrapers of the future. In this video, The Real Deal looks at the go-to technology that’s being engineered by some of the world’s leading elevator firms.

Jeffrey Soffer and Fontainebleau Aviation

The Soffer family is requesting a $5 million bond grant to expand its jet center at Miami Opa-Locka Executive Airport.

Turnberry Airport Holdings is seeking approval of the grant from Miami-Dade County’s Economic Development and Tourism Committee on Thursday and then from the county commission in April. The billionaire family would use the county bond for a $27.6 million project at the airport, where it leases 41.4 acres, according to the South Florida Business Journal.

Turnberry’s project calls for a 30,000-square-foot hanger and 57,000-square-foot executive and maintenance office for Fontainebleau Aviation. The county bond money would be used to pay for the public infrastructure.

The billionaire family’s aviation company would have to meet certain job creation requirements to receive the grant, the newspaper reported. It generated $17.7 million in revenue in 2016, an amount projected to increase to $26 million in 2020 with the expansion. [SFBJ] – Katherine Kallergis

Denver, in background. (Credit from left: ITU Pictures, Pixabay)

The research is in: millennials are settling in some unexpected places to build their careers.

The top 10 metro areas where college-educated millennials gather is supposed to point to strong real estate markets — demarcated by high median house prices — and strong economies, but there are some surprising results in the new geographical rankings, complied by the Brookings Institute.

In response, CityLab ran a correlation analysis to compare the Brookings’ data to generally accepted indicators of talent, technology, diversity and density to find that millennials gather in the same metro areas where older populations of college-educated people already are; where there is a high concentration of people working in artistic and tech-related industries; and are positively co-related with cities that have large LGBTQ and Asian communities.

Here’s a look at the unexpected cities the Brookings Institute ranked in the top 10 for millennial workers. [CityLab]Erin Hudson


(Credit: Shutterstock, Marcio Jose Bastos Silva)


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San Jose

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San Francisco

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Washington, D.C.

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New York

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Minneapolis – St. Paul

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Clockwise from top left: AVE Aviation & Commerce Center, Mizner Park Office Tower and Miami Industrial Logistics Center

Kuehne + Nagel Group inks 109,000 sf lease in Hialeah Gardens

International logistics company Kuehne + Nagel Group just expanded its footprint in Miami-Dade County with a 109,000-square-foot lease at the recently completed Miami Logistics Center in Hialeah Gardens.

Kuehne + Nagel Group inked the lease at the 255,846-square-foot building at 10701 Northwest 140th Street, raising the building’s occupancy to 80 percent from 40 percent. The building opened about five months ago, according to State Street’s Frank Trelles.

Doral-based State Street Realty represented the landlord Duke Realty, which paid nearly $80 million last year for the three-building industrial park, just east of the Ronald Reagan Turnpike and south of 138th Street.

The asking rent is about $9.15 per square foot, according to marketing materials. The industrial park totals nearly 677,000 square feet and offers space for more than 230 trailers and 32-foot-tall ceiling heights. Bridge Development Partners developed and sold the industrial park.

Kuehne + Nagel Group has at least three other offices in and around the Airport West-Doral submarket.

AVE Aviation & Commerce Center reaches 100% occupancy

Two companies have secured the remaining 30,000 square feet at AVE Aviation & Commerce Center at Opa-locka Executive Airport, according to a press release.

Michigan-based Valassis, a media delivery service company, inked a 12,000-square-foot lease; and the Ware Group/Johnstone Supply, a HVAC/R supplies wholesaler, signed an 18,000-square-foot lease at the park.

JLL’s Sky Groden represented The Ware Group/Johnstone Supply and Matt Maciag represented Valassis.

The 2.6-million-square-foot, mixed-use business park at 14350 Northwest 56th Court includes retail, office warehouse and jet hangar space. Other tenants include KSI Trading Corp., Turbopower, Banyan Air Services and the U.S. Postal Service.

Real Estate Firm Relocates HQ to Mizner Park Office Tower

Royal Investment Group just relocated its headquarters from Orlando to Mizner Park Office Tower in downtown Boca Raton.

The firm moved into a 5,300-square-foot space in the 167,600-square-foot, seven-story mixed-use tower. The real estate firm manages more than 1,100 properties and has offices throughout the U.S. and Canada.

Boca Raton-based Key Investment Advisors’ Kathleen Yonce represented the tenant. Cushman & Wakefield’s John K. Criddle and Joseph J. Freitas represented the building owners GGP and Clarion Partners.

Tenants at Mizner Park Office Tower include Kaufman, Rossin & Co.; Gray Robinson, P.A.; West Park Capital, D.A. Davidson & Co.; Mesirow Financial; Wintergreen; Morrison Brown and Brockway Moran & Associates.2

(Credit from back: PxHere; joiseyshowaa/Flickr)

“If the right one don’t get you then the left one will”– the famous lyric pretty much sums up the results of scientists’ recent study about the effect of rising sea levels on the Bay area.

The threat of changing sea levels is the devil many know, but subsidence, or the rate at which land sinks, is a compounding, lesser known factor that will have a big impact going forward. Essentially, the sea is getting higher and the land is sinking lower; around 2100, the two will meet and San Fran will loose an estimated 165 square miles to the ocean, according to Wired.

Scientists say humans have caused subsidence by draining naturally-occurring aquifers and the eventual flooding of coastal cities is basically unavoidable at this point — save moving inland — and will effect cities globally, including New York.

“There is no permanent solution to this problem,” geophysicist and author of the paper Manoochehr Shirzaei told Wired. “I’m not so sure there’s a good way to avoid it.”

Based on data collected between 2007 and 2011, the Bay area’s coast is sinking at a rate of 2 millimeters per year. [Wired]Erin Hudson

4295 Cutlass Lane in Naples

A five-bedroom, seven-bathroom house in Naples sold for $16.1 million, the most expensive sale of a Collier County house so far this year via the Southwest Florida Multiple Listing Service.

The sale price of the two-story waterfront house in Port Royal, one of the wealthiest neighborhoods in Naples, was $400,000 below the $16.5 million asking price.

Built in 1993, the house at 4295 Cutlass Lane recently was renovated by Naples-based A. Vernon Allen Builder.

The house was listed for sale  for 95 days before the sale closed, according to

Its $16.1 million sale price was 50 percent higher than the $10.7 million price the last time the house changed hands in 2014.

According to the deed, Michael and Julie McGlynn  bought the house from Michael and Susan Price of Fredericksburg, Texas.

The listing agent was Richard Prebish of William Raveis Real Estate in Naples, and the buyers were represented by Premier Sotheby’s International Realty.

The highest price paid for a listed residence in Collier County was $17.7 million for a newly built house at 3750 Rum Row in the Port Royal neighborhood of Naples. [Naples Daily News] – Mike Seemuth

Altis Boca Raton

Altman Companies finished construction of a 400-unit apartment complex at a former business park in Boca Raton.

Altman built the apartment complex, called Altis Boca Raton, with units ranging in size from 700-square-foot, one-bedroom apartments to 1,407-square-foot, three-bedroom apartments. Monthly rents start at $1,820.

Common-area amenities include a swimming pool, gym, yoga studio, spa, sauna and steam room.

The property also features car-charging stations, a Starbucks cafe, an entertainment room with table games and video games, a pet spa, fire pit, nine-hole putting green, movie room, business center and meditation garden.

Boca Raton-based Altman developed the six-story complex at 5500 North Military Trail in the Park at Broken Sound, formerly known as Arvida Park of Commerce.

The former business park was renamed after the city government opened it to residential and retail development in 2012 by approving a mixed land-use designation known as “planned mobility” for the 700-acre property in northwest Boca Raton. [South Florida Business Journal] – Mike Seemuth

The InterContinental Miami hotel (Credit: Agoda)

The insurance regulatory agency in China is considering offers to buy luxury U.S. hotels it has seized, including the InterContinental Miami hotel in downtown Miami.

The agency has seized Beijing-based Anbang Insurance Group Co. and has taken ownership of more than a dozen U.S. hotels that Anbang acquired.

In 2016, Anbang paid $6.5 billion to buy a portfolio of 16 high-end hotels from New York-based investment firm Blackstone Group L.P. less than a year after Blackstone bought the hotels, including the InterContinental Miami, for $6 billion.

China’s insurance regulatory agency also is considering offers to buy such hotels as the InterContintental in Chicago, Essex House in Manhattan, and Four Seasons hotels in Austin, Texas, and Jackson Hole, Wyoming.

The Chinese government may sell the hotels for less than Anbang paid due to slow revenue growth in the U.S. hotel industry.

The growth rate for revenue per available hotel room in the United States peaked at 8.2 percent in 2014 and has decelerated each year since then, rising just 3 percent last year, according to hotel industry research firm STR, which has forecast 2.7 percent growth this year.

Prosecutors in Shanghai said Friday they indicted the former chairman of Anbang, Wu Xiaohui, on charges of abusing his power and committing fraud in fundraising activities. [Wall Street Journal] – Mike Seemuth

Jorge Escobar

Miami-based commercial real estate investment firm Black Salmon Capital is part of a joint venture that bought an office building in Indianapolis for $70 million.

Black Salmon acquired BMO Plaza, which has about 440,000 square feet of interior space, by purchasing its former owner, a company called 135 N. Pennsylvania, LLC.

Black Salmon, led by CEO and managing partner Jorge Escobar, is part of TSG Group, a Miami-based group that plans to invest as much as $300 million in commercial real estate properties by 2019. Escobar owns half of TSG, formerly known as The Solutions Group.

BMO Plaza in Indianapolis

In November, TSG made its first acquistion, spending  $33 million for a 109,000-square-foot office building in San Francisco called the Offices at Public Market.

The Indianapolis acquisition continued Black Salmon’s strategy of “investing in prime commercial real estate properties throughout the U.S.,” Ryan D. Bailine, a shareholder in the Miami office of law firm Greenberg Traurig, said in a prepared statement.

Bailine led a team of real estate, tax and corporate attorneys at Greenberg Traurig that represented Black Salmon in the $70 million transaction.

The Greenberg Traurig team including shareholders Paul Berkowitz, Seth Entin, Jonathan Gelman, and Evan Kanter, and associate Travis Walker. – Mike Seemuth

Mark Pulte and 446 North Lake Way

Developer and luxury home builder Mark Pulte is struggling to win the town’s approval for designs of two houses he plans to build on waterfront sites in Palm Beach.

The town’s Architectural Commission twice has rejected the design Pulte proposed for a house he plans to build at 535 North County Road, and the commission has rejected his proposed design for a house at 446 North Lake Way five times.

Members of the commission have asked Pulte for a major revision of his proposed house design on North Lake Way since they first considered the first version in June of last year. Commissioners have complained that the proposed house is too large for the lot, which is about one acre, and the  contemporary design is too stark.

At the Feb. 28 meeting of the Architectural Commission, its chairman, Richard Sammon, said a revised design for the planned house on North Lake Way is moving in “the right direction” but still too large. The commissioners voted unanimously to review further revisions to the design at their March 28 meeting.

Pulte also encountered resistance to a revised house design for a two-acre lot at 535 North County Road, which he bought for $37 million in October from Russian billionaire Dmitry Rybolovlev, who carved the lot out of a larger estate he bought from President Donald Trump in 2008.

Bill Boyle, an architect working for Pulte, reduced the size of the proposed house on North County Road by 1,859 square feet and tried to make the design “warmer” by adding such materials as shell stone and mahogany to the design.

But Ann Vanneck, vice chairwoman of the Architectural Commission, said the proposed design of the house was inappropriate and resembled the look of a hotel. Another commissioner, Robert Garrison, complained that the proposed design would make “this thing … enormous.” The Architectural Commission voted 4-3 to review the house design at its meeting later this month. [Palm Beach Daily News] – Mike Seemuth

Aston Martin Residences rendering

Real estate developers put luxury brands on their buildings in other metropolitan areas, but nowhere is the practice more fashionable than in South Florida, where five branded condominiums are expected to open by 2021.

The large international segment of the condo market in South Florida is one reason why developers there are forming partnerships with luxury brands for automobiles and apparel.

Branding is especially important to international buyers in the Miami area, who often are more familiar with a condo project’s brand than its developer or its address, according to Jon Paul Perez, vice president of Related Group, the leading condo developer in South Florida.

The Miami Association of Realtors reported that foreign nationals bought 15,400 residences in Miami last year, a 41.3 percent increase from 10,900 residences in 2016.

The developer of a branded condominium usually pays the brand two percent to five percent of the proceeds when the sale of each condo unit is closed, according to Edgardo Defortuna, president and CEO of Fortune International Group.

Porsche Design Tower on Sunny Isles Beach is one of the best-known branded condominium developments in South Florida. The 60-story building has gained notoriety because of its automobile elevator, which shuttles condo owners and their vehicles between the street and parking spaces outside their condos.

Germany-based automaker Porsche entered a partnership with Dezer Development to put its brand on Porsche Design Tower. Of the building’s 132 condos, 126 have been sold since sales began in 2012, said Gil Dezer, president of Dezer Development.

British automaker Aston Martin and Argentina-based developer G&G Business Development entered a branding agreement for a 66-story condominium in downtown Miami called Aston Martin Residences, which is scheduled to open in 2021.

Other developers in South Florida are using fashion brands to attract buyers to such condo developments as Fendi Château Residences, a 12-story, 58-unit building in Surfside that opened in 2016.

Missoni Baia, a 57-story, 229-unit condominium scheduled for completion in the fall of 2020, is a project that developer OKO Group branded with the name of the Missoni fashion house.

Under construction in Sunny Isles Beach is a 56-story condo development called Residences by Armani/Casa. More than 75 percent of the units have been sold, and construction of the high-rise is scheduled for completion in the summer of 2019.

One of the buyers of units at Residences by Armani/Casa is Robert Thorne, chief executive officer and founder of The Wellness Habitat Co. of Miami. Thorne, who owns some Armani suits, told Mansion Global that he has confidence in his purchase of a $1.4 million condo at the development “just knowing that the brand is behind it.” [Mansion Global] – Mike Seemuth

Astor Park

Los Angeles-based TruAmerica Multifamily acquired a 368-unit rental housing complex near Orlando for $50 million.

TruAmerica paid about $135,000 per unit for the Astor Park rental complex in Winter Park, its seventh acquisition in Florida since the firm entered the state’s rental housing market nine months ago.

The new owner plans to spend $4 million on capital improvements at Astor Park, built in two phases from 1987 to 1999 with one-, two- and three-bedroom units.

TruAmerica will upgrade unit interiors, common areas and the exteriors of Astor Park, located at 4545 Willa Creek Drive in Winter Park, a northern suburb of Orlando.

Interior upgrades will include stone counter tops, new cabinet faces, vinyl plank flooring, tile backsplashes, and improved lighting and plumbing fixtures.

