Novak Djokovic with the unit (Eighty Seven Park unit photo via Lenny Kagan, Djokovic via Getty)
The world’s top-ranked tennis player scored a small win with the sale of his Miami Beach condo.
Novak Djokovic sold his unit at Eighty Seven Park in North Beach for $6 million, slightly more than the $5.8 million he paid for the condo in 2019.
Djokovic — who could complete a “Golden Slam” this year if he wins the remaining two major tournaments and the Olympics — bought the three-bedroom, three-and-a-half-bathroom unit 901 from the developer, an affiliate of David Martin’s Terra.
Djokovic’s Universe Collins Investment LLC sold the 2,233-square-foot unit, which includes an additional 1,715-square-foot wraparound terrace. The buyer has not been revealed.
The sale, first reported by the Wall Street Journal, was recorded on the MLS.
Carlo Dipasquale with Cervera Real Estate and Wendy Mendoza with Cayhill and Dumott Realty represented the tennis pro, while Joyce Gato with Douglas Elliman brought the buyer, according to the listing.
Terra completed the 66-unit, 18-story oceanfront tower at 8701 Collins Avenue in North Beach in November 2019. The Coconut Grove-based developer partnered with Bizzi & Partners, New Valley and Pacific Eagle on the project.
The building includes a gym and spa, wine bar and two pools. It was designed by Renzo Piano, Rena Dumas Architecture Intérieure and WEST 8 Urban Design & Landscape Architecture.
Condé Nast International’s chairman, Jonathan Newhouse, recently sold his unit in the tower for $6.2 million, the same price he paid in 2019.
Clockwise from lower left: John Cooper and Allen Morris from The Allen Morris Company and Stormont Hospitality and Camilo Lopez and Jorge Escobar from Black Salmon (Ander & Co)
A joint venture between The Allen Morris Company and Stormont Hospitality partnered with Black Salmon to buy a boutique hotel in Miami Beach, the second in a series of planned purchases together.
AMS Hospitality Group and Black Salmon paid $25.5 million for Circa 39, a 97-key hotel at 3900 Collins Avenue, according to a press release. The Art Deco-style property includes two buildings and a surface parking lot across the street.
Records show ThirtyNine Collins LLC, led by Kent Janzon, co-owner of The Palms Hotel & Spa, sold Circa 39.
The price breaks down to $263,000 per key. Host Hotels holds the per-room record in Miami-Dade County. It paid $1.42 million per key for the 1 Hotel South Beach in 2019.
The two companies plan to spend $300 million acquiring hotels and other hospitality properties. Their first purchase together was in December, when they acquired the Pelham Hotel New Orleans.
They expect to begin a multimillion-dollar renovation of the hotel and pool deck, and bring in new food and beverage concepts, according to the release. Highgate will manage the hotel.
Melissa Rose of JLL arranged the financing for the purchase.
The property last sold for $8.1 million in 2008.
Samuel Heskiel of Beachfront Realty and Miguel Pinto of Apex Realty brokered the deal, Pinto said. The deal has been in the works since December, according to Pinto.
Circa 39 remained open throughout much of the pandemic.
South Florida’s hotel market, especially in oceanfront areas including Miami Beach and Fort Lauderdale Beach, has recovered faster than other parts of the country, though properties reliant on group bookings and conventions continue to struggle. Hotel investment sales are beginning to pick up again, brokers say.
Recent trades include TPG Real Estate Partners’ $61 million purchase of two adjacent hotels in Miami’s Edgewater neighborhood.
Terra’s David Martin and 1177 Kane Concourse (Google Maps)
Terra closed on a mixed-use development site along Bay Harbor Islands’ Kane Concourse for $31.5 million.
David Martin’s Coconut Grove-based Terra had been under contract to purchase the property at 1177 Kane Concourse and closed on Wednesday, according to a news release from one of the sellers.
The purchase comes on the heels of the Bay Harbor Islands Town Council’s vote on June 9 to transfer the development agreement to Terra from the previous owner.
Sellers Northwood Ravin and Wharton Equity Partners’ Wharton Urban real estate investment platform in early 2020 won town approval to build 90 residential units, 98,800 square feet of office, and 14,900 square feet of commercial space.
Jaret Turkell and Roberto Pesant of Berkadia marketed the site on behalf of Charlotte, North Carolina-based Northwood Ravin.
The development agreement remains in place, Town Council members and a Northwood Ravin representative said during last week’s meeting.
Prior to last week’s vote, Terra’s David Martin said the group’s plan is for a residential, office and retail project, adding that there will be a “signature food and beverage” operator at street level.
Although the council voted unanimously to convey the development agreement to Terra, some members said they were unhappy that the sellers are transferring the site after the town worked with them to hammer out the project design.
Ben Yorker, Northwood Ravin vice president of development, responded that the goal was to create a “cherished community asset” and achieved this after working with residents. But the project would benefit from a developer and operator who is locally based, he added.
Peter Lewis, chair of New York-based Wharton Equity Partners, said in the release that in light of the activity in Miami’s submarkets, “this was an ideal time to redeploy capital” throughout South Florida and in its projects in other markets.
The Wharton and Northwood affiliate, NR/Wharton Kane Concourse Property Owner, bought the site in 2016 for $20.3 million.
Another project on tap in Bay Harbor Islands is the 41-unit, eight-story Onda condominium at 1135 103rd Street. Ugo Colombo’s CMC Group and Valerio Morabito’s Morabito Properties are developing the building, with an expected completion in 2023.
T-Mobile store logo (Getty) and 4850 Northwest 103rd Avenue in Sunrise, Florida (Google Maps)
A group tied to Principal Real Estate Investors picked up a T-Mobile data center in Sunrise for $26 million.
Property records show an affiliate of Des Moines, Iowa-based Principal Real Estate Investors bought the property at 4850 Northwest 103rd Avenue from LPCH Florida Equities, tied to Dallas-based Lincoln Property Company.
Lincoln Property’s data center division Lincoln Rackhouse developed the building, after acquiring the property in a sale-leaseback, according to Lincoln Rackhouse’s website.
Lincoln Rackhouse bought the 4.3-acre site in 2017 for $2.2 million from T-Mobile. Lincoln completed the 45,571-square-foot building in 2019.
T-Mobile, based in Bellevue, Washington, occupies the entire building. It has a 20-year lease with renewal options, according to Lincoln Rackhouse.
The deal is in line with a CBRE projection that data centers, which generally include office space and large electrical and computing rooms, would be in demand nationally this year.
The demand is driven in part by new technology, streaming and the shift to remote work, according to CBRE.
Last year, Spanish multinational telecommunications company Telefonica sold its Doral data center at 11300 Northwest 25th Street for $44 million.
Dr. Ernst A. Langner and Nataly Langner with their Palm Beach estate (Compass, Dr. E.A. Langner-Foundation)
German entrepreneur and philanthropist Dr. Ernst Langner sold his ocean-to-lake estate in Palm Beach for nearly $110 million, marking the second most-expensive residential sale to close on the island.
A trust managed by Langner sold the 15,954-square-foot mansion at 1840 South Ocean Boulevard for $109.6 million, property records show. The buyer was a trust named for the home’s address, and which is managed by attorney Ronald Kochman.
Langner is chairman of the advisory board at The Dr. E.A. Langner-Foundation, and his wife, Nataly, is chair of the board of directors.
The 2.7-acre property last sold in 2012 for $23.5 million. Langner demolished the previous home and completed the new estate in 2014.
The property was listed for sale in March for $115 million. Sandwiched between Lake Worth Lagoon and the Atlantic Ocean, the waterfront home has nine bedrooms, ten full bathrooms and three half-bathrooms, according to the listing.
Lawrence Moens of Lawrence A. Moens Associates represented the buyer and seller. Moens recently represented the seller of a $95 million estate in Palm Beach last month.
This deal is second to the $122.7 million closing of an oceanfront mansion earlier this year. Private equity titan Scott Shleifer purchased the spec home at 535 North County Road.
High-end home sales have continued in Palm Beach despite a limited inventory of on-market properties.
This month, closed sales include the nearly $33 million sale of a waterfront home at 482 Island Drive and the hedge fund manager Igor Tulchinsky’s nearly $40 million purchase of the oceanfront estate at 12088 Banyan Road in North Palm Beach.
Edgar Bronfman Jr. and his Palm Beach home (Getty, 200 Regents / Sotheby’s)
Liquor dynasty scion Edgar Bronfman Jr. spent $12 million for a late 1950s Palm Beach home.
Bronfman bought the property at 200 Regents Park Road from Joel and Carol Jankowsky, records show.
Joel Jankowsky retired as an attorney in 2019, but remains as partner emeritus at Akin Gump Strauss Hauer & Feld LLP. Jankowsky worked out of the firm’s Washington, D.C. office, according to its website.
Bronfman is a managing partner at Accretive LLC, a private equity firm based in New York. According to Variety, Bronfman was named executive chairman of FuboTV in April of last year. He was formerly the chairman and CEO of Warner Music Group.
His late father, billionaire Edgar M. Bronfman, was chairman of the Seagram Company, after inheriting control from his father, Samuel Bronfman, according to an obituary in the New York Times. In the 1990s, the company was the largest owner of liquor brands in the world. In the early 2000s, Seagram’s core business was broken up and acquired by Pernod Ricard, Infinium Spirits and Diageo. Its entertainment assets were purchased by Vivendi; and food and beverage assets were sold to The Coca-Cola Company, according to published reports. Edgar M. Bronfman died in 2013.
The Jankowskys purchased the 0.7-acre property for $5.4 million in 2015. According to Palm Beach County records, the couple renovated the interior the same year. The home was built in 1959.
The house was listed in 2019 for $10.5 million. After price hikes, the most recent asking price was $12 million in August.
Jeff Cloninger with Sotheby’s International Realty represented the seller, while Lawrence Moens of Lawrence A. Moens Associates represented the buyer.
The 6,767-square-foot-house has six bedrooms, seven-and-a-half bathrooms and a pool. It was decorated by Palm Beach interior designer Leta Austin Foster, according to the listing.
As longtime host of NBC’s “Open House,” Sara Gore has toured through hundreds of luxury properties. Now she’ll also help clients buy and sell them.
The TV personality is joining Ryan Serhant’s brokerage as one of the few agents dealing with high-net-worth clients, she and Serhant told The Real Deal. Gore will handle properties asking $10 million or more, they said.
For the nationally syndicated “Open House,” Gore visits compelling homes throughout the U.S., in addition to other ventures that include a weekly podcast with filmmaker Matthew Miele.
Gore began studying for her real estate license last year, she said, and spoke with Serhant in the fall after interviewing him about the launch of his New York-based firm. The two have known each other for a decade, said Serhant, who has appeared on “Open House” over the years.
“I’ve always told her, ‘you’re in the luxury real estate space, you should get your real estate license,’” he said. Serhant added, “she always just sort of laughed.”
Now, Gore has that license. It was on her mind since college, when she worked part-time for luxury property manager Gregg Carolvich at two Lenox Hill co-ops. He encouraged her to pursue the idea.
“It’s always been there,” Gore said. “And honestly, the pandemic just gave me the opportunity of time.”
Serhant’s firm was a “natural fit,” she said, given it has an in-house film studio and emphasis on personal branding. “Where real estate and media meet, that’s something that I completely understand,” she said.
Gore isn’t giving up her TV career, and she’ll likely work on her new real estate business with a partner. She declined to name that person.
NBC signed off on the move, with a caveat. There will be a disclaimer on the screen whenever a Serhant property is featured on her show. A network spokesperson said Gore doesn’t choose the homes that appear on “Open House.”
Bay Park at 3301 Northeast Fifth Avenue (Google Maps)
Edgewater, a bayfront Miami neighborhood north of downtown, continues to attract big spenders.
The latest, Beach Hill Capital Partners — a Miami-based investment firm led by Daniel Rotenberg — is offering $130 million for an older waterfront condo complex called Bay Park, The Real Deal has learned.
The company submitted a letter of intent in mid-May for the 253-unit, two building development that was completed in the early 1960s. Rotenberg declined to comment.
Condo buyouts are notoriously complicated, with competing buyers often coming forward after an initial offer is made, dividing unit owners. At Bay Park, 80 percent of condo owners would have to agree to sell for the deal to move forward.
At 3301 Northeast Fifth Avenue, the complex is immediately south of the Hamilton on the Bay, a rental tower acquired last year by REIT Aimco, where tenants are protesting after being notified that their leases had been terminated. Aimco is rumored to be assembling more land for a larger project, but the company denied it is involved in offers for Bay Park. A source with knowledge of the Bay Park deal confirmed that Aimco is not involved.
According to the LOI from Beach Hill, the buyer would give Bay Park unit owners between nine and 12 months to find new housing.
The property, developed in 1961, includes 13- and 14-story buildings with more than 211,000 square feet, parking, a tennis court and a pool. It’s zoned T6-36A-L, which allows for at least a 36-story building.
Though tricky, condo buyouts have become more common in South Florida due to a scarcity of undeveloped land, especially along the waterfront. Vlad Doronin’s OKO Group recently completed a bulk purchase of a condo in Brickell where the developer is now building Una Residences. Jules Trump and Gil Dezer have done the same for condo towers in Sunny Isles Beach.
Older buildings approaching their 40-year recertifications, which often require unit owners to pay a special assessment to bring their buildings up to code, are prime targets. After a 40-year recertification, buildings are re-assessed every decade.
That, coupled with rising property taxes, insurance and other costs, often result in owners taking the offer and moving elsewhere.
“All of these things sort of snowball,” said condo consultant and former TRD columnist Peter Zalewski. “That’s typically why people decide to sell. Terminations, that’s what’s going to happen a lot this cycle.”
Developers, including the Melo Group, OKO Group, Related Group and Two Roads Development, all have new condo projects in Edgewater. Melo recently launched sales of the first of two towers at Aria Reserve about ten blocks south, with prices ranging from $750,000 to $12 million for penthouses. The developer spent a decade buying more than 80 parcels, including condo units, to complete the five-acre assemblage.
Elsewhere in South Florida, developer Jean Francois Roy is in contract to buy out the condo owners of a property in downtown Fort Lauderdale and replace the building with a rental project called Avica Rio Vista, fronting the south bank of the New River.
Last year, a group of developers including Bruce Eichner and Two Roads Development were competing to purchase an aging condo building in Bal Harbour, with offers of more than $100 million. A deal for that property has not yet closed.
Jean Francois Roy and renderings of the Fort Lauderdale project (OceanLand)
Jean Francois Roy plans to develop an eight-story multifamily building in downtown Fort Lauderdale after buying out condo owners on the site through a bulk purchase.
Roy, founder and CEO of Fort Lauderdale-based Ocean Land Investments, will build Aviva Rio Vista, a 96-unit multifamily project on the south bank of the New River, just west of the Federal Highway tunnel under the river.
The project will replace a three-story condominium, after national developer Trammell Crow failed to build a 21-story tower on the same site.
Roy plans to start demolishing the 30-unit Edgewater House Condominium at 501 Southeast 6th Avenue by the end of 2021 to clear the 0.8-acre site for Aviva Rio Vista, after acquiring all the condos later this month. The condos were built in 1980. The two-year construction phase of the project is set to start in the spring of 2022.
The Fort Lauderdale City Commission on Tuesday approved an application by the Edgewater House Condominium Association for a development permit to build Aviva Rio Vista.
“We have a purchase contract on each of the units,” Roy told The Real Deal. “It’s closing June 30.” He declined to disclose the purchase price for the Edgewater condo units, citing confidentiality agreements, but said the total cost of the Aviva development would range from $65 million to $70 million.
“We are underwriting it as a rental, and during the construction, we will possibly convert it to a condominium,” Roy said. “It’s an expensive project because the finishes are like those in boutique, high-end condominiums.”
Most of the units will have two-bedroom floorplans and span 1,200 square feet. Overall, unit sizes will range from 937 square feet with one bedroom, to 2,100 square feet with three bedrooms.
Roy declined to discuss the likely range of monthly rents at Aviva. If he converts the project to a condominium, unit prices would be less than $1,000 per square foot, he said.
Amenities at Aviva will include a rooftop swimming pool, a spa and fitness center, and about 8,000 square feet of commercial space for a restaurant, coffee shop and bookstore.
In 2018, the city commission rejected a proposal by multifamily real estate developer Trammell Crow Residential to redevelop the condo site as a 21-story, 181-unit tower called Alexan-Tarpon River.
Aviva Rio Vista is designed as about half the size of the rejected Trammell Crow tower.
“What we first saw [from Trammel Crow] wasn’t the right thing for the neighborhood and the area,” commissioner Ben Sorenson said at the meeting Tuesday night. “At the end of the day, I think we’ve got a product that is going to be great and a better fit for the area.”
Roy said residents of Aviva Rio Vista are likely to come from the nearby Rio Vista neighborhood, a cluster of single-family houses across Federal Highway from the Aviva development site.
He also expects Aviva Rio Vista to appeal to buyers of other boutique multifamily projects that he has developed on the waterfront in Fort Lauderdale. Ocean Land Investments completed the 35-unit AquaBlu and eight-unit AquaVue in 2018, the 20-unit AquaMar in 2017, the 16-unit AquaLuna in 2016, and the 22-unit AquaVita in 2015.
Ocean Land’s portfolio also includes larger projects, among them Trump Hollywood, a 200-unit tower that the developer completed in partnership with the Related Group in 2007. Ocean Land also developed Ritz-Carlton Residences Singer Island, a 242-unit condominium with two 27-story towers in Riviera Beach.
Local investor Joseph Imbesi is the seller behind the off-market deal, which includes two parcels spanning 50,000 square feet, 360 feet of waterfront and multiple slips in the marina, Imbesi told the publication.
One of the parcels is a 14,500-square-foot house that is still under construction, the other is an empty lot, the publication reported, adding that the seller gave Neumann a $1 million allowance for the unfinished construction.
Although Neumann has said he’d like to live forever, he has at least one lifetime’s worth of cash to burn. In May, the former WeWork chief was given $245 million worth of stock as part of a renegotiation of his exit package from the company.
Brett Harris of Douglas Elliman represented the buyer. Imbesi was represented by his son, Douglas Elliman agent Tony Imbesi.
Charlene and the late Ron Esserman with an aerial of the Coconut Grove home (Google Maps, the Miami Foundation)
Charlene Esserman sold her waterfront house in Coconut Grove for $15 million.
Records show Esserman sold the home at 3303 Devon Court to Jonathan D. Lewis, who used a trust in his name.
Lewis is president of Jonathan Lewis & Associates, according to his Linkedin page. Based in Miami, the firm provides consulting and management services, according to Bloomberg. Lewis listed the same address of the company on the deed.
Charlene Esserman is the widow of former auto magnate and philanthropist Ron Esserman, who owned several auto dealerships and established the Esserman Automotive Group. He died in 2020.
Property records show that the house was built in 1997. The Essermans acquired it in 1998.
The 7,532-square-foot house has three bedrooms and three-and-a-half bathrooms on a 0.4-acre waterfront lot, according to property records.
It wasn’t the pan-roasted halibut that drew a small crowd to Blu Mar on a recent Thursday afternoon.
One after another, guests on the splashy Southampton seafood spot’s outdoor patio removed the face coverings they had been wearing for the better part of a year and tossed them into a fire pit, which was then doused with fuel and set ablaze to the tune of “Disco Inferno” by the Trammps.
The gathering — convened just days after the CDC issued new guidelines that said vaccinated individuals could go maskless — wasn’t a protest so much as a celebration.
“The message was clear: Everyone must get vaccinated,” said Zach Erdem, owner of Blu Mar, which briefly had its liquor license pulled last summer over alleged violations of the state’s mask mandate, among other things.
With more than 138 million Americans fully vaccinated as of early June, Covid restrictions are quickly being lifted across the country.
In New York, indoor and outdoor capacity limits for most businesses, along with mask mandates for vaccinated people, were lifted May 19. California businesses will be free from capacity restraints on June 15. And though much of Florida had been open for business for months, Gov. Ron DeSantis suspended all remaining restrictions with an executive order on May 3, two weeks before the CDC’s updated guidance.
While these orders afford business operators significant leeway over just how stringent or lax they want to be — in some cases, a level of ambiguity that has risen to confusion — retailers, hoteliers, restaurateurs and office landlords are broadly optimistic about a comeback. Still, major obstacles remain, including a dire shortage of service workers, a sobering outlook for tourism and an unpredictable office market.
Mavis Benson said she saw an immediate influx of visitors to her Avalon Gallery in Delray Beach, Florida, after the CDC’s change in guidelines.
“It was almost like someone flipped a switch,” she said.
Hollywood’s Musso and Frank during the pandemic (Getty Images)
Classic Hollywood eatery Musso and Frank was shut for more than a year during the pandemic. It reopened for dinner on May 6, when Los Angeles County allowed restaurants to expand indoor capacity to 50 percent.
Now it’s preparing to go to full capacity on June 15, and it won’t be requiring masks or asking patrons for proof that they’ve been vaccinated.
To mask or not to mask?
Equinox’s mask requirements are emblematic of the shifting circumstances from state to state. In California, masks are required at all times at the luxury fitness chain, while in New York, those who are vaccinated can go maskless. In Florida, anyone can opt to work out without a mask.
It’s one of the many retailers across the country deciding how to best react to the reopening. The verdicts that businesses come to can be consequential, according to Rachel Kolocotronis of the hospitality consulting firm Elliot Group.
“If this restaurant decides that they want to be a little bit more strict with their mask guidelines, they run the risk of being mistreated by the guests,” Kolocotronis said. “If they want to be more lax with their guidelines, they run the risk of guests not feeling comfortable enough to dine there.”
Three South Florida businesses The Real Deal spoke with said employees are required to wear a mask, but not patrons. Even so, most customers are opting to keep masks on.
“I think wearing masks probably is going to be part of our society for a long time in our future,” said Stephen Bittel, chair of Terranova, which owns retail and restaurant property along Miami Beach’s Lincoln Road and Coral Gables’ Miracle Mile. “People are going to do what they need to do to feel comfortable re-engaging in the communities.”
In Los Angeles, reopening rules aren’t yet set in stone, and counties in California have the option to impose their own restrictions despite the state’s new guidance, which extends through Oct. 1.
It’s been “a yo-yo game” in L.A. throughout the pandemic, said Jon Shook, co-owner of Jon & Vinny’s and four other local restaurants. “We’re making day-to-day decisions.”
Shook said he’ll probably make it optional for guests and servers to wear masks. But difficulties finding available workers also make it trickier to reopen at full capacity.
A staffing crunch
Along Delray’s Atlantic Avenue, patrons came back but many employees did not, said Laura Simon, executive director of the Downtown Development Authority.
When businesses temporarily closed during lockdowns, many employees found jobs elsewhere or sought out different lines of work with less risk of exposure to strangers. Others have opted to remain on unemployment benefits, boosted by a $300 weekly supplement from the federal government extended through September.
Restaurants are “opening indoor dining, and then also maintaining their outdoor dining, and [trying] to provide the level of service that their guests are used to,” Kolocotronis said. “We’re seeing quite a bit of concern about how to balance that. Those that are working at these restaurants are working crazy hours and are a lot of times becoming super burned out.”
Inventory is an additional concern, as factory production has not gotten back up to speed to pre-pandemic levels. That has left Megan Mignano, president of three women’s clothing stores in downtown Delray, wondering how much potential the shops are missing out on.
“People are like, ‘I have not been able to do anything for a year. I am going to go all out and get that $400 dress.’ We can’t keep stuff in stock fast enough,” she said.
A tale of two markets
In New York, many retailers have been operating since capacity increased to 50 percent in March. Around the same time, more opportunistic businesses began considering expansion, given the increased vacancies and low rents.
“Every week it gets a little more normal,” said Brandon Singer, the founder of brokerage Retail by MONA.
The Hampton Inn Miami Beach Mid-Beach (Hampton Inn)
Still, deals have primarily occurred in neighborhoods rather than in Midtown, noted Peter Braus, managing principal at commercial brokerage Lee & Associates NYC.
“I’ve been calling it a doughnut hole,” he said.
That doughnut hole has been compounded by the slow return of office workers, along with the lack of tourism. NYC & Company estimated that domestic travel to New York would be back to its 2019 baseline no sooner than 2023. For international travel, it will take until 2025.
Retailers’ struggles may only be surpassed by those of hotels. The American Hotel and Lodging Association predicts that nationwide hotel room revenue will reach $110 billion this year, a significant improvement over last year’s disastrous figures, but still 34 percent lower than 2019.
“It’s not going to be profitable for at least a year,” said Vijay Dandapani, CEO of the Hotel Association of New York City.
Some hotels have pushed ahead with reopening anyway, initiating the process of rehiring staff, cleaning rooms and welcoming guests.
John Fitzpatrick, who operates two hotels in Midtown, reopened his 687 Lexington Avenue location in May after going dark for over a year. Though his other hotel, near Grand Central, has been open throughout the pandemic, it wasn’t uncommon for it to have fewer than 10 rooms occupied at any given time. At one point, that hotel was considered for use as a maternity ward for a local hospital overrun with Covid-19 patients.
“When I compare ourselves to fellow hoteliers down in Miami, getting 600 [guests] a night for rooms and they can just name the price, we here are just fighting for anything we can get,” Fitzpatrick said.
Indeed, the 100-key Hampton Inn Miami Beach Mid-Beach has made a turnaround. Last year, occupancy hovered around 20 percent and the average daily rate was less than $100, said Todd Benson, a principal at the hotel’s owner, Pebb Capital. The hotel was “in the negative” most of last year, unable to cover expenses and debt, he added.
“It was a struggle until February,” he said. Around that time, occupancy crept up to 37 percent and average daily rate to $125. Occupancy bumped up to the mid-70s in March and April and hit 80 percent in May. The average daily rate for that month was close to $200.
Benson is betting on a further swell in tourism once the cruise industry reopens. The CDC approved a Royal Caribbean cruise set to embark on June 26 from Fort Lauderdale to the Caribbean. It will be the first cruise ship with paying customers to depart the U.S. in more than a year.
Smaller businesses are also seeing gains. At Coral Gables’ Fine Line Furniture & Accessories, the change was felt in April and May, scoring 50 percent higher foot traffic in those months compared to earlier in the year, said President Brianna Brown.
“It seems like all the consumers are happy to be out again,” she said. “They want to touch and feel everything. It has become a social thing.”
For South Florida restaurants, business is not only back, but in many cases back stronger than it was before the pandemic.
“Restaurants are exceeding their best years for sales,” said Lyle Stern, president of the Lincoln Road Business Improvement District.
This is good news for Terranova, as all deferred rent for the down months last year has been paid back, Bittel said.
But it hasn’t been all positive for the landlord and its tenants. The Regal Cinemas at Terranova’s Shadowood Square retail complex near Boca Raton is still closed after the movie theater chain shut down nationwide for a second time in October following a brief reopening last August.
A judge ordered Regal to pay $807,118 in rent owed for the location in April.
Bittel said he isn’t worried about losing money on the 45,000-square-foot space, noting that Terranova and Regal are close to striking a deal to reopen. If that doesn’t happen, he said, another theater chain wants to move in.
Still, the record restaurant business has been welcomed by Bittel, who said the pandemic caused the worst economic downturn he has seen in 40 years.
“In April and May of last year we were all shut down and locked down and, as a business owner-operator, terrified of what the future would look like,” he said. The restaurant boom “has positioned 2021 sale levels to exceed those in the pre-pandemic period.”
Suzanne Frisbie and Corcoran CEO Pam Liebman (Corcoran)
A top Palm Beach broker is returning to her previous firm.
Suzanne Frisbie re-joined the Corcoran Group from Premier Estate Properties, where she had hung her license for nearly the last three years, she told The Real Deal. Frisbie spent the majority of her career at Corcoran, leaving in November 2018 after more than 14 years.
Frisbie, an individual agent, joined Corcoran along with four agents and two executive assistants. Frisbie is the third top agent in Palm Beach and No. 11 in the U.S. based on individual sales volume, with more than $405 million in sales volume last year, according to Real Trends.
Her recent deals include representing the buyer of 520 Island Drive in Palm Beach. Billionaire hedge fund manager and Milwaukee Bucks co-owner James Dinan paid more than $49 million for the spec mansion in May.
Frances Frisbie Criddle, Richard Frisbie, Allison Wren and Lindsay Goldberg also left Premier for New York-based Corcoran, which is led by Pamela Liebman.
Frisbie said she was happy at Premier but ultimately made the move because her family’s company, Frisbie Group, plans to launch new condo projects, including a development in West Palm Beach. She said Corcoran’s new development business is “an optimal fit” for the Frisbies’ projects.
Frisbie took with her two listings for Palm Beach properties at 125 Via Del Lago, asking $29.5 million; and 95 Middle Road, asking nearly $28.9 million. Inventory has decreased dramatically on the island, where ultra high-end home sales have skyrocketed over the past year.
Boca Raton-based Premier Estate Properties, which is affiliated with Christie’s International Real Estate, is led by broker-owners Carmen D’Angelo Jr., Gerard Liguori and Joseph Liguori.
D’Angelo said he and the company wish Frisbie “all the best” with her new project in West Palm Beach.
Prior to moving over to Corcoran in 2004, Frisbie was with Sotheby’s International Realty for nearly 17 years, according to her LinkedIn.
The Hamptons continues to be the hottest housing market in the tri-state area, with several notable sales and listings in recent weeks as the summer season kicks off.
The flight of well-heeled city residents during the pandemic made for a year-round East End real estate boom in 2020, and the buying frenzy shows no signs of slowing.
Home sales in the Hamptons were up 48 percent year-over-year in the first quarter, according to a report by Miller Samuel for Douglas Elliman Real Estate.
And this season, the bidding wars over houses have spilled over into price increases for everything from boat slips to surfing lessons.
“Everyone including the gardener, painters and electrician asked for an increase of 25 to 40 percent this season,’’ Water Mill homeowner Dana Duneier told the New York Post. “My housekeeper explained that she is in demand.’’
Notable recent sales and listings include a disputed property purchased by New England Patriots owner Robert Kraft, the Southampton home designed and owned by the late fashion designer Luba Marks and a multicolored home designed by conceptual artists that offers a can’t-miss amenity: “immortality” to its residents.
Top 5 recent sales
1. 40 Meadow Lane $43 million The biggest recent sale on the East End was this purchase of a Southampton property by New England Patriots owner Robert Kraft, the Wall Street Journal reported. The 7,000-square-foot mansion at 40 Meadow Lane was home to former HFZ Capital Group principal Nir Meir and had been snarled in legal disputes with creditors following his unceremonious ouster from the struggling development firm. The off-market deal was finally wrapped up in April, according to Miller Samuel.
