Renderings of the property at 3630 Northwest 25th Street near the Miami International Airport

One of Brazil’s wealthiest families just paid $22.75 million for the leasehold interest in an industrial property near Miami International Airport.

IStar sold the 212,000-square-foot property at 3630 Northwest 25th Street, 3500 Northwest 24th Street and 2401 Northwest 36th Avenue to the Dayan family, which has a controlling interest in Bazilian-based Banco Daycoval S.A. The family paid about $107 per foot for the leasehold interest, according to a press release.

LSG Sky Chefs has a triple-net lease for the two buildings, which feature refrigerated areas, large-scale commercial kitchens, freight elevators, 47 dock-high loading doors and offices, and a lot used as a vehicle maintenance facility. LSG Sky Chefs, owned by Deutsche Lufthansa AG, provides on-board airline catering services for major airlines out of the Miami airport.

HFF’s Manuel de Zárraga, Tracey Goo and Luis Castillo represented both sides.

Safety, Income & Growth Inc., a publicly traded company focused solely on buying ground leases, will hold the fee-simple land position in its portfolio of ground leases. SAFE is managed by iStar.

A ground lease gives the lessee the right to build on a site or collect rents from the property on site, and separates and defines who owns the land and who owns the building.  – Keith Larsen

Illustration by Nicholas Little

Matthew Hansen’s dream house used to be a monastery.

The hedge funder bought a Hell’s Kitchen townhouse from the Archdiocese of New York for $3 million in 2011. He gut-renovated the six-story property, which had housed the Christian Brothers for more than 50 years, into a single-family mansion with a restored 1910 facade and an expansive, six-bedroom interior.

But Hansen put the mansion, which sits at 416 West 51st Street, back on the market for $15 million in 2016. “It was kind of my dream house,” he told The Real Deal. “But now I have 7,000 square feet, and I’m living in only 1,000 of them.”

Like many luxury listings, the property languished on the market and is now listed with the Corcoran Group for nearly $12 million. But unlike most listings, Hansen is accepting digital currency as payment. He even posted the home on bitcoin-realestate.com, a global listings site that launched in 2013 for buyers and sellers interested in trading in cryptocurrency

416 West 51st Street

Hansen is one of a small but growing group of New York homeowners and real estate players testing the use of cryptocurrency — the decentralized and encrypted currencies such as Bitcoin that bypass standard financial institutions — in residential deals.

And it’s not a coincidence that he’s an early adopter. The Wall Street veteran launched a hedge fund called Crypto Knight Capital, which invests in digital currencies and other crypto assets, in January.

“It helps that I’ve been involved in cryptocurrency,” Hansen said. “I have the infrastructure in place to take it, and I’m very comfortable with the asset class.”

While there are few statistics on how many real estate deals have been done in crypto, sources say the handful of deals that have been publicized — both in New York City and beyond — are important test cases for the market. As of late May, there were 47 homes listed on Zillow nationwide, including four in New York, that mentioned Bitcoin.

In all respects, those sellers are laying the groundwork for the broader use of crypto in residential sales and rentals — or at least determining whether there will be a broader use. And although some say that could pave the way for more black-market buyers, others see it as a necessary litmus test.

“What we may need is for some people to have these transactions in Bitcoin, so we can start gauging the pros and cons, and what the pitfalls are so that we can build on it,” said Shahriar Sedgh, a real estate lawyer with the Manhattan-based firm Sedgh & Zuckerman, who has advised clients on the use of cryptocurrencies.

First come, first serve

Ben Shaoul, the head of Magnum Real Estate and the industry’s most prominent Bitcoin proponent, was the first developer to accept the digital currency.

When Shaoul launched sales at Liberty Toye, an 81-unit rental-to-condominium conversion at 62 Avenue B in Alphabet City, he specified in the offering plan that he would accept Bitcoin.

The developer said he then worked with the Attorney General’s office to ensure that doing so complied with the law. Shaoul declined to comment on the specifics. “I’m not going to give up my secret sauce,” he said, “but there is a secret sauce.”

He said his decision to accept Bitcoin in the first place was a direct response to demand from buyers. “Prospective buyers came to us and said, ‘Will you accept cryptocurrency?’” Shaoul noted. “That’s what compelled us to figure out how to accept it.”

The developer said he expects interest from buyers looking to pay for condo units with Bitcoin and other digital currencies to escalate. “A lot of the inquiries are from younger, millennial-style purchasers who have amassed large fortunes in cryptocurrency who are now looking to deploy their capital,” he said.

But those buyers will not be spending their digital cash at Liberty Toye. Last month, TRD reported that Shaoul entered into contract to sell the unfinished project to an undisclosed buyer for $85 million. Sources said Magnum plans to withdraw the offering plan and return deposits to buyers who’ve gone into contract. According to StreetEasy, at least 14 units — which had asking prices ranging from $675,000 to $1.6 million — are in contract. Shaoul declined to comment on the condo project changing hands, but sources said the property is expected to continue to operate as a rental.

Even before Liberty Toye, Shaoul said he was more than willing to take Bitcoin for an apartment in New York. In April, he accepted the digital currency for two units at his 33-story condo at 389 East 89th Street — one for $1.5 million and the other for $893,000. He then immediately converted that to U.S. dollars using the payment platform BitPay.

Several other homeowners in the city, including Hansen, have advertised in the past year that they’ll accept cryptocurrencies. At the moment, only two properties in New York include it in their description, according to Zillow.

Claudio Guazzoni de Zanett, another hedge funder, listed his Upper East Side mansion for $30 million, or $45 million in Bitcoin, in April. Guazzoni — who was hit with five violations under state law last year when he listed the property on short-term rental sites — told the Wall Street Journal that the difference in price is due to Bitcoin’s volatility, a sign that he may plan to hold the payment in Bitcoin rather than transfer it to dollars.

Meanwhile, in January, ManageGo, a Brooklyn-based rental management company, became the first to tout its acceptance of crypto coins. The company’s website says it accepts Bitcoin, Litecoin and Ether, and then immediately transfers the funds to dollars, but it appears that the functionality has not been rolled out yet. Brookliv, a Brooklyn-based brokerage that uses the ManageGo rental platform, accepts Bitcoin for deposits, and promotes its Bitcoin-friendliness on their listings.