TruAmerica also will install new landscaping, repaint exteriors, and improve the property’s gym and swimming pool furnishings.

Founded as a joint venture between Robert Hart and The Guardian Life Insurance Company of America, TruAmerica manages a $7 billion portfolio of 33,000 rental housing units in Florida and eight other states. – Mike Seemuth

Clockwise from top left: Century 21 CEO Nick Bailey, Boston Real Estate Collaborative’s development with a roof top farm, Robert A.M. Stern Architects designed a 39-story building in Minneapolis, LA approved the Lake on Wilshire and JPMorgan is preparing to demolish its NYC home.

Houses are flipping at the highest level since 2006
From TRD NYC: More than 207,000 condominiums and single-family house were flipped in 2017 — the most since 2006 — a report from Attom Data Solutions found. The average 2017 flip generated a 50 percent gross return compared to 28 percent during the housing bubble of the 2000s, Bloomberg reported. [TRD]

REITS with female board members get higher average prices and total returns
Real estate investment trusts with an above average number of female board members outperformed REITs with no female members, a new study from Wells Fargo found. The study looked at 165 equity REITs from 2006 to 2017 and found that an average company had 15.5 percent female board members. REITs with higher than average number of women had share prices about 2 percent higher, the Wall Street Journal reported. [TRD]

Number of ultra-rich growing around the world
For anyone selling luxury real estate, there are now more ultra-rich people to buy it. According to Knight Frank’s 2018 wealth report, there are 2.5 million people with $5 million or more in assets, 9 percent more than in 2016 and 20 percent more than five years ago. New York has the highest concentration of high-net-worth individuals in the U.S., followed by Los Angeles, Chicago and San Francisco. [TRD]

Century 21 CEO wants to double its business by 2022
Nick Bailey, the new CEO of Century 21, has plans for his company to make 832,000 transactions annually by 2022 — double the 417,000 it had in 2017. The company has overhauled its branding and is focusing on improving consumers’ experience, Bailey told Inman. Century 21 is a subsidiary of Realogy, the $6.1 billion parent company of Corcoran Group and Citi Habitats. [TRD]


Here’s how you demolish a 52-story building in the middle of NYC
JPMorgan Chase plans to build a new, larger home on Park Avenue, but first it has to demolish its current 52-story home. In what will be the largest voluntary demolition in the world, contractors will need to remove harmful substances, enclose the building in netting, and then disassemble the building from the top down. [TRD]

Despite securing over 200 buyers, Miami condo towers switch to rentals
Despite having secured more than 200 buyers, University Bridge Residences, the 20-story tower near Florida International University, will become a rental building. University Developments cited a strong rental market and the new tax law as reasons for making the switch. Buyers will get their deposits back, and the building is expected to open for the 2020-to-2021 academic year. [TRD]

LA approves major Westlake development with provisions for affordable units
The Los Angeles City Council approved a major mixed-use development near Westlake with conditions that the developer donate more than $2 million to community organizations and that the project includes a minimum of 10 affordable apartments. The Lake on Wilshire will include a 41-story apartment tower, a 14-story hotel and a performing arts center. The project is being developed by the Walter and Aesha Jayasinghe family trust. [TRD]

Rooftop farm would cap proposed Boston residential development
Boston Real Estate Collaborative is proposing a unique amenity for its 54-unit residential development on North Beacon Street: a rooftop farm. Designed by Francke | French Architects, the farm would support a “hyper-local” agricultural program. Plans submitted to the Boston Planning & Development Agency include 16 condos, 38 apartments and an underground parking garage. [Boston Herald]

A.M. Stern-designed 39-story condo tower planned for Minneapolis waterfront
Local developer Luigi Bernardi and Ryan Companies are proposing to build a 39-story condo tower along the Mississippi River in Minneapolis. Robert A.M. Stern Architects designed the 101-unit building, which has been dubbed “Eleven.” The developers introduced their plans to the Downtown Minneapolis Neighborhood Association’s land-use committee and they hope to break ground before the end of the year. [Star Tribune]

Naples Beach Hotel & Golf Club (Credit: PGA)

A Phoenix-based group agreed to redevelop and acquire the family-owned Naples Beach Hotel & Golf Club, a 125-acre landmark in Naples.

The Watkins family will continue to operate the hotel and golf club as it works with Phoenix-based Athens Group on the redevelopment until 2021, after which Athens Group would acquire the property.

While details of the redevelopment are still being determined, the project will include adding residences to the property at 851 Gulf Shore Boulevard in Naples along the Gulf of Mexico.

The Watkins family has owned and operated the Naples Beach Hotel & Golf Club, the oldest resort in Naples, for more than 70 years.

Naples Mayor Bill Barnett hailed the planned redevelopment, which will preserve the resort’s golf course, allaying concerns among some Naples residents that apartments would replace the 18-hole course.

Opened in 1929, it is the oldest 18-hole golf course in Naples. Golfing legend Jack Nicklaus and course architect John Sanford redesigned it in 2016. [Naples Daily News] – Mike Seemuth

iPic theater seating

An iPic movie theater with a restaurant and bar will be part of a mixed-use development on Federal Highway near downtown Fort Lauderdale.

The luxury movie theater will have screens in eight auditoriums, each with capacity for 40 to 60 guests, who will be have fully reclining leather seats, plus pillows and blankets upon request.

The theater will operate together with a restaurant called City Perch Kitchen + Bar, designed by Sherry Yard, chief operating officer of iPic Entertainment.

The theater and restaurant will be part of a mixed-use development at 601 North Federal Highway.

The development, called 601 N Federal, will have retail and office space totaling about 150,000 square feet and as many as 180 apartments.

Barron Real Estate, the developer of 601 N Federal, expects to finish construction of the mixed-use development in the fall of 2020.

Boca Raton-based iPic Entertainment now operates movie theaters with 121 screens in Florida and eight other states. – Mike Seemuth

Armando Codina and the site of Beacon Logistics Park in Hialeah

Coral Gables-based Codina Partners landed $54.3 million of bank financing for its development of an industrial park on 72.2 acres in Hialeah.

Codina Partners, led by developer Armando Codina, got a $23.1 million acquisition and development loan and a $33 million revolving line of credit to fund construction from Weston-based Florida Community Bank.

The Coral Gables-based company assembled the development site at 9100 West 40th Avenue by acquiring 55 acres in 2015 for $28.3 million and the other 17.2 acres in January for $10 million.

Codina has said the planned industrial park, called Beacon Logistics Park, would have industrial buildings with as much as 1.5 million square feet of space.

Buildings that range in size from 145,000 square feet to 230,000 square feet are the centerpiece of the site plan for Beacon Logistics Park.

The development marks Codina’s return to the South Florida industrial market after more than a decade.

From the mid-1980s to 2006, Codina developed more than 20 million square feet of industrial space in the Miami area including Beacon Centre, Beacon Industrial Park and Dolphin Commerce Center. [South Florida Business Journal] – Mike Seemuth

Graham Penn

The Miami Gardens City Council will consider an application to build 401 homes just west of State Road 7.

The city council will consider the application from Arlington, Virginia-based Graham Holdings Co. on Wednesday. Miami attorney Graham Penn is representing Graham Holdings in the application process.

A subsidiary of Graham Holdings paid $5 million in 2014 for the proposed 37-acre development site at 502 Northwest 207 Street.

A television tower is the only structure on the site acquired by Graham Holdings, which formerly owned South Florida television station WPLG-Channel 10 as well as the Washington Post daily newspaper.

Graham Holdings applied to build 456 homes on the Miami Gardens site in 2016 and has since reduced the density of its proposed development.

Proposed zoning for the site would allow construction of 113 townhouses there plus 288 units of multi-family housing, including a minimum of 120 units that would be sold as condos.  [South Florida Business Journal] – Mike Seemuth

Las Olas Square in downtown Fort Lauderdale, formerly known as SunTrust Center

Miami-based Steelbridge Capital signed an operator of co-working office space and a national restaurant chain as tenants of Las Olas Square, a two-building office complex in downtown Fort Lauderdale.

The parent company of executive office provider Regus will open a 32,000-square-foot co-working space at the property under the company’s Spaces brand. Two other Spaces locations are planned in downtown Miami and Miami’s Wynwood area.

Del Frisco’s Grille will open its first chophouse-style restaurant in South Florida at Las Olas Square. Tampa is Del Frisco’s only current location in Florida.

Steelbridge bought the two-building property at 501 and 515 East Las Olas Boulevard from SunTrust Banks Inc. for about $90 million in 2016.

Steelbridge is now overseeing a $10 million project to remodel the property, formerly known as SunTrust Center, that the company expects to complete by early next year.

Gavin Campbell, a managing principal of Steelbridge, told the Sun-Sentinel in an email that the company wants its property on East Las Olas Boulevard “to become a new town square for the Las Olas community.” [Sun-Sentinel] – Mike Seemuth

Edmund Ansin (Credit: Boston Globe)

The family of billionaire Edmund Ansin, which owns South Florida television station WSVN-Channel 7, bought 28.7 acres in Miramar from retailer Walmart for $14 million.

Walmart sold the vacant land at the northeast corner of Flamingo Road and Miramar Parkway to the Ansin Family Trust, headed by Andrew Ansin, the son of Edmund Ansin who runs the Miramar Park of Commerce, a business park with five million square feet of industrial space.

The deed to the 28.7-acre site includes a restriction that prevents the Ansin family from leasing the land to a retail chain similar to Walmart or Sam’s Club or to an online retailer that would build a fulfillment center on the site.

The Ansins, who own WSVN’s parent company Sunbeam Television, have no immediate plans for the property, a representative of the family told the South Florida Business Journal.

Walmart, which bought the property in 2005 for $10.22 million, had planned to build 253,000 square feet of commercial space there with a partner called Master Development, but the project never advanced to the construction phase. [South Florida Business Journal] – Mike Seemuth

A Claire’s store in Tampa (Credit:

Claire’s Stores Inc. is preparing a Chapter 11 bankruptcy filing as the retailer of costume jewelry and ear-piercing services looks beyond malls for high-traffic store locations.

Filing a Chapter 11 bankruptcy would allow Claire’s to continue operating with protection from creditors while it tries to resolve its debt problems.

Claire’s is struggling to repay $2 billion of debt that Apollo Global Management LLC loaded onto the retailer’s balance sheet when Apollo completed a leveraged takeover of Claire’s in 2007.

An interest payment of $60 million is due Tuesday, and more than $1.4 billion of the $2 billion debt will mature next year.

Many of the Claire’s stores are in shopping malls, where the number of shoppers has declined due to competition from online retailers.

Claire’s has reached agreements with the CVS drugstore chain and supermarket operator Giant Eagle to put some of its outlets on the premises of the drugstores and supermarkets, where the number of potential customers may be greater than the number at shopping malls.

According to its website, Claire’s has locations at malls throughout South Florida including Aventura Mall, Dadeland Mall, Sawgrass Mills, the Coral Ridge Mall, Boynton Beach Mall and the Town Center at Boca Raton.

Hoffman Estates, Illinois-based Claire’s had its headquarters in South Florida before Apollo bought the retailer from the family of Rowland Schaefer in 2007 for $3.1 billion.

Claire’s now has more than 3,000 stores and says it ranks first worldwide in sales of ear-piercing services.

Greg Portell, lead partner of the retail practice at the A.T. Kearney consulting firm, told Bloomberg that Claire’s is capable of profitable operations but “they can’t service their debt.” [Bloomberg] – Mike Seemuth

The Real Deal won two Best in Business Awards from the Society of American Business Editors and Writers, the organization announced Thursday.

TRD received the general excellence award for an industry publication for series of stories published last year. These included Konrad Putzier’s investigation into an alleged co-working Ponzi scheme involving BarWorks, Putzier’s story revealing that George Soros was the secret financier behind a Kushner-backed real estate finance startup, as well as his and Mark Maurer’s look into the different tricks employed by retail landlords to increase rent rolls. There was also Katherine Clarke and Will Parker’s in-depth profile on Brad Zackson, the real estate fixer for Donald Trump’s embattled former campaign manager, Paul Manafort.

The committee at SABEW said TRD‘s reporting “set a high standard for what is expected.”

Also included was “Real estate’s diversity problem,” by Kathryn Brenzel, Rich Bockmann and Elizabeth Kim, which explored the challenges faced by minorities in what is a traditionally male-dominated industry. That story also won in the feature category for small publications.

In announcing the win, SABEW called the feature “a comprehensive and compelling narrative” that exposed discriminatory practices in a clubby, male-dominated industry. — TRD

Steve Wynn (Credit: Getty Images)

Wynn Resorts has settled a years-long dispute with a Japanese firm that at one point owned half of the casino company. The agreement also removes a barrier that could help hasten the exit of its largest shareholder and founder, Steve Wynn, who faces numerous claims of sexual harassment.

The deal is a $2.6 billion payout to Aruze USA, a subsidiary of Universal Entertainment, the Wall Street Journal reported. It comes with an agreement by Aruze to give up any claims in what amounts to a complex stockholder agreement. That pact limited the parties involved, Wynn, his ex-wife Elaine Wynn, and Aruze in how much control they held over their shares, the Journal reported.

It prevented them from selling without the permission of the other parties, so Aruze’s exit essentially loosens the legal knot tying up shares.

The agreement was meant to allow Wynn to retain control of the company he founded. Litigation began in 2012 when Wynn forced Universal to sell its shares at a 30 percent discount after claiming its founder, Kazuo Okada, had legal issues abroad. Elaine Wynn joined the suit to remove restrictions on her 9 percent stake in the company.

Following a bombshell report of Wynn’s decades-long pattern of sexual harassment of female staff earlier this year, Wynn resigned last month as chairman and chief executive, and has given up any opposition to his ex-wife’s sale of shares.

More than 100 women came forward in late January to accuse Wynn of sexual misconduct, which followed a Journal investigation. That story detailed a $7.5 million payout to a manicurist who Wynn allegedly forced to have sex with him, uncovered in court documents related to Elaine Wynn’s pursuit to sell her shares of the company.

Neither Wynn nor Okada are party to the agreement between Wynn Resorts and Aruze, because Okada was pushed out last year over separate allegations of fraud. [WSJ] — Dennis Lynch 

Homes in Boulder, CO

Flipping houses was more popular in the U.S. last year than at any point since the now infamous real estate bubble of the 2000s.

A report from Attom Data Solutions found that investors flipped more than 207,000 condominiums and single-family homes in 2017, the most since 2006, according to Bloomberg. More than 138,000 investors flipped homes last year, which was the most since 2007.

This decade’s home flippers seem to be more cautious than their counterparts from 2006, with the average 2017 flip generating 50 percent gross returns as opposed to 28 percent in 2006.