2. 1210 Meadow Lane $28.8 million The 3,727-square-foot beachfront home that the late fashion designer and Broadway dancer Luba Marks designed and built in Southampton in 1972 sold in mid-May, according to Miller Samuel. The oceanfront property at 1210 Meadow Lane sits on 3.32 acres, with three bedrooms, four and a half bathrooms, a tennis court and a pool, besides more than 200 feet of white-sand beach. It was listed in the early winter with Douglas Elliman’s Michaela Keszler and Madeline Hult Elghanayan at $37 million.
1210 Meadow Lane, Southampton
3. 67 Surfside Drive $28.5 million
An oceanfront mansion in Bridgehampton that was featured in the 1987 film “Wall Street” finally sold in mid-May after more than two years on the market, according to Miller Samuel. The 6,700-square-foot home, with four bedrooms and extensive outdoor lounge space surrounding the pool area, was first listed for $34 million in late 2018. The seller was investor Stanley Shopkorn, who paid $1.9 million for the property in 1997, according to PropertyShark.
4. 347 Jobs Lane $25 million
The newly built, 10,000-square-foot home on Mecox Bay in Bridgehampton closed in early June, according to Miller Samuel. It sits on 2.26 acres and features seven bedrooms and eight bathrooms, plus a pool, boat dock, tennis court and covered outdoor entertaining space with a full kitchen. It was originally listed in July 2019 for $30 million before shaving $5 million off its ask last October.
5. 96 Further Lane $23 million
The East Hampton home boasts 11 bedrooms and 11 full bathrooms, two half-baths and a pool, spa, gym, tennis court and outdoor fireplace. The eat-in chef’s kitchen includes three refrigerators. One thing the 9,795-square-foot manse lacks is direct access to the nearby beach, which was reportedly one reason why investor Steve Cohen sold the home in 2013 to move a few doors down Further Lane.
Listings to watch
125 Mid Ocean Drive $52 million Shutterstock co-founder Jonathan Oringer has listed his modernist home in Bridgehampton. It has eight bedrooms and nine bathrooms, as well as a main suite with an office and its own terrace. The main level has floor-to-ceiling glass windows overlooking the beach, and the rear of the home opens to 1,800 square feet of terrace space and an infinity pool. The 2.2-acre property includes 160 feet of ocean frontage. Douglas Elliman’s Erica Grossman and Michaela Keszler have the listing. Oringer purchased the 10,300-square-foot home in 2014 for $40 million.
81-82 South Midway Road $15 million A nearly three-century-old wood-shingled Colonial at 81-82 South Midway Road on Shelter Island has hit the market. The house was built around 1750 by George Havens, an early Shelter Island settler who named it Kemah, a Shinnecock word meaning “in the face of the wind,” according to the listing. The property is on 23 acres spanning two waterfront lots, offering 385 feet on Great Fresh Pond, 5.6 acres of meadow and 596 feet on Peconic Bay. The 3,000-square-foot home itself has six bedrooms, two full bathrooms, two half-bathrooms and a wide brick fireplace. Penelope Moore of Saunders & Associates has the listing.
113 Springy Banks Road $975,000 Though far from the priciest listing to hit the South Fork market in the past month, this East Hampton house — dubbed Bioscleave House (Life-Span Extending Villa) — is certainly the most colorful. The kaleidoscopically hued home was designed by conceptual artist couple Madeline Gins and Shusaku Arakawa (protégés of the surrealist artist Marcel Duchamp) in keeping with their philosophy of “reversible destiny,” which, according to the New York Times, held that “buildings could be designed to increase mental and physical stimulation, which would, in turn, prolong life indefinitely.” In addition to the promise of immortality, the 2,700-square-foot, 52-color house also features four bedrooms, two and a half baths and a fireplace. Jose B. DosSantos of Brown Harris Stevens Hamptons has the listing.
A U.S. visa program that gave green cards to investors and was popular among real estate developers, is set to expire, with no clear plan for an extension.
As it stands, the EB-5 program allows foreign investors in the U.S. who put at least $900,000 into a business that creates 10 or more jobs to apply for permanent residence. It’s now due to expire at the end of June.
Created in 1990, the so-called “cash-for-visa” program was created to stimulate foreign investment and job creation, and became particularly popular in the real estate industry. But some lawmakers representing more rural constituencies say it is too vulnerable to fraud and promotes urban development at the expense of rural investment.
“Make no mistake, this program cannot continue in its current form,” Senator Chuck Grassley, R-Iowa, told the Wall Street Journal. Grassley teamed up with Senator Patrick Leahy, D-Vt., to propose a bipartisan restructuring of EB-5.
Their bill defines more narrowly which projects and investors qualify for the program and would preserve for five years regional centers, which let businesses pool money from many EB-5 investors. Regional centers have become popular in real estate, contributing millions of dollars to projects including the Barclays Center, the Brooklyn Navy Yard redevelopment, and City Pier A in Battery Park.
So far, the bill hasn’t won bipartisan support.
Senate Majority Leader Chuck Schumer, D-New York, doesn’t support the Grassley-Leahy proposal. He and Leahy held a call with representatives from industries including real estate that have taken advantage of EB-5 and said they aimed to find a compromise, according to the Wall Street Journal. Industry representatives have threatened to withdraw their support from any bill that does not make it easier for developers to raise money.
Even some in real estate support the Grassley-Leahy proposal, as they fear the program expiring altogether more than the senators’ restructuring of it. Others proposed shortening the program’s reauthorization period from five years to one, giving them another crack at negotiating a better program within the next year.
While EB-5 became popular in the past decade as developments proliferated, a 2019 federal regulation that raised EB-5 investors’ minimum contribution from $500,000 to $900,000 took some wind out of its sails.
In past years, the program has passed Congress cloaked in massive spending bills. By nudging the program’s expiration date up this year, Senators Grassley and Leahy managed to keep EB-5 out of any upcoming spending bill. However, if Congress fails to strike a deal, Schumer could just let the program die and bring it back when the chamber negotiates its next spending package in the fall.
Fuse Group Investment CEO Eyal Peretz and attorney Michael Ehrenstein (Fuse, Ehrenstein Sager, Twitter via GUT Miami)
Fuse Group Investment acquired the storied Security Building in downtown Miami and plans to sue WeWork over allegedly vacating its offices in violation of the lease, The Real Deal has learned.
The 17-story, historic building at 117 Northeast First Avenue was under a foreclosure action against the previous owner, Security Building AR Owner LLC.
Fuse Group bought the note and once it “stood in the shoes of the lender,” it resolved the lawsuit against the former owner by accepting a deed on the property, said attorney Michael Ehrenstein, who represented Fuse in the acquisition.
Ehrenstein, of Ehrenstein Sager, worked with Mark Meland and Bryan Vega of Meland Budwick on the deal. Ehrenstein declined to disclose how much Fuse Group paid to buy the mortgage or disclose any other values associated with the deal, only saying it was an “amicable” resolution of the suit.
Fort Lauderdale-based Fuse Group, led by Chair Shimon Elkabetz and CEO Eyal Peretz, is an investor focused on bridge and construction lending, and on direct equity real estate investments, according to its website.
Fuse’s Peretz did not immediately return a request for comment. He said in a release that Fuse plans to move the building into its next chapter as a “home for vibrant and innovative tenants.”
The Security Building was WeWork’s flagship Miami location, as the New York City-based coworking giant in 2017 renovated the building with 96,000 square feet of offices, according to the release. It also fully leased the property.
Fuse Group now plans to sue the WeWork affiliate that rented out the property for allegedly violating the lease, and sue WeWork’s parent company for allegedly breaching its obligations as guarantor on the lease, according to the release.
“They haven’t paid their rent and they are not there,” Ehrenstein said. “They removed all of their furniture, so we want an order from the court that we can have possession.”
Platform Capital Funding had filed a foreclosure suit in December against the Security Building’s previous owner, alleging a default of more than $46 million. This included more than $37 million in principal from a 2016 loan, interest and late fees, according to the complaint.
It also included $5 million that was deposited in 2019 by would-be property buyer Inveniam Capital Partners, which planned to acquire the building in part with funds raised through a cryptocurrency auction.
Inveniam wanted to buy the Security Building for $65 million, but the plan unraveled in 2019, when Inveniam CEO Pat O’Meara claimed he had to end the deal because his senior lender changed the language of the agreed-upon loan.
Aside from the previous owner led by Richard Weisfisch, Platform Capital also named Weisfisch and Andrew Joblon individually in the foreclosure suit.
In a March motion to dismiss, the previous owner and Weisfisch called the suit “premature,” arguing the loan had not yet matured. They also said the lender only was entitled to $500,000 from the $5 million Invenian deposit, based on an agreement it had with the borrower.
Their attorney, Alan Grunspan of Carlton Fields, called the outcome “a fair arrangement for both sides.”
Joblon, managing principal at Turnbridge Equities, did not immediately return a request for comment left with Turnbridge.
The building was last purchased in 2015 for $23.5 million. The tower, built in 1927 as the headquarters for the Dade County Security Company, was added to the National Register of Historic Places in 1989.
A rendering of the project and Nicole Kushner Meyer (Kushner)
Kushner Companies paid $20.5 million for a slice of an assemblage in Miami’s Edgewater neighborhood, more than two years after going into contract on the property, The Real Deal has learned.
Investor Enrique Manhard and his partners sold the 0.75-acre piece of a larger assemblage, at 2000 Biscayne Boulevard, to New York-based Kushner, led by Charles Kushner, Nicole Kushner Meyer and Laurent Morali.
Kushner plans a nearly 400-unit apartment tower for the site, which will mark the first phase of a 1,100 unit development. In a statement, Kushner Meyer said the project will “create a new district” in Edgewater.
The 2000 Biscayne sale price breaks down to $621 per square foot and $48,000 per unit.
Estrella Perez and Pascal Levy of EP Realty Group brokered the deal.
Kushner has been busy in South Florida. In May, the firm won approval to bring a four-tower, mixed-use development to downtown Fort Lauderdale. It is planned to have 1,300 apartments, office and retail, and possibly a hotel. Construction of that development is expected to start in the first quarter of 2022 and finish in phases in 2026.
Earlier this year, the company and its partner Block Capital broke ground on Wynd 27 and Wynd 28, a mixed-use development in Miami’s Wynwood with 152 apartments, 33,500 square feet of retail and 46,000 square feet of office space.
The Avenue Apartments at 6220 Reese Road in Davie (Photo via Avenue Davie)
Miami Beach-based multifamly investor Boardwalk Properties is accused of racial discrimination in a lawsuit claiming the company was upset about Black employees working at one of its apartment complexes.
Gina Joseph, who is Black, sued Boardwalk Properties FL last month, saying she was let go from her job at the company’s The Avenue Apartments in Davie.
Her termination came after Boardwalk manager Adam Walker “directly stated that ‘we need to get rid of all these Black faces, I need a white face here’ regarding the leasing management,” according to the complaint.
Walker’s comments came after meetings with staff from the property management firm that hired Joseph in 2019, according to the suit. Walker allegedly had been upset with the property manager for hiring Black employees.
Joseph says she was demoted from leasing manager to agent, and was eventually fired in March last year by the property management company. She and the only other Black staff member, who also was let go, were replaced by white employees, according to the lawsuit.
She levied race and color discrimination claims under the Civil Rights Act. Joseph is seeking an unspecified amount of damages from Boardwalk. Walker and the property management firm that employed Joseph are not named as defendants.
Boardwalk’s attorney, Andrew Gordon of Hinshaw & Culbertson, said the company did not want to comment. He filed to move the case to federal court from Broward County Circuit Court.
Although the suit so far levies no claims of racism or racist comments directly at Joseph, the alleged Boardwalk statements “speak volumes,” said attorney Chad Levy, who represents Joseph.
Walker’s alleged comments amount to “the insinuation” that if The Avenue property management office has Black employees, then this would lead to more Black tenants at the complex, Levy said.
“That’s the only rational reason that he would want a white person in the office,” Levy added. “Obviously, that is illegal and simply can’t be permitted.”
According to the complaint, Boardwalk also allegedly said it “saw ‘too many Blacks’ on the property.”
Boardwalk, through an affiliate, bought the 394-unit The Avenue at 6220 Reese Road for $119 million in 2018.
That year, the company focused on Broward multifamily, as it also bought the 191-unit Queue Apartments at 817 South East Second Avenue in downtown Fort Lauderdale for $53 million.
In April, various affiliates of Boardwalk sold a 452-unit multifamily portfolio in Miami Beach and Bay Harbor Islands to Sentinel Real Estate for $96.6 million.
(iStock/Illustration by Kevin Rebong for The Real Deal)
In the past 20 years, new housing construction lagged 5.5 million units behind historical levels, according to a report by the National Association of Realtors.
The trade group is now lobbying for a “once-in-a-generation” policy response from the Biden administration and Congress to make up the gap, the Wall Street Journal reported.
On average, 1.225 million housing units were built each year from 2001 to 2020, according to the NAR report, down from 1.5 million units between 1968 and 2000. The deficit has left the country 5.5 million units short.
“We need affordable [housing], we need market-rate, we need single-family, we need multifamily,” David Bank, senior vice president of Rosen Consulting Group and one of the report’s authors, told the Journal.
In particular, NAR found construction is short by two million single-family homes, one million two-to-four-unit buildings, and more than two million buildings with at least five units.
When taking into account aging or destroyed units, as well as household-formation growth, construction was closer to 6.8 million units short of necessary levels.
Compounding the problem for house hunters, few places are for sale. Existing-home inventory dropped almost 21 percent annually to just 1.16 million units at the end of April. With demand high, the median home cost almost 20 percent more in April than it did the year before.
Despite the sobering numbers, not everyone is convinced there’s a crisis. The birth rate is low and immigration fell during the Trump administration.
“Our adult population isn’t growing as fast as it used to,” John Burns, chief executive of John Burns Real Estate Consulting, told the publication. Now, “we don’t need to build as much,” he said.
Builders have attempted to speed up construction, but can’t find enough land, workers, or materials. They will need to build 1.5 million new units a year to close the existing deficit, according to NAR. Even if annual construction rates matched their recent peak of 2.1 million homes, it would still take a decade to fill the gap of 5.5 million dwellings, according to the report.
In response, NAR is requesting expanded tax credits for low-income rentals. It also wants federal funding to encourage localities to allow more housing density. In addition, the group calls for renovation of distressed properties and commercial-to-residential conversions.
A waterfront mansion on Miami Beach’s North Bay Road sold for $25 million, nearly double its purchase price two years ago.
Records show Kahan & Kligler P.A., as trustee of The 4412 North Bay Road Land Trust, sold the house at 4412 North Bay Road to TFT4412 Nbay LLC, a Delaware corporation. The selling entity is led by David Kahan, an attorney in Boca Raton.
The land trust bought the 9,991-square-foot house in 2019 for $13 million. It was listed in April of this year, asking $25 million.
Jill Hertzberg of Coldwell Banker Realty’s Jills Zeder Group represented the seller, while Farid Moussallem of Compass represented the buyer.
Property records show the house has eight bedrooms, seven full bathrooms and two half-bathrooms. The 16,362-property also includes a pool and a dock, according to the listing. The two-story mansion was built in 2010.
Very close to the house that just sold, a waterfront home at 4380 North Bay Road sold for $13.8 million; the founder of a payment processing company bought the mansion at 4580 North Bay Road with an adjacent lot for $37 million; and model Cindy Crawford and her husband Rande Gerber bought the house at 4404 North Bay Road for $10 million.
April showers bring May flowers — but this year, daffodils aren’t the only things sprouting in your yard. Rents are growing through the roof.
This April, single-family rental prices jumped by more than 5 percent year over year, according to new data from CoreLogic. Rents grew by just 2.4 percent in the same time span in April 2020, meaning the growth rate has more than doubled since early in the pandemic.
The annual increase was the largest for single-family rents in almost 15 years. In lower-priced rentals, where rent is 75 percent of the regional median or less, rates also grew faster than they did a year ago.
Rent growth was particularly sharp for detached single-family homes — almost four times the rate of attached homes in April. With outdoor space commanding a premium for pandemic-weary Americans, detached single-family homes saw rents grow 8 percent year-over-year in April 2021.
As aging millennials start looking for houses but find few on the market and breakneck competition for anything worth buying, many are opting to rent. With such heightened demand for single-family rentals, developers have poured billions into so-called “build for rent” communities. .
In high-priced homes, or those worth more than 125 percent of an area’s median price, rent grew 6 percent in April 2021, compared to just 2 percent the prior year.
Phoenix, Arizona soared above the rest of the pack, with 12 percent annual growth in its single-family rental prices. Overall, the southwest led the country, with Tucson, Arizona and Las Vegas nabbing the two and three spots on the list, respectively.
While almost every city surveyed experienced growth, Boston actually saw rental prices dip in April, falling almost 6 percent in the last year.
“While rent growth slowed last April at the start of the pandemic, the rate of rent growth this April was running above pre-pandemic levels even when compared with 2019 and shows no signs of diminishing,” said Molly Boesel, principal economist at CoreLogic, in a statement.
525 Market Street, Amazon CEO Jeff Bezos, Sephora CEO Martin Brok and Wells Fargo CEO Charles W. Scharf. (Getty, Keating Architecture)
The following is a preview of one of the hundreds of data sets that will be available on TRD Pro, the one-stop real estate terminal that provides all the data and market information you need.
The 1 million-square-foot office tower at 525 Market Street in San Francisco’s Financial District is the city’s third-largest building by square footage and is also anchored by Amazon.
Early last year, the New York State Teachers’ Retirement System sold a 49 percent stake in the building to RREEF Property Trust in a deal that valued it at $1.2 billion. The recapitalization was financed with a $682 million CMBS loan from Barclays, Goldman Sachs and Wells Fargo.
A month later, everything changed.
The pandemic raised questions about the future of office space — for tech tenants in particular — and the San Francisco office market was one of the hardest hit in the country. But 525 Market Street — where Amazon has over 400,000 square feet — and with a rent roll full of investment-grade tenants, appears unbothered by the turmoil.
The CMBS financing was securitized across a number of transactions in 2020, and rating documents associated with those deals provide an inside look at the 38-story building’s finances.
As of December 2019, the property was 97.3% leased to a variety of tenants in industries including technology, finance, law, and personal care. Since 2012, occupancy at the building has averaged about 92 percent, according to DBRS Morningstar.
Amazon, the largest tenant with about 40 percent of the total rentable area, first became a tenant at the building in 2018 and has since expanded several times. The 48-year-old building, where the tech giant houses its Amazon Web Services and Amazon Music divisions, also represents Amazon’s largest space in San Francisco.
Two other anchor tenants have been at the property much longer. The second-largest tenant, French multinational beauty retailer Sephora, uses the building as its North American headquarters and has been a tenant since 2004.
The third-largest tenant is Wells Fargo, which has been at the building since 1997. The investment bank recently saw a 197 percent rent hike on a lease renewal for part of its space, with annual rent per square foot jumping from $32 to $95.
The property also has about 15,000 square feet in retail space on the ground floor with food and beverage tenants like Chipotle and Joe & The Juice.
With $120.5 billion in assets under management as of last summer, the New York State Teachers’ Retirement System is one of the largest public retirement funds in the U.S. It acquired 525 Market Street in 1998 and owns it through an affiliate, Knickerbocker Properties. RREEF America REIT II, the entity which acquired a minority stake in 2020, is a subsidiary of Deutsche Bank.
Since 2015, NYSTRS has invested $102 million on renovations for the property, upgrading the ground floor retail, lobby and plaza, as well as tenant amenities and office interiors.
Glenn Straub and 2855 Hurlingham Drive (Casino.org, Google Maps)
UPDATED, June 16, 3:30 p.m.: Developer Glenn Straub bought a nearly 15,000-square-foot mansion in Wellington for $9 million.
John J. Fleischhacker and his wife, Daveanna R. Fleischhacker, sold the estate at 2855 Hurlingham Drive to Straub, records show.
John J. Fleischhacker’s family founded Lake Region Medical, a major supplier of pacemaker parts. Fleischhacker created his own medical device firm, Daig Corporation, in 1974, and sold it to St. Jude Medical in 1996 for $427.5 million, according to the Star Tribune.
In 2019, both Fleischhacker and Straub sold other Wellington properties. Fleischhacker sold an equestrian property for $5.5 million. Straub sold a 150-acre portion of the Palm Beach Polo and Country Club for $16 million. His companies paid $27 million for the 2,250-acre club at a government auction in 1993.
In the latest sale, Fleischhacker purchased the 0.9-acre Wellington property in 2005 for $12.5 million, records show. The home was listed for $15.4 million in 2012. It was most recently asking $10 million in June.
Travis Laas of Engel & Volkers Wellington represented the seller.
The 14,768-square-foot mansion has three bedrooms and eleven-and-a-half bathrooms, according to the listing. The house was built in 1993, records show.
Other recent sales in Wellington include the head of a wealth management firm buying an equestrian estate for $13.5 million, an investment management executive buying a waterfront spec home for $6.2 million, and a Cumberland Farms family member buying an equestrian estate for $8.2 million.
1007 West Prospect Road in Fort Lauderdale and 999 West Prospect Road in Oakland Park
Seattle-based investors bought three multifamily buildings with 48 units in Broward County for $7.25 million.
Schulman Properties, based in Las Vegas, Nevada, sold the two buildings at 999 West Prospect Road in Oakland Park and the building across the street at 1007 West Prospect Road in Fort Lauderdale to Delaware-registered Jass 2 LLC, records show. The deal breaks down to $151,041 per unit.
The buying entity is tied to Andrew Smith and Justin Sult of Seattle, according to Lee & Associates’ Matthew Jacocks, who represented the buyer and seller with Patrick Montelus of the same firm.
The buildings were built in the 1970s on 1.9 acres. They last traded in 2018 for $6.8 million, records show.
Schulman Properties, led by Robert Schulman and Brian Burdzinski, develops single-family homes, as well as retail, industrial, multifamily, hotel and office projects, according to its website.
The group did not develop the Broward properties, but the firm invested about $500,000 in improvements, including converting two of the buildings into market-rate apartments after they were run as a sober-living facility for about 20 years, according to Jacocks. The third building also is market-rate, although tenants get rental assistance from an outreach program, he said.
Jacocks’ commercial real estate advisory firm, Strategic Capital Realty, based in Aventura, managed the property while Schulman was the owner, but it will not continue as manager, Jacocks said.
The combined property, which consists of all two-bedroom units, features a pool, cabanas, laundry facilities, a courtyard garden and a 74-spot parking lot, according to a news release.
Multifamily deals in Broward have been flowing in recent months and some developers are building apartments in long-overlooked Oakland Park.
In Deerfield Beach, Cortland bought the 226-unit apartment community at 67 Southwest 12th Avenue for $66 million in June; and Mesirow Financial bought a 261-unit complex at 1600-1700 East Sunrise Boulevard for $83.5 million in May.
In Oakland Park, Newrock Partners and Brickbox Development are working on a 274-unit apartment building with an adjacent garage. They scored a $67.5 million construction loan for the project in June.
Theresa Battle’s first thought each morning is whether today is the day she’ll lose her two-story house in Jamaica, Queens, to foreclosure.
“Every day when I get up, I’m afraid of what’s going to happen,” said Battle, 57, who runs a daycare center out of the property.
Like millions of Americans, she was unable to keep up with her mortgage payments after the pandemic forced her to close her business in March 2020, cutting her income in half.
She thought she’d be protected by the federal government’s forbearance program, which allows homeowners who lost income because of Covid-19 to skip mortgage payments for up to 18 months without a penalty. When she asked for help in June 2020, her mortgage servicer, BSI Financial, turned her down, she said, because her home loan isn’t backed by the federal government.
BSI’s private investor clients, not BSI itself, determine whether to accept or deny a forbearance request, a spokesperson for the Texas-based firm said in an email. As of June 1, about 1,800 borrowers were on an active forbearance plan with the servicer. BSI declined to comment on Battle’s specific case due to privacy concerns.
First implemented as part of the CARES Act, the forbearance program — the biggest government intervention in the $10 trillion mortgage market since the financial crisis of 2008 — was designed to prevent a flood of foreclosures in the midst of a pandemic. It freezes the foreclosure process for most borrowers with government-backed loans, but stops short of mandating similar relief for borrowers with privately backed loans, which account for about 30 percent of the U.S. mortgage market.
So far, the number of homeowners missing payments has been slowed, if not entirely stemmed. The number peaked in June 2020, with 4.3 million homeowners in forbearance. As of late May, it was down to 2.2 million, according to Black Knight.About 5.6 percent of those are ”re-entries,’’ borrowers who were in forbearance, resumed payments, then returned to forbearance, according to the Mortgage Bankers Association. Overall, about two-thirds of borrowers who were in forbearance have exited the program, the MBA said.
While some may be able to refinance at lower rates or reach agreements with their lenders to catch up on missed payments, it could be devastating for others.
Some homeowners will face foreclosure or be forced to sell their homes, including those like Battle who were denied forbearance, as well as those who are nearing the end of their forbearance period but still can’t afford to make payments.
“I think the thing to focus on is what is the person’s ability to repay,” said Zahra Jafri, president of New York-based Lynx Mortgage Bank. “If they’re going to stay in their home with their mortgage, is their ability to maintain the home and repay that loan still there?”
The Consumer Financial Protection Bureau, a federal agency charged with ensuring that banks, other lenders and the financial services industry follow the rules, received the most mortgage-related complaints in three years in March. Homeowners griped about delays, denials and a lack of clear instructions from servicers.
The CFPB estimates that about 3 million homeowners are behind on their mortgages and says a disproportionate number of those borrowers are Black or Hispanic. About 1.7 million borrowers will exit the program beginning in September, with many at least a year behind on their payments.
“More borrowers are behind on their mortgages than at any time since the height of the Great Recession,” said Dave Uejio, CFPB’s acting director, in a statement. The CFPB will do “everything in our power to help families stay in their homes,” he added.
One of the agency’s responses to the trouble it sees coming is a proposal to extend the moratorium on foreclosures until the end of 2021.
Mortgage industry officials warn that extending the moratorium could end up making homes even more unaffordable by further reducing the supply of available properties, sparking bidding wars for those that remain.
Home prices soared to a 13.2 percent year-over-year gain in March, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, the biggest annual gain in a single month since December 2005.
“The moratorium did what it was intended to do,” said Jason Vanslette, a South Florida-based attorney who represents lenders and servicers in foreclosure cases. “[But] I think there’s always unintended consequences for something that was considered inherently good.”
For those unable to catch up on their mortgage payments, selling their home may be the best solution. Though selling into a hot market may get the banks off their backs, it will do little to solve their housing problems over the long term, said Ira Rheingold, executive director for the National Association of Consumer Advocates.
“What is that family going to do if they can’t afford their current house?” he said. “You’re not going to be able to afford a house, because housing prices are so high.”
The moratorium also suspended foreclosure cases that were filed before the pandemic, leaving about 250,000 loans in limbo.
That backlog could account in part for the 21 percent spike in the second quarter on foreclosures of homes sitting empty, known as “zombies,” said Rick Sharga, executive vice president of the research firm RealtyTrac. New York had more zombie homes than any other state for the quarter, followed by Ohio, Florida, Illinois and Pennsylvania, according to ATTOM Data Solutions.
The current shortage of homes for sale means that even a surge in foreclosures probably wouldn’t move prices much nationally. But some areas of the country — those with the highest unemployment and the most borrowers in forbearance — will be much harder hit, said NYU Law professor Michael Ohlrogge.
‘A structural problem’
Minority and low-income neighborhoods, which have suffered disproportionately from the pandemic, will also likely see the worst fallout from the end of forbearance.
“Communities of color, minorities, the elderly, the people that were targeted by these subprime loans for years,’’ said Bruce Jacobs, a foreclosure defense attorney in South Florida, “they’re the ones that have no protection by the government [foreclosure moratorium]. It just seems inherently unfair.”
Even with a moratorium in place, older foreclosure cases based on private loans are still working their way through the system, adding to court backlogs as forbearance ends. Jacobs is currently working with Ana Lazara Rodriguez, an 82-year old woman who was a political prisoner for 19 years in Cuba under Fidel Castro, to stop her eviction from a foreclosure initiated in 2009.
In a hearing on May 27, Jacobs asked a judge to stop the eviction until the conclusion of a lawsuit brought by Rodriguez that questions the legality of the loan documents.
The garden outside Rodriguez’s tangerine-colored home, which she usually tends to weekly, is a mess. She canceled her regular treatment appointment for macular degeneration to attend the hearing, and she’s starting to think about what she will do if she has to leave her home of 26 years.
“I would have to live in my car,” she said. “It’s the only possession I have.”
The judge did not grant the injunction until June 4, two days after a sheriff served Rodriguez an eviction notice. While Rodriguez gets to stay in the home for now, her team needs to raise enough money for a bond that will go toward protecting the new owner from losses incurred while the case continues.
The legitimacy of loan paperwork has been a common issue in the Sunshine State since the financial crisis of 2008, when a spike in foreclosures revealed that banks often lost the original paperwork when mortgages were traded. Instead, they generated affidavits “robo-signed’’ with the names of bank employees attesting to the lost documents’ existence.
“It’s my belief that there’s a structural problem within the system,” said Laura Wagner, executive director of Floridians for Honest Lending. She’s connecting state legislators with foreclosure defense attorneys to advocate for cracking down on lenders and servicers that use fraudulent means to seize homes.
After Theresa Battle was denied forbearance, what followed was a series of discussions with a BSI Financial representative about possibly modifying her loan, but it seemed she was perpetually missing a required document. When she tried to resume partial payments, BSI Financial wouldn’t accept them, she said.
By September, Battle thought things might be looking up. Her daycare was set to reopen that month, and talks with the servicer seemed to be turning a corner, she said.
“Then I received papers that they were going to start foreclosure.”
Desperate for help, Battle reached out to a lawyer whose daughter attends her daycare, who ultimately put her in touch with senior housing counselor Tenying Yangsel at Chhaya Community Development Corporation, which represents South Asian and Indo-Carribean communities in New York City.
“They’re giving her a hard time,” said Yangsel, who began communicating with BSI Financial on Battle’s behalf in January. Yangsel says she has worked with more than 150 homeowners since the start of the pandemic and helped 77 of them enter forbearance programs.
Chhaya was part of a coalition that met in May to give feedback on how New York state can use part of the funds from the Biden administration’s American Rescue Plan to help homeowners like Battle. Signed into law on March 11, it provides emergency aid to cover back rent, mortgage payments and utility costs.