Brookliv’s CEO, Ari Weber, said he’s accepted four deposits in Bitcoin via Coinbase so far, and that the landlords didn’t mind as long as the units got rented.

Weber said it’s particularly practical for foreigners renting in New York City and helps them avoid the usual fees and wait time associated with transfers from financial institutions in their home countries. “If they have any cryptocurrency, they can immediately make a deposit,” Weber said.

The brokerage head chose to accept Bitcoin to provide clients with as many options as possible, essentially to stand out from the competition. “I wanted to be the first,” said Weber, who expects cryptocurrencies, like credit cards, to one day be accepted as a standard form of payment.

Shaoul said he will continue to expand the use of crypto on real estate deals in the coming months. As of now, the developer accepts only Bitcoin, though he plans to add two additional coins sometime this year. “This is the future,” said Shaoul, adding that he expects to close on his first commercial deal in Bitcoin soon.

“Evolving science”

Not surprisingly, those jumping on the bandwagon are almost all investors in or proponents of cryptocurrency.

For the average buyer or seller, cryptocurrencies remain highly impractical, the attorney Sedgh noted. “The way the market is set up right now, it’s not ready to become the norm for the everyday buyer and seller of real estate,” he said.

The biggest hurdle is the bureaucracy tied to real estate deals, according to sources. In order to transact in Bitcoin, all the parties to the property deal need to be on board, and without the infrastructure in place, most institutions prefer to avoid the hassle.

The most oft-cited concern is volatility, especially if there’s a delay between when the contract is signed and when the deal closes. In the past year, the price of Bitcoin has wildly spiked and crashed, hurtling from $2,000 to $20,000 and back down to $6,000 in a matter of months. Since falling to the low point in February, the price has hovered around $8,000 — give or take several thousand on some days. Other cryptocurrencies, such as Ethereum and Litecoin, have shown similar hair-raising volatility.

For that reason, deals are generally pegged to fiat currency, which eliminates the volatility problem for everyone but the buyer. To date, there have been no crypto-to-crypto transactions, in which the asset is valued and exchanged only in digital currency, in New York. That’s due to the volatility, sources say, and also because it would be incredibly rare for all parties in a transaction — which can include lawyers, brokers and title insurers — to want to walk away with Bitcoin in their wallets.

A third challenge is that condo boards and banks don’t recognize cryptocurrencies as assets.

“If it’s a buyer looking to buy with all Bitcoin, and they’re applying for a mortgage, their bank is not going to look at their Coinbase account for their approval,” said Sedgh. “You still need to show verifiable income and assets, such as bank statements and income in U.S. dollars to be approved for their financing.”

Dan Conn, the CEO of Christie’s International Real Estate, said he wouldn’t feel comfortable if a buyer came in requesting to transact in Bitcoin and had no evidence or history of safe assets with transparent origins. In general, Conn — a former investment banker — said he didn’t see the benefit of Bitcoin in real estate transactions.

“I think it’s bananas,” he said, about transacting in such a volatile currency.

But Hansen argued that luxury assets are the perfect place to use Bitcoin because they’re one-off purchases, often in cash, and intended to store value. He said it can take roughly 15 minutes for a Bitcoin transaction to clear. That, he said, makes it useless for buying coffee, but far more efficient than a typical wire transfer, which can take several days if it’s from a different country.

In one all-crypto deal in Massachusetts, the buyer and seller agreed that if the price of Bitcoin fell below a certain amount, they would renegotiate. The broker on that deal took his fee in Bitcoin, then immediately transferred it to dollars.

Hansen hasn’t hammered out exactly how he’d make it work for the 51st Street property, but said he would likely charge a premium to transact in Bitcoin, in order to account for the costs involved in liquidating the coins (fees are notoriously high), not as a hedge against volatility. He expects to liquidate enough money to repay the mortgage.

“This is very much an evolving science,” Hansen said. “It’s not like anyone has cornered the market on how this should work.”

Digital dark side

For those whose only knowledge of crypto is watching the fictional hedge fund manager Bobby Axelrod use it to make shady payments in “Billions,” you are not alone.

And there are very real concerns about cryptocurrency being used for illegitimate reasons.

Antonio del Rosario, a broker with Brown Harris Stevens, is currently marketing a studio at 88 Greenwich Street that accepts Bitcoin, but his post about the listing got rejected from Facebook, Instagram and LinkedIn, until he removed the word “cryptocurrency.” “We do not allow ads that promote financial products and services that are frequently associated with misleading or deceptive promotional practices,” read the notification Rosario received from Facebook, which included “initial coin offerings and cryptocurrency” in the policy.

Under political pressure, Facebook and other social media sites implemented new policies earlier this year to combat fraudulent uses of crypto.

Despite that hiccup, Rosario is bullish on the future of Bitcoin. He said that more than 50 percent of the inquiries for his listing at 88 Greenwich, which accepted Bitcoin, were about the cryptocurrency, and many asked for information on how the transaction would work. “We’re getting offers in cryptocurrency, not in dollars,” he said.

Rosario says that New York has been particularly slow to adapt to the changes wrought by blockchain technology. “What can be tough with New York is that there’s too many old ways of doing things here,” he said.

Boris Sharapan Fabrikant, a broker at Triplemint, said he’s also received interest from clients, and plans to advertise that one of his sellers is accepting Bitcoin.

“A lot of it was just to create buzz,” he said. “I’ve seen brokers doing it. It’s a great way of getting your apartment attention.”

Shaoul said accepting additional cryptocurrencies is part of his firm’s “marketing platform.” And in today’s residential market, anything that gets eyeballs on a project — even a marketing ploy — can be counted as a win.

Part of Hansen’s motivation for accepting cryptocurrencies is to widen the pool of potential buyers. “If it helps get [more people] in to look at the property, then I’m all for it,” he said. The option to buy with Bitcoin might be attractive to international buyers if they’re not required to pay taxes when exchanging the digital coins for real estate, the seller noted.

