Real Estate News

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

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Private equity giant scoops up mobile home park in Hollywood. The Carlyle Group purchased a mobile home park in Hollywood for $25.2 million, another example of private equity firms buying up mobile home communities. [TRD]

 

Gables Residential sells dev site near Shops at Merrick Park. A national apartment builder sold a development site near Shops at Merrick Park in Coral Gables to BF Group, a local developer. Development options for the property include a hotel and office building. [TRD]

 

Copperline Partners closes on bulk co-op deal in Palm Beach. The price was $35 million, and the property could be redeveloped by its new owner into a luxury hotel. [TRD]

 

Grove Isle developers face new lawsuit over proposed project. Grove Isles Associates is facing another legal challenge to its plans for a new condominium complex in the waterfront luxury community in Coconut Grove. [TRD]

 

CMBS loan for Starwood’s Mall at Wellington Green is in trouble. The $680 million CMBS loan for a Starwood mall portfolio that includes a large Wellington property has been sent to special servicing, according to Trepp. [TRD]

 

Why Compass, @properties and tech startups are diving into bridge loans. To help clients increase their purchasing power, a number of residential brokerages have launched bridge loan programs that let clients borrow money to pay for a new home before they sell their old one. [TRD]

 

Long Island politicians want HUD to investigate real estate discrimination. U.S. representatives Kathleen Rice and Thomas Suozzi are drafting a letter to HUD Secretary Ben Carson to call for a probe into the “steering” that a Newsday investigation found was commonplace in the broker community. The representatives will also request that the department end its “harmful rollback of fair housing measures.” [Newsday]

 

Proptech startup Eden completes $25M Series B. Eden, a proptech startup that helps landlords manage parts of the workplace like scheduling cleaning services and ordering snacks, raised $25 million in its Series B funding round. Soho-based venture-capital firm Reshape led the funding round, Eden announced Tuesday. [TRD]

 

Ten-X Commercial laying off half of its workforce. Ten-X Commercial, an online real estate transaction platform, eliminated half its workforce after efforts to sell the company fell through. Close to 100 employees in offices in Texas, New York and California were given notice on Monday morning during a call with executives, according to people on the call and those familiar with the matter. [TRD]

 

Miami professor who taught class on money laundering allegedly laundered millions. University of Miami professor and author Bruce Bagley taught classes on corruption and money laundering, but federal prosecutors are saying that he also helped launder at least $3 million in money from Venezuela through his bank accounts, according to the Miami Herald. On Monday, the 73-year-old Bagley was arrested on one count of conspiracy to commit money laundering and two counts of money laundering. He could face 20 years in jail on each count. [Miami Herald]

 

The New York State Attorney General’s office has launched an investigation into WeWork. The embattled office-space company, which is soon set to lay off thousands of workers, confirmed to Reuters that it had received a request from the state’s AG office, led by Letitia James. [TRD]

 

Compiled by Keith Larsen

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Residential agents are uniquely positioned to assist buyers who are in the in-between phase (Credit: iStock)

Residential agents are uniquely positioned to assist buyers who are in the in-between phase (Credit: iStock)

Once the gatekeepers to sales listings, real estate agents are increasingly in front of another key aspect of the home-buying process: the financing.

To help clients increase their purchasing power, a number of residential brokerages have launched bridge loan programs that let clients borrow money to pay for a new home before they sell their old one. In addition to boosting sales, the programs are a way for firms to distinguish themselves from the competition — which is increasingly coming in the form of instant home buyers, who make instant cash offers to purchase homes.

“The fact that banks don’t really give you credit for your home equity until you move is tough for a lot of people,” said Tim Heyl, a top agent at Keller Williams who last year launched Homeward, which lends buyers funds to make all-cash offers. At closing, the Austin, Texas-based startup takes possession of the property until the buyer secures a mortgage, or it turns over the keys through a leaseback.

According to Heyl, Homeward is completely separate from his 50-person real estate team, which handles $350 million in annual sales.

Residential agents are uniquely positioned to assist buyers who are in the in-between phase, brokerage heads said.

“Not all banks will do a bridge loan, it’s not your typical mortgage,” said David Golden, co-founder of Chicago-based @properties, which partnered with Canadian Imperial Bank of Commerce (CIBC) to offer buyers bridge loans.

Golden said the impetus was buyers who’ve had good deals get away from them. “We’ve seen clients come to us and say, ‘What can you do to help me?’” he said.

Like @properties, Compass recently launched a bridge loan program through a partnership with lenders Better.com and Freedom Mortgage.

Michael Coscetta, the firm’s chief strategy and sales officer, said rates offered by traditional banks and hard-money lenders tend to be “prohibitively high.” In an email, he said a bridge loan program was one of the “most-requested” services from agents and clients in 2019.

Through Compass’ bridge loan program, buyers can also apply to have six months of their loan payments fronted by Notable, an independent lender.

By partnering with lenders, brokerages may also be looking to mitigate the risk of customers defaulting on their loan. “Not every property is going to sell,” said David Goldin, who founded Excelerate, a lending startup that fronts the costs of renovations and staging for sellers.

“If [sellers] don’t have the means to pay the money back, now you have the brokerage firm either suing the client or charging the commission back to the agent,” said Goldin, who previously started Capify, to provide hard money loans to small businesses. “That’s not going to fly too well.”

Proptech players

Investors have also been pouring money into startups that aim to help homeowners finance their purchases. New York City-based Knock, founded by former Trulia executives, has raised $600 million in equity and debt since 2015 to purchase homes on behalf of sellers and then represent customers in the sales of their old home.

Better.com, a direct lender that is one of Compass’ bridge loan partners, raised $160 million in August, bringing its total funds raised to $254 million and a $600 million valuation.

And in San Francisco, Homelight — best known as a matchmaker between sellers and agents — recently raised $109 million to build up its mortgage lending and iBuying businesses. In July, the company purchased Eave, a digital mortgage lender that uses technology to underwrite loans in 24 hours.

“Currently, the way homes transaction, there are all these contingencies. The buyer really doesn’t know if they have access to a mortgage until deep in the closing process,” said founder and CEO Drew Uher. “We’re turning every buyer into a cash buyer, if they want to be.”

Competing with iBuyers in real-time

Though most broker-affiliated financing programs focus on sales, agents John Giannone and Jac Credaroli, cousins who work for Douglas Elliman in New York, launched a loan origination platform called Feeasy to provide up to $50,000 to buyers and renters. For a fee, Feeasy connects renters and buyers to a San Francisco-based lending partner, Upgrade, whose loans are originated by Utah industrial bank WebBank.

“It was really a means of us adding value to our deals and adding value to our clients,” Giannone told The Real Deal earlier this year.

According to Heyl, Homeward captures business that may otherwise be lost to iBuyers including Redfin, Zillow, Offerpad, Opendoor and Knock. (This month, a study of iBuyer purchases found the companies typically pay sellers close to market value for their homes.)

“The thing is, the iBuyers offer a great solution to people who want to buy and sell at the same time,” Heyl said.

If iBuying is on one end of the real estate spectrum, and traditional brokerage on the other end, Seattle-based Flyhomes falls somewhere in between. Founded in 2015, the brokerage makes cash offers on properties. To date, it claims to have brokered $1 billion in sales. It recently launched a “Trade Up” program that leverages the seller’s home equity to land bigger mortgages, and provides a guaranteed price for the home (or Flyhomes will buy it).

Flyhomes is backed by $160 million in debt and equity, and a third-party lender guarantees a mortgage for customers who are trading up. The company said “Trading Up” customers who’ve been approved for homes in the $700,000 to $800,000 range can see their power power go up to $1.1 million.

“We are highly focused on human touch points, so in that way we’re a traditional brokerage,” said Sam Kasle, Flyhomes’ head of brokerage, who oversee 80 agents in Boston, Portland, Southern California and San Francisco. “At the same time, we do have deep roots in proptech.”

Kasle said Flyhomes is operating under the notion that the future of real estate is vertical integration, because that’s what customers want. “Nobody goes to the milk store to buy milk,” he said. “You go to the grocery store.”

The post Why Compass, @properties and tech startups are diving into bridge loans appeared first on The Real Deal Miami.

Mall at Wellington Green Barry Sternlicht (Credit: Google Maps)

Mall at Wellington Green and Barry Sternlicht (Credit: Google Maps)

A $680 million commercial mortgage-backed securities loan for a Starwood mall portfolio that includes a large Wellington property has been sent to special servicing, according to Trepp.

The four-property portfolio is owned partly by Starwood Property Trust. Loans are generally sent to special servicing when they are either in default or when a property has lost a major tenant.

The Mall at Wellington Green, which lost Nordstrom as one of its main anchors earlier this year, is the largest of the four properties backing the loan. The portfolio also includes the MacArthur Center in Norfolk, Virginia, the Northlake Mall in Charlotte, North Carolina, and The Mall at Partridge Creek in Clinton Township, Michigan.

The loan was set to mature in November 2017, but it was extended until November 2019. according to Trepp. It was not paid back this month.

After it lost Nordstrom as an anchor, Starwood proposed redeveloping the Mall at Wellington Green, to include multifamily units, restaurants and entertainment space, and a hotel, according to the Palm Beach Post. The hotel would include a pool, deck and beach, and the project would be centered around a 3.5-acre Crystal Lagoon.

The Mall at Wellington Green, Wellington’s biggest taxpayer, saw its taxable value drop 32 percent this year to $150 million as a result of the Nordstrom departure, according to the Palm Beach County Property Appraiser’s Office.

Starwood’s Starwood Retail Partners bought the property in 2014 for $341.1 million, marking the largest real estate deal ever recorded in the county at the time.

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Rendering of The Markers Grove Isle

Rendering of The Markers Grove Isle

Grove Isles Associates is facing another legal challenge to its plans for a new condominium complex in the waterfront luxury community in Coconut Grove.

This time, it’s a lone Grove Isle homeowner who owns a $26-million-a-year in sales metals manufacturing firm seeking to derail the project, known as The Markers Grove Isle.

For the past four years Grove Isle Associates has engaged in legal skirmishes with the community’s condo association, which represents unit owners in three residential towers, over the tearing down of a hotel and spa on the island to make way for The Markers, a five-building project. Most recently, the Grove Isle Association appealed a lower court’s denial of its petition to prevent the developer from getting its demolition permit.

According to the new lawsuit filed in Miami-Dade Circuit Court against Grove Isles Associates and the city of Miami, the developer’s current plans would create an “over-sized stadium-like structure” that would encircle Grove Isle Tower 3, where Robert Denholtz owns a three-bedroom unit. The new buildings would also cause significant danger to Grove Isle residents during tropical storms and hurricanes by creating a “Venturi effect,” which causes wind forces to increase as it passes through a narrow airspace between the existing buildings and the new structures, the complaint alleges.

The lawsuit was filed by Save Grove Isle, a shell company formed Oct. 31 that lists Denholtz as its manager and his unit as the corporate address. Denholtz is president of Durex, a metals manufacturer based in Union, New Jersey. On the same day, Save Grove Isle sued the city and Grove Isle Associates, seeking an injunction to stop the developer from obtaining any building permits to move forward with construction of The Markers.

“It is outrageous that the developer would attempt to construct a building in a manner that would jeopardize the health and safety of Grove Isle residents,” said Save Grove Isle’s lawyer Todd Legon. “What’s even more outrageous is that the city would let them do it.”

A city of Miami spokesperson declined comment, but Grove Isle Associates attorney John Shubin said the lawsuit is frivolous. “It will not prevent the developers from moving forward with demolition and construction,” Shubin said. “It is a desperate Hail Mary not brought in good faith to derail the project.”

The lawsuit claims the Grove Isle Association commissioned an engineering report that the potential for high wind velocities will increase dramatically when the new five-tower complex is completed. Save Grove Isle alleges the report concluded that 50 miles per hour wind gusts would speed up to 300 miles at the most narrow point between Grove Isle Tower 3 and the proposed project.

Aside from the alleged catastrophic wind forces, the lawsuit alleges the new project would create traffic havoc on Grove Isle as the community relies on a two-lane bridge to get in and out, and the new construction would interfere with a $24 million concrete restoration of the three existing condominiums slated to be completed in 2021.

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Ambassador Hotel Cooperative Apartments (Credit: iStock)

Ambassador Hotel Cooperative Apartments (Credit: iStock)

A co-op in Palm Beach sold in a bulk deal for $35 million, and could be redeveloped by its new owner into a luxury hotel.

Copperline Partners purchased 69 of the 97 units at the Ambassador Hotel Cooperative Apartments in Palm Beach at 2730 South Ocean Boulevard. The sale closed in 69 transactions giving Copperline Partners secured a 76 percent ownership in the property.

The deal took about a year to complete and were complicated by a lawsuit filed by the board of the Ambassador Hotel Cooperative Apartments against the developer. The board sued over allegations that the developer, Adam Schlesinger, lied to the unit owners over the building’s physical state. The lawsuit was dismissed in June.

Greenberg Traurig’s West Palm Beach office led by David M. Layman represented Copperline Partners in the transaction.

The oceanfront Ambassador Hotel Cooperative Apartments is made up of two buildings built in the 1940s and 1980s. The buildings could be redeveloped into a luxury hotel, the Palm Beach Post reported in May.

New development opportunities are rare in the tony town of Palm Beach. The town has restrictive covenants on new buildings and there are only a few hotels on the island.

In May, the Palm House Hotel at 160 Royal Palm Way in Palm Beach sold to a U.S. affiliate of the private real estate investment firm London + Regional Properties for $39.6 million.

The post Copperline Partners closes on bulk co-op deal in Palm Beach appeared first on The Real Deal Miami.

 4601 Le Jeune Road, Jose Boschetti and Maurice Boschetti

4601 Le Jeune Road, Jose Boschetti and Maurice Boschetti

A national apartment builder sold a development site near the Shops at Merrick Park in Coral Gables to BF Group, a local developer. Development options for the property include a hotel and office building.

Atlanta-based Gables Residential sold the 18,748-square-foot assemblage at 4521 and 4601 Le Jeune Road to BF Group, led by Jose and Luis Boschetti. BF Group paid for $4.17 million for the property.

Maurice Boschetti of BH Realty represented the buyer in the off-market deal.

Jose Boschetti said BF Group will make a decision on what it plans to build on the site within three months. It’s considering building a 130-room limited service hotel, a medical or office building, and a boutique assisted living facility focused on memory care.

Across the street, Gables Residential built Gables Ponce, a 367-unit luxury apartment complex with retail on Ponce de Leon Boulevard and Le Jeune Road.

Property records show LG Ponce III, an affiliate of Gables Residential, acquired the lot it just sold as part of a larger deal that included adjacent land on Granello Avenue. In 2016, the Coral Gables City Commission approved Gables Ponce III, a nine-story, 190-unit residential building with retail space, at 363 Granello Avenue.

Jose Boschetti said BF Group had been chasing the lot for seven years. His company also owns the land at 4200 Laguna Street and 4311 and 4225 Ponce de Leon Boulevard.

Last year, Gables Residential completed Gables Columbus Center at 60 Minorca Avenue in downtown Coral Gables.

North of Merrick Park, Hersha Hospitality has proposed building a 135-room hotel at 4241 Aurora Street. GGP, which owns the high-end mall, sold the vacant site in late 2016 for about $3 million.

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Katerra CEO Michael Marks in Taipei in June

Katerra CEO Michael Marks strolled onto the Las Vegas stage, his name and title projected onto a giant black screen. In a style that’s become a cliché among Silicon Valley startups, he was about to unveil the construction firm’s new products to an audience of more than 200 people.

“We’ve been working hard, quietly behind the scenes for the last few years,” Marks said at the February event. “This is our coming-out party.”

At the time, the company had every reason to be a confident debutante: Just one month earlier, SoftBank Group’s Vision Fund had committed another $700 million to the startup — bringing the firm’s rumored valuation to more than $4 billion.

And since it opened its doors in 2015, the unicorn has grown rapidly through a series of acquisitions, reaching a staff of 8,000 globally and doubling down on cutting-edge forms of construction, including prefabrication and buildings made of engineered wood.

The company’s meteoric rise, however, hasn’t been without growing pains.

In its four years, Katerra, which is headquartered in the San Francisco Bay Area, has already had three CEOs and is now on its third chief financial officer. And according to a story late last month on the news site the Information, the company has pulled out of “at least half a dozen apartment and hotel projects in the U.S.”

The Information also reported that the company has laid off more than 100 staffers in three states.

Like other SoftBank-backed startups, including WeWork and Compass, Katerra has yet to turn a profit and has ambiguous plans for an initial public offering. And with WeWork’s recent implosion — the company abandoned its planned IPO and saw its valuation slashed by nearly $40 billion — Katerra and the other companies SoftBank has bet big on are facing heightened scrutiny.

SoftBank declined to be interviewed for this story, but told the Information that the company is approaching $2 billion in revenue this year. Marks, meanwhile, noted that SoftBank is not the company’s only investor — Foxconn and venture capital firm DFJ have also backed the company.

Katerra, he said, plans to turn a profit sometime in 2020 and is sufficiently capitalized, meaning it doesn’t need to go public, though it may do so after 2021. Marks said it’s healthy that WeWork’s issues have triggered introspection among other companies, but he argued that Katerra’s strategy doesn’t need revision.

“I don’t feel one iota of additional pressure,” Marks told The Real Deal in an interview. “We’re not at all like WeWork.”

Still, some sources said WeWork’s struggles could reflect poorly on the construction startup.

Miles Tabibian, co-director of real estate and construction at early-stage tech investor Plug and Play, said there’s already anxiety over tech valuations in Silicon Valley.

“There are always detractors,” he said. “I don’t think WeWork helped.”

At the same time, Katerra is taking on a sector in real estate that’s been one of the slowest to adopt technology. While the company’s strategy of being a one-stop shop — a designer, supplier and builder — allows it to ensure new technology is used at every layer of the construction process, it also means the firm is taking on far more risk both in terms of capital and liability.

John Fish, the CEO of Suffolk Construction, conceded that the construction industry has failed to embrace technology and is facing mounting pressure to evolve as a possible recession looms and costs rise — driven in part by the U.S.-China trade war. But, he said, VC-backed firms don’t necessarily have all the answers.

“The industry is at a crossroads,” he said. “[But] I don’t think Katerra’s strategy is a panacea for driving costs to the bottom.”

An unimaginative space

Until recently, the details of Katerra’s plans to become profitable might not have mattered much. But that may no longer be the case for companies that SoftBank has showered with cash.

“Given what happened with WeWork, profitability is going to become an issue. I would think before Katerra tried to go public, they’ll have to become profitable,” said Frank Sciame, head of the eponymous construction and development company.

Sciame, however, seemed to draw a distinction between the two startups.

“WeWork is in a class of its own,” he said. “They really were trying to redefine the real estate world.”

Katerra hasn’t faced the same level of scrutiny that WeWork and Compass have, but it doesn’t have as much direct competition as those firms.

Architect Michael Green — whose eponymous firm was acquired by Katerra last year — called WeWork a “completely different animal.” The co-working firm is more of a traditional landlord than a tech company.

In addition, Green said the $1 trillion-plus-a-year U.S. construction industry is due for disruption and noted that very few firms have the financial capability to make that happen.

“The space is such an empty, vacuous, unimaginative environment that those who do invest enough to be able to step in at scale are probably those who reap the benefits the most,” said Green, whose firm focused on buildings designed with mass timber. “I think it’s hard to compare a construction tech company to a traditional tech company in any way because you need more money, but you also have access to a lot bigger profitability down the road.”

Katerra built a 1,334-square-foot home in 48 hours in Saudi Arabia and won a contract there to construct 4,101 homes nationwide

Katerra has, indeed, been buoyed by soaring interest in construction-focused tech.

Since 2008, investors have poured more than $27 billion into the sector in the U.S., according to the global consulting firm McKinsey & Company. In the first half of this year, investment in the sector totaled $4.2 billion, putting 2019 on pace to exceed 2018’s $6.1 billion, according to the Wall Street Journal.

Katerra appears to be the dominant fundraiser in the space, though other unicorns have emerged. Procore, a construction management software company, is valued at $3 billion, and Uptake — which uses artificial intelligence to monitor repair needs at buildings — is valued at $2.3 billion.

Jeevan Kalanithi, CEO of OpenSpace — a company that uses artificial intelligence to create 360-degree, navigable maps of construction sites — said there’s an opening right now to change the landscape as a younger generation steps in and the industry copes with a shortage of skilled workers. 

“The industry lost 1 million people as a result of the 2008 financial crisis, and it never really came back,” said Kalanithi, whose firm has raised $17.5 million and is working with Tishman Speyer on the Spiral office tower in Manhattan.

Still, the construction tech sector has some maturing to do.

Kelly Benedict, head of Lendlease’s innovation department in North America, said there’s been a deluge of flashy new tools that, while impressive, amount to a “bunch of solutions looking for problems to solve.”

“There’s a graveyard of failure,” she said. “What tech is getting traction, what is emerging and what’s really going to stick?”

And traditional firms, like Lendlease, are also getting in on the action, either by launching their own tech-focused initiatives or investing in startups. Developers have also started doing more in-house. JDS Development, for instance, does its own construction, and the Related Companies owns a construction management arm and a glass manufacturing firm.

Among construction tech companies, there have been two main strategies: Either focus on one discrete problem — such as safety hazards on construction sites — or take on the entire construction process.

Katerra has favored the latter approach. In the past two years, the company has acquired at least eight construction, architecture and supply firms.

Katerra has more than 300 projects in its pipeline and, as of October, it had 22 U.S. projects under construction where it’s serving as the designer, supplier and general contractor. These projects include the Catalyst Building, a five-story timber office property in Washington state; a 97-unit multifamily project in Hayward, California; and Fort Apache, a 192-unit multifamily project outside Las Vegas. (It has yet to take on a project in New York City).

In September, the company opened its own factory for cross-laminated timber (CLT) — billed as an environmentally friendly alternative to concrete and steel — in Washington. It’s now manufacturing wooden components for buildings up to 18 stories.

Green said that the public’s comfort level with CLT has grown exponentially over the last few years, but there’s still a long way to go in educating key players about the material. In New York, for example, such structures are still limited to seven stories. 

Mihir Shah, co-CEO of JLL Spark — the venture capital and innovation arm of the commercial brokerage — said Katerra’s soup-to-nuts strategy makes sense for a fragmented industry like construction.

“In order to get something efficient, you have to get all members of the ecosystem to adopt technology,” said Shah, which isn’t invested in Katerra. “That’s why Katerra is taking a different approach. It’s like ‘You know what? We’ll be all parts of the stack.’ In construction, unless they’re all in that rhythm, it doesn’t really work.”

“They’ve basically bought every part of the ecosystem so they can do it all and experiment well,” Shah added.

Startup growing pains

Katerra was founded by three tech and finance veterans: Marks, Fritz Wolff and Jim Davidson.

Marks served as CEO of electronics company Flextronics (now called Flex) — which handles multiple aspects of the manufacturing and design of products — and did a stint as CEO of Tesla before founding private equity firm Riverwood Capital. Wolff was a top exec at his family’s real estate private equity firm, the Wolff Company. And Davidson founded tech investment management company Silver Lake.

Part of the impetus for launching Katerra, Marks said, was a suggestion from Wolff, a longtime friend and partner, to create another company that was vertically integrated like Flextronics.

“He said, ‘What you should do is you should create a Flextronics for the construction industry,’” Marks recounted.

In Katerra’s early days, the firm billed itself as a smart home-construction company. But by 2017, it was referring to itself — first and foremost — as a technology company. That’s perhaps not surprising for a SoftBank-backed company: Compass and WeWork have adopted similar branding strategies.  

Marks acknowledged that identifying as a tech-forward company is in vogue, but he said that in Katerra’s case, it’s not just lip service. He noted that Katerra has more than five dozen patents and develops custom robotics and artificial intelligence software. The firm doesn’t just deal with “a drone flying over a site and seeing how much dirt was moved” and then refer to itself as a tech company, he said.  

Still, like WeWork and Compass (to a lesser extent), it’s seen significant executive turnover. Marks replaced the company’s second CEO, Brad Knight, two years ago. In September, Katerra tapped its third CFO, Matthew Marsh. 

Marks said the changes, along with the layoffs, were made as part of the company’s growth strategy. “I think that’s healthy and natural. It’s not a sign of distress,” Marks said. “You don’t go from 0 to 8,000 [employees] without needing to make some changes in personnel.”

The Information reported, however, that on several projects, the company’s all-in-one model “couldn’t save as much money on construction as initially thought” and that there were cost overruns on dozens of projects.

Katerra focuses on offsite construction, meaning that while it manufactures prefabricated parts, the components are assembled at the building site. 

Daniel Timianko of Brooklyn-based FullStack Modular, which acquired Forest City’s modular operations in 2016, said that while Katerra is using new materials (wood) and manufacturing its own supplies, it employs a fairly traditional construction process.

While FullStack delivers an entire building superstructure that essentially snaps into place, Katerra provides prefabricated parts that are installed piecemeal. 

“What happens on the site is exactly the same as a general contractor. They are not disrupting the onsite construction trade,” he said. “They are using wood, so Katerra can’t build a skyscraper. We can.”

Modular construction has started to gain momentum in New York — the city is using it for affordable housing construction. But the method is far from mainstream, and one high-profile project that did use it, the B2 Tower at Forest City’s Pacific Park, was plagued with delays and other issues.  

But Katerra has demonstrated that its approach can lead to efficiencies.

In May, it inked a contract with Saudi Arabia to build 4,101 homes nationwide. The deal came after it won a contest to build a 1,334-square-foot home in 48 hours.

Go big or go home

In January 2018, Marks appeared on CNBC to discuss the $865 million funding round Katerra had just closed. At the time, SoftBank, which led the round, valued the firm at $3 billion. “We were actually hoping for a bigger valuation, but it’s fair,” he said. 

A year later, SoftBank’s additional $700 million brought that number up to over $4 billion. And some have reported that it’s valued at $5 billion.

But whether Katerra’s valuation will stand is a question that at least some are asking.

Public relations executive Ed Zitron, who founded the San Francisco-based tech-focused PR firm EZPR, said Katerra seems to have fallen into a “big sexy Valley trap,” noting that it’s raised a ton of money and is spending rapidly but has been forced to lay off staff. From a branding standpoint, he said Katerra and other companies need to stop following the “WeWork template.”   

“When there are comparables to WeWork, which are spending a lot of money without being profitable, laying off people, that’s when you start saying, ‘Huh, maybe there is a consistency with SoftBank’s investments,’” said Zitron. “If they don’t want to be associated with WeWork, maybe they should stop looking like WeWork.”

Jake Fingert, general partner at real estate venture firm Camber Creek, which isn’t invested in Katerra, said a highly capitalized company like Katerra poses a potential investment risk. The economics just don’t make sense yet, he said, noting that it will take a while for the firm to reach a scale where its massive investment in factory space is surpassed by revenue. Still, he said that Katerra has an edge because it has “patient capital in its corner.” 

“Having deep pockets and the ability to wait that out, in itself, is an advantage,” he said.  

And JLL’s Shah said future investors are not likely to be too deterred by WeWork’s recent problems, especially if Katerra shows a long-term profitability plan.

“I don’t think you can get too bent out of shape by one or two examples,” he said. “If you come to [Silicon Valley], are people a little more cautious? Are they thinking about profitability for later-stage growth? I think that’s true.”

Zach Aarons of MetaProp, also a proptech venture firm, said that while he doesn’t have direct knowledge of Katerra’s finances, companies that raise a ton of capital are playing “a numbers game” that threatens to “totally obliterate your ability to have a successful exit other than an IPO.” He noted that WeWork’s potential IPO raised questions about what it would trade at compared to a traditional real estate company. Katerra could face a similar challenge when it goes to market.

“When you think about Katerra, if they are trying to be a GC or they’re trying to be a lumber mill, what premium would they fetch as it relates to the valuation multiple?” he said. “It creates a go big or go home dynamic.”

The post After WeWork’s spectacular fall, it’s crunch time for Katerra appeared first on The Real Deal Miami.

Orangebrook Mobile Home Estates and Carlyle Group co-CEOs Kewsong Lee and  Glenn A. Youngkin (Credit: Google Maps, Carlyle Group)

Orangebrook Mobile Home Estates and Carlyle Group co-CEOs Kewsong Lee and Glenn A. Youngkin (Credit: Google Maps, Carlyle Group)

The Carlyle Group purchased a mobile home park in Hollywood for $25.2 million, marking another example of private equity firms buying up mobile home communities.

Carlyle, based in Washington, D.C., bought the 344-site mobile home park at 301 Pembroke Road for about $73,000 per site. Orange Brook Mobile Home Estates Inc., which is led by Charles R. Smith of Pembroke Pines, sold the property. It spans over 24 acres.

Amenities include a heated pool and shuffleboard, according to its website. The community sits behind the Orangebrook Golf & Country Club and is geared toward residents aged 55 and older.

Increasingly, private equity firms and real estate investment trusts are buying up mobile home parks to own or redevelop. Investors see mobile home parks as a safe bet during recessions and economic downturns, as most low-income renters are unable to quickly up and move their properties.

In December, Sam Zell’s Equity LifeStyle paid nearly $50 million, or about $53,000 per lot, for a mobile home park near Riviera Beach. In 2017, Carlyle Group paid $45.52 million for a 437-unit mobile home community in Boynton Beach.

Carlyle Group is one of the world’s largest private equity firms with $212 billion of assets under management.

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Eden CEO Joe Du Bey (Credit: iStock)

Eden CEO Joe Du Bey (Credit: iStock)

Eden, a proptech startup that helps landlords manage parts of the workplace like scheduling cleaning services and ordering snacks, raised $25 million in its Series B funding round.

Soho-based venture-capital firm Reshape led the funding round, Eden announced Tuesday.

San Francisco-based Eden launched in 2015. Its technology is available in 25 major U.S. metro areas, the company said.

Eden targets “the enormous workplace market that we believe can be radically transformed,” Reshape partner Vik Patel said in a statement.

The company provides a platform building owners and tenants use to streamline different tasks that go in workplace management like HVAC repair. Eden’s clients include Convene and VTS, among others.

It has also received significant interest from real estate firms investing in proptech. Early investors include RXR Realty, Thor Equities, Mitsui Fudosan and Fifth Wall Ventures. So far, the startup has raised $40 million.

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Miami condo sales again fell last week.

A total of 105 condos sold for $43 million in Miami-Dade County last week, compared to 139 units that sold for a combined $50 million the previous week. Condos last week sold for an average price of about $410,000 or $314 per square foot.

The priciest sale was at Murano Grande at Portofino. Unit 3403 sold for $3.85 million, or $1,172 per square foot, after 121 days on market. The listing agents were Bill Hernandez and Bryan Sereny, while the buyer’s agent was Luis Felipe Vieira De Souza.

Over on Bay Harbor Islands, unit 7G-N at Kai at Bay Harbor sold for $2.58 million. The unit traded hands for $793 per square foot. It was listed with Bragi Sigurdsson. Monica Cohan brought the buyer.

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

Most expensive
Murano Grande at Portofino #3403 | 121 days on market | $3.85M | $1,172 psf | Listing agents: Bill Hernandez and Bryan Sereny | Buyer’s agent: Luis Felipe Vieira De Souza

Least expensive
Grove Enclave #1404 | 18 days on market | $780K | $332 psf | Listing agent: Michael Schnabel | Buyer’s agent: Suzanne Feanny

Most days on market
SLS Lux #4301 | 403 days on market | $1.03M | $918 psf | Listing agent: Ana Lagomarsino | Buyer’s agent: Jonathan Mann

Fewest days on market
Grove Enclave #1404 | 18 days on market | $780K | $332 psf | Listing agent: Michael Schnabel | Buyer’s agent: Suzanne Feanny

The post These were the most expensive condo sales in Miami last week appeared first on The Real Deal Miami.