However, there are still some red flags in local markets, with flippers in Boulder, Austin and Santa Barbara all earning less than 25 percent on gross returns. [Bloomberg]Eddie Small

Shoppes of Boynton and Northbridge’s Adam Lazier (Credit: Atlantic Retail and Northbridge)

Shopping centers continue to sell in South Florida.

Toronto-based Northbridge Investment Management just paid $27.8 million for The Shoppes of Boynton, a 151,830-square-foot retail center in Boynton Beach, property records show.

The center at 2234 North Congress Avenue traded hands for about $180 per square foot. The seller, Boynton FCA LLC, is an affiliate of Charlotte, North Carolina-based FCA Partners.

Records show the Shoppes of Boynton last sold for $19.4 million in 2012. It’s anchored by a Ross Dress for Less, with other tenants including Tuesday Morning, FedEx and Miller’s Ale House.

Just this week, Publix dropped $37.3 million for two shopping centers it anchors in Miami-Dade County. Last year, some of the priciest retail deals in South Florida were grocery-anchored retail centers, with the exception of the $283 million sale of mixed-use retail center 1111 Lincoln in Miami Beach.

Over the summer Northbridge paid $33.2 million for a shopping center in West Boca Raton and $16.5 million for the Kendall Pointe shopping center in Miami-Dade. The Canadian firm invests in large-scale industrial, retail and office properties, according to its website.

Downtown Miami (Credit: PxHere)

Office and apartment development in Miami’s urban core is outpacing other such areas in 11 major U.S. markets, according to recent data compiled by CoStar Group.

Miami’s urban core, which includes downtown, Brickell, Edgewater, Midtown Miami and Wynwood, accounted for 40 percent of new office construction in the city since 2010, which is higher than Boston, Chicago, Atlanta, Houston, Washington, D.C., San Francisco, Phoenix, Los Angeles, Dallas-Fort Worth and Philadelphia. During the same period, construction of new apartments ballooned by 66 percent in Miami’s urban core, far ahead of new construction growth in Chicago, New York City, Los Angeles, Washington, D.C. and six other major cities, according to the data.

CoStar senior market analyst Ben Braley presented the findings during the annual urban core report event hosted by the Commercial Industrial Association of South Florida this week. The event featured urban developers Joe Furst, Alex Karakhanian and Avra Jain, commercial broker Tony Arellano and investor Jonathan More.

Braley told the audience gathered in a conference room at the law firm Bilzin Sumberg that construction growth was largely fueled by more people and businesses moving into Miami’s urban core. Between 2010 and 2017, population growth soared by 43 percent in downtown Miami and surrounding neighborhoods compared to an 8 percent citywide population growth.

Arrellano, who recently left Metro 1 to form DWNTWN Realty Advisors with Devlin Marinoff, said the CoStar statistics shows development in downtown Miami and surrounding neighborhoods is being driven by a critical mass of people moving in. “That is really the trend we are seeing,” Arellano said. “All the reports and data confirms it. The densification of Miami will create enormous wealth and create an amazing sense of place.”

Jain, who is involved in developing projects along the Miami River, Little River, Overtown and the MiMo District, said her partners and clients remain positive about future development in the city. “We are all seeing interesting inquiries from new businesses seeking to expand space,” she said. “I think with the tax law changes, there will be more people moving here.”

Other highlights from the CoStar presentation include:

From the fourth quarter of 2010 to the fourth quarter of 2017, Miami urban core office rent growth more than 40 percent, outperforming the current national average for urban cores.

During the same period, office sales per square foot grew from an average of $120 a square foot to $500 a square foot.

The pricing for multifamily developments also accelerated. In the fourth quarter 2010, the sales price per unit was $100,000. Today, it is more than $400,000.

(Credit: Spokane Regional Transportation Council)

Wynwood may be the Miami neighborhood with the most foot traffic, but it is considered far from pedestrian-friendly. Two recently approved city measures championed by Wynwood developers and property owners aim to fix that conundrum.

The Miami City Commission this week approved a contract with Arquitectonica GEO to develop a streetscape and tree canopy master plan for Wynwood, as well as the hiring of Local Office Landscape and Urban Design, LLC to convert a stretch of Northwest Third Avenue into a woonerf, a street which is designed with devices that slow down traffic.

The Wynwood Business Improvement District, which represents landlords and tenants in the artsy neighborhood, has advocated for both projects to accompany a zoning overlay approved in 2015 that gives developers more flexibility to convert roughly 273 acres of industrial properties into commercial and residential buildings. At the same time, the Wynwood Neighborhood Revitalization District, or NRD, provides owners of existing warehouses with incentives, such as the transferring of development rights to other projects, to maintain and improve their buildings.

“As part of our NRD, we had two broader initiatives we wanted to accomplish,” said Joe Furst, managing director of Goldman Properties, who is the Wynwood BID’s chairman. “One is the street master plan so that all our streets, sidewalks and street trees made sense and worked together. And the other is our large impact project along Third Avenue, the woonerf.”

Furst said the city and the BID are aiming to complete the woonerf within two years and implement the master plan in phases over a series of years.

According to the scope of work, Arquitectonica would receive a maximum fee of $615,140 to work with Wynwood property owners and other stakeholders to develop a blueprint for a more pedestrian and bicycle friendly neighborhood.

“There is a dramatic need for green and open space areas along with an enhancement to the tree canopy for the benefit of its current and future residents and visitors,” the scope of work states.

Arquitectonica, among other tasks, has to identify strategic tree species and planting locations at Wynwood gateway streets and thoroughfares, develop guidelines for public landscaping on rights-of-way that interact with art on commercial buildings and find ways to improve the pedestrian experience with appropriate street furniture and other streetscape features.

Local Office Landscape is getting a $342,900 contract to transform Northwest Third Avenue between 25th and 29th streets into a woonerf, a Dutch version of a pedestrian-primary, bicycle friendly “shared” street.

The scope of work calls for installing trees, landscaping, street furniture, sculptures, exercise equipment and artistic wayfinding devices along the proposed woonerf. Local Office Landscape must also develop the woonerf so that it encourages interactions with surrounding projects such as Wynwood Walls and Wynwood Arcade, as well as ensuring safe and continuous pedestrian and bicycle passage along the entire length of the shared street.

Both the master plan and the woonerf design will be subject to final approval by the BID, the planning and zoning appeals board and the city commission.

Ramsey and Alexander Akel (Credit: Akel Homes, Pexels)

After settling contentious litigation among family members, Ramsey Akel has launched a new Delray Beach-based private real estate firm, Akel Homes, with his son Alex.

The new firm is based at a 2,000-square-foot space in the BankUnited Building at 5300 West Atlantic Avenue.

Ramsey Akel was formerly part of the Boynton Beach-based homebuilder Ansca Homes, along with his father-in-law and brother-in-law. The Akel family had overseen the acquisition, construction and sales of more than 4,000 homes in South Florida since 1986. But after Ramsey Akel’s father-in-law retired in 2008, the brothers-in-law disputed the direction of the company, resulting in litigation.

In 2017, Ramsey Akel settled the legal battle, according to a spokesperson. “All parties involved were able to positively resolve all of their disputes,” the spokesperson said via email.

Now the father-son duo is close to breaking ground on Villamar at Toscana Isles, Akel Homes’ first single-family community in Palm Beach County, Alex Akel said.

The community will feature 208 one- and two-story homes with lakes views, ranging in size from 1,800 square feet to 3,000 square feet. Prices have not yet been determined, but sales are set to launch within the next three months and will be handled in-house, Alex Akel said.

Akel Homes also recently bought a 12-acre site on the southeast corner of Hypoluxo Road and Lyons Road, which is in the permitting process.

The company currently has six employees and plans to add more in the near future. Akel said the firm will focus on single-family home communities, townhome and multifamily communities as well as boutique condo buildings.

“It’s tough out there,” Alex Akel said, citing rising construction costs and lack of developable land, “but we’re up for the challenge.”

Adam Neumann

Adam Neumann

When IBM inked a deal to lease every desk at WeWork’s 88 University Place co-working space last year, Adam Neumann had more than one reason to celebrate.

Neumann and top WeWork brass had been working hard to win over corporate clients, and IBM was the first reported case of a company agreeing to take over an entire location. But few knew that Neumann also had a more direct financial stake in the agreement: he personally owns part of the property, and the deal with the technology giant guaranteed a steady stream of dollars into his pockets.

Property records show that in July 2015, fashion designer Elie Tahari bought the 11-story building near Union Square for $70 million. Sources familiar with the deal said Neumann quietly partnered with Tahari on the acquisition, and owns a substantial stake in the building. Neumann, sources said, owns the stake privately, not through WeWork.

After Tahari and Neumann agreed to buy the building, WeWork signed a forward lease to occupy eight floors, which it now manages on behalf of IBM.

88 University Place

The office building is just one of several private investments Neumann has made since co-founding the co-working company in 2010. He has acquired stakes in office buildings, startups, a development site and several luxury properties. Sources describe him as a passionate investor who likes to seize opportunities wherever he sees them. And from his perch at the top of a company last valued at $20 billion, he sees many.

“He’s a hustler before he’s anything else,” said one source close to the company, speaking on condition of anonymity.

But 88 University also shows how these personal investments can create complications. Neumann owns a stake in both the tenant and the landlord — a potential conflict of interest.

“I would be furious,” said one unconnected venture investor who spoke on condition of anonymity, citing Neumann’s clout in the startup world.

WeWork declined to comment on 88 University. Asked how the company deals with potential conflicts of interest, a spokesperson said: “WeWork has a review process in place for related party transactions and those transactions are disclosed to investors.” A source close to WeWork claimed Neumann was not involved in negotiating the lease, and claims the lease’s terms are in line with WeWork’s leases at other buildings.

Going in blind

Woolworth Building (Credit: Williams New York)

WeWork was barely two years old when Neumann made his first big real estate investment. In early 2012, Neumann and an early investor in WeWork, Waterbridge Capital’s Joel Schreiber, toured the Woolworth Building in Lower Manhattan, eyeing it as a possible co-working location.

WeWork never signed a lease for the property. But Neumann saw the tower’s potential for a condominium conversion and approached its owners, Steve Witkoff and Ruby Schron, with an offer to buy the upper 25 floors. They said yes, and Neumann signed a contract to buy the floors for $68 million.

“I don’t know what possessed him to think he could do it, but he did it,” Ken Horn, founder of Alchemy Properties, said in 2013. “He’s the kind of guy who sets his mind on something and moves forward on it.”

There were just two problems: Neumann didn’t have any money, and he didn’t have any development experience. Mark Lapidus, who later became WeWork’s head of real estate, remembered meeting Neumann at a wedding around that time.

“So, he says, ‘I just went hard on a building, you’ve probably heard about it, the Woolworth Building in New York […] Can you help me?,’” Lapidus recalled in an interview with Commercial Observer. “I say, ‘What do you mean?’ and he says, ‘Well, I have no equity, I have no debt and I’m trying to negotiate these condo docs. I have no idea what I’m doing, I have no development partner and I’m kind of working on this business called WeWork that I have four locations for, and I’m really focused on, but I think this whole Woolworth Building could be amazing.’”

Four months later, Neumann brought on Horn as a majority investor and co-developer. In September 2017, a penthouse at the condo conversion hit the market for $110 million, but sales at the building are said to be sluggish, and some observers are skeptical whether the project can turn a profit.

Crawl, walk, run

Not long after the Woolworth deal, Neumann made his first major office investment.

175 Varick Street

In November 2012, Extell Development sold its leasehold on the 170,000-square-foot office building 175 Varick Street in Hudson Square for $32.75 million. The buyer was a partnership between investment firm AEW Capital Management, which was the equity behind the deal, and an entity called WeWork 175 Promoter LLC, which served as the ownership’s manager. The entity was tied to a group of WeWork executives including Neumann, Lapidus and CFO Ariel Tiger, property records show. According to a source familiar with the deal, the executives negotiated a so-called promote interest: WeWork was already the anchor tenant (it had signed a lease a year earlier), and if AEW ended up selling it for a profit, the LLC would get a share of the spoils. And that’s how it played out. In August 2014, AEW sold the leasehold to Tishman Speyer for $58.7 million, a nearly 80 percent premium over the purchase price. AEW’s Marc Davidson, who worked on the deal, did not respond to a request for comment.

One possible explanation for why Neumann made personal real estate investments during WeWork’s early years is that the co-working company didn’t initially see itself as a landlord. The idea was to pursue an “asset light” strategy popular among VC investors, sources said. Buying buildings may be profitable in the long run, but it ties up a lot of money that could be otherwise spent on opening new locations, hiring staff, investing in new technology or acquiring competitors.

That strategy gradually changed. In early 2017 WeWork and private equity firm Rhone Group began raising money for a joint real estate investment fund, which later shelled out $850 million to buy the Lord & Taylor flagship building on Fifth Avenue.

Neumann also looks to be involved in a Chelsea development project. In November, an entity called Chelsea Realty Capital LLC took over a $65 million mortgage on a development assemblage at 123131 West 23rd Street and 116120 West 24th Street. The LLC was registered to WeWork’s headquarters and Adam Neumann signed the loan document. A source close to WeWork told TRD at the time that the project was Neumann’s personal investment.

Jeffrey Dagowitz had put together the development site over several years, and a source told TRD in early 2017 that it was rumored to be the future site of a WeLive co-living tower. Dagowitz did not respond to a request for comment.

  “I don’t know what possessed him to think he could do it, but he did it.He’s the kind of guy who sets his mind on something and moves forward on it.” 

When making acquisitions, Neumann tends to bypass brokers and goes straight to owners, according to one agent who learned this firsthand.

Last year, a broker shopping around a Manhattan office property received a call from the owner.

“There’s a guy here with long hair who wants to buy the building and says he owns WeWork,” the owner said, according to the broker, who spoke on condition that their name and the address of the building not be mentioned. When the owner told Neumann to speak to the broker, WeWork’s CEO responded that he “crushes brokers’ balls.”

Neumann met the broker and made a verbal offer that was about 30 percent below the highest bid. He didn’t get the building. The broker said Neumann never explicitly said whether he planned to buy the property himself, or through WeWork.


Linden Farms

As investors pumped more and more money into WeWork and Neumann’s net worth rose, he started buying luxury properties for himself. In 2012, he bought a home in the Hamptons for $1.715 million. In 2014, he paid $10.5 million for a six-bedroom townhouse in Greenwich Village. And last year he bought four apartments in a single building on Irving Place in Gramercy for $35 million. He also owns a 60-acre estate in Pound Ridge, Westchester, which he bought in 2016 for $15 million. The farm will reportedly host classes for WeWork’s new grade school for entrepreneurial kids, WeGrow.

Commercial real estate aside, Neumann has also invested in startups. He owns stakes in the Panama-based hostel company Selina, audio streaming company Tunity and map tool company Pins.

