Real Estate News

Bill Cunningham and Pam Liebman (Credit: Larry Ford)

Bill Cunningham has been promoted to president of sales at the Corcoran Group, a new role that consolidates oversight of sales for the firm’s Manhattan, Brooklyn, Hamptons and South Florida markets.

Sales managers overseeing the Brooklyn and Hamptons regions previously reported to Pam Liebman, CEO of the firm. “This is hugely productive for the company,” Liebman said Wednesday. “It gives me more time to be more strategic and focused on the future of the company.”

Cunningham joined Corcoran in 2001 as an agent and worked his way up to running the firm’s main East Side office. In 2014, he spent nine months as president of Trump International Realty before returning to Corcoran as general sales manager, replacing retiring executive Tresa Hall.

Until now, Corcoran’s Brooklyn and Hamptons markets were overseen by Frank Percesepe, who is retiring June 15. In South Florida, Bill Yahn recently turned over day-to-day operations to John Hackett, who will report to Cunningham. Yahn is retiring in December.

Corcoran was the No. 1 firm on The Real Deal’s most recent ranking of residential brokerages, after closing $6.29 billion in sell-side deals in 2017.

321 Ocean and Cliff Asness

A company tied to AQR Capital Management co-founder Cliff Asness is the buyer of a penthouse at 321 Ocean that sold last week for $26 million, property records reveal.

Skurge LLC, a Delaware company that lists a Greenwich, Connecticut address, purchased the five-bedroom, 6,807-square-foot penthouse at 321 Ocean Drive from Russian venture capitalist Boris Jordan in what is the most expensive condo sale of the year.

Records show Asness controls a recently incorporated Florida company with the same address. Voter records show the Greenwich address is the home of Asness and his wife Laurel.

Forbes pegs Asness’ net worth at $3.8 billion. He co-founded AQR with John Liew, David Kabiller and Robert Krail in the late 1990s. As of the end of the year, the investment firm had more than $224 billion in assets under management, according to its website.

Liew’s wife recently paid $13.5 million for a unit at the nearby Apogee in South Beach. The buildings are less than a mile away from each other. Liew is worth about $1.25 billion, according to Forbes.

The 321 Ocean unit sold for more than $3,800 per square foot, but it was originally listed for double that amount. The sellers, Jordan and his wife Elizabeth, tried to flip the penthouse unit for $53 million in 2015, the same year they purchased it for $20 million. It was relisted last year for $35 million.

Douglas Elliman’s Bill Hernandez and Bryan Sereny listed the unit. Eloy Carmenate and Mick Duchon, also of Elliman, represented the buyer, whom they declined to identify.

Avenir site map and Landstar Development Group’s Rosa Schechter (Credit: Avenir Community Development District and LinkedIn)

The Avenir Community Development District just paid $16 million for a portion of Avenir, a nearly 4,800-acre mixed-use community in Palm Beach Gardens.

Property records show an entity tied to the Avenir Community Development District bought 130 acres of land from a company tied to Landstar Development Group.

The Avenir Community Development District was established in January 2017 and is led by a five-member board consisting of Virginia Cepero, Roberto Horwitz, Randolfo Stern, Daniel Lopez and Eduardo Stern, according to its website. Representatives for the district were not immediately available to comment.

The 4,783-acre Avenir site, north of Northlake Boulevard and west of Bee Line Highway, was approved in 2016 for 3,000 single-family homes, 250 multifamily units, 400,000 square feet of commercial space, 200,000 square feet of medical office space, 1.94 million square feet of office space, a 300-key hotel, green space and more, according to the city of Palm Beach Gardens.

The project is part of a taxing district, meaning home buyers and businesses who move in will have to pay an annual fee of about $1,800 a year to cover the construction and management of infrastructure within the development.

Earlier this month, Landstar boosted its construction loan to nearly $109 million for the first phase of the project. It’s expected to take up to 10 years to complete.

Serena Williams and the Bear’s Clubs property

Drinks are in order for tennis star Serena Williams.

One of the most accomplished professional athletes in the world just sold a 2.4-acre vacant lot at 152 Bear’s Club Drive in Jupiter for $6 million to Patrón Spirits CEO Edward Brown and his wife Ashley, property records show. The price equates to $2.5 million per acre.

Williams paid $4.12 million for the land in 2013, serving her a profit of $1.88 million.

The lot is located near the 18-hole golf course at Bear’s Club, which was founded by golfer Jack Nicklaus and his wife Barbara.

Brown, who has been CEO of Patrón since 2000, owns other expensive property in South Florida. In April, Patrón Spirits International AG was acquired by Bacardi Ltd. for $5.1 billion.

In March 2017, Brown spent $20 million for a six-bedroom, 10,769-square-foot mansion in Hillsboro Beach, records show.  That was shortly after he sold a 3-acre waterfront estate at 1370 South Ocean Boulevard in Manalapan for $40 million.

The residences at the Bear’s Club share access to the golf course and a 40,000-square-foot clubhouse. The community has been home to celebrities like basketball legend Michael Jordan and professional golfers Luke Donald, Ernie Els and Michelle Wie.

Rally photos

Some Miami Beach commissioners are open to the idea of using taxpayer dollars to buy a portion of Crescent Height’s Alton Road redevelopment site between 5th and 7th streets to build a park that combats sea level rise.

Any acquisition would be part of a deal in which Russell Galbut’s Crescent Heights would still be allowed to build one of the tallest residential towers in South Beach.

The Miami Beach City Commission’s land use committee on Wednesday instructed planning and zoning staff to study the feasibility of Miami Beach buying some of the land, as well as new proposals by Crescent Heights to build a taller tower than what is allowed under the development site’s current zoning.

“We should seriously look at it,” said commissioner Mark Samuelian. “Sometimes you have to spend money for the good of the community. We could get a game changing park for resiliency. That is an important alternative that needs to be explored.”

Over the years, Crescent Heights’ co-founder Galbut has presented various controversial plans for the redevelopment of a huge swath of land near the on and off ramps of the MacArthur Causeway. The latest proposal is no different, drawing opposition from a coalition of homeowner groups called The Gateway Alliance.

Yet some condo associations, such as the one for the Bentley Bay, at 520 West Avenue, and the Floridian, at 650 West Avenue, have reached a compromise with Galbut to support one of the three options Crescent Heights proposed for the 85,348-square-foot block that includes the former site of South Shore Hospital.

The Bentley Bay and The Floridian associations back the plan for a 36-story building with about 288 units. A second contemplates a 42-story tower with about 336 units. And the third would be a 50-story, 400-unit building for the property. Any of the three would be built on a parking pedestal.

The development would also include a five-story, mixed-use retail and residential building on the 600 block of Alton Road.

As a sweetener, Galbut has offered to set aside roughly 3 acres for green space with porous elements that would help reduce flooding in the neighborhood. Crescent Heights is also willing to help the city build a pedestrian bridge that would connect to a baywalk south of 5th Street.

“We believe strongly this is a unique opportunity our community should not miss,” Galbut said. “Our tower is in the same scope and size of other towers surrounding it. It has a fairly smaller floor plate than every other tower in South Pointe, perhaps South Beach.”

Galbut also said the proposed green space would do a lot to combat rising seas and flooding. “We are a whopping 87 percent permeable surface,” Galbut said “That is true resiliency.”

However leaders for The Gateway Alliance claim Crescent Height’s application to vacate 6th Street and combine the floor plate ratio of the 500 Alton Road and 600 Alton Road lots would set a dangerous precedent. About a dozen alliance members held a rally outside Miami Beach City Hall prior to the land use committee hearing. They held up signs that read, “Our streets are not for sale,” and ”No developer giveaways.”

The alliance proffered a counter proposal in which the developer agrees to only building a 280-foot building with a parking pedestal taking up only half of the block and a floor plate that would only be about 6,800 square feet. The remaining open space on the 500 and 600 blocks would become a community park that incorporates resilient technologies to combat sea level rise.

Alliance founder and Miami Beach Frank Del Vecchio, along with other members, said they would even support the city buying part of the site from Crescent Heights.

“We are not just in opposition here,” Del Vecchio said. “We have a better idea: For the city to pay for 3 acres on the 600 block of Alton Road for a resilient passive park.”

Crescent Heights currently has been approved to build 60-foot to 75-foot buildings with up to 510 units.

Patrick Murphy and Jeff Greene

Democrats Jeff Greene and Patrick Murphy are both still mulling a run for governor in the Sunshine State.

Greene, a billionaire real estate developer in Palm Beach, and Murphy, a vice president at his family’s Coastal Construction, are still considering entering the 2018 race, according to the Palm Beach Post. Murphy is also a former U.S. representative, and lost a U.S. Senate race to Marco Rubio in 2016. https://therealdeal.com/miami/2017/12/04/movers-shakers-ex-related-vp-eric-fordin-joins-mast-capital-more/

It wouldn’t be the first race for Greene, either. He spent $23 million in an unsuccessful effort to win the 2010 Democratic primary for U.S. Senate, losing to Kendrick Meek. The Palm Beach County developer is working on a number of projects in the county, including an office tower, retail, residential and hotel developments.

If either joins the gubernatorial race, they would be running against Chris King of Winter Park, former Miami Beach Mayor Philip Levine, former U.S. Rep. Gwen Graham and Tallahassee Mayor Andrew Gillum.

Murphy has been outspoken about using local, state and federal money to fund sea level rise mitigation projects. [Palm Beach Post] – Katherine Kallergis

(Illustration by Sebastien Thibault)

Ask any broker who’s dealt with Amazon to tell you what it was like, and they’ll present you with an airtight nondisclosure agreement prohibiting them from speaking. “Under the radar” doesn’t even begin to describe the company’s ultra-discreet approach to its real estate deals, especially as it’s bought up, or leased, more and more property with each passing year.

Second only to Apple as the world’s most valuable company, Amazon, with an estimated worth of $768 billion, has the potential with every move to reshape each market in which it operates. But it was the acquisition of Whole Foods Market for $13.7 billion last August that’s brought an even greater urgency to competitors’ attempts to divine the e-retailer’s next moves.

Grocers, for one, are “scared shitless” about what Amazon might do next — though they’d never admit it publicly, said MWPVL International’s founder and President Marc Wulfraat, whose firm consults on supply chain, distribution and logistics for major American companies within the food and beverage sector. One reason for panic? Amazon “can spend a billion dollars tomorrow and not notice it,” Wulfraat said.

“I can assure you this is top of mind for everybody,” he continued. “A lot of companies are worried sick right now. There’s a lot of boardrooms where this is the dominant discussion, and they’re asking, ‘What do we do to defend ourselves?’”

As with the hotly anticipated announcement of the location of Amazon’s second North American headquarters, the e-commerce giant’s apparent penchant for the element of surprise has the retail industry on tenterhooks, with competitors desperate for clues about how Amazon may leverage its ownership of the grocery chain’s 470-plus stores.

John Schoettler

The company’s CFO, Brian Olsavsky, was characteristically coy about future plans when discussing its recently launched two-hour Whole Foods grocery delivery, which was available for Amazon Prime members in 10 cities as of press time.

“We’re going to use the 10 cities as a test and see how customers respond, just like we always do,” he said on a Q1 earnings call in late April. “Then we’ll announce expansion plans once we digest that.”

Inside the jungle

While CEO Jeff Bezos is no doubt the most recognizable face of the Amazon brand, the man responsible for the company’s real estate expansion keeps a much lower profile. Real estate chief John Schoettler, a born and raised Seattleite who’s been with the company since 2001, leads an in-house team that is estimated to number under 100 people, according to one source with knowledge of Amazon’s real estate operations who wished to remain anonymous.

As the most senior man at the top of the mysterious team, Schoettler, whose official title is vice president, global real estate and facilities, may not appear on national news shows, but he talks to local media and serves on a number of community organizations’ boards on behalf of Amazon. In 2005, Schoettler told the Seattle Times he instigated a company-wide real estate plan with Bezos’ blessing and only one condition: that Amazon’s main headquarters stay in Seattle. Schoettler has since overseen the company’s office space as it ballooned to 8.1 million square feet as of last year, making Seattle into America’s largest company town, with Amazon occupying 19 percent of the city’s office stock.

But the bulk of Amazon’s real estate portfolio is in the booming industrial sector, which serves as the backbone of the delivery service it’s become known for. Last year, the e-retailer’s North American property devoted to its supply chain — including fulfillment and data centers — totaled 4.4 million square feet owned by the company, and 131 million square feet that it leased.  The team’s strategy is ultimately overseen by senior vice president of Worldwide Operations Dave Clark, says a source in the industry.

Amazon’s real estate empire is growing by bigger and bigger increments each year, public records show. The company acquired $9.6 billion in property and equipment under capital leases last year, compared to $5.7 billion in 2016 and $4.7 billion in 2015. (The company’s report does not break out expenditures on property alone.) A similar increase occurred with property and equipment under built-to-suit leases: In 2017, the company spent $3.5 billion — more than double 2016’s $1.2 billion.

And the spree seems far from over. With job descriptions posted online in late April, Amazon was hiring  team managers to work with its North American and European real estate teams and noted that the job required working in “an extremely fast-paced environment with a high degree of ambiguity.” To qualify for a Seattle-based transaction manager role, candidates had to have experience managing deals for industrial operations at a national level and maintaining a minimum $20 million dollar deal flow.

“I just hear that [the Amazon real estate team] is responsive when they’re ready, but it’s otherwise hard to get a hold of them,” said the source who wished to remain anonymous. “I think they work pretty hard.” According to an industry source with direct experience in the company, Amazon’s in-house team is split into four main groups: the industrial team, which is by far the largest; Schoettler’s corporate office team, which is thought to number less than 12 people; a team dedicated to Amazon Web Services’ server farms; and the retail team, which handles brick-and-mortar bookstores and is driven by employees who are not from traditional real estate backgrounds.

Michael Frankel

But they do outsource some of the work. To expand its Seattle campus, the company teamed up with Vulcan Real Estate beginning in 2007, while Seattle firm KBC Advisors, whose website says it is made up of 13 people, is one of the external teams Amazon’s industrial team works with, according to the Puget Sound Business Journal. KBC confirmed that Amazon was a client but declined to comment further. The industry source with knowledge of the company’s operations estimated that Amazon’s industrial team numbered about 80 in-house, but, with their property management team from CBRE factored in, the total team would be around 400. CBRE declined to comment on its dealings with Amazon. 

What’s next?

Amazon will continue to expand its real estate holdings as per the dictates of its customer data, said Cooper Smith, director of research at business intelligence firm L2. Smith added that he expects Amazon to capitalize on its own infrastructure by expanding into offering carrier and delivery services, much like how the company already facilitates online sales between third parties.

The company is about halfway to its goal of having a warehouse within 20 miles of every U.S. consumer due to a rapid buying spree over the past several years, according to Smith, who added, “but Walmart’s already there.” As of 2017, Walmart operated out of a total of 179 distribution facilities across the U.S. and had a portfolio of 5,358 stores;  the vast majority of both are owned, not leased, by the company, according to annual filings. 

If Amazon wants to be within 20 miles of every customer, it needs to lease more industrial properties within city limits, which is a challenge in what has become an extremely tight market from coast to coast, experts said.

“There’s essentially no more land,” said Michael Frankel, co-CEO of Rexford Industrial Realty, a REIT that specializes in developing and leasing small-to-medium property in densely populated areas. Amazon leases a medium-sized facility from it in Glendale, California.

“The need to find hybrid models is really intense. We think Amazon will need more warehouses that are truly in infill locations, not far from Whole Foods stores,” he said.

And that initiative seems to be underway, as Amazon has been adding distribution capabilities to its Whole Foods stores in Los Angeles.

A source told Bloomberg in late March that Amazon was searching for larger locations for Whole Foods where the properties could be a hybrid of a store and a fulfillment center. Currently, stores are just under 40,000 square feet; now Amazon-Whole Foods is requesting stores up to 80,000 square feet. They also reportedly directed one of their landlords, Regency Centers Corporation, to convert some parking spots at Whole Foods stores into stalls for delivery drivers.

But Amazon’s strategies vary widely between cities. A person who works with Whole Foods’ real estate group told The Real Deal they hadn’t received any new directives and it was “business as usual.”

“We haven’t seen any difference at all,” the source said. “I don’t think the plan —if there is one — is so gelled that [they are] incorporating it into any of their real estate strategies yet.”

Former Rep. Barney Frank and former Sen. Chris Dodd (Credit: Getty Images)

UPDATED, May 24, 3:59 p.m.: Nearly a decade after bad real estate loans helped thrust the U.S. economy into a major recession, the House of Representatives passed a bill to roll back a number of regulations for banks. The changes, experts said, could become a catalyst for increased commercial real estate lending, opening up many new sources of funding to developers.

On Tuesday, the House voted 258-159 in favor of a bipartisan regulatory relief bill that would remove some provisions of the 2010 Dodd-Frank Act, which was created in the aftermath of financial crisis. It follows the passage of a similar Senate bill that passed in March.

The bill, which Trump signed Thursday, reduces some regulatory burdens for community and regional banks. These banks have long argued that Dodd-Frank has been too costly and unfairly burdensome, maintaining that it was Wall Street and major banks that were responsible for the toxic lending that led to the financial crisis, not smaller lenders.

The legislation will leave a dozen big banks in the U.S. under stricter federal oversight, relaxing restrictions on thousands of lenders with less than $250 billion in assets.

Changes in the bill pertaining to a type of commercial real estate loan could increase the number of banks lending to some commercial projects. In theory, this would be great news for developers who are looking to finance a restaurant or hotel since it means they have more access to capital at potentially lower rates than what is currently available.

“The number of lenders will increase and a few more banks will step into the game,” said Heidi Learner, chief economist at Savills Studley, a commercial brokerage. “In general, when there is more supply you would expect there to be lower costs.”

Learner said one major change in the bill pertains to certain type of commercial real estate loans known as “High Volatility Commercial Real Estate” loans.

These loans, which are used for the acquisition, development or construction of some real estate projects, are deemed to be riskier by regulators. As a result, banks are required to reserve more capital, which is also more costly for banks.

“It made the cost of financing those loans that much more expensive because they had to hold more capital,” Learner said.

But the new proposed rules clarify when banks are able to reclassify a HVCRE loan to a non-HVCRE loan, which have lower capital set asides. This could potentially result in cheaper rates for developers in the market for funds.

The new bill also revised a provision where commercial borrowers are required to put down 15 percent equity, which could be done through an appreciated value of a property versus a cost basis under Dodd-Frank.

Douglas Stanford, a Miami-based commercial transactions and finance attorney, said some of the new rule changes in the bill could result in banks stepping in to lend to more small commercial projects.

As some banks have backed away from lending in this space over the past few years, private equity has filled the void. Generally, however, private equity charges a higher rate than what traditional banks offer, Stanford noted.

“Many banks have been discouraged from making commercial real estate loans,” he said. “Those same players can possibly get another shake out of this…. And you might see banks getting some of the business back.”

Too big to fail

Another major revision the bill calls for is increasing the threshold at which banks are designated “systemically important financial institution (SIFI)” – also known as “too big to fail.”

The rule was designed so that regulators can keep a closer eye on large financial institutions’ capital levels, since their failure could have a ripple effect on the global economy. Under Dodd-Frank, banks with $50 billion in assets or above were deemed as a “SIFI” and faced tougher regulations, including annual “stress tests.”

But the new law would increase this threshold from $50 billion in assets to $250 billion in assets, meaning that about 40 banks between $50 billion and $250 billion in assets could lend and grow more without having to worry about increased regulations. Only 12 banks would still meet this classification, but many of them have found a back door into the commercial real estate lending game.

As a result, mid-sized banks such as Miami Lakes-based BankUnited, which has over $30 billion in assets, can grow their real estate loan portfolio without having to worry about additional regulatory burdens. So too, potentially, could Bank of the Ozarks, which with just $22 billion in assets as of 2017 is South Florida’s most active condominium construction lender and one of the most active lenders in the New York market.

For banks nearing the $50 billion in asset mark, “it eliminates one concern when looking at growth and planning,” said Russell Hughes, of the real estate data provider Trepp.

Hughes said that the changing designation “could potentially spur M&A mergers and acquisitions.” Meaning that banks that might have been concerned about growing larger could now start acquiring more banks.

While many developers will likely turn their focus on how this new bill will impact commercial real estate, local bankers also see potential implications for residential lending.

In the House’s bill, banks under $10 billion in assets will no longer have to meet some of the same stringent mortgage underwriting requirements that larger banks do.

Since the financial crisis, many banks have stopped originating mortgages, claiming that regulations have made the line of business too costly. Nonbank financial institutions, including giants like Quicken Loans and LoanDepot, originated 48.3 percent all mortgages in the U.S. in 2016, up from 30 percent in 2012, according to a recent paper by researchers from the Federal Reserve Board and the University of California, Berkeley.

But that could change if the rollback bill becomes law.

“One of the most significant reforms is on residential mortgages,” Keith Costello, CEO of Orlando-based First Green Bank, which has over $730 million in assets, wrote in an email. “Community banks will be exempt from ability to repay laws (congressional underwriting) on loans we hold in our portfolios. This will allow us to ramp up residential lending using our own standards and risk parameters for loans we hold.”

This story has been updated to reflect that the bill’s HVCRE capital requirements would not decrease by 50%, but could clarify when a bank could reclassify a HVCRE loan to a non-HVCRE loan, which have lower capital set asides.

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Menlo-Park-and-Mark-Zuckerberg (Credit: Wikipedia Commons)

Prologis  had about 300 million reasons to smile after its 2015 deal with Facebook.

The tech giant bought a 21-building campus in Menlo Park from Prologis that year in a deal that made the industrial landlord about $300 million, according to Bloomberg. Prologis bought the site for $110 million about 10 years ago, and Facebook ended up doubling its first offer for the complex to roughly $400 million.

The site’s warehouses are now being torn down so Facebook can have more space for housing and offices.

Industrial landlords like Prologis are benefitting from tight markets in urban areas as demand for residential and office space overtakes manufacturing and warehouse facilities. The Menlo Park deal took about 1.1 million square feet of industrial space off of the San Francisco area’s market.

“The supply of space is going down, and that’s creating more pricing power,” Prologis CEO Hamid Moghadam told Bloomberg.

Prologis hopes to continue getting more out of its land. They are building the country’s first multistory warehouse in Seattle and plan to build one in San Francisco as well.

The company is also buying rival logistics owner DCT Industrial Trust for $8.4 billion in stock with an eye on boosting its presence in markets including New York, California and Florida.  It backed out of a deal this winter to pay $265 million for a FedEx warehouse in Queens.  [Bloomberg]  – Eddie Small

Barry Sternlicht and Sawgrass Commerce Center

A company tied to IP Capital Partners just picked up two office buildings in Sunrise’s Sawgrass International Corporate Park for $27.62 million, property records show.

Starwood Capital Group affiliates SVT Sawgrass Building A and SVT Sawgrass Building B sold the 153,200-square-foot office portfolio at 13800 and 14050 Northwest 14th Street for about $180 per square foot.

Sawgrass Commerce Center A and Sawgrass Commerce Center B sold for about $13.8 million each. The buildings were built between 2000 and 2004.

Records show IP Capital Partners financed the deal with a $17.2 million loan from Allegiant Capital Funding. The private real estate investment and management firm is based in Boca Raton.

Starwood Capital bought the office buildings in 2015 as part of a $178.3 million, nine-property office portfolio acquisition.

Since then, Starwood Capital, now based in Miami Beach, has been selling off the properties. In February, it sold Sawgrass Pointe 1 for $51 million. The 231,000-square-foot, six-story office building is also within the Sawgrass business park.

Sawgrass International Corporate Park is home to the regional headquarters for Ford, Fidelity Information Systems, AT&T and American Express.

3452 North Miami Avenue with Asi Cymbal and Marc Sirkin

The owners of Beaker & Gray have signed a lease to open a new bar and lounge called BoomBox at Bardot’s former site in Midtown Miami.

BoomBox will open in a 3,264-square-foot space at 3452 North Miami Avenue late this summer, Marc Sirkin of Engel & Voelkers told The Real Deal.

Sirkin and Asi Cymbal of Cymbal Realty represented the owner of the building, North Miami Avenue LLC, led by Cymbal Development’s Ziva Nitzan. Theresa Maieli of La Palma Real Estate Group represented the tenant.

Bardot, a former nightclub owned by Amir Ben-Zion, shut down last summer.

Brian Nasajon, Tony Nasajon and Ben Potts opened the restaurant Beaker & Gray at 2637 North Miami Avenue in Wynwood in 2015.

Their second venture, Mason in Midtown, will open at the end of May in the former Gigi space next door at 3470 North Miami Avenue in Midtown Miami. That building is also owned by an entity controlled by Cymbal Development’s Nitzan. That deal also was brokered by Cymbal and Sirkin.

Midtown Miami has seen many restaurants come and go in recent years. Skorpios opened earlier this year in Bocce Bar’s former space at 3252 Northeast First Avenue. On the same block, Brasserie Azur, which opened in 2015, has recently closed. And on that corner, Apeiro, which also opened in 2015 and closed in 2016, was replaced by Tap 42, which opened a year ago.

Stuart Miller and Eric Wu (Credit: Lennar and LinkedIn)

Opendoor is expanding its home trade-up program, extending it to all developers.

The house-flipping company expanded the program to all markets last summer and added homebuilders including Taylor Morrison and Meritage Homes, Inman reported Wednesday. Now the company is letting any builder in any Opendoor market participate.

