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Cohen’s DCOTA is delinquent on second loan: Trepp report

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Charles Cohen and the Design Center of the Americas

Cohen Brothers Realty Corp. faces a second delinquency on loans backing the Design Center of Americas, a financially troubled interior design showroom in Dania Beach.

A $86.5 million loan was marked delinquent in February, just three months after the borrower said it could not meet the payments on a separate $86.5 million loan secured by the property, according to Trepp, a financial data provider.

The newly delinquent loan is now more than 30 days past due, Trepp reported. It ranked it as one of the five largest CMBS loans to turn newly delinquent in 2019.

The Design Center of Americas, known as DCOTA, is a 782,986-square-foot property at 1855 Griffin Road, owned by New York-based Cohen Brothers Realty Corp.

The property was built in 1985 as an interior design showroom, but has struggled to retain tenants amid changing retail habits. It has converted much of the design center space to office property, leasing 100,000 square feet for the headquarters of online pet retailer Chewy.com.

Still, the property is currently only 64 percent occupied, according to Trepp.

The property has had trouble with its debt since 2012, when a note went into special servicing and terms of the loan had to be modified. The loan’s interest rate was lowered and its maturity date was extended for a two-year term that ended in August 2017. It was then later extended until March 2019.

Cohen Brothers Realty Corp. is headed by Charles Cohen. It holds over 12 million square feet of commercial property nationwide, with notable New York office properties including 3 Park Avenue, Grand Central Plaza and International Plaza.


Russian mogul wants to split Hibiscus Island lot, build two spec homes

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Ilya Karpov and 320 S. Hibiscus Drive (Credit: LinkedIn)

Ilya Karpov, a former director and stakeholder in a defunct Russian agricultural firm, is the buyer who paid $11.6 million last year for the largest lot on Miami Beach’s Hibiscus Island.

Karpov wants to subdivide the 31,500-square-foot property at 320 South Hibiscus Drive and build a pair of two-story spec houses on the site. He has asked the Miami Beach Planning Board for a variance to build the homes, which are slightly taller and denser than what the zoning code allows. His hearing is set for March 26.

Mount Sinai Medical Center sold the property in September to an entity controlled by broker Daniel Tzinker. But an affidavit filed with the project’s planning application names Karpov as the owner. When reached by phone, Karpov said that Tzinker is representing a partner, whom Karpov declined to name.

“It’s two partners, doing two houses, and we’ll sell them both,” Karpov said. He is handling development while he and his partner have split the equity. The two do not have a construction loan.

Karpov was general director at the OGO Group, a now-dissolved conglomerate that was once one of Russia’s largest grain-producers, according to a World Bank report from 2006. Karpov, 47, said that he started working there as a broker at the age of 21 and climbed the ranks, eventually acquiring shares in the company. He sold his stake in the firm 10 years ago and moved to Miami Beach five years later.

He expects to deliver the houses in two years and said that $2,500 per foot is a good rate for the area. At a combined 12,700 square feet, that would put a price tag of nearly $32 million on the two houses — a large return, even discounting the fees for luxury architect Ralph Choeff, who is designing the project.

“The price for this lot was good,” he said. “We started negotiating with Mount Sinai probably 12 months ago. The first time I was there was February [2018], even before they came to the market. Natalia [Gryczynska] and Ale [Diaz-Bazan] — they found it,” he said, referring to his Douglas Elliman brokers.

“Hibiscus has perfect views, south exposures,” Karpov said. “I think that’s what people want.”

Karpov has been involved in real estate in South Florida since at least 2007, when he bought a house at 19 Palm Avenue on Palm Island in Miami Beach for $4.5 million at the top of the market. He sold it seven years later for $6.5 million.

He said he enjoys the work and the area. “I was married here,” he added.

Triarch buys Plantation Professional Park from Kislak

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Thomas Bartelmo, President and CEO of Kislak Organization

Triarch Capital Group paid the Kislak Organization $11.3 million for Plantation Professional Park, marking a sharp increase from the property’s last sale price three years ago.

Miami Lakes-based Kislak sold the 63,319-square-foot-property at 6710–6834 West Sunrise Boulevard for $178 per square foot, records show.

Kislak bought the six-building office park in 2016 for $5.1 million, according to records. The office park was built between 1987 and 1989 on a 7.8-acre site, according to a release. The Plantation Professional Park is currently about 96 percent occupied, with tenants including Dickens Sanomi Academy and American Access Care.