And according to the New York Post, WeWork’s “founders” invested in retail tech company Outernets. Reached by email, Outernets’ Omer Golan would not confirm whether Neumann is an investor.

Forbes currently estimates Neumann’s net worth at $2.5 billion, and he reportedly sold some of his stake in WeWork for $100 million.

It’s not unusual for startup CEOs to make personal investments. Amazon’s Jeff Bezos invested $250,000 in Google in 1998, for example, a stake that would be worth billions today if he had kept it.

“It’s a thing that has been common in Silicon Valley for years and has migrated to New York,” said Zach Aarons, a co-founder of the real estate tech accelerator Metaprop NYC. The key, he said, is disclosing all investments and having a third party vet them to prevent potential conflicts. “There’s nothing necessarily bad about it,” he said. “It’s just you need to make sure your organization has these kinds of processes and protocols in place.”

Jon Bon Jovi (Credit: Wikimedia Commons)

Jon Bon Jovi is livin’ in a Palm Beach home.

The singer-songwriter, producer and actor paid $10 million for the oceanfront home at 230 North Ocean Boulevard. Property records reveal Judith Goldfarb sold the five-bedroom, 6,800-square-foot house to 230 North Ocean LLC, an entity managed by attorney Charles Sussman. At least two of Bon Jovi’s albums credit Sussman and his company for business-management services, according to the Palm Beach Daily News.

Christian Angle of Christian Angle Real Estate represented the buyer, and Lawrence Moens of Lawrence A. Moens Associates was the listing agent.

The home, built in 1985, hit the market for just under $14 million and was reduced to about $10.9 million. The property includes a pool, two-car garage, fireplace and wet bar, library and dining room.

Goldfarb owned the house with her late husband, businessman Gene Goldfarb. They paid $2.2 million for the property in 1991.

Bon Jovi, who reportedly also owns a home in Boca Raton, was worth an estimated $410 million in 2016, according to Forbes. [Palm Beach Daily News] – Katherine Kallergis

It’s official: Despite widespread fears to the contrary, the IRS has clarified that last year’s big tax bill did not kill all interest deductions on home equity lines of credit (HELOCs) and equity loans.

In a policy statement, the IRS said that it has received “many questions … from taxpayers and tax professionals” about HELOCs and equity loans in the wake of the Tax Cut and Jobs Act of 2017, which passed in December. That legislation eliminated a section of the federal tax code authorizing interest write-offs on “home equity indebtedness” from 2018 through 2025. But as noted in this column in January, the law did not curtail deductions on all HELOC and equity loan interest payments. It depends on how you use the money you borrow.

Taxpayers can “often still deduct interest on a home equity loan, home equity line of credit or second mortgage, regardless of how the loan is labeled,” said the IRS, provided the borrowed funds are used to “buy, build or substantially improve the taxpayer’s home that secures the loan” and the total debt on the house does not exceed statutory limits. The amount of the first mortgage on the property, combined with the home equity or HELOC debt, cannot exceed $750,000, the newly revised limit for mortgage interest deductions by taxpayers filing joint returns; married owners filing separately have a new ceiling of $375,000. Previously, the limits were $1 million and $500,000.

So what does all this mean in practical terms? Here’s a quick example. Say you and your spouse own a $500,000 house and have a $250,000 first mortgage with an interest rate in the mid-3-percent range. You want to put on a family room addition estimated to cost $100,000 and do bathroom upgrades estimated to run another $50,000. However, you’d prefer not to give up your super low interest rate by refinancing into a new, larger first mortgage. Another option, now fully sanctioned by the IRS: Take out a $150,000 HELOC that will permit you to draw down periodic amounts to pay contractors as they complete scheduled construction benchmarks, leaving your first mortgage intact.

Since 100 percent of your HELOC dollars are to be used to substantially improve your home — and the combined debt load of $400,000 ($250,000 plus $150,000) is well below the statutory limit and doesn’t exceed the value of your home — you should be able to write off all the interest on your HELOC.

In its policy statement, the IRS offered examples of what you cannot do with your HELOC or home equity loan cash if you want to write off the interest. At the top: paying off credit card bills and other personal debts. This is potentially a big deal for some owners because, in past years, debt consolidation — rolling credit card balances and other high interest rate personal expenses together into a single, lower-cost loan — was an important financial strategy for many families. You can still do debt consolidations with equity loans — you just can’t write off the interest. Another major use that is now cut off from interest deductions when using home equity dollars: paying off student loans.

Though the IRS didn’t specify them, other once-popular uses for equity cash that no longer will qualify for write-offs are auto purchases, vacation travel expenses and buying home furnishings. All these were commonplace during the heyday home equity borrowing binge years of 2004-2006, just before the market came tumbling down.

Some good news: You don’t have to spend 100 percent of your HELOC cash on home improvements, according to Greg A. Rosica, a tax partner with Ernst & Young, the national accounting firm. You can buy or do other things with the money — you just can’t deduct the interest you pay on them. Quick example: Say you own a $500,000 house with a $300,000 first mortgage. You borrow $100,000 via a HELOC this year. You spend $80,000 on a new roof and master bath. You spend the other $20,000 on paying off student loans. Under IRS allocation rules, you can still write off interest on the $80,000 you spend on home improvements — four-fifths of the total. Interest payments on the student loans are not deductible.

Bottom line: Americans’ home equity just hit a record $14.1 trillion, according to the Federal Reserve. So there’s plenty of cushion that could be tapped for responsible purposes — whether homeowners choose to deduct the interest or not.

Rendering of Residence Inn by Marriott in Coconut Creek and Malcolm Butters (Morlin Hospitality Group and Butters Construction)

Miami-based Morlin Hospitality Group and its partner Butters Construction and Development just scored $15.5 million to build a Residence Inn by Marriott in Coconut Creek.

Property records show Mercantil Bank issued two construction loans to Coconut Creek Hotel M-R1 for $10.12 million loan and $5.38 million. The financing is for a 1.75-acre lot at 5730 North State Road 7. The joint venture paid $2.37 million for the land in 2017. Seth Fellman, who heads Morlin Hospitality Group, planned to break ground in 2016 but was delayed in permitting, according to the Sun Sentinel.

The $21 million development calls for a six-story hotel with 105 rooms equipped with kitchenettes, a pool, fitness center and laundry facilities.

Morlin also developed the 105-room Hampton Inn & Suites hotel next to the development site, at 5740 North State Road 7. That hotel opened in 2014.

Coconut Creek-based Butters is also partnering with the Bristol Group on the University Place office building in Coral Springs.

Rendering of Palazzo Della Luna

Fisher Island developer Heinrich von Hanau is ready for the next one.

His company is launching sales for Palazzo Della Luna, a luxury condo building under construction next to Palazzo del Sol. Prices start at $6.5 million and go up to $40 million.

PDS Development also secured a $90 million construction loan for the 10-story, 50-unit building in January, and it expects to complete the project in the summer of 2019, according to a press release. Mack Real Estate Credit Strategies provided the financing.

Dora Puig, broker and owner of Luxe Living Realty, is handling sales of Palazzo Della Luna. Units will range from 3,724 square feet to 10,194 square feet with three to seven bedrooms. Puig also handled sales of the building’s sister project, which PDS completed in 2016.

Della Luna will feature interiors by Champalimaud Design and architecture by Kobi Karp. Amenities will include sunrise and sunset pools, cabanas, a beauty salon, treatment and massage suites, a media room, children’s play room, business center and fitness center. Enzo Enea will handle landscaping, connecting both buildings with outdoor tea gardens, a croquet lawn, bocce ball court and yoga lawn.

Buyers at Palazzo del Sol, one of three new developments on the private island over the past decade, included former Formula One driver Enrique Bernoldi, Hasbro billionaire Alan Hassenfeld, attorney Jim Ferraro, Azerbaijani billionaire Aras Agalarov and Yard House founder and CEO Steele Platt.

Von Hanau is not the only developer to launch during a stagnant time in the condo market. Earlier this week, Vlad Doronin’s OKO Group launched sales for Una, a luxury condo tower planned for Brickell.

From left: Hiten Samtani, Kacy Keys, Tom Wolf, Tami Hardee, Steve Fifield and Jeffrey Cooper

It’s no secret that Los Angeles has a serious shortage of affordable housing. Gubernatorial candidates are pledging a dramatic increase in new housing and Mayor Eric Garcetti is claiming state Senate bills don’t do enough.

In the Westside, home prices have skyrocketed amid low supply. Proximity to the beach has always helped.

The residential real estate market took center stage at The Real Deal’s Westside forum on Wednesday at the Water Garden in Santa Monica, where experts in a variety of industries offered insight on existing conditions and what the future may bring.

“There’s a misguided impression that we have an affordable problem,” said one of the panelists, Fifield Companies’ founder and CEO Steven Fifield. “We actually have more of a workforce housing problem.” Fifield said that Angelenos at the top and the low end of job wage-earning scale have housing, but those in the middle are struggling to find places to live.

Residential brokerage owner Tami Pardee, the panel’s residential expert, said there has been an increase in the number of people sharing bedrooms so they can afford living in Venice. Her clients, many who are Silicon Beach techies who work at Snapchat and Google, aren’t exactly low-wage earners, either.

“There’s gotta be some changes made on a public level,” she said.

Tom Wolf, an executive at Lowe Enterprises, said the city’s building regulations, particularly regarding density, need to be addressed. “We need a global change.” In 2016, voters did approve Measure JJJ, which allows for higher density residential constructions near transit stations and those in which the developer includes affordable units.

Culver City Mayor Jeffrey Cooper, meanwhile, was on the hot seat. Cooper, who is about a month from ending his second term, agreed that Westside has a housing problem, but acknowledged his “NIMBY-istique” reservations about building vertically on his home turf.

“Culver City was a blue collar city,” Cooper said. “We understand the needs of people moving in, but [they’re] very different than they were 30 years ago.”

Those people are now increasingly tech-oriented. The Westside city has attracted the likes of Apple and Amazon in recent months, prompting Hiten Samtani, TRD’s digital editorial director and panel moderator, to nickname Culver City a “tech Mecca.” Cooper, relishing that name, requested to “sit on that” for a minute.

“Tech is integrating into so many different fields that I don’t see it fading out,” Cooper said. “Tech itself is here to stay.”

But tech is not the answer for everyone. Seritage Growth Properties’ Kacy Keys said she’s not actively seeking a tech tenant for her firm’s adaptive reuse project at the historic Sears on Colorado Avenue in Santa Monica.

“One of the challenges with tech tenants is credit,” Keys said. “Whether it’s a WeWork or Riot Games, establishing credit in order to make that lease happen for 10 years is an important facet of it.”

On the residential side, credit doesn’t seem to be a problem for “millennial techies who want to live by the beach,” Pardee said. But their interests extend further than a home with a good view, she said. Millennials are all about the experience, and are increasingly ditching the “white modern boxes” for something with more soul, Pardee added. Now, there is something called a “Love and Inspiration Room,” or “LAIR” for short.

“There used to be a man cave,” Pardee said. “But women wanted a room. And guess who’s making the decision in a marriage?”

From left: Raymond Bolduc, Dennis Carvajal, Marisela Cisneros, Mirce Curkoski, Gabriela Dajer, Guillermo de la Paz, Mayi de la Vega, Claudia Fernandez, Barbara Lamar, Maria Melendez, Vanessa Stabile, Jorge Uribe

One Sotheby’s International Realty opened its new headquarters in the Miami Design District.

The brokerage announced the new office at its 10th annual summit, where president Daniel de la Vega also released the firm’s top producers for 2017. At the top of the list was Jo-Ann Forster, Susan Rindley, Saddy Delgado, Rafael Arias and Jill Penman. The top teams were the Alex Miranda and Joseph Padula team, and Mirce Curkoski, Albert Justo, Alexa Iacovelli, Mikhael Porter and George Burns’ The Waterfront team.

The company moved its headquarters from Coral Gables to a 4,000-square-foot space on the second floor of 4100 North Miami Avenue, according to a spokesperson. It’s in the same building as TSG and Minotti Kitchen. The open workspace features Herman Miller furniture and Keith Haring wallpaper.

The firm’s sales volume last year totaled $2.73 billion, including new development sales, the spokesperson said.

In 2017, One Sotheby’s was among the most active brokerages in South Florida in terms of acquisitions. It closed on the acquisitions of Turnberry Realty, Crescendo Real Estate, OMG Realty and Coastal Sotheby’s. The brokerage, led by CEO Mayi de la Vega, has 14 offices in South Florida and is handling sales of 19 developments.

Donald Trump (Credit: Wikimedia Commons)

Hurricanes may have protected the South Florida construction industry from feeling the full force of President Trump’s new import taxes.

The president’s newly announced tariffs on imported steel and aluminum are not expected to have much impact on the local construction industry because in order to withstand hurricane-force winds, local developers say, structures are primarily built with concrete and domestic rebar.

A week after first announcing plans to impose the tariffs, Trump made it official on Thursday, saying he would place a 25-percent tax on imported steel and a 10-percent tax on imported aluminum.

Products from Canada and Mexico may be exempt, but such details have not yet been worked out, according to the White House. The move is part of Trump’s efforts to boost U.S. production and lower the nation’s reliance on imported materials. Critics have said it could start a global trade war and lead to higher construction costs in the U.S.

South Florida’s strict building code requires concrete structures to be held together with rebar. Rebar is made of steel, but steel beams are not typically used, as they are elsewhere in the country. “Our hurricane codes are so strict because we need buildings that don’t move,” said Gil Dezer, president of Dezer Development.

Dezer and the Related Group are building Residences by Armani/Casa, a 56-story, condo tower in Sunny Isles Beach. Nearly all of the aluminum, used on windows, is purchased from domestic manufacturers, Dezer said. About 80 percent of the rebar is from U.S. manufacturers, while 20 percent is imported. The cost of the imported material is about 18 percent lower their U.S. competitors.

“So a 25-percent tariff would make it more expensive…,” he said, referring to the steel tariff. “In the short term, it may increase pricing. In the long term it may open up more plants.”

Louis Birdman, who is co-developing One Thousand Museum, the 62-story Miami condo tower designed by the late Zaha Hadid, said he doesn’t expect the new tariffs to have an immediate impact on construction costs.

Birdman said his team buys construction materials through suppliers, and those material costs are locked in. “If there is, in fact an escalation, it would take a while to trickle down,” he said. “And the project we’re working on [One Thousand Museum] would have zero impact…. All our steel and aluminum has been long since purchased. And for projects in the future, I have no idea whether it would affect costs or not.”

Yet in wake of the new tariffs, if there is a nationwide run on U.S. steel, there may not be enough supply to meet demand, said Miami accountant Alan Lips.

Developers and builders would then have to look to imported materials, which could drive up the cost of construction or lead to delays, said Lips, a partner in Gerson Preston Klein Lips Eisenberg Gelber.

Construction costs overall have been on the rise, experts say.