Opendoor formed a partnership with Lennar earlier this year for the program. In the process, the customer finds a home from a builder that they want to move into right away — a lot in progress that’s expected to be ready in a certain timeframe. After getting an estimate for the price Opendoor would pay for their existing home, the customer decides whether to move forward and selects a closing date between 10 days and nine months from then.

“Nineteen of the industry’s top 25 builders,” including “six of the top 10,” have used the program, the company told Inman.

The program will be available in new markets at Opendoor expands, the report said.

Lennar provided $100 million in debt to Opendoor to go with the $35 million in equity from venture capital firm Fifth Wall Ventures. Fifth Wall, founded in 2016, has since raised hundreds of millions of dollars for what it calls the first fund backed by real estate money that only invests in property tech startups.

Opendoor is seeking to raise at least $200 million from investors at a valuation of about $2 billion. The money is meant to help the company’s expansion in areas including Charlotte and San Antonio. [Inman]Meenal Vamburkar

1960 South Ocean Boulevard (Credit: Redfin and Palm Beach Property Appraiser)

UPDATED May 23, 3:10 p.m.: After bouncing on and off the market for eight years, a sprawling ocean-to-lake estate called Paradisio Del Mar in Manalapan finally sold for $13.5 million, property records show.

The 24,000-square-foot mansion at 1960 South Ocean Boulevard was reportedly listed in 2010 for about $35 million, so the sale price marks a 60 percent discount off the original asking price.

Records show the buyer is Jean Christine Thompson. She’s the vice president of the Dallas-based Thompson Petroleum Corp., which was co-founded by her late father James “Jimmie” Thompson Jr.

The seller, William Gerrard, is a retired entrepreneur who worked in the telecommunications industry. He also served as mayor of Manalapan from 2008 to 2010.

In a previous interview with the Wall Street Journal, Gerrard said he spent $8.1 million assembling the property between 1997 and 2002. He then invested an additional $17.2 million into renovating the property, including building an underground tunnel that connects to the estate’s private beach.

The seven-bedroom home, built in 1989, sits on 4.17-acre plot of land between the ocean and the Intracoastal. Robert Temelkoski of Bowen Realty and William McManus of the Fite Group Luxury Homes had the most recent listing. Douglas Elliman’s Steven Solomon represented buyer.

Singer-songwriter Billy Joel recently sold the neighboring lot for $7.5 million. His Manalapan mansion at 1920 South Ocean Boulevard is also on the market for $16.9 million.

Sladja Stantic and Daniel de la Vega

Sladja Stantic is returning to One Sotheby’s International Realty after less than two years at Douglas Elliman.

Stantic just opened an office in Miami Beach’s Sunset Harbour neighborhood and is starting the Sladja Miami Homes team after leaving her former partner at Elliman, Dina Goldentayer. The former teammates will continue to co-list their existing listings at Elliman, Goldentayer said.

Stantic joined Elliman in September 2016 to sell Terra’s Eighty Seven Park, a luxury condo building under construction in North Beach. She said her involvement in the development was a “really exciting experience” but that she returned to One Sotheby’s to build an office and become more involved in the community.

One Sotheby’s President Daniel de la Vega said at the time that the door was open for her to return to the brokerage.

“I gave it my best, but came to the conclusion this is what I want to commit myself to,” Stantic said.

“We have and will continue to have a great relationship with Sladja, we wish her well in her future endeavors,” said Jay Parker, CEO of Douglas Elliman’s Florida brokerage, in a statement.

Stantic will be focused on the Venetian Islands, Sunset Islands, Mid-Beach and South-of-Fifth. She opened the 1,300-square-foot office at 1825 West Avenue last week and is working with One Sotheby’s to staff the space.

Together, Stantic and Goldentayer brokered more than $500 million in sales over six years at One Sotheby’s, before joining Elliman.

Drai’s nightclub at the Cromwell (credit: David Jeans)

Looking out from a booth in the Wynn nightclub Intrigue, it was difficult to ignore a man on stilts dressed as a tree bounding between the aisles. From up there, the view certainly spelled excess: women dancing on podiums and a crowd of real estate folk bumping and bopping to a top 40 playlist.

The party at the nightclub Sunday night set the tone of what was to come on the inevitable party circuit that accompanies the 2018 ICSC RECon convention in Las Vegas.

While some of the renowned parties thrown by the country’s biggest commercial real estate firms remained a fixture on the social calendar, other firms stayed behind the bushes and abandoned their events all together. RKF opted not to host a party this year, and a company spokesperson said it would hold smaller client dinners instead. CBRE, Eastern Consolidated, Winick Realty Group and law firm Fried Frank also chose not to throw a large bash.

For those who did host, not all were welcome. This reporter was turned away from Related Companies’ annual extravaganza at Nobu Villa, within Caesars Palace. Cushman & Wakefield and Newmark Knight Frank also flagged that no press would be allowed to attend their bash at the Marquee Nightclub in the Cosmopolitan.

The parties were in full swing by Sunday and the New York contingent gathered by the Wynn’s pool. The Polsinelli law firm and Ashkenazy Acquisition Corporation were entertaining at several cabanas. Further down, people milled about Winick Realty’s cabana.

Attendees noted the absence of some of New York City’s prominent retail-owning Jewish families — some of whom were due to arrive in Las Vegas Tuesday, following the observance of Shavuot. James Famularo, a principal with Eastern Consolidated’s retail leasing division, said that attendance was notably down at the Wynn pool, compared to last year. “The holiday definitely affected it, but people are still here,” he said.

But before the most extravagant events took off, several companies held private dinners or more modest gatherings. A few dozen people attended a quiet gathering for Lee & Associates party outside Joe’s Seafood, Prime Steak and Stone Crab at Caesar’s Palace.

Over at the Wynn, however, Marcus and Millichap hosted a show at Intrigue. A woman pranced by at the club’s entrance, wearing what equated to an Egyptian-themed headpiece and cloth that hung from her arms to finish the costume. Within the club, similarly costumed women danced on raised podiums amid the congested bustle of real estate folk gently elbowing their way to the bar.

Jay-Z and Alicia Keys’ “Empire State of Mind” was the closing song of the night, before, almost to the second of midnight, the lights flashed on, prompting attendees to scuttle for the exits.

Monday morning may have been a slow start for some, but by the evening, people were keen to blow off steam after a long day on the convention floor. A thin line gathered in front of Marquee nightclub for the renowned Newmark Knight Frank party at the Cosmopolitan.

Over at the Cromwell Casino, a heavy bass line thundered across the Drai’s nightclub pool party for JLL’s annual event. A sultry red glow lit the corridor that led to the rooftop beach, which offered sweeping views of the Las Vegas strip.

While JLL’s mega party was a tough act to follow, Blumenfeld Development Group opted for a smaller group and held their party at Intrigue after the Cushman & Wakefield crowd moved out. It was modestly attended by real estate folk and hired models, in comparison to the previous night’s event by Marcus & Millichap.

“We had the same party last year and we thought it was comparable,” said David Kaplan, the company’s general counsel, adding that he believed there was a drop in attendance on the convention floor.

New York City

Property owners seem to be willing to get a bit unconventional these days to keep rent payments rolling in amid the ongoing waves of store closures.

Indoor amusement parks, doctors’ offices, movie theaters, gyms and even discount stores  — once considered undesirably downmarket — are plugging holes in vacancy-riddled shopping centers and storefronts as rents decline, leases shorten and concessions spike, brokers and owners say.

The Real Deal’s ranking of the top leasing deals and brokerages in major markets in the U.S. reveals that, despite efforts by national firms to boost their retail teams in recent years, the marketing of stores is still largely a local game outside of Los Angeles and New York City. “We’re all trying to do the best we can,” said Marty Shelton, an L.A.-based broker with NAI Capital, the second most active retail leasing brokerage in L.A. County, with 718,825 square feet rented over the past 12 months, according to TRD’s analysis.

To rank the top brokerages in leasing for Chicago, Miami, L.A. and New York, TRD examined data provided by commercial real estate services firm Lee & Associates NYC on new retail leases and renewals in those markets from April 2017 to March 2018. Brokerage leasing totals and deals were shared with the firms, which were given the option to submit additional information. 

Josh Strauss

New York

The country’s most populous city, which is also a major draw for tourists on shopping sprees, has not been insulated from the retail collapse. Once-vibrant shopping districts in Manhattan — like Fifth Avenue, Madison Avenue, Soho and Bleecker Street — continue to be pocked with empty storefronts.

As in other U.S. markets, the list of top New York leases over the past year includes many tenants in the business of offering “experiences,” a heavy-in-rotation retail buzzword.

To wit: The largest deal of the last 12 months was Equinox Fitness’ renewal of its nearly 66,000-square-foot, two-level space at Midtown’s One Park Avenue, a 22-story, full-block office building at East 32nd Street majority-owned by Vornado Realty Trust. The deal, which was handled in-house by Vornado, closed last spring.

Similarly, Chelsea Piers, the vast Manhattan sports complex, leased a 52,000-square-foot, two-level space at 33 Bond Street, a new 25-story rental in Brooklyn from developer TF Cornerstone. A 25-yard pool, yoga studios and a cafe will be included the property, which earned a fourth-place finish. In the transaction, the landlord was represented by Winick Realty Group, the fourth most active retail brokerage in New York, with 547,000 square feet under its belt.

Even though New York sees tens of millions of visitors a year, retail in tourism-rich districts like Times Square — including restaurant concepts that are performing well in other markets — has also struggled, brokers say.

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At 11 Times Square, an office tower developed by SJP Properties on West 42nd Street, two high-profile restaurants collapsed after about only a year: an offering from Señor Frog’s, a national restaurant chain; and Urbo, a farm-to-table eatery.

“Times Square is actually under-restaurant-ed,” said Joshua Strauss, an executive vice president with RKF, which markets the tower. “But if you don’t have an offering that’s compelling, no one is going to come.”

Now 11 Times Square will serve up a 48,000-square-foot, three-level virtual-reality-themed indoor amusement park from the film studio Lionsgate. The first of many planned across the country, the attraction will draw on movies and TV shows like “The Hunger Games” and “Mad Men.”

The asking rent on the 20-year lease, which includes options to renew, was $8 million a year, “and we got close to it,” Strauss said.

SJP is offering an unspecified amount of free rent while Lionsgate and its operator, Parques Reunidos Group, extensively renovate the location, which will open in 2019. “Experience is driving retail,” Strauss added. “It’s not just a fad. It’s the wave of the future.”

In terms of the present, RKF is New York’s busiest retail brokerage, with more than 1 million square feet leased in the last 12 months, according to TRD’s analysis of data, which was provided by Henry Abramov from Lee & Associates NYC. RKF seems to be that rare national firm with regional dominance, even though the 20-year-old company’s roots are in Manhattan.

Other national players with similar clout in New York include Cushman & Wakefield (No. 5 with 523,000 square feet) and Newmark Knight Frank (No. 6 with 431,000 square feet).

But local firms have also finished strong, like Winick, as well as Ripco Real Estate (No. 2 with about 872,700 square feet).

Ripco had a hand in the city’s second-largest retail deal, the lease of about 57,000 square feet in the Hub section of the Bronx by Burlington Coat Factory, now known as just Burlington after an early-2017 rebranding. Located in a bustling shopping district, the store is owned by A&H Acquisitions, a retail-focused developer helmed by longtime retail investor Alex Adjmi. Ripco repped A&H; CNS Real Estate was the agent for Burlington.

“It’s in a terrific transportation hub, close to the subway and buses,” Cliff Simon of CNS told TRD last summer about the deal. “It’s an old historic shopping street with great density.”

Burlington, a rapidly expanding discount apparel chain with about 640 stores in 45 states, also took 55,000 square feet in Kings Plaza Shopping Center, a mall in Mill Basin, Brooklyn, owned by Macerich. Other tenants at the mall, which opened in 1970, include Old Navy and H&M. The Brooklyn Burlington lease, which is for 10 years and has three options for extensions, was the third-biggest transaction last year.

Los Angeles

Los Angeles

L.A. County is tightly focused on making sure the bottom doesn’t fall out of the retail leasing market.

To accomplish this, the sprawling metropolis is thinking small. Tenants continue to experiment with pop-up stores, flocking to small spaces of less than 10,000 square feet that come with leases of just a few months. These short-term deals are trending at the same time that there’s an increase in calls to brokers from tenants asking how they might lower their rents, though those efforts are usually unsuccessful, brokers said.

Large-scale retailers are also shrinking footprints to appeal to the tastes of millennials — who reportedly dislike cavernous stores — and to save on real estate costs, which are of particular concern in booming L.A.

As large retailers see upticks in their e-tailing businesses, vast brick-and-mortar locations are less important anyway, said Shelton of NAI Capital, citing the example of Target, which usually occupies 150,000-square-foot stores and as of press time was still looking for a 22,000-square-foot berth in the Hollywood neighborhood.

Similarly, Kohl’s, a department store chain, closed several locations across L.A. in the last two years, in part, according to news reports, to save on expensive leases.

One of Kohl’s closed locations in San Gabriel will welcome what appears to be the first California outpost of the British grocery chain Asda in what was the fourth-largest lease in the county over the last 12 months. Asda entered into an 80,000-square-foot sublease deal brokered by Colliers International, the fourth most active L.A. County retail leasing brokerage, according to TRD’s ranking, with nearly 345,000 square feet rented.

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Like Colliers, CBRE — which is No. 1 in L.A. with nearly 1.6 million square feet leased — is a national firm. But West Coast agencies are also active, like NAI Capital, in second place, and Centers Business Management, which is focused on shopping centers and took fifth place with 343,000 square feet.

It’s important to note that TRD’s brokerage  ranking, which does not include numbers of deals, does not tell the full story when it comes to the most active players in the market. Some local firms are not focused on hitting mega-deal home runs, which can be hard to attain in the current economy. Instead, they opt for lots of base hits to get ahead.

For example, despite not landing any huge individual leases, NAI manages to be one of the city’s most active firms through multiple small-bore deals, like a recent one with a 7-Eleven convenience store at 6500 Hollywood Boulevard, Shelton said. Fast-casual restaurants, like Burger Lounge, a chain that specializes in grass-fed meat in 1,500-to 2,500-square-foot spaces, are also a strong subsector, he added.

As is the case across the country, discount stores offering items at deep discounts — around $1, in some cases, but also with less drastic cuts — are also a growth category.

A recent transaction in this category involves the discount-furnishings store Curacao, which in October renewed its lease for an over-100,000-square-foot space in a shopping center at 5980 Pacific Boulevard in the Huntington Park neighborhood. That was L.A.’s largest leasing deal in the last 12 months, according to TRD’s ranking..

When Curacao’s lease was up for renewal, Argent Retail Advisors — the 10-year-old brokerage representing the landlord, Il Young Kim — began marketing the 1984 building, said Terry Bortnick, Argent’s president. He said there was widespread interest from a “who’s who” of tenants, since large footprints are hard to come by in the area. But Pacific Properties might have had to renovate the space, a costly undertaking, and so instead stuck with Curacao in a 10-year deal, Bortnick said.

The asking rent was $25 a square foot annually, which is on a par with the $27 average asking rent for shopping centers countywide, according to Cushman & Wakefield.

“Deep discounters are one of the few categories that are still aggressively opening in today’s environment,” Bortnick said.

Meanwhile, landlords are being squeezed as they look for new tenants, including discount chains, to replace closing stores.

In addition to offering free rent to commercial tenants while they renovate their stores — a fairly typical concession — owners are now expected to offer credits to help pay for things like expensive electrical work, according to brokers.

South Florida

South Florida

With low vacancy rates and a whirlwind of retail leasing, the Miami metro area continues to buck the national trend.

In fact, the average asking rent in the first quarter of 2018 was about $40 a square foot, according to Colliers International. That’s a sharp jump from the $35-per-square-foot asking rent in the year-earlier quarter.

But dark clouds may be forming, brokers said. Toys “R” Us, the bankrupt toy chain that announced in March it would close all of its U.S. stores, has 23 locations in South Florida, meaning a mass of big-box space is poised to flood the market.

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In a similar vein, Miami is awash in new retail construction, like the mixed-use megaproject Miami Worldcenter, which has 360,000 square feet of stores being built or planned for downtown. 

As is the case in other markets, a major bright spot appears to be discount retailers. These chains are often publicly traded and have deep pockets, which helps explain their appeal as tenants.

Many of the top leasing deals of the last year involved companies emphasizing below-market-rate merchandise, according to TRD’s ranking. Costco, the discount giant, took more than 51,000 square feet by the Miami airport, and Burlington was responsible for a pair of leases, one in Lake Park in Palm Beach (ranked fifth) and one in Hollywood, which was 35,178 square feet.

As in other markets, national chains are picking up some of the slack. Hobby Lobby, the arts-and-crafts store, took three major berths last year, all at 55,000 square feet — a size the brand strictly adheres to — making the chain responsible for three of the top five South Florida leases.

A variety of landlords are benefiting from the store’s moves. In Dania Beach, near Fort Lauderdale, Hobby Lobby will take space at Kimco Realty Corporation’s Dania Pointe, an under-construction 1 million-square-foot retail complex that is charging forward despite the gloomy forecast.

While malls are suffering as shoppers gravitate toward other experiences, Kimco, a Long Island-based developer, is betting there will be demand for its brand of shopping complex, which is more open-air than typical mall properties.

The $800 million, 102-acre Dania Pointe project, on the site of a former roller coaster, the Hurricane, includes tenants like T.J. Maxx and Outback Steakhouse among its 10 storefronts.

Hobby Lobby also picked up space in a building owned by Verde Realty, a real-estate investment trust, in Pembroke Pines. In addition, the chain will cut a ribbon in part of a former Kmart store at the Plaza at Lake Park, a shopping center owned by the Sterling Organization, a Florida-based private-equity firm.

On the tenant side, all three Hobby Lobby deals were handled by Katz & Associates, South Florida’s second most active brokerage with 326,000 square feet leased last year, according to the ranking. A 22-year-old firm that mostly represents tenants along the East Coast, Katz did not return a call for comment.

Chicago

Chicago

As the retail economy has suffered, so too have companies generally considered bullet-proof, like Wal-Mart. Earlier this year, it announced it was closing dozens of its Sam’s Club spin-offs, for instance.

But some stores – namely, chains that can offer even deeper discounts than mass-market retailers – are inching in. A location that Sam’s Club was on the verge of leasing, at the in the Deerbrook Shopping Center in Deerfield, Ill., is instead now home to the latest outpost of the Dump Luxe Furniture Outlet, an 11-location chain specializing in discounted couches and tables, with an unusual twist. It’s open only on weekends to keep labor costs low. With about 136,000 square feet, the deal was Chicago’s largest in the past 12 months, according to TRD’s data.

Arcore Real Estate Group worked on behalf of Dump Luxe. The landlord, Mid-America Real Estate Corporation, repped itself at the property, which is a handy symbol of the decimated retail sector.

Tenants such as Best Buy, Office Max and the Great Indoors, a home decor retail chain owned by the struggling Sears, have vanished in recent years. But in an effort to salvage the property, Mid-America has renovated the one-time enclosed 1970s shopping mall into open-air shopping center; that Great Indoors store became a parking lot.

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Other major leasing activity in Cook County seems to mirror national trends. Medical facilities, eager to branch into neighborhoods as the health care industry grows, are snapping up storefronts. The Chicago Center for Sports Medicine & Orthopedic Surgery signed a lease for an 80,000-square-foot store in a shopping center anchored by a Ross Dress for Less in North Kenwood, near Lake Michigan.

Likewise, Advocate Health Care will take about 50,000 square feet in Wrigleyville, in a former Sports Authority store. Services offered there will include X-rays and cardiac testing, according to a press release from Next Realty, the landlord. CBRE handled the transaction. “Finding 50,000 square feet of free-standing retail space with parking in Lakeview is like finding a unicorn. It just doesn’t exist,” said Marc Blum, Next’s president.

At the same time, Chicago’s retail vacancy rate seems relatively high. Quantum Real Estate Advisors put it at nearly 7 percent in 2017.

But market segments like grocery stores, too, seem robust. Indeed, Living Fresh Market signed up for a 70,000-square-foot store in Forest Park, in a deal it brokered with an in-house team. NAI Hiffman represented landlord Living World Christian Center in the deal.

Brightline (Credit: Brightline and nsldc.org)

Phase two of Brightline’s Miami-to-Orlando train service is off to a bumpy start.

Members of Florida’s congressional delegation are discussing whether project is eligible for $1.15 billion in tax-exempt bonds that the project’s parent company All Aboard Florida is seeking for the northern expansion of the service to Orlando. All Aboard received $600 million in private activity bonds for the first phase of the project.

U.S. Transportation Secretary Elaine Chao has received letters to suspend the issuance of the bonds, according to the Sun Sentinel. In response, several congressional members have also signed a letter in support of the project, including Ileana Ros-Lehtinen, Carlos Curbelo, Darren Soto, Lois Frankel and Frederica Wilson.

Those opposed include U.S. Rep. Mark Meadows, along with Florida congressmen Brian Mast, Bill Posey, Ron DeSantis and Matt Gaetz. Meadows wrote that “we cannot support what amounts to blank-check authority for this program” in a letter to Chao. Mast and Posey represent districts along the Treasure Coast, where opposition to the high-speed rail is strong.

Critics of the project allege the Brightline expansion would be unsafe and is posing as a “highway” to receive federal backing.

In April, Grover Burthey, deputy assistant secretary for policy at the Department of Transportation, said Brightline qualified for the bonds under a federal designation of “highway,” according to the publication.

Just last week, Brightline launched its Miami station, which goes to West Palm Beach. Brightline is targeting a 2021 date for the West Palm Beach to Orlando leg. [Sun Sentinel]Amanda Rabines

The Real Deal is pleased to announce we will be teeing off on our first golf outing at Grande Oaks Golf Club in Davie, Fla. — home to the filming of the cult classic “Caddyshack” — on Monday, June 4.

To purchase tickets or foursomes, please visit our site 

The outing will benefit the Orphaned Starfish Foundation, an advocacy group dedicated to working with orphans, victims of abuse and at-risk youth through computer technology.

Please look out for updates to join TRD insiders and other key South Florida real estate professionals for a day of great golfing, networking, cocktails, meals and fun.

Key opportunities to sponsor this must-attend event are available. Please contact Golf@TheRealDeal.com for more information.

EXp Realty’s Glenn Sanford

EXp Realty’s entry into Nasdaq was a billion-dollar day.

The cloud-based brokerage founded in 2009 crossed $1 billion in market cap on Monday, the same day it started trading on Nasdaq, according to Inman. Its market cap at the end of the day was at $1.044 billion, making it already more valuable than national franchise brokerage Re/Max, which has a market cap of $944 million.

However, it still has far to go to catch up to other real estate companies like Redfin, valued at $1.83 billion, and Realogy, valued at $3 billion.

CEO Glenn Sanford founded EXp Realty in 2009, which includes a virtual world where avatars of brokers can network and attend classes. Agents earn stock in the company when they make contributions such as closing deals or recruiting new agents, and the company currently exists in 49 states, Washington, D.C. and Canada. [Inman]Eddie Small

Rendering of the Atrium at Doral and David Martin

UPDATED, 10:40 p.m., May 22: Terra and AvalonBay Communities just paid $33.5 million for a development site in Doral.

The developers acquired the Atrium Office Park and adjacent restaurant at 3900 Northwest 79th Avenue in Doral, across the street from CityPlace Doral. Avalon Doral LLC paid $20 million for 4.6 acres of the site and Doral Atrium Retail Investments paid $13.5 million for the remaining 5.2 acres, property records show.

An LLC owned by Armando Guerra sold the 9.8-acre site.

Trammell Crow Residential will build Alexan Doral, a 350-unit luxury apartment building on the site for AvalonBay, according to Saul Perez, who represents Trammell Crow in South Florida. The project will include 40,000 square feet of amenities, including a gym, bike path, parks, a pool deck and lounge.

Terra, led by David Martin, plans to build about 80,000 square feet of Class A retail space on the property. Construction is expected to start this summer with a date to turn over to tenants of 2020, according to a statement from the developer.

Perez represented the buyers in the land sale. The properties last sold for $9.8 million in 2000 and $1.9 million in 2001, according to property records.

Terra also closed on a $45.3 million mortgage from Doral Blvd Finance & Investment LLC for the property.

Earlier this year, Terra filed plans for Doral Square, a 145,000-square-foot retail center at the southeast corner of Northwest 36th Street and Northwest 87th Avenue. The developer paid $12.5 million for the 2.9-acre site, also an office building, in September.

The Related Group, Shoma and PGIM opened the nearby CityPlace Doral at 8300 Northwest 36th Street about a year ago. The $800 million, 55-acre development features more than 1,000 residential units and about 40 restaurants and retailers.

The South Florida Business Journal first reported the Atrium Office Park sale.

Rendering of 500 Alton Road and Russell Galbut

One of Miami Beach’s most controversial development plans is up for discussion again.

Developer Russell Galbut will go before the Miami Beach Land Use and Development Committee on Wednesday for the site at Fifth Street and Alton Road. A rally is planned in opposition.

Galbut, co-founder of Crescent Heights, is proposing three options for the 85,348-square-foot block, in exchange for offering space for a public park that the developer would pay for. Crescent Heights is proposing a 36-story building with about 288 units; a 42-story tower with about 336 units; or a 50-story, 400-unit building for the property. It would take up the entire block with a parking pedestal.