In the meantime, Battle said BSI has offered her a three-month payment plan that would require a $7,000 lump-sum payment and mortgage payments that jumped to about $3,600 from her previous payments of $2,471.
When Battle looks at the unpaid balance of her loan, which now sits at more than $500,000, she said it looks as if she hasn’t paid anything.
“I just feel like I’m stuck with them forever,” she said. “This is really tough to go through.”
Jose Luis, Martin and Carlos Melo with renderings of Aria Reserve (Melo Group)
UPDATED, June 16, 12 p.m.: Melo Group is launching condo sales of one of two towers on a site it has been assembling for more than a decade in Miami’s Edgewater, The Real Deal has learned.
The Melo family, which has largely focused on building rental towers in recent years, released information to brokers on its next project, Aria Reserve Miami. The two-tower, roughly 800-unit development is expected to rise at 711 Northeast 23rd Terrace. Miami-based Melo is launching sales of the first tower, with 391 units. The developer plans to launch the second tower based on market demand.
Melo Group, led by Jose Luis Ferreira de Melo, Martin Melo and Carlos Melo, has been assembling the land for more than a decade, property records show. The site totals about 5 acres. The project was previously called Island Bay.
Carlos Melo said the inventory of condos from the last cycle has largely been absorbed. “We were waiting for the correct time,” he said. “The market wasn’t prepared a couple of years ago.”
The company bought more than 80 properties, including individual condos, to acquire the site, Carlos and Martin said.
Interior rendering of Aria Reserve
Construction of Aria Reserve’s south tower could start as early as next year and is expected to be completed in 2024, according to a spokesperson.
Melo’s last condo development, Aria on the Bay, was completed three years ago. The developer quickly pivoted in the last cycle when the condo market dried up, to focus on building thousands of market-rate rentals in the Arts & Entertainment District and downtown Miami. In 2012, Melo also built 23 Biscayne Bay, immediately south of the latest assemblage.
Prices for units at Aria Reserve’s first 62-story building start at $750,000 and rise to $12 million for the 15 penthouses. Most units will range from one to four bedrooms, with between 1,100 square feet and 2,600 square feet. The penthouses will range from 3,500 square feet to more than 9,000 square feet, each with a three-car garage.
Sales are being handled in-house, according to Carlos and Martin Melo.
The towers are being designed by Bernardo Fort-Brescia of Arquitectonica with interiors by MORADA Haute Furniture Boutique and landscaping by ArquitectonicaGEO. Amenities will include a 2-acre recreation deck with a lap pool and spa, gaming center, playground, tennis courts, basketball courts, paddle courts, miniature golf, a wellness center, gym, meditation garden and more.
Melo also plans to build a public park along 23rd Street that would connect to the planned Miami Baywalk.
The deposit structure for condos will vary for international and U.S. buyers, with domestic buyers following a 30-percent deposit structure and foreign buyers putting down 40 percent, according to marketing materials. Following the Great Recession, a number of condo developers in Miami, including Melo, began requiring 50 percent deposits.
Lately, developers are reporting interest and sales from foreign buyers, who had largely disappeared from the market during the pandemic, as well as continued demand from local and out-of-state buyers.
Property Markets Group and Related Group are among the developers that have also launched sales of new projects in recent months, with more expected to go to market later this year. Last week, developers Russell Galbut and David Martin began sales of their condo tower at the entrance to South Beach at 500 Alton Road.
A number of investment firms and developers have targeted Edgewater in recent years for its proximity to downtown Miami, Miami Beach and major highways, as well its waterfront, including Two Roads Development, OKO Group, Related and others.
Confidence is lowest in the Northeast and Midwest, at 73 and 70. (iStock)
The National Association of Home Builders/Wells Fargo Housing Market Index — which tracks homebuilder confidence in current and future single-family home sales and traffic of potential buyers — dropped to a seasonally adjusted 81 in June. That’s down from 83 in April and May and a 12-month high of 90 in November.
A reading above 50 is viewed as positive, but June’s readings are the lowest in 10 months. Confidence is lowest in the Northeast and Midwest, at 73 and 70, respectively, compared to 86 in the West and 85 in the South.
“These higher costs have moved some new homes beyond the budget of prospective buyers, which has slowed the strong pace of home building,” he told CNBC.
Robert Dietz, chief economist for the NAHB, explained that because appraisals “tend to lag” behind market prices and construction costs,lower-than-expected appraisals can force buyers to either put more equity into a deal or abandon the transaction.
Nicholas Liberis knew his office project in Long Island City had to be different.
A new 11-story building surrounded by former warehouses and budget hotels was not exactly a top-of-mind destination for tech giants or hedge funds. Then came a global pandemic, which forced companies to rethink their office footprints entirely.
“You needed every competitive advantage that you could get,” said Liberis, a partner at Archimaera, the Brooklyn-based architecture firm responsible for designing the building, which is called the Oasis.
Liberis believes this advantage will come from a German-inspired design standard for new construction and retrofits known as “passive house.” Intended to achieve dramatic reductions in energy consumption, the design standard also yields buildings that are quieter and have better air quality for tenants, according to advocates.
It’s a concept widely embraced throughout much of Europe, where some municipalities have even begun incorporating it into local building codes.
Despite the advantages of passive house design, it has yet to appeal to the American masses. Upfront costs can be more expensive. Moreover, it’s just not on the radar for landlords and developers who generally prefer to collect rent checks with minimal expenses.
But the concept is gaining steam.
Cornell Tech designed its 26-story residential building on Roosevelt Island to passive house standards. In Boston, a 690-foot-tall condo and office tower is set to be the largest passive house in the United States upon its targeted completion next year.
The real catalyst in New York could be Local Law 97, which will require larger building owners to reduce their carbon emissions by 40 percent by 2030 and 80 percent in 2050. That’s a daunting challenge even for the most energy-efficient buildings, but advocates say passive house standards could be the solution.
“The fact that someone can buy a passive house-principled building and know that… they won’t have to pay an assessment or penalty is a real thing,” said Brooklyn Home Company’s Bill Caleo, who uses passive house techniques in his buildings.
From Germany to America
Passive houses have captured architects’ imaginations since the concept first emerged in Germany in the late 1980s. It wasn’t until 2003, though, that the first building adhering to the standards was constructed in the U.S. : a 1,200-square-foot home in Urbana, Illinois.
In the years since then, the Passive House Institute US, a nonprofit founded in 2007, has certified more than 1,000 completed or ongoing projects in North America. To qualify for certification, buildings must adhere to a few key principles.
For one, passive house buildings must be highly insulated to ensure that hot air does not escape through areas of least resistance, known as thermal bridges.
“Buildings lose a lot of energy going through the walls,” said Stas Zakrzewski of the New York architecture firm Zakrzewski + Hyde Architects, which focuses on passive houses.
In addition to being airtight, the building must have windows that are triple-pane, or have at least three glasses.
Overall, passive houses can reduce buildings’ energy consumption by up to 85 percent, according to New York Passive House, an advocacy group.
But building houses with heavier insulation can pose a risk: poor air quality. That’s why passive houses also require an enhanced ventilation system, providing filtered, fresh air 24/7.
In New York City, this concept may sound radical.
Air-conditioning units perched on window ledges are ubiquitous in the summer. And in the winter, when dusty old radiators start clanking, tenants are often forced to open windows to lower temperatures in the absence of thermostats.
But Zakrzewski said passive houses are not complicated and they present an easy way for landlords to reduce energy costs.
“It’s not like you are building a rocket ship,” said Zakrzewski.
Zakrzewski has used passive housing to retrofit large pre-war Victorian homes in Brooklyn’s Ditmas Park. Homeowners wanted to lower their energy bills, which the architect said sometimes climbed as high as $1,000 per month.
Thus far, Zakrzewski’s largest project has been in Chelsea.
Working with developer Alex Bernstein — whose family owns several commercial buildings in the neighborhood — Zakrzewski designed a 25-story, 55-unit passive house apartment building at 211 West 29th Street known as Flow Chelsea.
Flow Chelsea at 211 West 29th Street
In marketing the project, Bernstein initially eschewed the “passive house” label, instead playing up the benefits of the design, one of which is quietness.
“You can be on the second and third floor and not hear anything,” said Bernstein. “You really are amazed by how quiet the apartments are.”
Brooklyn Home Company’s Caleo said that he was attracted to another benefit of passive homes: air quality. Citing studies about how filtered air affects cognitive brain activity, he believes that passive homes — which must provide constant flowing fresh air — can improve tenants’ health.
“We are trying to sell amenities like Sub- Zero,” said Caleo, who uses passive house technology for new residential projects. “Why are we not selling premium air quality?”
What’s in a name?
Even to their proponents, passive houses have not been the easiest sell.
Although the concept has gained prominence over the years, its devotees still amount to a niche group, largely consisting of academics and the sustainability-minded.
Bernstein said that the name is partly to blame for the lack of awareness.
“Passive house is a terrible name,” he said.
Zakrzewski, who also serves as president of the New York Passive House organization, agreed: “It’s not a great name.”
For one, a passive house is not passive. The concept involves air constantly flowing through a building, which essentially functions as an autonomous entity. Second, the design does not have to be for a house. The technique can be applied to commercial buildings such as offices or hotels, as well as apartment buildings.
Changing a name might help with branding, but landlords and contractors still have to buy in.
Passive house construction can carry an initial premium of 3 to 5 percent on materials and labor, with the goal of reducing those costs down the line, according to industry professionals. However, with rising lumber and material costs across the U.S., those margins are narrowing. Finding contractors and engineers who are certified to design and build passive houses is another challenge.
“It’s a stubborn industry,” said Alan Barlis of the architecture firm BarlisWedlick, which has designed a number of passive homes in upstate New York. “It’s a tight-margin world. Innovation comes with great difficulty.”
Regulation is coming
Passive houses have become particularly popular in such cold-climate regions as Sweden and Canada. Against frigid outdoor conditions, homes require loads of hot air that can escape through the building. This is not only expensive, but also ultimately harmful to the environment.
Some Swedish cities have required new municipal construction to use passive house techniques as part of the country’s plan to reduce carbon emissions. In 2017, the Flemish government moved its headquarters to Belgium’s largest passive office building, in Brussels, where passive house standards have been mandated for new buildings and renovations since 2015.
To date, the U.S. has no federal mandate for building owners to use passive houses. Local Law 97 in New York also does not require the design to be used in construction.
The city is still figuring out the kinks of the law. Zakrzewski, who sits on the Local Law 97 Climate Advisory Board, said that New York “is interested in passive housing,” but declined to give more details.
Even absent any government mandate, passive houses are increasingly popping up throughout the Northeastern United States. One driver could be Covid-19. The pandemic dampened interest in leasing office space, which means that office tenants can afford to be more picky about space.
“It’s a saturated market,” said Liberis. ”People are thinking more about what they are offering.”
One consequence, he said, is that there is now a greater demand for higher quality products, something passive house standards can provide.
“This is really where all the building is going,” he added.
Starting today, businesses will also be left to set mask policies, according to the Los Angeles Times. And for the first time since last March, they can operate at full capacity.
“There will be no capacity limits and no distancing requirements,” said Dr. Barbara Ferrer, L.A. County’s public health director.
Along with restaurants and bars, amusement parks, gyms, movie theaters and arcades can all operate at full capacity.
Vaccinated employees, however, will likely have to wait to go unmasked until a decision from the California Occupational Safety and Health Standards Board, which could come later this month.
Some events and venues will still have restrictions. Organizers of indoor events with more than 5,000 attendees must verify that guests are fully vaccinated or have tested negative for Covid-19 in the previous 72 hours.
State officials recommend outdoor events of more than 10,000 people do the same, but won’t require it.
The whiplash of Covid cases over the last year and a half have led California and L.A. County to impose then lift then reimpose restrictions as numbers ebbed and flowed. The worst months in the state were between late November and around February.
State and county officials — through a colored four-tier system — have gradually eased restrictions and raised capacity limits for various businesses as vaccination rates increased.
L.A. County has been in the least restrictive tier since early May. Indoor operations were allowed at restaurants, but with a maximum capacity of 50 percent. Bars were capped at 25 percent Theaters were also capped at 50 percent and large live indoor events were limited to just 10 percent.
A Palm Beach waterfront home sold for $32.6 million, after nearly 30 years in the hands of the same family.
Records show Gertrud Turklitz 482 Island Drive AG sold the house at 482 Island Drive to The 482 Island Drive Trust, with Palm Beach attorney William W. Atterbury III as trustee.
The Swiss selling entity lists Achim Turklitz as its sole shareholder. Turklitz is the son of Arno and Gertrud Turklitz, the original owners of the home. The two bought the house for $3.5 million in 1992. It was built in 1959.
The house was first listed in 2010 with an asking price of $29.9 million. After price changes over the years, it was most recently asking $36 million in April.
Christian Angle of Christian Angle Real Estate represented the seller, while Crista Ryan with Tina Fanjul Associates represented the buyer.
The 6,014-square-foot house has five bedrooms, five full bathrooms and two half-bathrooms. The waterfront lot spans just over half an acre and includes a pool and a one-bedroom, one-bathroom guest house above the garage, according to a floor plan included in the listing.
Records show the Swiss entity also formerly owned the neighboring lot until 2015, when it sold the property for $8.4 million. The Turklitz family bought the lot for $1.4 million in 1993 to preserve their eastward views, according to the Palm Beach Daily News. A house was built on the lot in 2018.
The latest sale is among many others high-priced deals recently in Palm Beach. Just this month, the managing partner of a hedge fund flipped a home for $7.3 million; another hedge funder, Igor Tulchinsky, bought an oceanfront estate for $40 million; and Tommy Hilfiger purchased a $21 million home.
Hines chairman and CEO Jeff Hines with 609 Main in Houston, Texas (Hines)
The following is a preview of one of the hundreds of data sets that will be available on TRD Pro, the one-stop real estate terminal that provides you with all the data and market information you need.
In the early days of the coronavirus pandemic, as Houston’s economy faced the double whammy of a public health crisis and collapsing oil prices, a deal for one of the city’s newest trophy properties fell apart.
A group led by Korean investment firm KB Securities had been selected as the buyer for the 48-story office tower at 609 Main Street in March, but pulled out of the deal a month later. When the property hit the market in late 2019, it was expected to fetch a price as high as $700 million.
Hines and the California Public Employees Retirement System, which completed the downtown Houston skyscraper in 2017, remained on the hook for a $230 million construction loan that would mature in September. The lender, JPMorgan Chase, provided a $260 million refinancing for the property that month, in the form of a single-asset commercial mortgage-backed securities deal.
Rating documents for the securitization provide an inside look at 609 Main’s finances and rent roll.
As of August, the 1.1 million-square-foot building was 94 percent leased to 31 tenants, according to a report from S&P Global Ratings. Fifty-five percent of the property had been pre-leased prior to opening, with two Chicago-based firms serving as anchor tenants.
The largest tenant at the building is United Airlines, with 21 percent of the total floor area, and the property serves as the airline’s second headquarters. While the company suffered billions in losses due to the pandemic, United and other airlines are now predicting a rapid rebound as the U.S. economy recovers.
“The company has invested $10.8 million ($47.38 per sq. ft.) in tenant improvements across their nine floors, demonstrating their commitment to the property,” the S&P report notes. Although United has a contraction option of up to two full floors at the building, the fact that it is paying below-market rent also makes it less likely to exercise that option, according to S&P.
The building’s second largest tenant is Kirkland & Ellis, the world’s largest law firm by revenue with more than $4.1 billion in 2020. The firm occupies the top floors of the tower, with penthouse suites that feature “an expansive skylight ceiling,” as S&P analysts observed on their inspection of the property.
The rest of the tower’s rent roll is granular, with no tenant accounting for more than 5.1 percent of total underwritten rent. Exposure to the energy sector is relatively low for a Houston office building, at just 7.4 percent. Law firms account for 37 percent of the rent roll, while banks and financial services make up 16.7 percent.
And 609 Main is also home to WeWork’s second downtown Houston location, which opened in 2019. The troubled co-working firm recently tapped Transwestern Real Estate Services to market its 300,000 square feet of space across four Houston locations, with an emphasis on larger tenants.
With a presence in 225 cities in 25 countries, Houston-based Hines has developed more than 1,400 properties around the world, from One Vanderbilt in New York City to One Museum Place in Shanghai. And the company remains active in its home market.
Two blocks from 609 Main, Hines and Ivanhoé Cambridge are building the 47-story Texas Tower, which is set to open later this year. To the south, Hines and 2ML Real Estate Interests are planning a 53-acre life sciences district dubbed Levit Green.
Mike Komaransky and the $30.5 million home (Coldwell Banker Realty)
UPDATED, June 16, 9 a.m.: A waterfront mansion that was home to cryptocurrency investor Mike Komaransky sold for $30.5 million, marking one of the most expensive residential sales to close in Coconut Grove this year.
Property records show 3550 Matheson Ave LLC sold the waterfront property at that address to The Matheson Property Trust, managed by attorney Stuart Kapp.
Komaransky, director of the cryptocurrency trading firm Grapefruit Trading, listed the address on the deed transfer of his former Coconut Grove property down the street. He sold that house, at 3604 Matheson Avenue, last year for $6.7 million. In the latest sale, it is unclear if he was the seller or if he was renting the home. Komaransky declined to comment.
The four-story, 11,024-square-foot mansion is on a nearly half-acre corner lot fronting Biscayne Bay. The property has 350 feet of waterfront, two pools, a rooftop deck and five-car garage. Kobi Karp of Kobi Karp Architecture & Interior Design designed the house.
It was listed in May for $32 million by Judy Zeder of The Jills Zeder Group at Coldwell Banker. Oren Alexander of Douglas Elliman represented the buyer. The agents involved declined to comment.
Built in 2014, the five-bedroom mansion has a private master wing suite, a media room, gym and smart home features.
Elon Musk and the San Francisco estate (Getty, Gullixson / Compass)
Before Elon Musk heads to Mars or takes Dogecoin to the moon he is selling off his real estate.
Musk has re-listed his San Francisco mansion, which he calls his “special place.” Musk first put the 9-bedroom, 9.5-bathroom home up for sale last year along with the rest of his real estate portfolio, according to the New York Post. In November, he took it off the market.
He announced the listing of $37.5 million in a Tweet. Musk said he used to rent out the space for events.
Musk purchased the 16,000-square-foot home in 2017 for $23.4 million.
Last year, the CEO of Tesla and SpaceX sold his 16,000-square-foot Bel Air mansion for $29 million. Musk also sold four adjoining Bel Air properties that were listed at $62.5 million to spec home developer and designer Ardie Tavangarian.
Musk has a reported wealth of $152 billion, according to the Forbes.
Avenir Development’s Rosa Schechter and the Avenir project in Palm Beach Gardens
The massive Avenir mixed-use project in Palm Beach Gardens just got bigger with the master developer’s purchase of additional acreage for $69.4 million.
Avenir Development bought 445 acres north of Northlake Boulevard and east of Coconut Boulevard, records show. It plans to set up infrastructure for single-family houses and some commercial construction before other developers come in to build the homes, according to Rosa Schechter, principal of Avenir Development. The infrastructure is to be finished in about a year.
Avenir Holdings, led by David Serviansky, sold the land, records show. Avenir Development obtained $62.5 million in financing from the seller.
Although the seller and buyer share executives, they are not the same company, according to Schechter.
Serviansky, principal at Landstar Development Group, also is vice president of Avenir Development. Manuel Mato of Avenir Development is vice president of the seller, Florida corporate records show. Schechter is the registered agent for both the buyer and seller.
Avenir Holdings in 2017 sold a 2,287-acre portion of the developable land to Avenir Development for $15 million.
The entire 4,763-acre Avenir is approved for about 3,900 residential units, most of them single-family houses along with 250 multifamily units; roughly 1.8 million square feet of offices; 200,000 square feet of medical offices; a 300-key hotel; and 400,000 square feet of retail. A pending site plan for a town center calls for office and retail uses, with Publix as a grocer.
Avenir is about five-and-a-half miles west of Florida’s Turnpike and along Northlake Boulevard. Coconut Boulevard traverses the development site. More than half of the site will be conservation land the developer is restoring into wetlands.
Home construction is proceeding, with some of the houses already sold and occupied, Schechter said.
In March, national homebuilder PulteGroup bought 98 lots at Avenir from the master developer for $13.7 million, with plans to develop the Avondale single-family home community.
Toll Brothers is also building at Avenir. The homebuilder paid $31 million for a chunk of land in 2019, with plans for a 469-unit, age-restricted community.
Nationally, just under one-third of office workers have returned to the office spaces they occupied before the pandemic. (iStock)
With more than half of all adults fully vaccinated, Americans are once again eating at their favorite restaurants, attending concerts and jumping on flights.
But the vast majority of workers have yet to return to the office.
As of this week, fewer than three in 10 white-collar employees, on average, are back in their offices in 10 major U.S. cities — including New York, Los Angeles and San Francisco — according to the Wall Street Journal, citing data from Kastle Systems.
Nationally, just under one-third of office workers have returned to the office spaces they occupied before the pandemic, according to Kastle, a security company that tracks access-card use in about 2,500 office buildings across the country.
The slow return to work is weighing heavily on business districts in major cities, where in addition to office landlords, retailers and restaurants rely on corporate workers for business. It is unclear when, if ever, things will return to pre-pandemic levels. Despite a push by large companies to reopen, employees say they would prefer to continue working from home at least on a hybrid basis, according to recent surveys.
In addition to preferring to work from home, some employees also cite health concerns, given the large portion of the workforce has not yet been vaccinated.
Companies such as Salesforce recently opened their offices to employees working from home on a voluntary basis, but few have returned. Only 200 of Salesforce’s 10,000 employees are back in the office.
On Monday, Insider reported that Uber is considering relaxing return-to-office policies that were communicated in April, amid backlash from employees. Earlier this month, The Verge obtained an internal letter from Apple employees asking management to give individual teams more autonomy over remote work, expressing “growing concern” that the company’s current plans — including asking workers to return three days per-week starting in September — have already driven some of their colleagues to quit.
Stanley C. Moss and 3621 South Ocean (Polen Capital, 3621 South Ocean)
UPDATED, June 16, 1:21 p.m.: The CEO of Boca Raton-based investment management firm bought an oceanfront Highland Beach townhouse for $6.3 million.
Trilliam Properties LLC bought unit 6 at 3621 South Ocean Boulevard from 3621 Highland Beach Holdings LLC, the developer, records show. Trillium Properties is managed by Stanley C. Moss and Lisa B. Moss.
Stanley Moss is CEO of Polen Capital. The firm manages $62 billion in assets and has offices in Boca Raton, Boston and London, according to its website. Moss joined in 2003.
The selling entity is managed by Sean Posner of Grafton Street Capital, who, alongside Halstatt Real Estate Partners, developed the building in 2019.
The 5,498-square-foot townhouse has five bedrooms and six-and-a-half bathrooms, according to the listing. The four-story townhomes each feature a pool, rooftop deck and two-car garages on 200 feet of beachfront. The townhouses were developed in 2019.
Jennifer Kilpatrick of the Corcoran Group represented the buyer and seller.
The land for the project was purchased for about $11 million in 2015. According to Bill Hennessy of the Posner Group, the development is completely sold out.
Leon Ojalvo with Blue Lake Village Apartments (SRE Commercial Group)
Investor Leon Ojalvo bought the lakefront Blue Lake Village Apartments near Miami Shores for $15 million.
Ojalvo, of Miami-based investment firm Liberty Base Investments, bought the 106-unit community at 1205 Northwest 103 Lane from an entity tied to investor Fidel Yero, according to the seller’s broker. The deal breaks down to $141,509 per unit.
Jacob Serure of SRE Commercial Group represented the seller, and Tomas Sulichin of RelatedISG Commercial represented the buyer.
Ojalvo scored an $11.8 million acquisition loan. Broker FM Capital declined to disclose the lender.
The 90,000-square-foot property was built in 1991 on 6.4 acres, property records show. The community fronts Silver Blue Lake. The property is fully leased except for three units, Serure said.
The selling entity, led by Yero, bought the complex in 2003 for $3.7 million, records show.
This is not the first multifamily deal for Yero near Miami Shores. In 2016, a group he managed sold a pair of apartment buildings at 8951 Northeast Eighth Avenue and 800 Northeast 90th Street for $11.4 million.
South Florida multifamily deals have been flowing in recent months. Near Blue Lake Village, Lynd bought an apartment complex at 17600 Northwest Fifth Avenue in Miami Gardens in June for $40.8 million.
From left: Bain Capital Credit’s David DesPrez, SKW’s Ayush Kapahi and Danny Wrublin with 111 Wall Street (Google Maps, Getty, Chance Yeh)
SKW Funding and Bain Capital Credit have formed their second joint venture, targeting $1.3 billion in troubled real estate debt.
The new entity was part of the lender consortium behind a $410 million debt package for Nightingale Properties and Wafra Capital Partners to redevelop the former Citibank building at 111 Wall Street. The size of the loan package was initially reported as about $500 million, but the joint venture confirmed the lesser figure with The Real Deal.
SKW and Bain Capital provided mezzanine financing as part of the capital stack, but would not disclose how much.
The 111 Wall Street loan was an example of a role the joint venture can play in the pandemic-driven downturn affecting certain real estate sectors, said Bain Capital’s David DesPrez.
“In the debt capital markets, we are seeing fewer lender participants for office than when we were pre-Covid,” he said. “We are, in a number of cases, filling the void of those folks.”
The joint venture’s main focus will be sub- and nonperforming loan acquisitions and originations of special-situation loans in the greater New York City market, but it will also seek opportunities nationally. The venture recently acquired a $42 million note secured by an office portfolio in Austin, Texas.
In July 2019, SKW — which was founded in 2014 by the Wrublin family’s Dalan Management and HKS Advisors partners Ayush Kapahi and Jerry Swartz — and Bain Capital teamed up for a venture that resulted in nine deals. Its target was $500 million.
Condo sales and volume both fell in the second week of June in Miami-Dade County.
A total of 276 condos sold for $149.3 million last week, down from 299 condos that sold for $233.2 million the week prior.
Units sold for an average price of $541,000, down from $780,000 the previous week. Condos sold for $402 per square foot, a decrease from $447 per square foot the previous week.
The most expensive closing of the week was a $7.3 million sale at Oceana Key Biscayne. The unit sold for $2,162 per square foot after 45 days on the market. Carlos Coto represented the seller, and Sandra Pava represented the buyer.
The second most expensive sale was the $5.9 million sale of a unit at the Ritz-Carlton Residences, Miami Beach. It sold for $1,387 per square foot after 149 days on the market. Carol Cassis-McMillan represented the seller, while Jason Sims represented the buyer.
Here’s a breakdown of the top 10 sales from June 6 to June 12.
Oceana Key Biscayne 902S | 45 days on market | $7.3M | $2,162 psf | Listing agent: Carlos Coto | Buyer’s agent: Sandra Pava
As Opendoor hits a new milestone, the iBuyer is rolling out its operations in six new cities.
Effective Tuesday, the company announced that it is now doing business in South Florida — including Miami, Fort Lauderdale and Palm Beach — as well as Oklahoma City, Reno, Columbia, South Carolina and Knoxville and Chattanooga, Tennessee.
The news comes as the iBuyer says it’s reached a milestone of 100,000 transactions in its seven years of existence. With the expansion, Opendoor says it is now up and running in 39 cities across the U.S., half of which have launched in the last five months.
“The recent fostering of a tech ecosystem in South Florida has only further supercharged the rapid development of the area,” he said in a statement.
By and large, the six new markets were selected for their growing populations and strong housing markets that appeal to homebuyers seeking affordable prices and looking to relocate as part of the pandemic’s work-from-anywhere movement, the company said.
Opendoor is the largest of the three major players in the iBuyer sector, selling over 9,000 homes last year and generating $2.6 billion in revenue. Its business hinges on making cash offers for homes and then reselling them, as well as ancillary business lines, such as providing homebuyers the capital upfront to land homes.
The company went public in December in a $4.8 billion SPAC deal with a blank-check firm led by investor Chamath Palihapitiya.
When real estate’s wealthiest and most powerful have it all on the line, they call Janice Mac Avoy.
Take the $5.45 billion sale of Stuyvesant Town. When bondholders sued to block the transaction, Mac Avoy successfully defended seller CWCapital Asset Management, enabling one of the largest real estate deals in U.S. history.
She represented Eli Tabak, Joseph Tabak, Joseph Chetrit and Arbor Realty Trust as they wrangled for a piece of the storied Ring portfolio of 13 prime Manhattan office buildings. And she’s provided legal muscle to real estate titans such as Aby Rosen and Michael Fuchs in their many showdowns with rivals.
The co-head of the real estate litigation department at Fried, Frank, Harris, Shriver & Jacobson, — where she’s spent her entire three-decade legal career — Mac Avoy has worked on multibillion-dollar deals that reshaped the city’s skyline. It’s a track record she illustrates by rattling off the story behind building after building while walking through Manhattan.
A devoted advocate for women’s reproductive rights, she was one of 113 prominent female lawyers who signed a remarkable amicus brief in 2016 that helped convince the Supreme Court to strike down a Texas law limiting access to abortions.
Mac Avoy sat down with The Real Deal at her Midtown office at the end of May — just a few days after the Supreme Court agreed to hear a new challenge to Roe v. Wade — to talk about her craft, her activism and how she found strength in relinquishing control.
Born: February 24, 1963 Lives: Bronxville, moving to the Lower East Side Hometown: Seattle and St. Louis Family: Divorcing, two children
I first want to ask you about the Supreme Court hearing this challenge to Roe v. Wade. I know that it’s a big issue for you.
It’s terrifying, frankly. You see all of these state legislators lining up and passing what are clearly unconstitutional laws. If Roe falls, they’ll be enacted, and you will have huge swaths of the south where there will be no access to abortion care.
It’s particularly devastating for black and brown women, but it’s devastating for all women. I’m on the board of The Center for Reproductive Rights, and we are the lawyers for the plaintiffs in that case.
There was this famous line in the filing from the 2016 case about how you’re not an attorney who had an abortion; you’re an attorney because you had an abortion.
That line wasn’t mine, but I think it spoke for so many of us who… I would not have become a lawyer if it hadn’t been for my access to abortion care. If I had been forced to have a child when I was 18 years old, I wouldn’t have gone to college. I wouldn’t have gone to law school. I would have had a shitty job and I would’ve been poor just like my parents.