Brian Pearl, principal of Global City Development, which is building University Bridge Residences in Miami, said the price of rebar has already climbed. Pearl, whose company is building the residences in partnership with Podium Developments and Reichmann International, added that the new tariffs may lead to increased costs, but it may be only 1 to 2 percent.

“It will have a small impact,” said developer Jean Francois Roy of Ocean Land Investments. “Not as large as people mention.”

Katherine Kallergis contributed reporting.

Secretary Cason visits HUD DC Field Office (Credit: Flickr/U.S. Dept. of Housing and Urban Development)

The updated mission statement for the Department of Housing and Urban Development appears to remove language that promises the federal agency will provide housing “free from discrimination.”

A March 5 internal department memo stated the agency’s mission statement was being updated “in an effort to align HUD’s mission with [Secretary Ben Carson’s] priorities and that of the [Trump] Administration.” The Huffington Post first reported the story.

Assistant Secretary for Public Affairs Amy Thompson circulated the memo in house and asked for comments and suggestions from staff, indicating the language may not be final. The new version is considerably shorter than the existing mission statement, and now reads:

“HUD’s mission is to ensure Americans have access to fair, affordable housing and opportunities to achieve self-sufficiency, thereby strengthening our communities and nation.”

That compares to the existing mission statement, which reads:

“HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.”

HUD spokesman Raffi Williams said the department was tweaking the statement to make it “a more clear and concise expression” of the historic work the agency performs, and pushed back on the idea that HUD was abandoning any “discrimination-free” policies.

“HUD has been, is now, and will always be committed to ensuring inclusive housing, free from discrimination for all Americans,” Williams said.

This comes shortly after another controversy that involved Carson. In that case, it was revealed that a $31,000 dining set had been ordered for his office with taxpayer money, amid a dramatic budget cut set for HUD. The dining set order was promptly canceled shortly after the story made headlines.

In May, Carson made headlines when he cautioned against making public housing “too comfortable” for renters, because it would encourage them to stay there. [Huffington Post] — Dennis Lynch

If you want to have a successful real estate investment trust, it would help to include women on the board.

A new study from Wells Fargo analyzing 165 equity REITs from 2006 to 2017 found that companies with an above average number of female board members had higher total returns and average price over the decade, according to the Wall Street Journal.

An average REIT had 15.5 percent female board members, and the share prices of REITs with a higher percentage of women than this outperformed the REITs with no female members by about 2 percent.

REITs in the prison, advertising and energy-infrastructure fields had the highest percentages of female board members, according to the report, while healthcare, single-family residential and industrial REITs had the lowest percentages, and 34 of the REITs had no female members at all.

The Real Deal recently took an in-depth look at real estate’s gender divide in the wake of the Harvey Weinstein scandal and national #MeToo movement. [WSJ] – Eddie Small

Paraiso Plaza and DDR’s David Lukes (Credit: Google and DDR)

Publix Super Markets just purchased a shopping center it anchors in Hialeah for $15.7 million.

The Lakeland-based grocer paid about $245 per square foot for the 64,260-square-foot Paraiso Plaza shopping center at 3339 West 80th Street, according to property records. The seller is an affiliate of DDR Corp., a publicly traded retail-focused real estate investment trust.

DDR paid $9.65 million for the 7.3-acre property in 2003. The shopping center, built in 1997, is home to an IHOP, Little Caesars Pizza and Chase Bank.

Publix has continued to purchase shopping centers where it has locations. As of December it owned about 32 percent of its locations – an increase from the 11 percent it owned in 2007, according to the Palm Beach Post. A year ago, Publix said it planned to invest $1.53 billion to buy its store-anchored shopping centers, as well as build and remodel additional stores.

In April, the company paid $23.2 million for the new location in West Miami and $29.6 million with its joint venture partner Echo Realty for a shopping center in Pompano Beach.

DDR owns and manages more than 300 open-air shopping centers across the country. In June, Madison International Realty refinanced a portfolio of 52 shopping centers it owned via a joint venture with DDR for $1.05 billion, and upped its stake in the portfolio to 80 percent.

Donald Trump and a steel mill (Credit: Wikimedia Commons, Pixabay)

President Donald Trump is expected to sign his controversial steel and aluminum tariffs plan today, a move that could slam businesses in a handful of states the hardest, including California, New York and Florida. Experts say the tariffs could start a trade war, raise prices and lead to a drop in new construction.

Businesses in 10 states would pay around two-thirds of the $9 billion that the right-leaning Tax Foundation estimates the tariffs will raise, according to a report in Money. About a third of that would come from just four states: New York, California, Florida and Texas.

Businesses in the Lone Star State imported 10.8 percent of all the primary metals brought into the country last year and if import levels remained the same this year, Texas would pay $968 million in import duties for their steel and aluminum.

New York firms import 8.5 percent of those metals, and would pay $759 million in taxes, according to estimates. Firms in California and Florida would end up paying around $525 million apiece.

Some economists fear the move will spark a trade war with both adversaries and allies around the globe. Real estate industry pros have also said the tariffs will further raise the cost of building, compounding the impact of the import tax Trump imposed on Canadian lumber last year.

Trump sent domestic and foreign stakeholders into a frenzy last week when he announced his intention to impose the tariffs, which he argued will boost American steel and aluminum manufacturers.

The measure has seen opposition from the president’s Republican allies, but has also earned him unlikely support across the aisle and with unions, particularly United Steelworkers and the AFL-CIO. Not all unions are on board though. Those representing workers whose industries rely heavily on international steel and aluminum imports, such as auto manufacturing, worry the duties will hurt them.

The biggest fallout has been the announced departure of National Economic Council Director Gary Cohn, who tried to steer Trump away from the plan.

Trump appears to have softened his stance on blanket tariffs, offering hints that he is open to exemptions for major trading partners including Mexico and Canada. [Money] – Dennis Lynch 

Rendering of University Bridge Developments, Alicia Cervera Lamadrid and Brian Pearl

The developer of a planned student housing condo tower near Florida International University is switching gears and turning the project into rentals, instead.

Unlike other developments that have been canceled or converted to rentals because of the weak condo market, University Bridge Residences had secured more than 200 buyers for the 492-unit, 20-story tower, according to Alicia Cervera Lamadrid, managing partner of Cervera Real Estate. Cervera was tapped to handle sales of the project in August.

University Developments, led by Global City Development principal Brian Pearl, said the decision to build multifamily was due to the strong rental market and changes in the tax law, which slashed the corporate tax rate to 21 percent from 35 percent. The partnership developing the project, which includes Podium Developments and Reichmann International, is planning to break ground in the spring and complete the building at 740 Southwest 109th Avenue for the 2020-to-2021 academic year.

The roughly 150 buyers who were under contract to purchase units will received their deposits back, and the developer is paying commissions on what would have been due now, Cervera Lamadrid said.

“We’re clearly disappointed it’s not moving forward as a condo,” she said, adding that “it was a very exciting product for us because it was a new asset class in our market. We did a lot of heavy lifting to introduce the product to the market.”

Units at University Bridge ranged from $190,000 to more than $600,000. Amenities will include a resort-style pool and sundeck, a rooftop with a sunset terrace, a yoga lawn and performance stage. A pedestrian bridge over Southwest Eighth Street will give residents access to FIU.

Cervera and her team are looking to reroute the buyers to other projects, including Smart Brickell, a mixed-use residential project with units that will be set aside for home sharing via Airbnb. Condos at Smart Brickell are priced from $318,000 to more than $400,000.

“Obviously a lot of time and effort has gone into [University Bridge],” Cervera Lamadrid said, referring to the more than 60 real estate agents who brought buyers to the project. “We’re trying to do everything possible to mitigate their losses.”

Property records show College Suites Associates LLC, a company affiliated with the developer, purchased the property for $16.6 million in 2016. Pearl said the development partnership is reviewing term sheets from lenders and expects to secure a roughly $130 million construction loan.

3700 Wilshire Boulevard and Dr. David Lee

Jamison Services’ founder Dr. David Lee allegedly threatened to use an AR-15 assault weapon to keep protestors off the site of his latest Koreatown project, according to a new report in CityWatch.

The LAPD is now investigating the incident, which took place late last month. In a statement to The Real Deal Tuesday, Lee said the following: “For 30 years in the Korean community in Los Angeles, I have prided myself on my ability to enjoy a congenial relationship with everyone. Unfortunately, last week comments by me were misunderstood by valued friends and to those individuals I sincerely apologize.”

On Feb. 23, Lee, along with Jamison president Garrett Lee and attorney Allen Park, met with City Council President Herb Wesson and key aides at Wesson’s district office. Also in attendance were Anne Kim and Annette Van Duren from Save Liberty Park, a community advocacy group that has campaigned against the project, and Marcello Vavala from the Los Angeles Conservancy.

The group discussed Jamison’s site at 3700 Wilshire Boulevard, where the developer wants to build a 36-story mixed-use tower with over 500 rental units. Save Liberty Park has been pushing the city to designate Liberty Park, a park fronting Wilshire Boulevard, as a Historic-Cultural Monument. If it receives that status, Jamison would be prevented from demolishing the park pending a review by the Cultural Heritage Commission.

During the meeting, Lee allegedly told the Save Liberty Park members that if the group didn’t let him build, he would use his AR-15 rifle to shoot people who step on his land. That’s according to a recap of the meeting Van Duren provided to CityWatch, a community-focused website and newsletter based in L.A. Lee’s alleged comments came just days after the school massacre in Parkland, Florida, where a 19-year-old male killed 17 people, the majority of them teenage students, with an AR-15 style semi-automatic rifle.

The LAPD was asked to look into the matter on Feb. 27, sources confirmed. Representatives for the police department didn’t respond to TRD’s requests for comment.

If the City Council’s Planning and Land Use Management (PLUM) committee votes to grant the HCM designation for Liberty Park, the matter will proceed to a full Council vote. Sources said PLUM did vote for the HCM designation Tuesday, but this could not be confirmed by press time.

Jamison is one of Koreatown’s biggest landlords, where it has pioneered adaptive reuse, converting several commercial buildings into multifamily properties. Citywide, its portfolio spans about 18 million square feet, and is valued at about $5 billion, according to Real Capital Analytics.

(Credit: Pexels, Public Domain Pictures)

The delinquency rate on CMBS loans came in nearly a full percentage point lower than a year ago, a positive indicator for lending in the year ahead, and bucking the gloomy predictions the industry has long been hearing.

The rate in February was 4.51 percent, down from 5.31 percent in February 2017, according to CMBS analytics firm Trepp. That’s despite a wave of maturing CMBS loans packaged in 2006-2007, just before the subprime mortgage crisis.

Experts worried that wave of debt would slow down lending, but low interest rates, strong real estate values and a diverse pool of debt capital have allowed borrowers to refinance and restructure maturing debts, according to the Wall Street Journal.

There’s still plenty of options for borrowers — bridge loans from insurers and other non-traditional lenders are available, and lending activity from Fannie Mae and Freddie Mac hasn’t slowed down in the multifamily sector.

Gerard Sansosti, an HFF executive managing director, told the Journal that 2018 “will be a year of plenty of liquidity in the debt space. We don’t’ sees any lender looking to do less this year.”

The high value of real estate has also enticed investors into debt financing over equity. A December survey of 550 institutional investors by data firm Preqin found that 42 percent were looking to expand their allocations in private debt, according to the Journal. [WSJ] — Dennis Lynch

Javier Duarte in front of the house at 277 Marinero Court in Coral Gables

The Mexican state of Veracruz is suing three real estate investment firms and their leaders for allegedly conspiring with the state’s former governor to purchase 41 properties in Miami-Dade County with millions of dollars of allegedly stolen government funds.

The lawsuit, filed in Miami-Dade Circuit Court, attempts to gain control of the properties, which it claims were purchased with money that Javier Duarte De Ochoa stole during the course of his tenure as governor of Veracruz from 2010 to 2016. Police nabbed Duarte last year in neighboring Guatemala after six months on the lam and extradited him to Veracruz to stand trial on corruption charges.

Veracruz state seeks a minimum of $25 million worth of compensatory damages and additional punitive damages.

The suit names Miami-based Vulcan Dynamic Realty Fund and its CEO Inaki Negrete, Miami-based Nexxos Realty and its managing member Ana Maria Velasquez, and Delaware-based ACE Realty Holdings as defendants.

Neither ACE Realty Holdings, Vulcan Dynamic Realty Fund nor Inaki Negrete could be reached for comment. Negrete is listed as an officer in five other companies, according to Florida state records. Velasquez said she had “no relationship” with the other parties in the lawsuit and no knowledge of the suit. Nexxos lists 17 agents on its website.

The properties are mostly single-family homes spread throughout Miami-Dade, from Aventura to Florida City. All but one house, at 277 Marinero Court in Coral Cables, is owned by Vulcan Dynamic Realty Fund, an active fund founded by Vulcan Investment Partners in 2012, “dedicated to purchasing and renovating distressed properties at 50 percent of their original construction cost,” according to a press release. The Marinero Court home is the most costly of the properties, which ACE Realty purchased for $7.7 million in 2014.

Vulcan Investment Partners was founded by “a group of leading Mexican businessmen and financial experts” and planned to invest $150 million through the fund to purchase 1,200 such properties, according to the release. At the time, the firm planned to liquidate the fund for huge gains last year. The suit does not say when all the purchases related to the alleged theft of government funds were made.

Here are the properties, according to the suit:

277 Marinero Court, Coral Gables

10550 Northeast Second Place, Miami Shores

10770 Northwest 66th Street #511, Doral

10800 Northwest 82nd Terrace, UNIT 10-6, Doral

1201 North Liberty Avenue, unit 1201G, Homestead

12170 Southwest 216th Street, Miami

12225 North Miami Avenue, Miami

13606 Northwest 10th Terrace, Miami

1490 Northwest 58th Terrace, Miami

15120 Jackson Street, Miami

17800 Southwest 113th Court, Miami

19600 Northeast 18th Place, Miami

2012 San Remo Circle, Homestead

20200 Northeast 14th Avenue, Miami

20901 Southwest 121st Avenue, Miami

21034 Northeast 34th Court, Aventura

21725 Southwest 120th Avenue, Miami

220 Northeast 45th Street, Miami

2330 Northwest 11th Street, unit 27, Miami

2353 Southeast 12th Court, unit 224, Homestead

24987 Southwest 128th Court, Miami

25000 Southwest 122nd Court, Miami

26650 Southwest 132nd Avenue, Miami

2710 West 60th Place, unit 106, Hialeah

2811 Northwest 100th Street, Miami

2895 Northwest 45th Street, Miami

3039 Northwest 54th Street, Miami

3122 Northwest 43rd Street, Miami

368 Northeast 174th Street, North Miami Beach

390 Northeast 163rd Street, Miami

433 Northwest 14th Street, Florida City

4850 Northwest 102nd Avenue, unit 104-9, Doral

487 Northwest 15th Street, Florida City

520 Northwest 3rd Avenue, Homestead

5775 Southwest 35th Street, Miami

5852 Southwest 33rd Street, Miami

864 Southwest 7th Plaza, Florida City

875 Southwest First Street, Florida City

9855 Marlin Road, Cutler Bay

20100 Highland Lakes Boulevard, Miami

20200 Northeast 14th Avenue, Miami

Laura Hanrahan contributed reporting

From left: Divorce lawyers Daniel Jaffe, Laura Wasser and Neal Hersh (Credit: Jaffe Clemens, Hersh Mannis, WCM Family Law, Wikimedia Commons)

A just-divorced woman returned one day late last year to her palatial Los Angeles home to find it reeking of cigarettes. Which was odd, since neither she nor her ex-husband smoked. After some sleuthing, she discovered that her former partner, who had to surrender the property to her as part of their bitter divorce battle, had collected strangers’ cigarettes and stuffed the butts into the mansion’s air vents.