 
Attorney General Letitia James (Credit: Getty Images)

Attorney General Letitia James (Credit: Getty Images)

The New York State Attorney General’s office has launched an investigation into WeWork, Reuters reported.

The embattled office-space company, which is soon set to lay off thousands of workers, confirmed to the news outlet that it had received a request from the state’s AG office, led by Letitia James.

James’ office is reportedly looking into multiple transactions involving former CEO Adam Neumann that were scrutinized for potential self-dealing. One arrangement involved millions of dollars paid to Neumann by WeWork to lease buildings that he owned. Another transaction reportedly being examined is a $5.9 million payment to Neumann by the company to buy from him the trademark “We.”

The inquiry follows a Bloomberg report last week that stated the U.S. Securities and Exchange Commission had launched a separate probe into WeWork, and pointed to the same transactions as potentially being examined by the agency. [Reuters] — David Jeans

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Close to 100 employees were given notice on Monday morning (Credit: iStock)

Close to 100 employees were given notice on Monday morning (Credit: iStock)

Ten-X Commercial, an online real estate transaction platform, laid off half its workforce after efforts to sell the company fell through.

Close to 100 employees in offices in Texas, New York and California were given notice on Monday morning during a call with executives, according to people on the call and those familiar with the matter.

Thomas H. Lee Partners, the private equity firm that owns Ten-X Commercial, has been trying to sell the company since the start of the year. CoStar Group had been in talks for a potential acquisition until recently, according to former Ten-X employees.

Thomas H. Lee Partners declined to comment. Ten-X and CoStar did not respond to multiple requests for comment.

Ten-X says that more than $50 billion in real estate transactions have been conducted through its marketplace. It was founded in 2007 as Auction.com, a residential real estate deal platform. In 2016, it launched a separate platform known as Ten-X Commercial, which provided a marketplace for commercial properties. Along the way, it received investments from multiple firms, including Barry Sternlicht’s Starwood Capital, Stone Point and CapitalG.

In 2017, Thomas H. Lee Partners purchased a majority interest in Ten-X for close to $1.6 billion. The private equity firm quickly set about separating the two products — Auction.com and Ten-X Commercial — into siloed companies. Shortly after, Ten-X Commercial cut about 10 percent of its staff in early 2018.

Since the private equity firm began marketing Ten-X earlier this year, it attracted multiple suitors, including Newmark Knight Frank. Newmark declined to comment.

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Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

 

Last call for Purdy Lounge. Miami Beach bar announces closure. Purdy Lounge in Miami Beach’s Sunset Harbour neighborhood will hold its last last call on February 8. The popular bar and lounge, at 1811 Purdy Avenue, announced on Facebook that it would be closing early next year after operating for about 20 years. [TRD]

 

Russell Galbut wants to sell another Miami Beach hotel. Miami Beach developer Russell Galbut and his nephew Keith Menin are looking to sell another Miami Beach hotel. A company tied to Galbut and Menin is seeking to sell the 26-room Domio Kaskades Hotel in Miami Beach for $15.8 million or $607,692 per room. [TRD]

 

Morgan Reed Group lists Rail 71 development for $33M. Morgan Reed Group is looking to cash out on its investment in a Little River office development. The company hired brokers Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors to list Rail 71, at 7205 Northeast Fourth Avenue, for $33 million or $258 per square foot, the brokers said. [TRD]

 

Cutler Bay axes Edgardo Defortuna’s plans for single-family development. Edgardo Defortuna’s 16-year plan to build a new development along Biscayne Bay in Cutler Bay was shot down by the town council. Defortuna, who leads Fortune International Group, sought to build 29 single-family homes on an 8.4-acre site south of Southwest 184th Street. [TRD]

 

The Flooring King buys a new palace in Miami Beach. A former owner of Jungle Island sold his Miami Beach home to the self-proclaimed Flooring King for $5.8 million, property records show. Bernard and Mary Levine sold the six-bedroom, 5,441-square-foot house at 266 South Coconut Lane on Palm Island to Ofer Sustiel. [TRD]

 

Fund manager’s wife buys Boca Raton mansion for $13M. The wife of an investment manager bought a waterfront Boca Raton mansion for $13 million, adding to the list of pricey sales this year at the Royal Palm Yacht and Country Club. [TRD]

 

Ocean Delray breaks ground. National Realty Investment Advisors (NRIA) and U.S. Construction have broken ground on Ocean Delray, an oceanfront luxury residential project. The project at 1901 South Ocean Boulevard will have 19 units priced between $5.7 and $10 million.

 

State lawmakers are moving to shut down Opa-locka. The state’s Joint Legislative Auditing Committee is seeking to move forward with legislation that would force residents of Opa-locka to vote on dissolving the city, according to the Miami Herald. The push comes after a report from the state auditor found 99 issues of fraud and mismanagement in June. [Miami Herald]

 

Brickell Flatiron commercial space sale closes amid lawsuit. Despite suing developer CMC Group for an unfavorable redesign of Brickell Flatiron’s commercial space, Avi Dishi and Haim Yehezkel finalized a $22.5 million deal to buy the 24,800 square feet on the ground floor and mezzanine level set aside for a restaurant and retail. [TRD]

 

Fitness expert wants to shed his Hollywood home via auction. A fitness expert, bodybuilder and supplement maker is looking to shed his waterfront estate in Hollywood. James Grage, co-founder and vice president of BPI Sports Fitness Supplements, is selling the house at 1215 Diplomat Parkway, within Hollywood Golf Estates, at auction on Nov. 25. [TRD]

 

Compiled by Keith Larsen

The post Last call for Purdy Lounge, Russell Galbut wants to sell another Miami Beach hotel: Daily digest appeared first on The Real Deal Miami.

Purdy Lounge in Miami Beach (Credit: Facebook)

Purdy Lounge in Miami Beach (Credit: Facebook)

Purdy Lounge in Miami Beach’s Sunset Harbour neighborhood will hold its last last call on February 8.

The popular bar and lounge, at 1811 Purdy Avenue, announced on Facebook that it would be closing early next year after operating for about 20 years.

“There is a lot you can do in 20 years, begin a new century, build a new business, develop a neighborhood, make new friends, strengthen bonds, dance, celebrate, cry, fall in love, and drink a few happy meals,” the post reads.

Residents, including the Sunset Harbour Neighborhood Association, have wanted the city to change Purdy’s closing time to 2 a.m. from 5 a.m. for nearly a decade, the Miami New Times reported last year.

Since it opened in 2000, the neighborhood has been developed into a high-end area with luxury condos, retail and office space. Last year, developer Scott Robins and former Miami Beach mayor Philip Levine sold a seven-building, 61,400-square-foot portfolio in Sunset Harbour for nearly $69 million to a North Carolina investment firm. Tenants there include Lucali, Flywheel Sports, Barry’s Bootcamp, Panther Coffee, Icebox Café and Stiltsville.

Brokerages such as Brown Harris Stevens and One Sotheby’s International Realty have opened offices in the neighborhood.

In October, the Miami Herald reported that Pubbelly, which opened in Sunset Harbour in 2011, had closed over the summer for repairs and decided not to reopen.

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Rail 71, Tony Arellano and Devlin Marinoff

Rail 71, Tony Arellano and Devlin Marinoff

Morgan Reed Group is looking to cash out on its investment in a Little River office development.

The company hired brokers Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors to list Rail 71, at 7205 Northeast Fourth Avenue, for $33 million or $258 per square foot, the brokers said. The flex creative office building is 89 percent occupied with 49 office, showroom and gallery tenants, including Dwntwn’s office, Saladino Design Studio, Fede Design, Bloom Miami and Bousa Brewing.

The 127,562-square-foot building, which backs up to the Florida East Coast Railway, was built on a 3.4-acre site west of Biscayne Boulevard. Rail 71’s annual net operating income is about $1.8 million, with average gross rents of $19.39 per square foot, according to the offering memo.

The building is part of the Little River business district, near Ironside, the Citadel and the MiMo District.

Arellano said Morgan Reed has been investing heavily in Old San Juan, Puerto Rico, and that the company planned to sell Rail 71 after completing a renovation and leasing up the building.

Nearby, a group of developers that includes Plaza Equity Partners and Tony Cho is planning the Magic City Innovation District, an 18-acre, $1 billion phased project at Northeast 62nd Street and Fourth Avenue. The development could have eight 25-story residential buildings, five 20-story office buildings, and an innovation tech center all employing roughly 7,000 people.

Landowners in Little Haiti including Magic City are pushing for a new Tri-Rail station to be built on their properties.

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From left: Keith Menin and Russell Galbut, with the Domio Kaskades Hotel

From left: Keith Menin and Russell Galbut, with the Domio Kaskades Hotel

Miami Beach developer Russell Galbut and his nephew Keith Menin are looking to sell another Miami Beach hotel.

A company tied to Galbut and Menin is seeking to sell the 26-room Domio Kaskades Hotel in Miami Beach for $15.8 million or $607,692 per room. The property at 300 17th Street totals 18,725 square feet.

Marcus & Millichap’s Drew A. Kristol, Kirk D. Olson and Joseph Thomas represent the seller in the deal.

If the sale goes through, it will be the third Miami Beach hotel Galbut and Menin have sold since July. In August, companies tied to Menin and Galbut sold the shuttered Sanctuary Hotel at 1745 James Avenue for $14.4 million to Blue Road. A month earlier, Galbut sold the Bentley Hotel on Ocean Drive for $28 million. It was previously managed by Menin Hospitality.

In September, Menin and Galbut signed a 10-year lease with the short-term operator Domio to take over management of the Kaskades Hotel. Domio is a New York-based startup that aims to “professionalize the Airbnb space” by renting out apartments or hotels rooms on a short-term basis.

Domio expanded to South Florida in August when it signed a $1.45 million lease for 45 units at the beachfront Monte Carlo at 6551 Collins Avenue in Miami Beach. The company has more than 2,000 rooms in its portfolio, the bulk of which are in Chicago and New Orleans, according to its website.

The Kaskades Hotel was originally designed by architect Melvin Grossman in 1953. Grossman was known for his minimalist style and designed the historic International Inn in Miami Beach and worked on Caesars Palace in Las Vegas, according to his obituary.

Galbut’s company purchased the property for $2 million in 2013.

Galbut’s Crescent Heights is one of the most active developers in Miami Beach. The company is currently developing a 44-story, 519-foot-tall luxury residential building called Park on Fifth at 500 Alton Road, on the site of the former South Shore Hospital.

Recently, however, Galbut has turned his attention to Miami’s Edgewater neighborhood. Crescent Heights is in the planning stages for a mixed-use project between Northeast 29th to 32nd streets and between Northeast Second Avenue and Biscayne Boulevard. The Miami-based firm, led by Galbut, Sonny Kahn and Bruce Menin, plans to build 800 residential units and over 600,000 square feet of retail and office space on the assemblage.

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249 West Alexander Palm Road and Kimberly Vassalluzzo

249 West Alexander Palm Road and Kimberly Vassalluzzo (Credit: Realtor)

The wife of an investment manager bought a waterfront Boca Raton mansion for $13 million, adding to the list of pricey sales this year at the Royal Palm Yacht and Country Club.

Kimberly Vassalluzzo purchased the 8,862-square-foot canalfront estate at 249 West Alexander Palm Road for $1,467 per square foot, records show. The home was built last year and sits on 0.34 acres in Royal Palm Yacht and Country Club.

Mikhail Avrutin, who is the owner and developer of Baltic Hotel Group, sold the property.

The house has six bedrooms and 10 bathrooms. The seller and the buyer were represented by David W. Roberts with Royal Palm Properties, according to Realtor.com.

Vassalluzzo’s husband, Scott J.Vassalluzzo, is the managing member of the Boca Raton-based investment firm Prescott General Partners. The firm has $2.5 billion in assets under management, according to a Securities and Exchange Commission filing.

The Royal Palm Yacht and Country Club has seen a number of big sales recently. Richard Templer, the owner of a professional horse racing stable, and his wife Diane Templer last month purchased a waterfront home at 190 Northeast 5th Avenue for $12.2 million.

Also last month, Robert Sheetz, the founder of the Sheetz convenience store and gas station chain, sold a waterfront estate at 133 West Coconut Palm Road in the Royal Palm Yacht & Country Club for $11.45 million.

In September, a group of executives tied to a West Palm Beach transportation company bought a 9,203-square-foot house at 300 East Key Palm Road for $12.1 million.

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The bombshell probe also found that minorities had to meet more stringent financial qualifications than white buyers. (Credit: iStock)

The bombshell probe also found that minorities had to meet more stringent financial qualifications than white buyers. (Credit: iStock)

A three-year undercover investigation by Newsday found 40 percent of Long Island brokers routinely discriminate against minority buyers.

Black testers experienced unfair treatment 49 percent of the time, Latinos 39 percent and Asians 19 percent. Black buyers were on average shown the fewest of an agent’s listings in majority-white neighborhoods, Newsday found.

The bombshell probe also found that minorities had to meet more stringent financial qualifications than white buyers. In seven cases, minority buyers without a pre-approved mortgage were blocked from home tours, but whites were not.

A quarter of the brokers directed white buyers to listings in majority-white communities, while black and Latino buyers were steered toward more integrated communities. Brokers spoke with white buyers about the racial or ethnic makeup of certain communities, which is illegal according to fair housing laws.

Newsday used paired-testing, a federally approved method for finding violations of fair housing laws. One white and one black, Asian or Latino tester would approach the same agent for help, providing similar financial details and identical preferences in home location and features.

Testers approached some of the island’s biggest brokerages: Douglas Elliman, Century 21 Real Estate LLC, Charles Rutenberg Realty, Coldwell Banker Residential Brokerage on Long Island, Coach Realtors, Daniel Gale Sotheby’s International Realty, Laffey Fine Homes, Keller Williams Realty, the Corcoran Group, Signature Premier Properties, Realty Connect USA and RE/MAX LLC.

No unfair treatment was exhibited by agents from the Corcoran Group or Daniel Gale Sotheby’s International Realty, according to the study. [Newsday— TRD Staff

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More than 4,000 people are expected to receive notice in coming weeks (Credit: iStock)

More than 4,000 people are expected to receive notice in coming weeks (Credit: iStock)

More than a third of WeWork’s 12,000 employees will likely receive notice this week that they no longer have a job. The layoffs are part of an effort by the struggling office-space company to cut costs, close ancillary businesses and narrow its offering to subletting office space.

WeWork chairman Marcelo Claure (Credit: Getty Images)

WeWork chairman Marcelo Claure (Credit: Getty Images)

In a company email sent by chairman Marcelo Claure, employees were told that layoffs will begin this week in the U.S., and that a planned all-hands meeting will be postponed from Tuesday to Friday, where Claure will present the company’s five-year plan.

“In the areas of the business that do not directly support our core business goals, we have to make some necessary job eliminations,” Claure said in the email, which was seen by The Real Deal. “We are going to eliminate and scale back certain functions and responsibilities, which will increase efficiency and also accountability.”

A person familiar with the matter told TRD that employees in the legal and human resources departments will begin receiving notice Monday.

WeWork declined to comment.

WeWork employees have waited weeks to hear notice of the layoffs, since the company abandoned plans for an IPO and had its valuation slashed from $47 billion to $8 billion. After CEO and co-founder Adam Neumann left the company in October, SoftBank, its largest investor, committed to a $9.5 billion lifeline to bail out the company, and installed a Claure to implement a turnaround strategy.

In sum, more than 4,000 people are expected to receive notice in the coming weeks, according to multiple people familiar with the matter.

Those include 1,000 maintenance workers who have been informed that their employment will be terminated on Dec. 9, according to a group of employees. The group, WeWorkers Coalition, formed in recent weeks and sent a letter to management earlier this month stating that they “don’t want to be defined by the scandals, the corruption and the greed exhibited by the company’s leadership.”

The group announced over the weekend that WeWork had reached an agreement with JLL to accept close to 1,000 maintenance and cleaning workers, many of whom would then be contracted to work in WeWork buildings.

However, the group raised alarm at the terms of the deal, and said that employees were told by WeWork to sign the terms of the contract by Monday, otherwise it would consider their resignations voluntary. The group said on Twitter that the contract has confused employees with pay discrepancies, and demanded a deadline extension.

In a separate tweet, the group added that WeWork “is not following through on its promise to treat employees with ‘dignity and respect’ during this restructuring process.”

Many employees and shareholders with stock options are also waiting to hear when a $3 billion tender offer by SoftBank will be launched, after being delayed for almost two weeks.

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Antonio Sustiel and 266 South Coconut Lane (Credit: Facebook and Zillow)

Antonio Sustiel and 266 South Coconut Lane (Credit: Facebook and Zillow)

A former owner of Jungle Island sold his Miami Beach home to the self-proclaimed Flooring King for $5.8 million, property records show.

Bernard and Mary Levine sold the six-bedroom, 5,441-square-foot house at 266 South Coconut Lane on Palm Island to Ofer Sustiel. The Levines provided the buyer a $5.4 million mortgage.

Sustiel, who was featured on CNBC’s “Blue Collar Millionaires: Dirty Stinkin’ Rich,” owns The Flooring King, which he has called one of the largest closeout liquidators of laminate wood flooring.

A company led by Bernard Levine sold Jungle Island to ESJ Capital Partners for $60 million in 2017.

The Levines paid $1.4 million for their Miami Beach house in 2000, according to property records. It was last on the market in 2017 for $8 million. The home, built in 1972 and later expanded, sits on a 14,000-square-foot lot with 100 feet of water frontage, a Brazilian Ipe dock, and boat lifts.

Earlier this year, Brazilian developer Leo Macedo listed his Palm Island mansion at 30 Palm Avenue for $29 million.

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From left: WeWork’s Adam Neumann and SoftBank’s Masayoshi Son (Photo-Illustration by Nazario Graziano)

Masayoshi Son was widely regarded as an eccentric-but-gifted entrepreneur when, in 2014, he dazzled investors during an earnings presentation by showing them a picture of a large, brown-feathered bird.

“SoftBank wants to become the goose that lays the golden eggs,” Son told them, two years before launching a $100 billion Vision Fund that went on to anoint a crop of promising startups.

But over a turbulent six weeks starting in September, one of its biggest bets went south when WeWork scrapped plans for an IPO, saw its valuation plunge to less than $8 billion from $47 billion and ousted its co-founder and CEO, Adam Neumann.

The co-working company — which lost $900 million during the first half of 2019 — was on the brink of insolvency when SoftBank threw it a $9.5 billion lifeline.

In the wake of that spectacular downfall, many are now questioning Son’s strategy of dumping massive amounts of cash on unprofitable firms. Although cherry-picking startups and supersizing their growth made Son a kingmaker, the tactic is now facing harsh criticism, with some saying it’s stoked a trend of overvaluing companies.

Ed Zitron, founder of the San Francisco-based tech-focused PR firm EZPR, mocked Son right after WeWork’s implosion last month.

“Masa Son! I reach out to you with the greatest salutations! I would like to offer you a deal – one billion dollars of your soft bank [sic] fund and I will make a terrible company and lose all of the money!” he tweeted.

The playful needling underscores increased scrutiny on other companies SoftBank has backed — including Compass, Opendoor, Lemonade and Katerra.

“SoftBank’s Vision Fund has become the poster child for what many believe is a bubble in private market valuations of technology stocks,” Walter Piecyk, an analyst at research firm LightShed Partners, wrote in mid-October. “In fact, many blame SoftBank for driving up industrywide valuations across multiple verticals, whether SoftBank was an investor or not.”

SoftBank has, indeed, helped fuel other massive funding rounds in the venture world, where there’s now increased pressure to land a lottery-style win. Since the end of the financial crisis, investors have poured hundreds of billions of dollars into high-risk startups.

“The SoftBank/Vision Fund investing philosophy is the sharp tip of the spear,” said Hong Kong-based analyst Jeffrey Halley, explaining that it’s been the most aggressive investor in the field.

With too much dry powder, many venture capitalists have looked outside their typical investment parameters into high-risk deals, said Halley, who works at Oanda, the foreign-exchange firm.

“The market,” he added, “ignores realities and convinces itself in a massive groupthink that ‘this time it’s different.’”

“Embarrassed and impatient”

The timing of WeWork’s downfall couldn’t be worse for Son, who is trying to raise a second Vision Fund — this one for an estimated $108 billion.

In early October, some SoftBank executives reportedly urged him to delay the offering because he was struggling to raise the cash.

In September, at a five-star resort in Pasadena, California, Son told a group of entrepreneurs — whose companies were backed by SoftBank — that they need to become profitable soon, according to published reports.

And in recent weeks, Son has said publicly that he was “embarrassed and impatient” with SoftBank’s recent track record. During an investor call late last month, he apologized to investors in the first Vision Fund, according to Bloomberg.

LightShed’s Piecyk, however, said in his report that it’s not the “size of the possible investment losses at WeWork” that are most concerning. “It’s the ongoing damage to SoftBank’s reputation and how that might limit future investing,” he wrote.

The global stock markets share those concerns. SoftBank’s stock — down 30 percent since July — slid even more on news of the WeWork bailout.

“This sorry episode is also a searing indictment of SoftBank’s valuation and screening methodology which needs to shift towards being based on fundamentals rather than blue sky,” Richard Windsor, founder of the research company Radio Free Mobile, wrote in a research note.

While companies like Apple and Foxconn, the electronics manufacturer, are contributing to the Vision Fund 2, Abu Dhabi and Saudi Arabia — two of the biggest investors in SoftBank’s previous fund — haven’t confirmed their commitments.

SoftBank (and other companies) took flak for accepting money from Saudi Arabia after Washington Post journalist Jamal Khashoggi was killed at the Saudi consulate in Istanbul last year. But while some investors initially shunned Saudi leader Mohammad bin Salman bin Abdulaziz Al Saud (aka MBS), Son — who raised $45 billion from the kingdom for the first Vision Fund — stayed with him.

With that controversy behind it, sources said, SoftBank must now worry about its reputation among investors in the wake of WeWork’s failed IPO.

Although SoftBank’s first Vision Fund earned $1.5 billion on its investment in Flipkart, an Indian e-commerce company, Uber’s public offering was widely considered a flop.

Sources close to Son have reportedly said he’s considering a more cautious strategy for Vision Fund 2. The SoftBank chief will focus on companies with clear paths to profitability and is likely to slow the frenetic pace of investment. The first Vision Fund deployed roughly $80 billion within two and a half years; Vision Fund 2 will be deployed over four to five.

Some observers, however, said the WeWork bailout represents a second chance for SoftBank to make good on one of its biggest bets.

“These are grownups. These are all consenting adults,” said Rett Wallace, founder of Triton Research, who added that SoftBank can “well afford” these sorts of losses. “It makes sense for them to keep [WeWork] going rather than walk away from it, abandoned on the side of the road.”

How SoftBank will right-size the co-working giant remains to be seen.

After adding 6.3 million square feet of office space in the U.S. and Britain last year, the co-working firm was on track to take another 9.9 million square feet this year, according to data from CoStar Group. But it’s unclear whether WeWork will follow through on those lease commitments — or if some of the landlords it struck deals with will be left holding the bag. In mid-October, WeWork scrapped plans to lease an entire 36-story office tower in Seattle.

“If SoftBank turns WeWork around with the decks cleared … the fallout should be limited,” Halley said. “Much will depend on how the next few SoftBank-invested exits go over the next six months.”

Keeping distance

Amid WeWork’s reckoning, other SoftBank-backed firms have tried to distance themselves from the spectacle. In a company-wide email sent early last month, Compass CFO Kristen Ankerbrandt posited that it was hard to draw any parallels between the firms.

Compass and others have argued that unlike WeWork — where SoftBank holds an outsized stake — they have benefited from diverse investor bases. (Following the bailout, SoftBank, which has invested $13 billion in the company to date, held a roughly 80 percent stake in WeWork.)

By comparison, SoftBank has contributed just over a third of the $1.5 billion raised by Compass, company officials said. In an interview at the residential brokerage’s Manhattan headquarters last month, CEO Robert Reffkin also downplayed SoftBank’s role in determining Compass’ valuation of $6.4 billion, which he said was set by multiple investors including the Canada Pension Plan Investment Board, Dragoneer Investment Group and Glynn Capital Management.

“It’s a number of third-party investors, who are much smarter than I am, that do this for a living,” Reffkin said.

Katerra CEO and co-founder Michael Marks, meanwhile, told The Real Deal last month that his company is “not at all like WeWork.”

VCs that invested alongside SoftBank in Opendoor — the San Francisco-based iBuying startup that’s raised $1.3 billion in equity and $3.5 billion in debt financing since 2013 — are also downplaying SoftBank’s role. 

“SoftBank is a relatively small minority of capital Opendoor has raised,” said David Weiden, a partner at Khosla Ventures, which has invested an undisclosed amount in the company.

In March, Opendoor closed a $300 million round at a $3.8 billion valuation from investors including SoftBank, General Atlantic, Lennar Corporation, Fifth Wall Ventures and others.

SoftBank declined to comment, but a source close to the Vision Fund said it measures fair market value in accordance with international private equity, venture capital and accounting standards.

Yet amid increased competition, Opendoor began curtailing expenses this spring — laying off 50 out of 1,300 staffers and asking 200 to 300 others to relocate to Phoenix. The company also pulled the plug on free lunches.

And Compass halted launchings in new markets this year. Instead, it’s focusing on its existing markets. But in a pointed rebuke of Neumann’s $60 million private jet, Compass said all of its execs fly commercial. (Notwithstanding Chairman Ori Allon’s flight on a private plane to the Bahamas this year, according to his Instagram.)

On Oct. 17, Reffkin posted a selfie from what appeared to be the coach cabin of a flight from New York to San Francisco. “If anyone wants tips on how to fall asleep on a redeye,” he wrote, “I’m happy to give you some great tips!”

The SoftBank fallacy

SoftBank’s presence has turned the VC landscape on its head in the last few years. 

Amid stiff competition for the most promising deals, many investors simply overpaid by valuing companies based on metrics they expected to see in the future.

As of 2019’s third quarter, there were a record 180 VC-backed companies valued at over $1 billion, according to the data analytics site CB Insights. Helping fuel that were more than 120 companies that received over $100 million apiece during the second and third quarters.

The danger of inflated valuations, though, has become clear.

Tech startups that went public in 2019 have faced a cool reception in the public market.

In late October, for example, the stock price of instant-messaging firm Slack was down more than 47 percent since its June IPO, and Uber’s was trading at nearly 20 percent below the IPO price. Both were backed by SoftBank.

And it’s not just investors who were burned.

After SoftBank’s bailout, thousands of WeWork employees were bracing for mass layoffs, but those cuts were delayed because the company couldn’t afford the severance payments. In addition, under the bailout plan, employees who opt to sell their WeWork shares to SoftBank will do so for less than the paper value of the stock when it was issued.

“It is not unusual for the world’s leading technology disruptors to experience growth challenges as the one WeWork just faced,” Son said in statement at the time of the bailout.

Many WeWork employees were also irate over Neumann’s golden parachute (he got $1.7 billion to walk away from his board seat) and his reckless spending and self-dealing. “I don’t know why anyone was paying him for the word ‘we,’” one former executive told TRD in September. “The only word he knew was ‘I.’”

But the problem is bigger than Neumann.

Merritt Hummer, a senior principal at Bain Capital Ventures, said it’s become common for VCs to overpay for a stake in sought-after companies.

“It’s become not the exception but the rule for companies that are performing,” she said.

“The SoftBank fallacy, if you want to call it that, is that they’ve applied this methodology to companies that are mature,” she added. “That is risky to do when you’re the last capital in and the next decision-maker — in terms of a valuation of the business — is going to be the public market.”

David Jeans contributed reporting.

The post Piecing together SoftBank’s disruptive real estate bets appeared first on The Real Deal Miami.

Edgardo Defortuna, an aerial of 18551 Old Cutler Road, and renderings of the project (Credit: Google Maps)

Edgardo Defortuna, an aerial of 18551 Old Cutler Road, and renderings of the project (Credit: Google Maps)

Edgardo Defortuna’s 16-year plan to build a new development along Biscayne Bay in Cutler Bay was shot down by the town council.

Defortuna, who leads Fortune International Group, sought to build 29 single-family homes on an 8.4-acre site south of Southwest 184th Street. The plan received heavy opposition from environmentalists and neighbors over concerns about traffic and wetland protection.

Defortuna’s subsidiary, Cutler Properties, initially purchased a 138-acre property in 2003. The development group was seeking to build 341 residential units as part of a mixed-use project on 40 acres and then would preserve the 93.15 acres bordering Biscayne Bay. The site, however, was never approved for an environmental permit by the South Florida Water Management District and the development group had to change its plans.

Cutler Properties then filed a lawsuit in 2008 against the water district but settled and agreed to only build on 8.4 acres. In 2016, the development group had to change its plans from a mixed-use project to low-rise, single-family homes. Ultimately, the plan was denied by the council in a 4-1 vote on Wednesday, according to Cutler Bay’s town clerk.

Fortune International Group declined to comment through a spokesperson.

Fortune International Group’s recent and current developments include condo projects such as Jade Ocean and the Ritz-Carlton Residences in Sunny Isles Beach, along with the Class-A office tower 1200 Brickell in Miami.

Cutler Bay in south Miami-Dade County is seeing more interest from developers. The homebuilder Lennar Corp. recently paid $19.5 million for a 58-acre lot near Southwest 104th Avenue.

Earlier this year, a Midtown Miami developer paid $7 million for the 39,000-square-foot Toys “R” Us building at 19525 South Dixie Highway in Cutler Bay.

The post Cutler Bay axes Edgardo Defortuna’s plans for single-family development appeared first on The Real Deal Miami.

Brickell Flatiron (Photo Credit: Golden Dusk Photography)

Brickell Flatiron (Photo Credit: Golden Dusk Photography)

Despite suing developer CMC Group for an unfavorable redesign of Brickell Flatiron’s commercial space, Avi Dishi and Haim Yehezkel finalized a $22.5 million deal to buy the 24,800 square feet on the ground floor and mezzanine level set aside for a restaurant and retail.

The sale closed earlier this week, according to representatives for Ugo Colombo’s CMC Group and Dishi and Sons, the shell company formed by the two real estate investors.

“Buyer and seller fully complied with the purchase contract,” said a CMC Group spokesperson in a written statement. Dishi and Sons attorney Adam Lamb confirmed his clients paid the agreed upon price from 2016, when the deal was brokered by Cervera Real Estate’s Nickel M. Goeseke. Lamb added Dishi and Sons is not withdrawing its lawsuit, filed in August in Miami-Dade Circuit Court.

“We are pursuing a claim for damages,” Lamb said. “The property is not what was presented to us.”

Lamb said his client completed the sale to fulfill commitments for some of the commercial space that has been pre-leased.

In its lawsuit, Dishi and Sons sought a court order to slash the purchase price. The partnership alleged CMC Group altered the construction plans without notifying Dishi or Yehezkel. Those revisions allegedly made significant portions of the commercial space unusable by placing a garage ramp through it.

Dishi and Sons, which paid a deposit of $11.25 million, claims CMC Group only provided plans and other renderings showing the commercial units contained usable, unobstructed spaces on the ground floor with appropriate ceiling heights. Dishi and Sons obtained letters of intent from prospective tenants, including an unnamed high-end restaurant that wanted to take advantage of the high ceilings and ample space.

Dishi and Sons alleges that when the 64-story tower was being built, CMC Group put a “several-ton cement parking garage ramp” in the middle of the commercial space.