It enabled me to wait until I was financially and emotionally ready to be the kind of mom that my kids deserve to have.
Did you have access to a legal abortion?
Yes, I did. I went to Planned Parenthood. There weren’t protestors, so I didn’t have to go through the gauntlet.
By the time I was in college — by like ‘83, ‘84 — there were protestors on a daily basis, and I volunteered. You’d wear a yellow vest, and two of you would come together and put your arms around the person who you’re escorting to the clinic and walk them through the gauntlet of people screaming obscenities at them and telling them they’re going to hell.
You’ve talked about your upbringing and breaking the cycle of poverty. What was your family life like?
Complicated. I’m the first person in my family to graduate from high school. My father worked at Boeing and my mom was a waitress. They split up when I was 3, and I lived with my dad and a number of stepmothers. My dad got married six times. I love my father. He was an amazing man, but he also had a really bad temper and was very violent and the house was chaotic.
When I was 14, I went to live with my mom. She got pregnant with me when she was 17. She had already quit high school because she had to work full time. So for me, education was always critically important and an obvious way to escape that.
And we were white, so it was so much easier. We already started on the 50-yard line. But there were so many things ready to pull you back, to pull you down.
You graduated Columbia in the late 80s, and you went to work at Fried Frank.
I started working in M&A litigation because that was the thing that you did in the 80s. And [M&A] literally dried up one day in the 90s at the same time that the real estate market tanked. And whenever real estate markets tank, people litigate.
That’s like being thrown into the wood chipper.
It really is. And it was pre-Blackberry days. So that was the one thing that in some ways was better; it was more intense when you were in the office, but when you were out of the office, you were done. Fast-forward to 2008, 2009, when, again, it’s just sort of like drinking from a fire hose in terms of crisis after crisis after crisis, but then you had the Blackberry, and it was never turned off.
Tell me about what happened with Stuy Town.
The litigation was very acrimonious. We were brought in just to broker a deal. Jon [Mechanic] was working on it. And we worked through the night, got it done, got the settlement arranged and then continued working on the transaction with the sale to Blackstone.
What do you think the saga of Stuy Town says about the state of affordable housing in the city?
I think that the repercussions from [the Tenant Protection Act] are going to ultimately be that landlords exit affordable housing and don’t take care of their existing affordable housing, but it’s going to take a while. It will create such a shortage of affordable housing if it’s not remedied. And it’s nice of government to say, “Landlords, you should take the hit.”
Personally, I think that the obligation of government is to provide subsidies for renters, rather than putting all of the burden on the landlords.
What is your approach to litigation?
I joke that I’m the anti-litigation litigator. I absolutely try to settle, because everybody hates litigation, including me.
I love being in a courtroom, and I love cross-examining a witness. There is nothing that feels more powerful and jazzes me up more than cross-examining someone and twisting them in knots and destroying them. I know I look like a nice person, but I love it.
But in order to do that, you have to do years of work and years of discovery. For every hour of cross examination, you have to prepare for like 30 hours. And while I love that moment at the end product, I don’t love all of the stuff that’s leading up to it. More importantly, clients hate it, they hate that process, they hate the cost.
And you don’t control your fate, someone in the robe is going to decide your fate. So I always tell clients that they should try and take control of their own destiny and settle.
You call some of the work you do the “betting the company” cases. What rises to that level?
The Ring case was incredibly important for Princeton [Joseph Tabak], and Joe [Chetrit] and Eli [Tabak]. It was the biggest deal that they had done up until then.
I would say most of the cases are “bet the company” cases. Frankly, we’re very expensive, so it takes a big dispute to justify our fees.
What do you charge per hour?
I don’t think I’m supposed to say. I was interviewed on my abortion rights activism, and I got a voicemail from some guy with a Southern accent that said, “I was going to hire your firm, but I’m not going to hire you now because you support abortion rights, and you can just take your $850 an hour,” and blah, blah, blah.
And I was like, “Dude. I’m way more than that.” And then I got in trouble for saying that.
Is there a difference between having a client who’s an entrepreneur like Aby Rosen or someone who’s institutional, like CWCapital or Fortress?
I would say that individual entrepreneurs are sort of cowboys. They’re much more colorful and don’t create bureaucracies around themselves. They’re great to have as clients because they will often fight and take it all the way to trial, even when it doesn’t make economic sense to do it, because they are invested in the project. I love working with clients like that. They’re a lot more fun.They swear like truck drivers and so do I, so it works out very well.
Is the Fried Frank holiday party going to make a comeback?
I think it will be back much the same as before. If it ain’t broke, don’t fix it. We once joked about doing it at Javits, but it’s just too institutional. Even though we have outgrown the capacity [at Cipriani 42nd Street], it’s such a beautiful room. It’s the Fried Frank party room!
Looking back at your career, what are the big things you got wrong?
I grew up with the Fried Frank thesis that a good litigator is a generalist litigator, and I believe that’s true, but you’re never going to become truly outstanding in your field until you concentrate on one thing.
It took until 2008 before I became 100 percent real estate. In some ways it was good, too, because I had two kids and I worked part-time for the first few years when they were born and tried to work less when they were little, and by 2008 they were a little bit older, and it was easier to dive in.
How do you define success for yourself?
Am I happy? That’s the most important thing. The pandemic sucked in more ways for me than for most people. First day of lockdown, our family dog of 15 years died. My marriage fell apart, my sister was murdered, and then my cat died. It really fucking sucked. I am on the other side of that, and I’ve just decided that being happy is the most important thing.
What happened with your sister?
She struggled with drug addiction her entire life and struggled with turbulent relationships connected to her addiction. She was in an abusive relationship, and he pushed her down the stairs and broke her neck in two places and broke her back and then didn’t take her to the hospital for two days and her organs started to shut down.
She lasted about a week, and my nephew [her son] — who has lived with me since he was 12 — we made it out in time to say goodbye to her. She was in a coma, but her doctor was like, “Look, we’ve done all of these brain scan studies. The hearing is the last thing to go. She can hear you.” And she died on the morning that we were leaving, so I think she really did know that we were there.
My dad kicked her out of the house when she was 16 and I was in law school. I used my student loan money to pay her rent, and when she wasn’t able to take care of her son anymore, I took him in. It was hard to let go of this illusion of control that I have, that if I only take care of her she’ll be OK. I thought that I could save her — and I couldn’t. I’m sorry. I haven’t talked about it in a while.
I don’t think anyone’s ever opened themselves up like this before in these pages.
I don’t understand people who are guarded and don’t want to talk about their feelings. Like, why? Everyone has feelings and everyone has shit that happens to them. I do a lot of work for victims of domestic violence, and I am helping other women escape abusive relationships.
Talking about it has been great because I have had such a tremendous amount of support from folks really being there for me. If you don’t talk about it, you’re not going to get that.
Twelve organizations representing landlords, brokers and developers sent a letter to President Biden on Friday, asking him to let the “one-size-fits-all” eviction policy run its course.
The group, which includes the National Multifamily Housing Council, the National Association of Realtors and the National Association of Home Builders, cited the increase in vaccine distribution, along with other Covid mitigation measures the administration has taken — such as providing financial assistance to renters — as among the reasons the moratorium was no longer necessary.
The ban will only “place insurmountable levels of debt on renter households and prevent recovery in the housing sector,” according to the three-page letter sent Friday.
Since the start of the pandemic, the federal government has deployed nearly $47 billion to help renters, landlords and homeowners cover those debts. Tenant advocates say renters are still struggling to pay their bills, and predict a wave of evictions when the ban expires.
The Centers for Disease Control and Prevention extended the nationwide moratorium just before it was about to end in late March. Last week, CDC director Rochelle Walensky would not say whether the agency would issue another extension, according to Reuters.
The June 11 letter from landlord groups is the first time they have made their plea directly to Biden. Meanwhile, the CDC’s late-March eviction moratorium extension came two weeks after a letter sent by 2,200 tenant advocate organizations and others that urged Biden to prolong the ban.
As Covid case rates have dropped in the U.S., courts have been more willing to side with landlord challenges to the moratorium. Still, the federal ban has stood.
A federal judge did strike down the ban last month, ruling that the CDC had exceeded its authority, but a stay was issued while the Biden administration appealed. After an appellate court ruled it would not lift that stay, landlord groups appealed the case to the U.S. Supreme Court.
In response, 22 state attorneys general on Friday sent an amicus brief to the Supreme Court, urging the justices not to overturn the moratorium. The filing argued that higher vaccination rates have not made tenants more financially secure.
“Economic recovery takes time, and many people still cannot pay back rent while the nation remains in the early phase of reopening,” according to the brief, which included the District of Columbia.
Some states have extended the ban past the federal deadline.
New York’s eviction moratorium protects tenants until Aug. 31. The state’s rent relief program launched June 1 with some glitches and the first relief payments won’t reach tenants for another four to eight weeks.
On Monday, the National Multifamily Housing Council sent a release to landlords in anticipation of the moratorium’s expiration. It listed measures they could take, such as encouraging tenants to apply for rent relief, offering tenants payment plans and extending 30-day notices before filing an eviction proceeding.
3050 Coral Springs Drive in Coral Springs; 1361 Southeast Fourth Street in Deerfield Beach and clips from the complaints. (Google Maps, District Court of Southern Florida)
A Coral Springs man was charged in an alleged multifamily investment sham enterprise that siphoned and misused $2.4 million, with nearly half diverted into his personal account.
A lawsuit filed by the Securities and Exchange Commission claims Larry Brodman and his Property Income Investors sold fraudulently unregistered security offerings, raising $9.1 million for real estate investments from 156 investors in 26 states. The alleged sham lasted from at least January 2016 to last September.
The June 7 complaint also charged Anthony Nicolosi, a top-producing sales agent, who along with others received commissions, even though they were neither registered sales agents nor affiliated at the time with registered broker-dealers. Documents provided to real estate investors vowed that commissions would be paid to licensed brokers.
In signed consents, Brodman and Nicolosi, of Lake Worth Beach, neither admitted nor denied the allegations but agreed to a future court order for the “disgorgement of ill-gotten gains” and a civil penalty. Their signed consents resolve the claims in the SEC’s civil suit but do not give the duo immunity from any criminal claims that could arise in the future, according to the documents.
Their attorneys did not immediately return requests for comment.
Federal Judge Raag Singhal in Fort Lauderdale ordered on Monday for Brodman and Nicolosi to pay an amount that is yet to be determined. Singhal also issued permanent injunctions against the duo, precluding them from violations of Securities Act provisions.
According to the SEC, Brodman founded Property Income Investors in 2016. It was marketed as a firm to buy, renovate, lease out and sell apartment buildings. Documents provided to investors said Brodman would receive 30 percent from rent profits, with the rest going to investors, and that he would split property sale proceeds with investors.
That would have entitled him to $312,000 at the most, but Brodman skimmed $1.12 million and put it into his personal accounts, according to the SEC’s complaint. Another $1.2 million was used to pay commissions to unregistered sales agents, including Nicolosi, the suit alleges.
This is not the first time that Nicolosi, who legally changed his last name from Anthony Peluso, is accused of selling unregistered securities. In December 2020, the Alabama Securities Commission issued him a cease and desist order, according to the SEC. In June 2001, the National Association of Securities Dealers permanently banned him from associating with any of its members “for engaging in high-pressure sales tactics and making misrepresentations to customers,” the SEC added in its complaint.
In the latest alleged scheme, properties were purchased through 11 limited liability companies. Records show that one of the entities bought an eight-unit apartment property at 3050 Coral Spring Drive in Coral Springs for $1.25 million in 2019; and another purchased a five-unit property at 1361 Southeast Fourth Street in Deerfield Beach for $635,000 in 2017.
Property Income Investors and the 11 entities signed consents, agreeing for the court to appoint a receiver over them, records show.
This is yet another case that shines a spotlight on South Floridians and real estate tied to questionable investments. Others involve criminal charges.
Palm Beach County resident Dusko Bruer was sentenced in May to 24 months in prison for evading taxes and hiding funds offshore, and using some of the money in foreign bank accounts to buy a Lake Worth Beach mansion for his ex-girlfriend.
Also, Weston resident William Kelly recently pleaded guilty for his role in an EB-5 investment visa fraud case involving a Jay Peak biomedical research project in Vermont.
After the 2008 financial crisis, middle schooler Hank Wu traveled with his parents every weekend to places such as Las Vegas and Florida to scout for investment properties.
In high school, he found a new, more exciting investment opportunity: cryptocurrency. He invested heavily and made millions riding the meteoric rise of Bitcoin as well as that of lesser-known coins, like Tether.
Since then, he’s sold around 80 percent of his crypto portfolio, putting his winnings into other investments like backing startups and, increasingly, buying real estate.
In 2018, Wu bought seven garden-style rental units in West Palm Beach, leaning on his parents for their expertise. Now 24, Wu is about to close on another real estate buy: a condo in Manhattan.
During the pandemic, he went into contract for a one-bedroom unit at Madison House — a Fosun and JD Carlisle project under construction at 15 East 30th Street in Manhattan — for $1.8 million. He paid in cash, funds that he wouldn’t have had if not for his adolescent crypto bets.
“In the back of my mind, I had this implicit understanding that you should always invest in real estate,” Wu said. “I can rely on it not to go to zero.”
Wu is one of many who have made millions on cryptocurrency and are now looking to park their crypto riches in the more stable and tangible asset class of real estate. With huge spikes, cryptocurrencies have minted thousands of millionaires. Almost 80,000 Bitcoin addresses hold over $1 million each, according to data from BitInfoCharts. From New York and the Hamptons to Miami and Los Angeles, crypto wealth is being pumped into luxury real estate properties, according to brokers, buyers and crypto fund managers.
For many, the volatility of cryptocurrency is attractive, as is the potential for outsized riches.
“People are thinking, ‘What can I spend a penny on and make one million dollars?’” said Piper Moretti, who founded the Crypto Realty Group.
Now, some individuals are using their new dough to achieve long-term goals: making a down payment on their new house, buying a third home in Miami or purchasing a private jet or exotic car. Others are figuring out ways to balance their portfolio, protecting their net worth from crypto’s notorious volatility and opting for assets with more predictable cash flows, such as multifamily.
Whether these people are converting crypto into cash to invest or using Bitcoin directly to buy property, sellers, fund managers, brokers and attorneys are having to adapt and learn new ways to close property deals.
The Bitcoin hedge
James Keogh, a broker at Douglas Elliman in the Hamptons, recently bought a new four-bedroom home at 73 Cross Highway to Devon in Amagansett for $2.1 million. After putting 10 percent down in cash, he converted $250,000 worth of Ethereum to pay another 15 percent down at closing.
“If I had sold it a week later, it would have probably been $400,000,” Keogh said of his Ethereum stash, which he started amassing after watching videos about its potential on TikTok. “But I needed the money.” Keogh’s earnings were classified as short-term capital gains and therefore subject to higher tax rates.
Over the last year, cryptocurrencies such as Bitcoin, Ethereum and Dogecoin have seen explosive, unprecedented growth. Bitcoin jumped a staggering 800 percent from April 2020 to a high of $63,000 on April 15. But it’s been a turbulent journey. In late May, the price of a coin dropped to $34,000.
In comparison, prices for industrial and multifamily properties — the two strongest real estate asset classes in 2020 — rose by 8.8 and 8.3 percent, respectively.
“Real estate has traditionally been a good place to park your money,” Keogh said. “With interest rates as low as they are, it’s becoming a no-brainer for people that have made 100 percent on their money through crypto.”
For those who have built up a significant crypto portfolio, “the right thing to do is to take some of that money off the table and diversify,” said Matthew Hougan, chief investment officer at crypto asset management firm Bitwise. “Selling some of your crypto to buy a house, or diversifying your portfolio to include more stocks and bonds, is a very great thing.”
No cash, no problem
As cryptocurrencies generate more wealth, residential brokers have a larger pool of interested buyers.
“We advertise homes as taking crypto, and from that alone, we’ve had multiple calls from billionaires in the crypto world that we did not have access to before,” said Aaron Kirman, a Los Angeles-based luxury agent at Compass. “People like options.”
Kirman is listing a 9,000-square-foot property at 777 Sarbonne Road in Bel Air on behalf of celebrity cosmetic surgeon Alex Khadavi for $87.8 million — and Bitcoin offers will be entertained.
But it’s not just lavish L.A. spreads that are available to buyers hoping to use crypto. In Manhattan’s Financial District, former WeWork chief growth officer David Fano is selling his penthouse at 130 Beekman Street. “Purchase for 88 Bitcoin or $3.29 million!” read a recent listing from Compass’ Rachel Glazer.
In some cases, sellers bullish on crypto are giving sweeter deals for buyers who make an offer in crypto. A 7,310-square-foot home at 358 Crescent Avenue in Wyckoff, New Jersey, is being listed for $3.9 million. But if an offer to buy the house is made with crypto, the seller — who records show is financial analyst Timothy Brackett — will knock off $50,000.
The most common way to buy a home with cryptocurrency is to convert it into U.S. dollars at an agreed exchange rate.
Buyers and sellers can set up the transaction through payment processor BitPay, according to Shaun Pappas, a partner at law firm Starr Associates who has worked on such deals. An invoice is generated by the seller, and the buyer has 15 minutes to lock in a rate to convert the coin to cash. Once executed, the cash is placed into an escrow account, akin to a normal property transaction.
In other cases, buyers may have the option to transfer their crypto directly to the seller without exchanging it for cash — a wallet-to-wallet transaction. Though this is less common, it could generate greater proceeds for sellers.
Los Angeles-based developer Michael Chen wanted to give potential buyers this option when listing a spec home at 1108 Wallace Ridge in Beverly Hills for $65 million. With a wallet-to-wallet transaction, a $65 million home could halve or double in value overnight, depending on where the coin stands. But Chen is willing to take the risk.
“I don’t see it as just a currency,” Chen said. “I see it as an investment.”
Those who use Bitcoin to purchase property may end up with a very 21st-century kind of buyer’s remorse.
Madison House at 15 East 30th Street
In February, investor Chamath Palihapitiya tweeted a photo of a Lake Tahoe plot he had bought in 2014 with Bitcoin. The deal was valued at $1.6 million at the time, but Palihapitiya tweeted that had he held on to the cryptocurrency instead, it would have been worth $128 million. “#FML,” he wrote.
Anonymous no longer
When Keogh showed his mortgage broker at Bank of America — “not a crypto person,” he said — that he had cashed out his crypto earnings to use as part of the down payment, the broker demurred.
Keogh tried to explain it was just like a brokerage account, “like trading stocks.” Bank of America eventually relented, and Keogh secured a mortgage.
“I think the concern on the bank’s end is that they don’t necessarily know where the money is coming from,” Keogh said.
Anonymity is a central issue when it comes to cryptocurrency: Wallets and addresses do not have to have identifying details, making it difficult for banks, brokers and attorneys to verify owners.
“We do our due diligence,” Chen said, adding that someone who can afford a $65 million house likely has a financial background that can be vetted. “We would just want to know they’re doing this legitimately without breaking the law.”
But as trading cryptocurrency becomes more mainstream, anonymity is something crypto users may have to give up if they want to buy property.
Banks have to know where the crypto came from and identify the buyer, Pappas said. In some ways, this “defeats the purpose” of crypto, which was built around anonymous transactions, he noted.
Just a Lamborghini
As in Hank Wu’s debut deal, others who have made money in crypto are also looking at cash-flowing rental properties as investments.
Keith Wasserman, co-founder of multifamily investment firm Gelt, said he’s seeing more and more investors who have realized gains from cryptocurrency participate in his fund.
“It’s like the barbell approach,” he said, referring to the investment strategy of betting on the two extremes of high-risk assets and those with predictable cash flows, while avoiding middle-of-the-road choices.
I literally shitposted my way to becoming a millionaire. @MasterClass coming soon.
Some investors use their crypto wealth to realize long-term goals of owning property, while others want to cash out of their real estate assets and bet it all on crypto, according to Nicole DeCicco, founder of CryptoConsultz. The firm helps educate cryptocurrency investors on how to diversify their portfolios.
Others think it’s too soon to be selling Bitcoin, are skeptical of investments that aren’t decentralized, or like to follow investment advice from Tesla CEO Elon Musk.
“The people with the most invested, they’re not buying property,” said Stephan Burke, a Miami-based Elliman broker who has closed wallet-to-wallet and crypto-to-cash deals since 2017. “They want to sit on crypto and see what happens.”
Angel investor and crypto fund founder Terrence Yang hates owning real estate, and hasn’t made any buys since he got into Bitcoin.
“It’s illiquid,” Yang said. “It’s easy for the government to raise taxes on.”
“No, just a Lamborghini,” said independent venture capitalist Peter Saddington when asked if he had bought real estate since making money on crypto. He bought the supercar in 2018 for 45 Bitcoins, which he had purchased years before for less than $115. A single Bitcoin was trading in the high $30,000s at the time this story went to press.
Wu is driven more by the turn of the key in a new property than by the rev of an engine. Though he doesn’t have any other crypto-backed real estate deals in the pipeline, he’s keeping his eyes open for more residential investments.
Because, as Wasserman said, we all need a place to live,“until we’re living on Mars with Elon.”
Arch Companies founders Jeffrey Simpson, Jared Chassen and Infinity’s David Berg. (Google Maps, Infinity, Getty)
Arch Companies and Infinity Real Estate are partnering to build a mixed-use multifamily project in Miami’s Edgewater, across the street from their 2500 Biscayne tower.
The two New York firms plan to develop the more than 1-acre assemblage at 2501 Biscayne Boulevard, most recently home to Latin Cafe 2000.
The property sold for $13 million in 2017 to an entity affiliated with Arch Companies, led by founders Jeffrey Simpson and Jared Chassen. Infinity, led by partner David Berg, recently formed a joint venture with Arch to build the project.
Infinity and Arch plan a 250-unit development in a 20-plus-story building, though zoning allows for 36 stories, Simpson, Chassen and Berg said. Food and beverage concepts will also be part of the project initially, and long term. Mimi’s Cafe, a pop-up created by Arch and Michael Kaplan’s New Wave Hospitality group, will open during the planning phase of the project.
The developers declined to disclose the joint venture purchase price. They’re in the design stage and plan to break ground on the project toward the end of 2022.
They said they’re piggybacking on growing demand in South Florida for housing, office and hospitality space.
About three years ago, Greystone Development sold its stake in 2500 Biscayne, a 19-story apartment tower that was renamed Wynwood Bay. The remaining owners, including Infinity Real Estate, refinanced the property.
Edgewater has attracted major condo and multifamily developers in recent years, including the Related Group, OKO Group, Two Roads Development, and apartment giant Aimco.
Black Lion recently paid $12.1 million for the Amara at Paraiso restaurant building, at 3101 Northeast Seventh Avenue, in Related Group’s bayfront Paraiso condo complex.
TPG Real Estate Partners recently paid $61 million for two hotels in Edgewater, at 3400 Biscayne Boulevard and at 3450 Biscayne Boulevard.
Aimco, a publicly traded real estate investment trust, which paid nearly $90 million for the Hamilton on the Bay in Edgewater, is renovating the building and is said to be assembling land for a larger project. Tenants recently had their leases terminated and are organizing against the company.
In November, with mall owners getting crushed, Washington Prime Group CEO Lou Conforti said that bankruptcy was off the table. But in March, it was reported that the mall REIT was preparing for the filing.
Now it has done the deed.
Washington Prime Group filed for Chapter 11 bankruptcy Sunday. The company has secured $100 million of funding for day-to-day operations while it goes through the process.
The real estate investment trust, which owns more than 100 malls, has $4 billion in assets and $3.5 billion in debts, according to court filings in the Southern District of Texas.
“The company’s financial restructuring will enable WPG to right-size its balance sheet and position the company for success going forward,” Conforti said in a statement. “The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”
The restructuring support agreement provides for a deleveraging of Washington Prime Group’s balance sheet by nearly $950 million through exchanging unsecured notes for equity, a $190 million paydown of its revolving credit and term loan facilities and a $325 million equity rights offering, backstopped by SVPGlobal.
The plan has the support of creditors, led by SVPGlobal, that hold 73 percent of the principal amount outstanding of the secured corporate debt and 67 percent of the principal amount outstanding of the unsecured notes.
However, like many other mall operators, the company struggled when the pandemic sent foot traffic and rent revenue plunging. Washington Prime Group collected just 52 percent of the rent due in the second quarter of 2020.
Washington Prime Group joins CBL & Associates Properties and Pennsylvania REIT, both of which filed for chapter 11 bankruptcy in November.
The six-bedroom Coral Gables house. (Compass / Zignavisual Photography, Del Toro Insurance)
Del Toro Insurance’s chiefs paid $5.7 million for a mansion on the Coral Gables Waterway.
Records show Angel and Elena Del Toro bought the waterfront home at 380 Isla Dorada Boulevard in Coral Gables’ Cocoplum neighborhood. The sellers are Juan Reinaldo Perez and Zoila Perez.
Angel and Elena Del Toro (Facebook via Del Toro Insurance)
Angel Del Toro is CEO of Miami-based Del Toro Insurance, while Elena Del Toro is senior vice president of the company. Del Toro Insurance was founded in 1998 and specializes in automobile insurance policies in Florida, according to its Linkedin page.
The Perez family purchased the property for $250,000 in 1987, records show. The two started constructing the current home in 1992, according to records. The house was completed in 1995.
The 10,009-square-foot mansion was first listed in 2009 for $8.6 million. After years of price changes, the most recent asking price was $6 million in June of last year. Lourdes Alatriste of Douglas Elliman represented the sellers.
The six-bedroom, five-and-a-half-bathroom home was built on a 0.6-acre lot, records show. The property also includes a 45-foot dock, according to the listing.
Developers are eternal optimists. And forgetful masochists.
These gruff street fighters of the real estate world often must buck the consensus view, time the market perfectly and take reputational and financial risks that would drive the average person to a breakdown.
Few builders better exemplify this type than Jorge Pérez, the condo king of Miami, who is running the Related Group with his son Jon Paul. The focus of our cover story this month, Pérez is not only aggressively starting new projects in the hometown he’s dominated, he’s also moving quickly to build up to 100 projects across the country and in Latin America.
Never mind that Related has been burned before when attempting to branch out — twice in Las Vegas, including in 2005, when it partnered with George Clooney on a development ultimately derailed by rising construction costs after sales had already started.
Pérez said his most important lesson in humility came from the Great Recession, when he stood in a ballroom filled with his creditors to renegotiate nearly $2 billion he owed.
But developers have short memories, and Related’s goal is to diversify outside the extreme highs and lows of the Miami market. Can he pull it off? Check out our story on page 66.
Overall, there’s much to be optimistic about.
While it’s well known that the residential market is still firing on all cylinders — one buyer in Westchester lost out on six bidding wars in a row (page 32) — the commercial sector, too, is getting a new lease on life.
In Manhattan, office tenants are now taking their spaces off the sublease market — space they desperately wanted to shed during the pandemic — anticipating an earlier-than-expected return to the workplace (page 24).
While only a small percentage of Manhattan office workers had returned as of last month, that figure is expected to approach two-thirds by September, according to a survey by the Partnership for New York City.
When it comes to the national foreclosure crisis, the government’s forbearance program has saved homeowners from default by allowing them skip mortgage payments for up to 18 months. About two-thirds of the 4.3 million borrowers who were in forbearance a year ago have since exited the program.
That said, there are still millions of homeowners in trouble, and what happens when the eviction moratorium ends is anybody’s guess (page 72).
Elsewhere, we’ve got the second installment of our Hamptons special section (page 35). Even in a hot market, there are some hard-to-sell dogs that can’t seem to find a buyer — we take a closer look at these problematic properties on page 38. And just how much of a price premium does an East End water view command, anyway? We break it down on page 46.
In a story that’s bound to make you jealous, we take a look at some of the investors — including Gen Z-ers — who have made millions in cryptocurrency and are now looking to park some of that money in the (relatively) stable asset class of real estate. One 24-year-old investor’s latest purchase — a $1.8 million pad in NoMad — was paid for in cash with the proceeds of his bets (page 55).
Finally, our Closing interview this month is one of the most moving we’ve ever published. Janice Mac Avoy, the co-head of real estate litigation at Fried Frank, talks about how she loves cross-examination and “twisting [a witness] in knots.” But she also opens up about the murder of her sister last year, the dissolution of her marriage and abortion (page 86).
“I have had such a tremendous amount of support from folks really being there for me,” she said. “If you don’t talk about [your feelings], you’re not going to get that.”
Abu Dhabi’s sovereign wealth fund may be having second thoughts about its real estate investment strategy as the pandemic ravages certain asset classes.
The Abu Dhabi Investment Authority, one of the biggest government-backed investment funds, is reviewing financial performance of the shopping malls and office buildings in its portfolio, Bloomberg News reported, citing anonymous sources. Depending on the outcome, the authority may consider reducing its exposure to some troubled investments.
The retail and office markets were among the most impacted by the pandemic. Shopping malls had already been struggling amid the rise of e-commerce, and the work-from-home phenomenon has led employers to rethink their physical footprints.
ADIA has about $700 billion in assets under management, of which real estate accounts for about 5 to 10 percent, according to the outlet. The Abu Dhabi fund may redirect its real estate investments to logistics, life sciences, technology hubs and affordable housing.
David J. Blumberg and 415 Center Island Drive (Google Maps, Blumberg Capital)
Another financier is planting roots in South Florida. The founder of early-stage venture capital firm Blumberg Capital paid $11 million for a waterfront Golden Beach mansion.
David J. Blumberg bought the house at 415 Center Island Drive from Christian Taratuta and Veronica Sarabia, records show.
Taratuta is the founder and CEO of IMS Internet Media Services, a digital communications and marketing company based in Miami, according to its website. The company also has offices in Argentina, Brazil, Chile, Colombia Mexico, Ecuador, Italy, Panama, Peru, Spain and Uruguay.
Blumberg founded San Francisco-based Blumberg Capital in the early 1990s, according to its website. Before founding the firm, he managed international investments at the Bronfman Family Office, Adler & Co, APAX Partners and at T. Rowe Price.
Taratuta and Sarabia purchased the waterfront property in 2011 for $2.2 million, records show. The married couple demolished a home on the site and filed to build a new house the same year. It was finished in 2015.
Property records show the two-story home has five bedrooms and six-and-a-half bathrooms. The 7,257-square-foot house is on a 16,500-square-foot lot with 100 feet of Intracoastal Waterway frontage, according to the listing.