“That was a house she fought hard for in the settlement,” said Laura Wasser, a divorce attorney whose client roll reads like one half of Hollywood’s A-List.

Divorce is a multibillion-dollar industry in L.A. When a well-heeled couple splits, an army of attorneys, estate planners, consultants and wealth managers is mobilized. A couple’s real estate ends up being among the most contentious issues in a divorce battle: Who gets to keep the chalet in Aspen? The pied-à-terre in Manhattan? And who stays in the house? When there’s commercial property or active projects involved, things get even trickier. Brokers navigating situations like these have to strike a fine balance between advocating for their clients and being sensitive to the situation.

“There’s a lot of acrimony connected to a divorce,” Coldwell Banker’s Joyce Rey said. Brokers will often need to tap their “psychological skills” and have a “little more patience and understanding” when selling such homes, she added.

“[Brokers] really have to be very mutual in their approach and can never let the emotions of the parties get to them,” said Pacific Union’s Aaron Kirman. “They have to be very calculated and take it like a business. They really need to be able to know what the ultimate goal is for both parties so that both of them are on the same page.”

What’s mine is yours

California is a “community property” state, meaning that all assets acquired during the marriage are considered to be jointly owned and are required to be split down the middle in the event of a divorce. But for ultra-wealthy couples, it is often more advantageous to put the estate in “joint tenancy,” said Neal Hersh, another divorce lawyer to the stars.

Joint tenancy is a special kind of co-ownership that contains a clause stating that whichever spouse outlives the other automatically receives the deceased spouse’s property interest. It also provides another, more intriguing provision that allows divorcees to avoid paying off some debt while also retaining their separate contributions to the property, according to Hersh.

Under California Family Code section 2640, also known as the “right of reimbursement” clause, spouses can retain their own contributions to community property assets. That means that if one spouse put down a $1 million down payment on a $5 million house, they are entitled to receive the $2.5 million for the house, plus the $1 million initially put down. The clause can be waived if it is in writing, such as in prenuptial agreements.

“If you’re repping the money side, you generally won’t waive it,” Hersh said. “You want to make sure that they recoup their separate property contributions.”

Divorce, developer-style

Figuring out the real estate question can become increasingly troublesome when a divorce involves a developer or landlord, whose primary business is to build and acquire property.

In January 2017, Yvonne Niami, then-wife of film producer-turned-luxury developer Nile Niami, filed for divorce. The event led to speculation that the developer’s spec mansion in Bel Air, for which he is asking a whopping $500 million, might be impacted. The former couple did sell off their Beverly Hills home for $15.6 million two months later, but the spec home project is still on. Representatives for Niami declined to comment for this story.

Navigating the divorce process for a developer requires first figuring out how much of the portfolio should be considered community property, Hersh said. If a spouse enters a marriage with an existing portfolio of properties in hand, then that would be considered “separate property.”

But any property acquired with funds earned during the marriage would be considered community property, and subject to split. That can include the appreciation of property during a marriage.

“If you’re a developer, the question is: ‘What portion of that real estate just went up by osmosis and what part went up to my efforts in creating it?,” Hersh said. “If there is separate property before marriage, and it increases, we have to apportion what part of the appreciation is attributable to efforts and which part is attributed to the market.”

Wasser uses a similar strategy when working for her movie producer or screenwriter clients, who are often disputing rights over intellectual property.

“We do the requisite amount of discovery about those properties to figure out how much time and effort went into them,” Wasser said. “Often there will be some work that will be put in during the marriage, and post marriage, so [we] make a timeline. You have to figure out what part happened during the marriage, which would be attributed to community efforts, and what part post separation will be attributed to the post-separation efforts.”

Brokers are often called in during the discovery period to provide their expertise. Kirman, who says a good chunk of his business stems from divorcing clients, said he’s been called by forensic accountants researching title ownership.

“A lot of the times there’s a discrepancy on value, but the market sets the real value on property so people are always calling us to get information,” he said.

If a developer is trying to buy out a spouse, then the process would usually require an appraisal of each property in a portfolio, said Hersh.

But appraising a whole portfolio can cost millions and months, so sometimes spouses will choose to stay in the various ventures and arrange some sort of interest payment to the developer spouse, according to Daniel Jaffe, a founding partner at Beverly Hills-based Jaffe and Clemens law firm.

“In many cases, parties agree that they will stay partners rather than go through expense of having [a portfolio] appraised, Jaffe said. “We’ve got cases going where both the husband and wife own 50 percent and both are going to continue to working together. Of course, it requires a lot of trust to stay in business with your divorced spouse.”

Of course, a prenuptial agreement could eliminate any chance of a portfolio being split down the middle. Prenups are quite common among wealthy Angelenos, Wasser said, and are often encouraged by entertainment attorneys or managers.

Jaffe, among others, speculated that’s likely the case with Niami.

“I’d be surprised if there wasn’t a prenuptial agreement,” he previously told The Real Deal. “That completely changes things.”

When real estate couples don’t have a prenup, the process can become a labyrinthine mess, as evidenced by the monthslong divorce proceedings of Harry and Linda Macklowe in New York.

Harry’s attorneys attempted to minimize the mega developer’s fortunes in court, claiming his net worth was negative $400 million while the couple’s joint fortune was $1.3 billion. They did this by invoking the developer’s capital-gains tax obligations, but Linda’s attorney, John Teitler, was having none of it.

“This is a case study in divorce accounting 101,” Teitler said in court. “Mr. Macklowe himself knows these types of [capital] gains are never actually realized by real estate developers.”

Home splits

For ultra-wealthy couples whose fortunes were made outside real estate, it is often likely that one party will buy out the other on shared property, Wasser said. Or if a couple shared multiple homes, then one spouse will “keep the house in the city while the other takes the house in Malibu,” she said.

But when appraisers on opposing sides value a home differently, things can get iffy.

Jason Fischman, of Appraisal Evaluations, said appraisers are not permitted to commit to a predetermined value or outcome. Still, he’s seen cases where an appraiser from the other team provided a value that was almost double his own.

When fighting for real estate, it is in the best interest of the spouse who wants to keep the house to have the lowest evaluation possible, Hersh said. That way, the buyout would cost less.

“Each side has their desired outcome and this is the reality,” Fischman said.

Hersh, who’s seen real estate appraisers testify for five days in court just to confirm the value of a house, said there’s lot of pushing and shoving during the process. And with appraisers like Fischman charging $200 an hour for an appraisal, and $400 an hour for expert testimony, the bills pile up quickly.

Those homes can often be a pain point for brokers as they are never made from a “normal rationale,” Hilton & Hyland’s David Kramer said.

“It is notoriously tough,” he added. “It can be a very long painful process and in the end [brokers] just get fired because [the couple is] not happy.”

Kirman said he sees brokers get kicked off listings “all the time.”

“If an agent can’t get a husband and wife to agree,” he said, “they’re not doing their job.”

Conscious uncoupling

If a couple knows they’re heading for a split, there are steps they can take to minimize the headache.

Wasser recently launched “It’s Over Easy,” a website that provides a step-by-step guide to splitting up.

Services, which range from $750 to $2,500, include access to family law forms, an interactive co-parenting calendar and artificial intelligence that can help calculate support payments. Included in the forms is a real estate balance sheet, in which couples list their properties under “assets” and “debts.”

People “get a good snapshot of what they have and what they owe and what it will look like if they take on responsibility,” Wasser said. “Sometimes you can buy someone out but then you can’t actually afford multiple payments on the house.”

Celebrities who play their cards right can make the most of a difficult situation.

One tactic, dubbed the “Architectural Digest curse” by Slate is when celeb couples on the verge of divorce open their homes to prominent publications in a bid to generate buzz for a property that’ll soon be up for sale. Jennifer Aniston and Justin Theroux have played that card, according to Architectural Digest, showing off their mid-century modern in a spread just weeks before news of their divorce broke. Other stars who’ve reportedly used the technique include Naomi Campbell and Liev Schreiber, Patrick Dempsey, Marc Anthony and Drew Barrymore.

Hilton & Hyland co-founder Jeff Hyland, who sold silent screen star Harold Lloyd’s

$18 million estate during Lloyd’s divorce, said he’ll sometimes be the first to know about an upcoming separation.

“Someone will ask me, ‘What’s my house worth?,’ and if you’ve been in the business long enough, you can tell,” Hyland said. “People look to us in our professions for two things — our integrity and confidentiality — so when you get that call you know exactly what to do.”

Deutsche Bank’s headquarters in Frankfurt and John Cryan

European banks are doubling down on real estate lending, and a growing chunk of the money is flowing into the U.S.

“We have capital and we have appetite,” Deutsche Bank’s head of commercial real estate Roman Kogan told the Wall Street Journal. As of September, German banks held $24 billion in U.S. commercial mortgages on their books, according to Trepp, up from $14 billion a year earlier.

French lender Natixis, meanwhile, has emerged as one of the most active property lenders in the U.S. and recently issued a $480 million construction loan for a development in Boston’s Seaport district.

In The Real Deal’s January 2018 ranking of the top 15 construction lenders in New York City, Deutsche placed first with $2.67 billion in dollar volume across nine deals between October 2016 and September 2017.

Banks are issuing more loans in part because Europe’s economy is booming, and in part because post-crisis regulations are loosening. Spain’s Bankia, for example, saw barred from issuing certain types of mortgages following its government bailout in 2012. But now the prohibition has lapsed, and the lender plans to finance construction projects in Spain again.

“It’s a good time to be in the sector; in terms of growth, the cycle still has upside,” Alberto Manrique, who heads Bankia’s construction financing division, told the Journal.

But the uptick in lending comes amid fears that a bubble is building in Europe’s property market. European Central Bank president Mario Draghi in February voiced concern over the market. “We actually see stretched valuations,” he said. [WSJ] Konrad Putzier 

Renderings of FATCity

The Traina Companies is looking to joint venture or sell the site of a 1.35-million-square-foot, mixed-use project in Fort Lauderdale, FATCity.

Avison Young’s David Duckworth, John Crotty and Michael Fay are listing the property at 300 North Andrews Avenue. Duckworth said it’s hitting the market unpriced and a call for offers is planned for about 45 days from now.

New York and Delray Beach-based Traina secured entitlements for FATCity in July. The 2.69-acre site was approved for two 30-story towers with 270,000 square feet of office space, retail and hospitality, 612 residential units and more than 1,300 parking spaces.

Between 2015 and 2017, comparable sites in Fort Lauderdale have sold for an average of $27 per buildable square foot, which would come out to about $36.45 million for the planned development.

The site spans the entire eastern block of Andrews Avenue between Northeast Third and Fourth streets and is about two blocks away from All Aboard Florida’s Brightline station in Fort Lauderdale, just south of Flagler Village.

Duckworth said Avison Young is approaching national and local developers interested in large-scale, transit-oriented projects.

A number of developments are underway in and around Flagler Village. In December, the Related Group joined FATVillage partners Doug McCraw and Lutz Hofbauer in securing approvals for the Gallery at FATVillage, a 14-story, 168-unit project with parking and retail space. Last month, a company led by Miami developer Ricardo Vadia purchased the Flagler 626 site at 626 Northeast First Avenue.

Ocean Trail on the waterfront in Jupiter (Credit: Redfin)

Six months after Hurricane Irma raked Palm Beach County with tropical force winds and a 5-foot storm surge, the condo association for an oceanfront residential building in Jupiter allegedly hasn’t been able to pay for more than $500,000 in repairs, according to a recently filed lawsuit.

Delray Beach-based Rolyn Companies sued Ocean Trail Condominium Association No. 1 last month for breach of contract in Palm Beach County Circuit Court.

The complaint highlights the difficulty condo associations face in quickly coming up with funds to fix storm-related damage, legal experts say.

Rolyn alleges the association hasn’t paid $598,734 for emergency work done to the building in the immediate aftermath of one the modern era’s deadliest hurricanes. Rolyn attorney Ryan Lamchick and the property manager for the condo building in Jupiter did not return phone messages seeking comment.

Josh Migdal, a partner with Mark Migdal and Hayden, who is not involved in the Ocean Trail litigation, said condo associations typically rely on insurance companies to cover the cost of repairs caused by a catastrophe, but in some cases the work is completed before a claim is paid.

“The reality is that most associations don’t have cash on hand to pay for immediate repairs,” Migdal said. “When you couple that with insurers that may not pay claims, you have a recipe for disaster.”

Condo associations could also approve special assessments, but there is no guarantee that unit owners will pay it, Midgal said.

Built between 1975 and 1983, Ocean Trail is a development consisting of five buildings that sit directly on the beach. Each building is 14 stories tall, and all the units have two bedrooms and two bathrooms. The sizes range from 1,170 square feet to 1,600 square feet and current listings show units are asking $300,000 to $600,000.

According to Rolyn’s complaint, condo association treasurer Roderick MacGregor signed an emergency work authorization on Sept. 13, 2017 giving the general contractor the green light to fix “fire, water, storm and other casualty damage” to Ocean Trail No. 1 caused by Irma on Sept. 10. Rolyn completed the job, but the condo association failed to pay the bill, the suit alleges. The company is also seeking damages, interest and attorney fees.

As part of its lawsuit, Rolyn filed a motion requesting a judge compel the association to enter arbitration to settle the debt.

Laura Hanrahan contributed to this report.

Leonardo DiCaprio in “The Great Gatsby,” 220 Central Park South and a Yacht and Mansion in South Florida

The world’s population of ultra-rich is growing, and their real estate investments are pushing up real estate prices in cities from New York to Guangzhou, China.

According to Knight Frank’s 2018 wealth report, there were 2.5 million people with assets of $5 million or more last year — up 9 percent compared to 2016 and up 20 percent compared to five years earlier.