So far, Hansen said, the listing has garnered attention from a financial adviser in Luxembourg and a man purporting to be a Syrian refugee looking for a place to park his cash, among others. Those inquiries came through the Bitcoin listing site, which has brought in a roughly equal number of inquiries as the regular channels, said Scott Stewart, the broker for the property.

“It’s a way to reach the uber-wealthy, some of which are above board and some of which are black-market people,” Stewart added.

The Syrian with cash to burn is out, according to the broker, but the Luxembourgian financier is legitimate.

And while Hansen said he’s indifferent to whether he actually sells in Bitcoin, he remains bullish on the value of digital currencies.

“Eight years ago, this didn’t exist,” he said about the cryptocurrency market, “and now it’s worth $400 billion.”

Rendering of the Bradley, Jon Paul Perez and Scott Wadler

The Related Group and Block Capital Group secured more than $53 million for the Bradley, a mixed-use project they’re building in Wynwood.

The developers closed on a $33.18 million construction loan from Santander Bank and received $20 million in preferred equity from Greenstreet Real Estate Partners, according to HFF. HFF’s Scott Wadler and Jesse Wright arranged the financing.

The Bradley, previously called Wynwood 26, will be a 175-unit apartment building with about 32,000 square feet of retail space at 51 Northwest 26th Street in Miami. Lenny Kravitz’s Kravitz Design is handling the building’s interiors and programming, which includes the lobby, gym and rooftop deck. Units will range from 480-square-foot studios to 1,000-square-foot, three-bedrooms, with rents from about $1,400 to $2,800 a month.

Related and Block Capital expect to deliver the building in early 2020. Related partnered with Block Capital when it paid $5.25 million for its 50 percent share of the 1.2-acre development site in 2015.

Related is also working with East End Capital on Wynwood 25, a mixed-use apartment project and adjacent office building that recently topped off.

Coconut Grove-based Greenstreet owns properties in South Miami and Miami’s MiMo District. The firm has acquired more than $1.5 billion in real estate since it was founded in 2000, according to the company.

Rendering of the property

Developers John Flynn Sr. and Leona Flynn just sold their Palm Beach estate for nearly $13 million, a few months after buying a smaller home from Apple’s former CEO.

The Flynns sold their 7,316-square-foot house at 300 Ridgeview Drive to Harvey C. Jones Jr., a trustee of H.C. Jones Living Trust, according to property records. Jones is a managing partner at Square Wave Ventures, a private investment firm. He purchased the house for $1,773 per square foot.

The six-bedroom, eight-bathroom house is near the Palm Beach Country Club. The Flynns paid $2.4 million for the half-acre lot in 2006 and built the home two years later.

The Flynns own a Dublin-based development company with a portfolio of projects in Ireland and England. The couple recently bought a nearly 4,000-square-foot house at 127 Reef Road in Palm Beach for $6 million in April 2018. It was formerly owned by ex-Apple CEO John Sculley and his wife Diane.

Waterfront Properties and Club Communities agents Toni Hollis and Gloria More had the Ridgeview Drive home on the market for $15 million. Todd Peter of Sotheby’s International Realty represented the buyer.

Pebblebrook Hotel Trust Chairman Jon Bortz and Park Central NY at 870 7th Ave (Credit: Pebblebrook Hotels and Booking)

Pebblebrook Hotel Trust is upping its offer in an effort to block the Blackstone Group’s prospective $4.8 billion acquisition of LaSalle Hotel Properties.

In a regulatory filing, Pebblebrook announced a purchase price of $37.80 per share, up from its previous proposal of $35.89. According to Bloomberg, the previous proposal was only made verbally. LaSalle rejected the deal before agreeing to an all-cash deal with Blackstone. Pebblebrook’s new offer represents a 13 percent premium from Blackstone’s $33.50 merger price.

Pebblebrook has been in pursuit of LaSalle for the past few months. When the Blackstone-LaSalle agreement was announced, Jon Bortz, Pebblebrook’s president and CEO, publicly criticized the deal, saying that Pebblebrook’s proposal was “substantially superior.” Pebblebrook’s new offer includes the $112 million termination fee that LaSalle would be required to pay Blackstone.

Pebblebrook will campaign for its merger proposal. The firm has hired advisory firm Okapi Partners LLC to determine which shareholders are in favor of the Blackstone deal.

Pebblebrook claims it holds a 4.8 percent stake in LaSalle. The company exited the New York City market when it sold the Dumont NYC Hotel to the LeFrak Organization last year. If its proposal gets the required two-thirds vote from LaSalle shareholders, Pebblebrook will gain stakes in four Manhattan hotels: the Gild Hotel, Park Central New York, the Roger and Westhouse. [Bloomberg]— Christian Bautista

Rogerio Ceni and Mansions at Acqualina unit 2901

Former Brazilian soccer player Rogério Ceni sold his Mansions at Acqualina unit in Sunny Isles Beach.

Ceni, who won 20 major titles over his 25-year career and is considered one of the best Brazilian goalkeepers in history, is now manager of Fortaleza, a soccer club based in Ceara, Brazil.

Property records show Ceni controls RBCH Holdings LLC, which sold unit 2901 at 17749 Collins Avenue for $6.13 million. Ceni’s company paid about $6 million for the unit when the Trump Group completed the 47-story, 76-unit tower in 2015. That means he made about $130,000 on the unit.

Roberta Ingletto of Concierge Realty Brokers represented Ceni, who she declined to name. Cervera Real Estate’s Karine Carvalho brought the buyer, a Portuguese investor. Carvalho could not immediately be reached for comment.

The four-bedroom, 4,849-square-foot unit sold for $1,264 per square foot. It hit the market in July for just under $7 million, and was last listed for $6.7 million, according to Redfin.

In March, a New York hedge fund executive paid $17 million, or more than $2,100 a foot, for a full-floor penthouse at Mansions. The developer, led by Jules and Eddie Trump, is building the Estates at Acqualina, north of Mansions at Acqualina and Acqualina Resort & Spa.

Renderings of townhomes

National Realty Investment Advisors plans to build 14 townhomes on 2 acres in Boynton Beach, after securing a $16.5 million loan from a Florida commercial bridge lender.