Other recent waterfront sales in Golden Beach include the founder of a healthcare company buying a waterfront teardown for $7.5 million, billionaire Phillip T. Ragon buying an oceanfront house for $20 million, and a mortgage chief buying a waterfront home for $14.1 million.
Jorge, Jon Paul and Nick Pérez (Photos by Studio Scrivo)
Getting burned twice in Las Vegas didn’t kill Related Group’s dream of national expansion. But it taught the megadeveloper the importance of boots on the ground.
Miami condo king Jorge Pérez and his son Jon Paul are expanding their Related Group with a $13 billion pipeline of projects throughout the Americas, their boldest move beyond Florida since their first Las Vegas venture in 2005, when they teamed up with George Clooney and Cindy Crawford’s husband, Rande Gerber, on a hotel, condo and casino development called Las Ramblas.
“We were selling like hotcakes. Then we got our construction costs back and realized, ‘I’m going to lose money for every condo that I sell.’ So we had to scratch that,” Pérez said. “Thank God somebody gave us a great offer for the land, and we left Las Vegas.”
Related is moving quickly to develop roughly 25,000 units in the United States and Latin America. By next year, markets outside Florida — including Georgia, Tennessee, the Carolinas, Virginia, Texas and the Rocky Mountain region — could account for more than half of its developments. In Latin America, it has condo developments in Mexico, Brazil and Argentina.
Pérez said Related is in its “highest growth mode” for each of its divisions, including condos, affordable housing and market-rate and mixed-use developments. The company is affiliated with, though independent of, New York-based Related Companies.
“We are right now pumping on all cylinders,” he said, adding that South Florida is experiencing “one of the rosiest periods” in its history, citing huge demand from the Northeast, California and other areas.
Related’s failures to launch in Las Vegas helped shape its current expansion strategy. Both times, Pérez pulled out due to higher-than-expected construction costs, a sign the company hadn’t understood the market well enough before going in. Now Related establishes regional offices before building in new markets.
In Florida, Related’s knowledge and relationships run deep, but in new markets, its “guesswork has to be correct,” Pérez said.
In November, the 71-year-old Pérez, who is Related’s chairman and CEO, named his elder son, Jon Paul Pérez, president of the company. The 36-year-old had already been thrust into the existential challenge of dealing with the pandemic.
When Covid hit, Related employees started working remotely immediately, and the firm lobbied hard to keep the construction industry going in Florida, Jon Paul said during a joint interview with his father at Related’s new headquarters in Miami’s Coconut Grove.
“That was extremely important for us,” he said. “We got together with all the government officials, lobbied with them all, and we were able to deem construction an essential business, which allowed all of our projects to continue.”
Like other multifamily landlords, Related feared its tenants wouldn’t pay rent, but collections bounced back faster than anticipated, he said. Florida also benefited from the migration of wealthy buyers from high-tax states in the Northeast, as well as Chicago and California.
Still, critics warn of a bubble that eventually will burst, with sales slowing and rents and prices falling as demand vanishes.
“This is reminiscent of 2006, 2005 for me. Everybody’s drinking the Kool-Aid again,” said Peter Zalewski, a condo market consultant and former columnist for The Real Deal. “The reality is no one knows what’s going to happen until the eviction moratorium is lifted.”
Before the pandemic, a number of developers were saddled with condo inventory from the previous cycle, including Related.
“At the time, we thought we probably had three to four years’ sellout of that remaining inventory, and as of [mid-May], we’re completely sold out,” Jon Paul said.
Condo sales dried up at the start of the pandemic, but since this January, inventory has dropped and developers are reporting sellouts on brand-new projects as well as those that have been on the market for years. Last year, Related launched sales of Solemar in Pompano Beach, led by Nick Pérez, Jon Paul’s brother and a vice president at the company.
Solemar, a 105-unit oceanfront building, sold “twice as fast as we were expecting,” said Nick, 33. “Our goal was to get to 40 [percent], 50 percent by this time. We’re at 80 percent.”
Related recently teased a new project, Baccarat Hotel & Residences, planned for a Brickell riverfront development site in Miami that the company has owned for nearly a decade. The first tower, with 375 units, recently began taking reservations.
With projects in Miami, Palm Beach, Boca Raton, Pompano, Fort Lauderdale, Tampa and Jacksonville, “the condominium division has become, again, a very important division,” said Pérez.
Being first to market — and first to sell out — is key for Related. “Our job is to act very rapidly in understanding what that demand wants,” he added.
Related plans to launch at least two more projects in downtown Miami: a high-end condo tower at 1400 Biscayne Boulevard where Auberge was previously planned, and a short-term rental/condo development with Airbnb. It also plans more projects throughout Florida.
Migration to Florida from across the country has driven much of the development. According to the state’s Office of Economic and Demographic Research, nearly 330,000 new residents moved to Florida between April 2020 and this April. They are seeking to take advantage of zero state income tax, warm weather and a business-friendly environment.
Related is among those developers taking note.
“There seems to be, in the developers’ minds, no end in sight for the next three to five years,” said Jim Andrews of Integra Realty Resources, a research and advisory firm. “I think all of that will have to slow down at some point.” A lot will depend on the national economy, as well, he added.
In particular, Pérez is watching the political landscapes in New York, Chicago and California.
“In talking to my fellow developers and bankers, they’re extremely afraid about the politics in New York. Who will be the mayor? Can they afford to continue to have the social programs that they have?” he said. “Will there be a reduction in taxation, so they’re not taxed at a higher level than anyplace else?”
New York is following a strategy that would require large government spending, funded by increasing taxes on the wealthy, Pérez believes. “If I’m correct in that, you will continue to see the exodus, because a lot of firms are just tired of it.”
He predicts that Northeastern buyers will continue to flock to Florida for the next two to four years. Any decline in domestic demand will be offset by an increase in South American buyers, he said.
“Florida, particularly South Florida, has a history of extremes … extreme ups and downs. We’re like a roller coaster,” he said. “When you’re doing these huge jobs that take years to do, you need to make sure that you’re not caught in the middle. So we’re constantly doing research.”
The huge demand for single-family homes during the pandemic pushed prices up and eventually spilled over into condos. In the first quarter of this year, condo sales — excluding new construction — increased by more than 50 percent to over 4,800 in Miami-Dade County, according to the Miami Association of Realtors.
Zalewski said everyone is “gambling” on the market right now and that developers should collect as much cash as they can while the spigot is open.
“At some point reality and the fundamentals will become important again. Right now fundamentals don’t mean anything,” he said, citing ongoing low interest rates, an eviction moratorium and stimulus payments.
Pérez is a noted art collector and patron — his name is on the Pérez Art Museum Miami — and Related’s projects tout their artistic elements as a selling point. Pérez said museum-quality art has become more and more important for the high-end buyer.
Related will soon be rolling out an ultra-luxury multifamily brand, while it’s also venturing into affordable condos, priced in the $300,000 range, geared toward buyers who have been priced out of home ownership in the city.
And as a result of the pandemic, most unit designs now include an extra bedroom or den that can be used as a home office, Jon Paul said. In some of the market-rate multifamily projects, Related is also including “big house units” with ground-floor entrances and attached garages.
The company’s projects are built with resiliency in mind — think higher seawalls and energy-efficient buildings. Though it’s not something buyers are asking for, according to Pérez.
Related is also incorporating air purification systems, increased outdoor amenities, more touchless features and warm lighting that’s easier on the eyes.
“If you’re running out of milk, you can actually communicate with the supermarket [through the refrigerator],” Pérez said. “These are small things, but really they’re the things that are going to make one’s life easier.”
Pérez recently moved from his waterfront Coconut Grove estate to a penthouse at Related’s Park Grove project, which the company developed with Terra. He plans to list the Coconut Grove property for about $40 million, and calls condo living, which he has become synonymous with, “everything that I want.”
Related’s CEO is notorious for his attention to detail. During the photo shoot with TRD, he noticed a dying tree on the terrace of the company’s office building. By the afternoon, Nick was in the process of having the tree removed.
“I never know what to expect, because I’m the younger brother,” Nick said. “I’m keeping my head down and trying to execute and grow and move up the ladder.”
Pérez required his two eldest sons to work outside of the family company before joining Related. The succession plan has been in place for years.
Though restrictions on travel in the first eight months of the pandemic slowed the company’s growth plans, Related now has between 90 and 100 projects in the works. In addition to regional offices in Atlanta, Dallas and Phoenix, Pérez and Related’s development division chief, Steve Patterson, said Related is considering opening an office in California and may make a bigger push in the Rocky Mountain region.
Patterson said the younger Pérez is making key decisions regarding Related’s expansion.
“He’s getting comfortable with our confidence in him and his dad’s confidence in him. That needed to happen for him to take the reins,” Patterson said of Jon Paul. “Jorge will step in where he needs to.”
Related’s goal is to become “more geographically and economically diversified,” according to Patterson. In Atlanta, it’s completed two apartment developments, Icon Midtown and Icon Buckhead, and has four in the works. In the Southwest, Related is working on four projects in Arizona and two proposed developments in Texas.
That’s in addition to luxury hotel and condo buildings in São Paulo, Buenos Aires, and Mexico’s Cancun, Puerto Vallarta and Zihuatanejo.
Along the way, Pérez said he has learned it is crucial to be grounded in the details of the markets he wants to enter, which requires local intelligence and a degree of caution.
But Pérez’s most important lesson came from the Great Recession, when he stood before a ballroom filled with his creditors to renegotiate the nearly $2 billion in debt he owed.
“The biggest thing we learned is humility,” Pérez said. “We are not bigger than the market. We have to listen to the market.”
Reports surfaced June 1 that construction startup Katerra was shutting down its U.S. operations. Three days later, mass layoffs began.
Now, three former employees are pursuing a class-action lawsuit against the construction startup, alleging it failed to provide adequate notice of their termination. The lawsuit, which is seeking to certify a class of some 700 laid off Katerra employees, was filed as an adversary complaint in Katerra’s bankruptcy case.
The employees worked in Seattle, Jersey City and Hayward, California, according to the lawsuit. Clifford Marvin worked as an architectural specification writer in Katerra’s Seattle office, while Todd Irving served as a construction superintendent on a Katerra project in Hayward. Joseph Russomanno was a help desk technician at the company’s Jersey City office.
Under the federal Worker Adjustment and Retraining Notification Act, or WARN, employers with 100 or more employees must provide at least 60 days’ written notice of plant closings and mass layoffs. There are some exceptions, including “unforeseeable business circumstances.”
But Katerra’s financial problems date back many months, and the lawsuit alleges that Katerra was required to abide by these notification rules and owes employees unpaid wages and accrued vacation time.
A representative from Katerra did not immediately respond to a message seeking comment.
Katerra filed for bankruptcy protection June 6, listing liabilities between $1 billion and $10 billion and assets of just $500 million to $1 billion. It recorded losses of $2.78 billion in 2018, 2019 and 2020, according to the filing.
The company, which had a history of financial issues as well as difficulties completing projects, plans to sell its operations in India and Saudi Arabia, as well as a number of companies that it acquired over the years. SoftBank, its largest backer, is providing a loan of $35 million to help the company unwind its operations and market its assets.
South Florida’s luxury real estate market has seen a huge jump in sales over the past year, as the uber-wealthy continue to move from high-tax states. In turn inventory has declined and homeowners are cashing out.
Seasoned veterans like Steve Wynn and Todd Michael Glaser have dominated recent headlines by flipping properties, but “a new breed of buyer” in South Florida also has emerged. Some buyers, including athletes, executives and celebrities like Tommy Hilfiger, are trading not just homes, but towns, moving to other parts of the tri-county region.
Similarly, fashion icon Tommy Hilfiger and his wife, handbag designer Dee Ocleppo Hilfiger, sold their waterfront Golden Beach mansion for $27.5 million in May, then purchased a waterfront home in Palm Beach for $21 million shortly after.
“I see three, four, five transactions with the same clients,” Stacy Robbins of Stacy Robins Companies said. “It’s a new breed of buyer in Miami.”
Robins, who helped Rabin sell his Miami Beach condo, said that a main factor in her clients’ decision to switch locations is lifestyle fit. For those who like the nightlife and culture South Florida has to offer, Miami Beach may satisfy their needs, while those who prefer a more quiet life might find Palm Beach to be just the right speed.
Longtime film and television producer Douglas Cramer moved across Biscayne Bay. Cramer and his husband traded their La Gorce Island property in Miami Beach for a home in Miami’s Morningside, while Richard Wackenhut uprooted from Palm Beach to Boca Raton.
Robins compared the housing market to the stock market, with some homebuyers expanding their portfolios. More is to come, she said.
Nutrition power couple Roger and Sloan Barnett have been assembling a collection of South Florida homes this year. In April, the couple purchased a Coconut Grove mansion for close to $46 million, and a Star Island mansion for $38 million. They sold their unit on Fisher Island for $23 million in May, four months after buying it.
“Some [buyers] want to be close to the action,” said Joanna Jimenez of Compass. “For others, waterfront property is more important.”
Robins also attributes the steady stream of deals to out-of-town buyers who may be used to owning properties around the country. “New Yorkers are used to leaving the city,” and enjoying beach getaways in the Hamptons or other nearby places, while still enjoying everyday city life, Robins said.
Faced with little inventory, some buyers are choosing teardowns or lots, aiming to build their dream home. While they wait, they’ll pick up a smaller house or a condo.
Financier Gary Siegler, too, scored a renovation project after buying a Miami Beach teardown for $8.3 million. Days earlier, he sold an Indian Creek home for $27.9 million.
Out of town buyers are pushing pricing up, in some cases leaving sellers with few options of where they can move.
In the first quarter of 2021, residential sales volume in Miami-Dade, Broward and Palm Beach counties totaled $15.8 billion, according to the Miami Association of Realtors.
“Locals are taking advantage of the market by selling and moving,” said Danny Hertzberg, of The Jills Zeder Group at Coldwell Banker. Hertzberg represented a seller who flipped a waterfront Venetian Islands home in February.
Gary Pohrer, a top agent in Palm Beach, said he now has to find homes for his sellers before getting their listings, as a result of the huge decline in inventory. Off-market deals also abound.
Prime 112 restaurateur Myles Chefetz sold his waterfront Venetian Islands home on a 17,000-square-foot lot in an off-market deal in April, and bought a non-waterfront Miami Beach spec home on a nearly 9,000-square-foot lot in May.
Developers David Martin, Russell Galbut and renderings of the project.
UPDATED, June 14, 12 p.m.: Developers Russell Galbut and David Martin launched sales of their condo tower at the entrance to South Beach, marking a key milestone for the project that has long been planned for the site at 500 Alton Road.
They are joining a number of condo developers who have started sales this year, many who are doing so after sitting on the sidelines for months, or even years, waiting for demand to ramp up.
Galbut’s GFO Investments and Terra, led by Martin, are developing Five Park Miami Beach with New Valley. The 48-story, 519-foot-tall skyscraper will have 98 condos and 180 “park residences,” the latter of which may be rentals or condos.
The developers held a brokers’ event last week, but a formal sales launch is planned for later this year, according to a statement from Douglas Elliman Florida CEO Jay Phillip Parker. Elliman is leading sales of the 98 condos.
The property was once home to South Shore Hospital.
In March, Galbut and Martin secured a $345 construction loan for the project – one of the largest loans to close in South Florida during the pandemic – from The Blackstone Group and Apollo Global Management.
The condos will range from 1,434 square feet to 6,000 square feet, with two to five bedrooms, private elevator entrances, 10-foot ceilings and floor to ceiling sliding doors. Prices start at $2.5 million, according to broker eblasts.
The condos will be on floors 30 to 48. The building will have about 40,000 square feet of amenities scattered throughout the building, including a pool deck on the fifth floor and a clubhouse on the 26th floor. It will also have electric car charging stations, co-working space, a gym, spa and treatment rooms, a pool bar and cafe, and short-term rental suites.
The South Shore Hospital building, which fell into disrepair and remained as a shell on the property for more than a decade, was demolished in 2019 after the developers announced their partnership.
Galbut’s ownership dates back to 2010. He initially said the hospital would remain in operation.
Records show a $90 million deed was transferred in September 2019 to TCH 500 Alton LLC, a holding company managed by Terra and Crescent Heights entities. Galbut, chairman of GFO Investments, is managing principal and co-owner of Crescent Heights. Last year, the developers broke ground on the adjacent 3-acre Canopy Park, which will feature a Monstrum artistic playground, pedestrian and bike paths, an outdoor gym and public art.
The park is expected to be completed this summer, and the tower could be delivered in the fourth quarter of 2023, according to marketing materials. Construction of the bridge crossing the MacArthur Causeway was set to start two months ago in April.
In a statement, Martin said he’s seeing demand from domestic and international buyers, the latter of which had disappeared from the market early on in the pandemic.
Related Group, PMG, Ugo Colombo and Valerio Morabito, Kolter Urban and others have kicked off sales of a number of condo buildings this year. In March, PMG and its partners launched sales of the Waldorf Astoria Residences Miami, which is planned as the city’s tallest residential tower at 100 stories.
Nearby in Brickell, Related recently began taking reservations for the first tower at Baccarat Residences along the Miami River.
And after launching sales of E11even Hotel & Residences Miami in February, PMG and E11even Partners are nearly sold out to buyers who have put down 10 percent non-refundable deposits.
The Real Deal’s June issue is live for digital subscribers and soon to hit doorsteps across the country.
As a long-awaited semblance of normalcy returns, the fruits of dogged persistence in the face of adversity are being realized in key real estate markets around the U.S. Whether it’s crypto millionaires pumping their gains into property, or Miami’s condo king taking yet another shot at expanding his realm, several stories this month illustrate that if you stick with something long enough, interesting things are bound to happen.
Still, the future remains as unpredictable as ever, and in many cases, potential crises loom at every turn. In this issue, we bring you stories of determination in the face of past failure or future uncertainty, including:
The federal forbearance program is the biggest government intervention in the mortgage market since the 2008 recession, but still leaves many borrowers out to dry. Complicating matters further, an extension of the foreclosure moratorium might only make homes more unaffordable.
Kraftwerk and BMW’s weren’t the only German exports to reach American shores in the 1980s. The “passive home,” a design standard that drastically reduces energy consumption and improves air quality, has been around for decades, but it’s finally gaining steam on this side of the Atlantic.
Real estate attorney and reproductive rights activist Janice Mac Avoy opens up like perhaps no Closing interview subject before her, on cowboyish entrepreneurs, Roe v. Wade, breaking the cycle of poverty and her personal struggles during the pandemic.
The two-flat building in Woodlawn where Emmett Till lived (Getty)
Chicago is seeing a surge in efforts to landmark homes with a connection to Black history.
Such efforts are underway for seven Chicago homes once owned by historical Black figures, according to Crain’s Chicago Business.
All seven of the properties in some stage of landmarking could become museums.
Some are the former homes of historical figures, including the Woodlawn two-flat where Emmett Till lived and a North Kenwood home owned by blues great Muddy Waters.
The effort to landmark Waters’ former two-flat has the support of the local alderman, Sofia King. The current owner, Waters’ great-granddaughter Chandra Cooper, is raising funds to turn it into a museum.
The one property that was not a private residence is a Washington Park greystone that was once a Phyllis Wheatley Club. The organization ran settlement houses for Black women coming north during the last century’s Great Migration.
The house is severely dilapidated and at risk of demolition.
Purchasing, rehabilitating and preserving historic properties can be expensive, but a successful landmarking can help attract investment and public dollars.
The family of Illinois’ first African American legislator, John W.E. Thomas, is reportedly exploring a landmarking effort for his former home as well.
Villa Guardatoia and Casa Natalino (Concierge Auctions)
Miss the chance to scoop up this Tuscan villa and it could be centuries before it hits the market again.
After 400 years in the hands of the Cecchi de’Rossi family, Villa Guardatoia and a nearby farmhouse, Casa Natalino, are set to hit the auction block starting June 24 with no reserve. Concierge Auctions is managing the auction.
Set on 18.5 acres in the hills of Tuscany near the city of Pescia, the main house, featuring 12 bedrooms, was built in the 1600s as a summer retreat and has never left the family until now, according to Mansion Global.
Casa Natalino was originally home to the farmer who looked after the property. It’s since been turned into three apartments with a total of seven bedrooms and four bathrooms.
The property includes a working vineyard and a 450-tree olive grove. There is also a swimming pool, gardens, lawns and wooded areas.
A no-reserve auction means that there is no minimum bid required; the property will be sold regardless of price.
Concierge Auctions recently managed the auction of Villa Firenze, a sprawling Los Angeles estate once listed for $165 million. It sold for $51 million, setting a new record for the priciest property sold at auction.
Not all auctions result in a sale. An auction for an 80-acre California estate was cancelled by the owner. The gavel dropped at the auction of Stuart Rubin’s Beverly Hills mansion last year, but that deal was nixed after the fact for unclear reasons.
Concierge has faced some scrutiny in the past, including allegations that it used fake bidders to artifically drive up prices. The firm was sued at least 10 times between 2014 and 2019 for the alleged practice.
Seal Beach’s landmarked water tower house (Compass)
One of Orange County’s most unusual homes is hitting the market.
Seal Beach’s landmarked water tower house is asking just under $5 million, according to the Los Angeles Times. The property last sold in 2016 for $1.5 million.
The water tower at 1 Anderson itself was erected in the 1940s by the Santa Fe Tank & Pipe Company, but by the 1980s had fallen into disrepair and was facing demolition.
A group of locals organized a campaign to save the graffiti-covered eyesore in the 1980s and Long Beach City College professor George Armstrong stepped up and bought the property, then converted the 75,000-gallon tank into a four-story home.
The current owners are investors Scott Ostlund and Barret Woods, who bought it in 2016. They renovated the place again, opened it for public tours and rented it out for $1,000 a night.
The tank-turned-house totals 2,800 square feet. It sits just a few blocks from the beach and offers commanding views of the Pacific from decks and large windows.
The highest floor is a rotunda and lounge with wraparound windows, a bar and a built-in fishtank. The floors below include the kitchen, a pirate-themed bedroom and an owner’s suite.
The ground floor includes a two-car garage, storage room, bedroom and deck with a hot tub. The home is accessible via an elevator and a spiral staircase.
Ostlund, a commercial broker with Lee & Associates in Ontario, has the listing.
Britain’s largest hotel lobby warned that employers may cut half a million jobs when the government ends its wage support program.
A representative for UK Hospitality told Parliament on Monday that its members owe around $132 million in back taxes and owe landlords roughly $5.1 billion, according to Bloomberg News.
The government’s furlough program has helped draw investment to the United Kingdom’s pub and bar sector.
“All it takes is one landlord to be recalcitrant and to not concede or not negotiate and it could be enough to trigger insolvency across the whole of the estate,” UK Hospitality’s Kate Nicholls said.
She also warned that those debts will become an unsustainable burden if the British government does not follow through with plans to drop all lockdown rules by June 21.
Some government officials have said a full reopening may not be possible because a new variant of Covid-19 has been spreading in the country.
The pandemic hit U.K. hospitality providers hard, like the rest of the world. The U.S. hospitality industry was down about 411,000 jobs in December 2020 from a year prior, though it has recently showed some signs of recovery and led employment gains for the last several months.
But even when a full reopening does happen, Nicholls said the U.K. industry is facing a unique challenge: the loss of migrant workers to the European Union. She said the government should introduce an emergency recovery visa for workers to return.
She said the renovation and construction work is city-approved and would be “on and off for the next year and half.”
The wood-and-brick, ranch-style house was built in 1963. It totals 5,228 square feet with five bedrooms and bathrooms. The home was updated in 2006.
The great room has vaulted ceilings and is the main living space in the house. There is a large kitchen with a dining area and a wine-serving area as well.
The main bedroom has a fireplace and a walk-in closet. There is also a one-bedroom guest house.
The property totals about an acre and includes a pool and patio area. Azalea — whose given name is Amethyst Amelia Kelly — said she’s building a playground for her one-year-old son, Onyx. It will include a zip line.
HFZ’s Ziel Feldman with the Shore Club (Getty, Facebook via Shore Club)
HFZ Capital Group is off the hook from paying $6 million to the planned operator of the Shore Club in South Beach, following litigation tied to the companies’ failed deal.
HFZ Capital Group wanted to redevelop the property at 1901 Collins Avenue in Miami Beach into a condo-hotel, and signed luxury Brazilian hospitality brand Fasano to manage the revived project. In 2017, HFZ Capital canceled both its redevelopment plan and Fasano’s contract, in light of the slow condo market.
Fasano, through its affiliate HMI Holdco, sued HFZ’s affiliate, Shore Club Property Owner LLC, in 2019, claiming HFZ Capital did not meet the conditions that would allow it to forego a termination fee.
The only way HFZ Capital could skip payment was for failure to secure financing on reasonable and acceptable terms, only after working diligently to obtain a loan, according to court records.
Miami-Dade Judge Michael Hanzman decided HFZ Capital met these conditions.
Although its attempts to score a loan were “admittedly not Herculean,” HFZ Capital made “commercially reasonable – albeit not ‘perfect’ – efforts,” Hanzman wrote in his May 18 final judgment. Hanzman noted South Florida’s condo market at the time was “volatile.”
Shubin & Bass attorney John Shubin, who represents Fasano’s affiliate, said the group appealed. He declined further comment.
In the complaint, Fasano argued that HFZ Capital had not made its best efforts to secure a loan for the project, as at the time it scored financing for some of its other projects.
HFZ co-founder and principal Ziel Feldman did not return a request for comment. HFZ’s attorney, James Gassenheimer of Berger Singerman, said the ownership group welcomed the result and reiterated that unless it was able to obtain financing, it had the right to end the management agreement.
The 309-key Shore Club has not reopened since closing due to the pandemic. The plan was for the waterfront property to be converted into the first Fasano-branded project in the U.S. with 85 hotel rooms and 70 condos, named Fasano Hotel + Residences Shore Club Miami Beach.
Since then, Fasano opened a residence-hotel on Fifth Avenue in New York City. The Shore Club has yet to reopen.
In December, HFZ put the Shore Club property on the market for sale.
An affiliate of The Clark Estates, the family of the late newspaper publisher and businessman Stephen Carlton Clark, sued the Shore Club owner in March to block its sale without Clark Estates’ approval. According to the complaint, the Clark Estates affiliate is a half owner of Shore Club JV LLC, which in turn owns the hotel through Shore Club Property Owner.
Gassenheimer said the hotel is not currently on the market.
HFZ Capital’s win is an anomaly of sorts for the New York-based developer that has been embroiled in legal and financial woes.
Stephen Ross (Getty) with Esperanté Corporate Center at 222 Lakeview Avenue in West Palm Beach (Esperanté Corporate Center)
Stephen Ross’ Related Companies bought half of the ownership interest in Esperanté Corporate Center in downtown West Palm Beach.
New York-based Related Companies now is an equal owner of the office tower with London-based JZ Capital Partners, said Gopal Rajegowda, partner at Related Southeast. The move solidifies Related as the biggest office owner in downtown West Palm Beach.
The purchase was of an interest in the limited liability company that owns the tower, meaning no deed was recorded, records show. Related bought out the interest of New York-based RedSky Capital. Rajegowda declined to disclose a purchase price.
The 20-story tower last traded in 2016 for $125.75 million. It was built in 1989 on 2 acres, records show.
Related, led by Miami Dolphins owner Ross, is both buying and building offices in downtown West Palm Beach.
Related bought the 18-story CityPlace tower for $175 million in May, and the Phillips Point pair of office towers for $282 million in January.
The group is opening its 20-story, fully leased 360 Rosemary in mid-June, and it plans to start building the 25-story One Flagler at the foot of the Royal Park Bridge that connects West Palm Beach and Palm Beach.
Related’s bet on the area is based in large part on the influx of financial and technology firms to South Florida. Tenants opening at 360 Rosemary include investment firms Comvest Partners and Norwest Equity Partners, according to a news release.
The group aims to leverage its connections with out-of-state tenants looking to relocate or expand to South Florida.
“There are multiple companies that are thinking about migrating or setting up satellite office space in West Palm Beach, and naturally they are going to contact us,” Rajegowda said.
Related also developed CityPlace in 2000, recently rebranding it as Rosemary Square as part of a facelift of the project.
Nick Mastroianni II sold the property back to the sellers at a small profit (Google Maps, Nicholas Mastroianni)
The sellers of a waterfront Jupiter mansion were able to buy back their house within days, in a classic case of seller’s remorse.
EB-5 fundraiser and developer Nick Mastroianni II, who paid $7.3 million less than a month ago for the home of workers’ rights attorney Jerry Neil Paul and his wife, Elizabeth Ann Paul, sold the property back to them for $7.5 million.
The first sale of the mansion at 19681 Loxahatchee River Road occurred May 17, and the second sale was June 4, according to the deeds.
After they sold the home to Mastroianni, the Pauls regretted their decision, according to Rob Thomson of Waterfront Properties & Club Communities, who brokered both deals.
And Mastroianni, under a trust in his family’s name, agreed to sell it back. Mastroianni is founder and chairman of the U.S. Immigration Fund, which calls itself one of the largest EB-5 regional centers in the country.
The 8,891-square-foot, seven-bedroom, 11-bathroom Jupiter estate sits on a 1.7-acre riverfront property with a pool, two outdoor kitchens, a dock and boat lift, according to the listing. The property, developed in 1998, has 180 feet of river views, a six-car garage, caretakers quarters and a guest house.
The Pauls originally paid $5.3 million for the house in 2014, records show.
Jerry Neil Paul is a founding partner of Paul & Hanley, now called The Paul Law Firm, which specializes in mesothelioma and asbestos claims.
Mastroianni also owns a non-waterfront home in Palm Beach Gardens. A trust in his name acquired that house in 2013 for $787,500. In May, his son Nick Mastroianni III sold a non-waterfront Palm Beach Gardens home for $4.6 million.
In Jupiter, Mastroianni’s Allied Capital and Development of South Florida developed Harbourside Place, a $170 million retail, restaurant and hotel project that was completed in December 2014. Mastroianni raised $99.5 million for the project from 199 EB-5 investors, some of whom later sued over alleged fraud.
Earlier this year, USIF affiliates sued to stop a foreclosure sale that would wipe away a $60 million EB-5 investment in a failed Manhattan tower project that HFZ Capital was to develop with a church.
A waterfront mansion with a wine room and hair salon on the Coral Gables Waterway sold for $12.3 million.
Records show 287 Rada CT Investment LLC sold the home at 287 Rada Court in Coral Gables to Mark H. Hasner as trustee of The 287 Rada Court Trust. Hasner is an attorney based in Miami.