The developer has approval to build 60-foot to 75-foot buildings with up to 510 units, but the developer has been pursuing approvals for a taller tower for years. The properties include the three blocks between Alton Road and West Avenue from Fifth to Seventh streets where the South Shore Hospital shell remains.

The developer’s adjacent Wave mixed-use development includes apartments, 63,000 square feet of commercial space and a 122,000-square-foot outpatient and medical complex for Baptist Health South Florida.

Some neighborhood groups have emerged in support and against the developer for the 500 Alton Road site. The condo board for the Bentley Bay, at 520 West Avenue, and the Floridian, at 650 West Avenue, reached a compromise with Galbut to support plans for the 38-story proposal, said Allan Kleer of the Bentley Bay board. Kleer, an agent with One Sotheby’s International Realty, said the buildings along West Avenue endorsed the proposal, which also calls for a five-story, mixed-use retail and residential building on the 600 block of Alton Road and about 3 acres of public green space.

Miami Beach activist Frank Del Vecchio is leading a rally against the developer. His Gateway Community Alliance is supporting a separate option: a 280-foot building for the 500 Alton Road property with the parking pedestal taking up only half of the block. The floor plate would be about 6,800 square feet.

The Gateway proposal also calls for the remaining open space on the 500 and 600 blocks to become parks, with the developer leaving the surface parking lot intact at 700 Alton Road, the latter of which the Floridian residents use for parking.

Del Vecchio said the West Avenue, South of Fifth and Sunset Harbour associations oppose the developer’s proposals. The West Avenue association voted in May to reject any proposal for the redevelopment of the 500 and 600 blocks of Alton Road “involving the aggregation of floor area ratio across two or more city blocks,” according to a letter.

“Residents come first and we’ve got to put a pause to development,” Del Vecchio added.

Those supporting the 38-story building, one of the developer’s proposed options, welcome the development, calling the three blocks of vacant land “an eyesore and a nuisance to our residents and to the neighborhood for far too long,” according to a letter from the Bentley Bay’s condo board.

The project would require approval from the city commission, a city memo shows.

Doug Yearley

Toll Brothers saw its best quarter ever for contract value — but the luxury homebuilder’s profits missed expectations, in part due to higher labor and material costs.

Net income for the quarter was $111.8 million, or 72 cents a share, the company said in a statement Tuesday. That’s down from $124.6 million a year ago.

“All product types and regions are expected to show margin growth” in the next two quarters, CFO Martin Connor said in an earnings call Tuesday. Gross margin fell below guidance in part because of cost pressure with labor and material costs, he said. Costs rose 20.5 percent to $1.29 billion in the quarter.

Toll Brothers’ City Living division, which primarily focuses on the New York City metro area, sold 29 units for a total of $89.6 million during the quarter ($3 million a unit).

Meanwhile, net contract value rose 18 percent to $2.38 billion, the highest quarter ever. Contract value for the City Living division rose 19 percent, California in particular saw a 52 percent jump.

The City Living division inked 65 contracts valued at $97.1 million in the second quarter of FY 2018, compared with 43 contracts signed in the second quarter of 2017, with a value of $81.8 million. The average contract price was $1.49 million, down from $1.9 million a year earlier.

As California becomes a larger portion of Toll Brothers’ business, the overall region saw 564 contracts in the quarter, up from 388 in the second quarter of 2017. Contract value grew to $901.2 million from $594.1 million.

California and the Western region also produced nearly 50 percent of total revenues in the second quarter, the homebuilder said. Overall revenues were $1.6 billion, the highest second quarter ever. Toll Brothers is expecting its $6.36 billion backlog to boost revenue growth this year.

“It does not appear that the rise in mortgage rates has had a negative impact on our business,” CEO Douglas Yearley said on the earnings call.

For the full year, Toll Brothers expects to deliver 8,000 to 8,500 units with an average price between $830,000 and $860,000. The company said it has been “shifting a bit to fill in the lower price point” over the past couple years. The strategy is a reflection of more millennials buying homes as well as the company’s geographic diversity, executives said on the call. The shifts are not driven by rising mortgage rates, the company said.

Toll Brothers’ City Living is aiming to sell $323.5 million worth of apartments at 77 Charlton Street, its condo project in Manhattan’s Hudson Square. The average price per unit is just over $2 million, in line with the company’s shift away from ultra-luxury in favor of mere luxury in recent years.

Alec Baldwin's Glengarry Glen Ross Scene (Credit: New Line Cinema)

Alec Baldwin’s Glengarry Glen Ross Scene (Credit: New Line Cinema)

Revolutions tend to promise one thing and deliver another. Think of the Jacobins paving the way for Napoleon, the Soviets toppling one autocracy only to ultimately replace it with another, or anti-corruption crusader Hugo Chavez building an empire of graft in Venezuela. Turns out this maxim also applies to real estate technology.

Not too long ago, it seemed like the real estate business was about to enter a new era. To some observers, websites like Zillow and Trulia or their office equivalents 42Floors and LoopNet threatened to put brokers out of business (although officially these firms said no such thing). Crowdfunding startups dreamed of doing the same to pricey fund managers. Why pay a cut to an agent if you can just find your house or office online, for free? Why give your savings to a pension fund, which gives it to an asset manager, which gives it to a real estate lender, which gives it to a developer, if you can just lend the money to a developer yourself, online, and save a fortune in fees?

These startups advocated a vision: A completely transparent industry freed from the burden of expensive middlemen, one where customers can find anything they need online and investing in a building or leasing an office is as easy as ordering a book on Amazon. Transaction costs would plummet, efficiencies would soar, and everyone would be happy (except, of course, for the thousands of brokers, canvassers, lawyers and analysts who would lose their jobs).

Fast forward a few years, and this vision hasn’t quite become reality. Instead, the opposite seems to be taking place: well-funded startups are currently in a quest to add more and more intermediaries to real estate deals.

Take the residential brokerage industry. Last year, HomeLight and OpCity raised $40 million and $29 million in venture funding, respectively, landing them among the year’s biggest real estate VC deals. Both companies offer software that matches people with the right real estate agent. Tired: hiring an agent to sell your home is so 2016. Wired: using a (virtual) agent to find an agent, who goes on StreetEasy to find a buyer, who probably has a broker too.

Speaking of StreetEasy: rather than threaten to replace brokers, listing websites now cater to them. StreetEasy’s parent Zillow makes much of its money through its Premier Agent feature, which lets brokers pay to get their names next to listings. It also charges agents in New York City fees for any rental listing they post. If your revenue depends on brokers, you don’t exactly have an incentive to push them out of business.

“A machine cannot explain to a buyer what it will feel like to live in a neighborhood,” Zillow’s CEO Spencer Rascoff said at a November conference. “Real estate will always be a people business.”

In commercial real estate, too, dreams of disintermediation are giving way to a reality of superintermediation. The highest-valued real estate startup by a wide margin, WeWork, leases office space from landlords and subleases it to companies and freelancers for a profit. The company, which last year raised $4.4 billion from SoftBank at a $20 billion valuation, recently announced a partnership deal with major brokerage firms that pays agents higher fees if they bring tenants to the co-working company.

If anyone dreamed of a future where you sign onto a listing portal and rent your office directly from the landlord, the future is more likely to look something like this: you hire a broker to rent an office from a co-working company, who in turn rents it from a landlord (who probably manages the building on behalf of a fund manager, who manages the money of a pension fund, and so on).

Convene, Knotel and their multifamily cousin Common are other examples of companies adding a new intermediary between landlords and tenants. All three startups are backed by landlords.

In real estate finance, the crowdfunding revolution has been a disappointment. Most startups that are still around and doing well stopped focusing on matching developers and retail investors directly, and are instead trying to win big fund managers as clients.

Ray Sturm’s career exemplifies that change. In 2013, he co-founded the real estate crowdfunding company RealtyShares, which allows individuals to invest as little as $5,000 in real estate deals online. He left the company about a year later and launched AlphaFlow. Rather than match individuals directly with real estate investments, AlphaFlow is a technology-based intermediary that helps pension funds and other institutions find hard money lenders to invest with.

The marketplace model of matching developers and small-time investors “didn’t really work,” Sturm said. The problem: most investors simply don’t have enough information, or the ability to process it, to make good investment decisions. They still need an asset manager to make these decisions for them.

“Many investors found that investing well in this space is more difficult than they initially anticipated,” Sturm said.

Bill Brown, has made a similar observation when it comes to the residential market. Online exchanges like eBay or Amazon work well for highly commoditized goods, where every product is the same, he said. Not so much for real estate.

“Your residence is not a commodity,” he said.

Say you want to buy a new phone. You can read reviews online and trust that the phone you’ll get will be exactly like a million others from the same assembly line. Now imagine you want to buy a pet tiger. You could look at the tiger’s photo online and trust the listing’s insistence that the animal is a Jainist, but do you really know enough about tigers to judge the odds of getting eaten based on an online listing? Every animal is different. You might want to consult an expert first. Where the stakes are high and reliable information is difficult to come by, intermediaries are crucial for a market to function. That’s why real estate brokers aren’t going to disappear anytime soon.

If middlemen aren’t going anywhere, it then makes sense to at least try to help them work more efficiently. A platform that matches homeowners with agents, for example, adds another layer to the transaction, but in theory it also allows sellers to find the right agent more quickly and get the best price for their home. Technology layering makes transactions more complex, but it can let intermediaries do a better job. In the end, we may be left with fewer, more productive brokers and agents, lower transaction costs, and a more efficient industry overall. That, at least, is the hope.

But the recent history of finance shows that trying to make an industry more efficient by making it more complex can backfire. Since the 1980s, Wall Street added more and more layers to virtually any transaction. The old business of banks taking deposits and issuing mortgages turned into a maze of loan brokers, collateralized debt obligations, credit default swaps, synthetic collateralized debt obligations, and so on. The result was an unnecessarily complex industry that enriched its participants through neverending transaction fees and ended up being so confusing to everyone involved that few people realized how shaky the construct was until it collapsed in 2008.

Real estate entrepreneurs often point to Wall Street as a role model — a sophisticated industry that’s been quick to adopt new technologies. Let’s hope they learn from its mistakes, too.

As you’ve learned from The Real Deal’s reporting, Chinese players have been pulling out of the U.S. property market amid a government crackdown on capital flight. The news and views on what’s happening change constantly, so TRD launched a weekly newsletter to keep you in the loop.

Delivered every Tuesday morning, China Watch captures all the news on Chinese investments — and divestments — across the U.S.

Subscribe today.

100 Northeast First Avenue, Jose Mallea and Daniel Peña

Biscayne Bay Brewing is opening a second location in a historic building in downtown Miami.

The brewery, based in Doral at 8000 Northwest 25th Street, is opening a 6,200-square-foot brewery and taproom at the Old United States Post Office and Courthouse building, at 100 Northeast First Avenue. It’s slated to open this winter, according to a spokesperson.

Stambul USA, led by Daniel Peña, paid $11 million for the building in 2014. Barrett Wolf of Wolf Co. Real Estate Brokerage and Investments represented the tenant and landlord in the 10-year lease. Stambul also redeveloped and owns Eurostars Langford hotel nearby.

Biscayne Bay will likely mark the first brewery in downtown Miami thanks to a recently passed ordinance in the city, Wolf said. The company, owned by Jose Mallea, is leasing the third floor of the courthouse building in a space that once housed the Miami Weather Bureau Office, the first national weather service.

The property, designed by Kiehnel and Elliott, and Oscar Wenderoth, was built in the early 1900s and designated historic in 1989, according to a press release. It’s across the street from WeWork’s flagship Miami location at the Security Building.

Wolf declined to comment on asking rents in the building.

Avie Glazer and Palm Beach

The owner of one of the world’s most famous soccer clubs is being accused of foul play.

Benitz Building LLC filed a lawsuit in Palm Beach County Circuit Court against Avram “Avie” and Jill Glazer earlier this month. The company said that it was hired to make improvements to the Glazers’ house at 195 Via Marina Avenue in Palm Beach in July 2014 and had substantially completed the project in May 2017.

Benitz alleges that the Glazers owe the company $572,950 for labor and construction costs that it advanced. The West Palm Beach-based real estate company said in the lawsuit it has exhausted all available remedies and is now seeking $572,950 in damages, plus interest.

Avram and Jill Glazer purchased the house at 195 Via Marina Avenue in 2007 for $9.3 million. It has 6,545 square feet with four bedrooms and five baths, according to property records.

A call made to Glazer’s office at the Tampa Bay Buccaneers office was not immediately returned. Calls made to Benitz’s lawyer, Richard Chaves from the West Palm Beach law firm Ciklin Lubitz, were also not immediately returned.

Glazer is part of the family that owns NFL’s Tampa Bay Buccaneers. He is also co-chairman Manchester United, which is regarded as the world’s most valuable professional soccer team, according to Forbes, which estimates its value at $3.7 billion. During Glazer’s tenure at Manchester United, the team has won five Premier League titles.

Prior to owning professional sports teams, Glazer was CEO and chairman of Zapata Corp., an oil company which was founded by President George H. W. Bush.

Glazer is also a member of Mar-a-Lago, President Trump‘s Florida resort and club.

BP Powerline Road, Cypress Financial Road, I-95 Center of Commerce and Pompano Business Center

TSF Sportswear leases warehouse at spec Pompano Beach industrial park

Florida-based wholesale apparel distributor TSF Sportswear just inked a 173,000-square-foot lease for a warehouse at Bridge Development Partners’ Bridge Point Powerline Road in Pompano Beach.

The company has more than 30 brands, including American Apparel, Dickies and Next Level Apparel. TSF Sportswear is the first to lease space at the speculative industrial park that is under construction at 1951 North Powerline Road.

Bridge plans to complete the three-building, 467,000-square-foot park by the third quarter of 2019, according to a press release. It sits on a 40-acre site between the Florida Turnpike and I-95 at 1951 North Powerline Road.

CBRE’s Tony Hoover and his team represented the developer.

Patriot National moves to Cypress Financial Center in Fort Lauderdale

Fort Lauderdale-based insurance company Patriot National is relocating its headquarters to an 18,828-square-foot office space at the 11-story, nearly 200,000-square-foot Cypress Financial Center in Fort Lauderdale.

Patriot National moved from the 15th and 16th floors of Fort Lauderdale’s Las Olas City Centre after it filed for Chapter 11 bankruptcy protection earlier this year.

Marcus & Millichap also renewed its lease at the Cypress Financial Center, at 5900 North Andrews Avenue, and expanded by 1,000 square feet for a total of 12,851 square feet. In all, the building secured about 32,000 square feet of leases.

Patriot National was represented by Stiles Realty and Marcus & Millichap was represented by Cresa. Cushman & Wakefield’s Travis Herring and Katherine Ridgway represented the landlord, Steelbridge, which paid $32.6 million for office complex in 2014 through a joint venture with Apollo Global Management.

Duke Realty’s industrial park in Fort Lauderdale is 100% leased

Duke Realty’s Interstate 95 Center of Commerce in Fort Lauderdale just secured more than 69,000 square feet of leases, bringing its two-building, 306,465-square-foot industrial portfolio to full occupancy.

Lanter Delivery Systems, a parts distributor, inked a 38,830-square-foot space at 2200 West Sunrise Boulevard and Mygrant Glass Company, an auto glass wholesaler, leased the remaining space, which spans 30,214 square feet.

The tenants join U.S. Venture, Floor & Décor and Broward Motor Sports at the industrial development.

The Indianapolis-based real estate investment trust paid $54.8 million in September for the 17.5-acre property, between I-95 and West Sunrise Boulevard.

Home Depot division signs lease at Pompano Business Center

Interline Brands, a division of Home Depot, just signed a 46,800-square-foot lease at Pompano Business Center.

The company, a wholesale distributor and direct marketer of maintenance, repair and operations products for non-industrial businesses, is moving into a warehouse at 2012 Northwest 25th Street in Pompano Beach.

CBRE’s Tom O’Loughlin and Larry Genet negotiated a lease on behalf of the landlord, Clarion Partners. Interline Brands was represented by Cushman’s Rick Etner.

Masayoshi Son (Credit: Getty)

Real estate crowdfunding platform Cadre is seeking at least $100 million from a fund started by the SoftBank Group.

Representatives for the SoftBank Vision Fund met with a top executive from Cadre recently, Bloomberg reported. The fund gets nearly half of its $100 billion from the Saudi Arabian government and at least $15 billion from the United Arab Emirates.

According to Cadre representatives, co-founder Jared Kushner doesn’t have an active role at the company, but hasn’t divested his stake in the startup, which is valued between $5 million and $25 million.

The deal between Cadre and SoftBank may not materialize, sources told Bloomberg.

At the end of 2017, Cadre was valued at $800 million. Its backers include Andreesen Horowitz, Palantir Technologies and a fund founded by George Soros. Goldman Sachs also committed to investing $250 million of client’s money on commercial properties on the platform.

Kushner’s ties to Cadre could pose some conflicts of interest. SoftBank’s CEO Masayoshi Son is pushing for the merger of Sprint, a subsidiary of Softbank, with T-Mobile US, which would require the approval of federal regulators. Receiving money from Middle Eastern governments could also be an issue, given Kushner’s role as an advisor in the region.

This came up in recent discussions about Kushner Companies’ 666 Fifth Avenue. Brookfield Property Partners is in talks to take over leasing and operations at the office tower, in addition to investing hundreds of millions for a repositioning. The Qatari Investment Authority is Brookfield’s second-largest shareholder, though Brookfield representatives have said it has no involvement in the deal.

Last year, SoftBank made roughly 100 investments through its fund with a combined value of $36 billion in companies. Nearly $5 billion was invested in WeWork and Compass. The Real Deal recently explored whether its investments in disruptive real estate companies would pay off. [Bloomberg] — Kathryn Brenzel 

Condo sales volume bumped up in Miami-Dade last week.

The county recorded 174 closings for a total of $68 million, a slight increase from the previous week’s $65.5 million sales volume for 122 units.  Condos last week sold for an average price of about $537,000 or $343 per square foot.

The most expensive closing was at the St. Regis in Bal Harbour. Unit 705 in the north tower traded hands for $2.55 million, or about $1,435 per square foot. Bryan Sereny represented the seller, while Blanca Rivero brought the buyer. It was on the market for about a year before it sold.

Unit 1401 at One Bal Harbour was the second priciest condo sale to close last week. It was listed for 350 days with Lana Bell before selling for $2.5 million, or about $1,170 per square foot. Ellen Manas represented the buyer.

Closing prices in the top 10 deals ranged from about $1.3 million to $2.55 million.

Here’s a breakdown of the top 10 sales from May 13 to May 19. Click on the map for more information:

Most expensive
St. Regis #705N, Bal Harbour | 368 days on market | $2.55M | $1,435 psf | Listing agent: Bryan Sereny | Buyer’s agent: Blanca Rivero

Least expensive
The Pinnacle #1901, Sunny Isles Beach | 351 days on market | $1.25M | $598 psf | Listing agent: Michelle Dehez | Buyer’s agent: Jason Zarco

Most days on market
Ocean Club Tower Three #903, Key Biscayne | 376 days on market | $2.2M | $884 psf | Listing agent: Douglas Kinsley | Buyer’s agent: Natalia Anda

Fewest days on market
Ocean Two #2301, Sunny Isles Beach | 43 days on market | $1.68M | $570 psf | Listing agent: Lana Bell | Buyer’s agent: Lana Bell

(Illustration by Andre Carrilho)

Retail real estate these days can seem like a choose-your-own-adventure of sorts, with a variety of plausible story lines for all the players involved. Pivot to be experiential? Yes. Rebrand? Yup. Relaunch online? Affirmative. Chapter 11? Check. This last ending — filing for bankruptcy — is among the most prevalent plot lines, affecting not just retailers but landlords, brokers and lenders. And it is certainly the most visible on the retail landscape today.

During a recent research tour of malls and shopping centers, Avison Young’s Joshua Ladle and his team counted 16 empty big-box stores in South Florida’s Broward County. He’s watched as a parade of big-box retailers leave stores empty due to either bankruptcy or major cutbacks.

“We’re going to continue to see other big-box retailers come and go, but there will be replacements, or new uses filling those boxes,” Ladle predicted. “What happens more often than not — for those sites that are well-located — the next time I drive by those centers, six months later, there is a ‘Coming Soon’ sign for some other national big-box retailer.”

With Toys “R” Us announcing in mid-March that it would close all of its 800 U.S. stores, Ladle’s theory is about to be put to the test. What happens with those locations could serve as a guide to how things will play out across the retail real estate landscape nationwide as landlords and brokers scramble to reclaim,  reposition and re-tenant properties amid mushrooming vacancies. One estimate put the available space at the end of this year at roughly 70 million square feet due to store closings by Walmart, Sears and HH Gregg, and of course the brand repped by Geoffrey the Giraffe, among other retailers.

More than half of the closing Toys “R” Us stores are leased to the toy retailer by a dizzying spectrum of landlords, from obscure mom-and-pop commercial real estate firms to big-name real estate investment trusts.

“About 500 Toys ‘R’ Us stores are leased,” said Jan Rogers Kniffen, a former retail executive and one of the country’s leading retail consultants. “And there are like a zillion freaking landlords. Almost every one of these stores is going to have an individual solution. No one is talking about taking a huge block of stores. It’s all going to be one-offs.”

Complicating matters is the fact that landlords are at the mercy of the courts when it comes to reclaiming properties from bankrupt tenants. In the case of Toys “R” Us, the company has sought court approval to assign about a quarter of its leases to new tenants, and if the retailer gets the go-ahead, landlords will not get a say in the matter. The remaining unexpired leases are being put up for auction, where landlords have to bid against institutional investors, REITs and big-box retailers.

To get a handle on the fates of the hundreds of shuttering Toys “R” Us stores, the role of the broker community in how things will unfold and the takeaways for the wider world of retail real estate, The Real Deal interviewed some of the nation’s leading retail real estate experts. By all accounts, many varying scenarios are in play.

Can brokers cash in?

Commercial leasing and sales brokers are bound to see more opportunities as Toys “R” Us and other big-box retailers liquidate real estate assets and look for new tenants, experts say.

In some cases, national retail brands are retaining brokerages to identify below-market leases for prime locations that Toys “R” Us intends to sell at auction. In other instances, the landlords looking to replace one of the toy stores with a more viable retail tenant are connecting with brokers trying to work out favorable lease terms for clients.

Avison Young’s Ladle said commercial brokers definitely benefit from the increased transactions in the marketplace when retailers liquidate leases and stores. “Brokers will represent banks, special servicers and landlords in assisting them with the sale of their property,” Ladle said. “On the other side of the table, brokers will also represent investors and buyers interested in purchasing these properties, and leasing agents benefit from re-leasing these properties.”

Josh Ladle

Miami-based CREC — which handles Florida leasing for Kohl’s, 24 Hour Fitness and Target, among others — is actively seeking out Toys “R” Us and Babies “R” Us locations in the Sunshine State for a big-box retail client, said Alan Esquenazi, a partner at the brokerage. Though he did not want to disclose the retailer’s name, Esquenazi said CREC helped the client negotiate a contract to take over a Babies “R” Us store in Altamonte Springs, Florida, and that his firm is also in negotiations for a lease of another store in Fort Lauderdale. Esquenazi said he also has other clients interested in bidding for Toys “R” Us leases in primary markets like New York City, Chicago, South Florida and Southern California.

“There are many opportunities for retailers to obtain an unexpired lease that is below market in a good location,” Esquenazi said. “A regional chain like Sedano’s supermarket can walk right in and get in cheap. Of course, they would take it.”

That means brokerage firms like CREC can capitalize on the demise of Toys “R” Us by representing either tenants that want to take over a lease or, for example, a real estate investment trust that might redevelop the space or place its own tenants there, Esquenazi said.

“For brokers such as myself, it creates opportunities to identify and try to secure big boxes that become available,” he said. “It does create new business activity in commercial real estate.”

Katy Welsh of Colliers International is another commercial broker who handles leasing for a number of national brands interested in acquiring Toys “R” Us leases. “As early as last fall, we have been preparing for leasing opportunities that would be created by the bankruptcy,”
she said.

Bidding on liquidated leases and stores

Retailers have not had much luck beating out landlords in the pursuit of Toys “R” Us leases, according to court documents. As part of its bankruptcy strategy, Toys “R” Us retained A&G Realty Partners, a consulting firm based in Melville, New York, that specializes in assisting distressed retailers in the disposal of real estate assets.

On Jan. 31, A&G emailed a marketing flyer to approximately 260,000 potential buyers, which teased 39 Toys “R” Us and Babies “R” Us unexpired leases that were going up for auction on March 29. Another 19 stores owned outright by the toy chain were also on the auction block. 

Family-oriented entertainment companies like Glowzone could also fi ll former standalone big-box stores like those Toys “R” Us leaves behind.

The firm did not respond to phone calls seeking comment, and court documents don’t explain why Toys “R” Us put up just 58 total stores for bid, but the toy chain has requested approval to sell all its remaining leases and stores in a June 11 auction.

Target, Aldi and Big Lots were among the big-box retailers bidding on multiple Toys “R” Us locations, as were REITs Federal Realty and Urstadt Biddle, according to press reports. At the end of the 10-hour March auction, current landlords won 30 out of 39 available leases, while Target, Aldi, Federal Realty and Urstadt Biddle came up empty, a review of the bankruptcy filings showed.