Cushman & Wakefield’s Greg Miller, Scott O’Donnell, Dominic Montazemi and Miguel Alcivar represented the Kislak Organization in the deal.

Aventura-based Triarch Capital Group was founded in 1996 by Daniel Halberstein, Mario Grosfeld, and Jorge Linkewer. It owns a number of properties in Aventura, including Artefacto Plaza, One Turnberry Place, and the Biscayne Harbour Shopping Center.

The Kislak Organization has acquired and managed more than 7,000 multifamily units, and brokered more than 1,550 commercial real estate transactions. Its founder Jay Kislak died in October at age 96. Kislak was a well known businessman and philanthropist in Miami, who started Kislak National Bank before eventually selling it to Banco Popular in 2005.

Investors launch leasing for Allapattah micro offices

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804 Northwest 21st Terrace

A Miami investment group is beginning leasing of a micro office development in Allapattah as the area heats up with new projects.

Central Commercial Real Estate launched leasing at the Allapattah Building, a renovated 14,520-square-foot building at 804 Northwest 21st Terrace in Miami, just west of Wynwood. Monthly rents, which are double net, start from $621 and go up to $1,190, according to a property flier. Units range from 274 square feet to 525 square feet.

Ari Dispenza, Diamela Burguera and Eric Gonzalez of Central Commercial Real Estate are handling leasing.

The Turris Group, which owns more than 4.6 acres of land and over 100,000 square feet of building space in Allapattah, owns the building. Property records show TTH23 804 AP LLC, managed by Luis Percovich, Ivan X. Gallegos and Alejandro Torres, paid $2 million for the building in October 2017. It was built in 1925 on a 14,543-square-foot lot.

The just-completed Allapattah Building includes a conference room, common area lounges and courtyards. The 30 offices each include a kitchenette and full bathroom.

Allapattah has attracted investment from Robert Wennett, Jorge Pérez, Lissette Calderon, the Rubell family, Michael Simkins, Lyle Stern, Moishe Mana and others. Wennett, who developed 1111 Lincoln Road, hired architect Bjarke Ingels to design plans for a residential, office, retail and hotel project between Northwest 21st and 22nd streets, and between Northwest 13th and 12th avenues.

In November, Pérez paid $2.7 million for the warehouse at 2270 Northwest 23rd Street where he’s planning a mixed-use complex focused around art.

Bankruptcy judge approves sale of Palm House Hotel for $40M

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Palm House Hotel

A bankruptcy judge finally approved the sale of the troubled Palm House Hotel to a U.S. affiliate of London + Regional Properties for $39.6 million.

London + Regional Properties, a U.K.-based luxury hotel and resort company, beat Related Cos. to buy the former failed EB-5 project in Palm Beach, according to the Palm Beach Daily News.

The judge declined to accept a last minute bid by Wellington developer Glenn Straub whose lawyer said the developer was prepared to pay $40.6 million for the property, according to the Daily News. But the judge ruled it down, saying it came too late in the process. The bankruptcy judge also previously ruled down a “credit bid” by Straub, which would allow him to make an offer without putting down any cash for the condo-hotel project at 160 Royal Palm Way, according to the Daily News.

London + Regional Properties is a private real estate investment firm with almost $12 billion in assets. The company owns the 453-room London Hilton hotel on Park Lane in London’s Mayfair neighborhood.

Some of the proceeds of the sale would go toward paying EB-5 investors who invested $500,000 in the project in order to get a green card. The investors have not yet been paid back.

Federal officials have charged the former developer of the Palm House, Robert Matthews, with multiple counts of wire and bank fraud and money laundering over the development.

[Palm Beach Daily News] — Keith Larsen

A new class action lawsuit could upend the real estate business as we know it

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From left: NAR president John Smaby, Realogy CEO Ryan Schneider, Keller Williams CEO Gary Keller, HomeServices of America CEO Gino Blefari, and Re/Max CEO Adam Contos (Credit: Getty Images, Wikpedia, iStock, and Hitchcock + Associates)

It takes aim at some of the central tenets of the U.S. real estate business: Multiple Listing Services and buyer’s broker’s commissions.