The selling entity is managed by Aurelio Leyva and Jonathan Leyva. Aurelio Leyva is president and CEO of the Miami-based manufacturing company CE, while Jonathan Leyva is the director of the same company, according to their LinkedIn pages.
Aurelio Leyva sold a Gables Estates mansion for $11.5 million in 2019.
The selling entity purchased the property in 2014 for $3.4 million, records show. In 2016, the corporation filed to construct a new single-family house. It was finished in 2018.
The home listed in 2017 for $14 million. The most recent asking price was $15 million in May 2020. Aurelio Leyva, along with Lissette Garcia, with Leyva International Realty, represented the sellers.
Property records show the 8,319-square-foot mansion has six bedrooms and eight-and-a-half bathrooms with a one-bedroom, one-bathroom guest house.
The home features an elevator and a two-car garage, in addition to a wine room and hair salon, according to the listing. The property has 125 feet of water frontage and is next door to the Cocoplum Yacht Club.
Cortland CEO Steven DeFrancis and Indigo Station at 67 Southwest 12th Avenue (Cortland, Inigo Station)
Cortland bought a 226-unit Deerfield Beach multifamily complex for $66 million.
Atlanta-based Cortland bought the 226-unit Indigo Station at 67 Southwest 12th Avenue from Palm Beach Gardens-based Ram Realty Advisors, records show.
The deal breaks down to $291,814 per unit.
Ram Realty, led by Casey Cummings, buys, renovates, manages and develops apartments, retail and mixed-use real estate in the Southeast, according to its website. It developed Indigo Station in 2019, after buying the 7-acre site in 2017 for $6.6 million.
Cortland, founded in 2005 and led by Steven DeFrancis, is a multifamily owner-operator that has invested elsewhere in South Florida. In January, it bought the 336-unit Parc Station apartments in Hollywood for $91.7 million.
Farther north, in Delray Beach, it bought a 284-unit complex in July for $73.9 million.
470 Broome Street (Photo via Saltzman Architects, P.C., iStock)
Early in his career, an indigent and isolated Pablo Picasso channeled his pain into a series of moody paintings that categorize his Blue Period. Today, Rayo Withanage, sitting in the artist’s former estate in the South of France, faces a blue period of his own.
According to a bankruptcy petition filed June 7 in Manhattan, the financier from New Zealand defaulted on the loan he used to buy Picasso’s estate and owes more than $50 million. And now he has problems in Soho, too.
In 2009 and 2010, a trust set up by Withanage’s father purchased two penthouses in the pricey Manhattan neighborhood for $8.1 million through Zuca Properties, an LLC. The trust now hopes to sell the units as part of its Chapter 11 bankruptcy plan, but according to the petition, Withanage refuses to play ball.
Pablo Picasso’s French Riviera manor (Photo via RESIDENCE365)
Julie Zingiloglu, the trustee of Withanage’s trust, says she has tried repeatedly to rent or sell the two condos. In early 2019, she tapped Brown Harris Stevens to lease and Compass to sell them. But she has failed, she asserts, because Withanage insists that the condos are his, and even changed the locks to prevent showings.
The trust is now seeking to boot its own beneficiary. Its plan: Retake the two condos, at 470 Broome Street, while Withanage is at his French chateau, lounging amid olive trees and bucolic vistas.
Withanage was described in a 2017 press release as a resident of Bermuda and London and the founder of Scepter Partners, an investment and merchant bank for sovereign investors, and as a founder of the BMB Group alongside Prince Abdul Ali Yil Kabier of Brunei’s royal family. His website lists fancy degrees, impressive business achievements and residences around the world. But such portrayals have drawn skepticism.
Withanage’s trust, which is overseen by the Swiss wealth management firm JTC, leased him and his family one of the condos, Penthouse South, in 2009, and sought to rent out the other. However, when Withanage and his wife, Mayra Gottsfritz, separated in 2018, he moved into the other unit without notifying the trust — or paying rent, according to Zingiloglu.
Zingiloglu says that in early 2019, Withanage’s father directed her to sell or rent the condos. The trust put Penthouse North on the market for $6.3 million but removed the listing within a month, as Withanage allegedly stayed in the unit and scuttled attempts to unload it.
Penthouse North went up for sale again in January 2020, asking just shy of $6 million. But Withanage told the trust that he had rented the unit to his friend Elia Zois, who has since been charged with falsifying information on his own bankruptcy documents. At the time, Withanage neither owned the condos nor had property management responsibilities.
Zois’s rent was half the market rate, according to Zingiloglu’s statement to the court. Still, he left in June 2020 owing $40,000 in rent, and Withanage took his place — and changed the locks — in December 2020, according to the bankruptcy filing. When Gottsfritz, his estranged wife, left the other penthouse in early 2021, Withanage moved in and changed its locks, too, the filing claims.
Withanage still maintains that he can live in the penthouses, and with the trust literally locked out, it cannot show the space, even as it claims to have two interested buyers whose offers hinge on physical tours.
As a result, the trust cannot pay the Picasso estate’s creditors, who have come calling.
According to the filings, TECREF S.à r.l., which lent Withanage 25 million euros to purchase the 13,000-square-foot manor, claims a right to the Soho condos, as Withanage has defaulted on the loan, which lists the LLC that owns the penthouses as his guarantor.
Zingiloglu declined to comment and Withanage could not be reached for comment.
Private equity mogul Nathan Leight and the Coconut Grove property (Sotheby’s, Terrapin Partners)
A trust linked to private equity firm founder Nathan Leight sold a waterfront mansion in Miami’s Coconut Grove for $48 million.
Leight, senior managing member and founder of Miami-based Terrapin Partners, was previously chief investment officer of Gabriel Capital.
He and his wife, Elizabeth, sold the estate at 3500 Curtis Lane and 3535 Curtis Lane to the Curtis Property Trust, according to property records. The Leights owned the property via the Acme Real Estate Trust, managed by trustee Stephen S. Schifrin. Schifrin is chief compliance officer at Terrapin Partners.
The 2.2-acre estate previously sold in 2011 for $13.4 million, according to Realtor.com. The property has two living units with 12 bedrooms, 12 bathrooms and three half-baths.
Nearby in Coconut Grove, LeBron James’ former home sold in May for $12.8 million. In April, Miami businessman Jorge Mas sold his waterfront mansion to nutrition moguls Roger and Sloan Barnett for nearly $46 million. And earlier this year, an author sold her mansion for $8.7 million.
Nicole Oge, Casa Blanca founders Hannah Bomze and Erez Zaurer (Getty, Casa Blanca)
A marketing veteran who held high-level posts at Douglas Elliman and WeWork is joining a dating-app-inspired proptech startup.
Nicole Oge, who previously served as chief marketing officer at Douglas Elliman and oversaw marketing at WeWork, is taking on the post of chief growth officer at the app-centric residential brokerage Casa Blanca.
Similar to dating apps like Bumble and Tinder, Casa Blanca uses a swipe left, swipe right interface to help users navigate home listings.
Oge said the app makes Casa Blanca more of a consumer-facing company as opposed to traditional brokerages, who rely on their agents to form and maintain relationships with customers.
“We are thinking through the lens of the consumer,” she said. “The app is the best example of this — similar to dating apps, the Casa Blanca app gets smarter the more a user engages with it. All communication and scheduling happens right in the app.”
Casa Blanca was founded last year by Hannah Bomze and Erez Zaurer, and earlier this year the company raised a $2.6 million seed-funding round. Bomze was previously an agent at Compass and Doulgas Elliman, though a spokesperson for Casa Blanca said she and Oge met through a mutual acquaintance after their time at the brokerage.
The company’s backers include Samuel Ben-Avraham, an early investor in WeWork. It has 38 agents in New York City and Colorado, and after recording $100 million in sales last year, aims to reach $250 million by the end of this year.
Oge joined Douglas Elliman in 2014 and oversaw an ambitious marketing expansion that aimed to position the real estate brokerage as a luxury consumer brand as it expanded into new markets, such as Aspen and Southern California. Those efforts included the publication of a short-lived quarterly magazine, “Elevate,” featuring articles by Vanity Fair writers, as well as “Elliman” magazine, which is still in publication.
She left the brokerage in 2016 and joined WeWork two and a half years later, right after it had rebranded itself as the We Company ahead of its ill-fated 2019 IPO effort. In the interim, she launched Labyrinth, a New York-based marketing and branding consultancy.
From left: Nikki Pechet of Homebound, Assaf Wand of Hippo Insurance, The Real Deal’s Hiten Samtani, Brendan Wallace of Fifth Wall and Max Simkoff of Doma (Wallace via Jeff Newton)
Home is where the heart is. Often, for U.S. homeowners, it is also where the heartbreak is.
The process of building, buying, selling, financing and insuring a home has for decades been fraught with red tape, misdirection and hidden fees. It’s only over the past few years that startups have gained the traction, funding and ability to take on this hidebound industry. Hundreds have failed, running out of money or time, but for the survivors, the rewards are extraordinary.
In March, Doma (formerly States Title) announced it would go public via a special purpose acquisitions company backed by investor Mark Ein. The deal will value the title insurance and digital closings startup at $3 billion, nearly five times its valuation in May 2020.
Just days after the news broke, home insurance startup Hippo announced that it too, was going public via a SPAC, this one backed by LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus, at a valuation — $5 billion — nearly five times greater than it was last July. Custom homebuilding startup Homebound, for its part, raised a $35 million round in August 2019 at a $210 million valuation.
An early backer and champion of the three startups was Fifth Wall, a real-estate focused venture capital firm with roughly $2.5 billion under management. Co-founder Brendan Wallace explains his playbook thus: Invest in the most promising startups, then stack the deck in their favor by connecting them with Fifth Wall’s LPs – some of the largest residential owners and operators – as well as other portfolio companies who can help with access to investors, talent and product ideas.
The Real Deal hosted the founders — Assaf Wand of Hippo, Nikki Pechet of Homebound, Max Simkoff of Doma and Wallace — for a roundtable discussion on challenging incumbents, the pandemic-triggered changes that sent their businesses skyrocketing, and the elements of residential real estate that have no place in the 21st century.
The definition of a home has expanded dramatically over the past year. How has that changed your own business and the broader residential world in which you operate?
Wand [Hippo]: Home was a lot more of a transactional place — you slept there, you woke up in the morning, you went to the office, your kids were in school. First, we’ve seen a surge of new home purchases. Everybody stayed in their home for 12 months, and there’s a certain point where you fill in the gap — an office, a gym, a place to have my garden. People came to a certain resolution that whatever was “home” has changed.
The second thing was a counter to urbanization. In the ‘50s, the GIs, everybody came back [from the war], it was a move to the suburbs and it was about a utilitarian approach to the house. People wanted to build as many homes as fast as possible. Hence anything that was complex, people got rid of it.
There needs to be a new calibration. The fact that people are now in their home longer changes the infrastructure. You used to have one shower a day, at 7 a.m. or 8 p.m. Now you sometimes have two showers a day, after the gym and then before you go to bed. You’re opening the fridge 5,000 times a day. The rooms are being used more. The home moves from something which was personal to commercial use in many, many ways. And I’m not sure that the infrastructure we have is actually catering to that need.
Where you see a massive default now, which matters in insurance, is crazy breakage of plumbing. And it has to do with a shift in plumbing materials in the ‘90s, as well as the utility and how much the plumbing is being used. There’s going to be some change in the material, in the infrastructure, and over time we’ll understand what the implications are for the insurance industry.
Pechet [Homebound]: We’ve seen two changes in how people think about their home. Number one is a dramatic increase in the importance. The importance of how it worked for you and the perfection of the setup for your life at that particular moment, skyrocketed. You can see it in terms of real estate sales but also see it in terms of sales of materials at Home Depot, people taking on DIY projects that never would have occurred to them before.
The second thing is customization. People really cared that their home was set up exactly for their sourdough bread-baking operation early on in Covid, or that their kids had a school room later. There’s a dramatic increase in the pipeline of people who were never planning to build a house who are now planning to. In some of our newer markets, up to 75 percent of our pipeline are people who are planning to buy a house and just couldn’t find the house that was perfect for them. Two years ago, they might’ve said, “Well, that’s all right, I’ll buy this house. I’ll live there for a while. Maybe I’ll renovate it eventually.” Now they’re saying, “No, actually it matters to get it just right.”
There are a lot of things that are non-obvious, where people have just always dreamed of having a bathtub that is just the right size for someone who’s 6-foot-7. We’re expanding the market of people who are willing to build custom homes and we’re able to deliver on a differentiated promise.
Developers and builders have always prided themselves on being anthropologists, on understanding consumer tastes. But now those archetypes have exploded because there are too many use cases. Has that shift brought a different level of anxiety to the closing process?
Simkoff [Doma]: The level of anxiety in the closing process has always been high. Some ungodly high number of people physically break down and cry during the process of closing a mortgage. What’s changed in the last year is a lot more people wanting to move. But the options for people unfortunately got smaller because traditional homebuilders had chronically underbuilt for the last six or 10 years following the [financial] crisis.
And you then had interest rates dramatically dropping, offering up financing to a lot of people who hadn’t previously considered purchasing. But now with the added pressure of a lot of these people in urban areas being reasonably unshackled [from offices], you had this perfect storm of people moving. Our business is instantly digitally closing mortgages. We have enjoyed 10 years of industry inertia disappearing almost overnight. You saw 20-odd states that had taken five years to approve remote online notarization laws go to 49 in a handful of weeks. There’s no looking back.
What are some of the relics in the industries you are targeting?
Wallace [Fifth Wall]: The entire capital markets ecosystem for all residential and commercial is antiquated. And we’ve seen this conflation of what we used to think of as commercial and residential. If you think about what the real estate industry is, it’s the economy happening indoors. It’s the use of space to create the economy, whether it’s knowledge workers or whether it’s manufacturing. And what we all just lived through is that so much of that moved into our own homes.
I’m sure you talked to a lot of office owners and they have different points of view on whether the office is going to come back. The reality is bedroom communities and commercial districts are more disconnected than they ever have been. And I would expect them to get more disconnected.
There is this great reshuffling. The residential industry saw this innovation first. Look at companies like Doma and Hippo and Opendoor. With creative approaches to the capital markets of buying and selling residential real estate, they were able to render a more frictionless process. [At Homebound,] Nikki’s re-envisioning the whole process of producing homes.
Consumers are more demanding of technologies than businesses [are]. So usually, innovation starts with consumers and then transitions to enterprise. There’s going to be the same thrust of innovation that happened in residential starting to collide with commercial, because it’s just as inefficient. Commercial title insurance, the process of building commercial assets, the process of selling them — it has all of the same features as residential. When we think about macro trends, I would look at everything that just happened in residential and assume with certainty that it will happen for commercial over five to 10 years.
Wand [Hippo]: The insurance industry over the last 100 years built a flawed process. It’s very difficult to purchase. It takes you two to three days to get hold of an agent, then you need to answer like 61 questions that you don’t know how to answer: “How far are you from a fire hydrant? When was the last time your roof was replaced?” You have no idea. When you are bored enough to actually look at the coverage, you see you’re covered for things that are obsolete. Things like fur coats and silverware and mausoleums and crypts.
And then you have a very flawed claim experience when, God forbid, something happens. You know on Day One that in Year 9 when you’re going to have a claim, the first sentence out of your mouth is going to be, “I knew you guys are going to be like that.”
With Hippo, the thought was “Let’s make it very easy and simple for people to purchase.” It takes a minute to get a quote and five minutes to buy. You can buy it if you’re doing a closing with Max [Doma], you can buy it with Opendoor [iBuying], you can buy it with Glenn [Kelman, of Redfin]. I’m agnostic — wherever the customer wants to purchase the product, I’m going to make it available.
“What’s so amazing about the technology that we’ve all built is not that it speeds up the logistics and the fulfillment, but that it enables us to focus on those relationship moments.”
Second thing, let’s modernize the product. So instead of being covered for the fur coats and pewter bowls and the mausoleums and crypts, let’s make sure that you’re covered for the home office that Brendan is sitting in, which is actually not covered if he has all kinds of electronic equipment. Let’s have enhanced electronics coverage, let’s cover the strollers, the camping equipment, the bicycle, all the stuff that is always below the deductible. And then on the claim side, let’s put a claim concierge, one person, start to finish, that handles your claim as opposed to an average of nine to 10 people that you’re touching every time you’re calling — “Oh, God. Let me tell you again.”
People are usually reaching you at an extremely emotional time in their lives.
Wand: This was the reason we put a human as the front person, as opposed to a bot. We were very much about efficiency and automation. And then you realize, what are the claims? There’s a total loss fire, and you’re standing outside of your house that is burning. You wake up in the morning and the basement is flooded. There was a burglary. The last thing in your life that you want to do is talk to a bot. You want to talk to an empathetic person who understands what’s going on. Who would triage the situation. Who would say, “Let me see what’s going on. Did they break anything in the house? Are you with the kids? Is everybody safe? Let’s do this. I’ll put you in a hotel for the night. Once the kids are asleep, I will call you again.”
Simkoff [Doma]: This has been such a missed opportunity, probably for all of the industries that each of us are — as much as I hate to use the term — disrupting. The [incumbents] had such an “infrastructural moat” — the capital, the licensure, the logistics, the construction capabilities that are needed to be a leading provider. They felt like they had license to just treat people like transactions.
In insurance, people pay attention to a metric called retention. Well, let me tell you what influences your retention is exactly what Assaf is talking about. You’re being given a gift. You get to interact with somebody who’s experiencing one of the most significant events of their life. Buying a home, refinancing a home, building a home, making an insurance claim when something happened. And if you can form a genuine bond with that person, you don’t need to build a relationship over a month. You can do it in a phone call or in the way that you instantly, digitally resolve something for them. It pays huge dividends.
What’s so amazing about the technology that we’ve all built is not that it speeds up the logistics and the fulfillment, but that it enables us to focus on those relationship moments.
If you technologize 80 percent of the trash, you can inject the humanity where it matters.
Pechet [Homebound]: Custom homebuilding is an industry that lots of people think is terrible but don’t really understand. Typically, you’re going to have a personal supply chain of a bunch of disconnected parties – of an architect who designs a house, you’ll [then] have a contractor who then tells you how much the house is going to cost. And invariably it is two times your budget. And then you have to get your permit. It’s this terrible chain of totally intransparent experiences that are always worse than you expect them to be, and always result in both time and cost problems that are much worse than you anticipated.
When you look at what’s underneath that, it’s just really complex. That’s one of the things across all of proptech. And that’s why there’s such a huge opportunity, because it’s really complicated and it’s really hard. But if you’re willing to do the hard work of trying to use technology to simplify it, that’s where you can build a business that can get massive.
I want to dramatically expand the size of the homebuilding world, because I can bring people in who have been so repelled by the reputation of the industry, that they can look at what we’re doing and say, “Actually, I think it’d be easier to build a house than to buy some used house that I don’t really want to live in.” The way that we do that with technology is we take things that are really complicated and inherently intransparent, and we make them simple and transparent.
That doesn’t always mean we make them better. Now, we’re having massive delays in getting permits because of communities that have permitting departments working from home, where they’re just not working as efficiently as they typically would. I can’t necessarily make that better. But what I can do is show you a typical permitting timeline, and I can tell you that permitting timelines are expanded right now by about 50 percent in your jurisdiction, because I have the data behind it to tell you that.
If there are natural disasters that are going to slow down construction, I can look at a geographic area and say, “Here’s what’s coming. Here’s what we’re doing to protect your property. And here’s the expected impact on your schedule.” And I can do it programmatically. That changes everything about the way somebody feels and their willingness to actually go through a process of doing something as hard as building a home.
Wand [Hippo]: Looking at these companies as technology companies is actually not the main point. The difference in all of these newcomers is a very simple one: Just focusing back on the customer and understanding what they want. In insurance, for 100 years, the customer used to be the [real estate] agent. And look it up, the actual end customer was called the “policy holder.” In title, the customer was 50 other people — the banker, the Realtor. That’s why the coverage is so obsolete, because nobody cared about the actual end customer.
There is this romantic view that Max is going with his wife, and they want to look at a house. And they’ll see 50 homes and become very jaded. But then they see the wonderful home and they start to visualize: “The kids are going to run in the backyard and I’m going to teach my young girl how to ride a bike.” And you start to envision that when there’s going to be graduation, your girl is going to go down the steps, wearing a nice dress. You envision this amazing life.
And then what happens? You’re getting pummeled and slapped when you’re doing the transaction. And six months down the line, there’s a time when you look at your wife and say “This is a freaking pain. That’s not anything we talked about. The back door doesn’t lock. The faucet keeps on breaking.” It becomes a part-time job maintaining and taking care of the home.
So what we learned from our customers is that they basically want to have a 1-800 number that takes care of their home. If they’re locked out of the home, they should call us. And if you have a water leak in the basement, it’s our problem how to [fix] it and make your life easier as a customer. And I think that’s the mindset that is very differentiated [from the] incumbents.
Wallace [Fifth Wall]: Most real estate companies are old. So they’re not really that customer-centric. I’m sure at one point early on, they were customer-centric or they never would have gotten big. But as they had enough time in the public markets they got into a mentality of reconceptualizing their customers as just “users.”
The leading characteristic of successful proptech businesses is re-injecting a customer centricity. Obviously there’s technology, there’s innovation, there’s a lot of new ways to apply technology. But at its core, that is really the unique, identifying feature of almost every company we look at.
Let’s talk about how incumbents can leverage their position. Lennar is the largest homebuilder in the U.S., but also a key investor in Doma and Hippo.
Wallace [Fifth Wall]: The entire process of residential real estate is painful today. So when we sat down with Lennar, who is an LP in Fifth Wall’s first fund, we plotted out every single aspect of buying a home all the way through to selling a home and identified what were the areas most ripe for disruption. What was so interesting was that there were so many companies that were going after different components of it, but in many ways you had to solve all of them to render that experience completely frictionless.
There are customers who are buying a Lennar home. They’re getting a mortgage through a software that’s powered by Blend, one of Lennar’s investments. They’re getting their title insurance with Doma, they’re getting their home insurance with Hippo, and they are selling that home to Opendoor in a trade-up program.
For a group like Lennar, there’s a lot to learn about how you re-envision your supply chain and your interactions with customers and how you actually transparently convey information about this gnarly activity that a consumer has to do, which is learn how to actually construct the house. So one of the things we try to foster a lot is that our CEOs can interact a lot with each other, but they also interact a lot with our strategic LPs.
Simkoff [Doma]: [Lennar CEO] Stuart Miller is on our board and Eric Feder [managing partner of Lennar’s VC arm, LenX] was on our board for a long time. They were relentless about figuring out what was their core business, where they have true economies of scale and true impenetrable moats, as a homebuilder. And then there was everything else. And when they looked at the “everything else,” they actually found that there was a lot of it in their business.
Most large incumbents, if they did that, would find the exact same thing. I do not think most of them would do what Lennar did. They basically took the “everything else” and were like, “How do we get those businesses operated by people for whom that is their core business and partner with them?” And you saw them doing that with everything from Rialto, which they divested, to North American Title, which we purchased from them, to their homeowners’ insurance business, which they divested to Assaf. It’s so plainly obvious the benefits of focusing on your core business and closely partnering with the best providers in the things that are non-core to you.
You can go to our filings and see that Lennar owned 100 percent of North American Title when it was their business and it was a traditional title business. And by doing this unique transaction and partnership with us, they now own somewhere between 23 percent and 26 percent of our company [Doma is currently valued at $3 billion]. We’re talking about exponential value creation for them and their shareholders.
It’s almost like a controlled fire. You are burning parts of your own village to make sure that the core of it is stronger. And that can be scary.
Simkoff [Doma]: That’s the historical way of looking at it. I think Lennar has now shown that’s not the way you should look at it. A divestiture is the exciting Day One of you taking that business and putting it in the hands of the people who are most capable of truly transforming it. And if this is going to become an exponential value creation platform, we are going to go to the map to try and own as much as we can.
“That’s exactly what entrepreneurs should be looking for: A place where incumbents are doing so well that they can’t and won’t shift to doing everything completely differently.”
Wand [Hippo]: Real estate transactions are [about] negotiating everything on Day One for the entire transaction. Whereas in VC, it’s an ongoing thing because you always know that there’s going to be the next fund that’s going to come in, and they’re going to use that as a base, hence why you’re framing what’s going on. I think this is where Fifth Wall adds value. It’s a dictionary of two sides, one side that’s living in Silicon Valley and one that comes from another world. You need a middleman that is very well-versed, but still trusted by both sides to bridge that gap.
Plus, people that are very good builders are good negotiators. There was a point where I had to explain to my board, we wanted to come up and basically discuss every component of the negotiation. I told them, “Guys, with all due respect to most of the VCs, you were like the Little League in negotiations and you’re talking to MVPs in the NBA.”
Wallace [Fifth Wall]: There’s another dimension to that. Real estate owners are really good negotiators, but they tend to think of assets as commodities. Meaning if you’re a homebuilder, one plot of land versus another plot of land, either one could be valuable at the right price. That’s not true in technology. This is actually one of the challenges that I think corporates [LPs] have always had, including groups like Lennar. The issue is, you want to identify the right technology partner, the right CEO that truly can disrupt the business, and owning a smaller portion of that company is way better than getting an amazing vulture deal on some company that nobody else wants to invest in. I mean, this is basically my life, arbitrating this.
How have your companies benefited from being part of the larger proptech ecosystem?
Pechet [Homebound]: Founders are great helpers of each other, and they know that as they move the ecosystem along, they make it easier for the next tranche of entrepreneurs. Opendoor has been incredibly helpful to us in thinking about our capital structure. Not very long ago, almost all tech companies were entirely funded by venture dollars. Venture dollars are really helpful in building innovative technology where you think you’re going to get 30-plus percent IRR indefinitely. But there are other interesting ways to finance large components of your business. Opendoor paved the way for all of us in figuring out how to go to the capital markets and get large tranches of different kinds of debt that allow us to grow disproportionately. (This past January, Homebound raised $20 million in convertible debt.)
What do you think the motivation is for that? It can’t just be altruism.
Pechet [Homebound]: I actually have seen it as incredible altruism. People who’ve given me just completely ridiculous amounts of their personal time when they really don’t have any extra, where they’ve said, pay it forward.
Simkoff [Doma]: It’s especially authentic when you know that the person who you’re getting advice from is in it for the right reasons. And I say that because you can meet other founders and you know that they’re probably experiencing the same challenges, both in their business and probably in their broader lives. There’s a lot of stuff that people don’t talk about, such as how it affects your personal relationships. There’s an empathy there where you’re like, “I know I’m going to be in the same place at some time. And I want to be treated the same way.”
That said, you used to get a lot of requests to connect and spend time with people who are not real founders. They’re people that are like, “Oh, I’m thinking about starting a company.” And you’re like, “Great. What is it?” They’re like, “Well, I don’t know yet. We need an idea.” And you’re just like, “What? You’re going to start a company and don’t even know what it is?” That’s just dumb. It’s insulting to the people that are real entrepreneurs, people that had to claw and scrape their way and leave a lot of damage in their wake.
Wand [Hippo]: Right now there’s an abundance of capital, and because of that, the bar to start a company, if you have just a good enough resume, [that] would be sufficient. What people forget is that in my book, the highest bar is actually the personal bar for the people that need to do it for themselves. The highest bar is to bring myself to the conviction that this is what I’m going to do for the next 10 years.
Wallace [Fifth Wall]: There’s a bunch of different industries represented on this call — title insurance, home insurance, homebuilding and venture capital. And nobody who’s running these companies worked in that industry beforehand. There’s something to that … [to] approaching these established industries with fresh eyes.
Pechet [Homebound]: Residential real estate is a trillion-dollar industry in the U.S. alone. And that’s exactly what entrepreneurs should be looking for: a place where incumbents are doing so well that they can’t and they won’t shift to doing everything completely differently. And where you can sort of quietly build a business on the corner that looks really small, but then quadruples every year until it’s the largest player in the entire industry. And when you look at what’s happening with millennials getting into their peak earning years and wanting to own homes, they expect something fundamentally different. And so it’s a tidal wave that’s coming. And if we can be watching that and building for it, just put your head down and do the work, we’ll get there.
You mentioned tidal wave. How has the worsening climate crisis plus the growing awareness that the real estate industry has a role in it changed your business?
Pechet [Homebound]: We started [Homebound] after the 2017 wildfires in Napa and Sonoma where 6,000 houses burned down. At the time, it was the largest, most destructive wildfire in the history of California. In the aftermath, homeowners felt totally hopeless. Even if they had million-dollar insurance checks in their pocket, they couldn’t figure out how to get started because the industry is so antiquated.
And so we started out of a disaster, but obviously there continue to be natural disasters happening every single year. This is a worsening problem. It means we need to be able to rebuild a lot more frequently. We need to be able to build houses that are more resilient, but you’re also seeing this year is the single biggest migration year of people crossing state lines in 16 years and is expected to only accelerate.
“With all due respect to most of the VCs, you were like the Little League and you’re talking to MVPs in the NBA.”
Wand[Hippo]: It’s not just climate change, it’s not just this migration. It’s the fact that people moved into places that they basically weren’t supposed to live in, on mountains and swampland, in areas that are known to have flooding. And there were incentives by municipalities and states to put these people in that place. Sadly, many times, insurance [providers] are the ones subsidizing that screw-up.
Now, the frequency of severe events keeps on increasing. Last year, we had three events that were one-in-a-hundred years, and statistically, it’s not supposed to be. But this is the game that we’re living in. When you’re managing a company like ours, you need to be very prudent because we are in the risk business. And because of that, I need to constantly think of the diversification of risk on the pricing of our products and still be catering to customers because it’s honestly dishonest to get Nikki for X and then increase it to 2X post that.
I’ll be the first one to say that we failed at the beginning. We didn’t do a good enough job. But as the company becomes more sophisticated, we up the level of people that we have on the risk team on changing that stuff.
Fifth Wall has raised multiple SPACs and both Doma and Hippo are going public via SPACs. With so much money up for grabs, how do you focus on building a sustainable business as opposed to chasing valuation? We’re talking in the wake of the collapse of Katerra.
Wallace [Fifth Wall]: Building new, compelling businesses is usually very cash consumptive at the outset. So you have to raise a lot of capital. And I think that’s becoming more true, honestly, as a lot of the Total Addressable Markets companies are going after are expanding. That leads to upward pressure on valuations, because if you’re going to raise that money, everyone is self-interested.
What we saw was in the last three years, especially with SoftBank and the effect that they had, is that we entered a weird Twilight Zone of “valuation doesn’t matter — all that matters is building a sustainable business, no matter how much capital you need to get there.”