The developer bought the land at 30 Briny Breezes Boulevard from Pelican Beach Group LLC, led by David Rinker, for $5.4 million, property records show.

National Realty Investment Advisors secured the $16.5 million loan from Trez Forman, which will cover the land and development of the townhomes. Trez Forman’s president and CEO Brett Forman arranged the transaction, according to a release.

The 14 townhomes will be three stories tall and include an elevator, rooftop deck, splash pool and two-car garage. They will have three bedrooms, four-and-a-half bathrooms in 3,400 square-feet.

NRIA focuses on ground-up construction and the renovation of townhomes, condominiums, and multifamily rental developments in the Northeast, according to its website.

Trez Forman has been an active lender in the South Florida market in recent months. Last month, the group closed on a $3.5 million acquisition loan for a property in Palm Beach that is set to be redeveloped into a new spec home, according to the release.

In April, the company completed a $17 million construction loan for the 30 Thirty North Ocean boutique condominium project in Fort Lauderdale Beach.

Trez Forman is a joint venture formed in 2016 by Boynton Beach-based Forman Capital and Vancouver-based Trez Capital Group. It had more than $200 million in completed deals in the first quarter of 2018. According to the release, the venture is on track to close more than $500 million in deals in 2018.

From left: Kanye West, rendering of new housing scheme designed for low-income residents. (Credit from left: TRD, Instagram via Jalil Peraza)

Forget about albums, Kanye West now drops renderings.

The rapper turned designer, entrepreneur and now developer revealed his newly-formed architecture studio’s first project, a prefabricated affordable housing scheme, via one of his collaborator’s Instagram account this week, according to the Architect’s Newspaper.

The public release of the renderings come weeks after West filmed an interview where he spoke about his plans to build a real estate empire. In a lengthy taped conversation between him and radio and television personality Charlamagne Tha God, West said, “I’m going to be one of the biggest real estate developers of all time. Like what Howard Hughes was to aircrafts and what Henry Ford was to cars.”

The interview concluded with both men walking along a grassy hilltop on a 300-acre property owned by West, which he claimed would be the location of his first “community.” West said he planned to build five properties on the land.

West’s had a long-standing interest in architecture — he appeared at Harvard’s Graduate School of Design in 2013 to address a class from on top a desk– and has collaborated with architects such as OMA, Family, John Pawson, and Alex Vervoodt as Architect’s Newspaper reported. And, more recently, West worked with Willo Perron to renovate a more than 14,000-square-foot office building from the 1970s into the headquarters of his company, Yeezy Studio, in Calabasas, California.

But it was only last month, via Twitter, that he announced his new venture to bring architectural design in-house: “We’re starting a Yeezy architecture arm called Yeezy home,” he tweeted. “We’re looking for architects and industrial designers who want to make the world better.”

This week, one of the Yeezy Home collaborators, Jalil Peraza, posted on Instagram renderings of the studio’s prefabricated low-income housing scheme. Here’s a glimpse at what a Yeezy home could look like:

Renderings of prefabricated housing scheme, designed by collaborators Petra Kustrin, Jalil Peraza, Kanye West, Nejc Skufca, according to Peraza’s caption. (Credit: Instagram via Jalil Peraza)

Renderings of prefabricated housing scheme, designed by collaborators Petra Kustrin, Jalil Peraza, Kanye West, Nejc Skufca, according to Peraza’s caption. (Credit: Instagram via Jalil Peraza)

[AN] — Erin Hudson

532 Lincoln Road

Nearly three years after signing a lease for a new gallery space at 532 Lincoln Road, global artist Romero Britto wants out, citing a raucous atmosphere, according to a lawsuit against his landlord, Denison Corporation, an entity controlled by the family of Bob Quittner.

But Britto’s efforts to break a 10-year lease with Denison hit a snag when Miami-Dade Circuit Court Judge Thomas Rebull rejected an emergency motion to place the gallery’s deposit rents into a court registry until the lawsuit is resolved. Bruce Weil, a partner with the firm Boies Schiller & Flexner representing Denison, said the underlying basis for Britto’s complaint is beyond the control of his client.

“We are pleased that the judge has quickly denied Romero Britto’s request to stop paying rent on his Lincoln Road art gallery,” Weil said. “Further, Britto is continuing to utilize the space and must pay his rent to the Denison Corporation while this case is being litigated.’’

Representatives for Britto could not immediately be reached for comment.

Britto’s gallery relocated to 532 Lincoln Road, a 1929-era building, from its longtime home just three blocks west on the popular retail street in 2015 because the building that housed the original gallery was sold.  Quittner’s family has owned the building Britto moved into since the 1940s. According to a copy of the lease attached to the lawsuit, Britto agreed to pay a base rent of $662,000 per year in monthly installments of $55,166.

Britto alleges that Denison has breached the agreement by failing to make sure the gallery has quiet and peaceful enjoyment of the property. “For example, [Denison] has permitted crowds of vagrants to congregate at the property, thereby intimidating [Britto’s] customers and disrupting business operations on a regular basis,” the complaint said. “[Denison] has also permitted street performers to create a nuisance at the property by blaring loud music and drawing away [Britto’s] customers.”

Britto alleges that Miami Beach Police routinely arrest homeless people in front of 532 Lincoln Road for various crimes, including assault, public drunkenness, burglary and disorderly conduct.

However, on June 10, Rebull ruled that Britto’s allegations were not sufficient to grant the gallery’s request that deposit rents be placed in the court registry. He also said the evidence was not substantial enough to discharge Britto from further obligations under the lease and return the gallery’s security deposits.

Mark Zandi and Donald Trump

From the New York website: Donald Trump’s economic plans may worsen the next downturn, according to Moody’s Analytics chief economist Mark Zandi.

“I think the economy is going to be more cyclical as a result” of Trump’s election, Zandi, a Democrat, said Thursday at a Urban Land Institute New York event.

Like several other commentators, Zandi expects that Trump’s plans to cut taxes and boost government spending this late in the economic cycle will drive up prices and in turn interest rates. “If you layer fiscal stimulus on top of a full-employment economy, what does that do? Well, it creates inflationary pressure,” he said.