As for those with $50 million or more? There were 129,730 in 2017, a 10 percent jump from 2016 and 18 percent more than 2012, per Knight Frank. The world’s demi-billionaires — or those with $500 million or more — numbered 6,900 in 2017, up 11 percent from 2016 and 14 percent since 2012.

In the U.S., New York is home to the most high-net-worth individuals — defined as households earning $250,000 or more a year — with 1.167 million hefty earners. That was almost double the figure in Los Angeles, with 637,700 households. New York and LA were followed by Chicago (400,416) and San Francisco (396,431).

According to Knight Frank, the ultra-rich are still investing heavily in real estate. The U.S. remains a safe haven for foreign buyers, who spent $153 billion on U.S. property between April 2016 and March 2017.

But they’re snapping up property elsewhere, and pushing prices up in those cities. The Chinese city of Guangzhou saw the biggest jump in real estate prices — 27.4 percent between 2016 and 2017. That was followed by Cape Town (19.9 percent) and Aspen (15 percent). New York’s prime prices grew 4.6 percent.

Knight Frank’s projections for the next five years shows even more wealth accumulation.

The population of those with $5 million or more is projected to jump 43 percent by 2022, while the number of those with $50 million or more will rise 40 percent and $500 million or more will increase 39 percent, the report found.

Currently, North America is home to the largest share of super-rich — with 34 percent of the world’s wealth concentrated here.

But that’s changing. Over the past five years, the number of ultra-wealth individuals in Asia jumped 37 percent and Europe increased 10 percent. Regions that saw declines in ultra-wealthy citizens include Russia (-37 percent) and in Latin America and the Caribbean (-22 percent).

In the next five years, China’s population of ultra-wealthy individuals is expected to more than double in the next five years, and India’s is expected to skyrocket 71 percent.

Wawa at 7289 Garden Road

Charles Whittall’s Orlando-based Unicorp National Development secured financing for its first project in Miami-Dade County.

Property records show an affiliate of Unicorp just scored a $6.6 million construction loan from Florida Community Bank to build a Wawa gas station and convenience store on the 1.56-acre lot at 3300 Northwest 87th Avenue, which it bought in January for $6.4 million.

The Unicorp affiliate filed plans with Miami-Dade County to replace the shuttered 6,180-square-foot Tony Roma’s building with the Wawa, according to the South Florida Business Journal. It would have 12 fueling pumps and more than 40 parking spaces.

Another Wawa is under construction in West Miami, next to El Palacios De Los Jugos off Coral Way. The Pennsylvania chain of convenience stores also has locations planned for or open in Miami Gardens, Deerfield Beach, Riviera Beach, Davie and Pompano Beach.

Unicorp has developed more than $2.5 billion of real estate across the country, according to its website. The Orlando-based company is in the midst of developing a $1 billion mixed-use development near Walt Disney World.

Matt Spangler

Target has one. So do Chobani, the Honest Company and Best Buy.

Now Compass — the startup residential brokerage with $775 million in venture money to burn — has created a “chief creative officer” job to ensure its brand and design aesthetic are applied to new products, offices and agent marketing as the company grows.

The New York-based firm said Matt Spangler, who has been Compass’ head of marketing and design since 2014, will become CCO and it will hire a chief marketing officer who will report to Maëlle Gavet, the company’s chief operating officer.

“With our speed of growth, it’s less of me getting in the weeds and more of me focusing on the enormous things we have to do: How can design and brand be woven into every piece of Compass’ platform?” Spangler said.

Although “chief creative” jobs have crept into major consumer brands, the residential real estate industry has been slower to adopt the position. But a few of the city’s largest firms have already given it a try.

Douglas Elliman hired Roy Kim in 2015 as its first chief creative officer for development marketing. But last year, when Kim left Elliman, the firm said it would not fill the role. Currently, Michael Hardman is Elliman’s creative director.

Town Residential hired David Lipman in 2014 to work on a long-term brand strategy and launch “My Town,” a lifestyle magazine. The firm has since cut ties with Lipman — who did the branding for One Madison Park and One57. Instead, Town currently has a 10-person marketing team that operates as “an agency within the firm,” said Lori Levin, director of marketing and communications. The team offers a “full creative suite,” including logos for projects, signage for buildings, and advertising for agents.

“We’ve named buildings, developed the visual identities of buildings and sustained the marketing campaign,” she said of the firm’s marketing group.

Several developers, though, have their own chief creative officers. At DDG, founding member Peter Guthrie is also the firm’s CCO and head of design and construction. Will Cooper, a partner at Brooklyn-based ASH, is CCO and leads the firm’s design team and brand strategy.

“New York City real estate has become incredibly competitive, with a surge of luxury housing,” said Jay Solomon, chief creative officer of Sugar Hill Capital Partners. “One way to distinguish your product is to have unique branding and design and a fully immersive experience for buyers and renters.”

Last year, Sugar Hill pivoted away from just renovating apartments and began giving each property its own brand identity by also redoing lobbies, hallways and other communal spaces, he explained.

“If you did not have a chief creative officer, you might have your architect planning the interiors different from the branding,” Solomon said. “It’s true that these things could meet and come to some sort of consensus, but I laid out my vision for the project and put each team to task.”

At Compass, Spangler will lead the firm’s “creative studio,” which will work on company-wide branding and individual agent brands.

“In a world where there’s more and more options … brand, storytelling and design is critical,” he said. “It’s not a new path, it’s a path that the world’s greatest brands are investing in heavily, so we feel like it’s an area to invest in as well.”

1510 Alton Road

A company tied to North Miami Beach dermatologist Dr. Alam Berke paid $7.15 million for a pair of buildings on Alton Road and West Avenue in South Beach.

Berke’s Bulldog Capital Investments LLC picked up the former Out of the Closet thrift store building at 1510 Alton Road and the three-unit apartment building immediately west at 1509 West Avenue. Records show the seller is Heritage Investors LLC, which bought the properties from the AIDS Healthcare Foundation in 2014 for nearly $4.6 million.

Berke referred comment to his son, Steve Berke, a former candidate for Miami Beach mayor and a marijuana activist. Steve, who is also CEO of cannabis media company Bang Digital Media, said the LLC is planning to secure a tenant for the space.

Together, the buildings have 10,420 square feet of leasable space and 15,000 square feet of land, according to the listing.

The apartment building site includes a parking lot with seven parking spaces. That building could be knocked down and used as parking for the retail, allowing the new owner to charge higher retail rents and set up parking meters, according to the marketing materials..

Scott Sandelin and Alejandro D’Alba of Marcus & Millichap represented Heritage, marketing materials show. The seller’s entity is led by Sham Kamlani.

A handful of properties on Alton Road have been listed or sold in recent months. In August, Russell Galbut’s Crescent Heights sold the building at 1550 Alton Road for $5.4 million. The developer is also building the Wave, a mixed-use project at 600 and 700 Alton Road with apartments, commercial space and a Baptist Health South Florida clinic. A new Whole Foods and Trader Joe’s are also planned for Alton Road.

Summit Apartments, Yoav Yuhjtman and Tal Frydman (Credit: Berkadia)

Miami-based Summit Property Group just sold a 352-unit apartment complex in Lauderhill for $28.5 million.

Federal Capital Partners is the buyer of Summit Palms at 4491 Northwest 19 Street according to a press release. The deal breaks down to about $81,000 per unit.

Records show an affiliate of Summit Property Group paid $7.8 million for the rental community in 2012. Since then it has invested more than $5 million in the property and pushed occupancy up to 90 percent from 5 percent in 2012, according to the release.

Berkadia’s South Florida office’sTal Frydman, Yoav Yuhjtman, and Nicholas Perrone brokered the deal. The garden-style apartment community consists of four buildings, a clubhouse, a community pool and green space. Property manager Avesta will continue to manage Summit Palms.

FCP entered the Florida market in 2015 and recently opened a Miami office, led by Bruce Gago. The privately held real estate investment company, founded in 1999, has also purchased properties in Tampa and Orlando. The company owns and manages more than $2.3 billion in assets.

 Forest Park rendering and BZG International’s Brandon Brugal and Uccio Zecchini (Credit: BZG International)

Forest Park rendering and BZG International’s Brandon Brugal and Uccio Zecchini (Credit: BZG International)

South Florida Developers just launched sales for its planned 144-unit townhome community in Florida City, Forest Park, and is planning to break ground soon.

The townhouse project will rise on a nearly 10-acre plot at 1205 Northwest Third Lane, near the U.S.1 entrance into the Florida Keys. Records show Forest Park Development LLC, led by Antonio A. Gonzalez, paid nearly $1 million for the land in 2014.

The developer is also building Tropical Villas, a 64-unit single-family home community in Homestead. BZG International is handling sales of both developments.

Units at Forest Park will range from 1,240 square feet to 1,700 square feet and start at $174,900 for a two bedroom, two-and-a-half bathroom townhome. Forest Park will offer up to four-bedroom townhomes, which are asking $199,900. Residents will have access to 1.5-acre community park.

Brandon Brugal, managing partner of BZG, said the community is geared toward buyers looking for a cheaper alternative to townhouses farther north in Miami-Dade. He adds they could also serve an incoming flock of residents in the Keys who may have been displaced due to Hurricane Irma.

The Homestead developer is expecting to break ground in April. Phase one will be completed by the end of this year.

Other real estate players investing in south Miami-Dade include Starwood Capital, with its recent acquisition of a 312-unit complex in Homestead and home builders like Lennar Corp., which purchased more than 77 acres for $10.75 million in July.

Rents are also on the rise. Homestead experienced some of the fastest-growing rent increases, according to Zumper. As of late last year, rents in Homestead rose by 15.1 percent year-over-year to $1,070 for a one-bedroom.

Nick Bailey, Century 21’s old logo and their new logo

Century 21 — a largely suburban brokerage with 128 offices in the New York City metro area, the most of any franchise — has unveiled a “big, bold” rebrand to coincide with ambitious plans to double its business within five years.

CEO Nick Bailey, who took the helm in August, is aiming to hit 832,000 transactions by 2022, up from 417,000 in 2017. “To be competitive, we owe it to our agents to be relevant today and tomorrow,” he told Inman.

As part of that push, the company has overhauled its branding, replacing a dated yellow-and-black logo with a sleek metallic look. “We tore the old house down to the studs and rebuilt it,” according to a website announcing the rebranding.

Bailey said he’s focused on the consumer experience — a la Amazon, Netflix and Yelp. But he doesn’t have any illusion about what business he’s in.

“Right now real estate companies are saying, ‘We are in the training business, we are in tech,’” he said. “There is no question, Century 21 is in the real estate business.”

Century 21 is a subsidiary of Realogy, the $6.1 billion parent company of Corcoran Group and Citi Habitats. Among national franchisors, it has the biggest presence in New York, with offices concentrated in Brooklyn and Queens. Nationwide, Century 21 has 2,216 offices. [Inman] — E.B. Solomont

Zenplace robot giving a tour (Credit: Zenplace)

Your next apartment tour may be led by a robot.

Brokerages are turning to robots to handle tasks like property tours, videos and creating floor plans, the Wall Street Journal reported. Brooklyn-based VirtualAPT invented a robot that makes three-dimensional property videos, and counts Douglas Elliman and Stribling & Associates among its clients.

REX, a brokerage based in California, has robots at each seller’s property to answer questions and collect information from prospective buyers. Zenplace, also based in California, has robots that allow agents to remotely lead clients on tours while projecting the human agent’s face on the screen.

“It was a little weird,” said Laura Franco, who was led on a tour by a Zenplace robot. “It was like she was there but she wasn’t there.”

Though many in the industry fear brokers will become obsolete as technology takes over tasks once performed by a human, Compass co-founder Robert Reffkin told the Wall Street Journal that he believes agents will always remain an important part of real estate deals. But new technology could disrupt how these deals are done. For instance, REX charges a 2 percent commission, compared to the typical 5 to 6 percent. The February issue of The Real Deal explored other technologies that could change the landscape.[WSJ] — Kathryn Brenzel  

3628 Northeast Second Avenue and Alex Karakhanian

Investor Alex Karakhanian just picked up another building in the Miami Design District.

Karakhanian’s LNDMRK Development paid $5.5 million for the building and lot at 3622 and 3628 Northeast Second Avenue in Miami. Dwntwn Realty Advisors’ Devlin Marinoff, Tony Arellano and Jordan Gimelstein brokered the deal.

The property includes a roughly 4,800-square-foot building on 5,750 square feet of land. Records show the seller is Richard J.S. Green, who acquired the building in 1996 for $220,000.

Interior designer Michael Dawkins has a few years left on his lease, Karakhanian said. Dawkins is the sole tenant of the two-story building.

Karakhanian recently sold the redeveloped building down the street at 3701 Northeast Second Avenue to Stockbridge Capital for $22 million. Milan-based Istituto Marangoni, a fashion and design school, is leasing that property.

Rendering of Drivers Club Miami (Credit: Drivers Club Miami)

South American developer Carlos de Narváez is moving forward with his $100 million luxury auto club project, Drivers Club Miami.

Miami-Dade County commissioners unanimously approved the developer’s proposal to turn county-owned land just west of Miami Gardens into a “country club for cars,” according to a press release.

The approval paves the way for Narváez’ 13 Pista LLC to build a massive car entertainment destination, equipped with a 2-mile driving course, auto storage and maintenance facilities, a community center and a government center for northwestern Miami-Dade. Drivers Club Miami will also include dining, retail and hotel components open to the public.

The project is set to rise on a 160-acre site at 20000 Northwest 47th Avenue, and would be developed in multiple phases. Under the county contract, the developer would lease 140 acres of land for an initial term of 30 years, with an expansion option. The lease will cost De Narváez at least $33.4 million.

In exchange for waiving competitive bidding and a below-market lease rate, Narváez also agreed to build improvements for the city, including a new public bicycle course. The three local nonprofits currently onsite will move into new nearby facilities built by the developer.

Miami Gardens has attracted a number of developers and investors. Moishe Mana recently secured a 120,000-square-foot lease in the city for his document storage company. – Amanda Rabines

Rendering of BLVD at Lenox and Michael Comras

A company led by Michael Comras closed on $35 million of construction financing for BLVD at Lenox, a Target-anchored retail project in Miami Beach.

City National Bank is providing the loan to Mac 1045 5th Street LLC, led by Comras. The five-story building will have about 67,000 square feet of retail space and 224 parking spaces. The developer broke ground in January.

CBRE’s Jonathan Rice and Jeff Ackemann of Atlanta secured the financing, according to a release. Target will anchor the development with a 33,000-square-foot store that’s slated to open in the spring of 2019. The retailer will open its first small-format store in South Florida at the Comras project.

In November, Comras said he’s aiming to lease the remaining 34,000 square feet of retail space to restaurant and service-oriented retailers. Asking rents at the project range from $40 per square foot to $70 per square foot. Available spaces include nearly 28,000 square feet on the ground floor and 5,500 square feet on the third floor.