The high percentage of landlords that bought back leases at the March auction proves property owners are willing to pay a lot of money to control which new tenants move into the vacated spaces and, therefore, how much rent they can charge, Colliers’ Welsh said .

“That tells me they have new tenants lined up to take the space,” Welsh said. “It could be traditional grocery stores, furniture stores or discount stores like Big Lots.”

Landlord Samco Properties of Durham, North Carolina, had a tenant lined up when it submitted a winning bid of $800,000 to regain control of a property it had leased to Toys “R” Us. The private commercial real estate firm beat out Big Lots for the remainder of the lease on a 47,300-square-foot building at 3330 Westgate Drive. The News & Observer of Raleigh reported that Samco has already signed a new tenant, Hamrick’s, a discount fashion retailer headquartered in Gaffney, South Carolina.

CREC represented a retail client at the March auction that bid on the lease for a Toys “R” Us store located in the Palms at Town & Country, a shopping center in the Kendall neighborhood of Miami-Dade County, according to Esquenazi. Situated near U.S. Route 1, the Palms also counts Kohl’s, Nordstrom Rack, Dick’s Sporting Goods, Marshalls and Home Goods as anchor tenants. “A number of retailers pursued the Kendall store lease,” Esquenazi said. “All of them were outbid by the landlord.”

Katy Welsh

The Palms owner Weingarten Realty bid $3.6 million to acquire the lease for the 45,000 square foot store, the list of winning bidders showed. However, court documents do not list the terms of the lease, including the length or what the original lease was worth.

Weingarten has three other properties in its portfolio leased by Toys “R” Us, but those leases have not been put up for auction. A Weingarten spokesperson declined to comment on the company’s plans for the Toys “R” Us space at the Palms and the three other locations.

Recouping cash

John Bell, a managing director for capital markets with Transwestern Commercial Services, theorizes that the decision by Toys “R” Us to reject the $675 million buyout offer for its U.S. locations from toy mogul Isaac Larian indicates that the chain’s top executives and real estate advisors believe they can get better offers selling off the stores individually at auction. “They get more value that way, rather than selling the stores in bulk to one company or someone looking to rescue Toys ‘R’ Us,” Bell said.

But top-dollar bids for Toys “R” Us leases and stores during the March auction were few and far between.

Big Lots picked up leases for two stores in Woodridge, Illinois, and Fresno, California, for just $303,000, though the lengths of the deals were not made public.

Raymour & Flanigan, a discount furniture retailer, paid a combined $1.7 million to take over leases for a Toys “R” Us and a Babies “R” Us in New Jersey; $155,000 for a Toys “R” Us lease in Millbury, Massachusetts; and $250,000 for a Babies “R” Us lease in Manhattan’s Union Square. Again, court documents do not state the original terms and how much the leases were worth at the time of the auction.

Benderson Development Company, which owns and manages more than 700 commercial properties in 38 states, put in the highest offer for a Toys “R” Us store. Benderson outbid Federal Realty with a whopping $15.6 million offer to acquire a Toys “R” Us store in Emeryville, California. The firm also picked up two more stores, one in North Miami Beach for $1.5 million and another in Amherst, New York, for $110,000.

There is no big-box retailer out there looking to acquire a large block of Toys “R” Us stores, according to Allen Shayanfekr, CEO of Sharestates, a tech firm that provides investors with a platform to participate in vetted debt offerings. “They would make any overtures public so that Toys ‘R’ Us knows they want to get any available leases,” he said. “Given no one has, I don’t think there is a lot of interest in doing that.”

Alternative uses 

Regardless of what becomes of the Toys “R” Us stores, the closings will further dampen an already dreary big-box landscape, said Phillip Hudson III, a Miami-based commercial litigator who specializes in bankruptcy and insolvency matters.

“There are fewer and fewer players vying for big-box space,” Hudson said. Retail analysts like Kniffen agree  that there may not be enough big-box retailers left to fill stores vacated by the Sports Authority, HHGregg and now Toys “R” Us, to name just a few. “We are going to see online penetration rise from 10 percent today to about 50 percent in 2030,” Kniffen predicted. “If that holds true, then looking at these big boxes, I don’t see how all of them can survive.”

The shuttering of Toys “R” Us stores, coupled with closings by other big-box retailers, will create an overwhelming oversupply of retail space. “That is going to drive rent prices down,” Hudson said. “There is so much space coming back on the market the next couple of years that some landlords may end up in default of their loans because their debt-to-income ratios will be so off.”

Retail owners, particularly those with standalone properties — which are considered less desirable than those attached to shopping centers — or locations in suburban markets and “Smalltown, USA,” will need to get creative, CREC’s Esquenazi said.

“Landlords who will be getting their real estate back will need to do everything they can to maximize value,” said Esquenazi. “That might mean a bowling alley or repositioning the property for office, residential or government uses.”

Landlords could also turn to companies that provide co-working office spaces to replace tenants, Colliers’ Welsh said. “Some co-working firms like to take over these big boxes,” she said. “They like the high ceilings. They can do trendy interiors with high-end furniture.”

She said that family-oriented entertainment companies like Glowzone could also easily fill former standalone big-box stores. Glowzone offers bumper car rides, bowling, mini golf and other games in a glow-in-the-dark setting.

Another alternative, according to Shayanfekr, is for landlords and investors to target Toys “R” Us stores where the underlying property could be rezoned for other uses, like multifamily or office.

“Anyone who is simply looking to use it for retail is going to provide a lowball offer,” he said. “But if the asset is in an area where the zoning will permit converting the asset into something other than retail, it might generate more aggressive offers.”

What’s in store

The clock is ticking on Toys “R” Us’ real estate exit strategy. In preparation for the final June 11 auction, A&G has continued its marketing efforts with email blasts, postings on online message boards and advertisements in newspapers and newsletters, according to an April 19 motion in bankruptcy court. “A&G is confident that its communications and marketing efforts will reach a substantial portion of likely interested bidders and generate a competitive bidding process,” the filing stated.

Toys “R” Us is requesting a May 29 deadline for interested buyers to submit bids, followed by a June 5 date to qualify offers.

Kniffen said the outcome of the first auction in March doesn’t instill a lot of confidence that the Toys “R” Us stores and leases will be taken over by innovative landlords or retailers.

“Most of the stores didn’t generate more than one bid,” Kniffen said. “That shows you that there is not a lot of interest in those locations. There are not a lot of people bidding against each other to scoop up these boxes.” 

ICSC in Las Vegas (credit: Adam Pincus)

Attendees of the International Council of Shopping Centers’ annual RECon may notice at least one key difference between the convention floor and the world outside. Inside, the percentage of women drops by about half.

Women represent only about 25 percent of the registered attendees at the world’s largest retail real estate convention, held each year at the Las Vegas Convention Center. That is according to a first-time analysis by The Real Deal of registered attendees over the past three years. The number is nearly unchanged for each of the past three years. ICSC estimates 37,000 people are attending the conference this year.

Possible reasons for wide gender disparities varied. Some noted that the late-night partying, trips to strip clubs, and overall ambience of Las Vegas presented a difficult environment.

“Vegas is not an easy place to travel to [as a woman],” said Adelaide Polsinelli, an longtime attendee and a broker with Eastern Consolidated.

One landlord-representative leasing broker, who asked to remain anonymous because he was not authorized to speak to the press, said attendance is often given to top producers, and gender is not a factor.

The gender divide at the convention is representative of a larger issue throughout the real estate industry. TRD took a closer look earlier this year at the widening gender gap in commercial brokerages and development firms, where men are largely dominant.

While the overall ratio of women at ICSC is consistent over three years, major public companies like Walmart and Wells Fargo and the brokerage firm KW Commercial have seen the percentage of women at ICSC decline during the same time period.

And for others, like Bank of America Merrill Lynch and food giant Aldi, the percentage of women has not been higher than 10 percent in any of the past three years.

Wells Fargo and several other firms disputed that ICSC attendance figures should be interpreted as the firm’s commitment to diversity.

“Gender diversity is extremely important for Wells Fargo, including in our commercial real estate group. In fact, about half of the CRE team members are women,” company spokesperson Beth Richek said in an emailed statement.

“It’s completely unfair and would be inaccurate to use our attendance at a single conference as a basis for assessing our commitment to gender diversity.

RELATED: Coverage of ICSC 2018

TRD analyzed all individuals who were registered with a company as of May 17 on the ICSC attendee list, We then identified their gender based on assumptions based on first names. About 2 percent of the individuals had names that were not clearly associated with a gender. We then took a closer look at firms that had at least 10 people registered, to look at trends from 2016 through 2018.

Some of the large corporations that sent more than 10 people sent no women at all, including Wells Fargo Bank (no woman among 13 attendees), PNC Bank (15 attendees) and the national construction-related firm Bohler Engineering, whose entire group of 30 people, are all men. That, even as the firm has a proactive Women in Engineering program, intended to increase the number of women in the field the company describes as, “a historically male-dominated industry.”

Representatives for PNC, Bank of America and Aldi could not be reached for comment.

Bohler’s chief legal counsel, Jane Leopold-Leventhal, said the firm not only has an aggressive program to hire and retain women, but also has a number of women in upper management.

In addition, about a quarter of the approximately 45 to 50 people Bohler brings to Vegas are women, and they work on networking and business development outside of the convention hall.

“Bohler is very proud of its continuous efforts to support the development of females in this field and truly believe we are at the forefront of our industry in doing so,” Leopold-Leventhal said.

Brokerage firms see enormous gender ranges in attendance. About 92 precent of KW Commercial’s attendees are men, and about 87 percent of Marcus & Millichap’s attendees are men. But the proportion of men at most of the large commercial brokerages averages between 60 and 80 percent.

Gina Relva, a spokesperson for Marcus & Millichap, said in an email, “I can’t say offhand whether that number is accurate, but what I can say is women and men are encouraged to attend.”

Yoryi De La Rosa contributed research.

Len Blavatnik and Alan Faena at the Faena District

Len Blavatnik’s Access Industries secured a $140 million loan to refinance the Faena District in Miami Beach.

Apollo Commercial Real Estate Finance is providing the floating-rate loan, according to the Commercial Observer. The financing is backed by the Faena Hotel Miami Beach, Casa Faena hotel, the Faena Hotel Residences, the Faena Forum, the Faena Bazaar and the retail and parking.

JLL negotiated the refinance.

Blavatnik and Argentine developer Alan Faena built the 1 million-square-foot mixed-use district, on Collins Avenue between 32nd and 36th streets. They financed construction of the 169-key Faena Hotel and the condo building with a $300 million loan from HSBC in 2014. The bank also provided an $80 million loan for underground parking and Casa Faena a year later.

In 2016, Faena postponed his plans to redevelop the Faena Versailles and Faena Mar projects due to the condo market slowdown.  [CO] – Katherine Kallergis

Leslie Evans, property at 249 Royal Poinciana Way

A Palm Beach attorney who federal prosecutors allege was involved in $50 million EB-5 fraud scheme just sold a three-building mixed-use property in Palm Beach for about $4 million.

Leslie Evans, a real estate attorney who is now facing federal fraud charges, sold the 5,576-square-foot residential and retail property at 249 Royal Poinciana Way, according to the Palm Beach Daily News.

The buyer is a company affiliated with Palm Beach-based Armata Holdings Management Corp., a real estate investment firm run by Alexander Hufty Griswold.

In April, Evans pleaded not guilty to charges related to a still un-finished condo-hotel project known as the Palm House Hotel. Prosecutors accuse Evans and the project’s developer, Robert Matthews, of defrauding about 60 Chinese and Iranian investors out of $50 million.

According to the lawsuit, the plaintiffs falsely claimed that famous celebrities and politicians such as Bill Clinton, Donald Trump, Celine Dion and Bill Koch – would serve on the Palm House’s advisory board. The investors were allegedly seeking green cards through the EB-5 federal visa program.

Construction at the site stopped in 2014 and a court-appointed receiver now oversees the project. 

The U.S. Attorney for the District of Connecticut charged both Matthews, 60, and Evans, 70, with wire fraud, bank fraud and illegal monetary transactions. They face maximum prison sentences ranging from 10 years for each count of illegal monetary transactions and 20 years for bank fraud to 30 years for each count of wire fraud.
[Palm Beach Daily News] — Keith Larsen

The giraffe mascot of Toys “R” Us, seen on this issue’s cover as a lanky giant laid low, made for a fitting visual for the company it represented — a colossus in its own right that earned the unfortunate distinction of being the third-largest retailer in history to file for bankruptcy. With the announcement in March that the company would close a whopping 800 stores, experts wondered what would fill the void left by its massive footprint. But just as an ecosystem absorbs the fallen and transforms them into food and fertilizer for other forms of life, so does the massive closure present opportunities for others in the retail sphere. Experts weigh in on the many ways retail real estate players may capitalize on the newly vacant spaces.

Happily, not everything about the current market is ripe for a morbid metaphor. Co-working companies, for example, are helping to revive their neighboring retail corridors. And experts heading to RECon in Las Vegas tell us that retailers are enjoying higher credit ratings than they had last year, since the sky has not fallen as many predicted it would. That means tenants are going to drive a harder bargain with their landlords, but deals are still getting done. Nimble owners are subdividing big box store spaces, making room for the kinds of businesses that are so far immune from the reach of e-commerce, as our look at the recent moves of the biggest retail REITs shows. The CEO of retail REIT ShopOne, Mike Carroll, dryly notes: “Amazon still hasn’t come up with a way to duplicate the feeling of getting a manicure or working out in a fitness studio.”

Nonetheless, Amazon is trying to disrupt a contingent of brick-and-mortar retail that was once among the safest bets for landlords: grocery stores. After the company’s blockbuster acquisition of Whole Foods last year, experts told us that competing grocers are desperate to figure out what they can do to “defend themselves” against the heavyweight retailer. Our look into how the company’s real estate team operate  found that it’s nearly impossible to guess at — let alone get ahead of — Amazon’s next moves

Other highlights in this issue include an analysis of the changing mix of mall tenants as seen through the lens of Simon Property Group’s roster this year as compared to last, our look at the top retail leasing brokerages in four of the nation’s biggest markets and a revealing interview with Kimco Realty’s COO, David Jamieson.

Enjoy the issue!

Vista Center business park and KA Real Estate’s Max Newland

UPDATED May 21, 4:50 p.m.: An affiliate of Kayne Anderson Real Estate just paid $6.2 million for a 20-acre development site within the Vista Center business park near West Palm Beach, property records show. Plans are to build a senior housing facility with about 250 units.

The site at 2810 Vista Parkway sits next to the Emerald Dunes golf club, within the Vista Center, a 500-acre master-planned, mixed-use development with over 3.3 million square feet of commercial space.

Vista Center Parcel 6 LLC, a company tied to Kenneth Tropin’s Graham Capital Management, is the seller. Records show the company paid $6.9 million for the property in 2015. Records also reveal Graham applied for several zoning changes to allow for a senior living facility to be built on the site, before selling the property.

KA Real Estate’s Max Newland, who leads the senior housing real estate team, said the firm is partnering with senior living community developer, manager and operator Discovery Senior Living to build and manage the project. Newland said the partnership plans to deliver about 250 units and is currently in discussion with construction lenders.

In 2016, KA Real Estate paid $38 million to buy a newly completed 120-unit assisted living and memory care facility in Palm Beach Gardens. And in 2015, KA Real Estate sold a senior housing community in Parkland for $79 million.

The firm, which has an office in Boca Raton, has invested in 74 senior housing communities in 25 states totaling 10,511 units, according to its website.

Graham Capital, based in Rowayton, Connecticut, is an asset manager that has an office in West Palm Beach. Last year, Tropin, it’s chairman and founder, sold his beachfront estate in Palm Beach for $20.4 million.

Armando Codina, Arthur Porosoff and Alex Ruiz with a map of Hialeah, Hialeah Arts District and Las Palmas

Hialeah is hot. The city has been experiencing a surge in real estate investment, bolstering its reputation as an industrial hub while also identifying it as a more welcoming place for multifamily and commercial construction following recent moves to encourage development.

But investors drawn to cheaper land prices and those who may be looking to make a quick buck on a flip could find it difficult in this working-class city where rents remain low as does the median household income, which hovers at $30,000, local developers and brokers say.

Hialeah’s sales volume last year was $217.1 million, a huge jump from $83.6 million in 2016, with most of that attributed to industrial warehouse activity, according to Real Capital Analytics.

The city has drawn strong interest from prominent developers like Codina Partners, which is planning Beacon Logistics Park, a massive warehouse on as much as 1.5 million square feet of space.

But other real estate sectors have also been steadily rising over the last few years.

Rents on office properties increased to $26.05 per square foot in the fourth quarter of 2017, up from $22.3 per square foot in the first quarter of 2014, according to CoStar data. In retail, the data shows that rental rates at the end of 2017 increased to $29.52 per square foot, up from $22.14 per square foot during the first quarter of 2014.

From a population of 1,500 in 1925, Hialeah has emerged as a working-class city over the ensuing decades, and is now the state’s sixth largest with more than 224,000 people.

As the city has grown, it has also attracted demand for new multifamily construction, along with investment in older, garden-style apartments, according to Marcus & Millichap’s Arthur Porosoff.

“You have a buying pool that you didn’t have before and that has to do with new investors looking for the next big thing,” Porosoff said, adding he’s seen a majority of multifamily investment in Hialeah coming from New York.

“A lot of people didn’t know about Hialeah,” he said. “When they thought about Miami they thought about Miami Beach or they would buy in the Design District and Edgewater. And as those markets values went up, they realized they can’t buy cheap over there anymore.”

Hialeah-based developer Maurice Cayon said he prefers “buying there than any other place because the numbers are right.” As head of his family-run real estate firm, Cayon Group, he owns a heavy concentration of commercial properties throughout the city and just completed Las Palmas, a 226-unit multifamily complex at 3500 West Ninth Avenue, in partnership with Tom Cabrerizo of CFH Group. It’s about 96 percent leased with rents ranging between $1,575 a month to $1,850 a month, according to its website.

The city is revamping the eastern section to court millennials. In 2016, the Hialeah City Council gave final approval to increase the density on more than 300 acres in the district in order to spur commercial and residential development there. The rezoning centers around two transit locations: Hialeah Market Station and Tri-Rail/Metrorail Transfer Station.

That area, often characterized as an industrial and manufacturing district, now allows developers to build up to 15 stories with 125 residential units per acre, depending on the location. The plans also allow for reduced parking requirements on 80 acres of land.

A representative for Hialeah Mayor Carlos Hernandez did not return repeated requests for comment on the rezoning and any recent redevelopment moves in the city.

Multifamily buildings are now trading in the range of $150,000 per unit, Porosoff said. And though most buildings sport low rents, he said, buyers can still expect a 6 percent cap rate, translating to steady income for investors.

Rents for multifamily developments built in the 1960s and ‘70s are about $1,000 for a one-bedroom and between $1,000 and $1,200 for a two-bedroom. Newer developments charge about $1,250 to $1,350 for a one-bedroom and $1,450 to $1,550 for a two-bedroom.

“Rent in Hialeah has gone up about 40 percent the last 10 years,” said developer Alex Ruiz, principal of Prestige Companies. Over the last two years Prestige has completed more than 200 units in the area. It’s in the middle of delivering Las Vistas at Amelia, a 174-unit rental complex in Hialeah.

Ruiz, a former Hialeah resident, said while multifamily construction is picking up, the city’s residents cannot yet support high-rise projects that officials have envisioned.

He said the rezoning has drawn a number of investors who have bought the remaining pieces of land. But he worries Hialeah’s cheaper rental market is a double-edged sword.

“There’s been massive amount of new speculators looking for density and approvals with the intention of flipping the land, but [where rents are at now] it’s next to impossible.”

Park Central New York and Jonathan Gray

Park Central New York and Jonathan Gray

Blackstone Group outmaneuvered Pebblebrook Hotel Trust to buy luxury hotel owner LaSalle Hotel Properties with an all-cash bid of $4.8 billion, including debt.

The agreement comes just three days after Blackstone sold its remaining shares in Hilton Hotels, making its investment in the company most profitable leveraged buyout in history at $14 billion.

Blackstone agreed to buy LaSalle at $33.50 per share, or a premium of almost 35 percent above the company’s share price on March 27, Bloomberg reported.

That was the day that Pebblebrook first announced a proposed all-stock deal to buy LaSalle. The company made three public bids, with the last one disclosed on April 24 valuing LaSalle’s shares at $35.44.

Even though Pebblebrook’s proposal is higher than Blackstone’s, LaSalle’s board preferred the certainty of the latter, people familiar with the process told Bloomberg.

“After careful consideration of multiple proposals received, the board determined that this transaction represents the most compelling opportunity for LaSalle’s shareholders, delivering a significant premium with immediate and certain cash value,” LaSalle chairman Stuart Scott said of the Blackstone agreement.

LaSalle owns four hotels in Manhattan, according to its website: Gild Hall, Park Central New York, the Roger and WestHouse.

Blackstone’s offer requires two-thirds support from LaSalle’s shareholders to go forward. The deal is scheduled to be completed in the third quarter.

If LaSalle chose to terminate the deal, it would pay a breakup fee of $112 million. Should Blackstone walk away, it would pay a reverse breakup fee of $336 million, sources said. [Bloomberg]Rich Bockmann

3 Via Los Incas and Richard and Lisa Perry (Credit: Getty Images)

The billionaire founder of Perry Capital and owner of Barneys New York just dropped $6.5 million on a home in Palm Beach.

Property records show Richard Perry and his wife Lisa closed on the five-bedroom, 5,700-square-foot home ay 3 Via Los Incas, near the Breakers. Lisa Perry is a women’s fashion designer whose clothing is sold exclusively at Barneys.

Richard Perry founded his New York hedge fund in 1988 and acquired a controlling interest in Barneys in 2012. He was worth about $1.2 billion in 2008, according to Forbes, and is the nephew of former Bear Stearns CEO James Cayne. Perry also announced in September 2016 that he would be shutting down Perry Capital. 

The Perrys own other properties in Palm Beach, including units at the Palm Beach Towers Condominiums on Cocoanut Row, according to property records.

Cris Condon of Sotheby’s International Realty represented the seller of the Palm Beach home, Christopher Altman Heine as trustee of the Sandra R. Heine 2017 Trust. It was on the market for $7.45 million, a Redfin listing shows. The home last sold for $1.75 million in 1987.

The non-waterfront property was built by Robert Gottfried and designed by Ames Bennett. It includes a formal living room and dining room, a library/family room and pool.

Barneys is opening its first flagship location in the Southeast at Bal Harbour Shops in 2023.

single-family-homes

Single family homes

More homeowners think now is the perfect time to sell than they have in the past 26 years. But that positive sentiment has done nothing to boost listing inventory and alleviate the tight housing market.

In early May, 39 percent of respondents in a survey conducted by the University of Michigan said conditions for selling a home were optimal because of favorable prices, Bloomberg News reported.

That was the highest share of homeowners who had a positive view on the market since late 1992.

But even though a greater share of homeowners think now is the best time to sell than they did during the peak of the house-flipping cycle in mid-2005, when the figure stood at 30 percent, the sentiment hasn’t led owners to list their homes for sale.

One explanation could be the fact that borrowing costs have climbed since the end of last year, making housing less affordable, especially for first-time buyers. The national rate for a 30-year mortgage is at a seven-year high at an average of 4.61 percent, according to Freddie Mac. That’s up from last year’s low of 3.78 percent in September. [Bloomberg]Rich Bockmann

Though men still make up the lion’s share of the global population of ultra-wealthy, an increasing number of women are joining their ranks. (Credit: Pixabay)

Though men still make up the lion’s share of the global population of ultra-wealthy, an increasing number of women are joining their ranks.

As of this year, 321 women responded to Wealth-X’s annual billionaire survey saying their holdings were over $1 billion–a 18 percent increased compared to the 2017 results.

By comparison, the number of male billionaires increased by 14.5 percent, 0.4 percentage points lower than the 2017 survey. The total population of high-worth men is 2,433.

According to Forbes‘ annual ranking in 2017, the number of women on the publication’s billionaire list increased by a record amount to a total of 227. The richest female billionaires include Liliane Bettencourt, whose net worth of $39.5 billion comes from her stake in a third of L’Oreal, which was founded by her father; Alice Walton, the daughter of Walmart founder Sam Walton, whose fortune clocks in at $33.8 billion; and Jacqueline Mars, whose grandfather founded the candy brand Mars, whose wealth is at $27 billion.

According to Bloomberg’s Billionaires Index, Yang Huiyan, vice chairman of Country Garden Holdings, is real estate — and China’s — richest woman.

Brauser Maimonides Academy in Dania Beach

A Modern Orthodox Jewish day school in Dania Beach just received a $6.75 million mortgage from one of area’s most active real estate lenders.

Little Rock, Arkansas-based Bank of the Ozarks granted Brauser Maimonides Academy the mortgage on May 15, property records show. The private school at 5300 Southwest 40th Avenue has students ranging from early childhood to eighth grade.

Multiple calls to the school were not immediately returned. The Sun Sentinel previously reported that the Jewish day school was planning several construction projects, adding a middle school and an early childhood wing as well as a gym and a performing arts space.

Brauser Maimonides Academy was hit with a foreclosure lawsuit in 2013 from a Dallas-based lender, but the suit was resolved in 2014 and settled for confidential terms, according to court documents.

Bank of the Ozarks is one of the most active construction lenders in South Florida and in many large metro areas across the country. Last year, the bank issued $1.15 billion in real estate loans in South Florida, of which about $746.5 million was construction financing, according to its annual report.