The 597-unit condominium at 1000 Brickell Plaza was recently completed. Brickell Flatiron‘s amenities include a rooftop sky spa and pool deck, a billiard and cigar room, wine cellar, movie theater, children’s playroom, outdoor lap pool and a children’s pool. Luis Revuelta, along with Italian designer Massimo Iosa Ghini and artist Julian Schnabel, designed the project.

The post Brickell Flatiron retail space closes for $22.5M amid lawsuit appeared first on The Real Deal Miami.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 9 a.m.

 

A construction worker was electrocuted at a construction site in Hallandale Beach. The accident happened near the Big Easy Casino. The worker, who has not been identified, later died at Aventura Hospital. [NBC 6 Miami]

 
Fort Lauderdale building

Fort Lauderdale building

A company tied to developer John K. Reilly is under contract to purchase a site in Fort Lauderdale near the Brightline station. Richard Mercedes is selling the 21,000-square-foot site, which includes a restored 5,000-square-foot building, at 199 Northwest Fifth Avenue. The buyer is Station Village LLC. Amanda and Chelsea Mercedes with Mercedes Real Estate listed the property for $4 million. The developer is planning multifamily on the site.

 

The U.S. Securities and Exchange Commission has launched an inquiry into WeWork to determine if the company violated reporting rules ahead of its doomed planned public offering. Citing two unnamed sources, Bloomberg reported that SEC investigators are scrutinizing disclosures made to investors while the company embarked on aggressive fundraising efforts and completed transactions that posed potential conflicts of interest. [TRD]

 

Jorge Pérez, president and CEO of Related Group, will give up some control to his son, Jon Paul Pérez, in 2020. Jon Paul was promoted to executive vice president over the summer. Matthew Allen, executive vice president and COO of Related Group, said it’s part of a succession plan that’s been in place “since day one.” [TRD]

 

Huizenga lobbied Rick Scott to secure Opportunity Zone designation for West Palm site. The son of Blockbuster video billionaire Wayne Huizenga successfully lobbied then-Gov. Scott to include the site of his $100 million West Palm Beach development into an Opportunity Zone, according to a ProPublica investigation. [TRD]

 

WeWork bonds fell thanks to anxieties over a delayed payment. A $3 billion portion of SoftBank’s $9.5 billion rescue package for the beleaguered co-working startup was supposed to arrive last Wednesday. The startup’s junk bonds fell and risk value shot up after TRD reported the news of the delay Thursday. [Reuters]

 

The AIDS Healthcare Foundation wants the city of Fort Lauderdale to approve apartment buildings based on city code, not on the income level of residents or areas where a project is located. The foundation wants voters to pass an initiative that would prevent the city from denying proposals based on income or location, according to the Sun Sentinel. Foundation officials are alleging their proposal to build a 15-story tower for low-income residents is being opposed by the city because nearby residents in a more affluent neighborhood don’t want it. But the city said the project isn’t allowed because it qualifies as a social service residential facility. [Sun Sentinel]

 

Bill Cunningham, the Corcoran Group’s president of sales, is leaving the firm. The move is part of a broader shakeup that will also see Gary Malin, president of sister firm Citi Habitats, add the role of COO of Corcoran to his responsibilities. In an email to agents Thursday, Corcoran CEO Pam Liebman said Cunningham’s departure is one of several changes underway at the company, which is a subsidiary of publicly traded Realogy. [TRD]

 
Avra Jain and a rendering of 225 NE 34th Street

Avra Jain and a rendering of 225 NE 34th Street

Avra Jain is planning to build a 15-story office building with $33M in Opportunity Zone money. Jain’s Vagabond Group Consulting LLC partnered with Los Gatos, California-based Bauen Capital to create an Opportunity Zone Fund. The office building, at 225 Northeast 34th Street, will be built on top of an eight-story parking deck and will have a large green space. It will be combined with an existing 47,000-square-foot building that includes Anatomy Gym. [TRD]

 

Compiled by Katherine Kallergis

The post Construction worker killed in Hallandale electrocution, developer under contract for site near Fort Lauderdale Brightline appeared first on The Real Deal Miami.

From left: James Grage, Matthew Elliott, and Marc Hameroff, with the home

From left: James Grage, Matthew Elliott, and Marc Hameroff, with the home (Credit: Facebook)

A fitness expert, bodybuilder and supplement maker is looking to shed his waterfront estate in Hollywood.

James Grage, co-founder and vice president of BPI Sports Fitness Supplements, is selling the house at 1215 Diplomat Parkway, within Hollywood Golf Estates, at auction on Nov. 25.

Platinum Luxury Auctions is handling the auction, which will be held without a reserve or minimum price, according to a release. The home hit the market in April, priced at $5.39 million, listed by Jay Pierre of Coral Shores Realty. Marc Hameroff and Matthew Elliott of Engel & Völkers Miami have had the listing since September and are taking it to auction.

The front of the home

The front of the home

Hameroff said Grage is moving to western Broward County and wanted to auction the property for a quick sale. “The seller understands that the traditional sales process may require a longer period of time to find the right buyer,” Hameroff said. “He instead wants a more expedient sale process, and the luxury auction short timeframe and date certainty of the sale appeal to him.”

The five-bedroom, six-and-a-half bathroom house, built in 2013, spans 7,264 square feet, on a nearly half-acre lot. It has 150 feet of frontage on a 120-foot canal. Records show Grage paid $810,000 for the property in 2011.

The kitchen in the home

The kitchen in the home

Grage had the home custom built and has lived there with his family for the past six years, Hameroff said.

The home’s features include open-concept formal living room with a large gas fireplace and NanaWalls opening to the patio, a gourmet kitchen with Viking and Miele appliances, and an infinity pool and fire pit.

The post Fitness expert wants to shed his Hollywood home via auction appeared first on The Real Deal Miami.

TRD is bringing some of the brightest minds in real estate to the Bahamas this winter. We’re excited to begin announcing some of the experts and innovators who will join us for our second annual Future City event. REBNY president Jim Whelan, JDS’ Michael Stern, Gil Dezer of Dezer Development, Young Woo, Anna Zarro and Rotem Rosen are just a few of the thought leaders who have already signed on.

REBNY president Jim Whelan

REBNY president Jim Whelan

Future City is an exclusive three-day retreat that gives 200 C-level executives a chance to learn from and network with the biggest dealmakers in the country. From February 23rd to 25th, TRD will take over the Baha Mar resort to provide participants with a chance to gain high-level knowledge as well as practical, applicable strategies for today’s changing market.

VC funding for Proptech hit record levels in 2019 as new technology helped real estate revolutionize. Our workshops and breakout sessions are tailored to the specific needs of our audience. We host cocktail events, group meals, and keynote speeches throughout. Plus, Future City’s luxury venue provides additional activities that will include golf, fitness, poker, backgammon, and more.

JDS’ Michael Stern

JDS’ Michael Stern

Last year’s sessions included workshops like “How to get on the venture capital train” and “Construction innovations changing the development landscape.” Attendees included Ken Fisher, John Catsimatidis, Sharif El-Gamal, Anthony Scaramucci, Meir Cohen, Don Peebles, Bruce Mosler, Chris Wein, Bently Zhao, Kobi Karp, Edgardo DeFortuna, Brad Metzler, Shaun Osher, Bess Freedman, Justin, Ehrlich, and many more.

If you are VP level or higher, please email FutureCity@TheRealDeal.com for further details. Space is limited and subject to approval.

The post Jim Whelan, Michael Stern and more to join Future City 2020 appeared first on The Real Deal Miami.

WeWork is reportedly facing an SEC probe

WeWork is reportedly facing an SEC probe (Credit: iStock)

The U.S. Securities and Exchange Commission has launched an inquiry into WeWork to determine if the company violated reporting rules ahead of its doomed planned public offering.

Citing two unnamed sources, Bloomberg reported that SEC investigators are scrutinizing disclosures made to investors while the company embarked on aggressive fundraising efforts and completed transactions that posed potential conflicts of interest.

The agency’s inquiry is reportedly in its early stages, and may not lead to allegations of wrongdoing. WeWork has reportedly retained Andrew Ceresney, a former head of the SEC’s enforcement unit.

A WeWork spokesperson declined to comment.

The report adds to mounting concerns for shareholders. During a period that involved the departure of CEO and co-founder Adam Neumann and a $39 billion drop in valuation, WeWork reported to shareholders Wednesday that it lost $1.25 billion in the third quarter as expenses again trumped growth.

And on Thursday, The Real Deal reported that SoftBank has delayed the launch of its promised $3 billion tender offer for more than a week. The offer is contingent on meeting “required regulatory approvals” and the absence of litigation, bankruptcy proceedings and debt defaults. Following the report, WeWork’s junk bonds value sunk while their risk jumped.

Some shareholders have begun to revolt. A former WeWork employee and shareholder filed a derivative lawsuit in California last month, accusing Neumann, other key executives and its main investor, SoftBank, of self-dealing and unjustly enriching themselves. The lawsuit is seeking class-action status.

The SEC inquiry is reportedly focused on claims WeWork executives made to investors ahead of the planned IPO. According to Bloomberg, WeWork spent big ahead of the IPO to demonstrate expansive growth to existing investors. By doing so, it depleted cash reserves and shortened the timeframe in which WeWork would run out of cash. SoftBank, its largest investor, ultimately saved the company and committed to a $9.5 billion lifeline, which included the $3 billion tender offer.

Multiple transactions disclosed in the company’s pre-IPO filing to the SEC, known as an S-1, have faced extensive scrutiny by investors, including a $5.9 million payment to Neumann for giving the company rights to the trademark “We.” Other transactions involved WeWork leases with buildings owned by Neumann. These arrangements have since been unwound.

However, another transaction that has been scrutinized is WeWork’s $850 million purchase of the Lord & Taylor building in Manhattan. Multiple executives — including Eric Gross and Neumann — had dual interests in the acquisition, as TRD previously reported. Board member and investor Steven Langman had interests in three sides of the deal.

The post SEC launches WeWork probe: report appeared first on The Real Deal Miami.

Jorge Pérez and Jon Paul Pérez (Credit: Wikipedia)

Jorge Pérez and Jon Paul Pérez (Credit: Wikipedia)

Miami’s condo king is preparing to hand over the title of president to his son within the next year.

Jorge Pérez, president and CEO of Related Group, will give up some control to his son, Jon Paul Pérez, in 2020, an executive at the company said during a Bisnow event on Thursday.

“Twenty years ago, Jorge made it very clear this is a family business and it will continue to be a family business,” said Matthew Allen, executive vice president and COO of Related Group. “That was always really key for us to make sure we guide him. He’s still learning. Really, he’s grown up tremendously. It’s amazing what he’s done.”

Jon Paul was promoted to executive vice president over the summer, a spokesperson confirmed. South Florida Business & Wealth first reported that Jon Paul will become president within a year, and CEO within two years.

The Related Group is South Florida’s largest condo developer, and has expanded into multifamily, affordable housing and hotels in recent years.

Allen spoke in a keynote conversation with Arden Karson, senior managing director of South Florida at CBRE — and a former Related executive — at the Bisnow Multifamily Annual Conference. The event was held at the W Fort Lauderdale, a Related Companies-owned development. Related Cos. owner Stephen Ross owns a minority stake in the Related Group.

Billionaire Jorge Pérez, who founded Related Group in 1979, has spoken about his succession plan in the past without a specific timeline. Both Jon Paul and his brother Nick worked for Related Companies in New York. Nick joined the Related Group in 2018 and is spearheading the development of the company’s new Coconut Grove headquarters alongside Vice President Patrick Campbell, a spokesperson said.

Jon Paul joined his father’s company in 2012, and has worked on projects such as Brickell Heights and Wynwood 25. When Jorge steps down, the senior leadership, which includes Allen, Carlos Rosso, Steve Patterson and Albert Milo Jr., will remain in place, Allen said.

“It’s a plan that’s been put into action since day one. But as I tell everybody … the day [Jorge Perez] is not at Related is the day we put him in his grave. I mean, he ain’t going anywhere. He will always have his eyes on everything,” Allen said. “Instead of putting in 80 hours at the office, he’ll only put in 40 hours a week and spend more time traveling and doing his art.”

The post Miami’s condo king will hand crown to son next year appeared first on The Real Deal Miami.

The Real Deal will be celebrating its 250th issue this January! This special commemorative issue will include a look back at the first two decades of New York real estate in the new millennium, and some of The Real Deal’s most notable coverage. Don’t miss our stories on the billion-dollar dealmakers and the billion-dollar deals that have helped shape the city and its skyline.

Our first issue of the new decade will also include a tally of the records and milestones of 2019 as well as stories on rent reform, one of the most pressing issues facing the industry today. Other coverage will examine LLC laws shielding owners’ identities and the changing social media strategies being used to sell properties today.

For marketing opportunities, please contact Advertising@TheRealDeal.com.

The post Coming soon: <i>TRD’</i>s 250th issue! appeared first on The Real Deal Miami.

Wayne Huizenga Jr., Rick Scott and Rybovich superyacht marina  (Credit: Wikipedia, Google Maps)

Wayne Huizenga Jr., Rick Scott and Rybovich superyacht marina  (Credit: Wikipedia, Google Maps)

The son of Blockbuster video billionaire Wayne Huizenga successfully lobbied then-Gov. Rick Scott to include the site of his $100 million West Palm Beach development into an Opportunity Zone, according to a ProPublica investigation.

The Opportunity Zone legislation, passed in December 2017 as part of President Trump’s tax code overhaul, was intended to help low-income neighborhoods. In this case, it benefits Wayne Huizenga Jr.’s plans to build luxury apartment towers on the Marina Village site. His partner on the project is Related Group developer Jorge Pérez, and Related Companies’ Stephen Ross owns a portion of the Related Group.

Over the last decade, Ross, Pérez, Huizenga and their families have given at least $1 million to Scott and the Republican party of Florida, ProPublica reported. A week after Huizenga Jr. sent a letter to Scott to include the census tract into the federal program, Scott revealed the areas he had selected in Florida, which included the tract, home to the Rybovich superyacht marina owned by Huizenga, where he’s planning to develop apartments.

The state of Florida did not originally include that area as an Opportunity Zone, and Scott rejected other poorer census tracts that the city of West Palm Beach had requested be included. Scott is now a state senator.

Investors who develop in one of the 8,000 designated Opportunity Zones throughout the country can defer federal taxes on capital gains until Dec. 31, 2026. Investors can reduce that tax payment by as much as 15 percent and pay no taxes on possible profits from an Opportunity Zone fund if they hold onto the investment for 10 years.

A spokesperson for Scott told ProPublica that the former governor focused on job creation in low-income areas. Rybovich’s president said the motivation to secure the Opportunity Zone designation was to “create incentives for redevelopment by third parties in the surrounding neighborhood.” [ProPublica] – Katherine Kallergis

The post Huizenga lobbied Rick Scott to secure Opportunity Zone designation for West Palm site appeared first on The Real Deal Miami.

Softbank's Masayoshi Son and Jared Kushner (Credit: Getty Images)

Softbank’s Masayoshi Son and Jared Kushner (Credit: Getty Images)

Talks for SoftBank to fund crowdfunding startup Cadre ended when Jared Kushner declined to divest his ownership stake in the company.

Ryan Williams — who co-founded the platform with Jared and Joshua Kushner in 2014 — was in talks with SoftBank CEO Masayoshi Son in early 2018, Bloomberg reported. Williams had even flown to Tokyo at Masayoshi Son’s invitation, but the talks fell through.

Cadre's Ryan Williams

Cadre’s Ryan Williams (Credit: Getty Images)

Son, SoftBank’s CEO, was concerned that Jared Kushner may have had conflicts of interest or undue influence due to his appointment as senior advisor to President Donald Trump in 2017.

Cadre has had to contend with the Kushner’s political profile, executive departures and “inflated business claims,” according to Bloomberg.

According to one account of the pitch made to SoftBank’s $100 billion Vision Fund in 2018, Cadre demonstrated software that it had not been using in practice. Cadre denied that, and did not comment further on the contents of its pitch.

The startup has not yet realized its goal of creating an online marketplace to make commercial real estate investments available to the masses. The online platform is currently only available to verified high net-worth individuals. In its latest funding round in 2017, it was valued at $800 million. [Bloomberg] — Georgia Kromrei

The post SoftBank wanted Jared Kushner to divest from Cadre appeared first on The Real Deal Miami.

The Club at Crystal Lake, AHS Residential’s Ernesto Lopes

The Club at Crystal Lake, AHS Residential’s Ernesto Lopes

Landmark Co.s snagged a new Deerfield Beach apartment complex for $30 million.

Landmark Companies bought the 125-unit property at 3800-3816 Crystal Lake Drive for $240,000 per unit. AHS Residential, which is managed by Ernesto Lopes, sold the complex. It was built this year.

Keasbey, New Jersey-based Landmark secured a $17.5 million loan from JPMorgan Chase to buy the complex.

AHS Residential purchased the property for $1.4 million in 2014, records show.

The complex, known as the Club at Crystal Lake, totals 144,205 square feet and sits on about 5 acres. The apartments range from one to three bedrooms with prices starting at $1,449 per month, according to its website.

Club at Crystal Lake sits in front of the site of the former Crystal Lake Golf Club. at the corner of Military and Sample roads. Lennar Corp. is planning to build 415 single-family homes and townhomes on the former golf club.

Lennar purchased the property in March for $12.8 million from Hoyer Homes.

Miami-based AHS Residential was founded in 2012 by Lopes and Rubens Menin Texeira de Souza to develop, build and manage multifamily properties. The company focuses on workforce housing and is currently developing Deering Groves, a 280-unit rental community in south Miami-Dade County.

In October, AHS Residential sold a seven-story apartment complex in Dania Beach for $38 million to a California-based trust.

The post Deerfield Beach apartment complex sells for $30M appeared first on The Real Deal Miami.

Bill Cunningham and Citi Habitat's Gary Malin. The longtime president of sales is leaving the firm.

Bill Cunningham and Citi Habitat’s Gary Malin. The longtime president of sales is leaving the firm.

Bill Cunningham, the Corcoran Group’s president of sales, is leaving the firm, The Real Deal has learned. The move is part of a broader shakeup that will also see Gary Malin, president of sister firm Citi Habitats, add the role of COO of Corcoran to his responsibilities.

Corcoran CEO Pam Liebman

In an email to agents Thursday, Corcoran CEO Pam Liebman said Cunningham’s departure is one of several changes underway at the company, which is a subsidiary of publicly traded Realogy. Corcoran is realigning its management team to focus on a “regional support structure” that Liebman will oversee, she wrote. In Cunningham’s wake, Michael Sorrentino, who oversees Brooklyn sales, will add oversight of Manhattan to his responsibilities.

“Corcoran is an incredibly strong brand, and I am confident these changes will make us even better,” she wrote in the email, a copy of which was reviewed by TRD. Sources familiar with the discussions said that among the changes was Malin’s elevation to the COO role at Corcoran. Malin has been leading Citi Habitats, which specializes in rentals, since 1998.

Cunningham joined Corcoran in 2001 and worked his way up to running the firm’s flagship office on the East Side. In 2014, he did a brief stint as president of Trump International Realty, before rejoining Corcoran as general sales manager.

In that role, he served as Liebman’s top deputy and confidante as the firm battled to maintain its dominance in the face of stiff competition and aggressive recruiting, particularly from Compass. With 1,320 Manhattan agents and $4.5 billion in closed sell-side deals, Corcoran was the No. 2 firm in the city last year, down 28 percent year-over-year, according to an analysis by TRD.

Neither Corcoran nor Cunningham immediately returned calls for comment.

Cunningham’s departure comes two months after Corcoran was hit by a major data breach, in which agent splits, marketing budgets and gross commission income were leaked to the entire company in an email. Though the email came from Cunningham’s account, Corcoran said criminal hackers were to blame.

Still, the trove of leaked information shed light on the health of the firm, which is one of the most successful subsidiaries of Realogy. The New Jersey-based conglomerate, which is also the parent company of Sotheby’s International Realty, Citi Habitats and Coldwell Banker, has seen its stock plummet over the past 18 months amid a slowdown in the luxury market and heightened competition for top agents. In addition to rolling out cost-cutting measures, Realogy announced last week that it is selling its relocation business for $400 million to help pay down $3.5 billion in debt.

In Thursday’s email, Liebman hinted that Corcoran, too, has been impacted by the changes to the brokerage landscape. She called Cunningham a colleague and a “very good friend,” and said she’d be spending more time with agents in the field, “actively listening, collaborating and supporting” them. She also said she’d be attending rotating sales meetings each week, and having biweekly breakfasts with agents.

“As always, I will be available to help you with my favorite thing, getting your deals done,” she wrote.

Though she did not address agent departures specifically, this month Brian Meier and his team joined Christie’s International Real Estate from Corcoran. And in the Hamptons, agents Cee Scott Brown and Jack Pearson joined Compass.

The post Corcoran shakeup: Bill Cunningham out; Gary Malin now COO appeared first on The Real Deal Miami.

Next week brings a new group of real estate events:

Host: CREW Miami
Date: Nov. 19
Time: 11:30 a.m. to 1:30 p.m.

CREW Miami is holding a lunch program at the Four Seasons Brickell in Miami, 1435 Brickell Avenue from 11:30 a.m. to 1:30 p.m. The event will focus on policy and investment challenges associated with commercial real estate’s environmental impact. Speakers include Alex Harris of the Miami Herald and Adam Lipkin of Counterpointe SRE.

Host: South Florida Business Journal
Date: Nov. 21
Time: 5:30 p.m. to 8:30 p.m.

The South Florida Business Journal is holding its 2019 Structures Awards at Jungle Island, 1111 Parrot Jungle Trail from 5:30 p.m. to 8:30 p.m. Come to this event to network and spend an evening honoring exceptional projects across various sectors of the real estate industry.

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

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

Avra Jain and a rendering of 225 NE 34th Street

Avra Jain and a rendering of 225 NE 34th Street

Avra Jain is a believer in Miami’s Midtown office market.

The area, near Wynwood and the Design District, has thousands of apartment and condo units recently constructed. In addition, some of the neighborhood is also in a federally designated Opportunity Zone, allowing Jain, a former Wall Street bond trader, to take advantage of substantial tax breaks.

Jain is planning to build a 15-story office building at 225 Northeast 34th Street with $33 million in Opportunity Zone money, she told The Real Deal. Jain’s company, Vagabond Group Consulting LLC, partnered with Los Gatos, California-based Bauen Capital to create an Opportunity Zone Fund. The office building will be built on top of an eight-story parking deck and will have a large green space. It will be combined with an existing 47,000-square-foot building that includes Anatomy Gym.

In 2017, Jain, Joe Del Vecchio and partners paid $13 million for the property at 3415 Northeast Second Avenue in Miami. It included the three-story, 52,500-square-foot building with the parking garage. Altogether the land totals 35,320 square foot, according to property records.

Jain said she is looking to fill a void in the market by creating a creative Class A office building for entrepreneurial and tech tenants looking to build their businesses in an Opportunity Zone.

Construction of the new addition is expected to begin in six to 12 months, according to Jain, who is best known for redeveloping the historic Vagabond Hotel in Miami’s MiMo district.

Jain was one of the first developers in Miami who sought to take advantage of the Opportunity Zone tax break. Vagabond Group Consulting and Coconut Grove-based Terra are also looking to take advantage of the program to redevelop a 6-acre industrial complex at 4800 Northwest 37th Avenue in Hialeah. Jain is structuring her funds on a project-specific basis, which means she is creating a fund to invest in each individual project rather than a blind pool to invest in multiple assets.

The federal program allows investors, businesses and developers to defer or forgo capital gains taxes if they build or invest in one of 8,700 designated Opportunity Zones throughout the country. Investors are able to forgo their capital gains if they put their money in an Opportunity Zone for at least ten years.

The program was intended to spur investment in distressed and low-income areas, but critics charge the program is simply a tax break for the wealthy and for mega projects such as the $4 billion SoLe Mia mixed-use project in North Miami.

Developers have until the end of the year to claim the biggest tax benefit from the program.

Jain said the Opportunity Zone program can make securing financing easier. “Banks are not always favorable toward office,” said Jain. “It is encouraging people to spend money where they may not have spent it before.”

The post Avra Jain plans to benefit from Opportunity Zone for Midtown office building appeared first on The Real Deal Miami.

Mika Mattingly and Cecilia Estevez with the Mid Bay Club Apartments

Mika Mattingly and Cecilia Estevez with the Mid Bay Club Apartments

UPDATED, Nov. 15, 8:47 a.m.: A South Florida family is looking to cash out on a waterfront development site in North Miami.

The Mid Bay Club Apartments, a 34,275-square-foot site at 11950 North Bayshore Drive, hit the market with brokers Mika Mattingly and Cecilia Estevez of Colliers International South Florida, Mattingly said.

Property records show an LLC controlled by William R., William E. and Eileen Prevatel, and Patricia Wood, own the property. It includes a 27-unit apartment building completed with one and two-bedroom units. It was built in 1964.

The building is generating $470,000 a year in gross income. Comparable properties have sold for $400 to $500 per square foot, Mattingly said. Based on an average of $450 per square foot, the site could trade for roughly $15.4 million. Mattingly said she expects it sell for a higher price because of the property’s wide bay frontage.

It’s zoned B-Z, which stands for Bayshore Zone, and allows 100 units per acre, or 90 units for that specific property. The zoning also allows for 115 feet, or roughly 11 stories, with over 200,000 square feet of development, according to a release.

Mattingly called it “the only covered land play” in the area, meaning the only income-producing development site on the water in North Miami. A buyer could also assemble land to the north and south to build a larger project.

The building last sold in 2011 for $1.5 million, records show.

The property offers views of Indian Creek Village, Bay Harbor Islands and North Bay Village. North Miami is going through a renaissance, Mattingly said. A number of projects are underway, including LeFrak and Turnberry Associates’ $4 billion Solé Mia project, which is located on 184 acres in a designated Opportunity Zone.

Former NFL player Elvis Dumervil has assembled more than 700 apartment units in North Miami and North Miami Beach.

Miami Heat veteran Udonis Haslem is also partnering with a developer to build a 134-unit rental apartment project for low-income residents of North Miami.

The post Bayfront development site in North Miami hits the market appeared first on The Real Deal Miami.

UPDATED, Nov. 15, 1 p.m.: Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 5:30 a.m.

 

The Republican National Committee’s winter meeting will be hosted at Trump National Doral Miami. Washington Post White House reporter Josh Dawsey tweeted that the contract was signed in March, citing an RNC official. President Trump planned to host the G-7 at the Doral resort, but nixed those plans amid backlash. [Twitter]

 

Habitat Group is moving forward with the construction of a large condo-hotel project in Brickell after scoring a $24 million loan. Habitat secured the construction loan from Miami-based Ocean Bank to build Smart Brickell’s Tower 1 at 239 Southwest 9th Street in Miami’s West Brickell neighborhood. The tower will have 50 hotel rooms and 50 condos and is planned for completion in 2021. [TRD]

 

At a ULI symposium, Richard LeFrak touted Solé Mia’s progress from a landfill to paradise. LeFrak recounted the moment roughly nine years ago when he received a call gauging his interest in 184 acres of waterfront land fronting Biscayne Boulevard in North Miami. “It’s a [former] landfill and it’s kind of had a checkered past,” LeFrak recalled the unnamed individual on the line telling him. “I asked what’s the minimum bid? He said $21 million. That’s all I had to hear.” [TRD]

 

A former printing and distribution site for USA Today in Miramar sold for $12 million. Zaragon purchased the 56,087-square-foot property at 10315 USA Today Way for $214 per square foot, records show. The property was previously used by Gannett Co. to print and distribute USA Today newspapers, according to Loopnet. [TRD]

 

A total of 139 condos sold for $49.7 million in Miami-Dade County last week, compared to 152 units that sold for a combined $52 million the previous week. Condos last week sold for an average price of about $358,000 or $294 per square foot. [TRD]

 

Donald Trump has been taken to court many times by lawyers, brokers, contractors and others who claimed that he owed them money. Now the shoe is on the other foot, as the Trump Organization copes with delinquent retail tenants. Last year the Trump Organization’s revenue fell by as much as $45 million —to between $610 million and $650 million, according to a Crain’s analysis. [Crain’s]

 

WeWork’s losses have reached $1.25 billion. The parent company of the troubled office-space startup also told shareholders that revenue increased to $934 million in the three months ending Sept. 30, a 94 percent year-over-year jump. The company is in search of a new leader after the ouster of founder Adam Neumann, and was reported to be in talks with T-Mobile US Inc. chief executive John Legere. [WSJ]

 

Jared Kushner declined SoftBank’s request to divest from Cadre. The decision to turn down SoftBank, which was concerned about conflicts of interest, saw funding talks fizzle for Cadre. The online real estate platform for was founded by CEO Ryan Williams and Josh Kushner in 2014. [Bloomberg]

 

Brookfield is buying JPMorgan’s U.S. mall stakes. The deal, valued at $3.2 billion, is a sign of confidence in the mall sector, which has struggled in recent years with the rise of e-commerce. [Bloomberg]

 

Free People, Madewell, Marie Robinson and Maisons du Monde opened at Aventura Mall. Carolina Herrera and Breitling opened in new spaces, and Peloton moved from a kiosk to a permanent store, according to a press release. Turnberry Associates and Simon Property Group own the mall at 19501 Biscayne Boulevard. [Press release]

 

The home of Pulitzer Prize-winning poet Elizabeth Bishop sold for $1.2 million. The Key West Literary Seminar purchased Bishop’s Key West home with plans to renovate it and use it as its headquarters, according to the Miami Herald. Bishop sold it to a family, which just sold it to the nonprofit. Her requirement to the family was that the home wouldn’t be changed. [Miami Herald]

 

A rezoning in Pompano Beach could advance Harbourside at Hidden Harbour, a planned nine-story, mixed-use development with 300 apartments on a waterfront corner of North Federal Highway. City commissioners initially approved a proposal to rezone about 9 acres next to a canal on the southeast corner of Federal Highway and Northeast 16th Street in Pompano Beach. [TRD]

 

On the heels of raising $35 million, a San Francisco-based brokerage that provides white-label tools to agents has set its sights on Florida. Side, the venture-backed brokerage founded in 2017, launched in Florida this week, the company said. Donnie Pingaro is Side’s managing broker in Florida. [TRD]

 

Compiled by Katherine Kallergis

The post RNC’s winter meeting will be hosted at Trump Doral, developer scores $24M construction loan appeared first on The Real Deal Miami.

Smart Brickell and Santiago Vanegas

Smart Brickell and Santiago Vanegas

Habitat Group is moving forward with the construction of a large condo and hotel project in Brickell after scoring a $24 million loan.

Habitat secured the construction loan from Miami-based Ocean Bank to build Smart Brickell’s Tower 1 at 239 Southwest 9th Street in Miami’s West Brickell neighborhood. The tower will have 50 hotel rooms and 50 condos and is planned for completion in 2021.

Smart Brickell is a three-building condo and hotel project that will offer owners the ability to rent their units out 50 times a year. In all, the project will have nearly 300 units and about 12,000 square feet of commercial space for a cafe, restaurant and retail. Tower 2 is expected to break ground in early 2020.

Santiago Vanegas, CEO and president of Habitat Group, said Smart Brickell Tower 1 is already sold out, while Smart Brickell Tower 2 is about 80 percent sold.

Miami-based Cervera Real Estate is handling sales for Smart Brickell. Hernando Carrillo is the architect. Condo prices range from $300,000 to $600,000.

Habitat Group is focusing on West Brickell. The company recently paid $6.1 million for a site at 1200 Southwest Second Avenue where it’s planning to build Brickell 12, a 96-key hotel project. The company’s other projects include the Brickell Lux and Millux Hotel, according to its website.