A new class action lawsuit alleges that the National Association of Realtors, along with the “Big Four” — Realogy, HomeServices of America, RE/MAX and Keller Williams — violated federal antitrust law by conspiring to require home sellers to pay buyer’s broker’s commissions at inflated rates. The suit was first reported by Inman.

The complaint, filed March 6, takes aims at NAR rules that require all brokers to offer buyer broker compensation when listing a property on a MLS, saying this has driven up costs to the seller and stifled competition.

“Because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission,” the complaint reads, “Absent this rule, buyer brokers would be paid by their clients and would compete to be retained by offering a lower commission.”

Filed on behalf of Christopher Moehrl, a homeseller from Minnesota, the lawsuit also says it will represent any home sellers who sold property and paid a broker commission in the last four years in specific geographic areas covered by different regional MLSs.

This includes areas in Texas, Maryland, North Carolina, Ohio, Colorado, Michigan, Florida, Nevada, Wisconsin, Minnesota, Pennsylvania, Arizona, Virginia, Utah and the District of Columbia.

If other homesellers joined the class action, the defendants could find themselves potentially liable for millions of dollars.

NAR responded by calling the lawsuit “baseless.”

“The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the homebuying and selling process,” Mantill Williams, a spokesperson for NAR, told Inman. “NAR looks forward to obtaining a similar precedent regarding this filing.”

On its website, NAR argues that MLSs and their accompanying rules encourage both competition and cooperation among brokers to the benefit of the consumer.

“The real estate market is competitive, and the business is unique in that competitors must also cooperate with each other to ensure a successful transaction. MLS systems facilitate that cooperation,” NAR’s website states. “MLSs are a powerful force for competition. They level the playing field so that the smallest brokerage in town can compete with the biggest multi-state firm.”

[Inman] – Decca Muldowney

Eva Longoria’s media mogul husband selling Miami Beach condo

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Eva Longoria and Jose Baston with Baston’s Il Villaggio condo (Credit: Getty Images)

UPDATED, March 12, 2:52 p.m.: Jose Bastón, husband to “Desperate Housewives” actress Eva Longoria, is selling his Miami Beach condo to a Quebec developer for $8.75 million, The Real Deal has learned.

Bastón, former president and board member of Mexico City-based Televisa, the largest media company in Latin America, is under contract to sell his combined unit at Il Villaggio, at 1455 Ocean Drive, to Zave and Celia Aberman, according to a spokesperson for One Sotheby’s International Realty.

Barbera Estela of One Sotheby’s represented both sides of the deal. The condo hit the market last year for $9.9 million.

Unit 1104 and 1105 includes four bedrooms, four bathrooms, four oceanfront terraces and 4,425 square feet of interior space. It also features a private elevator, a marble master bath, smart home system and Miele kitchen appliances.

Longoria, who is also a producer, restaurateur and activist, married the Mexican businessman in 2016. He recently stepped down from Televisa’s board of directors, citing personal reasons.

Property records show Bastón’s Oceanview 1105 LLC and Emfer Inc. paid a combined $7.85 million for the two units in 2012.

Brazilian billionaire developer Jose Isaac Peres of Multiplan Real Estate Asset Management completed Il Villaggio in 1998. He’s now working on two condo developments in Miami Beach.

Correction: An earlier version of this story incorrectly stated that the deal closed, according to a spokesperson. It’s under contract. 

3-D-printed homes are coming to the US

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Icon’s Chicon House in Austin, Texas (Credit: Icon Build)

3-D printing is going mainstream.

Construction-tech startup Icon says that its new 3-D printer, the Vulcan II, will be able to print a 2,000-square-foot family home in a matter of days, and reduce costs by about 30 percent.

“People will look back on this as something that was a game changer,” HUD secretary Ben Carson said on Thursday during a tour of Icon’s Austin factory.

Austin-based developer Cielo Property Group is purchasing the Vulcan II and plans to start production of affordable housing in the city this year, the Wall Street Journal reported. Icon is also partnering with startup New Story to build at least 50 homes in Latin America this year.

The 3,800-pound printer, operated by a tablet and needing just a few people to run and supervise it, works by pumping out concrete layer by layer, creating buildings with a distinctive, folded appearance. The nonconcrete elements of the homes will continue to be installed by traditional methods.

The technology faces a number of challenges to widespread adoption. Scaling and shipment of the heavy machinery will be difficult, and the printers will have to function outdoors in rain and wind, hot and cold.