And I think we’ve now had enough failures of that model to realize that it is actually not what works. Giving companies too much money too fast or valuations that are too high, too early can actually have really negative effects on their ability to realize their potential.
I don’t know exactly how SPACs play into that. It’s probably pretty complicated, but in private venture capital markets, I think we’re seeing, ironically, greater levels of rationality in terms of raising rounds that seem more appropriately priced today than they were even two years ago.
This interview was conducted June 4. It has been condensed and edited for clarity.
Steven Hudson and Charles Ladd with 830 and 840 East Oakland Park Boulevard (Google Maps)
Real estate honchos Steven Hudson and Charles Ladd Jr. bought the Primavera Plaza in Oakland Park for $10 million, their second retail purchase in the city in as many weeks.
Hudson, of Hudson Capital Group, and Ladd, of Barron Commercial Development, bought the property at 830 and 840 East Oakland Park Boulevard from ATID Investments, managed by investor Amos Chess, Hudson said.
The 51,594-square-foot strip center, which includes offices, was completed in the 1980s on 4 acres, according to property records. It last traded in 2002 for $3.35 million.
Some of the tenants at the property are Eastside Speech and Therapy, D’nails & Spa and Labcorp.
The purchase comes on the heels of Hudson and Ladd buying the Festival Centre at 3400-3570 North Andrews Avenue in Oakland Park for $23.4 million. The seller of that property also was an entity managed by Chess.
Las Olas Capital Advisors, based in Fort Lauderdale, provided $17 million in equity to the buyers for both deals.
Hudson’s and Ladd’s Foreward Management will manage the properties, Hudson said.
Hudson co-founded Fort Lauderdale-based Hudson Capital Group with his father, Harris “Whit” Hudson, in 1997, according to the group’s website. The family office, which also invests in select startups, has developed more than 4,000 residential units in Florida.
Ladd leads Barron Commercial, which also is based in Fort Lauderdale.
Oakland Park, long a Broward County city overlooked by developers, has piqued investors’ interest recently. Newrock Partners and Brickbox Development are building two multifamily projects in Oakland Park. In June, they scored a $67.5 million construction loan for their first apartment project. They also adapted older buildings into Industry I Oakland Park, where an enclosed farm, winery, music studio, photography and art studio are planned.
In another recent Broward County retail deal, MMG Equity Partners bought Plantation Square at 1723-1797 North University Drive for $12 million in May.
Last year more people relocated to ZIP codes with lower home values and more space. (Getty)
Long-distance movers got more bang for their buck in 2020.
The average out-of-town mover last year relocated to areas where homes cost less and had more space, on average, according to a Zillow report.
If the pattern continues, it would help smooth over the extremes in the U.S. housing market.
“Over the longer term, this trend could contribute to an evening out in home prices across the nation,” wrote Jeff Tucker, senior economist at Zillow, in the report. “It may also spread out some of the spending and wealth accumulation which had been increasingly concentrated in ‘superstar cities’ over the last few years.”
Zillow, using data from North American Van Lines, found the average long-distance mover relocated to ZIP codes where sold homes were 33 square feet larger and home values were nearly $27,000 lower than where they came from.
The five cities with the most outbound moves were Chicago, New York, Los Angeles and San Francisco — among the most expensive housing markets in the country. The cities with the most inbound moves were Phoenix, Charlotte, Austin, Dallas and Sarasota.
Although home prices have surged, especially in mid-sized cities such as Phoenix and Austin, long-distance movers from pricey cities like San Francisco and New York find home prices far cheaper than in their origin cities.
Some tech workers, like those at Yelp, Twitter and Zillow, have been given the option to permanently work remotely. Other companies like Oracle and Tesla are moving their headquarters to Austin, Texas, bringing their California employees with large tech salaries along.
The most common move last year was from one suburban ZIP code to another, as it was in 2019. But the second most common was from urban to suburban, replacing 2019’s No. 2: suburban-to-urban moves.
Zillow considers this data to be evidence of a “Great Reshuffling,” meaning social, demographic and economic factors have caused more Americans to relocate to areas that are cheaper and less dense.
Still, the report contends that the pandemic’s supposed urban exodus has been overstated. The largest increase in moves was not from cities to suburbs, but from suburbs to rural areas, which grew by 1.2 percent.
Contrary to the narrative that the coronavirus triggered flight from cities, the report found the share of people who relocated from urban areas did not significantly increase in 2020.
Chris Lorenzen and Richard W. Gray III with Apogee at 800 South Pointe Drive in Miami Beach (LinkedIn, DJR Enterprises, Apogee Condo South Beach)
The CEO of a securities and derivatives trading firm bought an Apogee condo in South Beach for $11.7 million.
Records show Chris Lorenzen purchased unit 804 at 800 South Pointe Drive in Miami Beach from Richard W. Gray III, individually and as trustee of a trust in his name.
Lorenzen is CEO of Chicago-based Eagle Seven Trading. He’s held the position since 2004, according to his LinkedIn.
Gray is an adviser for DJR Advisors, and was the co-founder and former CEO and chairman of New York-based Travelclick, which Amadeus bought from Thoma Bravo for $1.5 billion in 2018. He also serves on the boards of Visitors for M.D. Anderson Cancer Center in Houston and The Miami Project to Cure Paralysis at the University of Miami Medical School in Miami, according to DJR’s website.
Gray bought the condo for $5.5 million in 2008, records show. He listed it in 2019 for $13.9 million. The most recent asking price was $12.9 million in July 2020. The unit sold for $3,136 per square foot.
Kathy Green of Coldwell Banker Realty represented the seller, and Scott Betten of Income Real Estate represented the buyer.
Property records show the 3,731-square-foot condo has four bedrooms and three-and-a-half bathrooms. The unit also features 2,441 square feet of terraces and a two-and-a-half-car garage, according to the listing.
The Related Group developed Apogee in 2007. Other recent sales in the 22-story condo building include a real estate investment CEO selling a unit for $8.4 million, Maxim Group Vice Chairman Edward Rose buying a unit for $9.3 million, and the co-founder of Westdale selling a unit for $15.5 million.
Patrick Bet-David and (inset) Vince Virga with the property (Twitter)
Author and social media influencer Patrick Bet-David paid $20.4 million for a waterfront mansion in Fort Lauderdale, setting a record for the Bay Colony community.
Bet-David and his wife, Jennifer, acquired the six-bedroom, 10,436-square-foot home at 141 Bay Colony Drive, property records show. Vince and Joyce Virga sold the 1.1-acre property. Vince Virga is co-founder and co-chair of SkillStorm, a Fort Lauderdale-based tech employment firm.
The Bet-Davids financed their purchase with a $13.2 million loan from Goldman Sachs, records show.
Tim Elmes of the Elmes Group at Compass represented the buyer and seller. The mansion, with seven bathrooms and two half-bathrooms, a putting green, private beach and saltwater lap pool, was most recently asking nearly $25 million. The house has Calacatta Gold kitchen countertops and a temperature-controlled wine cellar.
The sale beats the previous Bay Colony record of $11.5 million for a property that sold in early 2020. Bay Colony, a community of only waterfront houses, has been home to the late Ray Kroc and the late Dave Thomas, who both made their fortunes in the fast food industry.
The corner property, with 800 feet of waterfront, including a boat slip with a lift, was developed in 2015. The Virgas paid $3.6 million for the lot in 2010.
The buyers sold their home in Plano, Texas to move to South Florida. The couple first moved to Boca Raton, where Patrick Bet-David opened an office for his media company, Valuetainment. He’s also the founder and CEO of a financial firm called PHP Agency and has written books, including “Your Next Five Moves.”
Recent pricey deals in Fort Lauderdale include hotelier Mikhail Avrutin’s sale of a waterfront mansion at 2412 Laguna Drive for $23 million. The former CEO of Rinker Group also recently sold his waterfront home for $6.8 million.
TPG CEO Jon Winkelried with AC Hotel Miami Midtown at 3400 Biscayne Boulevard and the next-door Hampton Inn & Suites at 3450 Biscayne Boulevard (Hilton, Google Maps)
TPG Real Estate Partners bought two hotels in Miami’s Edgewater neighborhood for $61 million.
Investor TPG, through an affiliate, bought the AC Hotel Miami Midtown at 3400 Biscayne Boulevard and the next-door Hampton Inn & Suites at 3450 Biscayne Boulevard, records show. TPG bought the properties through its national hotel platform Odyssey Hotel Partners.
TPG, based in San Francisco and Fort Worth, Texas, paid $32.3 million for the 153-key AC Marriott and $28.7 million for the 151-key Hampton Inn. The price breaks down to $211,274 per room and $190,007 per room, respectively.
Miami-based Aztec Group; Chattanooga, Tennessee-based 3H Group; and family owned firm Arti Hersi sold the hotels, through affiliates, according to Aztec Managing Director Boaz Ashbel.
Paul Weimer and Ron Danko from CBRE brokered the deal.
The sale price is for the real estate, and the true deal value — including furniture and a retail business at one of the hotels — is higher, according to Ashbel, who is also a manager of the selling entities. He declined to disclose the full deal value.
Aztec and 3H built the hotels on 1.2 acres, finishing the AC Marriott last year, and the Hampton Inn in 2017. Arti Hersi was a partner in the selling entities, but was not involved in the development, according to Ashbel.
Deeds show the developers bought the lots, which were previously home to a motel, in 2014 and 2018 for a total of $5.75 million.
The properties were put on the market this year, after a previous contract fell through at the start of the pandemic, Ashbel said.
TPG, founded in 1992 and now led by Jon Winkelried, has more than $91 billion in assets under management, according to its website. David Bonderman, James Coulter and William Price III founded the group, which also invests in technology, healthcare, and natural resources and energy.
Jacob Muller, managing director at TPG Real Estate Partners, said in an emailed statement that the firm is focused on the greater Miami area. “The acquisitions complement TREP’s national hotel strategy, which focuses on acquiring and owning high-quality hotel properties in growing markets,” he said.
Domestic travel has rebounded, but the South Florida hotel market, largely dependent on conventions and cruises, still needs business and international travelers to return before boasting a full recovery, experts have said.
Still, some developers are planning to add more keys to the market. In Miami Beach, the Chetrit Group scored a $62.5 million construction loan for a Collins Park hotel project in May, and Bulgari wants to open its first U.S. property in Miami Beach, by redeveloping the Seagull Hotel.
Mortgage-backed securities lost 0.18 percent in May while Treasuries gained, the worst underperformance since January 2020, the publication reported. Robert Kaplan, president of the Dallas Federal Reserve Bank, said that the housing market doesn’t need as much support as it’s been getting from the central bank.
“If the Fed is getting worried about inflation and wants to do something, they should pull from mortgages and go more into Treasuries,” Jake Remley, a senior portfolio manager at Income Research + Management, told the publication.
Fed chair Jerome Powell has not tipped the central bank’s hand, but backing off on mortgages would give it more leeway to support the Treasury market as President Joe Biden aims to implement his national infrastructure plan, which could require hefty borrowing.
U.S. consumer prices jumped last month, driving up 10-year breakeven rates, which is a bond-market proxy for the annual inflation rate expected over the next decade, Bloomberg News reported.
Not only has the Fed been buying mortgages, it’s also been adding $80 billion of Treasuries to its balance sheet every month. Participants at its April meeting said it should discuss scaling back this amount should the economy continue to make rapid progress, the publication reported.
Some industry experts think the Fed could discuss plans to scale back on bond purchases as soon as this summer, Bloomberg News reported. Others think that it is unlikely that the Fed will pull back from the mortgage market first, but instead will opt for its 2014 model, when it slowed purchases of Treasuries and mortgage-backed securities at the same pace.
“That’s the path we think they are most likely to go down because it’s the simplest to communicate and it doesn’t necessarily have any unintended consequences,” said Alex Roever, head of U.S. rates strategy at JPMorgan Chase.
Masayoshi Son and Katerra’s founders Fritz Wolff, Jim Davidson and Michael Marks. (Getty, Katerra)
Katerra’s cash position was “perilous.”
Its biggest backer, SoftBank, bailed out the construction startup with a $200 million investment in December. Three months later, Katerra’s primary lender, Greensill Capital, became insolvent, sending the startup’s clients scrambling to replace the general contractor on projects. Banks and insurance companies became increasingly squeamish about doing business with the firm, and a cash infusion from an expected deal with the sovereign wealth fund of Saudi Arabia never materialized.
By mid-May, Katerra desperately needed money.
It hired a restructuring consultant at investment bank Houlihan Lokey, which had helped save it from bankruptcy last year. Matthew Niemann, a managing director at the bank, went to Katerra’s founders — who had left the company — and to other stakeholders and third-party lenders to explore rescue options, but was turned down.
He came close to a deal with Kevin Genda’s Blue Torch Capital, but the firm, which buys debt from companies that are restructuring or in financial distress, ultimately decided against it.
SoftBank, which had poured more than $2 billion into the company since 2018, told Katerra that it “could not reasonably invest additional funds” into the company. It agreed, however, to provide $35 million to help it sell off its assets and wind down its U.S. operations. Katerra had requested $50 million.
“I analogize this to my 15-year-old daughter. [SoftBank] put us on a very strict program, what time we can get home at night, how far we can go on our bikes,” Niemann said during a virtual hearing this week in Texas bankruptcy court. “That said, it was the best we could do.”
Filings in Katerra’s bankruptcy provide new details on the months leading up to the firm’s demise. The company filed for Chapter 11 on Sunday and has already shut down 82 projects and laid off 730 of its 1,300 employees in the U.S. The company’s financial position is so dire that it asked the court to approve the immediate release of $15 million of the debtor-in-possession loan from SoftBank. Without it, Niemann said, Katerra would be “dead.”
Katerra burst onto the scene in 2015, growing rapidly by acquiring more than 20 businesses. It billed itself as a tech-first construction management firm that would streamline the building process by serving as the designer, construction manager and, in some cases, developer on projects. It opened its own factories to manufacture innovative building materials, such as cross-laminated timber and modular building components.
But its troubles were well-documented long before its rush for capital in May. The company had a spotty track record for delivering projects, laid off hundreds of employees, closed down factories and saw many leadership shake-ups. The company is also actively being investigated by the Securities and Exchange Commission, after it self-reported in August 2020 that employees of its renovations arm had inflated revenue and operating margin line items for 2018, 2019 and the first quarter of 2020, according to filings.
In a press release issued on Monday, Katerra blamed its collapse on the “unexpected insolvency” of a lender, though it does not name Greensill, and the pandemic.
In bankruptcy filings, however, Marc Liebman, Katerra’s recently appointed chief transformation officer, acknowledges that the company projects experienced “significant cost overruns, resulting in massive, ongoing losses.”
“Although Katerra won numerous projects, rapidly expanded its national footprint, and completed a series of successful capital raises, it was unable to generate a profit,” Liebman states in his declaration to the bankruptcy court.
He points to the company’s construction agreements, under which it guaranteed a maximum price its clients would need to pay, regardless of a project’s ultimate costs. Liebman also said Katerra provided discounts to “certain legacy customers.”
“In hindsight, those discounts were value-destructive,” he wrote.
Katerra hired Houlihan Lokey in September 2020 to explore “strategic alternatives,” according to Niemann. As part of that exploration, Niemann approached at least two of Katerra’s original founders, Jim Davidson and Fritz Wolff, and other potential investors. It is not clear if the third co-founder, Michael Marks, who was ousted as CEO last year, was part of that consortium.
“I analogize this to my 15-year-old daughter. [SoftBank] put us on a very strict program, what time we can get home at night, how far we can go on our bikes.”
The group of existing stakeholders, including SoftBank, and new investors came close to reaching a $380 million deal in exchange for a 90 percent ownership stake in Katerra, with the remaining 10 percent reserved for management. But negotiations broke down in November, according to filings.
Marks, along with Wolff and Davidson, could not be reached for comment.
Niemann said he had set out to find an option that did not involve hitting up SoftBank for additional capital. But the conglomerate turned out to be the only party willing to invest and agreed to provide the company with $200 million — $175 million in cash and the forgiveness of a $25 million loan. SoftBank also forgave a $440 million loan from SoftBank-backed financial-services firm Greensill. That aspect of the deal is now subject to a lawsuit brought by Credit Suisse, whose clients had bought that debt from Greensill.
According to the Wall Street Journal, SoftBank had provided that outstanding sum to Greensill expecting the money to go to Credit Suisse’s investors, but it did not.
Under the recapitalization, Katerra also reached an agreement with Fritz Wolff’s Wolff Companies, which had provided the startup with its only pipeline of projects in its initial years. Wolff Companies agreed to free Katerra from completion requirements on a number of active projects. In exchange, Wolff received a first lien security interest in Katerra’s cross-laminated timber factory in Spokane, Washington.
According to Niemann, Katerra offered its 20-plus subsidiaries an opportunity to buy back their businesses and release claims against the company. It is unclear how many of those deals were reached, though at least two subsidiaries, Michael Green Architecture and Equilibrium, have been transferring ownership back to the principals.
After this infusion of cash, however, Katerra’s problems snowballed. Greensill began insolvency proceedings in March. Katerra had expected to close in early 2021 on a deal in which the Public Investment Fund, Saudi Arabia’s sovereign wealth fund, would invest $147 million in Katerra Saudi Arabia in exchange for a 49 percent stake, according to filings. The company planned to use $23 million of that to meet obligations to a credit facility that was financing projects in the Middle East.
But that deal also fell apart, and the company had to use its own $23 million to meet those contract obligations. That led to issues with bonding projects and “massive liquidity constraints,” according to filings. Katerra recorded $2.78 billion in financial losses in 2018, 2019 and 2020.
SoftBank — which found itself in a similar situation with WeWork in 2019 — declined to provide any more financing to keep Katerra afloat. Instead, it agreed to provide a loan to unwind its U.S. operations and market its assets, which include operations in India and Saudi Arabia, where it was tapped to build 14,000 affordable housing units for the Saudi Arabia’s Housing Authority. It is also looking to sell equipment from its factory in Tracy, California.
The president of Katerra India said its operations were “business as usual.” The status of the housing development in Saudi Arabia was not immediately clear.
During this week’s hearing, Judge David Jones approved the requested release of $15 million of SoftBank’s debtor-in-possession loan, a type of financing that allows bankrupt companies to keep operating and gives the DIP lender a senior position on the company’s assets.
“We are very much a reluctant DIP lender here,” said Alfredo Perez of Weil Gotshal & Manges, who represented SoftBank at the hearing. “It’s not the position that we wanted to find ourselves in.”
232 Bahama Lane in Palm Beach, Jeffrey A. & Erica R. Keswin (middle) and Scott Goodwin & Kimberly Goodwin (right) (Photos via Compass, Facebook, Getty, Lyrical AM)
Scott Goodwin, the managing partner of a hedge fund, flipped a Palm Beach home to another hedge fund manager for $7.3 million.
Records show Goodwin and his wife, Kimberly, sold the house at 232 Bahama Lane after buying the spec home in November for $5.5 million. The new buyers are Jeffrey A. and Erica R. Keswin.
Scott Goodwin is the co-founder and managing partner of New York-based hedge fund Diameter Capital Partners.
He and his wife listed the 4,700-square-foot house in February for $7.7 million. Crista Ryan of Tina Fanjul Associates represented the sellers, and Gary Pohrer of Douglas Elliman represented the buyers.
Jeffrey Keswin is chairman and founder of Lyrical Partners, a New York-based investment management firm. The firm manages over $10 billion in private equity, real estate, traditional equity, venture and hedge funds, according to its website.
Erica Keswin is a workplace strategist and author of “Bring Your Human to Work.” In January, she published her second book, “Rituals Roadmap: The Human Way to Transform Everyday Routines Into Workplace Magic,” which made it to the best seller lists for the Wall Street Journal, Publishers Weekly and USA Today, according to her website.
The five-bedroom, four-and-a-half-bathroom house is on a 10,171-square-foot lot off the Palm Beach Country Club’s golf course.
Palm Beach has been the scene of many multimillion-dollar deals this year. Most recently, Tommy Hilfiger purchased a waterfront home for $21 million, Adrien Arpel sold her waterfront home for $25.4 million, and an oceanfront mansion sold for $35.4 million.
Real estate developer Rob Miller bought a mansion in the Bear’s Club of Jupiter for $10.7 million, marking a record this year.
Miller and his wife, Linnette, purchased the home at 150 Bears Club Drive from 150 Bears Club Drive LLC, managed by Wendy Cabral, records show.
Rob Miller is the owner of Jupiter Pointe Club & Marina, according to a news release.
The address for the selling entity links to Asset Specialists, a real estate firm based in Palm Beach, according to its website.
Property records show the 8,191-square-foot mansion, on a 1.25-acre lot, was built in 2002. The seller bought the house for $7.4 million in 2016.
The six-bedroom, seven-and-a-half-bathroom home is off the 14th hole of the Jack Nicklaus-designed Bear’s Club Championship Golf Course.
Mark Griffin of Sotheby’s International Realty represented the seller, while Vince Marotta with Illustrated Properties represented the buyer. According to the release, the off-market deal marks the most expensive sale in the neighborhood this year.
Recent deals in Jupiter include a waterfront home on the Loxahatchee River selling for $5.9 million, EB-5 chief Nick Mastroianni buying a waterfront mansion for $7.3 million, and Eric and Lara Trump purchasing a home for $3.2 million.
Moishe Mana and one of the properties that’s located on Flagler Street. (Getty, Google Maps)
Moishe Mana, the biggest private real estate owner in downtown Miami, bought two more buildings for $27.2 million. The properties add to his massive assemblage aimed at creating a tech hub.
Records show 41 Flagler Realty, which is linked to Mana’s Wynwood convention center, bought the properties at 62 Northeast First Street and 41 East Flagler Street from Flag 41, managed by Jose Saal of North Miami Beach-based real estate firm TIR Prime Properties.
The additions come as Mana is progressing on his long-anticipated plan to create a campus-like tech and cultural hub downtown. Mana’s vision is for startups and techies to set up offices there. Over the years, he also has said he plans residential units, a hotel, and a food and spice market.
His assemblage, amassed for roughly $375 million, consists of mostly older properties, which he plans to redevelop.
In his latest purchase, the two-story building on First Street was built in 1913 and spans 32,060 square feet, property records show. The three-story Flagler Street building was constructed in 1928 and totals 60,398 square feet.
The properties collectively sit on 0.9 acres between First and Flagler streets, just east of Northeast First Avenue. They last traded in 2014 for $11.5 million, according to a deed.
Mana did not return requests for comment.
In downtown Miami, he has started demolition at the 777 International Mall building at 145 East Flagler Street. The demo contractor filed a city notice of commencement in March.
Also, renovation work has started at his 13-story office building at 155 South Miami Avenue, which Mana will name the Nikola Tesla Innovation Hub.
In the past, Mana has said that his progress is dependent on the city’s planned makeover of Flagler Street. The long-stalled, $27 million facelift, which aims to make the street more pedestrian friendly and prompt business growth, finally launched in May.
In Mana’s more recent downtown Miami acquisitions, he bought the parking lot at 201 Southwest First Street for $6.9 million in February 2020, and the 12-story building at 25 West Flagler Street for $25 million in December 2019.
Harris County is set to purchase a downtown Houston office building for close to $29 million.
County commissioners gave the Harris County budget management’s office the go-ahead to complete the purchase of 1111 Fannin Street from Triten Real Estate Partners, during a June 8 meeting. The acquisition — which will conclude the county’s quest to centralize its operations — may not exceed $28.9 million, the commissioners said. The county will issue $29.6 million in bonds to finance the buy.
Triten purchased 1111 Fannin from Taconic Capital Advisors in December 2020. Terms of the deal were not disclosed but the building was valued at $21 million, according to a third-party data firm cited in a Houston Chronicle report.
As of January, Harris County had appraised the value of the building at $44.6 million, according to tax records. Triten has a formal hearing scheduled with the Harris County Appraisal District on June 21 to discuss the building’s value.
Triten and the National Land Tenure Company did not return a request for comment on the transaction.
The 17-story, 429,000-square-foot building sits in Houston’s central business district, and is connected to the city’s underground tunnel network, near Discovery Green Park, the Four Seasons Hotel and the Green Street development.
JP Morgan Chase moved out of the property in January 2021 and returned to Houston’s tallest tower — a 75-story building owned by Hines and Cerberus Capital Management’s 600 Travis Street. That building was renamed as the JPMorgan Chase & Co. Tower.
In March 2021, the budget office proposed acquiring a building to centralize its operations. It also previously floated the idea of constructing a new building for $84 million or renovating eight buildings it currently owns for $142 million.
“We saw an opportunity that would save the county money and contribute to the economic development of downtown,’’ Harris County Budget Director David Berry told The Real Deal. “The purchase met both the county’s financial and policy goals and is evidence of Commissioners’ commitment to be a steward of every taxpayer dollar.”
RET Ventures, a Utah-based venture capital firm, raised $165 million for a fund that plans to invest in technology for single-family rental and multifamily owners and operators across the U.S.
The company surpassed its initial target of $130 million. Participants included affiliates of some of the largest apartment and single-family rental operators in America, among them Essex Property Trust, Invitation Homes, Mid-America Apartment Communities, Greystar Real Estate Group, Starlight Capital and Starwood Capital Group.
Investors are increasingly betting on the single-family rental market, where demand has exploded thanks to remote work and rising costs of home ownership. Large single-family rental companies such as Invitation Homes Inc. and American Homes 4 Rent are increasing their share of the housing market.
Critics worry, however, that single-family rentals could worsen the affordability crisis or lead to more evictions.
Christopher Yip, a partner at RET Venture, said the fund is investing in early-stage companies. A particular focus is on something he calls “rent-tech”, which involves technology tied to rental properties.
He said the strategy is to address “pain points” for rental owners and operators.
RET Ventures is among the growing number of funds to invest in proptech. For many of these companies, the goal is to “modernize” technology-resistant parts of the real estate industry such as home closings, title insurance and construction.
Valuations for these firms have skyrocketed as many seek to go public through special purpose acquisition companies. RET Ventures has backed SmartRent, a home automation company for property managers and renters that plans to go public through a SPAC at an initial valuation of $2.2 billion.
RET Ventures has also invested in Passive Logic, an autonomous building platform, and Kasa Living, a short-term rental company, according to CrunchBase.
RET Ventures was founded in 2017 by John Helm, who was previously chief financial officer of the commercial brokerage Marcus & Millichap.
After winning an appeals court decision that caps a lengthy legal battle, the developer of The Markers Grove Isle is moving forward with construction, and rebranding the planned waterfront condominium project as Vita.
Construction is expected to begin in early 2022 after design tweaks, said John Shubin, the attorney for the developer, Grove Isle Associates, LLP. Plans include multiple five-story buildings with a total of about 65 units at 4 Grove Isle in Coconut Grove.
The long-stalled redevelopment project at Miami’s ritzy Grove Isle has been held back by more than a decade of litigation. Since 2018, after settling previous legal claims, Grove Isle Associates and two other developer entities, Grove Isle Yacht & Tennis Club and Grove Isle Club, were hit with new lawsuits filed by the Grove Isle Condominium Association and individual property owners.
The association and the residents opposed the demolition of a shuttered hotel, restaurant, indoor health spa and a clubhouse, as well as the removal of the island’s tennis courts. In 2013, Grove Isle Yacht and Tennis Club purchased Grove Isle Associates. Corporate records list Hector Fernandez-Rousselon, Coral Gables-based Pinto Realty and Key Real Estate Development Group as the managers of Grove Isle Yacht and Tennis Club.
On May 26, the Third District Court of Appeals affirmed a Miami-Dade Circuit Court ruling approving a 2020 settlement agreement between the condo association and Grove Isle Associates and the club entities. Preserve Grove Isle LLC, a nonprofit managed by residents opposing the project that was also a plaintiff, objected to the settlement.
“The court’s affirmance of the settlement agreement is a giant step forward for the entire Grove Isle community, who have put their disputes to rest and focused their energies on ensuring the development of a world-class new residential community in harmony with its neighbors,” Shubin said in an email. “I am glad that the court recognized that the interests of a very few disgruntled residents should not trump the will of a large majority who favored settlement and peace over futile litigation and acrimony.”
Joseph Serota, the attorney for the condo association, said the settlement stipulates that owners in the three existing Grove Isle condo towers will not have to pay dues to access the new restaurant and club that will be part of Vita. A 75 percent majority of the condo association’s membership voted to amend the condominium documents to reflect the elimination of mandatory dues, Serota said.
The developer also agreed to repair the Grove Isle bridge, seawalls and restore the tennis courts. According to court records, Miami-Dade Circuit Court Judge Michael Hanzman signed off on the settlement agreement in May of last year.
Five months later, on Sept. 23, Hanzman dismissed a separate 2019 lawsuit against the developer filed by another nonprofit called Save Grove Isle and 22 property owners. In his ruling, the judge cited the settlement agreement and opined that the plaintiffs did not have legal standing. The plaintiffs in that case have an appeal pending before the Third DCA.
But Serota and Shubin insisted it will not block Vita from moving forward.
“The decision by the Third DCA means that this long-contested dispute relating to the new development is now at an end,” Serota said. “The developer will be able to use his land in accordance with the settlement and the association will get significant benefits such as the bridge, seawall and tennis courts. Hopefully, we can move on, and those who live in [Grove Isle] can have some certainty and comfort as to what is going to happen.”
However, Alan Goldfarb, the attorney representing Preserve Grove Isle and Save Grove Isle, said the fight is not over. He also has a personal stake in the battle. A trust in Goldfarb’s name owns a four-bedroom, four-bathroom condo in one of the existing towers at Grove Isle.
“We lost one appeal, but we have another appeal pending,” Goldfarb said. “We are also asking the city of Miami to make [the developer] comply with all appropriate permitting regulations. The reality is that there are outstanding claims and those claims are valid.”
Igor Tulchinsky and 12088 Banyan Road (Getty, Douglas Elliman)
UPDATED, June 10, 9:38 a.m.: WorldQuant Asset Management founder Igor Tulchinsky flew from New York to spend the day in Palm Beach and bought a nearly $40 million oceanfront estate in the process.
“We flew down for a few hours, saw it, picked it,” said Ryan Serhant of Serhant, who represented the hedge fund manager in his purchase of 12088 Banyan Road in North Palm Beach. Ohio real estate scion and casino developer Jeffrey Jacobs sold the 18,852-square-foot, nine-bedroom mansion, according to property records.
Tulchinsky, chairman and CEO of Greenwich, Connecticut-based WorldQuant, also plans to open offices throughout Florida, Serhant said. He represented the buyer along with Chris Leavitt of Douglas Elliman.