With just over $4 billion in assets, Ocean Bank is an active construction lender in South Florida. Last year, the community bank provided an $85 million construction for Melo Group’s Art Plaza Apartment. This comes at a time when many banks in South Florida are backing away from construction lending due to heightened regulatory scrutiny.

The post Habitat moves forward with West Brickell condo, hotel project appeared first on The Real Deal Miami.

Richard LeFrak and Solé Mia

Richard LeFrak and Solé Mia

Richard LeFrak recounted the moment roughly nine years ago when he received a call gauging his interest in 184 acres of waterfront land fronting Biscayne Boulevard in North Miami. “It’s a [former] landfill and it’s kind of had a checkered past,” LeFrak recalled the unnamed individual on the line telling him. “I asked what’s the minimum bid? He said $21 million. That’s all I had to hear.”

It was chump change compared to the expected $4 billion LeFrak and his Aventura-based partners, the Soffer family, are putting into building Solé Mia, a master-planned community that will ultimately have 12 residential buildings totaling 4,390 units with more than 1 million square feet of commercial space in North Miami.

In January, the partnership completed the first phase, with the opening of twin 17-story towers called The Shoreline, a Costco and a 7-acre lagoon. It’s a marked contrast from when the U.S. Environmental Protection Agency designated the tract a Superfund site due to the amount of toxic materials that leached into the soil.

LeFrak, the keynote speaker at Thursday’s Urban Land Institute Miami Symposium at the Mandarin Oriental, Miami, told attendees that developing the massive site isn’t easy. But he’s confident the project will be successful.

“We had to deal with the politics, straightening out the environmental stuff and doing everything you have to do,” LeFrak said. “And we are going to turn that landfill into a paradise. It takes a lot of capital and effort and faith to envision something that is going to be 20 years away.”

The New York City developer has been bullish about Miami real estate since the aftermath of the 2008 crash when he became an investor in then-struggling BankUnited and partnered in purchasing the real estate portfolio held by the failed Corus Bank. In 2012, LeFrak partnered with Starwood Capital Group chairman Barry Sternlicht to buy and rebrand the former Gansevoort Miami Beach Hotel into 1 Hotel & Homes South Beach, a luxury condominium and resort. In February, LeFrak and Starwood sold the hotel portion for $610 million.

“I asked Barry to show me the brand book and he pointed to his head,” LeFrak said. “I had faith in him. He knows how to get things done. Now he’s spreading the 1 Hotels brand around the country and the world.”

Even as the luxury condo market has stalled in Miami, the population growth and the amount of land available for development and redevelopment, will lead real estate investors to continue flocking to the region, LeFrak said. “You follow the population,” he said. “You don’t create it. You have to be here ready to serve them. So, yes, I do see more investors coming here. I think too many for my taste.”

He also noted how technology is creating “tremendous disruption in the real estate business.” LeFrak said trends such as co-living and short-term rentals are driven by a younger generation that demands more mobility in their lives. “You’ve got to get in front of it,” he said. “You have to cater to it.”

As an example, LeFrak said a manager at one of his company’s new apartment buildings recently explained to him that not many new tenants are showing up in moving trucks. “He told me some people are moving in by taxicab,” LeFrak said. “They just bring in their luggage. When I asked what about the rest of it, he said it’s all being sent by Amazon.”

The post Richard LeFrak touts Solé Mia’s progress from landfill to paradise: ULI symposium appeared first on The Real Deal Miami.

Softbank CEO Masayoshi Son (Credit: Getty Images)

Softbank CEO Masayoshi Son (Credit: Getty Images)

After everything that’s happened at WeWork, shareholders now have a new worry.

SoftBank is delaying a $3 billion tender offer for WeWork shareholders. In a letter WeWork sent to shareholders Nov. 8, and obtained by The Real Deal, the Japanese conglomerate’s offer would commence “within five business days of the completion” a $1.5 billion investment in the struggling office startup.

That $1.5 billion payment was released to the company Oct. 30, which would have made the deadline for the tender offer Wednesday, Nov. 6. But no offer was extended, sources said.

The delay is the latest pang of uncertainty for WeWork investors, many of whom are employees whose compensation packages include company stock.

A person close to SoftBank said the tender “is going to happen soon,” but would not provide a timeframe.

“It’s just taking a little more time than expected due to the time needed to get all the technicalities in order,” the individual said, without providing specifics.

Following publication of this story Nov. 14, WeWork’s junk bond price dropped and its risk premium jumped to an all-time high as investors reacted to the news, Reuters reported.

The completion of the tender offer is contingent on “the receipt of required regulatory approvals” and the absence of litigation, bankruptcy proceedings and defaults on any debt owed, according to the letter.

Representatives for SoftBank and WeWork declined to comment.

After WeWork abandoned IPO plans because of an icy reception from public investors, SoftBank pushed out co-founder Adam Neumann and took a majority stake in WeWork. The $9.5 billion rescue package — a $5 billion debt facility, the $3 billion tender offer and a $1.5 billion commitment — staved off a potential bankruptcy this month.

The saga led to WeWork’s valuation dropping from $47 billion — a figure set by SoftBank in January — to $8 billion. Many investors who bought stock in recent years are now underwater.

WeWork reported to shareholders Wednesday that it lost $1.25 billion in the third quarter as rising expenses outpaced growth.

The post SoftBank’s $3B payout to WeWork’s investors is delayed appeared first on The Real Deal Miami.

10315 USA Today Way (Credit: Google Maps and iStock)

10315 USA Today Way (Credit: Google Maps and iStock)

A former printing and distribution site for USA Today in Miramar sold for $12 million.

Zaragon purchased the 56,087-square-foot property at 10315 USA Today Way for $214 per square foot, records show. The seller was Sudha of Miami, which is led by Akhil Agrawal, the president of American Medical Depot.

The property was previously used by Gannett Co. to print and distribute USA Today newspapers, according to Loopnet. The printing operations stopped and the property was sold to the healthcare supplies company American Medical Depot for $4.9 million in 2012.

The building was constructed in 1986 and sits on 7 acres. The property is located within the Miramar Park of Commerce, a 600-acre corporate park in Miramar.

Newspaper companies have struggled to generate revenue from digital advertising and many have stopped printing physical papers. As a result, media companies are trying to shed their real estate assets and distribution centers. In 2011, McClatchy sold the Miami Herald’s 14-acre waterfront property overlooking Biscayne Bay for $236 million to a Malaysian casino operator.

Earlier this year, a Cox Media Group affiliate sold the 360,000-square-foot building that housed the Palm Beach Post in West Palm Beach for $24 million to Scott Sherman and Ben Mandell’s Tricera Capital.

Chicago-based Zaragon is an active developer across the country. It owns and manages about 3,500 apartments, 1,100 mobile home units and 1.2 million square feet of office and industrial space, according to its website.

The post Former USA Today printing, distribution center sells for $12M appeared first on The Real Deal Miami.

Miami condo sales fell at the start of November.

A total of 139 condos sold for $49.7 million in Miami-Dade County last week, compared to 152 units that sold for a combined $52 million the previous week. Condos last week sold for an average price of about $358,000 or $294 per square foot.

A unit at the Continuum on South Beach sold for $4 million, or over $2,000 per square foot. The two-bedroom, 1,940-square-foot condo was on the market for eight days before it closed. The listing agent was Dario Stoka and the buyer’s agent was Timothy Allen Jr.

The second most expensive unit of the week sold for $2.65 million, or $766 per square foot. Unit 705 at Prive at Island Estates traded after 168 days on the market. Alice Edery represented the seller, while Ana Maria Rodriguez brought the buyer.

Here’s a breakdown of the top 10 sales from Nov. 3 to Nov. 9. Click on the map for more information:

Most expensive
Continuum on South Beach #3301 | 8 days on market | $4M | $2,062 psf | Listing agent: Dario Stoka | Buyer’s agent: Timothy Allen Jr.

Least expensive
The Floridian #1811 | 126 days on market | $810K | $706 psf | Listing agent: Rosy Pallozzi | Buyer’s agent: Carlos Fernandez

Most days on market
Millennium Condo #2803 | 438 days on market | $826K | $492 psf | Listing agent: Claudia Urrego | Buyer’s agent: Yelena Zborovsky

Fewest days on market
Continuum on South Beach #3301 | 8 days on market | $4M | $2,062 psf | Listing agent: Dario Stoka | Buyer’s agent: Timothy Allen Jr

The post $4M Continuum sale tops the week’s priciest condo sales appeared first on The Real Deal Miami.

Carlo Dipasquale, Wendy Mendoza and Tom Shannon and unit 409-S at the Four Seasons Residences at the Surf Club (Credit: Getty Images)

Carlo Dipasquale, Wendy Mendoza and Tom Shannon and unit 409-S at the Four Seasons Residences at the Surf Club (Credit: Getty Images)

Bowling alley magnate Tom Shannon purchased an oceanfront unit at the Four Seasons Residences at the Surf Club, property records show.

Shannon is chairman, CEO and president of Bowlero Corp., the largest ten-pin bowling center operator in the world. Records show he paid $6.4 million for unit 409 in the south tower of the Four Seasons, at 9001 Collins Avenue. The Stacy Lane trust sold the unit for $2,267 per square foot.

The two-bedroom, three-bathroom unit includes a den and 60 feet of ocean frontage. It was listed with Wendy Mendoza of Fort Realty and Carlo Dipasquale of Cervera Real Estate, asking $7.1 million.

It last sold for $5.4 million in 2017, when Fort Partners completed the development at 9001 and 9011 Collins Avenue.

Shannon’s Bowlero Corp. owns more than 300 bowling centers, most of which are in the U.S.

Unit owners at the Four Seasons in Surfside include developer Richard LeFrak, Harrison LeFrak, Esquire publisher Alan Greenberg, former Publix CEO Charles Jenkins Jr., billionaire real estate and casino tycoon Neil Bluhm, and private equity firm founder Doug Kimmelman.

In all, the Surf Club, designed by New York architect Richard Meier along with Miami-based architect Kobi Karp, includes 150 condo units, a 72-room Four Seasons hotel, a Le Sirenuse restaurant and a Thomas Keller restaurant.

The post Bowling kingpin scores unit at the Surf Club Four Seasons appeared first on The Real Deal Miami.

WeWork co-CEOs Artie Minson and Sebastian Gunningham

WeWork co-CEOs Artie Minson and Sebastian Gunningham

WeWork lost $1.25 billion in the third quarter — up from $497 million in the same time period last year.

The parent of the troubled-office startup also reported a surge in revenue to $934 million in the months following Sept. 30, the Wall Street Journal reports, citing a report to debtholders this week.

The $1.25 billion loss falls in contrast to the $638 million loss posted in the second quarter. The company blamed the third-quarter figures on rising expenses outpacing growth.

The startup’s mounting losses had caused concern among potential investors when the company attempted to go public this fall. The ill-fated plan led to the company’s valuation dropping from $47 billion to about $8 billion, and the ousting of founder and CEO Adam Neumann.

Since Neumann’s departure, the company has been scrambling to get back on track. It is reportedly in talks with T-Mobile US Inc. chief executive John Legere about taking over the position. [WSJ] — Sylvia Varnham O’Regan

The post WeWork under pressure as losses soar to $1.25B appeared first on The Real Deal Miami.

From left: Donnie Pingaro and Guy Gal

From left: Donnie Pingaro and Guy Gal

On the heels of raising $35 million, a San Francisco-based brokerage that provides white-label tools to agents has set its sights on Florida.

Side, the venture-backed brokerage founded in 2017, launched in Florida this week, the company said.

Unlike traditional firms, Side offers back-office and marketing support to agents who run their own businesses.

“It’s filling the void that the top-producing brokers have been looking for from their brokerage,” said Donnie Pingaro, Side’s managing broker in Florida, who previously ran his own boutique firm. “Tech is a big word in our industry, and I’ve not really seen any brokerages that connect it from end-to-end to let brokers do what they do best.”

Before joining Side, Pingaro said he spent a “tremendous” amount of time on back-office work for Ocean Insiders, a firm he founded in the 1990s to focus on Fisher Island real estate. Now, he said he’s able to focus on building client relationships.

Pingaro said he’s actively talking to brokers in Miami, Tampa and Orlando, as well as in Central Florida and the Panhandle.

Side currently does yet have a physical office in Florida. Typically, the firm doesn’t open brick-and-mortar locations, although individual agents may elect to lease space for their teams, said Vicki Bartholomae, Side’s chief of agent success.

In Los Angeles, Side recently recruited Ben Bacal from Rodeo Realty. The firm currently has 500 agents in California and Texas and 68 branch offices leased by agents. Side’s agents are on track to close $8 billion in deals next year, the company said.

Earlier this month, Side announced a $35 million funding round to fuel its national expansion. The Series C was led by Sapphire Venture’s Paul Levine, a former president and COO of Trulia. The round brings Side’s total funding to $60 million since it launched in 2017.

Trinity ventures’ Patricia Nakache and Matrix Partners’ Dana Stalder also invested in the round.

Past investors have included MetaProp, the New York City-based venture investor and proptech accelerator. Last month, co-founder Clelia Peters (who is also president of Warburg Realty) joined Side’s board.

The post VC-backed Side expands to Florida appeared first on The Real Deal Miami.

Harbourside at Hidden Harbour rendering

Harbourside at Hidden Harbour rendering

A rezoning in Pompano Beach could advance Harbourside at Hidden Harbour, a planned nine-story, mixed-use development with 300 apartments on a waterfront corner of North Federal Highway.

City commissioners initially approved a proposal to rezone about 9 acres next to a canal on the southeast corner of Federal Highway and Northeast 16th Street in Pompano Beach.

Commissioners granted approval of the rezoning on first reading at their meeting Tuesday night, and they will consider final approval on Dec. 10. The development also is pending site-plan approval by the city.

If the site plan is approved by February, construction of the development would start sometime next year, said Andrew Sturner, who owns the development site and a marina business on the south side of the site, called Aquamarina Hidden Harbour.

The development would replace a boatyard and some other existing commercial properties on the site, but Aquamarina Hidden Harbour would continue to operate at its current location, 2315 Northeast 15th Street. Sturner opened the business in 2009.

“This is my first foray into residential and mixed-use projects,” Sturner said, so he entered a partnership with Fort Lauderdale-based BLD Group to build the mixed-use Pompano Beach development. The project’s total cost probably will exceed $70 million, he said.

Sturner said he acquired the site of Aquamarina and the adjacent property from Wayne Huizenga Jr. for about $16 million.

Sturner and BLD Group’s plans are for the mixed-use development Harbourside at Hidden Harbour to have a nine-story, 562-space parking garage and at least 65,000 square feet of commercial space, including 10,000 square feet fronting North Federal Highway.

Commissioners voted 5-1 to change the zoning of the development site to “planned development-infill” from “general business/planned commercial/industrial district” and “marine business/planned commercial/industrial district.”

The developers recently submitted a site plan to Pompano Beach’s design review committee. Among other components, the development would feature a pedestrian promenade along the Caliban Canal and a privately owned and publicly accessible park on Northeast 16th Street.

Several citizens who spoke at the city commission meeting Tuesday night criticized Harbourside at Hidden Harbour as too large, as did Tom McMahon, the only city commissioner who voted against the rezoning. “I’m for development. I just think this is too large,” McMahon said. “This project compares to Fort Lauderdale, and we’re not Fort Lauderdale.”

Mayor Rex Hardin expressed concern about the design of the planned parking garage along Federal Highway: “In Pompano Beach, we don’t want parking garages to look like parking garages.” Graham Penn, an attorney representing the developers, assured the mayor that “no one wants this thing to look like a big slab of concrete.”

The post Multifamily project planned along Pompano Beach canal appeared first on The Real Deal Miami.

Five real estate trade associations are providing financial backing to a constitutional lawsuit looking to upend New York’s rent law (Credit: iStock)

Five real estate trade associations are providing financial backing to a constitutional lawsuit looking to upend New York’s rent law (Credit: iStock)

It’s not just New York trade associations fighting back against Albany’s new tenant-friendly rent law.

Five real estate trade groups — National Apartment Association, National Association of Realtors, National Multifamily Housing Council, National Association of Home Builders and New York State Builders Association — are providing financial backing to a lawsuit looking to upend New York’s rent law.

“The whole effort will collectively cost several million dollars,” said Jay Martin, the executive director of the Community Housing Improvement Program. “For that, we’ll need ongoing financial support from the industry collectively. This isn’t just another willy nilly, last-ditch effort. We genuinely believe we’re providing a comprehensive conversation at the court level that hasn’t been done before.”

CHIP, along with the Rent Stabilization Association and seven landlords, filed a suit in July alleging that New York’s new rent law violated the U.S. Constitution’s Fifth Amendment, which includes a clause that bars taking of private property without “just compensation.” The complaint also alleges that the rent law violates the Fourteenth Amendment’s due process clause because the law is “arbitrary and irrational.”

Washington, D.C.-based law firm Mayer Brown is leading the legal effort — which also claims that New York’s rent stabilization law violated the Constitution even before changes were made in June.

Martin has been traveling the country, most recently visiting Oregon and California, to seek industry support for the effort. In September, California passed AB-1482, its own statewide rent control measure.

Community Housing Improvement Program director Jay Martin

Community Housing Improvement Program director Jay Martin

Robert Pinnegar, the president of the National Apartment Association, said in a statement that the organization “is opposed to any regulation or barrier to construction, including rent control, that has a negative effect on housing affordability.” NAA is also the parent organization of the California Apartment Association, whose members led the California effort to counteract a 2018 ballot measure to repeal a statewide ban on rent control.

The five real estate groups will provide “all-encompassing” support for the costly litigation, as well as legal advice and public relations support, according to Martin. The exact dollar amount being contributed was not disclosed.

CHIP and RSA’s lawsuit names New York City, the city’s Rent Guidelines Board, the board’s members and the head of the New York State rent stabilization regulatory agency as defendants.

The post National groups fund NY landlords’ suit against rent law appeared first on The Real Deal Miami.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 5:30 p.m.

 

A showroom and office building in Palm Beach Gardens sold for $10.2 million. JKHA Group, led by Jerome Berko, purchased the 30,681-square-foot property at 4290 Professional Center Drive for $332 per square foot, records show. A company tied to Chicago-based Group One Investments sold the property. [TRD]

 

Renderings revealed of River Parc master plan, Unknwn’s Wynwood store. [TRD]

 

A high-rise apartment and hotel project is planned for an Opportunity Zone in Hallandale Beach. Taplin Development Corp., led by Jack Taplin, received approval from the city to build 320 apartments and a 120-key hotel with a retail component across from Gulfstream Park, according to a release. [TRD]

 

Investment in South Florida’s industrial real estate market rose 77 percent to $1 billion in the third quarter of 2019 on a yearly basis. The market is booming right now due to an influx of institutional buyers acquiring new properties and land, according to an analysis of Real Capital Analytics data by Avison Young. Institutional investors are zeroing in on industrial properties as the demand for e-commerce continues to take off. [TRD]

 

Emmanuel Sebag’s bet on spec in the Venetian Islands appears to have paid off. The developer just sold a five-bedroom, 5,600-square-foot home at 802 West Dilido Drive in Miami Beach for $15.55 million (about $2,750 a square foot), according to the MLS. [TRD]

 

Backed by SoftBank, Compass has grown exponentially. But breakneck expansion — it added more than 6,000 agents last year — has come at a cost. One Chicago-based broker says her earnings plummeted once she arrived at the brokerage, and she was unable to access marketing materials for months. [NYT]

 

Menin Development is breaking ground on its long-planned Delray Beach Market. The development firm, led by CEO Craig Menin and not affiliated with Menin Hospitality of Miami, is breaking ground on the 150,000-square-foot building on Thursday, according to a press release. It will house a 60,000-square-foot food hall with 35 vendors, and include a four-story parking garage. The project is expected to open in the spring of 2021. [Press release]

 

Brown Harris Stevens Miami was tapped to handle sales of Maison Residences Isla Morada. Juan Alvarez, an agent with BHS, is leading sales and marketing of the 12-unit community in Islamorada, in the Florida Keys, according to a press release. The four-bedroom residences range from $3.25 million to $3.55 million, and are expected to be completed toward the end of 2020. [Press release]

 
Pam Liebman and Silvia Coltrane

Pam Liebman and Silvia Coltrane

The Corcoran Group has brought on broker and developer Silvia Coltrane. Coltrane’s Real Estate Transactions office, at 9537 Harding Avenue in Surfside, will become Corcoran’s fifth outpost in South Florida. The move is expected to give the New York-based brokerage a shot at winning coveted new development business in markets that include Surfside, Bal Harbour and North Beach. [TRD]

Compiled by Katherine Kallergis

The post LeBron James’ Unknwn store is opening Dec. 5, Palm Beach Gardens showroom trades for $10M appeared first on The Real Deal Miami.

4290 Professional Center Drive (Credit: Google Maps)

4290 Professional Center Drive (Credit: Google Maps)

A showroom and office building in Palm Beach Gardens sold for $10.2 million.

New York-based JKHA Group, led by Jerome Berko, purchased the 30,681-square-foot property at 4290 Professional Center Drive for $332 per square foot, records show. A company tied to Chicago-based Group One Investments sold the property.

The three-story office and design showroom, known as the Design Center, was last purchased in 2014 for $6.8 million, records show. The property was built in 2007.

Group One Investments also has multifamily properties in Georgia, Texas, New York and Illinois. The company was founded in 1977 by Howard Wolkoff and Bob Weitzman, according to its website.

The sleepy town of Palm Beach Gardens is seeing more interest from developers.

Late last year, Brookfield Asset Management paid nearly $218 million for the PGA National Resort & Spa in Palm Beach Gardens, marking the largest hotel sale in South Florida of the year. This summer, New York Life Insurance Co. bought The Financial Center at the Gardens for $71.8 million, in one of the Palm Beach County’s largest office sales of the year.

The post Showroom and office building sell for $10M in Palm Beach Gardens appeared first on The Real Deal Miami.

Softbank CEO Masayoshi Son (Credit: Getty Images)

Softbank CEO Masayoshi Son (Credit: Getty Images)

A Chicago real estate agent was unable to access basic marketing materials after joining brokerage Compass. A hotel owner in India is facing eviction after hospitality startup Oyo stopped making payments. And an employee for Rappi, a Colombian delivery startup, was told he would need to buy a new phone after he was robbed on the job.

These people are among those sidelined by startups backed by SoftBank’s $100 billion Vision Fund, which provided them with immense sums of capital and a simple mantra: grow as fast as possible. Those startups have grown at breakneck speed with little oversight or regard for corporate governance, according to the New York Times.

WeWork and Uber, the two most prominent examples of SoftBank’s bets going awry, have provided a window into how the Japanese conglomerate has inflated the value of startups with profound consequences.

This fall, WeWork abandoned plans to go public after investors refused to accept its $47 billion valuation, and its charismatic CEO Adam Neumann left the company after SoftBank paid him more than $1 billion. SoftBank was forced to provide the company with a $9 billion lifeline to salvage it from potential bankruptcy. At Uber, the ride-share startup had an underwhelming IPO and recently posted losses of more than $1 billion.

Since these companies have floundered, some have begun to look at early warning signs in other startups backed SoftBank’s Vision Fund, which has invested in 88 companies.

Rappi, a Colombian startup received $1 billion from SoftBank and contracts delivery drivers in nine Latin countries. The company does not provide insurance or safety equipment such as a helmet to protect riders, who earn $1 per delivery. Dozens of riders have been injured.

Compass, which is valued at $6.4 billion thanks to large investments by SoftBank, has recently faced tough questions about its parallels to WeWork. According to the Times, Chicago broker Tricia Ponicki joined the firm after being offered generous incentives, but made just one deal this year. She has returned to former brokerage @properties, where she used to annually pull in $100,000.

Another firm, Oyo, a $10 billion Indian startup founded by a 19-year-old in 2013, has also been propped up by the Vision Fund. In some cases, it has stopped paying hotel owners, to whom it directs customers, forcing them into financial hardship. [NYT] –– David Jeans

The post The people left behind by SoftBank’s startups appeared first on The Real Deal Miami.

Rendering of River ParcRendering of River ParcRendering of River ParcRendering of River ParcRendering of River ParcRendering of River ParcRendering of River ParcRendering of UnknwnRendering of Unknwn

River Parc master plan in Little Havana

Miami-Dade County, Related Urban Development Group and SunTrust unveiled plans on Tuesday for the River Parc master plan, which will add 1,800 affordable and workforce housing units to a 22-acre property in Little Havana. The project consists of the public housing projects Robert King High, Haley Sofge and Martin Fine Villas.

This week, the county and Related’s affordable housing arm broke ground on the Gallery at River Parc, a 150-unit development at 780 Northwest 13th Court in Miami. That building will include a swimming pool, gym, multipurpose room and business center. It will have 40 studios, 70 one-bedroom units, and 40 two-bedroom units. Eighty percent of the units will be set aside for workforce housing and 20 percent will be affordable.

The total unit count at River Parc will be 2,600 apartments, including 800 existing public housing units. SunTrust is financing the project with a construction loan totaling more than $28 million, according to a spokesperson. Justin Ginsberg, Donna Kelce and Rebecca M. Cox of SunTrust arranged the financing.

Unknwn in Wynwood

LeBron James’ Unknwn is opening on Dec. 5 at 261 Northwest 26th Street in Miami. The 10,000-square-foot store includes 3,000 square feet of retail space and 4,000 square feet of courtyard space, designed by the firm New York Sunshine.

James co-founded Unknwn with Jaron Kanfer and Frankie Walker Jr. In South Florida, it also has a location at Aventura Mall. David Edelstein owns the Wynwood retail building.

The post Renderings revealed: River Parc master plan, Unknwn’s Wynwood store appeared first on The Real Deal Miami.

Clockwise from top: Robert Shapiro, Viktor Gjonaj, and Robert C. Morgan (Credit: Rochester Institute of Technology, LinkedIn, iStock)

Clockwise from top: Robert Shapiro, Viktor Gjonaj, and Robert C. Morgan (Credit: Rochester Institute of Technology, LinkedIn, iStock)

On October 15, developer Robert Shapiro—who pleaded guilty in August for leading a $1.3 billion real estate Ponzi scheme—received the maximum sentence of 25 years in prison. Drawn out over two years, the court case laid bare how his now-defunct Sherman Oaks-based investment firm, the Woodbridge Group of Companies, defrauded more than 7,000 investors, among them many elderly retirees and ABC News anchor George Stephanopoulos.

Certain elements of Shapiro’s flagrant self-enrichment scam may be especially standout—he stole somewhere between $25 million and $95 million and spent at least some of the money on expensive wine and Picasso works—his fraudulent behavior is hardly an outlier within the industry. In the decade since Bernie Madoff first made headlines, Ponzi schemes have proliferated: The SEC has prosecuted 50 percent more of these cases in the last 10 years, many of which are tangled up with real estate. In fact, the Woodbridge scam isn’t even the only one that made headlines this year. Check out these five other examples from 2019 alone.

 

1.) Back in May, the SEC charged upstate New York residential and commercial real estate developer Robert C. Morgan and two of his business operations with fraud for siphoning and misusing investor funds. According to the complaint, Morgan—whose company, Morgan Management, at the time included 140 properties and 34,000 units across 14 states—raised more than $110 million from 200 mostly small investors starting in 2013, funds he claimed that would be used to improve multi-family properties while, in reality, were diverted to pay back earlier investors, prosecutors said. The SEC called his alleged scheme “Ponzi-like,” according to the Buffalo News.

The SEC also alleged that Morgan had directed more than $11 million to repay an inflated, fraudulently-obtained loan for an unrelated apartment complex, while additional charges filed by the Justice Department accused him of conspiracy to commit bank fraud, wire fraud, and money laundering. In the months since the indictments, Morgan has shed properties, most recently selling about half his portfolio to Pennsylvania-based company called Morgan Properties, which is reportedly separate and unrelated to his own entities. Morgan has denied the charges and claims the investors have already been repaid.

 

2.) In August, Carl Chen, the owner of Delaware-based real estate company Chenmex, was sentenced to 51 months in prison after pleading guilty to fraud in relation to a multi-year Ponzi scheme. Between 1991 and 2017, Chen collected a total of $6.4 million from 41 investors according to court documents that also revealed that he “generally promised investors annual returns of 10 to 15 percent and signed a promissory note guaranteeing each investor interest-only payments on a monthly basis until such time as he paid back the investor his or her full principal investment.”

In 2013, Chen’s holdings could no longer float the interest payments to investors and the scam began to cave in. In 2016, as investors began to demand their money back, Chen offered a mortgage on his own home in exchange for an investor not demanding immediate repayment; the following year, he filed for Chapter 7 bankruptcy, seeking to discharge the $6.7 million lent to him by investors. The judge who sentenced Chen this summer called the case “one of the most horrendous white-collar offenses that I remember seeing.”

 

3.) This Ponzi scheme has a mystery element: Detroit commercial real estate developer Viktor Gjonaj disappeared this summer in the wake of multiple mounting lawsuits—one of which alleged that he stole from investors, including his wife, in a multi-million dollar pyramid scheme. Gjonaj was accused of doctoring purchase agreements in order to make investors believe they were buying ownership interests in properties in Southeast Michigan that were actually already owned by the investors.

There was a web of more than 30 companies “all designed for the sole purpose of defrauding investors and keeping the money hidden,” according to court documents cited by Crain’s Detroit Business. Gjonaj’s business partner, Gregory Vitto, was initially named in one suit, but has since been dismissed. He claims he was merely another victim: “I was used just like the rest of the people,” Vitto wrote in in text message to Crain’s. “He owes me a ton of money also.” As of mid-September, Gjonaj had been heard from but remained out of sight.

 

4.) In September, the SEC charged Chicago property developer Glenn C. Mueller and his companies with violating federal securities laws, alleging that his “fix-and-flip” real estate investment pitch was in actuality a $41 million Ponzi scheme. Mueller is accused of defrauding more than 300 investors over the past five years, many of whom were retirement age, claiming that their money would be used to buy and renovate apartment buildings across the state when actually Mueller used the money from new investors to pay off existing others. While the SEC appointed a federal equity receiver to take control of Mueller’s businesses and marshal assets to benefit his victims, it remains unclear if they will all get their money back: While his main company, Northridge Holdings, is estimated to be worth $100.4 million, liabilities exceed $113 million.

 

5.) Meanwhile, in Utah, former real estate investment guru Rick Koerber was convicted on 15 charges of fraud, wire fraud, and money laundering following 10 messy years of litigation by federal prosecutors. He was ultimately sentenced to over 14 years in prison. Koerber collected more than $100 million in investments from family and friends between 2004 and 2008, claiming the money would be used to purchase real estate but instead using the funds to support a lavish lifestyle as well as a hamburger franchise and a sexy horror film production. He was also accused of using money from new investors to pay previous investors in order to keep up the scam.

The Koerber case has been particularly contentious for the way he exploited fellow followers of the Church of Latter Day Saints. “He knew exactly what to say and do to get members of the Mormon community to trust him. He spoke their language,” federal prosecutor Tyler Murray said during the trial. Prosecutors pushed for a 20-year prison term; ultimately, Koerber was sentenced to 14 years and change. It is estimated his investors lost a total of $45.2 million.

The post Robert Shapiro is not alone: 5 real estate Ponzi schemes you should know about appeared first on The Real Deal Miami.

A rendering of Falls at Gulfstream

A rendering of Falls at Gulfstream

A high-rise apartment and hotel project is planned for an Opportunity Zone in Hallandale Beach.

Taplin Development Corp., led by Jack Taplin, received approval from the city to build 320 apartments and a 120-key hotel with a retail component across from Gulfstream Park, according to a release. The project will be called the Falls at Gulfstream and the property will consist of a 23-story building at 900 South Federal Highway.