Gables Marbella Apartments and Gables Residential CEO Susan Ansel (Credit: Gables Residential)

A company tied to Heitman just dropped $112 million for the Gables Marbella apartment community west of Boca Raton, property records show.

The 297-unit rental complex at 22182 Bella Lago Drive traded for about $377,000 per apartment. Records show Marbella Premium Apartments LLC, tied to Atlanta-based developer Gables Residential, sold the property.

The developer paid a little more than $43.4 million for the 19-acre property in 2005. Records show the complex was built a year later. Amenities include a community pool, playground and fitness center. The rental community consists of one- to four-bedroom apartments that feature tile floors and granite countertops.

Heitman is a global real estate investment firm headquartered in Chicago with about $40 billion in assets under management, according to its website. In 2015, it paid $82 million for 390-unit multifamily community in Jupiter.

A representative for Heitman was not immediately available to comment.

In February, Angelo, Gordon & Co. sold a nearby 340-unit apartment community for $44 million.

(Credit from left: Roger Norton, Pxhere)

Give buyers a dream pool and they’re all in — though that does not necessarily mean in the water.

Buyers are increasingly favoring a resort-style island, a dining area or sitting area, that’s built into or on top of their pools, according the Wall Street Journal.

“It’s more about engaging with the pool itself,” than swimming, landscape architect Kurt Kraisinger told the Journal about the increasing interest in having sunken rooms that puts people on eye-level with the pool water. Construction for the amenities don’t come cheap–costs begin at $25,000 and, in 2016, U.S. homeowners shelled out $2.7 billion on pool construction–but returns run high too.

In the Los Angeles market, homes asking more than $20 million can demand a $5 to $10 million premium depending on the quality of the pool and the view will often seal the deal, brokers say.

“Even if you use that pool once a year, [an elaborate pool] gives you a feeling that you’re going to enjoy your life,” LA agent Rayni Williams told the Journal. [WSJ]Erin Hudson

6700 Lakeview Center Drive in Tampa (Credit: YardiMatrix)

Boca Raton-based Meridian Capital Group arranged an $18.4 million loan to finance the acquisition of a single-tenant office building in Tampa.

The loan has a floating interest rate 520 basis points above the 30-day LIBOR rate and interest-only payments throughout the four-year term.

Merdian vice president Aryeh Meiteles and managing director Noam Kaminetzky at the firm’s Boca Raton office negotiated the loan from a bridge lender on behalf of the buyer of the office building, TriOut Advisory Group.

The three-story, 186,309-square-foot office building is fully occupied by HealthPlan Services, Inc., which is owned by publicly held Wipro Limited.

Built in 1984, the office building at 6700 Lakeview Center Drive in Tampa recently underwent $3.3 million of renovations. It serves as the corporate headquarters of HealthPlan Services.

The building’s over-sized lot has entitlements in place to construct another 191,000 square feet of office space. – Mike Seemuth

Rendering of Tru by Hilton hotel planned by Epelboim Development Group

Miami-based Epelboim Development Group got a $21.5 million loan to finance construction of a Tru by Hilton hotel in Orlando.

The site of the eight-story, 259-suite hotel on Westbrook Avenue in Orlando is across from the Orange County Convention Center. The hotel is expected to open in the fourth quarter of 2019.

The construction loan is “part of our capital stack, which is made up of the loan, private equity and EB-5 capital, totaling $39.5 million,” Noel Epelboim, president and CEO of Epelboim Development Group, said in a prepared statement.”

BridgeInvest originated the construction loan for the hotel, which would be the largest Tru by Hilton to date. Tanya Little, CEO of Hart Capital Partners, placed the $21.5 million loan.

Epelboim Development Group is now in the final stages of building an EVEN Hotel in Miami, and the firm has two other hospitality projects under development in Georgia. – Mike Seemuth

Latitude Margaritaville Watersound rendering

The third Latitude Margaritaville residential real estate development for residents 55 and older is coming to Florida’s Panhandle region.

Margaritaville Holdings, Minto Communities USA and The St. Joe Company plan to develop Latitude Margaritaville Watersound near Panama City Beach.

The location is a property in Bay County called Watersound, which St. Joe owns. According to a press release by Minto, Watersound is part of a larger property entitled for the construction of 170,000 homes.

Two other Latitude Margaritaville communities are under development near Hilton Head, South Carolina, and in Daytona Beach.

The press release did not specify how many homes are planned at the 55-and-older community in Watersound.

At the other two Latitude Margaritaville developments, Minto is planning to build 6,900 homes in Daytona Beach and more than 3,000 near Hilton Head, South Carolina.  – Mike Seemuth

(Credit from right: Pixabay, Johnny Magnusson)

Commercial real estate brokers are getting ready to inhale deeply.

Cannabis retailers preparing to open up shop once Canada’s legal pot market becomes official this summer are starting fierce bidding wars across the country in order to snag ideal spots for customers to pop by and grab their stash, according to Canadian Press.

As a result, JLL brokers’ phones have been “ringing off the hook,” according to research manager Gaurav Mathur. During an industry conference on Tuesday, Mathur said he expects commercial real estate prices will rise once legalization is official, though the high will likely vary across the country: the federal government is leaving it up to Canada’s 10 provinces and three territories to determine how marijuana will be distributed, and vastly different approaches are emerging in the run-up to legalization.

While some provinces, like Ontario, intend to keep dispensaries under government control, others are letting the free market run wild such as in Alberta, where the retail market is “absolute insanity” due to the influx of private pot retailers competing for prime space, according to Mark Goliger, CEO of National Access Cannabis.

“They’re just going in there and throwing lots of money and being aggressive with landlords, and its creating an out of balance scenario,” he told CP, noting that he’d come upon some bidding wars where parties on the other side of the table were offering to pay double the asking price for square footage. “Everybody is trying to get retail locations.”

While some retailers are “spiking the market with overly aggressive terms,” Goliger told CP he’d inked a deal with a coffee shop chain, Second Cup, to convert some locations into dispensaries.

In Alberta, the province expects to hand out 250 licenses to private companies to distribute marijuana in the first year of legalization with the stipulation that no entity can hold more than 15 percent of the market.

JLL estimates Canada’s budding pot industry will need to expand to five times its current level to 8 million square feet of industrial space by 2020, including distribution and logistics centers. [CP]Erin Hudson

Judy Green, CEO of Premier Sotheby’s International Realty (Credit: LinkedIn)

Premier Sotheby’s International Realty acquired the assets of another Naples-based residential brokerage, Stock Realty Resale & Rental.

The acquisition “strengthens our presence in the southeast Naples area,” Judy Green, CEO of Premier Sotheby’s, said in a prepared statement.

The former office of Stock Realty Resale & Rental at 7711 Collier Boulevard in Naples now operates under the Premier Sotheby’s brand.

The managing director of the office is David Gape, who also leads the Premier Sotheby’s office in Marco Island.

Twenty-one agents were affiliated with Stock Realty prior to the acquisition by Premier Sotheby’s, which invited them to remain with the office on Collier Boulevard.

Premier Sotheby’s, affiliated with the storied Sotheby’s auction house, has more than 1,100 associates and employees in 40 locations in Florida and North Carolina. – Mike Seemuth

Dubai Creek Harbor rendering

Emaar Properties, the developer of a 10-tower project in Dubai, commissioned a Fort Lauderdale-based architecture firm to design the buildings’ façades.

Emaar commissioned Rex Nichols Architects (RNA) for the first pre-construction phase of the development, called Dubai Creek Harbor.

The mixed-use development near downtown Dubai, scheduled for completion in 2020, would include residences, retail stores, restaurants and offices.

“We were approached by the senior manager for Dubai Creek Harbor based on the contemporary design featured on our website,” architect Rex Nichols, who runs RNA, said in a prepared statement.

If selected to continue design work beyond the first phase of pre-construction, Fort Lauderdale-based RNA would become the lead architect for the 10-building waterfront development in a joint venture with Robert Swedroe Architects in Miami.

RNA and Swedroe previously were in a Middle Eastern joint venture together to design a proposed mixed-use development in Riyadh, Saudi Arabia, which would include commercial buildings, villas and a hotel.

The 2.3-square-mile development site of Dubai Creek Harbor would encompass a 3,045-foot tower that will be the world’s next tallest building, Dubai Creek Tower, designed by architect Santiago Calatrava. — Mike Seemuth

Shaquille O’Neal’s estate in Windermere (Credit: Pinterest)

Former basketball superstar Shaquille O’Neal is taking a shot at selling his Orlando-area estate for seven times more than he paid 25 years ago.

It will be no easy layup: The unusual property is highly customized to suit O’Neal’s outsized personality.

O’Neal, 46, put his longtime primary residence in Windermere on the market with an asking price of $28 million.

He bought the 12-bedroom property for $3.95 million in 1993, when he was a player with the Orlando Magic.

He was with the Magic from 1992 to 1996, then played for the Los Angeles Lakers before returning to Florida in 2004 to play for the Miami Heat.

O’Neal is now a basketball analyst for “Inside the NBA,” a cable television show on TNT.

The listing agent for his Windermere home, Danial Natoli of Premier Sotheby’s International Realty, told the Wall Street Journal that O’Neal’s three-acre estate features a 6,000-square-foot basketball court with bleachers and the Miami Heat logo.

The Superman logo is emblazoned throughout the house, a reference one of O’Neal’s multiple nicknames for himself.

A mural in a walk-in cigar humidor with storage for wine has a built-in fish tank that blends with a mural to form the image of a truck with O’Neal in the driver’s seat. (His nicknames include “The Diesel.”)

A life-size Superman statue stands watch in the property’s outdoor resort area, nicknamed “Shaq-apulco.” It has a 95-foot swimming pool with a hot tub and waterfall, plus a swim-up bar leading to a covered outdoor kitchen. The Superman statue is located on a dock on one in a series of lakes called the Butler Chain.

Many of the features of O’Neal’s 31,000-square-foot home are made for living large, including two garages big enough for 17 cars and a built-in circular bed in the master suite with a 15-foot diameter.

Natoli told the Journal the home’s condition is good but a buyer probably would alter the property “for their own taste.” [Wall Street Journal] Mike Seemuth

Ellijay, Georgia (Credit: Mountain Place Realty)

Many natives of northern states who moved to Florida are “halfbacks” who relocated again to retire elsewhere in the South.

The economic recession in the late 2000s slowed the flow of native-northern halfbacks who moved to Florida and then moved roughly halfway back, settling in small mountain towns in such states as North Carolina and Tennessee.

But the halfback trend, which was well under way by the early 2000s, has regained momentum.

From 2000 to 2017,  net migration to counties classified as retirement destinations increased 169 percent in Georgia, North Carolina and Tennessee, compared to 67 percent nationwide, according to Hamilton Lombard, a demographer at the University of Virginia. The U.S. Department of Agriculture classifies a county as a retirement destination if net migration caused its 60-and-older population to grow at least 15 percent in a decade.

One of the biggest lures of small towns amid the Appalachian Mountains is a lower cost of living. Native New Yorker Marty Stefanelli, who moved to West Palm Beach, relocated from the South Florida metropolis to little Blue Ridge, Georgia, and cut his annual property tax expense by $17,000.

Real estate broker James Nichols, one of the owners of Love Those Mountains Realty in Ellijay, Georgia, told the Wall Street Journal the halfback trend “is very much in motion again.”

Nichols said the realty’s business is growing rapidly and that retirees moving up from Florida account for three-fourths of its sales.

The halfback trend has fully revived in western North Carolina since the end of the recession, according to Rebecca Tippet, a demographer with the Carolina Population Center at the University of North Carolina-Chapel Hill.

But while former Florida residents have brought more business to retailers in small Appalachian towns, some longtime residents complain that halfbacks also have brought more traffic and higher housing costs. [Wall Street Journal]Mike Seemuth

Woodmont Country Club (Credit: YouTube)

Construction of houses at a country club property in Tamarac is set to start next month, and now the owner of the property wants to build 60 townhouses there, too.

Homebuilder PulteGroup bought 44 acres of the closed golf course at the Woodmont Country Club in Tamarac for the construction of 152 houses.

Mark Schmidt, owner of the Woodmont Country Club, also had planned to develop 28,000 square feet of commercial space on six acres of the closed golf course.

But commercial real estate developers showed little interest, so Schmidt now wants the city’s permission to build 60 townhouses on the six-acre site instead.

The townhouse project at the southeastern corner of Pine Island Road and Southgate Boulevard would be called Brookstone at Woodmont. [Sun-Sentinel] – Mike Seemuth

Tom Scott, CEO of CA Ventures

A 187-unit apartment building that will cater to college students is under construction near Florida International University.

TD Bank made a $55.04 million loan to finance construction of the rental property at 400 Southwest 107 Avenue in Sweetwater.

The borrower is an affiliate of CA Ventures of Chicago, led by CEO Tom Scott, and the development is called The Residence at University City.

CA Ventures bought the development site in December 2017 for $4 million.

General contractor G.T. Construction and Development notified Miami-Dade County that construction of the 187-unit apartment property has started.

Continental National Bank, which had owned an office building on the development site, will occupy ground-floor retail space at The Residence at University City.

Another student housing development near Florida International University is under way at 740 Southwest 109 Avenue. The developer of the 20-story, 492-unit University Bridge Residences has converted the project from a condominium to a rental apartment building. [South Florida Business Journal] – Mike Seemuth

1616 South Ocean Boulevard in Palm Beach

An oceanfront estate in Palm Beach about a mile south of President Trump’s Mar-a-Lago resort sold for $22.43 million.

Ashley McIntosh, an agent of Douglas Elliman Real Estate, represented an unidentified family that bought the property at 1616 South Ocean Boulevard.

The family used an entity based in Lake Wales to buy the 11-bedroom estate, which has 18,866 square feet of indoor and outdoor living space.

The sellers of the property are Luciana Vittoria and her husband Joseph V. Vittoria, former chairman and chief executive officer of rental car company Avis Inc.

Property records show Luciana Vittoria bought the estate in 1996 for $5.75 million.

The estate was built in 1973 with a main house and guest house on approximately two acres with 151 feet of frontage on the ocean and 155 feet of lakefront.

According to the property’s listing, it is one of only 25 estates in Palm Beach with water views to the east and west.

In late March, two agents of brokerage firm Brown Harris Stevens, Gregory K. Weadock and Carole Hogan, co-listed the estate with a $27 million asking price, and by late April, the estate was under contract. [Palm Beach Daily News] – Mike Seemuth

Tamarac Village rendering

Construction of a downtown-style, mixed-use development in Tamarac may start soon.

Elise Boston, a spokeswoman for the City of Tamarac, told the Sun-Sentinel that construction is expected to start within the next few months and to conclude in late 2019.

The $30 million development, called Tamarac Village, would encompass a four-story complex of 13 buildings with 401 rental apartments, a two-story clubhouse for the tenants, and three commercial buildings with more than 44,000 square feet.

Part of the development site at the northeastern corner of Commercial Boulevard and Northwest 94 Avenue in Tamarac would be reserved for a city park.

The developer is Boca Raton-based JKM Developers. John K. Markey, the firm’s managing principal, declined to comment on Tamarac Village.

The City of Tamarac assembled the site of the development between 2006 and 2013.

The city government spent $16.6 million to acquire 17 properties including a bank building, a synagogue and vacant land. [Sun-Sentinel]Mike Seemuth

Midtown Delray Beach rendering

Delray Beach city commissioners unanimously granted final approval of a mixed-use development called Midtown Delray Beach after nearly seven years of planning and protests.

Hudson Holdings, the Delray Beach-based developer of the project, made multiple changes to its design before winning city approval.

The city’s Historic Preservation Board twice voted against Midtown Delray Beach, which would include a mix of apartments, retail stores, office space and an underground parking garage.

The development site on Swinton Avenue South of Atlantic Avenue covers two blocks in the city’s Old School Square Historic District, which recently got a listing on the National Register of Historic Places.

Steve Michael of Hudson Holdings told the Sun-Sentinel that construction of Midtown Delray Beach is expected to start by the end of the year. [Palm Beach Post] – Mike Seemuth

Serena Williams

Professional tennis star Serena Williams found a potential buyer for her 2.4-acre lot next to a golf course in Jupiter.

Williams, 36, listed the lot for sale in November for $6.5 million, which would be 57 percent more than the $4.12 million price she paid for it.

The status of the listing changed Friday to show that a potential buyer signed a contract to buy the lot, according to Mansion Global.

The lot at 152 Bear’s Club Drive in Jupiter is located along a golf course in the Bear’s Club development, designed by former champion golfer Jack Nicklaus.

Other celebrities who own property in the Bear’s Club development include professional golfer Michell Wie and former basketball star Michael Jordan.

Williams’ tree-covered, 2.4-acre lot in Jupiter has 1.8 acres of developable land, according to the listing, held by Michael and Andrew Leibowitz of Leibowitz Realty Group.

Williams, who gave birth to a daughter last year, has two other properties in Palm Beach County. She owns one home in Palm Beach Gardens and co-owns another with her sister, Venus.

In October, Williams bought an estate in Beverly Hills, California, for $6.68 million and listed a six-bedroom home in Bel Air, California, for $11.995 million. [Mansion Global] – Mike Seemuth

Clockwise from top left: GreenOak Real Estate founder Sonny Kalsi announced the firm’s new $1.55 billion fund, New York City is still the most expensive place to build, Elon Musk hopes to combat the housing crisis, and tipsters say FinCEN has a new LLC rule.

Treasury issues new LLC disclosure law
The Financial Crimes Enforcement Network (FinCEN) has issued a new set of regulations that require title companies to disclose the identity of all-cash buyers who purchase luxury property under an LLC, sources told The Real Deal. FinCEN issued the new geographic targeting order [GTO] with instructions that forbade title companies from disclosing the details of that new rule. “The terms of the GTO Order are CONFIDENTIAL and therefore we are not at liberty to share the details of the GTO Order with you,” according to a memo circulated by Fidelity National Title. “Please note that we are only requesting information that is required and we may be liable for civil and criminal penalties if terms of the GTO Order are not complied with.” The memo said the new GTO takes effect May 21. [TRD]

GreenOak Real Estate’s third US fund raises $1.55 billion — its largest yet
New York City-based investment firm GreenOak Real Estate’s third U.S. fund has turned out to be its largest to date. The firm founded by former Morgan Stanley execs raised $1.55 billion, exceeding the $756 million its second fund raised. GreenOak plans to put the money toward markets like New York, Seattle, Washington and Miami. “Our goal is to buy unloved or under-managed real estate, then fix, stabilize and sell it, so we need to invest in markets where there’s liquidity,” its founder Sonny Kalsi said. [TRD]

Elon Musk hopes to produce low-cost bricks in an effort to solve the housing crisis
SpaceX CEO Elon Musk’s latest project is an earthbound one. Musk hopes to mitigate the housing crisis by creating low-cost bricks using leftover muck from his tunneling company, but some experts are unsure the plan will work, citing the pricey nature of brick construction and the fact that land and labor are usually more expensive than building materials. [TRD]

New York City and San Francisco top list of most expensive places to build
New York City is still the most expensive place in the world to build, according to a new Turner & Townsend market survey. Building costs an average of $362 per square foot — up 3.5 percent year-over-year. Second on the survey’s list was San Francisco, followed by Hong Kong in third place. Turner & Townsend’s managing director in the U.S. cited shortages in skilled labor as a driving factor for rising costs. [TRD]

MAJOR MARKET HIGHLIGHTS

Related Midwest unveils plans for two towers in Chicago
Related Midwest has unveiled plans to build a pair of white towers at the mouth of the Chicago River. The “mismatched” towers, at 1,100 feet and 850 feet respectively, will rise at the now-abandoned Chicago Spire site, and the taller tower will be the fifth-tallest building on the skyline. Foundation work could kick off in the summer of 2019, according to Related Midwest President Curt Bailey. [TRD]

Amazon HQ2 odds are in Northern Virginia’s favor, according to an online gambling site
Northern Virginia is the location that’s most likely to be selected as the home of Amazon HQ2, according to online gambling site Bovada’s latest odds. Austin, Boston, Toronto and Atlanta have the next best chances, according to Bisnow, which asserted that the release of the odds has led to an increase in the stock price of Virginia REIT JBG Smith, which owns a proposed site for the Amazon offices in Crystal City and Potomac Yard. [Bisnow]

Greenwich Village apartment with $28 rent will soon fetch around $5,000 per month
A former actress was paying $28.43 per month for her rent-controlled apartment up until this past March, when she died at age 85 after being struck by a car, the New York Post first reported. Patricia O’Grady had lived in the Greenwich Village unit since 1955. After the landlord renovates the apartment, it will most likely rent for around $5,000 a month. [TRD]

Playboy moving out of Beverly Hills amid business changes for the company
Playboy is ditching its Beverly Hills digs for a 40,000-square-foot office sublease in Westwood. The move comes as private equity firm Rizvi Traverse tries to shake up the brand’s business model — and some say that means the eventual discontinuation of Playboy’s print magazine. Playboy Mansion owner Daren Metropoulos has promised not to demolish the property. [TRD]

Condo buyers sue Ritz Carlton Residences, Miami Beach developer over delays
A trio of condo buyers have hit the developer of the Ritz-Carlton Residences, Miami Beach, with lawsuits over delayed construction. The plaintiffs claim 4701 North Meridian LLC promised the project would be wrapping up by June 2017. Their units, however, still haven’t been built, according to the lawsuit. They hope to get their deposits back and have the developer fork over attorney’s fees. [TRD]

The Hilton in Midtown and Jonathan Gray

Blackstone Group sold its remaining shares in Hilton Hotels, an 11-year investment that many questions at first but turned out to be the most profitable leveraged buyout in history.

Blackstone will realize a profit of $14 billion in total after agreeing to sell its remaining 15.8 million shares back to Hilton for $1.3 billion, Bloomberg News reported.

The private equity firm put up $6.5 billion in equity with co-investors in 2007 to take the hospitality company private. Blackstone then wrote down the investment by 70 percent amid the financial crisis and later put infused cash and restructured the company’s debt before taking it public again in late 2013.

Blackstone president Jonathan Gray said “this was initially a very difficult investment” and credited Hilton CEO Christopher Nassetta’s leadership.

“The steep revenue declines could have easily dissuaded us, but the continued commitment of the entire firm paid off in a big way,” Gray said. “We saw a ton of white space in Europe and China for this company, and our thesis held together through the crisis and that’s what gave us confidence.”

When Blackstone put the deal together in mid-2007, the acquisition was 80 percent leveraged with financing from Bear Stearns.

Hilton in 2015 sold the Waldorf Astoria hotel to Anbang Insurance Group for $1.95 billion, and later spun off other company units.

“Often, success in private equity is attributed to financial engineering, but the Hilton transaction shows that isn’t the case,” Gray said.

HNA Group in 2016 bought a 25 percent stake in Hilton from Blackstone for $6.5 billion. [Bloomberg] – Rich Bockmann

Single family homes in L.A, Brian Blair and Jerry Coleman

Housing investment platform OfferPad raised $50 million in venture funding from private equity firm LL Funds and other investors.

The startup also extended an existing, $100 million credit line, Inman reported.

OfferPad buys homes from owners who want to sell quickly and for a guaranteed price, and then lists them for resale on its online platform. The business model is similar to Opendoor, which recently raised $35 million in equity, and Knock.

The company made headlines last month for ending its partnership with Zillow after the listings giant announced it would offer a similar service of buying and reselling homes.

Founded in 2015 by Brian Blair and Jerry Coleman, OfferPad buys and sells homes in Atlanta, Charlotte, Las Vegas, Los Angeles, Orlando, Phoenix, Salt Lake City and Tampa, and plans to expand into more cities. [Inman]Konrad Putzier

Tom Riley

The National Association of Realtors is holding off on increasing its annual dues by 2.5 percent — for now.

The organization’s executive committee decided to postpone the proposal, which would’ve inflated dues by 2020, Inman reported. NAR Treasurer Tom Riley indicated that the group will reconsider the plan in the next few months with “a little different verbiage.”

The group is still considering increasing dues by $30 in 2019. Members currently pay $120 in dues, along with an extra $35 for NAR’s advertising campaign. That extra fee in approved through 2019.

NAR hasn’t raised dues since 2012, when members were asked to pay an additional $40. Of the proposed $30 increase, $17 would be dedicated to upping the group’s political activity spending and the remaining $13 would help pay for a transaction management platform, zipLogix.

Many realtors weren’t happy about the possible 2.5 percent increase. In an Inman poll, 80 percent of nearly 2,000 respondents said they were against the hike. [Inman] — Kathryn Brenzel 

Industry professionals will gather in Las Vegas for the ICSC Global Retail Real Estate Convention
from May 20 to 23.

Tenants, who have had their backs against the wall in recent years, are expected to flex a little more muscle this month at the International Council of Shopping Centers’ Las Vegas conference RECon — the largest retail real estate convention in the world — taking place this year from May 20 to 23.

While some retailers are still signing high-profile deals, and activity in some of the country’s top markets, such as Manhattan, ticked up in recent months, there are still bankruptcies and mall closings aplenty in the headlines. And landlords have an enormous supply of space from which retailers can choose, giving them additional leverage.

“So what does that mean? You’ve got a lot of landlords competing for that one significant deal,” Todd Siegel, a Chicago-based broker with CBRE, said.