The stimulus, combined with planned deregulation of bank lending, also “means we’re going to get more of an overheating economy more quickly,” Zandi said. And overheated economies tend to come down more forcefully than the well-tempered kind.

Commercial real estate markets could play a part in the increased volatility, he added.

Zandi’s remarks depart from more bullish recent statements by leading real estate investors. Last month, Blackstone’s real estate head Jonathan Gray said he expects Trump’s fiscal stimulus and possible boost to growth to benefit the real estate market.

Financial markets have largely cheered Trump’s victory as good for near-term economic growth in the U.S., and Zandi doesn’t necessarily disagree — he simply cautioned that there will be a price to pay later on.

In the medium term, Zandi doesn’t see a reason to change his expectation of 2 percent average annual GDP growth. Any boost to growth from lower corporate taxes or deregulation will likely be minor, he argued, and offset by a pinch to growth from possible new trade barriers. “Trump’s been saying ‘I’m going to get 4 percent GDP growth’ – that’s not going to happen,” Zandi said.

Zandi, one of the country’s best-known economists, had first claimed that Trump’s proposed economic policies would lead to a “lengthy recession” in a June report.

Hillary Clinton referred to the report in campaign speeches, falsely implying that Zandi is a Republican (although he did once advise John McCain). The Trump campaign, in turn, released a statement accusing Zandi of “causing the Great Recession,” because his employer, Moody’s, has a bond-rating business that did a poor job assessing risk in housing bonds prior to 2008.  The campaign’s statement omitted the fact that Zandi works for a different part of the company and is responsible for macroeconomic research and analysis, not bond ratings.

The Miami skyline (Credit: Gabriel Kaplan) and Fidel Castro (Credit: Sven Creutzmann)

The fate of no single country has been more inexorably tied to Miami than that of Cuba.

More than a million exiles fled the island nation to Miami throughout the decades-long rule of communist dictator Fidel Castro, spreading their influence in all facets of the city’s economy. They bought homes, built communities and helped grow Miami’s then-fledgling skyline.

Now, in the wake of Castro’s death, some of Miami real estate’s biggest Cuban-American names are reflecting on Cuba’s future, the impact on U.S.-Cuba relations and — naturally — how it all affects real estate.

Esther Percal

Esther Percal

Esther Percal was born in Cuba, and left for Miami Beach in 1961 when she was six years old. She told The Real Deal that she wished her father were alive today so that she could share the news that Castro died.

She doesn’t believe there will be any sudden changes. “The impact has already been happening slowly….” said Percal, senior vice president at EWM International Realty. “Little by little they have opened the gates” to joint venture businesses, though she believes Raul Castro “is still keeping the country under a tight grip, because at the end of the day, they have stolen a country, or taken possession of it, along with the people.”

“My hope would be that tomorrow I can go buy property,” Percal added. “I would go get myself a beautiful house or apartment somewhere and hang out in Cuba.” She said she would set up a beach chair and umbrella and a manual typewriter and sit there and call her friends.

“I wish it would change, but I don’t see it changing right away,” she said. “In order to keep their power they have to make some changes.”

Andres Asion

Andres Asion

“I think that many people in the United States are looking to tee up the ability of when they are going to business with Cuba,” Andres Asion, founder of Miami Real Estate Group, said. Asion, who’s close with Versailles and La Carreta owners the Valls family, was on Calle Ocho celebrating the news all last weekend.

He echoed statements that Castro’s death won’t lead to new business, especially not right away.

Asion said a change in government and economic/political openness would affect the second-home market for South Floridians. “I think it’s going to affect more the Bahamas than Miami,” he told TRD. “I would definitely go and buy a home in Cuba and spend my weekends there than buy a home in the Bahamas.”

Mayi de la Vega

Mayi de la Vega

Mayi de la Vega, founder and CEO of One Sotheby’s International Realty, was born in Cuba and left when she was very young. Though she doesn’t remember her homeland, she said she has read much about the Cuban Revolution. “I really feel pain for the country for the atrocities that have been committed there.”

De la Vega said she doesn’t foresee immediate changes in Cuba or any impact on the real estate market in the short term. “As we all know, Cuba has an oppressive political system and Fidel planned [to bring in] his brother Raul to ensure that they would continue with his philosophies,” de la Vega told TRD.

“It’s a happy time for all the Cuban refugees who fled their country to seek freedom,” she added. “And I think we are all celebrating his passing and hope for a free Cuba which is really what we need, a free Cuba.”

Related Group CEO Jorge Perez

Jorge Perez

Jorge Perez, the chairman and CEO of the Related Group, noted that Castro has not had power in recent years, with his brother Raul Castro and the military maintaining control of the country. “Raul seems to be more willing to promote an opening of relations between Cuba and the U.S., but it seems that every time a forward step is taken, more restrictions seem to be applied,” Perez said via email.

“The high hopes from Obama’s visit have not materialized in either increased freedoms or trade,” he said. “With the collapse of the Venezuelan economy, I would have thought that Cuba would have moved to open the economy to foreign investments, particularly from the U.S. This has not happened in any meaningful way.”

Sergio Pino

Sergio Pino

Though most would agree Castro’s death won’t have a real, immediate effect on the island’s governance, one thing is certain: Once Cuba’s doors open, there will be opportunities abound for home builders.

Sergio Pino and his company Century Homebuilders are eagerly awaiting that day, he told TRD.

A 2008 study from Florida International University that Pino co-sponsored along with Lennar Homes found Cuba has a need for more than 1 million housing units, Pino said, not including decaying properties that must be either renovated or replaced.

“The only thing that’s been built in Cuba for the last 40 or 50 years is expensive resorts for tourists,” he said. “There’s been nothing built for the Cuban people.”

Real estate investment in Cuba has so far been out of reach, as the U.S. embargo precludes stateside companies from owning real estate on the island. That’s left many Miami developers — from the Related Group to Pino’s Century Homebuilders — waiting on the sidelines for relations between the countries to thaw.

If Cuba does shift to a more capitalist system, the initial wave of residential development would likely be geared toward low-end homes and rental projects, Pino said, as many residents of the island wouldn’t yet have the wealth to buy a home.