The Class A property will have a rooftop bar overlooking the finish line at Gulfstream Park. The property is also adjacent to the Village at Gulfstream Park, an upscale shopping center.

The federal Opportunity Zone program allows developers and investors to receive a tax incentive if they invest in one of the more than 8,700 zones throughout the country. The program was designed to encourage investment in low-income and distressed areas, but has come under scrutiny as a tax break for wealthy developers.

“We are currently seeking Opportunity Zone joint venture equity to meet the end of the year zone deadline,” Taplin said in a statement.

Developers and investors can utilize the largest possible tax advantage by deploying capital into Opportunity Zones by the end of this year. Experts predict there will be a rush of investment from developers looking to take advantage of the benefit.

BC Architects is designing the project.

Taplin Development’s apartment portfolio includes the Falls at Marina Bay in Fort Lauderdale, the Falls of Pembroke, and Harbour House Bal Harbour.

Hallandale Beach, in Broward County, is just north of Golden Beach. Hallandale has historically had a reputation as a small beach town, but now is seeing an influx of new high-rise luxury development. New York City-based KAR Properties is building a 38-story, 64-unit luxury condo project called 2000 Ocean in Hallandale. Half-floor condos are priced between $2.8 million and $5.5 million. Last year, Integra Investments ArtSquare, a 386-unit apartment complex at 413 North Federal Highway in Hallandale, opened.

The post High-rise hotel, apartments coming to Hallandale Beach Opportunity Zone appeared first on The Real Deal Miami.

Industrial sales are up

Industrial sales are up

South Florida’s condo market has slowed down and the housing market is not what it once was, but the industrial sector is as hot as ever.

Investment in South Florida’s industrial real estate market rose 77 percent to $1 billion in the third quarter of 2019 on a yearly basis. The market is booming right now due to an influx of institutional buyers acquiring new properties and land, according to an analysis of Real Capital Analytics data by Avison Young.

Institutional investors are zeroing in on industrial properties as the demand for e-commerce continues to take off.

In the past two years, the Blackstone Group spent the most, buying 36 properties in South Florida for $417.4 million. Duke Realty was second, having purchased four properties for $250.1 million. And DWS Group Americas, an investment manager, closed on five properties for $198.2 million, according to Avison Young.

On a per-foot basis, industrial prices in South Florida rose 14.8 percent in the third quarter of this year to roughly $160 per square foot, compared to $140 per square foot during the same period in 2018. Over the past year, 249 properties sold totaling 21.6 million square feet.

In the third quarter, BentallGreenOak and Bridge Development Partners recorded the largest industrial sale in Miami-Dade County by acquiring a mixed-use business park next to the Opa-locka Executive Airport for $126 million.

In South Florida, institutional investors made up 31.9 percent of the buyers and 17.7 percent of the sellers in 2019, while foreign investors accounted for 22.9 percent of the buyers and 22.4 percent of the sellers.

The post South Florida’s industrial sales jump to over $1B in Q3 2019 appeared first on The Real Deal Miami.

802 West Dilido Drive with agents Dina Goldentayer and Miltiadis Kastanis (Credit: Douglas Elliman)

802 West Dilido Drive with agents Dina Goldentayer and Miltiadis Kastanis (Credit: Douglas Elliman)

Emmanuel Sebag’s bet on spec in the Venetian Islands appears to have paid off.

The developer just sold a five-bedroom, 5,600-square-foot home at 802 West Dilido Drive in Miami Beach for $15.55 million (about $2,750 a foot), according to the MLS.

Dina Goldentayer of Douglas Elliman represented the seller, and Elliman’s Miltiadis Kastanis brought the buyer. Both agents declined to comment on the deal, and the buyer’s identity has not been disclosed.

The waterfront home, designed by David Lopez Quincoces, hit the market in March for $16.85 million, according to Realtor.com. It features a 1,200-square-foot master suite, a lounge, home theater, guest quarters, a summer kitchen, new dock and boat lift, and an infinity pool.

Property records show Sebag’s 802 W Dilido LLC paid $4.1 million in 2016 for the 10,500-square-foot lot. Sebag developed his own home nearby on the Venetians, according to Architectural Digest.

The $15.55 million sale is the highest price paid for a house on the Venetian Islands since former Formula One driver and spec home developer Eddie Irvine sold the 7,300-square-foot spec home at 126 West San Marino Drive for more than $17 million in May 2018. A year earlier, WhatsApp investor Jim Goetz paid $22 million for the seven-bedroom, 11,600-square-foot home at 212 West Dilido Drive.

The post Developer gets $15.6M for Venetian Islands spec home appeared first on The Real Deal Miami.

Martha Stewart

Martha Stewart

How would Martha design it, build it and sell it? Soon, we’ll find out.

Marquee Brands, which owns the Martha Stewart brand, hired real estate agency Brand Labs International to identify cities, developers and real estate projects for the Martha Stewart brand, The Real Deal has learned.

Brand Labs International’s CEO Florian Haffa said that Stewart will be involved in the design of various developments. The partnership is in talks with specific developers in the U.S., as well as in Europe and Asia. Haffa wouldn’t identify projects or cities where it plans to launch Martha Stewart-branded developments.

Stewart, a business mogul, television personality and author, sold her Martha Stewart Living Omnimedia empire to Marquee Brands earlier this year for $215 million. The company included furniture, kitchenware and other branded products. Marquee Brands is the parent company of other brands, such as BCBG Max Azria, BCBG Generation, Emeril Lagasse, and Ben Sherman, according to its website.

The Martha Stewart-branded real estate projects could include single-family homes, condos, townhouses, assisted living, and other residential communities.

Stewart said in a statement that she looks forward to building developments that “will fit our needs and offer practicality, usefulness, beauty and comfort.”

Her homes have “acted as laboratories” for the brand, according to a release. She owns a country farm north of New York City in Westchester County, a home on Perry Street in Manhattan’s West Village, a property on Mount Desert Island in Maine and a house in East Hampton, according to Architectural Digest.

Branded developments have become increasingly popular. In South Florida, developers have recently partnered with Porsche Design, Armani Casa, Aston Martin and others to brand luxury residential towers. Developers can ask for nearly 31 percent more on average than for comparable non-branded properties, according to data from Savills.

The post Design it the Martha Way: Martha Stewart to brand real estate developments worldwide appeared first on The Real Deal Miami.

Pam Liebman and Silvia Coltrane

Pam Liebman and Silvia Coltrane

In a move that could give the Corcoran Group a shot at winning coveted new development business north of Miami Beach, the brokerage has brought on broker and developer Silvia Coltrane, The Real Deal has learned.

Coltrane’s Real Estate Transactions Inc. office, at 9537 Harding Avenue in Surfside, will become Corcoran’s fifth outpost in South Florida. Corcoran is taking over the lease, and the office will be “fully Corcoranized” within a couple of weeks, said Pam Liebman, president and CEO of the New York-based brokerage. About 18 agents will work out of the Surfside location.

Liebman and Coltrane were introduced to each other by Patricia Prado, a Corcoran agent who previously worked for Coltrane. Liebman said she loves Coltrane’s experience in new development, and called her “a really fabulous lady,” adding that, “I know a lot of people were after her.”

While Liebman declined to disclose terms of the deal between Corcoran and Coltrane, she said “it’s a very fair deal for both of us.”

Coltrane has been involved in land sales totaling more than $300 million in recent years.

Coltrane, who’s been in the industry since 1980, has been involved in a number of deals and developments in Miami Beach, North Beach, Surfside and Bal Harbour. She brokered sales for Faena Miami Beach and the Fendi Chateau developers, as well as arranging the land for Ocean Terrace, a project led by Sandor Scher and backed by Alex Blavatnik.

Coltrane will continue running her development firm, Transacta Developers, but said that any property sales she handles will be brokered via Corcoran. She said that joining Corcoran will give her the opportunity to take her business to a new level. “I liked their ethics and their style,” Coltrane added.

The arrangement comes as a number of wealthy buyers from the Northeast are flocking to South Florida to reap the tax benefits.

“This is where our alliance together will be a winning combination,” Coltrane said.

Corcoran has been in the Palm Beach market for years, expanding to West Palm Beach earlier this year and to Miami Beach in September with an office at 1688 Meridian Avenue.

The Realogy-owned firm plans to take on more new development projects north of Miami Beach in cities such as Surfside and Bal Harbour. In Surfside, it was the on-site brokerage for the Four Seasons Residences at The Surf Club.

Corcoran, which is dealing with the aftermath of a massive data breach, is one of the top brokerages in New York City. The firm has 40 offices and 2,200 agents in Manhattan, Brooklyn, the Hamptons, Long Island, Shelter Island and South Florida.

The post Corcoran courts new dev expert in Surfside, opens fifth office appeared first on The Real Deal Miami.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 6 p.m.

 

1111 Lincoln Road adds new retail tenant. YOYOSO will occupy the 5,600-square-foot corner retail space at the property. The deal marks the largest retail lease, in terms of square footage, signed along Lincoln Road since the second quarter of 2018, according to CBRE Global Investors.

 

Todd Glaser, Rony Seikaly close on Miami Beach spec mansion. Todd Michael Glaser and DJ and former Miami Heat player Rony Seikaly paid $7 million for a waterfront Miami Beach property they had leased while building a new mansion. [TRD]

 

Menin Hospitality’s Bodega is expanding to Fort Lauderdale. Menin Hospitality co-founders Keith Menin and Jared Galbut signed a 10-year lease with options to open Bodega Taqueria y Tequila’s second standalone permanent location at the historic Bryan building, at 21 West Las Olas Boulevard in Fort Lauderdale. [TRD]

 

Kohl’s-anchored shopping center in West Palm goes for $24M. A West Palm Beach shopping center anchored by Kohl’s and Dick’s Sporting Goods sold for $23.6 million. [TRD]

 

Elliman foots bill for agents’ new business tool. Douglas Elliman is hoping it’s found a divine trinity in a new tool that combines marketing, business management and a customer relationship management system. [TRD]

 

NFL’s Frank Gore lists Davie mansion. Buffalo Bills running back Frank Gore is looking to part ways with his mansion in Davie. Gore, a native Miamian and University of Miami graduate, is currently the oldest active running back in the National Football League at 36 years old. Gore is listing his five-bedroom, six-bathroom home at 12535 Stoneway Court in Davie for $1.8 million. [TRD]

 

Miami again delays vote on David Beckham’s soccer stadium deal. At a special meeting Tuesday morning, Miami city commissioners voted to continue negotiations with Beckham’s partnership group to build Miami Freedom Park, a projected $1 billion commercial mixed-use project anchored by a 25,000-seat stadium for the Major League Soccer franchise Inter Miami CF. [TRD]

 

Zillow and Opendoor aren’t making much on home-flipping. The slew of iBuying companies that have popped up in the last two years aren’t low-balling sellers, but they don’t appear to be making much of a profit, either. Zillow, for example, lost an average of $4,826 on each home sale in the third quarter, after interest expenses — up from $2,916 in the second quarter, the company revealed last week. [TRD]

 

Toll Brothers sells golf course to ClubCorp for $8M. Toll Brothers sliced a deal for its golf course and private club at Jupiter Country Club to ClubCorp after selling out its residential community. [TRD]

 

Related’s affordable housing arm is unveiling the River Parc master plan. Miami-Dade County, Related Urban Development and SunTrust will reveal plans for the 22-acre redevelopment as they break ground on the Gallery at River Parc, a 150-unit affordable and workforce housing project. The master plan will add 1,800 of such units to the three public housing projects that already exist on site, currently totaling 800 units. The development is in Little Havana, across from Marlins Park. [Press release]

 

FEMA is delaying its planned rate restructuring for flood insurance premiums until October 2021. The agency hasn’t said how much rates will increase, but it will stop providing subsidized rates and refunds. Congress pushed FEMA to defer the new rates a year after originally planned. Florida, where 35 percent of the National Flood Insurance Program’s policies are written, stands to be impacted the most. [Sun Sentinel]

 

Todd Michael Glaser and former Miami Heat player-turned-DJ Rony Seikaly paid $7 million for a waterfront Miami Beach property. Glaser said the seller, real estate developer Ron Simkins, offered him the unique deal a year and a half ago. Glaser and investment partner Seikaly were able to lease the property at 1635 West 22nd Street on Sunset Island IV, knock down the house, build a new spec home in its place, and buy it when it was completed. It will hit the market for about $19 million. [TRD]

 

Compiled by Katherine Kallergis

The post 1111 Lincoln inks retail lease with Yoyoso, Miami-Dade and Related Urban reveal massive affordable housing plan appeared first on The Real Deal Miami.

When Steve Kessner began buying East Harlem rental buildings in the 1980s, like most landlords of rent-stabilized apartments, he played the long game. Keeping maintenance and renovation costs to a minimum, Kessner made modest but steady returns on his 47 properties, many of them run-down and rat-infested, and one of which he bought for just $5.

But when New York state lawmakers added ways to boost rents on stabilized housing in the 1990s and 2000s, it drew global pools of capital seeking higher returns. Three different buyers have since tried their hand at Kessner’s portfolio.

Hedge fund Dawnay Day bought the properties for $225 million in 2007, but the firm collapsed during the financial crisis. Next came Irving Langer’s E&M, notorious for evicting rent-stabilized tenants — a practice rewarded by a 1994 state law. Then Emerald Equity Group acquired the portfolio in 2016 for $357 million, financed with a $300 million acquisition loan from Canada-based Brookfield Asset Management, only to see state politics shift and the rent law swing back in favor of tenants this year.

Defeated in New York, big apartment building owners have been pouring money into politics to avoid a similar fate in California, Illinois and other states where rent control battles are raging.

National real estate investment trusts and global private equity giants have spent tens of millions of dollars lobbying in New York and California in the past year, according to an analysis of campaign finance records by The Real Deal.

The large institutional players are taking charge of efforts to fend off tenant gains as presidential candidates side with tenants and local landlord groups are bogged down by disagreements and disorganization.

Institutional investors control more rental housing nationwide than ever. Private equity firms and real estate investment trusts now own at least 200,000 multifamily rental units, according to an analysis of public financial filings.

Losing statehouse rent control fights can be costly. Just three months after New York’s sweeping reform in June severely limited increases of regulated rents for the foreseeable future, Emerald defaulted on loans for two buildings in its Dawnay Day portfolio. The firm, which had circulated a prospectus to investors in 2018 outlining plans to deregulate even more apartments and renovate a substantial portion of the Dawnay Day portfolio, began to miss payments in September.

Meridian broker Marvin Jeremias, who arranged the original financing, said that Brookfield was refinanced out of the investment long before the loans went into default. But Brookfield remains heavily invested in multifamily properties that politicians could rope into regulation, disrupting its plan to “redevelop well-located, older assets and earn an attractive return [for its investors] by raising rents.”

Brookfield acknowledges that the strategy is at risk, noting in its latest SEC filing that “the imposition of rent control on our multifamily residential units could have a materially adverse effect on our results of operations.” The company, which manages assets worth $350 billion, declined to comment for this story.

The California lobbying rush

California’s largest real estate investors and trade groups, including the California Apartment Association (CAA), have pumped more than $110 million into lobbying in the state since 2008. Some $72 million of that was spent last year alone to preserve a statewide ban on new rent control measures, with almost 30 percent coming from just five institutional firms: Blackstone, Equity Residential, AvalonBay, Essex Property Trust and Invitation Homes.

On Equity Residential’s most recent earnings call, the firm, part of billionaire Sam Zell’s real estate empire, decried the “chilling effect” of rent regulation in New York City and told investors the new law had cost it $400,000 in application and late fees — roughly $40 for each of its nearly 10,000 rental apartments in the five boroughs.

But the revenue hit from fee caps pales in comparison to that from the new limits on increasing rent through renovations, vacancy and deregulation of units, which is now exceedingly difficult to do.

Equity Residential and Invitation Homes did not return requests for comment. Blackstone did not comment, and AvalonBay Vice President Jason Reilly said, “We do not publicly speculate on potential legislative matters.”

Jim Markel, a California regional manager at the commercial brokerage Marcus & Millichap, said Essex had “taken a leadership role” in last year’s fight against Proposition 10, a referendum that would have undone the state’s restrictions on rent control by local governments, and against a similar ballot measure now being pushed by tenant groups.

Most of the major owners, as well as the private equity owners, are very up in arms about the prospect of rent control,” Markel said.

Michael Weinstein, president of the AIDS Healthcare Foundation, one of the main groups seeking greater tenant protections in California, told TRD that before voters rejected Proposition 10, there were high-level negotiations between his organization and the CAA, which represents larger firms and institutional investors.

At a meeting convened by state Sen. Bob Hertzberg, it appeared a compromise had been reached. But according to Weinstein, it was rejected — not by CAA, but by two of the top institutional investors in California.

The big interests said they wanted to go for broke,” Weinstein said. “We hammered out a deal, and then it was rejected by Blackstone and Essex, who were in the room.” (A source familiar with the meeting claimed that Blackstone was not present.)

I think Blackstone cares so much about rent control because … like any public company, you have a commitment to your investors, to make certain you’re responsible and there’s an adequate return on your investment,” said Tom Bannon, the chief executive of CAA.

Essex CEO Michael Schall signaled on the firm’s most recent earnings call that the top firms have not let their guard down since defeating Proposition 10 and winning concessions on a rent control bill, AB 1482, that California passed this summer.

We obviously track [rent control initiatives] pretty carefully and we kept our [campaign] entity, Californians for Responsible Housing, alive and well and organized in case of this,” Schall said about other rent control initiatives in the Golden State. “So we’ll wait and see what happens.”

Trade groups in disarray

Until recently, rent control was a local issue limited to city-based landlord and tenant groups battling in isolated jurisdictions. But in the past year it has been amplified with the help of Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez. Both have called for a cap on annual rent increases and for making it harder to evict tenants. The two politicians have ardent followings and immense media platforms, so their advocacy — along with an increasing number of rent-burdened tenants — could make rent control a lasting element of the nation’s political narrative.

Another factor that is motivating stepped-up political efforts by national investors in multifamily housing is the failure of New York landlord groups this spring in Albany.

The Real Estate Board of New York, Rent Stabilization Association and Community Housing Improvement Program spent $2.8 million on advertising to soften the blow of the state’s pending rent-law reform, to little effect.

The campaign, which sought to highlight mom-and-pop landlords, instead featured one who had poorly maintained her Upper West Side building, leaving tenants without cooking gas for 18 months. A ramen shop in her building, its gas burners rendered inoperable, had to close.

At least the trade associations collaborated on the ad buy. Since then, their efforts have been scattered.

Another industry group, the New York Capital Region Apartment Association, is organizing its roughly 400 members to sway lawmakers, but has rejected the idea of working with the other real estate lobbying organizations.

RSA and CHIP filed a federal lawsuit in July challenging the constitutionality of the rent law — a process that could bear fruit in three or four years. But the Real Estate Board of New York did not join the suit.

We asked them whether they would be interested, and they declined,” said RSA’s longtime leader Joe Strasburg, who noted that REBNY “makes their own decisions, whether it’s right or wrong.”

A spokesperson for REBNY declined to comment.

Strasburg acknowledged that he did not even visit Albany during the legislative session, instead conducting meetings via phone. REBNY and RSA did meet with Democratic state Sen. Julia Salazar early in the year, but both parties said the meetings were not productive. No surprise there: The groups had for years supported Senate Republicans, who reliably defended landlords’ interests when the rent stabilization law came up for renewal every few years. When the GOP was swept out of power in the 2018 elections, landlords were left with little influence in the upper chamber.

Some REBNY members, including Brookfield and Blackstone, took their own lobbyists to Albany during the session. But REBNY, CHIP and RSA were not included in a March meeting between real estate interests and backers of a platform of nine state bills. Instead, Blackstone, A&E Real Estate Holdings and Taconic Investment Partners negotiated with the tenant advocates in the closed-door meeting, which was organized by Kathryn Wylde, president and CEO of the Partnership for New York City, a leading business group.

Although Blackstone is the largest owner of rent-regulated units in New York City, Wylde said she invited the global asset manager to the meeting as a potential source of capital for solutions to affordable housing and as a trusted expert on finance. “[Blackstone] just has some very smart people in residential finance,” Wylde told TRD.

The meeting was unusual, according to Wylde, but she said she expects to facilitate more gatherings about rent-stabilized housing in the future. Wylde said Blackstone, A&E and Taconic are “in it for the long haul.”

They are spending accordingly. Blackstone has put at least $595,000 into New York lobbying since 2015, while Brookfield has spent $2.2 million on state lobbying and given at least $619,000 to Gov. Andrew Cuomo’s re-election campaign in the same period.

Brookfield also lobbied against the changes to New York’s rent regulations — specifically, state Sen. Neil Breslin’s bill to allow municipalities outside of the city to opt in to rent stabilization.

Like other firms that have bet on multifamily housing, Brookfield may be looking to make such investments in upstate New York as an alternative to the five boroughs, given how regulations have tightened in the city, sources say. But Breslin’s bill, which passed, represents a threat.

According to Breslin, the Canadian asset manager came to his office to discuss the potential rent law but failed to win him over.

Brookfield didn’t change my mind,” Breslin said. “I’m very proud of the legislation, and I’d do it again.”

The post Control freaks: Institutional players take over landlords’ war on rent caps appeared first on The Real Deal Miami.

Toll Brothers CEO Douglas C. Yearley, Jr. and Jupiter Country Club

Toll Brothers CEO Douglas C. Yearley, Jr. and Jupiter Country Club

Toll Brothers sliced a deal for its golf course and private club at Jupiter Country Club to ClubCorp for $8 million, after selling out its residential community.

ClubCorp purchased the club with an 18-hole Greg Norman Signature golf course as part of an acquisition of seven golf clubs in Toll Brothers communities, according to a press release. The acquisition included three golf resorts in Virginia, three in North Carolina, and one in Maryland.

Jupiter Country Club, at 300 Marsala Court, also includes a swim and racquet facility, a pool, tennis courts, and a cafe.

Toll Brothers previously sold all the homes at the country club, according to a spokesperson.

Dallas-based ClubCorp owns or operates a portfolio of more than 200 golf and country clubs, city clubs, sports clubs, and stadium clubs in 27 states, Washington, D.C. and internationally, with over 430,000 members.

South Florida has long been a haven for golfers and golf communities, but as the sport’s popularity and the supply of available land dwindles, home builders have increasingly targeted golf courses.

In October, the Pulte Group paid $31 million for the former Oak Tree Golf Course at Oakland Park to build over 400 homes. Last year, Lennar revealed plans for 415 single-family homes and townhomes on the site of the former Crystal Lake Golf Club.

The post Toll Brothers putts Jupiter golf course over to ClubCorp for $8M appeared first on The Real Deal Miami.

Zillow CEO Rich Barton (Credit: iStock)

Zillow CEO Rich Barton (Credit: iStock)

The slew of iBuying companies that have popped up in the last two years aren’t low-balling sellers, but they don’t appear to be making much of a profit, either.

Despite the convenience and rising popularity of selling homes online, the iBuying industry — essentially, where a corporation like Zillow uses an algorithm to buy a house, spend a small amount on renovations, and sell it again — is working with microscopic profit margins, if they make money at all.

Zillow, for example, lost an average of $4,826 on each home sale in the third quarter, after interest expenses — up from $2,916 in the second quarter, the company revealed last week.

Where firms like Zillow and OpenDoor do make some money is on the transaction fee, which runs between 6 percent and 9 percent, according to the Wall Street Journal.

“We’re looking to move it as quickly as possible and earn our money off the transaction fee,” Zillow CEO Rich Barton said last month. “And ultimately because this transaction sits at the nexus of all of these adjacent markets that we know so well, that are big businesses in and of itself, they’re dying to be integrated into one thing.”

A new study by real estate professor Mike DelPrete found that iBuyers such as Zillow and Opendoor purchase homes at only 1 percent less than the value of the home, as assessed by First American Financial Corp (quick math: $3,800 on a $270,000 home). DelPrete, who analyzed 20,000 transactions from iBuyers, also found that Zillow and OpenDoor on average made 3.3 percent, or $8,900, when they resold the home.

The convenience of not going through a traditional real estate agent — who charge between 5 percent and 6 percent — along with giving their buyers cash, is attracting more customers. But whether iBuying can sustain such a low profit-margin business or survive a downturn remains unclear.

“How are they ever going to make money?” DelPrete asked.

[WSJ] — Jacqueline Flynn

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Jorge Mas, David Beckham and a Miami Freedom Park rendering

Jorge Mas, David Beckham and a Miami Freedom Park rendering

What was billed as another do or die moment for David Beckham’s Miami soccer stadium deal turned into another game delay.

At a special meeting Tuesday morning, Miami city commissioners voted to continue negotiations with Beckham’s partnership group to build Miami Freedom Park, a projected $1 billion commercial mixed-use project anchored by a 25,000-seat stadium for the Major League Soccer franchise Inter Miami CF.

The international futbol star’s dreams of fielding a professional Miami soccer team has gone through a number of fits and starts since Beckham first tried to get his stadium built at PortMiami in 2014.

After four other sites were either rejected or abandoned, Miami voters in 2018 approved the city working out a deal with Beckham and his group, led by Jorge Mas, chairman of infrastructure firm MasTec, to redevelop the publicly owned Melreese golf course near Miami International Airport. Since then, commissioner Manolo Reyes and opponents, including wealthy civic activist Bruce Matheson, have sought to thwart the negotiations by alleging redevelopment of the golf course should have gone through a public competitive bidding process.

Reyes wanted to force a vote on the proposed agreement before Commissioner Willy Gort is steps down later this month due to term limits. His successor won’t fill Gort’s seat until after Nov. 19, the runoff election date between former state Senator Alex Diaz de la Portilla and auto parts businessman and real estate investor Miguel Gabela.

But at Tuesday’s special meeting, a majority of city commissioners were reluctant to force a final showdown after hearing from private lawyers representing Miami that a deal was close to being completed except for a couple of key issues: the completion of three fair market value appraisals, and traffic and environmental studies of the land underneath the golf course.

Marc Sarnoff, a former commissioner and a current partner with the law firm Shutts and Bowen, which is representing the city, said nearly daily negotiations have been ongoing over the past month. “Our goal is to give you a lease that we think protects the citizens of Miami,” Sarnoff said. “We are close to getting you the appraisals. We think we can have them to you shortly.”

Mas told commissioners that the partnership, which also includes SoftBank Group International CEO Marcelo Claure, has done significant work on its environmental study regarding the cleanup of toxic materials underneath Melreese golf course. “I do believe the environmental remediation can be done in an amount that makes the project feasible,” Mas said. “It is under $40 million. The taxpayers of Maimi will bear no expense. We will be asking for zero dollars from the citizens.”

Mas also noted the Beckham group will be financing 70 percent of Miami Freedom Park’s development costs with equity and that over 100 community meetings have been held to inform the project’s neighbors and city residents about the complex, which will also include a public park and soccer fields, as well as office, retail and hotel buildings.

Matheson, who recently appealed the dismissal of a civil lawsuit he filed to stop the project, said voters were misled about the Miami Freedom Park proposal not requiring competitive bidding. “Eliminating competitive bidding without disclosing it to the public is misleading and unconstitutional,” Matheson said.

Inter Miami CF will initially play at the Fort Lauderdale Stadium and Training Complex currently under construction. If Miami city commissioners approve a lease agreement this year, Mas said the MLS franchise’s permanent home at Miami Freedom Park would be completed in 2022.

The post Miami again delays vote on David Beckham’s soccer stadium deal appeared first on The Real Deal Miami.

Frank Gore and his Davie home (Credit: Getty Images)

Frank Gore and his Davie home (Credit: Getty Images)

UPDATED, Nov. 13, 12:37 p.m.: NFL running back Frank Gore is looking to part ways with his mansion in Davie.

Gore, a native Miamian and University of Miami graduate, plays for the Buffalo Bills. At 36, he’s currently the oldest active running back in the National Football League. He’s also played for the San Francisco 49ers, Indianapolis Colts and the Miami Dolphins.

Gore is listing his five-bedroom, six-bathroom home at 12535 Stoneway Court in Davie for $1.8 million, according to Kim Knausz, director of VIP sales for the sports and entertainment division at One Sotheby’s International Realty. The 6,743-square-foot house features a home theater with a game room and bar, oversized master suite, summer kitchen, half basketball court and a pool and spa overlooking a lake.

Property records show Gore paid about $1 million for the home in 2014. It was built in 2006 on a roughly half-acre lot.

Knausz is also the listing agent for Houston Texans wide receiver Kenny Stills’ home at 2401 Southwest 26th Avenue in Fort Lauderdale, which hit the market last month for $2.8 million. Stills was previously with the Miami Dolphins.

Joe Philbin, former head coach of the Dolphins, tried to sell his Davie house after being fired by owner Stephen Ross. Records show Philbin still owns his mansion on Phoenix Avenue. He had taken it off the market in 2017, but the unit is now listed for nearly $2.2 million.

Correction: An earlier version of this story incorrectly identified the square footage of the house.

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Douglas Elliman's Scott Durkin (Credit: Getty Images, iStock)

Douglas Elliman’s Scott Durkin (Credit: Getty Images, iStock)

Douglas Elliman is hoping it’s found a divine trinity in a new tool that combines marketing, business management and a customer relationship management system.

The platform, which launches next week, was beta-tested by the firm’s top-selling Eklund-Gomes team and partly developed using the team’s “book of business,” according to team CEO Julia Spillman.

It’s called Elliman Studio and was developed by Gabriels Technology Solutions.

“It wasn’t something that was off-the-shelf,” said Scott Durkin, Elliman’s president and COO, noting that it took more than a year to develop. “We changed it in many, many ways to accommodate the luxury agent.”

 

Fredrik Eklund (left), Julia Spillman and John Gomes (Photo by Guerin Blask)

He declined to say how much Elliman spent on the product or how much the firm will be shelling out for agents’ ongoing subscription costs to Gabriels, the real estate website creator of the CRM of Sotheby’s International Realty and other brokerages and of a retail CRM for individual agents.

Elliman Studio provides agents with templated property websites that can be customized and come with a unique URL for any listing, as well as templates and easy distribution for internal and external marketing campaigns. Finally, it serves as a repository for client contact information, with a system of financial reports allowing agents to forecast their income and deal volume.

Many of Studio’s features were informed by the “wishlist” of agents on the Eklund-Gomes team and Spillman herself, who worked closely with Elliman’s technology team and Gabriels engineers. The California office also participated in the testing.

Spillman acknowledged she wasn’t solely motivated by altruism; the team had been looking to upgrade its previous CRM, built off Salesforce, and was facing a $100,000 bill to do it. She approached Elliman’s technology team in search of an alternative. She and Durkin both claim the brokerage was already beginning to develop Studio with Gabriels, so the Eklund-Gomes jumped into participating in developing and testing the platform.

“This is a great investment that Douglas Elliman has done for us,” she said, but added, “I will be shocked if every agent in the company doesn’t find one additional deal [as a result of using Studio].”

Durkin admitted that while none of the tools in Studio is itself new, putting them in one place accessible to the entire company at no cost is a significant step and is key for recruitment and retention.

“It’s really an accountability program,” he said, noting the goal is to help agents close more deals. “If this is a successful venture for them, we reap the benefits as well.”

Durkin also emphasized that the tool is owned by a third party and the company would not have access to agents’ data. Privacy and security was a point of concern earlier this year after Compass acquired Contactually, a cloud-based CRM system whose users include agents at other firms such as Sotheby’s and Berkshire Hathaway. Before the acquisition, Compass had been developing its own CRM in-house.

Agents who leave Elliman could even take over payment of the subscription fee to Gabriels Technology Solutions to continue using a pared-down version of the system, Durkin confirmed.