Retailers who’ve been battle-tested by the ravages of e-commerce in recent years are reaping the rewards that their survival affords them. Credit ratings agencies are not as fearful as they were just a year ago that every retailer is going to go under, and thus retailers are enjoying better ratings, said Jared Epstein, a principal with Manhattan-based landlord Aurora Capital Associates. “Tenants whose credit has improved are emboldened and feel they have the leverage, and for the most part they do,” he added. 

As the industry heads to RECon, the general feeling is that brokers and landlords are expected to cater to tenants at the show. “There is a higher level of expectation now from retailers,” Jeffrey Roseman, a broker with Newmark Knight Frank, said. His firm is perpetually engaged in a sort of arms race with other brokerages, each seeking to provide the most valuable and relevant data for clients.

“Retailers are not just looking for a broker to show space. They are looking for a broker to help them grow, with a strategy regionally, nationally, internationally,” Roseman said.

The volume of meetings, for some, is also changing. CBRE’s Siegel said he was planning fewer sit-downs, but said each that he does do will drill deeper than the norm.

“It’s not like in years past, when you booked nonstop every 30 minutes. You have a half-dozen really critical flagship meetings over two days,” he said.

Who’s coming?

ICSC estimates that about 37,000 people will attend the show this year, which is on par with the past couple of years.

An analysis of the past three years of attendees by The Real Deal showed that about a quarter of the people at the show turn over every year, so there will be plenty of new faces. Approximately 25 percent of the nearly 29,000 people who registered for the show as of mid-May did not attend the show in 2017, the analysis found. Many are new brokers or new principals at long-attending firms, while others, such as development firm Tavros Capital, from Manhattan, are coming for the first time.

TRD’s analysis also found that about half the people at the show attend consistently. ICSC did not return request for comment on their changing mix of attendees.

Although the number of participants at the show may wax and wane, the number of people who make the trip to Las Vegas but never step on the convention floor is growing, some attendees said. Plenty of networking and deals can be done outside the convention, and more businesses are taking that option.

Michael Demetriou, from Baum Realty Group in Chicago, has been going to the Vegas show for several years and believes that is definitely the case. “I think of it as a shadow economy,” Demetriou said.

Scheduling conflicts

This year, the convention is taking place during a major Jewish religious holiday, Shavuot, which will keep some major retail players away from the show and delay the appearance of others.

Insiders expect a more sedate scene poolside, as people who wanted to chat up major New York City-based investors who will be absent this year due to Shauvot — such as Jeff Sutton of Wharton Properties and Alex Adjmi of A&H Acquisitions — will have to make other plans.

“If you know the popular kids are not going to the party, then you are not going to go,” said Jonathan Adelsberg, a partner at New York-based law firm Herrick Feinstein. He has attended for the past several years, but is not attending this year, although not because of Shavuot.

“I think a good number of my clients are not going this year, and so my level of productivity would be much better if I stay in town,” he said.

Because of the Jewish holiday, some brokerages, including Meridian Capital Group, will have a sharply reduced groups, and Eastern Union Funding will not attend at all.

“We have attended the show for close to 20 years now,” Abraham Bergman of Eastern Union said. “We will miss it this year and will instead head out and meet our clients in their hometowns.”

Some observant real estate players are looking at a workaround, in which they would fly out Friday before sundown and not work until Monday evening, then attend parties and the show on Tuesday.

ICSC chartered a plane to fly from Chicago after sundown Monday to bring professionals from that city.

One New York owner/broker, who asked not to be identified, said he was frustrated that ICSC organizers hadn’t resolved the Shauvot scheduling conflict.

“The impact is tremendous,” the insider said. “You can’t really qualify what you are losing or not losing. It’s just not being out there.”

However, some attending don’t expect the conflict to have much impact on the conference.

“That will affect some of the New York turnout, but in the scheme of the show, it will be relatively insignificant,” said Rick Friedland, of Friedland Properties.

Due to the Jewish holiday — but also in part because of the sluggish market — many expect the New York-based social scene to be lower energy than in recent years. Several firms that hosted large parties in years past are not doing so this year, including RKF, Eastern Consolidated and Winick Realty Group. They are either having smaller dinners or holding off entirely.

But the pool parties, including the Wynn’s hopping cabanas on Saturday and Sunday, will carry on. Epstein of Aurora Capital will be hosting tenants and brokers at a cabana at the hotel, even as the firm’s principal, Bobby Cayre, won’t be there because of Shauvot. 

“Just because the principal can’t be there does not mean the retailers won’t. That’s why we have to be there,” Epstein said.

201 East Flagler Street and Moishe Mana and Mika Mattingly (Credit: Marsha Halper and Colliers International South Florida)

Moishe Mana’s portfolio of properties in downtown Miami keeps growing.

The investor and developer just paid $12.9 million for a two-story retail and office building at 201 East Flagler Street. The deal brings his total spent in downtown Miami to nearly $285 million.

Mika Mattingly and Cecilia Estevez of Colliers International South Florida represented Mana in the deal. The seller, White Building Acquisition, LLC was represented by Robert Palacios of Regency Commercial Properties and Marci Osheroff of The Osheroff Group. Records show the selling entity is led by Marc Osheroff.

The 29,000-square-foot building sits on a 14,520-square-foot lot on the corner of Flagler Street and Northeast Second Street. The deal breaks down to about $445 per square foot for the building and $890 per square foot for the land.

Mattingly said the property is located on the southwest corner of a 2.5-acre development site, anchored by Marshalls, that Dwntwn Realty Advisors recently listed for $125 million.

The second floor of the office condominium is currently leased to the White Family Law Firm. Mattingly said there’s about 3,600 square feet of retail space available to lease on the ground floor, with rents starting at $85 per square foot and up.

The property was once owned by the late physician James M. Jackson, the founder of Miami City Hospital, now called Jackson Memorial Hospital, Mattingly said. The site was also home to the numerous theaters, including the Hippodrome and the Florida Theatre.

Mana began investing in downtown Miami about four years ago. In March he paid about $5 million for office units at 100 East Flagler Street, totaling more than 25,600 square feet of space at the 10-story Wells Fargo building.

His plans for the more than 1 million square feet of building space and 8 acres of land in downtown include converting the properties into retail, office and residential. Zyscovich Architects is designing the project.

While the future of brokerage remains uncertain, after the most recent quarter Wall Street is bullish on the tech upstarts. Though digital firms like Zillow and Redfin posted big losses, revenue soared in the first quarter.

William Blair analyst Stephen Sheldon, who projected that Redfin’s revenue would grow 30 percent this year, said the business model “can challenge traditional residential brokerages for market share without having to take much to perform well in the coming years.”

Meanwhile, their traditional brokerage foes posted single-digit revenue growth during the first quarter.

Here’s a recap of how some of the biggest firms did in the quarter that ended March 31.

Realogy

$1.23 billion revenue, up 2 percent from $1.2 billion

$67 million loss, up 139.3 percent from $28 million loss

Slow new development sales and commission payouts eat into Realogy’s profits; the New Jersey-based conglomerate spent $40 million on commission during the quarter, leading CEO Ryan Schneider to hint at a new “data-driven” commission model.

Analysts said they are impressed with Schneider’s vision. “The hope is that enhanced value propositions for agents in time can translate into better economics and commission splits favorable to Realogy,” Jason Deleeuw, an analyst at Piper Jaffray, wrote in a May 3 research note.

Douglas Elliman (Vector)

$159.4 million revenue, up 2.5 percent from $155.5 million

$8.1 million loss, up 8000% from $100,000 profit

New York is usually Elliman’s most lucrative market, but slow sales hurt the firm’s profits during the quarter, and it continued to shell out money for last year’s acquisition of Teles in Los Angeles. Elliman chairman Howard Lorber said things are looking up in New York, as sellers come to terms with prices that are down around 15 percent. “They’re finally starting to realize that they have to drop their pricing,” he said.

Redfin

$79.9 million revenue, up 33 percent from $59.9 million

$36 million net loss, up 28 percent from $28.1 million

Redfin’s still chasing profitability, and spent $11 million on advertising and new agent hires as it worked on ramping up market share during the first quarter. In the first quarter, it closed 9,522 deals, up 23 percent year over year. And the company said its sell-side business is growing faster than the buy-side.

Zillow

$299 million in revenue, up 22 percent from $245.8 million

$18.6 million net loss, up 304 percent from $4.6 million

Zillow’s revenue is still rising thanks thanks to its popular-but-controversial Premier Agent program. But the stock dropped after Zillow announced in April that it would get into the home-flipping game. Mark Mahaney, an analyst at RBC, downgraded the stock even though (or maybe because) CEO Spencer Rascoff called Zillow’s home-buying program one of its “biggest swings yet.”

News Corp.’s Digital Real Estate

$279 million revenue, up 27 percent from $219 million

$88 million EBITDA*, up 17 percent from $75 million (*Net income/loss not broken out)

For media giant News Corp., digital real estate business drove its $2.1 billion quarterly revenue, which was up 6 percent year-over-year. Traffic to Realtor.com, which is making a big push in New York, grew 10 percent and CEO Robert Thomson called Realtor a “core and increasingly” important part of the company. “Folks in the digital world were rather skeptical about it,” he said in March, of News Corp.’s acquisition. “The team has proved the naysayers wrong.”

Rendering of Miami Beach Convention Center (Credit: Clark Construction, Max Pixel)

The Miami Beach City Commission voted unanimously this week to issue a request for proposal for developers to submit designs and bids for a convention center hotel. The hotel would be built on the same site that a previous hotel design was proposed in 2016, which was ultimately turned down by voters.

But under the new request for proposal, the hotel would be a third smaller than the previous design. It would be no taller than 185 feet and will have between 550 and 800 rooms, according to the Miami Herald.

Commissioners also voted to get the winning proposal on the November ballot, since the renovated Miami Beach Convention Center is planned to reopen in September.

William Talbert, president and CEO of the Greater Miami Convention and Visitors Bureau, said the city lost $200 million in economic impact from conventions that passed on Miami Beach since the last hotel was turned down, the Miami Herald reported.

Two years ago, voters rejected a previously proposed hotel project by Atlanta-based Portman Holdings. Portman had proposed a 288-foot, 800-room hotel behind The Fillmore Miami Beach at Jackie Gleason Theater. The hotel would have been privately financed but the ballot measure required 60-percent approval from voters and it received only 54 percent. An ad hoc committee in November recommended proposing a hotel capped at 185 feet with up to 1,000 rooms. [Miami Herald]  — Keith Larsen

PGA Plaza and Craig Menin (Credit: Menin Development)

InvenTrust Properties Corp. just bought the PGA Plaza in Palm Beach Gardens for $88 million.

Property records show an affiliate of Menin Development sold the 121,000-square-foot shopping center at 2500, 2570 and 2658 PGA Boulevard. Craig Menin, CEO of the Delray Beach-based company, said the firm bought the 10-acre site in 2004 for about $17.5 million and began marketing it earlier this year with Eastdil Secured.

The plaza, built in 1975, underwent a $14 million renovation in 2015 that included upgrading its facade and landscaping. The renovations also allowed the developer to build a space for anchor tenants including Trader Joe’s. Other tenants include Marshalls, Ulta Beauty Anthony’s Coal Fired Pizza and Orangetheory Fitness.

InvenTrust bought the property 95 percent leased, according to a press release.

In 2011 the property was hit with a foreclosure lawsuit, but the developer transferred the property to a joint venture with institutional investor C-III Capital in exchange for paying $37.3 million in debt, which Menin said cleared the way for revamping the plaza.

InvenTrust, based in Oak Brook, Illinois, focuses on acquiring and managing open-air shopping centers. The real estate investment trust currently owns and manages about 80 retail properties totaling 14.2 million square feet.

Last year it paid about $163 million for two shopping centers in Pembroke Pines. The deal was one of the largest commercial sales in Broward County. It covered 95 acres on Pines Boulevard and Northwest 160th Avenue.

LLCDisclosure

The Treasury Department has re-upped rules meant to crack down on money laundering in real estate — but don’t ask Uncle Sam for details.

The Financial Crimes Enforcement Network (FinCEN) has released another set of rules requiring title companies to disclose the identity of all-cash buyers who purchase luxury property under the guise of an LLC, sources told The Real Deal. But FinCEN has instructed title companies not to disclose details of the new geographic targeting order (GTO).

“The terms of the GTO Order are CONFIDENTIAL and therefore we are not at liberty to share the details of the GTO Order with you,” according to a memo circulated by Fidelity National Title. “Please note that we are only requesting information that is required and we may be liable for civil and criminal penalties if terms of the GTO Order are not complied with.”

The memo said the new GTO takes effect May 21.

“The GTOs issued to date have provided FinCEN and law enforcement important information about money laundering vulnerabilities in the real estate sector,” FinCEN said in a statement, without further elaboration. “GTOs are a valuable tool and FinCEN will continue its efforts to study this vulnerability.”

FinCEN initially launched the LLC disclosure rule in March 2016 in an attempt to stop the flow of dirty money into real estate. And since July 2016, the rule has covered deals in all five boroughs of New York City; Miami, Broward and Palm Beach counties in Florida; Los Angeles; San Francisco; San Diego; and San Antonio, Texas. The rule applies to cash deals above $3 million in Manhattan and $1.5 million in the other boroughs.

But until last year, critics said FinCEN’s rules contained gaping loopholes.

Last August, the Treasury officials added teeth to a GTO that was extended to Hawaii. The revised GTO included wire transfers, which were previously excluded.

 

Tomi Rose, David Hammond over copies of the agreement between Rose and Opulence

Opulence International Realty and its former agent Tomi Rose are in a legal fight over an alleged $96,000 loan, court documents show.

Rose, who joined Opulence at the end of 2013 as vice president of the firm’s sports and entertainment division, left the company last year shortly before it was acquired by Brown Harris Stevens. She joined Douglas Elliman in September, according to documents filed with the state’s department of business and professional regulation.

Opulence filed a lawsuit against Rose in February, alleging she “refused to repay” about $96,000 that Opulence loaned her for marketing, travel and other expenses over the nearly four years she worked for the brokerage. The suit, filed in Miami-Dade County Circuit Court, alleges that Rose agreed to repay any money she owed Opulence if and when she left the company.

She also “periodically repaid advances made by [Opulence]” through commissions, according to the suit.

Opulence is suing for unjust enrichment and breach of contract.

Rose, meanwhile, is fighting back. She filed a separate lawsuit in February, alleging that several of the marketing costs that Opulence is trying to collect were not incurred by her; that she is owed commissions, including those from sales her mentees closed; and that the terms of the agreement between Opulence and Rose did not call for immediate repayment.

Rose declined comment. Attorneys for Rose and Opulence could not immediately be reached for comment.

The lawsuits also shed light on commission splits. Opulence agreed to give Rose 85 percent of commissions for sales, leases and referral fees, according to the documents.

Last month, Opulence moved to consolidate the lawsuits into one.

Rose, who is married to ex-Miami Heat player Mark Strickland, is known for representing basketball star LeBron James in the $13.4 million sale of his Coconut Grove mansion in 2015.

George Gleason, Chairman of the Board, CEO and President of Bank of The Ozarks (Credit: Insomnia Cured Here via Flickr, Pixabay, Public Domain Pictures, Wikimedia Commons)

Overlooking a small lake in a quiet area of Mid Beach, The Ritz-Carlton Residences, Miami Beach was pegged as an upscale European oasis in South Florida.

Ophir Sternberg, a native of Israel who moved to Miami in 2009, tapped Italian architect Piero Lissoni to design the project, where homes would range in price from $2 million to $40 million. It was Lissoni’s first U.S. venture, and Sternberg hoped to use him to deliver product that was “more European” and “more Italian” than anything Miami had seen before.

But when Sternberg’s Lionheart Capital needed financing to finish the project in the summer of 2015, he looked not to the old world, but toward an obscure regional bank smack in the middle of Arkansas.

Lionheart secured a $105 million construction loan from a lender called Bank of the Ozarks, which included assuming $10 million in existing construction financing. It was one of the first major construction loans in South Florida by the bank. By the following year, however, press releases and news articles made clear that Ozarks, a name that people were more likely to associate with a popular TV show, was shaping up to be one of the area’s biggest construction lenders.

During a period when banks across Florida were hesitant about lending on large construction projects, Ozarks was on a tear: With just over $22 billion in assets on its books, it provided more than $1.2 billion in construction loans in the Miami metropolitan area from 2013 through 2017, according to the company’s annual reports. In Miami-Dade alone, the bank was the largest condo construction lender for the county’s biggest projects, responsible for 26.5 percent of the total dollar volume of loans issued to the 25 biggest projects during the last five years, an analysis by The Real Deal shows. Compare that to Wells Fargo, the next biggest condo lender in Miami-Dade, which was responsible for 18.4 percent of the dollar volume of loans to those projects. Wells Fargo is the third-largest bank in the U.S., with nearly $2 trillion in total assets – that’s nearly 100 times the size of Ozarks.

Ozarks’ deals include a $259 million construction loan for Turnberry Associates’ 54-story oceanfront luxury condo tower in Sunny Isles Beach and a $138.3 million loan for CMC Group’s Brickell Flatiron. The 10 biggest construction projects it’s backing in Miami-Dade are slated to bring 3,289 new residential units to market, a mix of condos, rentals, and senior housing.

“We are proud to be contributing to the economic vitality of South Florida with our loans to many of the region’s marquee properties,” a spokesperson for Ozarks said.

But while some believe that Ozarks is a disciplined lender that’s merely filling a big void in lending activity, others question if it is overly exposed to one of the country’s most speculative real estate markets. Its critics draw comparisons to Corus Bank, a Chicago-based lender that aggressively financed condo construction in South Florida and was seized by regulators in 2009 after the condo market collapsed.

Like Corus, critics say, Ozarks could face challenges with maintaining its capital levels if there is an economic downturn, and point to the bank’s last annual report which shows that its concentration of construction loans is more than double its guidance. They also point to the bank’s high rates on deposits, its non-syndicated lending, as well as the sudden resignation of the bank’s chief lending officer as warning signs.

“There are some people out there that feel that this bank is almost like the Wizard of Oz – Dorothy thought that the Wizard could do everything,” said Kenneth Thomas, a Miami-based banking analyst. “All of (Bank of the Ozarks) numbers look amazing on paper, but it’s just a bank.”

Rendering of Ugo Colombo’s Brickell Flatiron. Bank of the Ozarks provided a $138.3 million construction loan for the project.

The South Beach diet

Founded more than 100 years ago in Jasper, Arkansas as a small community bank, Ozarks’ growth in South Florida and other large metropolitan areas stems directly from the Real Estate Specialities Group. George Gleason, a 64-year-old former attorney who leads the bank, has previously said that 2003, the year in which this group was formed, was the most important year in the bank’s history.

Based in Dallas, the group was led for most of its existence by Dan Thomas, a CPA and a former executive at a development group. Staffed by a team of attorneys and real estate professionals, it operates almost akin to a splinter group, responsible for the bank’s underwriting and overseeing the company’s debt on ground-up development projects. By the end of the first quarter of 2018, it accounted for more than $8.7 billion, or 64 percent, of the bank’s total non-purchase loan portfolio, according to an investor presentation.

The group started to attract interest in 2012, when it ventured into the New York market. Some banks, wary of regulatory concerns, had pulled back from financing ground-up projects, and Ozarks carved out a niche in originating medium-sized, non-recourse loans at attractive rates. (Non-recourse loans are generally riskier for lenders because in case of default, the lender can only go after the collateral.)

By the end of the second quarter of 2016, Ozarks had made $1.9 billion in real estate loans in New York City, with construction loans totaling $1 billion.

It then began to move into South Florida. In July 2016, the bank purchased Tampa-based C1 Financial, giving the institution about $1.6 billion in assets and 33 branches across the state. That year, Ozarks increased its construction-loan activity in South Florida to $312.2 million, up 214 percent from $99.2 million in 2015, according to its annual report.

“They are the lender of first resort to borrowers and also the lender of last resort,” said Thomas, the independent analyst, who noted that borrowers sometimes look to the bank when they can’t get financing from other places.

Ozarks’ borrowers and brokers who’ve worked with it, however, describe it as a disciplined lender that works with developers who’ve shown a strong track record.

“In general, they are wonderful lenders,” said Charles Penan of Miami-based debt brokerage Aztec Group. “They’ve been able to diversify their locations and they have had discipline.”

Penan noted the bank has the ability to make very large loans and offer non-recourse financing, which is unusual in the development lending business today.

“They are not the cheapest bank in town, but they are offering non-recourse and a lot of borrowers are offering to pay for non-recourse,” he said.

In a recent investor presentation, Ozarks also said that it reduces its risk because it “is always the senior secured lender” meaning that if a project did fail, it would be the first one to get repaid.

Michael Rose, an analyst with Raymond James who has a “strong buy” rating on Ozarks, believes its approach is conservative, in part, because its deals are structured with about 50 percent equity in the project from the developer or sponsor.

After the equity portion, there is generally subordinated and mezzanine debt in the project, which means that Bank of the Ozarks is typically only financing 13 to 35 percent of the project value, he said.

“The reason they don’t lose money is because there is so much equity in deals,” said Rose. “It’s really hard to see how they would lose money, they are always the senior secured lender.”

Rendering of Turnberry Ocean Club Residences. Bank of the Ozarks provided a $259 million construction loan for the project.

Making it rain in the Sunshine State

In 2017, Ozarks issued $1.15 billion in real estate loans in South Florida out of which about $746.5 million was construction financing, according to its annual report. Notable projects include Miami Worldcenter and Turnberry’s Sunny Isles Beach project in 2017, and the Magic City Innovation District in 2018.

For comparison’s sake, Miami Lakes-based BankUnited, which is South Florida’s largest bank by assets ($30 billion-plus), only had $165 million in construction loans on its balance sheet in the second quarter of 2017. Ozarks’ one loan to Turnberry of $259 million was about 1.5 times the size of BankUnited’s total construction-loan portfolio.

“With banking in particular, the locals understand the local market better than the out-of-towners,” said Peter Zalewski, a principal with the Miami real estate consultancy Condo Vultures. “You got to scratch your head and say, ‘what do the out of towners know that the locals don’t know?’”

Frank Gonzalez, who oversees the audit department at the accounting and advisory firm MBAF, said tri-county banks are generally not doing much construction financing.

“The regulators are focusing on that (construction lending) especially in South Florida,” Gonzalez said. “From our end as a financial auditor, it’s one of the key areas of focus, when we see it (construction lending on bank’s balance sheets) we kind of cringe.”

Ozarks’ mentions in its most recent annual report that its commercial real estate loan portfolio “may subject the company to additional regulatory scrutiny.” The bank also reported that it has more than doubled its guidance, set in part by the FDIC, for its concentration of construction lending relative to its capital levels at 209 percent.

Gleason, who purchased a controlling interest in Ozarks when he was 25, is a major backer of Republican candidates who support repealing provisions of the Dodd Frank Wall Street Reform and Consumer Protection Act. According to the National Institute of Money in Politics, Gleason has donated more than $89,000 over the past 14 years to Republican candidates, while his wife, Linda Gleason, gave another $82,000.

Going the distance

Adding to the concerns over the bank is the abrupt departure last July of Thomas, the longtime head of the Real Estate Strategies Group.

Thomas, who rarely spoke in earnings calls or gave media interviews, served as the chief lending officer at Ozarks from August 2012 to July 2017, and was widely seen as the catalyst for the bank’s massive real estate push. When news of his departure hit, the company’s stock dropped 12 percent.

“You are there for over 14 years, it was a great run. I moved to a different company and they’ve moved on to new management,” Thomas, who is now president of Dallas-based LandPlan Development Corp., said in an interview with TRD. He noted that he no longer owns any of Ozarks’ stock.

A spokesperson for the bank said that the real estate group’s “focus is on building a loan portfolio with the lowest credit and interest rate risks utilizing discipline and expertise.”

Some, however, have questioned whether its strategy is sustainable.

Carson Block, a well-known short seller who made a name for himself exposing fraud in Chinese companies, warned in a presentation in 2016 that Ozarks is overexposed to commercial real estate and construction lending in particular. He said the bank had too many unfunded balance sheet commitments, meaning it will need to continue to make acquisitions in order to fund its lending.

The bank has acquired 15 banks since 2010 and Gleason indicated it will continue on this trajectory.

“We expect we will make additional acquisitions, many of them in the future,” he said in the company’s January earnings call. “We’ve got a great organic model, and as we’ve always said, acquisitions are icing on the cake in addition to that organic growth model.”

And in a few months, the lender is set for a big change: Bank of the Ozarks will drop the reference to its origins and rebrand as Bank OZK.

“It frees us from the limitations of a name tied to a specific geographic region, ” Gleason said in a statement at the time.

A name-change, however, will only add to the mystique of the lender perhaps most responsible for shaping Miami’s condo market today.

“Bank of the Ozarks,” said Zalewski, “Is the most marketed bank in South Florida that no one understands.”

Brightline

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

Choo-choo! The Brightline high-speed train will finally roll into downtown Miami this weekend, offering express service to and from Fort Lauderdale, West Palm Beach, and Orlando in the coming years. Political and business leaders are hoping the new (reasonably priced) commuter rail system will be a transportation “game changer” for South Florida, allowing people to live in one city and work/play in another, while also alleviating vehicle traffic on the major highways. But challenges linger: Brightline already faces safety and noise concerns, and the “car-first” mindset of a region unfamiliar with mass transit. Will Brightline revolutionize South Florida business and culture the same way Henry Flagler’s railway did more than a century ago? Hop aboard for this month’s “South Florida by the numbers.”