Elliman’s Elizabeth Zahra and Gary Pohrer had the listing for the North Palm Beach mansion, which hit the market in 2019 for $42 million.
Jacobs, chairman and CEO of Jacobs Entertainment, a developer of gambling and entertainment properties, bought the property in 2001, and knocked down two smaller homes to build his mansion. He completed it in 2008, records show.
The nearly 3-acre estate has a safe room, which doubles as a hidden art gallery and movie theater; a telescope on the roof; a pool and 190 feet of ocean frontage.
Jacobs’ family owned the Cleveland Indians from 1986 until the early 2000s. They also previously owned the Pier House Resort & Spa in Key West.
In April, Tulchinsky paid $33 million for a unit at 220 Central Park South in Manhattan.
Nearby in North Palm Beach, billionaire Oracle Corporation co-founder Larry Ellison plans to demolish the mansion at 12525 Seminole Beach Road that he acquired in April for $80 million.
Tulchinsky’s neighbors also include former hedge fund manager Stanley Freeman Druckenmiller, who lives just south of the property Tulchinsky acquired.
North Miami Studios and two productions, “The Birdcage” and “Miami Vice” (Getty)
The production studios, once home to “The Birdcage,” “Miami Vice,” “Something About Mary” and a number of other films and television shows, sold to a developer that plans a mixed-use project, The Real Deal has learned.
An affiliate of Fuse Group Investment Companies paid $10.5 million for the 2.8-acre property at 12100 Northeast 16th Avenue in North Miami, property records show. Fuse Group, led by CEO Eyal Peretz, plans to create a town center with more than 400 multifamily units and an adaptive reuse of the studios, according to Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors, the brokers involved in the off-market sale.
The assemblage, known as Ivor Tors Studio, hit the market in 2017 for $15 million. It has more than 45,000 square feet of studio space. “Flipper” and “Striptease” were also filmed there.
Arellano and Marinoff said the deal closed within 15 days.
The brokers said the developer plans a creative, neighborhood-driven project, possibly with a food and beverage component. The warehouse complex is along the northwest corner of Northeast 16th Avenue and Northeast 121st Street. Arellano called it a “dynamite location” that’s 10 to 15 minutes away from Miami.
Movie producer Ivan Tors founded the studios in the 1960s.
Records show Sylvan Adams, CEO of Montreal-based Iberville Developments, bought the property in 1990 for $1.4 million.
Fuse did not immediately respond to a request for comment.
A number of developers have targeted North Miami. The largest project in the works is SoLé Mia, a $4 billion, master-planned community on the southeast corner of Biscayne Boulevard and Northeast 151st Street. Development duo Turnberry Associates, led by Jackie Soffer, and the LeFrak Organization, led by Richard LeFrak, recently secured a construction loan for a portion of the project.
Lynd CEO A. David Lynd and Lynd Acquisition Group President Constantine Scurtis with Parc Place Apartments at 17600 Northwest Fifth Avenue in Miami Gardens (Parc Place)
UPDATED, June 10, 10 a.m.: Lynd bought a Miami Gardens apartment complex for $40.8 million, marking the group’s second South Florida multifamily purchase this year.
San Antonio, Texas-based Lynd purchased the 234-unit Parc Place Apartments at 17600 Northwest Fifth Avenue in an off-market deal, according to a news release. The price breaks down to $174,359 per unit.
Ronald Meyerson of Cedano Realty Advisors represented the buyer. A team led by Newmark’s Tal Frydman and Hampton Beebe represented the seller.
The seller, an affiliate of Hollywood-based Coastline Management and North Miami Beach-based Tower Capital Group, bought the property in 2018 for $30.4 million.
The complex was built in 1972 and has had some improvements over time. Lynd plans at least $2.25 million in renovations to the units, gym, pool area and grilling stations, according to the release. It also will add amenities.
The buildings span 8 acres and offer one- to three-bedroom units, with an average apartment size of 737 square feet. The community allows pets.
ApartmentFinder.com lists monthly rents ranging from $1,250 for a one-bedroom to $1,750 for three bedrooms.
Lynd, founded by Michael Lynd Sr. in 1980 and now led by A. David Lynd, has managed more than 11,800 units in Florida, including more than 6,500 that it owned, according to its website and the release. Lynd’s investment arm, Lynd Acquisition Group, is headed by Constantine Scurtis.
The multifamily investor, developer and manager bought the 280-unit complex at 5750 Lakeside Drive in Margate in March for $50.75 million.
Miami-Dade County multifamily sales have been flowing in recent months. In April, New York-based Sentinel Real Estate paid $96.6 million for a 452-unit portfolio in Miami Beach and Bay Harbor Islands; and Estate Companies sold its newest West Miami project for $97 million.
The $6.2 billion iShares U.S. Real Estate ETF saw $1.3 billion of inflows last week. (Getty)
Investors are pouring money into real estate exchange-traded funds, in part as a bet on the storage and supply chain sectors.
The $6.2 billion iShares U.S. Real Estate ETF saw $1.3 billion of inflows last week, its most ever, making it the second biggest gainer among ETFs. The $41.4 billion Vanguard Real Estate ETF brought in $338 million following its $1.2 billion of inflows in May, according to Bloomberg News.
Though much of the activity in commercial real estate reflects optimism about reopening, the need for more data-related and supply-chain storage has remained consistent before and throughout the pandemic.
“It seems investors are using real-estate ETFs as a means of capitalizing on global logistics concerns,” Bloomberg Intelligence ETF analyst Athanasios Psarofagis told the publication.
Other real estate ETFs are expected to do similarly well as a strong demand for property, particularly residential assets, remains unmet because of low supply and the rising cost of building materials and labor.
“The big increases you’ve seen in single-family home prices is unprecedented in a recession and provides a lot of head room for apartment REITs,” BTIG analyst James Sullivan told Bloomberg.
Tommy and Dee Olceppo Hilfiger with 313 Dunbar Road (Getty, Google Maps)
If previous renovations of their properties are any indication, fashion icon Tommy Hilfiger and his handbag designer wife Dee Ocleppo Hilfiger will likely bring new life to their latest buy in Palm Beach.
The couple paid $21 million for another home on the ritzy island, weeks after selling their Golden Beach mansion.
The Hilfigers purchased the waterfront home at 313 Dunbar Road, property records show. Donald and Irene Dizney sold the three-bedroom, 5,047-square-foot house to the couple.
The Hilfigers bought the home via Villa Deniz LLC, managed by Michael Thomas Frost. The entity financed the purchase with a $14.7 million loan from JPMorgan Chase Bank.
The seller, Donald Dizney, is board chairman of United Medical Corporation. The Dizneys paid $4 million for the 0.3-acre property in 2013.
Built in 2006, the Mediterranean-style home features a lakeside pool and putting green, columned courtyard and a concrete dock on the Intracoastal Waterway. It hit the market in December for $21.5 million.
Christian Angle with Christian Angle Real Estate represented both the Dizneys and the Hilfigers in the deal, according to Realtor.com.
The Hilfigers recently sold their oceanfront Golden Beach estate for $24 million to real estate investor and author Grant Cardone.
Big ticket sales have become the norm in Palm Beach. Last month, punch time clock heir Edward G. Watkins sold his oceanfront Palm Beach estate for $95 million, marking the second most expensive sale this year on the island, after the $123 million sale of 535 North County Road to Tiger Global Management co-founder Scott Shleifer.
Alex Sapir and Giovanni Fasciano with Arte by Antonio Citterio in Surfside (Photos via Arte by Antonio Citterio/PR Newswire)
A developer’s decision to accept cryptocurrency as payment appears to have paid off, as a Miami-area penthouse just went for $22.5 million in digital tokens.
The deal came weeks after Alex Sapir’s Arte by Antonio Citterio, in Surfside, began accepting cryptocurrency through a partnership with blockchain and securities trading platform SolidBlock. It is the largest known cryptocurrency real estate purchase ever. Forbes first reported the transaction, which was announced in an overlooked press release May 27.
Encompassing the entire ninth floor of the 12-story condominium, the lower penthouse unit is 5,067 square feet and offers a 360-degree view of Miami’s ocean, shoreline and cityscape. The home features four bedrooms, four bathrooms, a powder room, a wine tasting bar, walk-in closets and a 2,960-square-foot wraparound terrace.
“Cryptocurrency is the future of wealth, and we believe this is only the beginning,” co-developer Giovanni Fasciano said in a statement. “Arte has set the precedent for what these sales can look like, and how fast they can take place. We’re proud to have laid the groundwork for this new, burgeoning world.”
The developers did not reveal the buyer or what kind of cryptocurrency was used.
It’s not the first record-breaking sale for Arte. Another penthouse in the building went for $33 million, or $4,300 per square foot, by far the most ever paid per foot in Surfside.
Cryptocurrency is making inroads in real estate. WeWork announced in April that it will begin accepting Bitcoin for membership fees. Real estate investor Kent Swig also got into the cryptocurrency game, launching his own digital token tied to gold.
Cosmetic mogul Adrien Arpel and the Palm Beach home. (Getty, Frankel Ball Realty)
Cosmetic mogul Adrien Arpel sold her waterfront Palm Beach house for $25.4 million.
Arpel, using her married name, Newman, sold the house at 1020 North Lake Way to Three Palm Trees LLC, records show.
The buying entity is managed by Warren B. Kanders. In December, he bought Jimmy Buffett’s former Palm Beach home for $6.9 million.
Arpel founded her eponymous line of makeup, Adrien Arpel, in 1959, according to Jewish Women’s Archive. She also sells her beauty and jewelry lines on the Home Shopping Network. She is the widow of Ronald M. Newman, the former owner of Display Creations. He died in 2015.
Records show Arpel bought the home in 2001 for $5.2 million. It was listed in January for $26.9 million, according to Realtor.com. Lawrence Moens of Lawrence A. Moens Associates represented the seller, and Christian Angle of Christian Angle Real Estate represented the buyer.
The 6,548-square-foot house has four bedrooms, five full bathrooms and two-half bathrooms, according to the listing. The two-story home was built in 1998 on a waterfront lot of just under half an acre.
According to Palm Beach County records, Arpel bought a condo at The Leverett House in Palm Beach in March for $9.4 million. In September, she sold her Southampton estate for $21 million.
Pricey Palm Beach sales are continuing after a hot month of May. Recently, an oceanfront mansion sold for $35.4 million, a vice president of an investment firm bought a waterfront property for $6.8 million and a punch time clock heir sold an oceanfront estate for $95 million.
Senator Shelley Moore Capito and President Joe Biden (Getty)
Following a week of fruitless negotiations with Senate Republicans to fund a $1 trillion infrastructure plan, President Joe Biden ended the talks without a deal.
The failed bargaining efforts concluded with a Tuesday call with Sen. Shelley Moore Capito of West Virginia, the lead Republican negotiator, the New York Times and other outlets reported.
Republicans had long been unwilling to support the plan, given the spending required and tax hikes needed to fund the package. It was originally to cost $2.3 trillion, but that number had been slashed in the attempt at compromise.
The inability to reach a consensus means Biden must seek votes elsewhere. Sensing an opportunity, the Problem Solvers Caucus, a bipartisan group of House members, on Tuesday drafted a proposal for $761.8 billion in spending over eight years, in addition to the $487.2 billion that Congress was already likely to enact, according Bloomberg,
Still, money for the plan remains elusive. The group will now work on determining a series of funding measures in coordination with members of the Senate.
Under the Problem Solvers’ plan, $959 billion would be allocated for transportation, $200 billion for energy including for energy-efficient housing, and $90 billion for “asset neutral” investments, such as freight.
Pacaso’s Spencer Rascoff and Austin Allison (iStock, Pacaso)
Second-home startup Pacaso plans to offer its agents the company’s future stock on top of their commissions.
The firm, founded by Zillow co-founder Spencer Rascoff and other former Zillow executives, is launching an equity program that will award 500 restricted stock units for buyer referrals. It will offer this program to its network of real estate agents, Pacaso owners or Pacaso employees.
For agents, the units will be offered along with their standard commission of 3 percent, according to Pacaso CEO Austin Allison.
“This is a really great opportunity to have a tool in a tool chest,” said Allison.
Pacaso said it recently raised $75 million at a $1 billion valuation, becoming the fastest U.S. company to achieve unicorn status. The stock units will vest and be paid after the company goes public or is sold.
The company, however, has yet to announce its plans for going public. Pacaso is following in the ranks of real estate companies including Compass that allow its agents to gain equity in a public offering.
Based in San Francisco, Pacaso is seeking to reinvent the timeshare model with a marketplace that allows buyers to purchase a fraction of a second home. It provides a network of agents to help customers establish limited liability companies for joint ownership as well as manage the properties. The firm focuses on single-family homes in residential neighborhoods as opposed to condos or resorts.
Allison said the company has seen a massive surge in demand for second homes during the pandemic.
“Basically take everything you are hearing about the real estate market and multiply it by two,” said Allison.
Pacaso launched in October with a $17 million seed round led by Maveron, with participation from Crosscut and Global Founders Capital. Wilke invested in that round, too, with former Starbucks CEO Howard Schultz, real estate coach Tom Ferry and Greg Schwartz, former Zillow president of media and marketplace and founder of mortgage startup Tomo.
The company, which claims it became profitable during the first quarter of 2021, collects a 12 percent fee from buyers up front and charges $100 per month in management fees.
Since Pacaso’s launch, more than a million people have visited its website, according to the company. Pacaso offers its services in 20 second-home destinations across the U.S. and plans to expand internationally.
Common’s CEO Brad Hargreaves (right) and Starcity’s co-founder and CEO Jon Dishotsky (Photos via iStock, General Assembly)
Consolidation of the co-living market is accelerating.
Common, among the fastest-growing co-living landlords, has reached an agreement with its former rival Starcity to take over management of the bulk of Starcity’s portfolio — about 7,500 units including both operating and pipeline units — around the globe, Common confirmed with The Real Deal. The acquisition came only several months after Starcity’s acquisition of Ollie, another co-living startup.
New York-based Common currently manages about 6,400 units, including both co-living units and traditional apartments. Taking all the pipeline units and the Starcity portfolio into consideration, Common’s footprint will reach 33,000-plus units. Terms of the acquisition deal were not disclosed.
Co-living facilities have proliferated in the past few years as the communal lifestyle — in which residents get a private, furnished bedroom with shared common areas — gained popularity. Tenants chose co-living facilities as an alternative to traditional rental apartments that became too expensive for many. Consolidation was already happening before the pandemic, and when tenants vacated their communal homes in the health crisis, co-living startups on weak financial footing struggled to survive.
“It’s been a tough year in many ways for the co-living industry,” said Common’s CEO Brad Hargreaves, noting that the occupancy rate of Common’s co-living units fell below 80 percent at one point in the pandemic, though the rate has recovered to 90-plus percent in recent months.
San Francisco-based Starcity had prided itself as a developer and operator of co-living facilities, and when the economy was humming, investors flocked to the startup’s creative projects. But it became clear that the business model was not sustainable in the pandemic-driven downturn, said Starcity’s co-founder and CEO Jon Dishotsky. Dishotsky and a majority of Starcity’s building staff will join Common in the acquisition deal.
Hargreaves said Starcity’s heavy presence in San Francisco and Los Angeles might have also made Starcity’s operation challenging.
“San Francisco has gotten hit the hardest of any city,” he said. “They built some extraordinary assets, and we’re excited to take over their management contracts.”
Common came out of the pandemic relatively unscathed for a number of reasons, including its focus as a designer and operator, rather than a developer, of co-living facilities. When operating, Common uses management agreements with landlords rather than traditional leases. The startup’s effort to diversify into multifamily property management beyond co-living has also helped weather the storm, Hargreaves said.
In addition, Common’s capital structure gave the firm room to breathe. In September, the company raised a $50 million round of Series D funding led by Kinnevik with participation from existing investors Maveron, 8VC and Norwest Venture Partners, bringing its total funding to more than $113 million.
Until late 2020, Starcity was on the other side of consolidation, acquiring Ollie’s technology, assets and management contracts. As part of the deal, Starcity’s management contracts formerly held by Ollie, including the one for Carmel Place in Kips Bay in New York City, will be taken over by Common. Separately, Common has signed an agreement with Simon Baron Development’s co-living facility in Long Island City, which was previously operated by Ollie.
Another co-living casualty of the pandemic was Quarters, a subsidiary of Germany-based Medici Living Group. The company planned to open 1,500 co-living units in the U.S. Instead, entities with ties to Quarters filed for Chapter 7 bankruptcy in January, ceasing operation and liquidating all assets to repay creditors.
Miami-Dade condo sales and volume rose during the first week of June.
A total of 299 condos sold for $233.2 million last week, up from 274 condos that sold for $183.1 million the previous week.
Units sold for an average price of about $780,000, up from $668,000 the week prior. Condos sold for an average of $447 per square foot, an increase of $31 per square foot over the previous week.
Tennis star Caroline Wozniacki and ex-NBA player David Lee closed on the most expensive sale of the week, paying $18.7 million for a penthouse at Fisher Island’s Palazzo Del Sol. The unit sold for $2,670 per square foot after 472 days on the market. Dora Puig of Luxe Living Realty brokered the deal.
The second most expensive sale was the $13 million closing of a condo at La Santa Maria Brickell in Miami. It sold for $1,300 per square foot after one day on the market. Ana Lindo represented the seller, while Daniel Gaviria represented the buyer.
Here’s a breakdown of the top 10 sales from May 30 to June 5.
Palazzo Del Sol 7001 | 472 days on market | $18.7M | $2,670 psf | Listing agent: Dora Puig | Buyer’s agent: Dora Puig
One Ocean 402 | 57 days on market | $3.1M | $1,516 psf | Listing agent: Andre Schaefer | Buyer’s agent: Pedro Saavedra
Most days on market
Palazzo Del Sol 7001 | 472 days on market | $18.7M | $2,670 psf | Listing agent: Dora Puig | Buyer’s agent: Dora Puig
Fewest days on market
La Santa Maria Brickell 4901 | 1 day on market | $13M | $1,300 psf | Listing agent: Ana Lindo | Buyer’s agent: Daniel Gaviria
UPDATED, June 9, 12 p.m.: Miami Beach’s attempt at curbing late-night partying by ending alcohol sales earlier was overturned in court.
The decision is a win for businesses that opposed the rollback but bad news for developers who say the city needs to reinvent its image in the entertainment district.
The Clevelander South Beach, a hotel with a restaurant and bar known for its all-day party environment, sued the city in late May over the commission’s vote to temporarily roll back alcohol sales to 2 a.m. from 5 a.m. in the entertainment district. The area is between Collins Avenue and Ocean Drive, from Fifth to 15th streets.
Miami-Dade Judge Beatrice Butchko decided during a virtual hearing on Monday that the commission’s vote on May 12 was illegal. The city passed the measure as a typical ordinance with a simple majority vote of 4 to 7. But because the decision impacts a specific district, that means that it was a land-development regulation requiring a supermajority vote of 5 to 7, according to the city and an attorney for the Clevelander.
No written order has been entered yet.
The city plans to appeal. In the meantime, the 2 a.m. cutoff will stay, unless an order mandating otherwise is issued, according to Deputy City Attorney Aleksandr Boksner. Butchko’s ruling on Monday did not identify when the rollback should be lifted.
The matter has pitted businesses in the entertainment district, whose owners are worried about losing their investment, against prominent developers, who say a crackdown on the anything-goes partying is needed. The city’s alcohol sales rollback came after an influx of spring breakers in April.
Montreal-based Jesta Group bought the Clevelander and an adjacent hotel in 2018 for $66 million, which broke down to $20.6 million for the real estate and $45.4 million for the restaurant and bar business.
“Outdoor live entertainment and 5 a.m. operating hours are central to the Clevelander’s property value, and we relied on those key factors in our decision to purchase the property,” Anthony O’Brien, Jesta senior managing director, said in an emailed statement.
The lawsuit was a “last resort” to preserve the landmark business, he added. The Clevelander said it is willing to work with the city on the evolution of Ocean Drive, despite their differing opinions.
Prominent developers such as Starwood Capital Group’s Barry Sternlicht, Related Group’s Jorge Pérez and Don Peebles, developer of the Royal Palm Hotel and the Residences at the Bath Club, have supported the city in its crackdown.
Sternlicht, who moved his Starwood’s headquarters to Miami Beach, said in an email that the issue is over what kind of tourism and companies the city wants to attract. The influx of partying crowds forces the city to spend millions of dollars on property protection, while losing tax revenue from tourists and groups “that want no part of what they perceive as mayhem in SoBe,” he added.
Sternlicht wrote that Ocean Drive is known for its architecture, “not its nightlife anarchy.”
“Let’s be serious, the costs to other establishments, to hotel room rates, to property values, to the city for excess law enforcement, to crime and vandalism, far outweigh the benefits of a few establishments catering to the 2- 5 am revelers,” he continued.
The city has tentatively approved a November referendum asking residents to permanently restrict alcohol sale hours, although a second commission vote is needed to put the measure on the ballot. Voters rejected this proposal in 2017.
As part of its effort to curb partying, the city, also in May, repealed a noise ordinance exemption on Ocean Drive from Ninth to 11th streets, meaning venues there had to abide by the noise restrictions imposed on the rest of the city. The two-block district includes the Clevelander, which is at 1020 Ocean Drive.
Butchko determined that the Clevelander had the right to “certain protections for live music,” although she did not find the city’s removal of the exemption illegal altogether, according to attorney Kendall Coffey, the Coffey Burlington who represents the Clevelander.
Gelber added the city will be appealing this as well because Butchko capped the noise level in the two-block area to 78 decibels, louder than what is allowed citywide.
“Our residents should not be held hostage,” Gelber said, “by a business model that is inconsistent with the residential community.”
Terra’s David Martin and the site now at 1177 Kane Concourse, Bay Harbor Islands (Google Maps)
UPDATED, June 8, 8:35 p.m.: Terra has a development site along Bay Harbor Islands’ Kane Concourse under contract, with plans for a residential, office and retail project.
Coconut Grove-based Terra, led by David Martin, intends to purchase the 2-acre vacant property at 1177 Kane Concourse from NR/Wharton Kane Concourse Property Owner, according to a letter filed with the town. A purchase price has not been disclosed.
NR/Wharton Kane Concourse Property Owner, affiliated with Charlotte, North Carolina-based Northwood Ravin and New York-based Wharton Equity Partners, bought the property in 2016 for $20.25 million.
The Bay Harbor Islands Town Council on Wednesday will consider a request to transfer the development agreement for the site to Terra. The council in January 2020 approved the development of 90 residential units, 98,800 square feet of offices, and 14,900 square feet of commercial space.
In an emailed statement, Terra said it also plans a residential, office and retail project, adding that there will be a “signature food and beverage” operator at street level.
“The development will meet growing demand for luxury living and boutique commercial space as more residents and companies gravitate to South Florida, while reinvigorating Bay Harbor’s iconic Kane Concourse,” the development firm said in its statement.
Berkadia’s Jaret Turkell and Scott Wadler, who declined to comment, are representing the seller.
Bay Harbor Islands, long a quiet waterfront town, now is seeing development, mostly of condominium buildings. Ugo Colombo’s CMC Group and Valerio Morabito’s Morabito Properties are developing the 41-unit, eight-story Onda condominium at 1135 103rd Street. The project is expected to be finished in 2023.
Also, Ian Bruce Eichner, who developed the Continuum South Beach, in May bought two waterfront properties for $29.5 million, with plans for two buildings with a combined 142 condos.
Terra, long a prolific developer of condos mostly in Miami, has branched out in recent years to other areas and project types. The group is developing the 460-unit Natura Gardens multifamily project near the planned American Dream Miami mega-mall in Northwest Miami-Dade County.
Property Guru CEO Hari Krishnan and Peter Thiel (Property Guru, Getty)
UPDATED, June 8, 9:05 p.m.: A Peter Thiel-led SPAC is in talks to merge with online real estate firm PropertyGuru to tap into Southeast Asia’s real estate market.
Thiel and billionaire Richard Li’s Bridgetown 2 Holdings are now in discussions with PropertyGuru for the U.S. listing, Bloomberg News reported, citing people with knowledge of the matter. The combined firm could be valued at as much as $2 billion.
PropertyGuru — backed by private equity firms KKR and TPG Capital — is focused on real estate in Singapore, Vietnam, Indonesia, Malaysia and Thailand. It backed out of plans to go public on the Australian stock exchange back in 2019.
The company recently acquired the Malaysia and Thailand operating entities of the global online real estate advertising company REA Group.
Bridgetown 2 Holdings raised about $300 million in its U.S. public offering in January. The company said it plans to focus on financial services, technology, and media in Southeast Asia, according to Bloomberg.
Thiel is a founder of PayPal and Palantir Technologies and was among the first outside investors in Facebook. Thiel bought two waterfront adjacent Miami Beach mansions in September for $18 million.
Robert Rivani of Black Lion Investment Group and Wynwood Arcade. (LinkedIn, Cushman & Wakefield)
UPDATED, June 8, 3:30 p.m.: Robert Rivani’s Black Lion Investment Group purchased the Wynwood Arcade and the nearby Amara at Paraiso property in Miami’s Edgewater for more than $25 million combined, as the firm doubles down on South Florida.
The two sales mark another sign of rising demand for retail and restaurant properties in Miami.
East End Capital sold the Wynwood Arcade, a nearly 23,000-square-foot retail and restaurant building at 50 Northwest 24th Street in Miami’s Wynwood for $13.3 million, Dwntwn Realty Advisors’ Tony Arellano and Devlin Marinoff told The Real Deal. The two brokers had the property listed for $14.5 million.
The adaptive re-use project is home to the popular Salty Donut craft doughnut and coffee shop; as well as Three, a restaurant; and No. 3 Social, a rooftop lounge.
Black Lion, based in Los Angeles, plans to invest more than $1 million into the Wynwood Arcade, adding outdoor dining on the north and south lawns and the remaining space on the rooftop, according to Arellano and Marinoff.
Black Lion hired Kobi Karp to design the interiors of the Wynwood Arcade with a jungle theme, similar to the Faena Hotel, Rivani said. He’s also in talks to bring a new nightlife concept on the rooftop, in addition to 3 Social, and plans to sign additional food and beverage concepts on the first floor.
The Wynwood Arcade is about 65 percent leased, he said.
The company also paid $12.1 million for the Amara at Paraiso building, at 3101 Northeast Seventh Avenue, in Miami’s Edgewater. Coconut Grove-based Related sold the 12,300-square-foot restaurant building, which is part of its Paraiso luxury condo complex fronting the bay. Miami restaurateur and chef Michael Schwartz operates the restaurant, Amara at Paraiso.
Fabio Faerman and Sebastian Faerman of FA Commercial represented the buyer and seller of the Amara building, which was listed for $20 million last year.
Black Lion also owns the Brickell Bay Boardwalk project in Miami, and the Crystal Cove Commons in North Palm Beach, with plans to acquire more real estate in South Florida.
“We want to have as many high-profile properties as possible” in the Miami area, Rivani said.
9720 Southwest Eighth Street in Miami and Core managing principals Adam Greenberg and Michael Lapointe (inset) (Google Maps, Core IPF)
Core paid $19 million for a shopping plaza near Florida International University’s Modesto A. Maidique Campus in west Miami-Dade County.
The Miami-based real estate investor, through an affiliate, bought the retail property at 9720 Southwest Eighth Street from two sellers tied to Miami-based Orion Real Estate Group, records show.
The seller bought the 60,692-square-foot retail center in 2014 for $13.4 million. It was built in 1966 on 4.7 acres, according to property records.
Tenants include a Goodwill store, an AutoZone Auto Parts, a CVS and money transfer service MoneyGram. The property is in the unincorporated Miami-Dade neighborhood of University Park.
Core, led by Adam Greenberg and Michael Lapointe, invests mainly in office and retail real estate, with a focus on adding value to properties in secondary markets, according to its website. It owns and operates 1 million square feet across the Southeast.
In March 2020, Core, together with Miami Beach-based TRG SBV II Owner LLC, bought two industrial properties, a retail center and a bank branch in Miami Gardens for $33.6 million.
Orion Real Estate, founded in 1978 by Executive Chairman Joseph Sanz, has a $1 billion commercial real estate portfolio in the U.S. and Canada, according to its website. Aside from investment, the group also has brokerage, capital sourcing and development arms. It also works on deal structuring and sale-leasebacks.
In March, Orion bought a Pinecrest office and retail center at 12651 South Dixie Highway for $32 million.
In other recent retail deals in unincorporated Miami-Dade, self-storage provider A+ Storage in April bought an Aldi-anchored shopping center in West Kendall for $22.4 million.
Daniel Sundheim and 2850 Tigertail Ave (Getty/Patrick McMullan, Related)
UPDATED, June 8, 3:05 p.m.: Daniel Sundheim’s D1 Capital Partners is the latest investment firm to plant a flag in Miami.
The New York City-based hedge fund signed a 10-year, 25,000-square-foot office lease at Related Group’s new building in Coconut Grove, where the developer is now based. The building, at 2850 Tigertail Avenue, is now fully leased, according to a release.
D1 lost $4 billion, or 20 percent, in the GameStop short squeeze saga earlier this year, but recovered about 90 percent of those losses by April, Bloomberg reported. Sundheim founded D1 in 2018. The hedge fund invests in companies in real estate, tech, financial services and more.
In addition to D1 and Related, other tenants at the Coconut Grove building include the John S. and James L. Knight Foundation and the law firm Ratzan Weissman & Boldt.
Nick Pérez, a vice president at Related, led the development of the office building. It was designed by Arquitectonica.
Cushman & Wakefield brokers Ryan Holtzman and Andrew Trench represented Related in D1’s lease. Oren Alexander of Douglas Elliman, who represented D1, said he and his tenant representation team are working on two additional office leases in the Miami area. New York firms are looking for offices with private outdoor spaces, he said.
A number of out-of-state companies – and their executives – have expanded to South Florida over the past year, with some moving their headquarters. Even prior to the pandemic, Barry Sternlicht and his Starwood Capital Group, and Carl Icahn and his Icahn Enterprises relocated to Miami Beach and Sunny Isles Beach, respectively.
Related recently completed the Coconut Grove office building, which is near the Park Grove condo project it developed along with Terra. Related, led by CEO Jorge Pérez, bought the office building development site in 2014 for $5.8 million in a joint venture with Terra. Terra later exited the project.
Related listed its former headquarters building in downtown Miami for sale unpriced in late 2019.