But as investment dollars flow to Cuba and jobs are created, the market for middle and higher-end homes would follow. Second homes would also be big business, he said, as many Cuban-Americans would be interested in owning residences both in the U.S. and Cuba.

Pino admitted that, for now, his business plans for Cuba are a dream. But with commercial flights to the island resuming and the corresponding boon to tourism, he hopes a taste of capitalism will help oust Castro’s communist legacy. Much will hinge on President-elect Donald Trump’s foreign policies, and whether he will continue President Barack Obama’s attempts to open relations with the island.

Jose Juncadella

Jose Juncadella

Jose Juncadella, principal at Fairchild Partners, said the future of Cuba’s economy will depend a lot on Miami. The communist country’s need for infrastructure and equipment could be a boon for Miami.

Miami’s industrial market stands to benefit, the Cuban-born commercial and industrial broker said. “Cuba is a very, very poor country so it may have an influx of economic donations from the U.S.,” he told TRD. “For them to buy our products, I don’t think it’s going to happen.”

The Cuban Revolution had a huge impact on the psyche of wealthy Latin Americans and their subsequent investment in the U.S., Juncadella said. Wealthy investors in politically unstable Latin American countries use what happened to the Cuban people, his parents included, as a reason to invest elsewhere.

What happened in Cuba “fueled a tremendous amount of investment” in Miami and the United States. “They invest here. They feel safe here.”

Eloy Carmenate

Eloy Carmenate

Douglas Elliman’s heavy hitting broker Eloy Carmenate agreed that, practically, Castro’s death meant little for the real estate market here or in Cuba.

But the communist leader’s passing signified much more to Miami’s Cuban community than the death of a hated dictator. For many, Carmenate said, the news last weekend prompted a sign of relief. Castro’s nearly 50-year grip over the island was pockmarked with executions, poverty and the imprisonment of political dissidents, all of which pressured millions to flee Cuba over the decades.

Carmenate is himself an American-born son of two Cuban migrants who left the island in 1962, a year after Castro’s forces crushed a small army of exiles who sought to overthrow the regime in the now-notorious Bay of Pigs Invasion.

Other members of his family weren’t as lucky, he said. Some were imprisoned, others were killed.

While swarms of Cuban-Americans took to the streets last weekend in the wake of Castro’s death, banging their pots and pans in happiness, Carmenate visited his mother in her senior home in Hialeah to celebrate.

Even though Castro’s death means some wounds now have a chance to heal, Carmenate said he won’t visit Cuba until the island’s government undergoes serious reforms.  

“Until I know they’ve stopped violating Cubans’ fundamental rights, I refuse to put a penny in that regime’s pocket,” he told TRD.

Alicia Cervera

Alicia Cervera Lamadrid

Alicia Cervera Lamadrid is adamant about little changing in South Florida or Cuba as a result of Castro’s death, but remains hopeful for the Cuban people. Cervera, managing partner and principal of Cervera Real Estate, said she’s extremely interested in eventually owning a second home in Cuba.

But for now, she says little came to fruition with regards to human, civil and fiscal rights following the opening of ties between the U.S. and her home country earlier this year.

“The government is the same, the policies are the same and there is very little assurance that there’s going to be anything different,” she told TRD, later adding that “developers have had their eyes on Cuba for as long as I’ve been in the business. It’s not a question of desire.”

Miami’s skyline (Credit: Gabriel Kaplan) and the Colombian flag (Credit: creative commons user ferchos04 II)

Colombia was still the top-dog for interest in Miami real estate during September, according to a new report, again beating out Latin America’s runner-up Brazil.

The Miami Association of Realtors just released their monthly ranking of foreign countries that most use its property portal to search for Miami real estate.

In September, for the 10th month in a row, Colombians were shopping for more houses here than those from any other foreign country.

Canada, which has traditionally come in at a lower ranking, reached the No. 2 spot for interest in September, blazing past the once-dominant Brazil, which lost its top spot earlier this year.

According to the association, Colombians aren’t just window shoppers: they purchased the third-most amount of Miami real estate last year among foreign buyers, accounting for roughly 10 percent of all international transactions. Considering that the total tally of foreign home purchases reached $6.1 billion during 2015, Colombia’s contribution is anything but small potatoes.

Venezuelans came in first with 13 percent, though they ranked fourth for interest in the September ranking. Brazilians took the No. 2 spot with a 12 percent share of foreign purchases.

Though Latin American countries are still showing strong interest in real estate here, their purchasing power has weakened over the past year as the U.S. dollar strengthens. That loss of value, along with economic and political turmoil in their home countries, has led to many foreign buyers holding off on closing deals in Miami. — Sean Stewart-Muniz

Here’s the full ranking for September:

1. Colombia
2. Canada
3. Brazil
4. Venezuela
5. Argentina
6. India
7. Spain
8. Philippines
9. United Kingdom
10. France

Gov. Rick Scott and others at a press conference Friday morning

Three Zika zones down. One more to go. At a press conference Friday morning, Gov. Rick Scott announced a one-square mile area in Miami’s Little River district had been cleared of the birth-defect-causing virus.

“I am proud to announce that the Little River area has been cleared of any ongoing active transmission of the Zika virus,” Scott told reporters gathered at St. Mary Cathedral School at 7485 Northwest Second Avenue. “This great news comes as Miami is welcoming millions of visitors for Art Basel.”

Ten days ago, the governor declared a three-mile area in Miami Beach between 28th and 63rd streets Zika-free. In mid-September, state officials cleared the first-declared Zika zone, a 1.5 square mile area in Miami that included Wynwood, Midtown and the Design District.

Scott said the state’s health department believes that the only active transmissions are isolated to a 1.5-square-mile area in Miami Beach south of 28th Street to Eighth Street. “I hope that local officials will consider every available resource to ensure aggressive mosquito control measures are being taken to lift this final Zika zone,” Scott said.

Local and state leaders have attributed a dip in Art Basel attendance to visitors worried about contracting Zika. The Centers for Disease Control and Prevention had issued travel advisories warning women who could become pregnant or already are pregnant to avoid the Miami and Miami Beach areas were Zika infections had been reported. The Zika virus, which is transferred through mosquito bites or sexual activity, primarily affects pregnant women and is linked to microcephaly, a birth defect that stunts the development of a fetus’ brain.