8: Number of daily round-trips Brightline will make between Miami and West Palm Beach during the week, with one fewer on the weekends. (Additional round-trips may be added in the months and years ahead.) [TheRealDeal]

$3 billion: Amount Fortress Investment Group Rail, Brightline’s parent company, has spent to build the rail project and stations, as well as several hundred millions more in Miami and West Palm Beach real estate projects. [PalmBeachPost]

11: Number of acres that make up MiamiCentral, the downtown terminal for Brightline. Located at 600 Northwest First Avenue, it spans six blocks between Northwest Third and Eighth streets. When completed, the mixed-use development will include retail space, a food hall, grocery store, office buildings, residences, and a garage. [MiamiHerald]

One: First name of the local Sotheby’s International real estate office which hosted a Brightline-assisted open house in April. Agents from the company’s Jupiter and Palm Beach Gardens offices traveled from the West Palm Beach station to Fort Lauderdale, toured area homes, and returned via Brightline that afternoon. [PalmBeachPost]

2019: Year Tri-rail is expected to begin service at MiamiCentral, bringing yet another major passenger rail system into (and out of) downtown Miami. [MiamiToday]

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

A Federal district court has dismissed a closely followed class-action lawsuit that charged Zillow — creator of the controversial Zestimate online home-valuation tool — with deceptive business practices designed to mislead consumers.

The suit, filed last year by Chicago-area home sellers, alleged that Zillow systematically engages in a confusing, unfair and deceptive marketing scheme that impairs homeowners and sellers in the sale of their houses. Plaintiffs charged that Zillow hides its multiple financial arrangements with realty agents and lenders, and that it ignores or refuses to correct “Zestimates that homeowners challenge as inaccurate or unfounded.” Plaintiffs also alleged that the company lowballs value estimates on so-called “FSBOs” — for sale by owner homes on its website — then increases them if a realty agent who pays money to Zillow subsequently lists them. An earlier version of the suit alleged that Zestimates undervalued plaintiffs’ homes and violated Illinois appraisal rules by serving as the functional equivalent of appraisals. That suit was dismissed, but the court allowed the plaintiffs to file an amended version.

If you’re not familiar with Zestimates, just tap any home address in the country into your search engine; you’ll likely see a value estimate pop up along with descriptions of the property’s features, photos and square footage. Zillow says it has Zestimates on more than 100 million homes, whether they are actively for sale or off the market. The estimates are based on “millions of public and user-submitted data points” on homes, which get fed through its proprietary algorithms to generate value estimates, one-year forecasts of future value and rent estimates.

The company insists that its Zestimates are relatively accurate, with a “median [national] error rate” of 4.6 percent. But for years, consumers, appraisers and realty agents have criticized the company for having much higher error rates on individual properties — sometimes 10 percent or more in areas where housing types vary widely or property data is difficult to obtain. Some major metropolitan areas have error rates well in excess of Zillow’s national median — Dallas-Ft Worth’s rate is 8.2 percent — and some states have exceptionally high rates. Delaware’s statewide median error rate is 11.9 percent; certain counties in some states have error rates of 20 percent or higher. In Illinois, at least five counties have error rates of 20 percent or higher and one, Perry County, has a 26.7 percent rate.

In her decision, Judge Amy J. St. Eve of the U.S. District Court in Chicago, concluded that “Zestimates are not false or misleading representations of fact” that are likely “to confuse consumers” because they are “merely” an estimate of the market value of a home. Nor do they constitute a “bait and switch” scheme as alleged by the plaintiffs or constitute “self-dealing” because they “funnel” FSBO sellers to Zillow’s “premier” realty agents — those who pay the company for special advertising placement and leads on who is shopping for a home.

Asked for comment on the decision, Zillow said that “we are pleased that the court has dismissed the claims in this lawsuit not once, but now twice — finding the allegations in the lawsuit without merit.”

Barbara Andersen, an attorney whose frustrations with an allegedly lowball estimate on her home prompted her to file the original suit, said in an email that the court “is disregarding” the reality that consumers give credibility to Zestimates and use them for their own purposes.

“If you can give … buyer(s) a tool to manipulate a seller, they will use it and vice versa,” she said, “depending on whether the Zestimate is too high or too low.”

Andersen said she finds it “disappointing” that “the buying public does not realize Zillow’s income is from brokers who pay” money for leads and advertising tied to Zestimate pages. “So basically Zillow is financially motivated to keep the Zestimate inaccurate so it can ‘funnel’ disgruntled sellers to brokers” who then “cure an issue [inaccurate valuations] that Zillow created,” she said.

In response, Zillow said “the Zestimate is incredibly accurate, and Zillow is constantly working to improve its accuracy even more.”

What to make of the Zestimate decision? Best advice is to take Zillow’s own suggestion and see Zestimates as starting points, not end conclusions as to true value. Plus, be aware of how the Zillow model works: The company makes most of its money — $213.7 million, 71 percent of total revenues in the first quarter of 2018, according to its latest securities filing — from realty agents and brokers who pay it for advertising on its websites.

Rendering of American Dream Miami

Triple Five Group can officially begin the construction phase of its $4 billion American Dream Miami project, set to become the largest mall in the country.

County commissioners voted 11-1 on Thursday to re-designate nearly 174 acres in unincorporated northwest Miami-Dade from “industrial and office” to “business and office” that will allow Triple Five to build 3.5 million square feet of retail space, a massive theme park and 2,000 hotel rooms on a  vacant triangle between I-75 and the Florida Turnpike’s Homestead Extension.

Then, commissioners approved a development agreement with Triple Five and minor zoning exemptions such as allowing the developer to place eight trees per acre instead of the required 16, and reducing a right-of-way requirement for Northwest 102nd Avenue from 70 feet to zero.

The approvals represented the final legislative hurdle for Triple Five, a global developer of mega-malls and entertainment facilities, to move forward with its ambitious, controversial proposal.

During a marathon meeting that featured more than 50 speakers and a standing room only commission chamber, Triple Five CEO Don Ghermezian boasted that his company is creating a one-of-kind destination that will add nearly 10,000 new jobs to South Florida and generate about $60 million in development impact fees. “I am looking to create entertainment and retail components that you don’t find in this marketplace,” Ghermezian said. “We are the only developer suited to create this type of environment.”

Three years ago, Triple Five unveiled plans for American Dream Miami,  which would supplant the company’s Mall of America in Bloomington, Minn., as the largest shopping center in the U.S. If built, American Dream Miami would have a 16-story indoor ski slope, a 20-slide water park, a 14-screen 3-D movie theater, and a performing arts center representing 2.7 million square feet of entertainment and common space, plus the shopping component.

Since that time, residents in northwest Miami-Dade and neighboring Broward have mounted public opposition to the project due to concerns American Dream Miami will worsen traffic congestion on I-75 and the turnpike. Many showed up to the county commission meeting sporting green t-shirts emblazoned with the words, “American Dream Nightmare.” Other opponents had affixed thumbs-down stickers to their clothes. A traffic study shows American Dream Miami will generate 70,000 vehicle trips in and out of the property.

To mitigate traffic gridlock in and out of American Dream Miami,
Triple Five will be responsible for constructing $210 million in road and interchange improvements, including widening Miami Gardens Drive for a new bus lane from I-75 to Northwest 57th Avenue. It will also pay $5.9 million in upfront impact fees to expand five Miami-Dade bus routes to the mega-mall, as well as bring in Broward County bus service and private shuttles, and build a $12 million transit center.

However, commissioner Daniella Levine Cava, the only commissioner to vote against Triple Five, said the company’s offer was not enough to address the potential traffic issues adequately and American Dream Miami would undermine the county’s investment in a new rapid transit plan. “I wish Triple Five and the Ghermezian family all the best,” said Cava. “I am not going to able to vote for it.”

Competitors such as Simon Property Group, GGP, and Taubman also entered the fray by forming the group South Florida Taxpayers Alliance to oppose any effort to give Triple Five government subsidies for American Dream Miami. During the public hearing, lobbyists representing the alliance warned county commissioners that Triple Five has a history of demanding taxpayer financing and public funds for its projects.

Jeff Bercow, a government affairs and land use attorney representing the alliance, noted Triple Five scored $250 million in tax breaks from the Minnesota Legislature in 2013 for a Mall of America $1.5 billion expansion and that the company obtained $1.1 billion in tax-exempt bond financing for its American Dream Meadowlands project in New Jersey. Bercow suggested Miami-Dade officials prohibit Triple Five from seeking county financial assistance in the development agreement entered with the company.

“Tax dollars should not be used to line the pockets of these wealthy businessmen,” Bercow said. “Based on the extensive track record of Triple Five, we feel it is necessary to protect the public.”

Miguel Diaz de la Portilla, the attorney for Triple Five, dismissed Bercow’s comments as a veiled attempt by his mall-owning clients to hurt a new competitor. “They claim they want an equal playing field,” Diaz de la Portilla said. “But they want to place an unconstitutional restriction that doesn’t exist on any application Mr. Bercow has brought before this board and that doesn’t exist for any of the malls Simon owns in Miami-Dade or anywhere else.”

Diaz de la Portilla added, “You can’t really believe everything Simon says.”

Miami-Dade Mayor Carlos Gimenez and several commissioners said there was no need to include the prohibition because they already informed Triple Five that the company would receive no county funds or tax breaks. “As long as I am here, it’s no,” Gimenez said. “I was very clear that we are not going to give any county funds for this project.”

Added Commissioner Rebeca Sosa: “I will support this for as long as there is no subsidy of any kind from this county to the entity.”

Rendering of project and Concord Hospitality’s Mark Laport (Credit: Navarro Lowrey and Concord Hospitality)

Concord Hospitality just scored a $42 million construction loan to build a Marriott Autograph Collection brand hotel that will anchor the mixed-use project planned for West Palm Beach’s former city hall.

Property records show Florida Community Bank is providing the loan for the 210-key hotel at 251 North Narcissus Avenue.

The $145 million project, developed by Navarro Lowrey Properties, is being built on a 3.5-acre site at 200 Second Street. The 435,000-square-foot development will consist of 251 luxury apartments, a restaurant, more than 20,000 square feet of retail space and a nearly 500-space parking garage, according to the developer’s website.

In April, PGIM Real Estate and Woodfield Investment Partners scored a $50.4 million construction loan to develop the luxury apartments and retail components of the mixed-use project, which sits across from the Intracoastal Waterway.

Navarro Lowrey paid $11.5 million for the site in February, roughly two years after the city first solicited buyers for the property. The city’s community redevelopment agency paid to demolish the former city hall building last year.

The project is expected to be completed by 2019, according to the developer’s website.

Hundreds of brokers, attorneys, bankers and industry insiders waited in a line that snaked around the entrance to the Pérez Art Museum Miami last week to celebrate the launch of Okan Tower, a new mixed-use tower planned for Miami’s Arts & Entertainment District.

The developer, Bekir Okan of the Turkey-based Okan Group, hosted the soirée on the top floor of PAMM with drinks and hor d’oeuvres, a violinist, and a digital billboard on the bay that showed renderings of the Hilton-branded tower. Okan ended the evening with speeches from the developer, One Sotheby’s International Realty president Daniel de la Vega and Miami Mayor Frances Suarez, followed by a fireworks show and Turkish music.

The $300 million, 70-story hotel and condo tower is planned for the site at 555 North Miami Avenue. The project will include a 294-room Hilton hotel, 236 condo-hotel units, 153 condos, 64,000 square feet of Class A office space and a restaurant on the 67th floor. Construction is expected to begin later this year. Prices start at $318,500 and range from 447 square feet to 1,245 square feet. The four duplex penthouses will range from 1,872 square feet to 2,142 square feet and from $1.9 million to $2.4 million.

Few projects are launching sales at this stage in the cycle. Earlier this year, Russian billionaire Vlad Doronin launched Una, a 47-story, 135-unit luxury waterfront condo building planned for Brickell.

Both Okan and Doronin are planning to self-finance construction.

Higher rates are adding urgency to the U.S. homebuying frenzy.

With mortgages rates at a seven-year high, homebuyers are moving more quickly, Bloomberg reported. Homes sold last month went into contract after a median of 36 days on the market, a record speed in data going back to 2010.

The average rate for a 30-year fixed mortgage climbed to 4.61 percent, the highest level since 2011, Freddie Mac said in a statement Thursday. The rise boosted the monthly payment on a $300,000, 30-year loan has climbed to $1,540 — up from $1,424 in the beginning of the year, Bloomberg noted.

“This is what happens when the economy is strong,” Sam Khater, Freddie Mac’s chief economist, told Bloomberg. “All the higher-rate environment does is it either causes them to try and rush or look at different properties that are more affordable.”

Buyers are also seeing higher home prices. The national median home sale price jumped 7.6 percent in April, compared to a year ago, to $302,200, according to Redfin.

More than higher mortgage rates, lack of inventory is the concern for clients, Minneapolis-area Realtor Mary Sommerfeld told Bloomberg. “My buyers say they better get busy and buy before the interest rates go up any further,” she said. [Bloomberg]Meenal Vamburkar

The Real Deal is pleased to announce we will be teeing off on our first golf outing at Grande Oaks Golf Club in Davie, Fla. — home to the filming of the cult classic “Caddyshack” — on Monday, June 4.

To purchase tickets or foursomes, please visit our site 

The outing will benefit the Orphaned Starfish Foundation, an advocacy group dedicated to working with orphans, victims of abuse and at-risk youth through computer technology.

Please look out for updates to join TRD insiders and other key South Florida real estate professionals for a day of great golfing, networking, cocktails, meals and fun.

Key opportunities to sponsor this must-attend event are available. Please contact Golf@TheRealDeal.com for more information.

Rendering of Commodore Plaza, Ricky Trinidad and Miguel Pinto

Metronomic Inc. is under contract to buy the parking lot next to the popular GreenStreet Cafe in Coconut Grove, where the developer is planning to build an Aloft hotel.

Metronomic, led by Ricky Trinidad, will pay $4.8 million, or about $670 per square foot, for the nearly 7,200-square-foot lot at 3110 Commodore Plaza, broker Miguel Pinto said. The Coral Gables-based developer is expected to close on the site in early July.

Pinto and Jenny May of Apex Capital Realty are brokering the deal. Records show Commodore Plaza Parking L.C. is the seller.

Trinidad is planning to build Commodore Place on the property, a five-story, mixed-use project with Class A retail space, according to his company’s website. He could not immediately be reached for comment.

The Chicago developer launched sales last year for a group of single-family homes in the West Grove. He’s also working on developing student housing in Little Havana near Miami Dade College.

The hotel project is in the center of downtown Coconut Grove, near CocoWalk and a number of shops and restaurants. Federal Realty Investment Trust and its partners are renovating and redeveloping CocoWalk into a mixed-use center with an open plaza, new office building and a new retail mix.

10 Blossom Way and Ken Griffin (Credit: Google)

Billionaire Ken Griffin just closed on a property that’s part of his massive assemblage in Palm Beach for $20.25 million.

The deal brings the hedge funder’s total spent on Blossom Way and the surrounding area to about $250 million over the past six years. The estate at 10 Blossom Way adds nearly 2 acres west of South Ocean Boulevard to the 15 acres he already owned, making the assemblage the largest estate by far in the town, according to the Palm Beach Daily News.

The sellers, Roger and Susan Hertog, paid $9.2 million for the 10,800-square-foot mansion in 2003. It was once owned by golfer Raymond Floyd.

Griffin is tweaking his plans for the Billionaires Row project, which would have stretched longer than a football field.  San Francisco-based architect Ugo Sap of Atelier Ugo Sap was handling the design.

Earlier this year, Griffin spent $58.5 million for the top four floors at JDL Development’s unfinished condo tower in Chicago. He heads the Chicago-based hedge fund Citadel, which has upwards of $27 billion in assets under management. [Palm Beach Daily News] – Amanda Rabines

North Bay Road

The Miami Beach City Commission voted down a plan to elevate North Bay Road amid growing concerns from residents that it could ruin their property values and lead to flooding on their properties.

The contentious move could delay the project for close to six years since the Florida Department of Transportation plans to start its Alton Road project in 2021. While Alton Road is under construction, drivers will be re-directed to North Bay Road.

The commission, in a 5-2 vote, turned down the plan to upgrade pipes for drinking, sewage and stormwater, as well as elevating upper North Bay Road. David Mancini and Sons was the winning bidder of the $24 million contract. Mayor Dan Gelber said the city needs to elevate streets and install pumps in order to protect property values,  but some residents are wary that elevating roads could cause more flooding.

Miami Beach, which has some of the area’s most expensive real estate, faces up to 2 feet of sea level rise by 2060, according to the Southeast Florida Climate Compact. NOAA reports show the island could see high tide floods on a daily basis by 2070.

Earlier this year, the city fired its former engineer Bruce Mowry, who stewarded the city’s sea level rise mitigation efforts, after he was found to have skirted environmental regulations, including building a seawall on Indian Creek and removing protected mangroves without permits. [Miami Herald] – Keith Larsen

Maryanne Trump Barry, Eric and Donald Trump Jr. with the property at 1125 South Ocean Boulevard (Credit: Getty Images)

The Trumps are keeping it in the family.

A company controlled by Donald Trump Jr. and Eric Trump paid $18.5 million for their aunt’s waterfront Palm Beach home, property records show.

1125 South Ocean LLC, an entity the brothers created in March, financed the purchase with an $11.2 million mortgage. The lender is not yet available in Palm Beach County records.

President Trump’s older sister Maryanne Trump Barry listed the eight-bedroom, 8,270-square-foot mansion at 1125 South Ocean Boulevard with Christian Angle of Christian Angle Real Estate in December for $22.9 million. The price was raised to $23.9 million in March, which means it sold at a 22.6 percent discount. Angle declined to comment.

Barry, 81, is a former judge of the United States Court of Appeals for the Third Circuit. In 2004, she paid $11.5 million for the Palm Beach home, which was built in 1956.

Barry sold the house at 160 Woodbridge Road, near Trump’s Mar-a-Lago private club, in 2005.



Closing Town Residential was Andrew Heiberger’s last option.

No amount of cost-cutting would save the residential firm, he said May 14 during a one-on-one conversation with The Real Deal’s Amir Korangy. In recent years, the pressure on traditional brokerage has mounted, and firms are now facing high commission costs and fierce competition for top agents.

“I don’t think the traditional brokerage model is sustainable,” said Heiberger, who shuttered Town’s brokerage and leasing business on April 19. “We’ve been disrupted.”

According to Heiberger, Town did $13.5 billion in sales during its eight-year run. But it struggled with turning a profit. By 2017, Town whittled its losses from $10 million to $670,000.

But Heiberger said he wouldn’t do anything differently. “I accomplished what I set out to do,” he said. He said he plans to finish two new development projects he’s been working on. “As long as I don’t have a toe tag,” he said, “those projects can get completed by me.”

Watch the full panel discussion above.

President Donald Trump and Mar-a-Lago (Credit: Getty Images)

President Trump’s newly released financial disclosure revealed more than the $100,000 Stormy Daniels payment to his personal attorney Michael Cohen.

The statement, released Wednesday by the Office of Government Ethics, show how much his properties, golf clubs and businesses earned last year. The highest-grossing Trump property was the Trump National Doral Golf Club at 4400 Northwest 87th Avenue with $74.7 million in 2017, according to Business Insider. While it raked in the most cash last year, the Doral resort also experienced the biggest dip in revenue compared to the previous year’s $115.8 million.

Mar-a-Lago’s income also dropped to $25.1 million from $37.2 million in 2016. Trump National Golf Club in Jupiter generated $14.3 million and the Trump International Golf Club in West Palm Beach closed out the year at $12.8 million.

In all, Trump’s South Florida properties made $127 million in 2017, Business Insider reported.

The Trump Park Avenue building in New York City also reported a year-over-year decline, with revenue totaling about $14 million in 2017, compared to nearly $30 million the year before. In Chicago, Trump made more than $8 million last year off the Trump International Hotel & Tower last year.

The Trump International Hotel Washington, D.C., which opened in late 2016, more than doubled its earnings to $40.4 million from $19.6 million. [BI]Amanda Rabines

Masayoshi Son (Credit: Getty)

If you are running a real estate company with a tech bend, now might be the time to give Masayoshi Son a call. His firm is reportedly in talks to launch another version of his $100 billion Vision Fund venture.

The Japanese billionaire behind the technology fund, which invested almost $5 billion to WeWork and Compass, could launch the new fund as early as next year, according to sources who spoke to Bloomberg.

As the founder and chief of SoftBank Group, Son pooled money from sovereign wealth funds in Saudi Arabia and Abu Dhabi for the current Vision Fund, of which $45 billion has been distributed to companies like Uber, ARM Holdings, NVIDIA, Flipkart, OneWeb, Slack and even dog-walking app Wag.

“Vision Fund 2 will definitely come, it’s just a matter of when,” Son said at an event in Tokyo, according to the outlet. “Sometime in the near future.”

Son, who has a penchant for employing unorthodox negotiation techniques, is said to have signed a $4.4 billion deal with WeWork chief Adam Neumann in the backseat of his car. In December, Son gave $450 million to tech-fueled Compass, raising its capital to $775 million, the most of any residential brokerage in the country.

Son was also part of a $13 million funding round for research and data company Reonomy, invested $860 million into construction startup Katerra, and acquired real estate investor and lender Fortress Investment Group for $3.3 billion in cash earlier this year.  In its April issue, The Real Deal explored whether Softbank’s flashy real estate plays will work. [Bloomberg]David Jeans

Owen Thomas and Steve Roth

Typical employees at CBRE make, on average, nearly 20 percent more than their counterparts at JLL.

And the average worker at Boston Properties earns more than the normal employee at Vornado Realty Trust, who takes home more than the average earner at SL Green Realty.

Public companies across the United States are revealing how much typical employees make for the first time in their financial disclosures as part of the mandate from the 2010 Dodd-Frank Act.

The Wall Street Journal pulled together a database of median employee pay for more than 1,000 publicly traded companies collected by the firm MyLogIQ.

Among the big real estate investment trusts, the typical worker at Boston Properties – which has 740 employees – earned a median salary of $104,897, while Vornado had a median salary of $61,824 for its 3,989 employees.

Boston Properties CEO Owen Thomas, meanwhile earned a total compensation in 2017 of $10.06 million, according to public disclosures. Vornado’s Steven Roth brought home a total compensation package of $10.46 million during the same time (which does not include $2 million in stock dividends).

SL Green’s median salary was $57,508 for its 1,065 employees. Its CEO Marc Holliday earned $17.4 million last year, according to SEC filings.

When it came to big commercial real estate brokerages, CBRE had a median salary of $57,303 for its 80,000 workers, and the median salary for JLL’s 82,000 employees was $48,000.

The highest-paying real estate company on the Wall Street Journal’s list is New Jersey-based hospitality REIT Chesapeake Lodging Trust, which had a median pay of $347,750 across 14 employees. [WSJ]Rich Bockmann

You’d expect construction bosses to be gladiators, experts at using the bully pulpit to advocate for the hardhats and contractors they represent. More unusual, however, is seeing them apply Churchillian diplomacy on stage. But that’s what the audience at The Real Deal’s 11th annual New York Showcase and Forum got to witness Monday.

In the midst of a discussion about the bitter battle between unions and Related Companies at Hudson Yards, the country’s biggest private development, Lou Coletti, president of the Building Trades Employers’ Association, requested a moment to read a quote aloud. He took out his spectacles, pulled out a paper and delivered a line from “The Darkest Hour,” the Winston Churchill biopic.

“Success is not final, failure is not fatal: it is the courage to continue that counts.”

John Banks, president of the Real Estate Board of New York, elicited another highlight-worthy moment when he came to the defense of Gary LaBarbera, president of the Building and Construction Trade Council of Greater New York. “Anyone who would impugn his integrity, doesn’t know the man,” Banks said of LaBarbera, prompting the union leader to reach over shake his hand, and pat his thigh lovingly. LaBarbera said that his group was ready to come to the table and hash things out with Related. The developer, however, wasn’t buying it.

The event brought together some of the city’s top developers, brokers, construction heads and other real estate professionals, with thousands coming through the Metropolitan Pavilion in Chelsea for a day of panels, exhibitor booths and networking.

Some of New York’s most active developers discussed how New York, despite more than 2.5 million square feet of new office space coming to Manhattan every year, needs to continue ramping up its building.

“If you look at London in the last 20 years, London’s replaced 50 percent of their stock with new office space. If you go to Hong Kong, that number is 80 percent. If you go to New York that number is 7 percent,” said Silverstein Properties’ CEO Marty Burger. HFZ Capital’s Ziel Feldman talked about paths to finance projects such as condo inventory financing – “It’s another way of getting money out the door,” he said.

On the residential side, TRD’s publisher Amir Korangy sat down with Town Residential founder Andrew Heiberger, for his first public appearance since Town went under last month. The two walked on stage to the “Game of Thrones” theme song. Heiberger opened up about why he decided the only move left was the nuclear option, disbanding the brokerage operations of a firm that he said has done over $13.5 billion in sales since its inception.

“There were about 10 percent of the people in our firm doing the lion’s share of the business,” Heiberger said. “And they were at very high splits.” He warned brokers in attendance that the traditional business model of a residential brokerage was no longer sustainable, citing existential threats such as ferocious competition for agents, growing expenses and rising commission splits.