The interior of the Chicon House in Austin, Texas (Credit: Icon Build)

Icon has had to overcome many technical challenges to get to this point. “We exploded so many pumps,” Icon CEO Jason Ballard said. “I’m talking about liquid concrete on every surface and every human in the room.”

Ballard founded the company two years ago and has raised $9 million in seed funding. This will be the company’s first effort to generate significant revenue, he said.

The construction industry faces serious problems due to worker shortages and rising material prices. Dozens of startups have invested hundreds of millions of dollars in technology to make construction more efficient – such a brick-laying robots – but so far none have made a real impact in what remains a conservative, inefficient industry. [WSJ] — Kevin Sun


Sedano’s Supermarkets CEO sells 86-acre home site in Florida City

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Homes under construction (Credit: iStock)

A company affiliated with the CEO of Sedano’s Supermarkets sold an 86-acre property slated for a home community in Florida City for $33.8 million.

Sedano’s CEO Agustin Herran

A company tied to Agustin Herran, the CEO of Sedano’s and a former board of director of Miami-based U.S. Century Bank, sold the site to Brickless Developer Group, which is managed by Nelson Delgado. The property at 1100 West Palm Drive in south Miami-Dade County sold for $392,000 per acre, records show.

Herran’s GREC HOMES IX LLC was planning to build a home community at the site called Keys Edge Development. The development was planned to have 389 single-family homes, 174 townhomes and 624 apartments, according to its website.

The buyer got $32.6 million in financing from the seller.

GREC HOMES IX bought the property for $17.1 million in 2005, records show.

Sedano’s is one of the largest Hispanic-owned grocery store chains in the U.S. It was founded by Rene Sedano in Hialeah in 1961 and now has more than 30 stores.

Homebuilders are increasingly moving farther south toward Homestead and Florida City as land becomes more scarce in South Florida. A lack of affordable priced homes have also pushed residents to the far suburbs.

In 2017, Lennar paid $10.75 million for about 77 acres in Homestead, just west of the Turnpike along Mowry Drive and Southwest 152nd Avenue. In June, the homebuilder also paid $9.5 million for about 32 acres at 11406 Southwest 248th Street.

Tish James subpoenas Deutsche Bank, opens investigation into Trump projects

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From left: New York Attorney General Letitia James, President Donald Trump, and Deutsche Bank CEO Christian Sewing (Credit: Getty Images)

The fallout from Michael Cohen’s congressional hearing continues.

Two weeks after President Trump’s former “fixer” told lawmakers that his boss inflated the value of his assets to secure loans, the New York attorney general’s office issued subpoenas on Monday to two lenders, Deutsche Bank and Investors Bank, the New York Times reported.

Last week, the New York State Department of Financial Services issued a subpoena to insurance broker Aon, also on the basis of Cohen’s testimony.

The subpoena to Deutsche Bank seeks loan applications, mortgages, lines of credit and other transactions connected to Trump properties in Miami, Chicago, and Washington, D.C., as well his failed attempt to buy the Buffalo Bills in 2014, according to the Times.

The subpoena to New Jersey-based Investors Bank is for documents related to a project it had backed, Trump Park Avenue.

This new inquiry, a civil investigation whose scope and focus is as yet unclear, opens up a additional scrutiny of Deutsche Bank, one of the few large lenders willing to do business with Trump in recent years. The bank is already the subject of two congressional investigations, and previously claimed it could not legally hand over documents related to its loans.

Soon after she was elected in November, attorney general Letitia James promised to investigate Trump’s real estate dealings, as well government subsidies, Russian collusion and possible violations of the emoluments clause. “We will use every area of the law to investigate President Trump and his business transactions and that of his family as well,” James told NBC in December. [NYT] — Kevin Sun

Former WeWork exec teams up with Chicago developer to launch amenity and property management platform

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Alex Samoylovich (red) and Jacob Rynar (blue) with a Flats Chicago gym (Credit: Facebook and LinkedIn)

In developing 8,000 apartment units over 15-plus years, Alex Samoylovich learned quite a bit about the demands of renters and the inefficiencies in multifamily property management.

Now the founder of Cedar Street Companies and Flats Chicago is using that knowledge to launch Livly, a property management system that streamlines the apps and technology that renters and landlords use.