William Talbert III, president and CEO of the Greater Miami Convention and Visitors Bureau, credited government agencies and private organizations for quickly responding to the Zika scare. “By working together, good things happen,” Talbert said. “This is a great Christmas gift to our community. The future is bright. This community has always handled crisis very, very well.”

However, Scott warned Miami-Dade County will have to contend with Zika again next year when mosquito season begins anew. “This has not passed,” he said. “We are going to work together. Hopefully the federal government will be a good partner and we will get a vaccine, which is the long term [solution].”

King Automotive building and possible renderings of Block Capital Group’s project

Block Capital Group, a joint venture between the Miculitzki family and Cabi Developers, paid $5.8 million for the King Automotive site in Wynwood with plans for a retail/restaurant redevelopment.

Records show Leon and April Wegman sold the properties at 260 Northwest 28th Street and 255 Northwest 27th Terrace to Wynwood Spaces 2 LLC. Wegman operated the repair shop for more than 50 years, and told the Miami New Times earlier this year he sold it for more than 100 times what he paid. Previous sales information is not available.

The 4,000-square-foot building sits on a nearly 10,000-square-foot lot. It was built in 1947.

Block Capital hired Arquitectonica and will present new plans to the city of Miami next week, Gaston Miculitzki told The Real Deal. He said future plans could include a market, restaurant/cafe and retail space with asking rents at about $65 per square foot, triple net, depending on the size of the spaces.

BM2 Realty and Central Commercial Realty represented Block Capital Group, and Jose Grullon of ISG represented the seller, Miculitzki said.

Block Capital is partnering with the Related Group on a mixed-use apartment project called Wynwood 26, also designed by Arquitectonica. This summer, Vitality Holding, managed by Martin Miculitzki, bought a nearly 18,000-square-foot building on Northwest 25th Street with plans to bring in new tenants. The Miculitzkis also own property near the Shops at Midtown Miami, in addition to other sites in Wynwood.

Unit 801 at the Continuum South Tower and Roberto Justus (Credit: Creative Commons)

Roberto Justus, who rose to fame during his years-long stint hosting Brazil’s version of “The Apprentice,” just sold his chic pad at South Beach’s Continuum complex for $15.3 million.

The deal was announced Thursday by Douglas Elliman’s Keith Marks and Sonia Toth, who had marketed the six-bedroom, seven-bathroom unit on behalf of Justus since November 2015. The massive modern-style condo boasts its own movie theater, game room and media room, along with ocean views and five — yes, five — parking spaces. A full furniture package was also thrown into the mix, according to the release.

With 7,236 square feet of living space, the sale breaks down to roughly $2,115 per foot. It’s a fairly significant drop from Justus’ original asking price of $24.5 million, which he sought early last year under South Pointe Drive Realty. Its most recent listed price was $19.8 million.

Sonia Toth and Keith Marks

Even so, the Elliman agents said in the announcement that it was the Continuum North Tower’s highest resale price this year by more than double. The buyer is an unnamed Argentinian.

The condo is actually composed of four separate units — 801, 806, 807 and 808 — that Justis assembled between 2011 and 2013 for a total of $5.1 million, according to county records. He transferred ownership of the combined units to a British Virgin Islands company, though a notice of commencement for renovations to the residence shows he was still the owner.

Besides hosting “O Aprendiz” for several years, Justus is also the founder and chairman of Newcomm Group, a Brazilian communications company.

The sale has yet to hit county property records, so the buyers’ identity is unknown. Kim Rodstein of Keller Williams Miami Beach brought the buyer.

Developed by Bruce Eichner, South Beach’s two-tower Continuum complex is no slouch when it comes to prices. Just last month, Argentinian media moguls Daniel Hadad and Viviana Zocco sold a double unit in the south tower for $10.5 million, or roughly $2,400 per square foot.

Albany Houses and a good FICO credit score

You probably know that your credit score is a crucial factor in your ability to qualify for a mortgage. You might also know that your score can vary depending on the type of scoring model your lender uses. If it’s an old, outdated version you might get a lower score. If it’s a newer, more advanced model, you’ve got a better shot at being scored more fairly.

Which brings up an end-of-the-year controversy: The two behemoths of the mortgage business — Fannie Mae and Freddie Mac — continue to use a credit scoring model that even its developer, FICO, says is not as “predictive” as its much newer models. Worse yet, Fannie and Freddie require that all lenders who want to submit loan applications to them must also use the same, outdated technology.

The net result, say critics from the lending industry, consumer groups, civil rights organizations and a bipartisan coalition of legislators in Congress, is that many applicants don’t get the credit scores they deserve. Many other consumers — the estimates range above 30 million — aren’t even scoreable using the models currently employed at Fannie and Freddie. Disproportionately, critics say, these are people who don’t make heavy use of the credit system or who are young and don’t have much information on file with the national credit bureaus. Large numbers of them might qualify for a mortgage, say scoring experts, if they were simply given a fair shot.

Acknowledging the problem, Fannie’s and Freddie’s government regulator, the Federal Housing Finance Agency, directed the companies two years ago to begin examining how to improve their scoring systems. For 2016, the FHFA told them to “conclude [their] assessment,” and “as appropriate, plan for implementation” of a better approach.

Since it’s now December and there have been no announcements about possible reforms, I thought it appropriate to ask this question: When are Fannie and Freddie rolling out their new and improved scoring models and what will they look like? The question is especially timely given the release in late November of a new study from the Urban Institute documenting how recent credit standards in the mortgage arena have impacted millions of would-be borrowers.

Researchers found that roughly 1.1 million home loan applicants were turned down last year because the standards used to evaluate them have been much more stringent than they were in the pre-housing boom era, when defaults were relatively low. Between 2009 and 2015, “lenders would have issued 6.3 million additional mortgages,” researchers calculated, “if lending standards had been more reasonable,” as they were back in 2001.