Comras, who led the investor group that sold an entire block of Lincoln Road to Spanish billionaire Amancio Ortega for $370 million in 2015, assembled the BLVD at Lenox site between 2014 and 2017 for a combined $8.48 million. – Katherine Kallergis

David Beckham and rendering the proposed soccer stadium in Overtown (Credit: Miami Beckham United)

David Beckham and his partners are considering a new property for their multimillion-dollar Major League Soccer Stadium.

Miami City Manager Emilio González met with Beckham partner Jorge Mas on Monday to discuss building the stadium on the city-owned Melreese golf course near Miami International Airport, according to the Miami Herald. The Mas brothers, who joined the stadium venture last year, have reservations about the size and location of the Overtown site, which is facing significant opposition from its Spring Garden neighbors.

Beckham and his partners could lease a portion of the golf course land from the city of Miami, a move that would be subject to a referendum. Melreese has enough land to build a sprawling soccer complex with restaurants, retail and office uses, plus a youth academy the Mas brothers have envisioned.

Beckham’s Overtown assemblage includes 6 acres purchased for $19 million in 2016. The group is under contract to purchase another 3 acres of land from Miami-Dade County, and would still need to secure land-use changes, rezonings and the contentious permanent closure of Northwest Seventh Street before it could build.

Activist Bruce Matheson is also fighting the development in court. Matheson is alleging the county gave Beckham and his partners “a secret discount from the taxpayers” when it gave them a no-bid, $9 million deal for the 3 acres of county-owned land. [Miami Herald] – Katherine Kallergis

(Illustration by Zach Meyer)

From the March issue: The guest list for the China General Chamber of Commerce USA’s annual gala is a who’s who of Chinese and American business royalty.

In mid-January, Blackstone’s Steve Schwarzman, Brookfield’s Ric Clark, Bank of China’s Xu Chen and Chinese Ambassador Cui Tiankai — to name a few — rubbed shoulders at the Ziegfeld Ballroom in Midtown.

But the real star of the show was a man rarely seen on Manhattan’s black-tie party circuit: HNA Group’s chairman and co-founder, Chen Feng.

Sitting at the evening’s honoree table, dressed in a Chinese tunic suit, he listened to Schwarzman give a glowing commendation of his company and its charitable dealings. “Tonight, we celebrate HNA and its brand mission to bring peace and happiness to the world,” Blackstone’s top executive said.

Following Schwarzman’s speech and a video advertisement for HNA set to a bombastic score, Chen — a short, gray-haired man with a warm smile — stepped to the microphone. “I feel that I am welcome as a family member here,” he said.

Then he started to gloat.

“Years ago, if I mentioned HNA to you, you might not be very familiar. But now, if you come to China, you must know HNA,” Chen said, noting that his firm “has developed from a regional airline in South China into a global conglomerate.”

He touted its three-peat in the Fortune 500 ranking, saying, “this year we will undoubtedly make it to the top 100 companies”; its 430,000 global employees; and its massive fleet of planes.

“For purchasing airplanes, we are one of the biggest clients of Boeing, so I think the president of the United States should honor us for a prize,” he said to loud laughter.

The entire event was a celebration of HNA’s supposed wealth and success. But behind the scenes, Chen’s empire was already crumbling.

Barely two weeks after the gala, the New York Times reported that the firm — struggling under a $90 billion debt burden — had started asking its own employees for money in the form of thousand-dollar loans to be paid back with high interest. And early last month, news broke that HNA would put its most prized Manhattan trophy, 245 Park Avenue, up for sale.

The Chinese conglomerate had bought the Midtown office tower for a record $2.21 billion just nine months earlier. As the most expensive New York City real estate deal of 2017, it seemed to cement HNA’s status as one of the city’s most aggressive, and deep-pocketed, foreign investors. And when The Real Deal published a cover story on China’s regulatory clampdown in May 2017, a handful of industry players pointed to HNA as the shining exception.

But since then, the company’s downfall has been swift and dramatic. Now, as it looks to sell billions in real estate, observers wonder what the company can salvage from its recent acquisition spree in New York and other major cities around the world.

245 Park Avenue

“I’ve never seen such a turn in the industry,” said Marcus & Millichap broker Eric Anton, referring to HNA and a handful of other Chinese firms that abruptly pulled out of the NYC market within the past year. “It was a surprise to almost everybody.”

From airline to skyline

HNA was always an outlier among the leading Chinese investors in New York real estate. There are financial firms like Anbang Insurance Group (which China’s government took control of in February), Bank of China and Fosun International, and there are major developers like China Vanke, Xinyuan Real Estate and Wanda Group.

Then there’s HNA, which started off as Hainan Airlines on the eponymous South Chinese island in 1993.

Chen, a devout Buddhist, reportedly pushed the drink trolleys on the company’s first flights. He later directed architects to build HNA’s Haikou headquarters in a shape that resembled the Buddha’s hand.

“I’m different from the other entrepreneurs in China,” he told the Hong Kong-based South China Morning Post in 2014. “I don’t drink, smoke, have banquets, go to karaoke or get massages.”

But as the company’s fleet and revenues grew, it went on a debt-fueled buying binge around the globe. Between 2015 and 2018, HNA spent more than $40 billion on overseas acquisitions, according to the Financial Times. It bought 25 percent of Hilton Worldwide for $6.5 billion, paid another $6 billion for the IT product company Ingram Micro and became Deutsche Bank’s single largest shareholder with a 9.9 percent stake.

And even before those massive deals, HNA had turned to New York real estate. Its first deal was the $274 million acquisition of office tower 1180 Sixth Avenue in partnership with Norman Sturner’s MHP Real Estate Services in 2011. The following year, it paid $126 million for the Cassa Hotel at 66 West 45th Street.

Then it all sat on the sidelines for several years. As companies like Anbang, Xinyuan and China Vanke spent billions on New York properties, HNA sat on the sidelines. But it returned with a bang around 2016, investing in Tishman Speyer’s Brooklyn office development at 422 Fulton Street and teaming up with MHP to buy 850 Third Avenue for $462.5 million. It also reportedly backed Tishman Speyer’s Spiral megatower near Hudson Yards and spent more than $900 million on three office towers in Minneapolis, Chicago and San Francisco.

“Generally, when groups come on the scene in a very strong way all at once, whatever is motivating them tends to be [more than] the pure economics of real estate,” said Woody Heller, a commercial real estate broker at Savills Studley. Often, there is another motivation behind the deal, he and others noted — whether it’s moving money overseas, making a name for oneself or simply the prestige of owning a trophy tower.

One New York developer, who asked to remain anonymous to protect his reputation, called HNA “one of the most reckless investors I’ve worked with.”

The Cassa’s seller, Solly Assa of Assa Properties, however, described the company and its CEO and co-founder Adam Tan, more specifically, as “smart and ambitious.”

“I think that’s evident in the brand recognition they’ve created for themselves in NYC since I first met them,” argued Assa, who said he was introduced to HNA through a mutual acquaintance.

As the firm grew its commercial real estate portfolio in NYC, co-founder Chen and his brother Chen Guoqing bought two condos at Extell Development’s ultra-luxury tower One57 for $47.4 million each.

Big-ticket deals and personal investments aside, Chen and his firm also made some smaller, slightly unusual acquisitions. In November 2015, HNA bought the Hudson Valley Resort — a small, dusty hotel in Kerhonkson, New York — out of foreclosure for $13.8 million.

Rochester Town Supervisor Carl Chipman told the Shawangunk Journal at the time that he had a meeting with an attorney representing an anonymous buyer, who asked if the property could be rezoned to become a retreat center and whether the buyer could build a heliport. “It wouldn’t be a simple thing,” Chipman said. “I suggested that they use Ellenville Airport instead.”

Then in February 2016, HNA bought the 450,000-square-foot Palisades Conference Center from IBM for $59.6 million. In a press release, the company said it planned to use the property near the New Jersey border for training sessions for its employees and to host “cultural and social events for its new neighbors.”

1180 Sixth Avenue

And in April 2017, HNA made what some see as its most unusual deal. Chen’s firm purchased a 25,000-square-foot townhouse on East 64th Street for $79.5 million through an affiliate, HNA Holdings Group New York, reportedly with plans to turn the property into a boutique office.

At about $3,180 per square foot, the building cost significantly more than the going rate for Class A Midtown office space.

“At that price I would have expected a residential mansion,” said Compass President Leonard Steinberg. “But these are unexpected times.”

245 Park to the rescue

Starting in November 2016, the Chinese government enacted a series of capital controls to curb risky overseas investments and stem capital outflows. Almost immediately, Chinese investment in the New York real estate market slowed to a trickle.

Yet HNA kept buying assets with the help of offshore financing and snapped up 245 Park and the East 64th Street townhouse. At a time when observers worried about Chinese buyers disappearing for good, investment sales brokers and industry optimists would point to HNA as a reason for hope.

But that didn’t last long, either.

In June, Chinese regulators began to investigate HNA, along with four other firms, for its use of leverage. Later that year, the company reportedly started delaying loan payments. Meanwhile, news reports increasingly revealed a company desperate for financing. Chen’s firm is now turning to private equity firms and recently pledged $396 million in shares as collateral to Pacific Alliance Group in return for loans.

The big question is whether HNA will suffer the same fate as Anbang, which the China Insurance Regulatory Commission seized for at least a year on Feb. 23 — saying it was a necessary move to prevent the company from collapsing. The action followed the indictment of the insurance firm’s chairman, Wu Xiaohui, who was charged with financial fraud, the Wall Street Journal reported.

Around $20 billion in HNA’s bonds are set to mature this year and next, and their yields have surged. Last month, S&P Global lowered the firm’s group credit profile from b to ccc+ — deep into junk territory.

“While we understand that HNA Group continues to have access to capital markets and appears to have the support of some banks, in our view it is unclear that this will be sufficient for the company to meet its upcoming obligations,” the ratings agency wrote.

To supercharge their growth, HNA and Anbang funded acquisitions with piles of loans, hoping that assets would increase in value and that their income would service interest payments. But the strategy is risky.

“When the debt gets ahead of you, it all stops,” said Al Tarar, founder of the advisory firm Arcis Capital and a former partner in PricewaterhouseCoopers’ Shanghai office.

But he said that HNA and Anbang are far from the only giant Chinese firms that binged on debt — they just happen to be two of the first to get into trouble.

“Many Chinese companies want to become like GE,” Tarar added. “But they want to achieve what GE did in 100 years in three or four years.”

Opaque ownership

HNA’s convoluted structure only complicates matters. The firm is reportedly owned by two charities, both named Cihang, and controls a web of 16 listed entities and many more private shell companies. Rupert Hoogewerf, who publishes an annual list of China’s richest people, told the Financial Times that he couldn’t include HNA’s co-founder in his ranking.

“We have been trying to get Chen Feng on there but we just can’t find any way to show that he’s got enough money,” he said.

Now, as HNA tries to avoid a total meltdown, it’s reportedly ditching much of its real estate in a sharp reversal. Last month, Bloomberg reported that the company plans to sell about $4 billion in U.S. properties, including 245 Park, 850 Third Avenue and the Cassa Hotel on 45th Street.

Within a week of the report, HNA and MHP sold 1180 Sixth Avenue to Northwood Investors for $305 million — $30 million more than the 2011 valuation. HNA also sold its Upper East Side townhouse to billionaire Len Blavatnik for $90 million.

But some observers are skeptical that the company will turn a profit with its other planned real estate sales, especially 245 Park. Two industry sources, speaking on condition of anonymity, said HNA paid about $100 million more than the next bidder when it bought the tower.

“They purchased the building significantly higher than what most sophisticated New York buyers would have paid, and the market for this type of product has treaded water at best since they bought it,” said Greg Kraut, a managing partner at the New York-based real estate investment firm K Property Group.

For HNA to get its investment back, majority buyer would need to target roughly the same average rent per square foot as SL Green’s new office tower One Vanderbilt (about $155) and still pay several hundred million dollars for upgrades, Kraut argued.

“[The 245 Park tower] is a great location, but it needs a complete makeover,” he said. “Who wants to spend the money for that type of risk when there are better and newer buildings that will be priced the same?”

Heller of Savills Studley argued that selling a property that expensive is always challenging because few buyers can afford it. “It’s a thinner market,” he said.

Even if HNA sells 245 Park for a decent price, a chunk of the proceeds will go straight to its mortgage providers.

The company financed the $2.21 billion purchase with a $1.75 billion loan from a group of banks led by JPMorgan Chase. The debt totaled nearly 80 percent of the purchase price, surpassing the industry average of 65 to 75 percent. The 21-story office building at 850 Third Avenue, meanwhile, has a $236 million mortgage from Morgan Stanley, and the Cassa Hotel is backing another $65 million in debt from the asset manager PCCP. And that doesn’t account for any potential mezzanine loans or offshore liabilities, which are not documented in city records.

“Very well connected”

One silver lining may be the company’s political affiliations. Chen and HNA’s other senior leaders are rumored to have close ties to Wang Qishan, who led China’s anti-corruption drive in recent years and is seen as a right-hand man to President Xi Jinping. Tarar called the company “very well connected” to Beijing’s leadership. And in stark contrast to Anbang, no HNA executives appear to have been locked up.

But Anbang may serve as a cautionary tale of how quickly things can change. While the China General Chamber of Commerce’s 2018 gala was all about HNA, Anbang’s chair was the star of the show a year earlier.

At the time, the company seemed at the pinnacle of its power — the proud owner of both the Waldorf Astoria and Essex House and reportedly in talks to buy a major stake in Kushner Companies’ 666 Fifth Avenue. Making a rare public appearance in New York, Wu shared the stage with Michael Bloomberg and gushed about his “good friend” Jonathan Gray, then Blackstone’s real estate head.

A year later, Wu and his company’s name were nowhere to be seen. Chen can at least hope that when the nonprofit hosts its next gala in January 2019, he’ll still be invited.

Eastern Consolidated broker Adelaide Polsinelli said it “wouldn’t be unexpected” if HNA ended up like Anbang. But even if the worst-case scenario happens — and Chen’s firm pulls back from the New York market completely — the retreat won’t necessarily be permanent, she said.

Take Mitsui Fudosan, for example. In the 1980s, the developer was among a handful of Japanese companies collectively investing billions in New York properties. Then, after Japan’s real estate bubble burst, it pulled back. But in recent years, Mitsui Fudosan reemerged as active investor in Manhattan and bought a 90 percent stake in Related Companies and Oxford Property Group’s $4 billion office project 50 Hudson Yards.

“I think you’ll see a lot of these [Chinese] firms reinventing themselves,” Polsinelli said. “We’ve seen that happen before. There are a number of firms that have come in from different countries to do the job they thought they could execute, find they could not, hit the reset button and then come back in a different form.”