The panel that followed him, which included the city’s top residential broker and executives from leading firms, naturally took issue with Heiberger’s assessment.

“I disagree that traditional brokerage is not a sustainable business model,” said CORE’s CEO Shaun Osher, adding that the most recent quarter was the firm’s strongest in over a decade. “If that were true, none of us would be sitting up here.” But the panelists did acknowledge some new realities in the market, including StreetEasy’s Premier Agent, which Raphael De Niro said had both created headaches – “The fact that I’m co-broking with people from Great Neck on Manhattan rentals is crazy,” he said – and opportunities – “I was not supportive of Premier Agent, [but] I’m changing my philosophy.”

Brown Harris Stevens’ Bess Freedman, however, still isn’t swayed. “It’s like we’re giving them the bullet and putting the gun to our head,” she said of the agent-advertising program.

Warburg Realty’s Clelia Peters said that it wasn’t national encroachment that would affect brokerage commission splits in New York, but rather the impact of a behemoth such as SoftBank, which has invested tens of millions in firms like Compass.

SoftBank’s strategy, she added, is to make landscape-altering bets on the firms they back, so every player would see an impact.

The day wrapped up with a panel in which commercial real estate leaders discussed how the lure of the public markets has changed the game for brokerage.

“I think other brokers have benefited from these public companies and their significant war chests,” said Newmark Knight Frank’s Dustin Stolly.

JLL’s Peter Riguardi said being public allows the firm to compete for the biggest prizes.

“We had some very large, strategic clients that, quite frankly, I think at the end of the day are only considering two firms for certain types for work,” he said.

“I think you mean three firms,” interjected Cushman & Wakefield’s Joanne Podell.

“No, I don’t,” Riguardi replied. “I mean two.”

All photos by Jhila Farzaneh for The Real Deal.

Rendering for project at t 1400 West Indiantown Road and Chris Perry (Credit: Pinnacle Storage)

A company tied to self-storage developer Pinnacle Storage just bought land in Jupiter and scored $8.85 million in construction financing to build its planned 97,500-square-foot facility.

The project includes demolishing the vacant Ellison Graphics building at 1400 West Indiantown Road. Property records show Jupiter Self Storage LLC paid $3.5 million for a 1.6 acre site.

Doug Smith of EWM Realty International represented the buyer in the deal. First Southern National Bank provided the financing. Pinnacle President Chris Perry said he plans to start demolition work in June, with completion expected during the summer of 2019.

Self storage company and real estate investment trust Life Storage, based in Williamsville, New York, will be managing the facility, Perry said. Kenneth Carlson Architects designed the project.

Once complete, the three-story self-storage facility will feature 700 climate-controlled storage units. The property sits on the south side of Indiantown Road, across from the Jupiter Medical Center Urgent Care Clinic.

Pinnacle is also behind the recently completed self-storage facility at 1144 Northwest Seventh Street in Miami, just two blocks south of the Miami River and east of Marlins Park. The Jupiter project would be the company’s first in Palm Beach County.

Renderings of 72+ Collins and Silvia Coltrane

Miami Beach developer Silvia Coltrane is proposing changes to her North Beach hotel project, including adding condos to the mixed-use development.

Coltrane’s 72+ Collins Hotel falls within the North Beach Town Center district. The Miami Beach Commission voted on Wednesday to pass an ordinance on second reading increasing the floor area ratio for the properties between 69th Street, Collins Avenue, 72nd Street and Indian Creek Drive/Dickens Avenue to 3.5 from the current FAR, which ranges from 1.25 to 2.75. Commissioners also approved the North Beach Town Center Revitalization Overlay plan amendment.

The approval allows developers, in some cases, to more than double the density now allowed, boosting property values in the process. Other developers to benefit from the FAR increase include Alex Blavatnik, Matis Cohen and Aria Mehrabi.

Next, Collins and 72nd Developers LLC, a company led by Coltrane with partners Jordan Kavana, Jacques Bessoudo and Blavatnik, will go before the city’s planning and zoning and design review boards with the proposed changes. If they secure their approvals, Coltrane said the developers will break ground by August.

The new proposal calls for 187 hotel rooms, 24 condo units and hotel amenities that include a full-service restaurant with room service, a sports bar, piano bar, wine room, a larger lobby, meeting rooms and two swimming pools.

Coltrane said she plans to finance construction with a loan from a Spanish fund and to partner with a European hotel flag.

72+ Collins Hotel would also include retail space on the ground floor with outdoor seating and gardens.

Ophir Sternberg in front of rendering of Ritz-Carlton Residences, Miami Beach

Three condo buyers are suing the developer of the Ritz-Carlton Residences, Miami Beach over the project’s construction delays, seeking to get their deposits refunded.

Since March, three separate civil lawsuits have been filed in Miami-Dade County Circuit Court against 4701 North Meridian LLC, which is a partnership between Ophir Sternberg’s Lionheart Capital and Elliott Management Corp.

The three lawsuits — one brought by a Dallas-based couple, one from a Miami-Dade resident and another from a Mexico-based entity — all claim to have entered into purchase agreements and put down deposits for condo units between 2014 and 2015. Their units ranged in price from $3 million to $4.8 million.

The plaintiffs allege that the developer stated in its contracts that the project would be substantially completed by June 30, 2017, which meant that the unit would be “physically habitable and usable for the purpose” for which it was purchased, according to one complaint.

But the project is still under construction and the prospective owners allege that the developer has not begun construction of their units. As a result, the plaintiffs allege that the developer has breached its sales agreement. They are seeking a return of their deposits and to have their attorney fees covered.

One of the suits, filed by Joel and Leslie Wishnick of Dallas, also seeks class action status on behalf of all buyers who signed contracts before June 30, 2017.

A spokesperson for the developer declined comment, citing pending litigation.

The lawyers representing the plaintiffs, Hasteny Trading, the Mexican real estate company; and the Wishnicks also declined to comment. Attorneys representing Eric Gordon, the Miami-Dade resident, did not immediately respond to requests for comment.

The Ritz-Carlton Residences is under construction on 7 acres on Surprise Lake in a residential area of Mid-Beach on the site of the former Miami Heart Institute. The luxury development will have 111 residences and 15 stand-alone villas with prices ranging from $2 million to $40 million.

Lionheart chose Piero Lissoni, an acclaimed Italian architect known for minimalist design, to design the project. Sales for the project began in 2014. Last year, Douglas Elliman reported that 70 percent of the units were pre-sold.

Ritz-Carlton Residences, Miami Beach will feature gardens, pools and 36 private boat slips. Shared amenities will include an art studio, a rooftop pool deck with private cabanas and a restaurant, a waterfront bar and social room, pet grooming facilities, indoor and outdoor yoga studios, a meditation garden and car wash facilities.

Lionheart Capital paid Mount Sinai Medical Center $20 million for the property in February 2012.

It may not be time to panic yet, but investors are starting to buy riskier mortgage bonds.

Homeowners whose mortgages get packaged into so-called credit risk transfer securities (CRTs) have lower credit scores and higher debt levels than they did in recent years, Bloomberg reported.

CRTs, like traditional mortgage-backed securities, are issued by Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. But unlike traditional housing bonds, CRTs aren’t fully guaranteed by the federal government. That means investors have to cover for losses, and makes the recent fall in credit scores worrying to some.

“Underwriting starts out very strict and as time goes on, it’s kind of the proverbial frog in the pot of boiling water,” John Kerschner of Janus Henderson Group told Bloomberg. “The heat keeps going up and up and then you realize, oh, this is really not good.”

The average credit score in Fannie Mae’s most recent two CRT issues was 743, compared to 765 in 2013. Meanwhile borrowers’ average debt-to-income ratio rose to 36 percent, up from 31.7 percent in 2013.

Still, the total volume of CRTs is just $50 billion — a fraction of the $40 trillion bond market — and some observers are more concerned about corporate bonds. Bank of America analysts noted that looser lending standards will be “prudent rather than leading to excesses as seen in the last decade.” [Bloomberg]Konrad Putzier

Rendering of Related’s project

The Related Cos. can move forward with its proposal to build a 25-story luxury office tower in West Palm Beach after a city board approved creating a business district.

The city’s planning board voted 3-2 to approve the Okeechobee Business District, which would support the development of luxury office buildings in a waterfront zone at Flagler Drive and Okeechobee Boulevard. Opponents criticized the business district, arguing it was “spot zoning” and would add to the already congested traffic in the area, according to the Palm Beach Post.

The board also OK’d Related Group and Rybovich’s plan to build two 24-story apartment towers on North Flagler Drive, and voted to allow for medical marijuana dispensaries to open in parts of West Palm Beach.

The city commission, which voted to kill the business district last year, has the final vote on the planning board’s approvals. Since the Okeechobee plan was voted down in September, two new commissioners were elected.

[Palm Beach Post] – Katherine Kallergis

 

Rendering of Alexan Tarpon River

UPDATED, 11 a.m., May 17: A proposed rental tower in downtown Fort Lauderdale that was headed toward approval under the city’s former commission may no longer happen.

Fort Lauderdale’s newly elected commission on Tuesday decided to defer a vote to approve the project after the developer, Trammel Crow Residential, slashed the original building height by seven stories.

The commission will vote June 19 after further evaluating the new design, according to the Sun Sentinel. Despite the lower building height, the Alexan Tarpon River planned development at 501 Southeast Avenue still consists of about 180 units.

The project was met with opposition from residents concerned with the city’s fast growth and increased traffic congestion, who hired a lawyer and a traffic engineer.

Mayor Dean Trantalis and commissioners Steve Glassman, Heather Moraitis and Ben Sorensen had halted the project earlier this year. The proposal is seen by many as a testament to what future developments in downtown Fort Lauderdale will look like under the newly elected commission, which recently also voted to end the Wave streetcar project.

The Alexan Tarpon River development site is on the south side of the New River, across U.S. 1 from the Rio Vista neighborhood. It would replace the 30-unit, three-story Edgewood Condo there. [Sun Sentinel] – Amanda Rabines

Victor Posner and Brenda Nestor (Credit: Social Miami, Wikipedia, Max Pixel)

UPDATED May 17, 3:15 p.m.: It’s been 16 years since Victor Posner passed away, but the legal war over the remnants of the master corporate raider’s real estate empire lives on.

Brenda Nestor — a former-girlfriend-turned-business-associate of Posner’s who was named the primary beneficiary of his $321 million estate in 2002 — has filed suit against the prominent law firm Akerman for breach of fiduciary duty, legal malpractice and civil conspiracy.

According to the complaint filed in Miami-Dade Circuit Court last month, Nestor alleges that she suffered damages as a result of “negligent and reckless” legal advice Akerman provided to her court-appointed successor of Posner’s estate.

“The complaint speaks for itself,” said Maury Udell, Nestor’s attorney. “Our client feels wronged by this firm that was looking out for its own interest.” An Akerman spokesman did not respond to an email and a phone message seeking comment.

In 2015, Miami-Dade Judge Celeste Hardee Muir removed Nestor after she allegedly disobeyed previous court orders for her failure to provide a full accounting of her actions as the Posner estate’s personal representative, according to court documents. Muir replaced Nestor with Philip von Kahle, a lawyer and a broker with Fort Lauderdale estate planner Moecker & Associates.

Nestor accuses von Kahle — who is not named as a defendant in her lawsuit — of making her a scapegoat with regard to the Posner estate’s dire finances. “Exercising his newly-developed twenty-twenty hindsight of the Great Recession that occurred in the late 2000s to early 2010s, [von Kahle] began to second guess thousands of transactions that Nestor engaged in while acting as personal representative,” her lawsuit states. “[Von Kahle] began attempting to ‘Monday-morning quarterback’ Nestor’s actions during her 13-year appointment personal representative, many of which were approved by the probate court.”

In her suit, Nestor alleges that von Kahle hired Akerman, which provided him with improper advice such as recommending he file a lawsuit in 2016 against Fidelity to claim a $23.1 million bond she had posted back in 2002 that allowed her to operate Posner’s real estate business through his estate.

That von Kahle lawsuit claims that Nestor caused the Posner estate to lose $375 million in value to negative $50 million during her tenure as personal representative. Her successor also accused Nestor of pouring “tens of millions of dollars into worthless businesses that were insolvent and had no value to the estate.”

Nestor also dipped into the estate and improperly distributed money to herself and companies in which she had a personal stake, according to the Von Kahle complaint.

In her lawsuit, Nestor accuses Akerman of breaching its fiduciary duty by failing to advise the court of conflicts of interests von Kahle had regarding the sale of assets by self-dealing, of which the law firm had knowledge.

Correction: An earlier version of this story cited an allegation against Nestor from a 2016 lawsuit filed by Von Kahle that he subsequently removed in an amended complaint a year later.

15490 Palma Lane and Selcuk Koksalan (Credit: Redfin and Twitter)

International show jumper Selcuk Koksalan and his wife Purlen just bought an equestrian estate in Wellington.

Records show the Turkish family paid $6 million for a 5.4-acre estate at 15490 Palma Lane. It’s near the Palm Beach International Equestrian Center, which houses the 12-week Winter Equestrian Festival every year from January to April. The village is where some of the sport’s most high-profile players practice, like the daughters of Bill Gates and Steve Jobs.

Oil and gas industry executive Thomas “Tommy” Nusz and his wife Terri are the sellers. In 2007 Tommy co-founded the independent exploration and production company Oasis Petroleum, Inc.

The property features all the workings of an equestrian facility like five turnout paddocks and an all-weather Riso arena. The stable boasts stalls and an owner’s lounge with a bath and tack room. Another building on the property holds three wash stalls, two garage bays and a tractor storage.

The four-bedroom main house has four bathrooms and a pool. Martha Jolicoeur of Douglas Elliman had the listing. The property hit the market in April 2017 for $7.95 million, according to Redfin. That’s a 24 percent discount off the asking price.

The niche sport has attracted some of the wealthiest people in the world to Wellington’s equestrian estates. Jennifer Gates’ and Steve Jobs’ estates are less than a mile from each other in Wellington.

Thomas Kirk Kristiansen, the great grandson of Lego’s founder, Ole Kirk Christiansen, and his wife Signe recently sold an equestrian estate, also in Wellington, for $5.9 million.

Though construction spending cooled slightly last year, New York City remains the most expensive place to build in the world with an average cost of $362 per square foot.

That’s a 3.5 percent year-over-year increase, and another 3.5 percent hike is expected in 2018, according to Turner & Townsend’s 2018 International Construction Market Survey.

San Francisco closely followed New York with an average cost of $347 per square foot, and Hong Kong ranked third with $344 per square foot.

In New York, high-rise office buildings were among the priciest to build at an average $565 per square foot. High-rise apartment buildings cost an average $302 per square foot.

Construction spending fell 12 percent from 2016’s record high, totaling $45.3 billion last year. Meanwhile, shortages in skilled labor continued to drive up costs.

“The industry skills shortage is one of the pivotal drivers of rising costs, felt at both a local and global levels,” John Robbins, Turner & Townsend’s managing director in the U.S. said in a statement. “We need to seize current market opportunity to attract new young talent back into skilled trades, incentivize the supply chain with more innovative and partnering contracting models, and invest in digital tools and modern techniques that will maximize productivity.”

New York had the second-highest average hourly-rate with $98.30, though the report only calculated the rates for union labor, which tends to be higher than that of nonunion workers. Thhttps://therealdeal.com/2017/05/17/high-construction-wages-material-costs-make-nyc-the-worlds-most-expensive-place-to-build-report/
e highest paid worker included in the report was “site foreman” with an average hourly rate of $145. Workers in Zurich had the highest average hourly rate at $104 per hour.

Blackstone’s Jonathan Gray and Prologis CEO Hamid Moghadam

A recent spate of mergers in U.S. real estate investment trusts has some investors giving the underperforming sector another look.

March posted a total return of 3.71 percent for the FTSE Nariet All Equity REITs index, compared with a 2.5 percent decline for the S&P 500 index over the same time, the Wall Street Journal reported.

And REITs outperformed again in April, with the index showing a 0.52 percent return, ahead of a 0.4 percent decline for the S&P 500.

“The tide is turning very slowly. It’s not going to be a sea change,” Jonathan Woloshin, head of equities and real estate for the Americas at UBS Global Wealth Management’s chief investment office, told the Journal.

REITs have been underperforming for the past two years, and through the first four months of 2018, returns for the Nareit index were down 6.2 percent. During that time, the S&P 500 saw only a 0.4 percent decline.

Analysts had predicted that real estate fundamentals would decline in the beginning of 2018, but first-quarter earnings came in better than expected.

“The bottom didn’t fall out as quickly as some investors believed would occur,” said Thomas Bohjalian, executive vice president at the global portfolio manager Cohen & Steers.

The sector is also getting a boost from merger-and-acquisitions activity, which investors see as a quick route to big gains.

Blackstone Group, for example, is buying Gramercy Property Trust for $4.4 billion cash, and Prologis made an $8.4 billion stock-for-stock offer for DCT Industrial Trust.

Both deals represent a premium of roughly 15 percent. [WSJ]Rich Bockmann

Miami-Dade County’s courthouse

Brightline’s parent company might still have a chance to build a new downtown Miami-Dade civil courthouse — in spite of the county mayor’s opposition.

On June 5, the Miami-Dade County Commission will decide whether or not to merge two bidding processes for real estate developers and contractors interested in building a new courthouse that will replace the deteriorating circa 1928 civil courthouse at 73 West Flagler Street.

If the processes are merged, it will enable New Flagler Courthouse Development Partners’ unsolicited proposal to compete with four other teams vying to build the new courthouse. NFCDP’s team includes Florida East Coast Industries, the parent company of Brightline, which will start passenger train service at FECI’s MiamiCentral project this weekend.

County Commissioner Sally Heyman made the proposal to keep the team’s bid alive at Tuesday’s commission meeting. Heyman stated that the “unsolicited proposer” was “aggrieved and harmed,” a likely reference to the accidental leaking of the team’s sealed bid to the Plenary Group, a multinational company that expressed interest in building the new courthouse, April 5. As a result of that leak, deemed accidental, KPMG LLP was replaced by BMO Capital Markets as the county’s consultant in the courthouse bidding process.

Eugene Stearns, a lobbyist representing NFCDP, said Heyman’s proposal was a step in the right direction. “We are getting close to what could be a positive outcome for the county and the judicial system,” he said.

But Miami-Dade County Mayor Carlos Gimenez said accepting NFCDP’s bid will be costly for county taxpayers. “The board’s acceptance of the unsolicited proposal is expected to be significantly more expensive than the procurement process already initiated by the county,” Gimenez stated in a May 10th memo.

FECI has been expressing interest in building a new courthouse for the county since 2014. Back then, the company proposed constructing a 618,000-square- foot courthouse with 51 courtrooms. That proposal fizzled after county voters rejected a $390 million bond issue that would fund the construction of a new courthouse.

On Jan. 11, FECI and its partners at NFCDP submitted a new proposal to build a new courthouse on land beside the old courthouse in exchange for $26 million a year for the next 35 years from the county. NFCDP would also purchase and redevelop the historically designated courthouse as a hotel. Further details of the proposal are still secret under the county’s proposed cone of silence law.

Gimenez, however, issued a “request for qualifications” on January 31 from developers interested in building a new civil courthouse under a “two-step P3 process.” On May 2, four proposals were submitted by Fengate Capital Management, the Plenary Group, Sacyr Infrastructure USA, and M-S-E Judicial Partners. Details on the four teams’ proposals are also currently secret.

In the May 10 report, Gimenez and BMO Capital insist that the two-step procurement process will ensure a more affordable and transparent process than the “alternative” proposal pushed by NFCDP. It’s a stance that Gimenez has repeated since February 12 when he first recommended that NFCDP’s unsolicited bid be rejected.

Gimenez has also insisted that the new courthouse be built on county-owned surface lots at the Children’s Courthouse at 155 Northwest Third Street. Gimenez claims it will cost $6.3 million more if the new courthouse is built near Flagler Street instead of the Children’s Courthouse site.

Local lawyer organizations, however, have stated that they prefer that the new courthouse be built near 73 West Flagler. The Miami Downtown Development Authority also fears that building the new courthouse elsewhere could harm Flagler Street’s future economic development. Due to those concerns, the county commission has also insisted on an economic impact report from the mayor.

Chief Judge Bertila Soto said either site can work for a new courthouse. But most importantly, Soto stressed the need for a new courthouse as soon as possible. Due to lead contamination, water fountains at the current 1928-era courthouse have been closed, Soto said. And, due to mold, falling plaster, and other hazards, the court has spent $2.7 million relocating staff and equipment to other buildings in the county in the past three-and-a-half years, Soto added. Just last week, the 19th and 20th floors were closed down.

“The 14th floor flooded because there was a leak in the bathroom,” Soto said. “So, we’re hoping that June 5th is the last day and they will pick a procurement process and it will happen. At least we know they are going to build a building. And we don’t care who. We just want to build it.”

Rendering of L’Atelier Residences (Credit: ArX Solutions)

The developers of L’Atelier Residences in North Beach refinanced their construction loan with a $27.8 million loan from Bank of the Ozarks.

The Disney family’s Shamrock Holdings, SMG Management and W Capital Group are the developers behind the 18-story, 24-unit building under construction at 6901 Collins Avenue in Miami Beach.

The lower leverage, lower interest rate loan replaces the $57 million construction loan the developers took out last year. Romspen Mortgage Investment Fund, a Toronto-based lender, provided the original financing, said David Larson of NKF Capital Markets. Larson arranged both loans.

L’Atelier is now sold out. Buyers include Steve Hafner, co-founder of Kayak.com, who is paying $21 million for the penthouse. Thanks to the penthouse sale, the developers secured a lower interest rate for the rest of construction, according to Larson.

SMGW Golden Sands LLC bought the 40,250-square-foot development site out of foreclosure in 2013, and demolished the former Golden Sands Hotel to build the new tower.

L’Atelier, designed by architect Luis Revuelta with interiors by Holly Hunt, is expected to be completed later this year. Amenities will include an infinity edge pool and deck, cabanas, a hammam spa, a gym and more.

Prices ranged from $3.5 million to $25 million. One Sotheby’s International Realty handled sales, which launched in 2015.

The developers could not be reached for comment.

Palmetto Design Center and Alan Macken (Credit: Macken Companies)

Macken Companies just sold a Walmart-anchored shopping center in Miami Gardens for $11.85 million.

The newly developed Palmetto Design Center at 3791 Northwest 167 Street sold for about $190 per square foot to Rise Star LLC, a Hollywood-based company led by Valentina Georgescu, according to a press release.

The plaza, completed in 2016, was developed in a joint venture between Macken Companies and Zvi Shiff of DZD Holdings. It hit the market in September asking $12.5 million, listed by Monte Greenberg of Macken’s in-house real estate brokerage Macken Realty.

Records show Macken Cos. bought the 7-acre shopping plaza in 2003 for $1.5 million.

Anchor tenant Walmart signed a 41,800-square-foot lease at the retail center in 2013. Other tenants include T-Mobile, Edible Arrangements, OPI Nails and Laundromart. A Spin Car Wash also leased a 32,520-square-foot outparcel within the property, according to the release.

The Walmart store has 17 years remaining on its lease with 16 five-year options, totaling 80 years. All the other tenants have about four years remaining on their leases with renewal options ranging from 5 to 25 years.

Demand for retail properties remains strong in Miami-Dade County. More than 2.8 million square feet of retail space is projected to be delivered this year in South Florida, according to a recent report from Marcus & Millichap. And in Miami-Dade County alone, about 1.8 million square feet will be completed by year’s end. Retail vacancy rates in Miami-Dade are projected to be 4.2 percent in 2018.

Nearby, Acre Companies is building a 37,000-square-foot 24 Hour Fitness health club and gas station at 19281 Northwest 27th Avenue.

(Credit: IHA)

Fewer South Florida homes sold in the first quarter compared to the same period last year, with Miami-Dade taking the brunt of the slowdown, new reports from the Florida Realtors show. Still, prices continue to rise across South Florida.

Residential closings fell 6.5 percent in Miami-Dade County to 5,770 during the first quarter. The decline was marginal in Miami’s counties to the north. In Broward, 7,284 homes and condos sold, marking a 1.5 percent decrease from the previous year. In Palm Beach County, residential sales increased about 1 percent to 7,199.

Miami-Dade

While overall sales fell in Miami-Dade, luxury closings continued to rise. Luxury home sales, priced at $1 million and up, jumped 12.3 percent to 421 in the first quarter, according to the Miami Association of Realtors.

Total residential sales volume fell by about $100 million to $2.6 billion.

The median price of a single-family home rose 5.9 percent to $337,000, while the price of a condo was up 4.5 percent to $230,000.

Broward

A decline in single-family home sales led to a slide in overall residential closings in Broward County. Single-family sales totaled 3,341 in the first quarter, a 3.6 percent decline, while condo sales totaled 3,943, a 0.3 percent increase.

Prices for condos jumped 10.3 percent to $160,000, and rose 8.2 percent to $345,000 for single-family homes.

Palm Beach

Nearly 7,200 houses and condos sold in Palm Beach County in the first quarter of 2018, marking a 1 percent increase compared to the previous year’s 7,125 closings for the first quarter.

Home sales totaled 3,988, up only 0.2 percent, while condo sales increased by 2 percent to 3,211.

Median prices were also up in Palm Beach County. The median price of a condo rose by 10 percent to $172,700 and the price of a single-family home was up 7.4 percent to $400,000.