A major culprit: a big shift toward the credit score elite when it comes to mortgage approvals. From 2001 through 2015, the share of borrowers approved for mortgages with FICO scores above 700 rose to 66 percent from 51 percent, while those approved with scores below 660 declined to just 14 percent from 31 percent. Credit scores of approved applicants at Fannie and Freddie this year alone have averaged between 752 and 754, according to loan technology firm Ellie Mae. Meanwhile, the average score among all Americans is just 699, according to score developer FICO. (FICO scores range from 300 to 850, with low scores indicating higher risks of default.)

In response to my question, a spokesperson for the FHFA told me that Fannie and Freddie continue to discuss their plans for scoring reforms with “a broad range of stakeholders” about the “cost, operational implications, and potential impacts on access to credit.”

Who are some of these “stakeholders” and how do they see this issue? Among the most directly affected are the banks and mortgage companies who deal with the two companies daily. They strongly favor a move to more advanced scoring models as a way to broaden the base of potential home buyers and borrowers without exposing themselves or Fannie and Freddie to higher risks of default.

Michael Fratantoni, chief economist for the Mortgage Bankers Association, told me in an interview that “by sticking to old models we are disadvantaging” sizable numbers of consumers. Groups such as Fratantoni’s also want to see the introduction of advanced scoring models from companies other than FICO — VantageScore Solutions, LLC offers a rival system now in use in most other segments of lending — as an option permitted by Fannie and Freddie.

“We are on the record for more competition in this space,” Fratantoni said. “We shouldn’t be locked into just one set of scores.”

Nor should potentially millions of credit-worthy consumers.

Rendering of Cube Wynwyd. Inset: Tere Blanca

A loft-style office building is set to rise in between Panther Coffee and 250 Wynwood in the artsy neighborhood.

RedSky Capital plans to develop Cube Wynwyd, an 8-story office building at 222 Northwest 24th Street, Tere Blanca told The Real Deal. Her firm will handle leasing for the project, which will include nearly 80,000 square feet of office space and about 11,400 square feet of retail space.

Arquitectonica is designing the LEED-certified building, which will include a rooftop terrace and 30-foot breezeway on the ground floor. It’s slated to open in 2018.

RedSky bought the 14,625-square-foot development site from its neighbors, the developer of 250 Wynwood, in 2015 for $5.85 million. This summer, the New York-based developer and investor submitted plans for the project, then called 222 Wynwood. At the time, it was unclear whether the building would be residential or office.

“We have so much demand from companies that want to be located in Wynwood but aren’t able to find the right office space,” Blanca, president of Blanca Commercial Real Estate, told TRD. She said she has a list of tenants, local and national, on a waiting list for office space in Wynwood.

Asking rents will range from about $38 to $42 per square foot triple net for spaces that go up to a full 11,360-square-foot floor. Blanca is handling leasing along with Danet Linares and Flavia Eternod from her firm.

Amenities will include valet service, Wi-Fi in the common spaces, a second generator for tenants, and restaurant and retail tenants on the ground floor.

RedSky, led by Ben Bernstein, paid about $31 million, or $565 per square foot, for a 1.25-acre site at 2700 Northwest Second Avenue earlier this year. That’s significantly higher than the $400 per square foot RedSky spent on the office building site.

Performance art, cocktails and an appearance by basketball player Chris Bosh were all part of Mast Capital’s 3900 Alton preview party on the rooftop of 605 Lincoln Road.

The event, held on Wednesday during Miami Art Week, featured works by artist Laura Kimpton during a preview hosted by New York-based HG Contemporary gallery founder Philippe Hoerle-Guggenheim. The event space was leased by New York-based hospitality firm Impulsive Group in September.

3900 Alton is an eight-story, 78-unit luxury condo project designed by Spanish architect Ricardo Bofill. Mast Capital launched sales for the building earlier this year with units starting at $790,000. The units, which will range from 927 square feet to 2,182 square feet. Fortune is handling sales. – Katherine Kallergis and Sean Stewart-Muniz

(Click to enlarge)

From the New York December issue: Donald Trump’s upset victory over Hillary Clinton has taken the country — and the New York real estate industry — on a rollercoaster ride of a lifetime in the last few weeks.

And few know what his presidency will really look like once he takes the oath of office next month.

But one thing is certain: The next four years will shape Donald Trump’s legacy more than any condo tower, hotel, golf course or casino he’s ever stamped his name on. Indeed, the bombastic real estate tycoon-turned-U.S. president-elect has vowed to “drain the swamp” in Washington, and the intrigue about how it will all play — for better and for worse —is palpable. [more]

Renderings of 888 Brickell

A company affiliated with Venezuela’s Mezerhane family has filed for city approvals to build a 38-story office tower on Brickell Avenue. If built, the tower would be one of the first projects almost entirely composed of offices to open in Brickell during this cycle.

The application, filed with Miami’s Urban Development Review Board, calls for a total redevelopment of the mid-rise office building at 888 Brickell Avenue, which is seven stories and houses only 53,189 square feet.

In its place, a modern 472-foot tower designed by Arquitectonica would be erected, promising to bring roughly 305,000 square feet of offices to the financial district. The building would also house 264 parking spaces, as well as 3,510 square feet of retail and restaurant space if approved.

The Mezerhane family, acting through a company called Alphatur N.V., has owned 888 Brickell Avenue since 1984 when it paid $6.3 million for the building, county records show. The property measures just over half an acre.

According to published reports, the Mezerhane family is known for its contentious relationship with its home country of Venezuala, where Nelson Mezerhane built a fortune from real estate dealings and other business ventures like founding Banco Federal during the 20th century.

Mezerhane sought asylum in the U.S. during Hugo Chavez’s reign over the country, and later filed a $1 billion lawsuit in Florida court against the Venezuelan government claiming it seized his property for dissenting against the regime, according to reports. Alphatur N.V., the owner of 888 Brickell, is controlled by Mashud Mezerhane.

The application for 888 Brickell is set to go before Miami’s Urban Development Review Board on Thursday. Mezerhane’s development plans come at a time when new office space is in high demand.

Large, mixed-use projects like Brickell City Centre and MiamiCentral have both experienced success pre-leasing their significant office components, and market watchers like Avison Young’s Donna Abood have said the urban core is starved from a lack of office supply.