Studio will launch across most of the brokerage’s offices Nov. 18, along with training sessions and materials, according to the company. It will reach Colorado and California locations next year, when a mobile app is also slated to debut.

Write to Erin Hudson at ekh@therealdeal.com

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Rendering of Bodega Taqueria y Tequila, Keith Menin and Jared Galbut

Rendering of Bodega Taqueria y Tequila, Keith Menin and Jared Galbut

Menin Hospitality co-founders Keith Menin and Jared Galbut were standing on a street corner in downtown Fort Lauderdale when they spotted the future home of Bodega’s second location.

“We looked around and felt the energy, and as we turned around we saw this corner and said ‘that feels like Bodega,’” said Menin, a principal at Menin Hospitality.

The hoteliers and food and beverage operators signed a 10-year lease with options to open Bodega Taqueria y Tequila’s second standalone permanent location at the historic Bryan building, at 21 West Las Olas Boulevard in Fort Lauderdale. The original Bodega, at 1220 16th Street in Miami Beach, opened five years ago, and the company recently opened a six-month pop-up out of a vintage Airstream in the Miami Design District. It’s also at the AmericanAirlines Arena.

The Fort Lauderdale location, set to open in the spring, is a test for Menin as it plans to expand throughout South Florida and other major cities in the U.S., said Galbut, managing principal of the Miami-based firm. It will mirror the Miami Beach location, including a fast-casual taco restaurant and a speakeasy-style lounge open daily from 12 p.m. to 5 a.m. The taqueria will feature a retrofitted Airstream trailer, and a door will connect guests to the late-night speakeasy.

“We hope there will be many more throughout South Florida in the next 12 to 18 months,” Galbut said, adding that additional Bodegas have “to have the same ethos and essence and feeling of what makes South Beach so successful.”

The Fort Lauderdale location is near The Wharf and PMG’s X Las Olas. The latter is a 1,200-unit apartment development along the Las Olas Riverfront.

Menin Hospitality also plans to open the Gale Fort Lauderdale Beach soon. Both the Gale and Bodega are the Miami-based company’s first forays into Broward County. The condo component of the Gale was completed last year, and unit owners will be able to join the hotel rental program once the hotel opens.

A minority partner in the South Beach Bodega and in the now-closed Ricky’s pizzeria next door recently filed a lawsuit against Galbut, Menin and affiliated holding companies, alleging that they co-mingling staff and resources without his consent, refused to show him the accounting books and the distribution of profits, and sent employees to work at other restaurants the pair own. A lawyer for Galbut and Menin said the complaint is full of incorrect and inaccurate representations.

The post Menin Hospitality’s Bodega is expanding to Fort Lauderdale appeared first on The Real Deal Miami.

Keller Williams CEO Gary Keller (Credit: Wikipedia, iStock)

Keller Williams CEO Gary Keller (Credit: Wikipedia, iStock)

Sales at Keller Williams rose 5.6 percent during the third quarter, even as the Austin-based franchise faced increasing competition from rivals.

The company said the dollar value of closed deals in the U.S. and Canada was $101.7 billion during the quarter, up 1.2 percent year-over-year. The value of contracts signed during the quarter rose 9.3 percent year-over-year to $105.1 billion.

But amid competition for agents from tech-focused firms, including eXp Realty, Keller Williams’ headcount has been erratic. As of September 30, the franchise had 162,289 agents in the U.S. and Canada — up 3 percent from the first quarter of 2019 but down 4.5 percent year-over-year.

Founded in 1983 by Gary Keller, Keller Williams claims to be the largest real estate brokerage franchise, with more than 185,000 agents worldwide. Outside of the U.S. and Canada, Keller Williams said third-quarter sales hit $1.2 billion, up 9 percent year-over-year. By comparison, national home sales rose 2.8 percent during the third quarter, according to the National Association of Realtors. Sales volume rose 6.4 percent.

After becoming one of the largest brokerages in the world by agent headcount, Keller Williams has been betting heavily on technology. In 2018, co-founder and CEO Gary Keller said the firm would spend up to $1 billion to develop tools to help agents.

Over the past year, the firm has rolled out several new products, including Kelle, a virtual assistant; Command, a suit of apps including a CRM; SmartPlans, a workflow management app; and Designs, a real estate-centric graphic design app.

Keller Williams is also partnering with Offerpad to bring its instant home-buying program, called Keller Offers, to 12 new markets by the end of 2019.

“We’re making huge strides in our journey to deliver the end-to-end platform that our agents need to provide the personalized, data-enriched experience their clients expect,” Josh Team, Keller Williams’ president, said in a statement.

The post Sales rise as Keller Williams pours money into tech appeared first on The Real Deal Miami.

Shoppes at Southern Palms

Shoppes at Southern Palms

A West Palm Beach shopping center anchored by Kohl’s and Dick’s Sporting Goods sold for $23.6 million.

The 200,888-square-foot Shoppes at Southern Palms at 8795 Southern Boulevard sold for $177 per square foot to a company tied to Claudio Mekler of Miami Manager LLC, according to a press release. New York-based Garrison Investment Group sold the property, records show.

Marcus & Millichap’s Craig Fuller, Erin Patton, Scott Wiles, Kirk Olson and Drew A. Kristol represented the seller and the buyer in the deal.

Olson said the buyer was attracted to the property because of the strong anchor tenants and steady cash flow. The buyer assumed $18 million of a CMBS note, he said. The property was 100 percent occupied by 11 tenants at the time of the sale, according to the release.

Kohl’s occupies a 92,396-square-foot building and Dick’s Sporting Goods has 80,000 square feet. Both have long-term leases.

The property was previously purchased for $31.4 million in 2012, but records show at least two parcels on the property were sold off after Garrison Investment Group bought the center.

Mekler’s Miami Manager owns other retail properties in South Florida, including the Gateway at Sawgrass and Plantation Marketplace, according to its website.

Despite reports of retail tenants struggling nationally, investor demand for retail centers in South Florida remains strong, especially in Palm Beach County. In June, a company tied to Preferred Apartment Communities bought the Publix-anchored Polo Grounds Mall at 926 South Military Trail near West Palm Beach for $20.5 million.

Last year, the Okee Square shopping center in West Palm Beach sold to a Boca Raton real estate investor for $18.4 million or $148 per square foot.

The post Kohl’s-anchored shopping center in West Palm goes for $24M appeared first on The Real Deal Miami.

Todd Glaser, Rony Seikaly and a rendering of spec home at 1635 W 22nd Street (Credit: Mary Beth Koeth, Getty Images)

Todd Glaser, Rony Seikaly and a rendering of spec home at 1635 W 22nd Street (Credit: Mary Beth Koeth, Getty Images)

UPDATED, Nov. 12, 11 p.m.: In a twist on financing spec home development, Todd Michael Glaser and DJ and former Miami Heat player Rony Seikaly paid $7 million for a waterfront Miami Beach property they had leased while building a new mansion.

Glaser said the seller, real estate developer Ron Simkins, offered him a deal a year and a half ago. He and investment partner Seikaly could lease the property at 1635 West 22nd Street on Sunset Island IV, tear down the house, build a new spec home, and then buy it when it was completed.

“It’s a different way of controlling a property, and we didn’t have to go to a bank to get financing. We were just paying him a lease amount,” Glaser said. “We built the house on a lot we didn’t own.”

The 10,000-square-foot house is set to be completed next month and will be listed for about $19 million, Glaser said. It has seven bedrooms, seven bathrooms and 112 feet of bay frontage. It was designed by Domo Architecture + Design.

Records show the lot spans nearly 20,000 square feet. Glaser said it cost $5.5 million to build the house, and they leased it for $29,000 per month since May 2018 — or about another $522,000.

Simkins paid $3 million for the property in 2005 and added his wife, Homeira Amira Simkins, to the deed in 2014.

Ron Simkins is chief operating officer of Innovate Development Group, the developer of the planned Miami Innovation District in Park West. He founded the firm with his brother Michael Simkins.

In April 2018, Simkins paid $7.5 million for an 8,900-square-foot home at 820 Lakeview Drive.

Glaser has been an active spec home developer, building multimillion-dollar homes in Miami Beach. Among his projects, he partnered with Stuart Miller, Lennar Corp.’s executive chairman, to build a 27,000-square-foot mega-mansion at 22 Star Island, priced in a whisper listing at $65 million. Glaser is now focusing on Palm Beach developments with partners that include former Miami Beach mayor Philip Levine, Scott Robins and Jonathan Fryd.

The post Todd Glaser, Rony Seikaly close on Miami Beach spec mansion appeared first on The Real Deal Miami.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 6 p.m.

 
Icon Harbour Island

Icon Harbour Island

The Related Group sold an apartment community on Harbour Island for $131.5 million, the largest multifamily deal in the Tampa Bay area. Icon Harbour Island, a 340-unit, 21-story high-rise, sold for $387,000 per unit, according to Newmark Knight Frank, which brokered the deal. Olympus Property is the buyer. The building was completed a year ago, Related said.

 

The Flagler on the River apartment complex was evacuated after a fire broke out. The fire began in a barbecue grill and spread to the balcony of one of the units at the Melo Group-owned apartment building. The fire department got the fire under control and no one was hurt, according to CBS Miami. [CBS Miami]

 

Jeffrey Soffer scores $1.2B refi of Fontainebleau Miami Beach. Goldman Sachs, Morgan Stanley and JP Morgan provided the fixed-rate loan for the nearly 1,600-key hotel at 4441 Collins Avenue, according to a press release from Newmark Knight Frank. [TRD]

 

Bradford Marine unveiled plans for its multi-phase renovation project of Fort Lauderdale Yacht Harbor. The project will include a facelift, new landscaping, new paving, parking, signage and new fitness center for yacht crews.

 

After the dramatic ouster of former CEO Adam Neumann, WeWork may have found a new leader. The company is in talks with T-Mobile US Inc. Chief Executive John Legere to take over the position, according to the Wall Street Journal. The We Company is reportedly looking for someone who can right the ship after the firm’s failed IPO attempt led to Neumann’s resignation and SoftBank’s bailout of the company. [TRD]

 

This vitamin company just got a financial shot in the arm. Rexall Sundown sold its warehouse in Pompano Beach for $8.7 million after the company laid off 250 employees earlier this year at three of its South Florida locations. [TRD]

 

The merger between JLL and HFF is still working through some issues. Several of JLL’s top agents have left the firm, and the newly created massive brokerage is still trying to settle on a clear direction. [TRD]

 

The SEC questioned WeWork’s financial metrics before the startup canceled its IPO. The agency sent WeWork a list of 13 unresolved issues on Sept. 11, according to correspondence seen by the Wall Street Journal. The agency was particularly concerned about how the company used a profitability metric called “contribution margin” to frame its losses. [WSJ]

 

The pool at Dania BeachThe pool at The Place at Dania Beach flooded again, forcing residents to evacuate from the downtown Dania apartment building. The pool, on the eighth floor rooftop of the building, leaked several thousands of gallons of water onto the floors below, less than two months after it first flooded. AHS Residential sold the 144-unit building at 180 East Dania Beach Boulevard last year to a California trust for $38 million. The city launched a criminal investigation to look into the leak.
[Miami Herald]

 

A Jupiter real estate firm will bring in a local developer to build out required research space at a new development that has been empty for over a year. Seven Kings Holding LLC plans to bring a developer in to convert the space into wet labs, clean rooms and other research space for research, biotech and life science tenants, according to the Palm Beach Post. The city would not grant the $75 million senior and rehab complex its certificate of occupancy until it fulfilled the research requirement. [Palm Beach Post]

 
Steven E. McCraney, President & CEO McCraney Property Company with the land

Steven E. McCraney, President & CEO McCraney Property Company with the land

McCraney Property Company and Mitchell Property Realty bought an 8.74-acre vacant site for $7.5 million in Boca Raton to build a new industrial project. McCraney and Mitchell purchased the land for $858,123 per acre from Biotest AG. It is located off of Park of Commerce Way near I-95. [TRD]

 

Compiled by Katherine Kallergis

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Parkline at MiamiCentral and Suffolk CEO John Fish (Credit: Suffolk, iStock)

Parkline at MiamiCentral and Suffolk CEO John Fish (Credit: Suffolk, iStock)

UPDATED, Nov. 12, 2:18 p.m.: Lawsuits continue to mount at MiamiCentral over construction delays.

A month after Suffolk Construction Company and others reached a multimillion-dollar settlement over construction issues at MiamiCentral, the construction company is suing the development group.

Suffolk Construction is suing two subsidiaries of Florida East Coast Industries, alleging the development group failed to give Suffolk an extension and increase the construction budget at the MiamiCentral apartment project, despite weather delays.

Suffolk Construction alleges the two subsidiaries of FECI breached their contract by refusing to increase the costs and timeline of the Parkline apartment project which it is currently building above the MiamiCentral station.

The complaint alleges inclement weather caused multiple delays with the project. It does not specify how the weather impacted the project or if the weather referred to was Hurricane Irma.

Florida East Coast Industries general counsel Kolleen Cobb did not immediately return a request for comment. Suffolk Construction’s lawyer Ira Libanoff also did not return a call seeking comment, while Suffolk Construction declined to comment through a spokesperson.

The lawsuit, filed in Miami-Dade Circuit Court, comes after Suffolk Construction, Virgin Trains USA and the structural engineering firm Skidmore, Owings and Merrill settled a lawsuit in October for $10.5 million over delays at the station component of the MiamiCentral mixed-use project.

In August, Facchina Construction of Florida, the project’s now-defunct general contractor, filed a lawsuit over construction issues pertaining to the office component of the project.

After Shorenstein Properties purchased the 2 MiamiCentral and 3 MiamiCentral office buildings in May for $159.4 million, Facchina Construction of Florida sued a Shorenstein affiliate for nonpayment of $4.3 million in construction work that was allegedly completed in 2016.

FECI is the parent company to Virgin Trains USA, the high-speed rail formerly known as Brightline, with stops in Miami, Fort Lauderdale and West Palm Beach. Last year, Richard Branson’s Virgin Group announced a strategic partnership with the rail line.

The two-tower Parkline project sits on top of a three-story parking structure above the MiamiCentral station. The North tower consists of 30 stories with 350 units, while the South tower consists of 33 stories with 466 units. The project will total 930,779 square feet.

Amenities include a 105,000-square-foot amenity deck, two fenced-in dog parks, a running track, a CrossFit lawn, grill stations, resort and lap pools, cabanas, a movie wall and lounge area, according to Suffolk Construction’s website.

Boston-based Suffolk Construction is one of the largest contractors in South Florida. Its projects have included Jade Signature in Sunny Isles Beach, the Bristol in West Palm Beach and CityPlace at Doral.

Correction: A previous version of this article misidentified the plaintiff in a lawsuit regarding Shorenstein Properties. 

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NAR President John Smaby and the Chartwell Estate, first shopped as a pocket listing in 2017 (credit: NAR)

NAR President John Smaby and the Chartwell Estate, first shopped as a pocket listing in 2017 (credit: NAR)

UPDATED 11:15 a.m., Nov. 11: The National Association of Realtors’ board approved a controversial policy that could drastically cut down on pocket listings, a popular practice in the world of luxe real estate.

A roughly 120-member NAR committee overwhelmingly approved the Clear Cooperation Policy on Saturday morning, sending it to the organization’s Executive Committee for consideration, according to Inman. On Monday, NAR’s board passed the policy 729-70.

The policy would require brokers to submit a listing to the Multiple Listings Service within one business day of marketing a property to the public. NAR argues it will help make the business more transparent.

Bright MLS Chair Jon Coile said pocket listings undermine the “social contract” that Realtors have with each other. Other supporters say it will help the NAR compete with off-MLS services popping up across the country.

Pocket listings are popular in the higher stratas of residential markets in top-tier cities such as New York, L.A., and Miami for a few reasons. They help obscure ownership and listings for high-profile clients and allow agents to be more flexible with asking prices.

They can be extremely lucrative for agents who have them because they essentially cut out outside agents. Those agents often end up representing both parties in deals.

The proposed policy has a cutout allowing brokers to make a listing an office exclusive and keep it off the MLS and platforms that aggregate from the MLS, including Redfin and Zillow, which could alleviate concerns for celebrity clients.

Last year, Pacific Union International launched an online platform that acts as a pre-MLS listing service. Pacific Union properties go on that platform with limited information starting when an agent signs on to represent a seller until it hits the MLS, which can take up to 10 days or so. Pacific Union says that lets agents gauge interest before listings start to accrue “days on the market.” In 2017, The Agency broker Christopher Dyson partnered with the firm’s CEO Mauricio Umansky and “Million Dollar Listing Los Angeles” stars James Harris and David Parnes on a new online platform dubbed “The Pocket Listing Service,” or ThePLS.com, which allows brokers to share and search nationally for off-market properties.

The NAR vote suggests there is strong support for such a policy. If approved by the Executive Committee, the measure would go to NAR’s board of directors for final approval, according to Inman. The policy would come into effect January 1, 2020. [Inman]Dennis Lynch

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320 Island Road (Credit: Zillow)

320 Island Road (Credit: Zillow)

UPDATED, Nov. 15, 1:17 p.m.: A member of the Berwind family that made its fortune in the coal industry is listing a custom lakefront estate in Palm Beach for $37.5 million.

James Berwind and his partner, real estate agent Kevin Clark, built the nearly 10,000-square-foot Bermuda-style mansion at 320 Island Road. It’s now hitting the market with Cristina Condon of Sotheby’s International Realty. The couple is looking to sell the six-bedroom, six-bathroom compound as they plan to travel the world on a new yacht, according to the Palm Beach Daily News.

Berwind, an environmental architect and animal-rights activist, is a son of the late Charles Graham Berwind Jr., the former leader of the Berwind Group. The company was historically involved in the coal industry and later became an investment management firm.

The Palm Beach property includes a two detached two-story guest house, with four-bedroom suites, a boat lift, full-house generator, car lifts in the garages, smart home features, 232 feet of water frontage on Tarpon Cove, gardens, patios, a waterfall and pool.

Property records show Berwind paid $9.7 million for the 0.6-acre lot in 2012.

The ultra high-end home sale market hit an all-time high this summer in Palm Beach. Fourteen single-family homes totaling more than $343 million in sales volume closed in July, according to MLS and Palm Beach County data compiled by Premier Estate Properties. By comparison, in July of last year, 10 properties sold for only $97 million. [Palm Beach Daily News] Katherine Kallergis

An earlier version of this story included incorrect listing information. 

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John Legere (Credit: Getty Images)

John Legere (Credit: Getty Images)

After the dramatic ouster of former CEO Adam Neumann, WeWork may have found a new leader.

The company is in talks with T-Mobile US Inc. chief executive John Legere to take over the position, according to the Wall Street Journal.

The office-sharing startup’s parent company — We Company — is reportedly looking for someone who can right the ship after the firm’s failed IPO attempt led to Neumann’s resignation and SoftBank’s bailout of the company.

The saga led to WeWork’s valuation plunging to about $8 billion from $47 billion.

WeWork executives Artie Minson and Sebastian Gunningham have led the company as a team since September.

Legere, 61, has run T-Mobile for the past six years and is credited with turning around the company’s fortunes by attracting a large volume of customers from competitors, and instigating a $26 billion takeover of Sprint. Known for his brash and outspoken style, he has labeled rivals “Dumb and Dumber” on Twitter. [WSJ] — Sylvia Varnham O’Regan

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Jeffrey Soffer and Fontainebleau Miami Beach

Jeffrey Soffer and Fontainebleau Miami Beach

Jeffrey Soffer closed on a $1.175 billion refinancing of the Fontainebleau Miami Beach, marking the latest restructuring of debt for the beachfront resort.

Goldman Sachs, Morgan Stanley and JP Morgan provided the fixed-rate loan for the nearly 1,600-key hotel at 4441 Collins Avenue, according to a press release from Newmark Knight Frank. The Commercial Observer first reported the refinancing.

Newmark Knight Frank’s Dustin Stolly and Jordan Roeschlaub represented the hotel owner, Soffer’s Fontainebleau Development.

The Soffer family-led Turnberry Associates paid $325 million for the Fontainebleau Miami Beach in 2005 and paid another $15 million for a nearby lot where an expansion is planned. Turnberry then spent $650 million on gutting and renovating the 1954 historic hotel, which ranks as the largest hotel in Miami-Dade County.

Designed by architect Morris Lapidus, the Fontainebleau sits on more than 15 acres of land with 11 pools, a 40,000-square-foot spa, and 12 food and beverage venues. The hotel is made up of four towers: the Chateau and Versailles buildings with 846 hotel rooms and the Tresor and Sorrento buildings with 748 condo-hotel units.

In March, Soffer split from Turnberry to form Fontainebleau Development after 25 years of working alongside his sister and company co-CEO Jackie Soffer. Jeffrey Soffer’s new firm is the sole owner of the Fontainebleau, JW Marriott Turnberry Miami, Turnberry Isle Marina, Turnberry Ocean Club and The Big Easy Casino in Hallandale Beach.

The Soffers have refinanced the Fontainebleau property in the past. In December 2013, Turnberry completed a $535 million refinancing led by JP Morgan. That year, the Soffers also regained full control of the hotel after they had previously sold a 50 percent interest to Dubai World.

In June, Jeffrey Soffer received $91 million in financing for the JW Marriott Miami Turnberry Resort & Spa from the Bank of China, boosting its loan to $340 million for the Aventura resort.

Soffer is also reportedly in talks to buy the 1,000-room Diplomat Beach Resort in Hollywood from Brookfield Asset Management’s Thayer Lodging Group. The resort hit the market earlier this year and is expected to trade for up to $1 billion, or $1 million a key.

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Javier Rodriguez and Andy Ziffer (Credit: Wikipedia) 

Javier Rodriguez and Andy Ziffer (Credit: Wikipedia)

Andy Ziffer joined Compass’ Fort Lauderdale office. Ziffer was previously with the boutique real estate firm he co-founded, called LauderdaleONE Luxury Real Estate. Before that, he was an agent with One Sotheby’s International Realty.

Javier Rodriguez joined Saul Ewing Arnstein & Lehr as a partner in the litigation practice. Rodriguez, who works out of the law firm’s Miami office, was previously a partner at CKR Law, working on real estate litigation, commercial disputes, creditor’s rights, employment cases, professional liability claims, admiralty, and tort cases.

Brown Harris Stevens Miami added Pilar Corredor, Miyako Haag and Terrance “Terry” Segall as associates based out of the brokerage’s Sunset Harbour office in Miami Beach. Ana Rubio, who also joined the firm as an agent, will be based out of Brown Harris Stevens’ South Beach office.

Preston Reid is now managing director of Berkadia’s hotels and hospitality group. Based in Tampa, Reid will focus on investment sales in the Southeast. He was briefly with JLL following JLL’s acquisition of HFF. Reid was with HFF between 2012 and 2019, most recently as a senior director for its hotels and hospitality group. Berkadia has opened new offices in Southern California, the Carolinas and in Miami.

InvesTeam Realty grew by agent count. The brokerage, founded by Reinaldo Gonzalez, has over 100 agents and has offices in Edgewater, Doral and Pembroke Pines. The new agents are: Ana Claudia Sentena and Veronica Alvarez, formerly with Cosmopolitan Realty; Patricia Guerrero, formerly with RE Real Estate Services in Doral; and Ana Maria Gutierrez and Andrea Medina, formerly with Fortune International Realty.

Kevin Ellis joined KW Property Management & Consulting as the new business development manager based in the company’s Tampa office. Ellis was most recently regional business development manager with Drum Cussac Group, a global business risk, security and crisis management firm.

The post Movers & Shakers: Fort Lauderdale broker joins Compass appeared first on The Real Deal Miami.

3001 Center Port Circle

3001 Center Port Circle

This vitamin company just got a financial shot in the arm.

Rexall Sundown sold its warehouse in Pompano Beach for $8.7 million after the company laid off 250 employees earlier this year at three of its South Florida locations.

The company sold the 61,856-square-foot building at 3001 Center Port Circle for $141 per square foot to CRSC Commercial Holdings, records show.

CRSC Commercial Holdings has the same address on the deed as R.J. Roberts & Co, a logo apparel company based in Pompano Beach. The building was built in 2002. Rexall Sundown purchased the property in 2010 for $4.6 million, records show. The property spans four acres.

Rexall Sundown was founded by South Florida entrepreneur Carl DeSantis in 1985. The company was sold in 2003 to Nature’s Bounty Co. for $250 million. Rexall Sundown makes a number of vitamins and supplements, Ester-C, Nature’s Bounty, Balance, Solgar, Osteo Bi-Flex, and Sundown Natural.

In a WARN Act in March, the company said it would wind down operations and close its facilities in Deerfield Beach, Boca Raton, Pompano Beach.

Warehouse asking rents in Broward County continue to rise even as an influx of new industrial product is coming to the market. In the third quarter, average industrial asking rents rose to $8.89 per square foot from $8.16 per square foot in the third quarter of 2018, according to Colliers International South Florida.

In Northeast Broward County, where Pompano Beach is located, 732,710 square feet of industrial space is under construction, according to Colliers.

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(Illustration by Oivind Hovland)

The mandate became clear soon after the $2 billion JLL and HFF merger was announced: Even though JLL was buying its competitor, HFF would be the one taking over the combined capital markets business.

And executives at the firm being acquired did not want the other’s top teams sticking around for much longer, according to several people familiar with the matter.

[We] weren’t a ‘cultural fit’ is the term they used,” one former JLL employee said on the condition of anonymity. “Despite the fact that there were a number of teams that were vastly more successful than the existing HFF teams.”

About four months have passed since the blockbuster merger officially closed. But the combined firms are still working through a number of kinks tied to the deal that created the country’s largest debt brokerage, sources told The Real Deal. Two of the biggest issues that remain the talk of the industry are top-agent turnover and a muddled direction for the consolidated business overall.

Representatives for JLL declined to comment for this story.

I think brokerage firms are trying to mirror the banks and create these service supermarkets, so to speak, where they can supply every line of business to a client,” the former employee said. “I think that it’s brimming with conflicts of interest.”

And that comes on top of New York’s stricter rent laws, the latest challenges in brick-and-mortar retail and a very uncertain economic outlook.

Multiple analysts said that while early indicators concerning the merger were positive, they would need to wait until at least the third-quarter results were finalized to have a clearer picture of how it was working out from a financial perspective. That information is expected to come out in early November.

Mitch Germain, a REIT analyst at JMP Securities, said turnover at the recently merged companies so far could just be the tip of the iceberg, and that he would not be surprised to see more departures as consolidation plans come to fruition.

We expect there to be a bunch of broker upheaval,” Germain said, citing ongoing discussions he’s had with competing firms. “We anticipate that’s probably going to take some time to work out.”

For now, though, most outside observers have been trying to figure out how the merger has been going with very limited information — something sources say they have in common with many people who still work at the brokerage.

It’s been all the HFF guys telling everybody they’re in control, and nobody really knows what the business plan is,” the former employee said. “It’s been pretty segregated.”

Consolidation fever

Eric Anton, a former HFF investment sales broker who moved to Marcus & Millichap in 2017, said he doesn’t expect things to settle at the newly formed company any time soon.

But it’s been tough to determine exactly how the merger will shake out given how rare deals of that size are among commercial brokerages, he noted. “I’m not sure it’s ever been the case that two investment sales companies that big merged — nationally and in New York,” Anton said, describing the situation as “new ground for everyone.”

The playing field is certainly changing, though.

Real estate mergers and acquisitions have been on the rise in recent years as the industry grapples with an increasingly uncertain market. M&A activity among real estate firms hit an all-time high of $524.7 billion in 2017 — nearly 25 percent more than 2007’s then-record $424.5 billion, according to figures from Thomson Reuters.

Paul Massey, who launched his boutique brokerage, B6 Real Estate Advisors, last year, said JLL’s acquisition of HFF will make the firm an even stronger contender. “It makes the industry aware that JLL will be a capital markets powerhouse going forward,” Massey said, “so the landscape has radically changed.”

JLL and HFF also entered their merger with prior experience working together, including co-brokering Blackstone Group’s $640 million sale of 5 Bryant Park to Savanna last year.

J.D. Parker, an executive vice president and division manager at Marcus & Millichap, said he expects to see even more brokerage mergers take place going forward. “We anticipate further consolidation in the space,” he said, “especially considering some of the challenging market conditions that we face.”

At the same time, it’s not unusual for large and complicated merger deals to come with a fair share of turmoil.

Less than four years after Cushman & Wakefield acquired Massey Knakal Realty Services for $100 million, for instance, both Massey and Bob Knakal had left the firm. And less than one year after Newmark Knight Frank purchased the retail brokerage RKF, Robert Futterman, RFK’s founder, was fired following reports of “erratic behavior.”

JLL’s purchase of HFF has been no exception.

Sources told TRD almost as soon as the merger was announced to expect a hefty amount of turnover and poaching. Those predictions largely came true over the past few months as HFF sales and debt teams muscled out several of JLL’s top producers. (The commercial leasing teams at JLL have seen less high-profile turnover due to the fact that HFF mostly specializes in capital markets transactions.)

One of the biggest departures to date happened in August, when the head of JLL’s debt arm, Aaron Appel, left the firm with his colleagues Keith Kurland, Jonathan Schwartz and Adam Schwartz to launch their own firm, called AKS Capital Partners.

Though his team had negotiated more than $40 billion in deals over the span of about five years with JLL, rumors began circulating soon after the merger that Appel would soon be on his way out. He reportedly left the company over differences in approach and style.

From left: Aaron Appel, Mo Beler and Bob-Knakal

Appel told TRD that he was fine with how the merger ended up for him and his team, and he said they had no hard feelings toward their former employer. “This merger is great for us,” he said, “and we wish JLL and HFF the best of luck.”

But others in the industry said Appel’s exit was not particularly smooth.

Peter Hauspurg, who shuttered his brokerage Eastern Consolidated last summer and took a new role at ABS Partners Real Estate, said the consolidation of HFF and JLL’s capital markets teams has been “somewhat problematic” and cited Appel and his team’s departure as the biggest shock.

You don’t let a producer like that go easily, so there must have been some friction inside, although they tried to minimize it, as expected,” he said. “But for him to walk out like that and form his own company is sort of a big step.”

What about Bob?

Other major departures have included Mo Beler, who spent two years as the head of JLL’s investment sales division in New York City, along with Anthony Ledesma and Yoav Oelsner, who both worked under Beler. Ledesma has since moved to the smaller commercial brokerage Hodges Ward Elliott.

Knakal, who joined JLL in September 2018 to lead its investment sales team with Beler, is still at the firm. But the merger has led to a lot of speculation around what his role and future at JLL will look like, according to several sources. The veteran commercial sales broker with more than 30 years of experience, largely focused on outer-borough multifamily deals, reportedly signed a five-year contract with JLL.

Knakal declined to comment.

Hauspurg predicted that Knakal would be fine, noting that he seemed to be cementing his position at the brokerage and doing solid work in a largely abysmal real estate market — especially given the state’s new rent law.

Another commercial broker echoed that point, noting that Andrew Scandalios, who led HFF’s capital markets group along with Michael Gigliotti, does not focus on the same types of deals, making him less inclined to try to push Knakal out.

I see that being more synergistic than it being an issue for Bob,” the broker said on the condition of anonymity. “Bob’s core competency is not selling office buildings in Manhattan like the HFF teams. It’s selling smaller multifamily buildings and development sites.”

Only a few who spoke to TRD for this story, however, could pinpoint reasons why the firm doing the acquiring had effectively agreed to cede control of its capital markets teams to the firm being acquired. One source indicated that JLL felt its own teams lacked leadership while HFF’s did not. HFF founding partner Mark Gibson, who now serves as JLL’s CEO of capital markets in the Americas, could take on an even broader role at the company going forward, the source noted.

Dollar volume may have also played a role. HFF’s national debt brokerage business closed $61 billion in deals in 2017, for example, while JLL’s closed $24.1 billion, according to figures from the Mortgage Bankers Association.

Yoron Cohen, a former broker at JLL who now works as a vice chairman at Colliers International, said the merger was mainly about finding ways to reduce costs and that it would be a long and rocky road to figuring out how good a decision it was. Cohen left JLL for Colliers in late 2016 and sued his former employer for defamation and age discrimination a few months later. The parties settled the case last March.

It will take four to five years to see how such an acquisition works out, and until then, no doubt it will be tough,” he said, noting that the brokerages will have to deal with “two different cultures and lots of changes to all involved.”

Early projections

Hard numbers reflecting how the merger has panned out from a business standpoint so far have been scarce.

During JLL’s most recent earnings call in early August, its president and CEO, Christian Ulbrich, said the early signs have been “very positive” and told investors the firm would “share combined results and progress on integration during our third-quarter call,” which is scheduled for Nov. 5.

So far, we are very happy [with] how the integration is running,” Ulbrich said.

Dilara Sukhov, the lead JLL analyst at Moody’s Investors Service, also said that initial signs from the merger have been largely positive, including the simple fact that it closed on schedule. “It’s one early indication among many that perhaps the teams worked very collaboratively toward the closing of the transaction, which is a good sign,” she said.

Moody’s expects the joint venture to lead to about $60 million in synergies, from consolidating office space to cutting back on redundant legal and board-related expenses, among other things.

But Sukhov said she’s confident in general that JLL will pull off the merger effectively. She noted that the firm has completed about 70 acquisitions over the past four years that have largely worked out well.

JMP’s Germain cautioned, however, that it’s too early to get a full picture of how the merger has worked out financially, given that there has not been a full quarter of results to analyze yet.

Clearly, there has been an uptick in activity,” he said. “To the extent of what expectations were and what that means for JLL, I think it’s too early to make that assessment.”

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Steven E. McCraney, President & CEO McCraney Property Company with the land

Steven E. McCraney, President & CEO McCraney Property Company with the land

McCraney Property Company and Mitchell Property Realty bought an 8.74-acre vacant site for $7.5 million in Boca Raton to build a new industrial project.

McCraney and Mitchell purchased the land for $858,123 per acre from Biotest AG. It is located off of Park of Commerce Way near I-95.

Biotest bought the property for $7 million in 2018, records show.

Avison Young’s Mark M. Rubin and Keith O’Donnell represented the seller in the deal. Todd Cohen of TCC Advisors represented the buyer.

Boca Raton is seeing demand for industrial properties from developers and investors due to the limited amount of available sites. According to Avison Young, Boca Raton’s industrial market’s vacancy rate dropped to 2.62 percent in the third quarter, as a total of 139,059 square feet of space was absorbed. That is more than double the absorption of any other submarket in Palm Beach County.

Last year, West Palm Beach-based McCraney Property Co. sold three fully leased warehouses in central Palm Beach County for $25.8 million.

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Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 9 a.m.

 

Financial Crimes Enforcement Network extends its order that looks into cash purchases of real estate for another six months. The order requires all U.S. title insurance companies to identify natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount remains at $300,000 for each metropolitan area, which includes Miami, New York City and Los Angeles.

 

Bloomberg v. Trump: Real estate edition. Despite their many differences, Donald Trump and Michael Bloomberg do have a few things in common. Both are billionaires, both may be vying for the same office now that Bloomberg is considering a presidential run, and both men have a penchant for luxury residential properties. [TRD]

 

Barry Sternlicht is eyeing an economic slowdown. Starwood Property Trust’s CEO Barry Sternlicht sees an economic slowdown in the near future as the country faces a new presidential election. Net income was $140.4 million, up 66 percent from $84.5 million in the same period of 2018, reflecting increased interest income on loans outstanding. [TRD]

 

South Florida home sales rise in Q3. Home sales, dollar volume and median prices rose across South Florida in the third quarter, driven by an influx of buyers from high-tax states and declining mortgage rates. [TRD]

 

Michael Shvo to unveil tropical gardens with LaLanne exhibit at the Raleigh. Developer Michael Shvo will unveil a LaLanne exhibit at the Raleigh hotel in Miami Beach ahead of Art Basel, a move that draws parallels to his marketing efforts at the Getty in New York City. [TRD]

 

Shareholder litigation against WeWork’s major players has begun. Co-founder Adam Neumann, SoftBank head Masayoshi Son and board members of the embattled office-space company were sued this week by a minority shareholder who accuses them of self-dealing and unjustly enriching themselves. [TRD]

 

Realtor.com’s parent is eyeing the mortgage business. Side businesses may be coming to Realtor.com. The site’s parent company Move Inc. will be moving into offering “adjacencies,” such as mortgages, as the overhaul of Realtor.com’s lead generation platform continues, said News Corporation’s CEO Robert Thomson in an earnings call Thursday. News Corp. owns Move. [TRD]

 

Zillow tries out a closing-services platform. In an effort to become a one-stop shop for home buying and selling, Zillow is testing a closing-services platform in an undisclosed number of markets. The new platform will work in tandem with the company’s buying and selling platform, Zillow Offers, with a goal to improve the economics of each home sale or purchase, according to Inman. [TRD]

 

The Underline obtains a $22 million grant. Friends of the Underline snagged a $22 million grant from Miami-Dade County’s Department of Transportation and Public Works to complete the Underline, a 10-mile long park for people to run and bike on. The new money will allow the Underline to connect to Coral Gables.

 

Sears said it will shut down 96 more Sears or Kmart locations. Sears announced it will continue to shut down locations and will have just 182 Sears or Kmart stores, down from 425 locations as of February, according to the Wall Street Journal. Five years ago, the company had nearly 2,000 locations. [WSJ]

 

Zillow’s Rich Barton (Credit: iStock)

Zillow’s revenue doubled in the third quarter. The company’s revenue grew to a record $745.2 million during the third quarter, driven by its year-old iBuying program. For the first time since the Seattle-based company launched an instant home-buying feature, revenue from its “Homes” segment eclipsed that of agent advertising. [TRD]

 
Rendering of Legacy Hotel and Residences with Dan Kodsi and Peggy Olin

Rendering of Legacy Hotel and Residences with Dan Kodsi and Peggy Olin

Developer Dan Kodsi plans hotel-condo tower at Miami Worldcenter. Dan Kodsi, who recently delivered the luxury condo tower Paramount Miami Worldcenter, revealed plans for his next building, Legacy Hotel and Residences, also at Worldcenter. [TRD]

 

Has Compass eased recruiting? Four months after filing a wide-ranging lawsuit accusing Compass of “predatory” poaching, Realogy CEO Ryan Schneider described a dramatic drop in Compass’ hiring. During an earnings call, Schneider said the firm’s “recruiting intensity” in October was down almost 50 percent from September and 67 percent from August, according to Realogy’s calculations [TRD]

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Donald Trump and Michael Bloomberg (Credit: Getty Images)

Donald Trump and Michael Bloomberg (Credit: Getty Images)

Despite their many differences, Donald Trump and Michael Bloomberg do have a few things in common.

Both are billionaires, both may be vying for the same office now that Bloomberg is considering a presidential run, and both men have a penchant for luxury residential properties.

The former New York City mayor and registered Democrat has built a townhome empire on Manhattan’s Upper East Side, while President Trump prefers the vertical life at his Trump Tower penthouse.

Something else they have in common: both have homes in Upstate New York and in Florida.

Ahead of a potential presidential face-off, The Real Deal sizes up some of their personal properties.

Michael Bloomberg

13808 Fairlane Court, Florida
Bloomberg’s daughter, Georgina, is a keen equestrian, and regularly attends the Winter Equestrian Festival in Wellington, a wealthy enclave in Palm Beach County. That’s where Bloomberg bought this 5.8-acre estate in 2016 for $11.8 million.

19 and 17 East 79th Street (Credit: Google Maps)

19 and 17 East 79th Street (Credit: Google Maps)

19 East 79th Street, New York: 5 units
Bloomberg bought five units in this co-op over the years through an LLC, including one in which he bought from Charles and Susana Finkel in 2016 for $14 million.

17 East 79th Street, New York
Bloomberg purchased this five-story limestone townhouse next door in 1986 for $3.5 million. According to reports, he hoped to combine the neighboring properties to build a megamansion.

610 Park Avenue (Credit Street Easy)

610 Park Avenue (Credit Street Easy)

610 Park Avenue Apt. 5B, New York
Bloomberg bought this condo through a trust in 2008 for an undisclosed price. Property records show he bought a storage unit in the same building in 2013 for $50,000.

Farmhouse, North Salem, New York
Bloomberg bought this four-bedroom 1820s farmhouse — complete with indoor riding ring — in 2000 for $3.6 million.

Vail's Mountain Haus at 292 E Meadow Dr, Vail, Colorado

Vail’s Mountain Haus at 292 E Meadow Dr, Vail, Colorado

Vail’s Mountain Haus: 292 E. Meadow Drive, Vail, Colorado
An avid skier, Bloomberg owns a four-bedroom condo at Vail’s Mountain Haus ski resort. Similar to a hotel, the 72-unit building has daily maid service and offers room service through the on-site George Restaurant & Pub, according to New York magazine.

4 Cheyne Walk, London, United Kingdom (Credit Wikipedia)

4 Cheyne Walk, London, United Kingdom (Credit Wikipedia)

4 Cheyne Walk, London, United Kingdom
Bloomberg purchased the 6,266 square-foot home in 2015 for $25 million. The seven-bedroom mansion was originally built in 1715 and has been featured in Town and Country magazine. The property includes an ornately decorated library, garden and master suite.

Stokes Bay, Bermuda
This 6,000-square-foot estate was purchased in 1998. Soon after, Bloomberg demolished the original home and built a $10 million mansion that includes a mini-golf course, multiple swimming pools and a private beach, according to New York magazine.

Donald Trump

Mar-a-Lago Resort at 1100 S. Ocean Blvd (Credit: Getty Images)

Mar-a-Lago Resort at 1100 S. Ocean Blvd (Credit: Getty Images)

Mar-a-Lago Resort 1100 S. Ocean Blvd, Palm Beach, Florida
The 110,000 square-foot resort has famously become the president’s second home, and now that he is switching residency, will be his actual home. Built in 1927 by Marjorie Merriweather Post, Trump bought the 126-room mansion in 1985. According to Forbes, he also owns three other homes near Mar-a-Lago, collectively valued at $36 million.

Trump Tower (Credit: StreetEasy)

Trump Tower (Credit: StreetEasy)

Penthouse, Trump Tower, New York
Trump’s longtime residence, the three-story Trump Tower penthouse features interior details in marble and 24-carat gold. The unit was designed by the late Angelo Donghia, who also designed homes for Ralph Lauren and Diana Ross.

Seven Springs mansion, Bedford, New York
This 39,000-square-foot property, north of New York, sits on 213 acres of land and reportedly features 13 bedrooms, 12 bathrooms, a bowling alley and an indoor pool. When he originally bought it $7.5 million in 1995, Trump wanted to build an 18-hole golf course on the site, but he never got approval for the construction.

Two houses in Sterling, Virginia
Located near the Trump National Golf Club in Washington, these homes are collectively valued at $1.5 million, according to Forbes. Though little is known about the properties, the president is said to lend them out to club members and guests.

Beachfront home, St. Martin, Caribbean
Trump bought this beachfront home in 2013 and listed it for $28 million in 2017, later dropping the price to $17 million. In 2018, it was reported that the property was available to rent on Airbnb.

—Sylvia Varnham O’Regan and Jacqueline Flynn. Research by Mary Diduch

Correction: A previous version of this article incorrectly stated the dates Trump bought and listed his beachfront home in St. Martin.

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South Florida’s housing market had a good Q3 as home sales rose (Credit: iStock)

South Florida’s housing market had a good Q3 as home sales rose (Credit: iStock)

Home sales, dollar volume and median prices rose across South Florida in the third quarter, driven by an influx of buyers from high-tax states and declining mortgage rates. The one down note was condo sales in Palm Beach County, which dipped 1.8 percent in the same year-over-year comparison.

The numbers from the Miami Association of Realtors reflect a strong September, when sales in Miami-Dade and Broward counties climbed by double digits. July was also solid, as sales dollar volume soared, particularly in Palm Beach County. August proved to be a slow month, with a drop in closings across the region.

Miami-Dade

Sales of single-family homes and condos increased in the third quarter in Miami-Dade County.

Total sales rose 4.6 percent, year over year, to 7,104. Single-family home sales jumped 7.5 percent to 3,514. Condo sales inched up 1.9 percent to 3,590.

Single-family sales dollar volume climbed by 13.4 percent to $2 billion, while condo sales volume remained flat at $1.3 billion.

The median price for single-family homes increased 2.8 percent to $370,000, while the median price for condos rose 4.3 percent to $245,000.

Broward

In Broward County, single-family home sales rose 4 percent in the third quarter, year over year, to 4,299 sales. Condo sales jumped 6.4 percent to 4,383.

Single-family and condo dollar volume also grew, up 7.7 percent to $2 billion, and up 6.6 percent to $951 million, respectively.

The median price for a single-family home increased to $370,000, a 4.2 percent jump, and the median price for a condo increased 4.8 percent, to $173,000.

Palm Beach

Total Palm Beach home sales rose 3.8 percent, to 8,046. Single-family home sales jumped 8.3 percent, year over year, to 4,697. Condo sales fell, however, by 1.8 percent, to 3,349.

Dollar volume soared by 19.6 percent for single-family homes, to $2.6 billion. For condos, dollar volume climbed by 16.5 percent to $1 billion.

The median price for single-family homes rose 2.9 percent to $345,000, while the median price for condos increased 3.4 percent to $185,000.

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Softbank CEO Masayoshi Son and former WeWork CEO Adam Neumann (Credit: Getty Images, iStock)

Softbank CEO Masayoshi Son and former WeWork CEO Adam Neumann (Credit: Getty Images, iStock)

Shareholder litigation against WeWork’s major players has begun.

Co-founder Adam Neumann, SoftBank head Masayoshi Son and board members of the embattled office-space company were sued this week by a minority shareholder who accuses them of self-dealing and unjustly enriching themselves.

The complaint, by former WeWork employee Natalie Sojka, targets SoftBank’s $9 billion takeover of the company, and says the Tokyo-based conglomerate increased its stake in the company to 80 percent from 29 percent through a “fire sale.” It also skewers a $1.7 billion package SoftBank provided to Neumann.

A spokesperson for WeWork called the suit “meritless.” A spokesperson for SoftBank did not respond to a request for comment, nor did a representative for Neumann.

WeWork’s valuation plummeted to $8 billion from $47 billion as its plans to go public during the fall fell apart. SoftBank, its largest investor, agreed to provide $9 billion to buy out shareholders and provide WeWork with enough capital to stave off bankruptcy.

As part of SoftBank’s bailout, founder Adam Neumann was paid almost $1 billion for his stake in the company and received a $185 million consulting fee. SoftBank also settled his $500 million debt with JPMorgan and other banks.

Since Neumann’s departure the office-space company has installed a new chairman, Marcelo Claure, a SoftBank executive and the former CEO of Sprint. Artie Minson and Sebastian Gunningham, two WeWork executives who worked under Neumann, are running the company as co-CEOs.

Most board members who have faced scrutiny for perceived corporate governance abuses also remain at the company. Some were named as defendants in the shareholder lawsuit, including Steve Langman, John Zhao, Ronald Fisher, Lewis Frankfort, Mark Schwartz and Bruce Dunlevie.

The plaintiff worked as an executive assistant and team lead at the company in San Francisco, leaving in September. She now works as an executive assistant to the CEO of financial firm SoFi, according to her LinkedIn page. Sojka’s attorney did not respond to a request for comment.

Sojka’s complaint, which is seeking class-action status and was filed in California Superior Court in San Francisco County, claims that WeWork attracted talented employees by offering them stock options that they were led to believe would spike in value once WeWork went public.

Instead, the suit alleges, WeWork’s major shareholders breached their fiduciary duty and forced the company to pull its IPO plans. While minority shareholders lost the value of their stock options, the majority investors engaged in self-dealing to protect their own interests, the complaint alleges. Reuters first reported on the lawsuit.

The lawsuit caps a tumultuous week for Softbank. After posting operating losses of $6.5 billion for the third quarter Wednesday, the firm’s stock dropped almost 4 percent. Son, SoftBank’s CEO, told news reporters in Tokyo that his “own investment judgement was really bad,” and that “I regret it in many ways.”

In the meantime, WeWork employees await to hear news of layoffs, which could hit as much as a third of the company’s 12,000 employees. This week 150 signed a letter to management that called for workers to be treated “humanely.”

“We don’t want to be defined by the scandals, the corruption, and the greed exhibited by the company’s leadership,” wrote the employees, who call themselves the WeWorkers Coalition, according to the New York Times.

Other legal offensives have been launched against those with ties to the company. Last month a former executive assistant to Neumann sued him and other WeWork executives for gender discrimination last month, alleging that she was targeted and harassed for being pregnant.

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Suzanne Frisbie and 1610 North Ocean Boulevard

Suzanne Frisbie and 1610 North Ocean Boulevard

The town of Palm Beach doesn’t see a lot of spec homes. But when they do come to market, they sell quickly and for top dollar.

The Frisbie Group sold a mansion for $25.5 million that it built last year at 1610 North Ocean Boulevard. A land trust tied to attorney Joel Koeppel bought the 8,118-square-foot house for $3,141 per square foot, records show.

According to the Palm Beach Daily News, the home was the last of three side-by-side houses developed by the Frisbie Group.

The island-style waterfront home has six bedrooms and seven-and-a-half bathrooms. The house has water views from every major room, along with a lakefront library, living room, dining room, family room, and two kitchens. It also has two separate guest suites and a four-car garage.

The Frisbie Group bought the property for $9 million in 2016, records show.

The small island community of Palm Beach scores some of the most expensive sales in the country, but there are few spec homes due to restrictions tied to historic landmark designation, new construction and architectural style.

Developer Robert Fessler set the spec mansion record in 2017 with a $49 million sale at 101 Indian Road in Palm Beach.

In February, Malasky Homes sold a waterfront spec home in Palm Beach for $15.5 million. The developer sold the 5,769-square-foot house at 608 Island Drive for about $2,695 per square foot.

The Frisbie Group is developing Via Flagler by The Breakers in downtown Palm Beach.

In separate transactions this year, Frisbie sold two condos at the formerly named Royal Poinciana Palm Beach development for $20 million.

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(Credit: iStock)

(Credit: iStock)

In an effort to become a one-stop shop for home buying and selling, Zillow is testing a closing-services platform in an undisclosed number of markets.

The new platform will work in tandem with the company’s buying and selling platform, Zillow Offers, with a goal to improve the economics of each home sale or purchase, according to Inman. Zillow lost an average of $4,826 on each home sale in the third quarter, after interest expenses — up from $2,916 in the second quarter.

“These are very early days and small numbers, but we are encouraged by the early consumer signals we’ve received that reinforce the value of bundling multiple services around each transaction,” Zillow CEO Rich Barton said on an earnings call.

Zillow Offers added eight new markets in the third quarter and plans to launch in Los Angeles. It reported a net loss of $64.6 million before interest, tax and other considerations.

Barton said the business was still in the early stages of development, beginning with building a national footprint.

“Phase two is about getting depth in these markets and figuring out how to roll out software and systems and process such that we can get gain leverage on the unit economic costs,” he said.

[Inman] — Sylvia Varnham O’Regan

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The LaLanne exhibit at The Real Deal’s event in October

The LaLanne exhibit at The Real Deal’s event in October

Developer Michael Shvo will unveil a LaLanne exhibit at the Raleigh hotel in Miami Beach ahead of Art Basel, a move that draws parallels to his marketing efforts at the Getty in New York City.

Les LaLanne at The Raleigh Gardens will open later this month at a private party to be held at the historic hotel, at 1775 Collins Avenue, which has been shuttered since 2017.

The exhibit will likely feature gorilla sculptures by Claude Lalanne and François-Xavier Lalanne, and will be part of Peter Marino’s and Raymond Jungles’ designed gardens.

Developers typically pull out all the stops during Art Basel Miami Beach, hosting over-the-top events to attract wealthy buyers.

Shvo hosted a preview of the gardens, with a gorilla sculpture at The Real Deal’s sixth annual Miami Real Estate Showcase & Forum, held at Mana Wynwood in Miami last month. Jungles also designed that installation as a jungle.

In 2013, Shvo and Paul Kasmin Gallery unveiled the Sheep Station, a François-Xavier Lalanne exhibit with 25 epoxy stone and bronze sheep at the former Getty filling station in Chelsea.

Victor Group and Shvo developed the Getty, which was the most expensive new boutique development to arrive on the West Side of New York City. In 2014, private equity executive Robert F. Smith paid roughly $59 million for a penthouse at the development, marking the priciest deal that had closed in Downtown Manhattan.

Shvo, along with Bilgili Group and Deutsche Finance Group, bought the 83-room Raleigh for $103 million from Tommy Hillfiger and Dogus Group this summer. The developer also purchased the Richmond Hotel and the South Seas Hotel, two Art Deco properties on the same block as the Raleigh. In all, the investors paid $242.85 million for the three hotels.

Shvo wants to build a slender, 200-foot residential tower behind the Richmond and the South Seas.

In late July, the Miami Beach City Commission endorsed a proposed ordinance that would allow property owners who control 115,000 square feet of land to build “ground level additions” up to 200 feet high in the RM-3 zoning district between 16th and 21st streets. Combined, the three properties sit on more than 125,000 square feet of land.

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Barry Sternlicht and Lord & Taylor’s Fifth Avenue

Barry Sternlicht and Lord & Taylor at 424-434 Fifth Avenue

Starwood Property Trust’s CEO Barry Sternlicht sees an economic slowdown in the near future as the country faces a new presidential election.

“I’ve never seen an election as long as I have been alive as polarizing,” Sternlicht told analysts on the company’s third quarter earnings call Friday. “Ross Perot Jr. was a billionaire and probably not the greatest candidate, and he got 19 percent of the electorate… The country needs someone in the middle. Sorry I am being political on an earnings call.”

Concerns about the election didn’t affect Miami Beach-based Starwood’s results, however, as third quarter earnings aligned with analysts’ expectations of 49 cents a share. Net income was $140.4 million, up 66 percent from $84.5 million in the same period of 2018, reflecting increased interest income on loans outstanding.

During the third quarter, Starwood made a number of large loans, including a $300 million loan for a 3.4 million-square-foot mixed-use, waterfront property in Washington D.C. It also made a $250 million mortgage for the construction of 79 residential units and a 50-key five-star hotel in London.

The company’s total revenue from commercial and residential lending grew 3.3 percent to $163.8 million in the third quarter from $158.6 million in the third quarter of 2018. Demand for lending was propelled by lower interest rates and spurred by the firm’s international growth, Sternlicht said. Forty-four percent of its commercial loans were international.

Analysts on the call eagerly awaited news about the company’s loan for WeWork’s purchase of Lord & Taylor’s Fifth Avenue flagship for $850 million. WeWork financed the deal with a $900 million loan from JPMorgan Chase, Starwood Property Trust and a third offshore lender.

WeWork’s real estate assets have come into question after the company’s valuation tanked from $47 billion to $8 billion and SoftBank agreed to a cash injection.

Sternlicht said WeWork “can’t walk away from the asset. Its a 15-year corporate guarantee. At this point, it is their single largest credit liability on their balance sheet. They can sublet or sell the building.”

Sternlicht said the company has been approached to buy its note on the building. “We have been noodling on whether or not we want to do that,” he said.

Last quarter, Starwood saw earnings fall by nearly a third as the company wrote down losses from struggling malls.

“I don’t see any way that the economy won’t slow,” Sterlicht told analysts on the third quarter earnings call. He admitted that hotels and retail properties throughout the country are still struggling, but said Starwood is seeing growing demand for multifamily properties, especially in Florida.

Starwood Property Trust’s shares rose 0.33 percent to $24.27 at 1:35 p.m.

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Obama Presidential Center (Credit: Obama Foundation, iStock, Pixabay)

Rendering of the Obama Presidential Center in photo composite. The project has stirred interest in the South Side area from real estate investors. (Credit: Obama Foundation, iStock, Pixabay)

The $500 million Obama Presidential Center isn’t shovel-ready, but plans for the massive project on the South Side have already attracted a new set of real estate investors from across the country.

Over the past year, multifamily broker Brian Mond said his firm has advised on about a dozen property sales in the area involving out-of-state buyers who were in part drawn to the area by the Obama Center construction. Mond, of Essex Realty Group, attributes the interest to the promise of the 19-acre presidential center, saying investors are betting on the project to help lure renters to Woodlawn and the surrounding neighborhoods.

Multifamily investors have come from New York, California, Colorado and New Jersey, Mond said, in addition to Chicago. The Obama Center and its four-building complex — which will rise inside the 500-acre Jackson Park — can carry “a whole new wave of investors into the market,” he said.

Essex Realty Group's Brian Mond

Essex Realty Group’s Brian Mond

Over the last two years, the South Side has gotten the attention of developers seeking higher returns and lower investment, according to industry pros. Development is on the rise, though still “very, very contained and very minor,” said Eiran Feldman of First InSite Realty, which owns and manages 500 South Side apartment units. So far, that investment has caused only a small uptick in prices within a roughly 1-mile radius of the future Obama Center, he said.

“The South Side still presents that opportunity for knowledgeable, savvy investors, so we’re seeing a lot of attention and we’re seeing a lot more activity, not just on distressed properties but also on stabilized properties,” said Feldman, who also leads South Side Community Investors Association.

Brokers and investors who work — and in some cases live — on the South Side see the Obama Center as a long-term boost the local real estate market.

“I’m hoping that those buildings become revalued and appreciated again,” Mond said. He added, “ the investment is going to be there. The people that are buying apartment buildings are chasing yield and they’re finding it in these markets, so I think that’s going to continue going forward.”

Gentrification acceleration
But the emergence of the Obama Center has also drawn criticism. Its potential to increase rent prices in the area has some local advocacy groups accusing the development of accelerating the gentrification of what has been an affordable area for residents.

The Obama Foundation — which is spearheading the project — said in a statement that, “we want our neighbors who have called this community home for decades to be able to continue to live on the South Side as long as they wish.”

The latest design for the presidential center calls for a 235-foot-tall museum tower with a textured stone facade that will likely be made of American granite. The project will include an auditorium, a small public library branch, 2-acre children’s play area and a 1-acre “wetland walk.”

Despite the former president and first lady’s popularity in the city, the center faced a lawsuit from a local advocacy group, Protect Our Parks, which challenged the legality of the location. A federal judge ruled in June that the city could approve the Obama Foundation’s plan to build the center on public land. Construction is expected to begin in the coming months, after a federal review of the center’s impact on the historic area.

Former President Obama and Michelle Obama explained their decision to locate the center in Jackson Park during the recent Obama Foundation Summit at Illinois Institute of Technology. The Obamas said they chose the site because it is in their “backyard” — Michelle Obama grew up on the South Side and the couple also lived there — and they want to create economic and employment opportunities for residents.

High-profile projects such as the Obama Center — as well as a Tiger Woods-backed plan to merge the Jackson Park and South Shore golf courses — tend to heighten concerns of gentrification, especially in areas that have seen decades of disinvestment.

First InSite Realty's Eiran Feldman

First InSite Realty’s Eiran Feldman

But industry pros say displacement is somewhat inevitable with big investments and these projects aren’t the only factors increasing interest in the South Side.

“I think residents have seen what’s happened with other large projects like the 606 [trail] and they’ve seen that the market has responded to those large public investment projects, so I think that’s one factor that’s raising concerns among residents,” said Geoff Smith, executive director of the Institute for Housing Studies at DePaul University. “I think that there’s a longstanding concern that these types of big investments aren’t really intended to benefit the residents of the neighborhood, so there’s a bit of mistrust in the goal of the city or the investors.”

In an August study, the University of Illinois at Chicago found residents could be priced out of the 2-mile radius around the Obama Center. The reasons include rising rents in new and renovated apartments, increasing home values and high eviction rates. “Even though the Obama Center construction has not started, real estate interest and investment has already begun to take the area into a new direction,” the report said.

Local advocates called for a community benefits agreement to freeze property taxes in the area and require 30 percent affordable housing on new developments. About 30 aldermen have signed on to such an ordinance, but it has not had a hearing in City Council, according to Crain’s. Mayor Lori Lightfoot has said her administration won’t “sit back passively and just be the facilitator and the conduit by which city approvals and licensing and so forth gets approved,” the Chicago Tribune reported.

Despite the opposition, Alderman Leslie Hairston, whose district includes the Obama Center, has said the majority of local residents support the project.

Rising property values
Though its impact on the South Side could be significant, the Obama Center isn’t the only factor drawing residents and investors who are contributing to the area’s changing real estate landscape.

The University of Chicago’s southward expansion from nearby Hyde Park — including plans for a high-rise dorm complex with about 1,300 beds in Woodlawn — is also causing a spillover as it drives more students and employees to the area.

“Rents going up in Hyde Park and demand for housing in Hyde Park has probably affected Jackson Park more dramatically in the last couple years,” said Feldman of First InSite Realty. “And if you throw in the Obama library, it’s an added element, it’s not the driving factor there.”

Southside Builders Association President and local investor Andy Schcolnik

Andy Schcolnik, investor and Southside Builders Association president

Property values in Woodlawn started rising well before the Obama Center’s site was announced in 2016. Southside Builders Association President and local investor Andy Schcolnik estimates the neighborhood has been appreciating steadily since the economic downturn around 2010 or 2011.

Since 2012, around the time the housing market started to rebound after the Great Recession, the median sales price of residential buildings in Woodlawn have increased substantially, but are still relatively low compared to the citywide average. The median sales price for a two- to four-unit building in Woodlawn increased from $38,500 in 2012 to $150,000 in 2018, compared to $135,000 in 2012 and $240,000 in 2018 across Chicago, according to a DePaul University study.

Within a 2-mile radius of the future Obama Center is an estimated 214 acres of vacant parcels zoned for residential development, mostly for low-density single family and two flats or high-density multifamily buildings, according to the University of Illinois at Chicago study. Chicago and the Cook County Land Bank each own several hundred parcels and properties in the area, presenting an opportunity for mixed-income and affordable housing developments, the report said.

For years, Schcolnik has purchased buildings in the area, fixed them up and helped residents set up shop, including hair salons, cafes and small food operations. In his experience, small entrepreneurs need help with money to get started and once they’re established, they have a good chance of surviving.

Schcolnik said he is hopeful the center will bring sustained investment to the area. As more services are required by the center, it will put more residents in business, he said.

“I think the potential is there,” he said. “I think there are a lot of African-American entrepreneurs that just don’t have the cash to start businesses but have the knowhow, have the willingness, have the hard work and the ethics.”

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 News Corporation founder Rupert Murdoch and CEO Robert Thomson (Credit: Getty Images, iStock)

News Corporation founder Rupert Murdoch and CEO Robert Thomson (Credit: Getty Images, iStock)

UPDATED Friday November 8, 2019, 10:49 a.m.: Side businesses may be coming to Realtor.com.

The site’s parent company Move Inc. will be moving into offering “adjacencies,” such as mortgages, as the overhaul of Realtor.com’s lead generation platform continues, said News Corporation’s CEO Robert Thomson in an earnings call Thursday. News Corp. owns Move.

“We are not entering the house-flipping, distressed-sale business, but want to offer vendors as many potential purchasers as possible,” he explained. “The more competition for a house, the higher the price for the seller.”

Thomson’s announcement comes a year after Move acquired lead-generation startup OpCity for $210 million last year. OpCity’s model began rolling out on Realtor.com this year with two changes that concerned some agents: The startup vets leads before passing them on to agents and collects a referral fee.

News Corp. CFO Susan Panuccio said on the call that the rationale behind last year’s OpCity deal was to increase revenue and provide a chance for Move to add “auxiliary revenues of different services.”

Move’s reported quarterly revenues increased 4 percent year over year to $123 million from $118 million in the same period last year.

The conglomerate’s intention to add businesses to its digital real estate services offerings comes as its looking to sell other subsidiaries as part of a “simplification” process. But Thomson is bullish on Realtor.com’s chances and the U.S. housing market as a whole.

“We have reason to be optimistic of its prospects thanks to signs of improving health in the U.S. housing market,” he said. “Existing home sales are on the rise, and there has been rapid audience growth at Realtor.com.”

Realtor.com’s unique visitors on web and mobile sites increased 18 percent from the prior year to about 71 million, according to the company’s internal data. For reference, Comscore claims Zillow Group has about 24 million unique visitors — a fact Thomson noted in the call, referring to Zillow by name.

“We’re in the very early stage of this evolution of the digital real estate market in the United States,” he said, noting that News Corp. expects to see Move’s financial results accelerate later in the company’s fiscal 2020 year. “Both short, medium, and long term, we believe that Realtor.com is a tremendous property.”

Correction: In the sixth paragraph, Move Inc.’s revenues for the previous year’s quarter was originally cited as $188 million; in fact, the company reported revenues of $118 million.

Write to Erin Hudson at ekh@therealdeal.com

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(Illustration by Andrea Mongia)

The news about New York’s luxury residential market has been grim lately — at least for developers and brokers.

Sales volume is down. Inventory is piling up. And discounts are the norm.

But brokers say there’s one group of buyers who have been eager to pull the trigger on deals: wealthy tech executives. And those buyers have, in some cases, been emboldened after their startups have been bought — and in the wake of a string of initial public offerings this year by companies such as Uber, Lyft, Slack and Pinterest.

“When Uber IPO’ed there were a lot of wealthy people who were looking for properties literally the next day, on Mother’s Day weekend,” said Nest Seekers International’s Ryan Serhant, who worked with some of them but declined to elaborate on any deals.

Despite the ridesharing firm’s disappointing IPO in May, it’s clear that many of the company’s employees made out well: Uber logged $5.2 billion in losses in 2019’s second quarter, which was largely attributed to employees cashing out.

Purchases by tech millionaires (and billionaires) are obviously nothing new. See Michael Dell’s $100.5 million purchase at Gary Barnett’s One57 in 2014. In the last year alone, Amazon’s Jeff Bezos and Uber founder (and now ousted CEO) Travis Kalanick have both made mega-purchases.

While there are no publicly available statistics that break out residential purchases by the industry that the buyers hail from, brokers have anecdotally spotted a slight uptick in acquisitions among a broader swath of tech executives and employees.

And these tech players aren’t just buying because they have cash windfalls; they’re also purchasing property in New York City because their companies have been gobbling up office space here.

In the third quarter alone, Google finalized its 1.3 million-square-foot lease at 550 Washington Street (also known as St. John’s Terminal), the final piece in its Hudson Square campus. Uber inked a 300,000-square-foot deal at 3 World Trade Center.

Meanwhile, Facebook is reportedly in talks with Related Companies to take an additional 500,000 square feet of space at Hudson Yards, a move that would bring its footprint at the development up to 1.5 million square feet. And Apple is looking for somewhere between 200,000 and 500,000 square feet but could take as much as 750,000, sources told TRD recently.

More generally, tech leasing has skyrocketed in Manhattan in the last decade: Tech firms occupied less than 1 million square feet 10 years ago in the borough versus 3.5 million square feet last year. And that’s not including the latest wave of monster leases signed this year.

Tech jobs have risen in tandem. Tech:NYC, a nonprofit that represents the tech industry, cited research showing that the number of jobs in New York’s “tech ecosystem” was at 333,000 last year — up from 250,000 in 2006.

“All of the major players are here,” said Clayton Orrigo, a Compass broker who recently worked with Shutterstock founder and CEO Jon Oringer. (Oringer sold a penthouse at 71 Laight Street for $19.5 million and went into contract on a $27 million penthouse in May at 56 Leonard, according to news reports.)

Rachel King, a broker who works on Serhant’s team at Nest Seekers and splits her time between Palo Alto and Manhattan, said she’s witnessed an uptick in movement from the West to East Coast. “Silicon Valley is where you make your fortune and New York City is where you spend it,” she wrote in an email.

The hoodie crowd

Justin Fichelson, a top-producing broker in San Francisco and founder of the Fichelson Real Estate Group, said that for many tech execs based in Northern California, “New York is top of their list to buy a second place.”

“It’s one of the things you do when you have a lot of money,” he said.

And the tech world is churning out a large number of millionaires.

Globally, about 10 percent of individuals under 50 who have a net worth of at least $30 million come from the industry — second only to banking and finance, according to a September report by research firm Wealth-X. A quarter of those individuals live in the U.S.

Fichelson — a former star of Bravo’s “Million Dollar Listing San Francisco” — said many have who made money in  Silicon Valley look to buy more lavish properties outside the Bay Area, mainly in New York and Los Angeles. In New York, he frequently refers clients to Dolly Lenz, who runs an eponymous firm, and Douglas Elliman’s Noble Black.

“The culture [in San Francisco] is very wear a hoodie and bicycle,” said Fichelson, who estimated that about 75 percent of his clients made their money in tech. “A lot of the buyers tend to be very low-key when they’re in San Francisco, and then they’ll buy something very large and sprawling in L.A. or something flashy in New York City.”

He noted that many are looking for city views, given that they are harder to come by in low-rise San Francisco. Lenz — whose website states that she’s sold over $11 billion in residential real estate during her 25-year-career — also noted that these tech buyers usually want “big and bold.”

“I must say thank God for these people because we’re losing the Chinese, we’re losing the Russians,” said Lenz, referring to the recent drop in overseas buyers. “We finally have a good pool of wealthy buyers that we can tap.”

Black wasn’t quite as enthusiastic, but he called the steady interest from tech players “one ray of sunshine.”

Bicoastal or bust

When a major tech player makes a multimillion-dollar purchase in New York, it makes headlines.

And examples of those deals abound.

Kalanick — who resigned from Uber in 2017 after a series of internal company scandals — bought a 6,555-square-foot penthouse at 565 Broome for $36.5 million in August.

Jet.com founder Marc Lore, meanwhile, bought a $43.79 million penthouse at 443 Greenwich Street last year.

And the list goes on.

Matt Cohler — a former Facebook executive who is now a venture capitalist backing tech companies — is believed to have traded his Gramercy Park townhouse last year for a Nolita penthouse asking $35 million at 152 Elizabeth Street. (It’s now on the market again.)

And Sean Parker of Napster and Facebook fame assembled two townhouses to create a mega-mansion on West 10th Street. In 2011, he bought a $20 million townhouse and then five years later shelled out $16.5 million for the property next door.

443 Greenwich Street, where Jet.com founder Marc Lore bought a penthouse

And those deals all paled in comparison to the $80 million that Bezos dropped on three units at 212 Fifth Avenue this past June.

But beyond those monster transactions, there are a lot of other hoodie-wearing techies with cash to burn.

Warburg Realty’s Catherine Smith has worked with a number of clients who started looking for property after selling their company to Adobe in 2011. She said many of them have built portfolios of residential investment properties over the years — buying up pricier apartments while keeping their existing ones.

For more recent buyers, the New York City properties they’re picking up serve as pieds-à-terre — a halfway point between their primary homes in San Francisco and clients in Europe. They also offer a New York home base when they have meetings here and a place to entertain.

They even help with dating in the city, according to Compass’ Orrigo, who travels to the Bay Area about every other month to network and lived in Palo Alto and San Francisco for about three years starting in 2009.

“It’s a better social scene,” he said. “The dream is always to be bicoastal.”

To delay or not to delay?

Orrigo is not the only broker wooing these buyers. A number of New York City brokers have been proactive about courting Bay Area clients.

Elliman’s Oren and Tal Alexander have made three trips to San Francisco in the past year after noticing an uptick in buyers from there in New York and Miami.

“If you ask them where they want to live, obviously, New York has a lot of offer,” said Oren Alexander. “Most of them are tired of being around a lot of tech people.”

But according to Deniz Kahramaner — a Stanford-trained data scientist who founded his own brokerage, Atlasa — the lag time between when tech executives cash out in the wake of an IPO and when they buy property averages about 18 months.

Kahramaner came to that finding after analyzing San Francisco’s residential market right after Facebook and Twitter’s IPOs in 2012 and 2013, respectively.

He said those delays are partly the result of lockup periods that tech employees have on their stock options — meaning they can’t sell stock during that time — and because it takes time to find a home and get ducks in a row.

Notwithstanding the possible onset of a recession, he expects the beneficiaries from 2019’s batch of IPOs to start buying in spring 2020.

As for those who are already buying in New York, brokers noted that they tend to favor new developments — starchitects are an added bonus. Home offices and properties conducive to entertaining are usually requirements, too.

Oren Alexander said he handled a deal for a well-known tech exec at 432 Park Avenue in which one major draw was that the buyer could turn part of the apartment into a boardroom.

Serhant noted that many of his clients have had designers fly in. “They’re not coming here for a three-bed apartment with, like, good exposures,” said Serhant. “They’ve got cash and they’re willing to spend it.”

Orrigo described his clients, particularly the female founders he’s worked with, as “real arbiters of style,” personally attending auctions for vintage furniture and carefully curating properties.

“They’re nesting with money, and it’s their money,” he said, noting that his tech clients average in age from 27 to 40 years old. “These are not third-generational wealthy people who have family handlers … They are used to doing stuff on their own.”

That said, some issues are more likely to pop up with tech buyers.

Orrigo said he’s become accustomed to fielding questions about the acoustics and special add-ons, often from “male software guys.”

“‘How loud is it at night?’ and ‘Can I put a Jacuzzi on the roof?’ Those are the questions I get all the time,” he said.

But generally, he said: “The tech people I know are very understated and quiet. A lot of these guys like to be super anonymous.”

He recalled how one of his high-net-worth clients jumped on a Citi Bike after dinner together at Lucali in Carroll Gardens rather than taking a car home.

Others, however, go all out when they entertain.

“There are A-list celebrities, pop stars performing and it’s like a Tuesday night. It’s completely insanity,” Serhant said.

The post ‘Thank God’ for techies: Silicon Valley execs ramp up NYC resi purchases appeared first on The Real Deal Miami.

Here are some real estate events worth attending next week:

Host: ULI Southeast Florida/Caribbean
Date: Nov. 12
Time: 5:30 p.m. to 7 p.m.

ULI Southeast Florida/Carribean is holding its WLI Networking Happy Hour at Boulud Sud Miami, 255 Biscayne Boulevard Way in Miami from 5:30 p.m. to 7 p.m. Attend this free event to spend an evening connecting with professionals in the land use and real estate development industries.

Host: Bisnow
Date: Nov. 14
Time: 8 a.m. to 1:30 p.m.

Bisnow is hosting its Multifamily Annual Conference South Florida at the W Fort Lauderdale, 401 North Fort Lauderdale Beach Boulevard from 8 a.m. to 1:30 p.m. This event will offer networking opportunities, along with discussions on the best management practices to implement and the future of the multifamily sector. Matt Allen of Related Group and Arden Karson of CBRE will be the keynote speakers at the event.

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

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

Jared Galbut and Keith Menin are majority owners of Bodega Taqueria y Tequila  

Jared Galbut and Keith Menin are majority owners of Bodega Taqueria y Tequila

In a recently filed lawsuit, downtown Miami nightclub pioneer Louis Puig is accusing hotel and restaurant developers Jared Galbut and Keith Menin of messing up his investment in a South Beach taco bar and a recently closed pizza joint operated by the duo.

Puig, who founded electronic dance venue Space in 2000 and sold it in 2013, is suing Galbut and Menin, along with four holding companies, for allegedly co-mingling staff and resources without his consent, refusing to show him the accounting books and the distribution of profits, and sending employees to work at other restaurants the pair own. Puig’s attorney Michael J. Schlesinger declined comment.

Ronald Lowy, the lawyer for Galbut and Menin, said the complaint is full of incorrect and inaccurate representations. Lowy said Puig is trying to pressure Galbut and Menin into buying him out.

“The companies have always acted properly and provided all documentation to Mr. Puig,” Lowy said. “We are happy to conduct negotiations with Mr. Puig, but we will not allow this frivolous lawsuit to impact our consideration.”

Since 2014, Puig has been a minority partner in Bodega Taqueria y Tequila at 1220 16th Street in Miami Beach and Ricky’s pizzeria next door at 1222 16th Street. The two restaurants are majority owned and operated by Galbut and Menin, the braintrust behind Menin Hospitality, which also operates three Miami Beach hotels and one in Chicago.

The lawsuit, filed in Miami-Dade Circuit Court, alleges that managers who were being paid by Bodega were seen working at Menin Hospitality’s Halves and Wholes sandwich shop and Pizza Bar, another pizzeria. Puig also alleges that Bodega revenue and employees were diverted to Ricky’s without his consent or authorization.

Galbut and Menin opened two food kiosks under the Ricky’s banner and restored an airstream trailer that sells Bodega food at various locations around Miami. But they have refused to provide Puig with an accounting of sales and the distribution of profits, according to the suit. Puig alleges mismanagement by his partners resulted in Ricky’s ceasing operations. He is asking a judge force Galbut and Menin to turn over all financial and bank records for the two restaurants.

The post Holy guacamole: Jared Galbut and Keith Menin sued over South Beach taco bar and nearby pizzeria appeared first on The Real Deal Miami.

Rendering of Legacy Hotel and Residences with Dan Kodsi and Peggy Olin

Rendering of Legacy Hotel and Residences with Dan Kodsi and Peggy Olin

Dan Kodsi is launching his next Miami project, geared toward international buyers looking for crash pads that they can also rent out whenever they please.

Kodsi, who recently delivered the luxury condo tower Paramount Miami Worldcenter, revealed plans for his next building, Legacy Hotel and Residences, also at Worldcenter. His Royal Palm Companies will build the project, with 278 branded condos above 255 hotel rooms, at 942 Northeast First Avenue, he told The Real Deal.

His plan is to break ground in June and complete the building within 32 months, Kodsi said.

As the luxury market grapples with an oversupply of large units sitting on the market, a number of developers are switching gears and building condo towers with smaller units, priced under $1 million, and without rental restrictions. They include projects such as Habitat Group’s Smart Brickell; Harvey Hernandez, Russell Galbut and Bruce Menin’s Natiivo Miami; and Aria Development Group and AQARAT’s YotelPad Miami. The Related Group is also working on a similar concept.

Fully furnished units at Kodsi’s Legacy Hotel and Residences will start in the $300,000s and the majority of condos will be priced between $300,000 and $500,000, Kodsi said. The units will range from 373-square-foot studios to a 949-square-foot, two-bedroom duplex, according to a fact sheet.

Owners will be able to participate in the hotel rental pool or rent their units out themselves on websites like Airbnb, TripAdvisor and Booking.com. Peggy Olin’s OneWorld Properties is handling sales. Her firm also handled sales and marketing of Paramount Miami Worldcenter.

The deposit structure calls for 10 percent down, each, at reservation, contract signing, groundbreaking, when construction reaches the ninth floor pool deck, and at top-off, with the remaining 50 percent at closing.

Kodsi said that his project will differ from its competitors because it will be a mixed-use building with a hotel that can host weddings, conferences and other events, as well as 50,000 square feet of medical space, and a wellness component. Citing a need for medical operators in downtown Miami, Kodsi said he is in talks with major hospital systems to either joint venture or lease the space.

The wellness center will feature “herbal baristas,” IV solutions and hormonal balancing.

In addition to the medical and wellness components, the tower will have a 1-acre pool deck – reportedly the largest in downtown Miami – a rooftop atrium event space, and a business lounge.

Kobi Karp is the architect and IDDI is the interior designer.

Along with Miami Worldcenter Associates, Kodsi developed the 60-story, 569-unit Paramount at the master-planned community. It was completed in July at nearly 90 percent presold.

In addition to Paramount, the $4 billion Miami Worldcenter is also expected to include about 450,000 square feet of high street retail, a 1,100-space parking garage, a 1,700-room convention center hotel from MDM Development Group and an office tower being built by Hines.

Art Falcone and Nitin Motwani are leading the development of the 27-acre area with partners CIM Group, MDM, citizenM and others. In January, Miami Worldcenter Associates, CIM Group and Falcone Group completed the first building, Caoba, a 444-unit rental tower at 698 Northeast First Avenue.

The post Developer Dan Kodsi plans hotel-condo tower at Miami Worldcenter appeared first on The Real Deal Miami.

Since 2012, Compass’ aggressive hiring of top agents from rival firms has stung competitors (Credit: iStock)

Since 2012, Compass’ aggressive hiring of top agents from rival firms has stung competitors (Credit: iStock)

After getting pummeled by Compass’ aggressive recruiting, Realogy Holdings says its rival is letting up.

Four months after filing a wide-ranging lawsuit accusing Compass of “predatory” poaching, Realogy CEO Ryan Schneider described a dramatic drop in Compass’ hiring.

During an earnings call, Schneider said the firm’s “recruiting intensity” in October was down almost 50 percent from September and 67 percent from August, according to Realogy’s calculations. “Something changed in the ecosystem and I think it’s the investor focus on profitability,” he said, in a thinly-veiled reference to SoftBank, one of Compass’ key backers.

Since 2012, Compass’ aggressive hiring of top agents from rival firms has stung competitors — particularly Realogy, which has battled to recruit and retain agents and keep commission splits down amid the heavy competition. “This is by far the biggest change in the competitive environment to our benefit that I have seen in the last two years,” Schneider said.

Compass CEO Robert Reffkin and Realogy CEO Ryan Schneider (Credit: Columbia and iStock)

But in the wake of WeWork’s bungled IPO, investors are increasingly asking questions about the valuations of startups backed by the Japanese conglomerate and its $100 billion Vision Fund. This week, the Vision Fund posted a $9 billion operating loss in the first quarter, its first quarterly loss since 2016.

“My own investment judgement was really bad,” CEO Masayoshi Son said at a Tokyo news conference.

Like other SoftBank-backed companies, Compass has sought to distance itself from WeWork. “It is hard to draw any parallels between our businesses,” CFO Kristen Ankerbrandt wrote in a memo to Compass staff days after WeWork’s suspended IPO.

Compass declined to comment on current recruiting efforts, though it’s clear the company hasn’t stopped recruiting altogether. The New York-based firm currently has 14,000 agents in 250 offices around the country.

Over the summer, L.A. agent Chris Cortazzo — who was Coldwell Banker’s No. 1 agent — took his 16-person team to Compass. In New York, Charlie Attias and Rachel Glazer joined Compass from the Corcoran Group and Brown Harris Stevens, respectively. Just this week, Hamptons agents Cee Scott Brown and Jack Pearson joined Compass from the Corcoran Group.

But Compass stopped entering new markets in January to focus on building a deeper presence in existing markets, CEO Robert Reffkin told The Real Deal during an October interview.

“We didn’t try to conquer the world,” he said. “We are focused on depth over breadth.”

For the past few months, Realogy and Compass have been waging war in the courtroom, after Realogy accused its rival of “predatory” poaching and illicit business practices.

“We don’t do a lot of whale hunting… We don’t pay seven-figure bonuses,” Schneider said Thursday. “We’re in the business of recruiting profitable agents. We’re not out making negative offers to agents just to bring in volume.”

During the third quarter, Realogy reported that its agent headcount rose 1 percent during the third quarter and 3 percent year to date. “We’re seizing the moment,” Schneider said.

The post Has Compass eased recruiting? appeared first on The Real Deal Miami.

Office rents rise across SoFla

Office rents rise across SoFla

Three things in South Florida seem certain: death, taxes and rising office rents.

In Miami-Dade County, rents rose to $38.30 per square foot in the third quarter from $35.93 per square foot in the same period of 2018. Vacancy rates dropped slightly to 9 percent from 9.1 percent, according to a report by Colliers International South Florida. Rents are rising partly as a result of new Class A office space being built across the county.

Homebuilder Lennar Corp. signed the largest new lease of the quarter for 156,000 square feet at 5505 Blue Lagoon Drive in the Miami Airport submarket. It was followed by BAC Florida Bank leasing 63,000 square feet in Coral Gables.

More office buildings are on the way with 570,000 square feet breaking ground in the third quarter, according to the report. Much of the new office space will be Class A, as Class A rents shot up to $45.18 per square foot in the third quarter from $42.92 per square foot in the third quarter of 2018.

Broward County office rents rose 8 percent, year-over-year, to $31.74 per square foot in the third quarter, while vacancy rates dropped to 9.0 percent from 9.7 percent, according to the report.

The largest lease in Broward was for doctor staffing firm Hayes Locums, which signed a 77,000-square-foot lease at Cypress Financial Center that will serve as the company’s new headquarters, according to Colliers. In Broward County, demand continues to remain strong for office buildings in downtown Fort Lauderdale. In the third quarter, Philadelphia- based Alliance HSP bought the One Financial Plaza in downtown Fort Lauderdale for $117 million.

In the northernmost part of the tri-county region, Palm Beach County rents grew to $31.81 per square foot, year-over-year, from $29.92 per square foot, driven by new office space in downtown West Palm Beach. Vacancy rates fell to 10 percent compared to 10.4 percent in the same period of the previous year, according to Colliers.

Related Group’s 360 Rosemary, a planned 300,000-square-foot Class A office building in West Palm Beach, has already started pre-leasing. The law firm Lewis, Longman & Walker signed a lease for 12,366 square feet.

The largest lease in Palm Beach County was for Kroger Co.’s online health and wellness business, Vitacost.com, for 43,000 square feet at Boca Raton Innovation Campus.

The post Here’s why office rents are going up in South Florida appeared first on The Real Deal Miami.

Zillow's Rich Barton (Credit: iStock)

Zillow’s Rich Barton (Credit: iStock)

Zillow’s revenue doubled to a record $745.2 million during the third quarter, driven by its year-old iBuying program.

For the first time since the Seattle-based company launched an instant home-buying feature, revenue from its “Homes” segment eclipsed that of agent advertising.

During the third quarter, home buying generated $384.6 million in revenue, up 55 percent from the second quarter. (Zillow Offers yielded just $11 million during last year’s third quarter.)

But the company’s losses also widened to $64.6 million from $492,000 a year ago.

Zillow joined a crowded field of companies that buy homes for cash when it pivoted to iBuying last year. But it “wants to become the team to beat,” Barton said during an earnings call Thursday. Previously, he’s called a pivot to home buying as Zillow’s “moonshot.”

During the quarter, the company purchased 2,291 and sold 1,211 homes. It ended the quarter with 2,822 homes on its balance sheet. Zillow said its iBuying segment generated gross profit of $13.8 million — for an average of $11,400 per home.

Zillow Offers is currently offered in 21 markets and plans to launch in Los Angeles next month. “We’re getting close to a national footprint,” Barton said.

Company officials said they see Premier Agent — its marquee agent advertising feature — as a “distinct competitive advantage” as it builds up the home-buying business. “It’s the size and strength of Premier Agent that allow us to invest in and expand Zillow Offers so quickly,” Barton said.

Zillow said Premier Agent “re-accelerated” during the quarter, pulling in revenue of $240.7 million, up 3 percent year-over-year.

“The profitability of our Premier Agent business is foundational to Zillow’s success and is the reason we are able to expand Zillow Offers with such confidence and speed,” Barton said.

Barton recently set the record straight on how it makes money from iBuying. “We’re not flipping this property,” he said last month. “We’re looking to move it as quickly as possible and earn our money off the transaction fee.”

The post Zillow iBuying revenue soars — but losses mount appeared first on The Real Deal Miami.

UPDATED, Nov. 8, 4:50 p.m.: Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 5:00 p.m.

 
19 Palm Avenue

19 Palm Avenue

A home with an automobile turntable just hit the market for $23.5 million. Owners Dean and Melissa Carr had Choeff Levy Fischman design the waterfront house at 19 Palm Avenue in Miami Beach. It features an open-air atrium in the center of the home, designer closets and a Fendi kitchen. Dina Goldentayer of Douglas Elliman is representing the seller.

 

Mexican developer Brom Inmobiliaro topped off the third office tower at Optima in Aventura. Blanca Commercial Real Estate is handling leasing of the 20-story, 308,198-square-foot building at 21500 Biscayne Boulevard. It’s joining the White Tower and Red Tower at the office campus, and is expected to be completed in the first quarter of 2020. The building includes floor plates of 17,000 square feet, an eight-story parking garage, and a high-end restaurant, said Tere Blanca, founder and CEO of the brokerage.

 

Realogy CEO Ryan Schneider

Realogy is selling Cartus for $400 million. The sale will not include affinity services, including partnerships with AARP and Amazon. The deal is expected to close in the first half of 2020. [TRD]

 

Side, a VC-backed brokerage that provides white-label tools to agents who run their own businesses, has raised $35 million to fuel its national expansion. The Series C, led by Paul Levine of Sapphire Ventures, brings Side’s total funding to more than $60 million, the company said. Founded in 2017, the San Francisco-based brokerage currently has 500 agents in California and Texas, who it said are on track to close $8 billion in deals next year. [TRD]

 

Location Ventures snagged a $12 million construction loan for its Coral Gables co-working project. The developer secured the loan from BGI Capital to renovate the ground floor of the 52,719-square-foot building into a new co-working concept known as Forum, according to a release. The building sits at 299 Alhambra Circle in the heart of the Coral Gables business district near Miracle Mile. [TRD]

 
The Eureka Drive site, Deme Mekras, Elliot Shainberg

The Eureka Drive site, Deme Mekras, Elliot Shainberg

Multifamily developer Garco is planning a project in south Miami-Dade, which could contain up to 300 units. According to Deme Mekras of MSP Group, Garco paid about $2.9 million for the 2.44-acre site on Eureka Drive, located between South Dixie Highway and the Florida Turnpike. [TRD]

 

Real estate heavyweights are distancing themselves from Donald Trump. A survey of half a dozen New York real estate bigwigs found none were supportive of Trump’s domestic or foreign policies. Earlier this year, Related’s Stephen Ross came under fire for holding a fundraiser for the president. [CO]

 

The head of a manufacturing distribution company sold his Gables Estates mansion for $11.5 million, property records show. Aurelio Leyva and Lilliane Levya sold the 9,640-square-foot house for $1,192 per square foot. The 1.62-acre property includes a tennis court and over 300 feet of water frontage. Aurelio Leyva is the president and CEO of a Miami-based manufacturing company called CE. [TRD]

 

Digital office space leasing company Squarefoot has completed a $16 million funding round, and plans to expand. The funding was led by DRW Venture Capital and included investors Triangle Peak Partners, RRE and Rosecliff. [CO]

 

Redfin CEO Glenn Kelman (Credit: iStock)

Why Redfin is holding back on growing iBuying business. Redfin’s revenue jumped 70 percent during the third quarter as the brokerage’s instant home-buying business raked in $80 million. That iBuying growth represents a 600 percent gain for the Seattle-based discount brokerage, which is one of several firms betting on iBuying nationwide. [TRD]

 

China, USA could slowly remove tariffs. China and the U.S. plan to lift some tariffs in stages if the two countries agree to a partial trade deal, China’s Commerce Ministry said, according to the Wall Street Journal. [WSJ]

Bee Gee widow Yvonne Gibb sells waterfront Golden Beach home. The widow of Maurice Gibb of the Bee Gees, sold her waterfront Golden Beach home for $5.1 million. Dalia and Steve Berman bought the 6,729-square-foot house at 516 North Parkway in an off-market deal, said Sue Honowitz of Rusty Stein & Co. Steve, a developer, is president and CEO of Hollywood-based Firm Realty. [TRD]

Correction: A previous version of this report mischaracterized the home at 19 Palm Avenue.

Compiled by Keith Larsen

The post Redfin’s revenue jumps 70%, China and USA could slowly remove tariffs: Daily digest appeared first on The Real Deal Miami.

Reonomy CEO Rich Sarkis (Credit: Reonomy, iStock)

Reonomy CEO Rich Sarkis (Credit: Reonomy, iStock)

New York–based real estate data firm Reonomy has raised another $60 million.

The company, which provides information on close to 50 million properties across the U.S., said Thursday that Canadian firm Georgian Partners had led the series D funding round. The venture investment arms of major banks Citi and Wells Fargo also joined the round, as did existing investor Sapphire Ventures.

The firm, which was launched in 2013 by Rich Sarkis, has now raised $128 million in total. A $30 million funding round last year was backed by SoftBank Group and Bain Capital Ventures.

Sarkis said his firm had seen “a lot of traction” in the past 12 months from large financial institutions, which led to Citi Ventures and the Wells Fargo entity joining the funding round.

The company said it would use the new funding to double down on its machine-learning capabilities, which can help it merge splintered property data sets from across the country. This year, the firm has announced a series of partnerships with property data firms, including Black Knight and CoreLogic.

The funding would also be used to scale to other markets, including Canada and the U.K., the company said.

The post Real estate data firm Reonomy hauls in $60M appeared first on The Real Deal Miami.

Miami skyline (Credit: iStock)

Miami skyline (Credit: iStock)

The Real Deal’s South Florida quarterly is on its way, packed with the biggest real estate news from Miami-Dade, Broward and Palm Beach counties.

The issue will be available to subscribers on Dec. 18, with the print edition hitting mailboxes the following week.

  •  Top commercial trades of the year by asset class including:
    • Largest retail sales and leases
    • Priciest hotel sales
    • Biggest multifamily trades
    • Top industrial sales and leases
  • The evolution of Coral Gables: The city is undergoing a major redevelopment boom, but will it succeed in attracting new businesses and residents?
  • The co-living question: As PMG and others embrace the trend, we investigate its viability
  • The priciest residential sales of the year

… And much more!

Not a subscriber? Get our Print + Digital plan now, which includes special issues.

Interested in getting your message in front of our readers? Contact Advertising@TheRealDeal.com to reserve your space today!

The post <i>TRD</i> South Florida’s Winter issue is coming soon! appeared first on The Real Deal Miami.

601 Leucadendra Drive (Credit: Zillow)

601 Leucadendra Drive (Credit: Zillow)

The head of a manufacturing distribution company sold his Gables Estates mansion for $11.5 million, property records show.

Aurelio Leyva and Lilliane Levya sold the 9,640-square-foot house to Famas LLC, a Delaware company with an address listed at 1200 Cartagena Avenue in Coral Gables.

The home sold for $1,192 per square foot. The 1.62-acre property includes a tennis court and over 300 feet of water frontage. The house, built in 1982, has six bedrooms, five bathrooms and two half bathrooms.

Aurelio Leyva is the president and CEO of a Miami-based manufacturing company called CE.

The house was most recently listed in July for $15.9 million, according to Realtor.com. It was last purchased in 2015 for $9.5 million, records show.

The listing includes plans for a 15,000-square-foot house designed by architect Cesar Molina. The spec home was on the market for $35 million.

In 2015, the Levyas sold a 1.23-acre vacant lot on Arvida Parkway to healthcare billionaire Mike Fernandez for $9.5 million.

Gables Estates is a high-end gated community in Coral Gables. In July, the Cisneros family of Venezuela sold their Gables Estates property at 555 Leucadendra Drive for $23 million. In May, the estate at 41 Arvida Parkway – once listed for $68 million – sold at auction for $25.5 million.

The post Manufacturing CEO sells Gables Estates mansion for $12M appeared first on The Real Deal Miami.