Launching Tuesday, Livly is an operating system and smart-phone app that seeks to be a central platform for paying rent, logging maintenance requests, booking amenities and fielding tenant inquiries, among other services.

The product will help landlords reduce property management expenses while unlocking “ancillary” revenue through the more efficient use of building space, Samoylovich said. It also seeks to create a more seamless tenant experience, he said.

The increasing demand for rental units and the corresponding rash of new deliveries have made the multifamily market hyper competitive. A system tying together a building’s amenities and services can be a huge leg up for landlords, Samoylovich said.

“In apartments, people are trying to keep their tenants,” he said. “In the future, it won’t be about the amenity races. It will be about the experiences and services that will help keep and retain tenants. By retaining and increasing your retention slightly, that increases the value of your property significantly.”

Livly already has some big backers and early adopters. The company is backed by $10 million in seed funding from Pritzker Group Venture Capital, Navitas Capital and JLL Spark, the $100 million fund launched last year by JLL to back real estate tech ventures. It is being rolled out at properties controlled by industry giants the Related Companies, Golub & Company and CA Ventures, according to the company.

Related Chief Operating Officer Matt Allen called Livly a “game changer,” and said it will be rolled out at Related’s Miami properties to start.

“Not only does Livly offer additional revenue streams to property managers, such as affiliate revenue from renter’s insurance and credit card transactions, the company also helps properties gain new revenue from rethinking and transforming shared and dead space in their buildings into monetized spaces,” Allen said in a statement.

In the multifamily market, developers have increasingly turned to amenities and services to attract tenants. Often those services include digital components like smart phone apps. As a result, some renters are juggling multiple apps and accounts for things like package delivery, building access and maintenance requests, Samoylovich said.

Samoylovich sought to streamline the digital experience for renters, and in early 2018 he hired Jacob Rynar to help him out. Rynar previously worked for Microsoft’s big data and cloud solutions efforts, and later worked for WeWork, which has its own tenant-facing app.

“Renters were typically working with a slew of third parties and they were having a really disjointed experience,” Rynar said. “That experience was not great. We really want residents to be able to utilize this app in a seamless way … to enjoy their time in the building.”

The technology also aims to help pad landlords’ bottom lines. Data collected by the app will tell landlords which spaces are being used, and it will help in the “activation of dead spaces,” or repurposing underutilized space to make it more valuable, Samoylovich said. The data collected will be owned by the landlords, he said.

“You’ll have live information to understand what are the things that are working within a building based on utilization and engagement,” he said.

Proptech is a growing field within the technology and real estate industry, with millions being poured into new products. Still, Samoylovich and Rynar said their product is unique. Given the demand for rental units, and the incorporation of high-tech amenities and services, the business partners believe they have a unicorn on their hands.

“It’s not just the growth of the popularity of multifamily, but more of what you’re seeing is the merging of the physical and digital world,” Samoylovich said. “It’s kind of the perfect storm of opportunity.”

Miami and Los Angeles developers indicted in major college admissions fraud scheme

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From left: Dragon Global CEO Robert Zangrillo, Crown Realty CEO Robert Flaxman, and WP Investments president Bruce Isackson (Credit: Dreagon Global, Getty Images, WP Investments, and iStock)

Three real estate developers and investors were among the 33 parents indicted in the Justice department’s largest-ever college admissions scheme, which federal prosecutors revealed Tuesday.

Miami developer Robert Zangrillo and Los Angeles developers Bruce Isackson of WP Investments and Robert Flaxman of Crown Realty were charged in the scandal, which involved parents allegedly paying bribes to secure their children acceptance into elite schools including Stanford, Georgetown and Yale.

Actresses Felicity Huffman and Lori Loughlin and William E. McGlashan Jr., a partner at the private equity firm TPG, were also among the wealthy parents who were charged by the Department of Justice.

An FBI investigation found that the parents conspired to bribe SAT and ACT exam administrators to allow students to cheat on their college entrance exams, as well as paid off varsity coaches and administrators who could facilitate their kids getting accepted to those universities. A number of parents used charitable organizations to conceal the payments, according to the Justice Department.

The owner of a college admissions company, William Rick Singer, was charged with money laundering, obstruction of justice, racketeering and conspiracy to defraud the U.S. The parents paid Singer about $25 million between 2011 and February of this year, according to the indictment. He’s expected to plead guilty.

The case is the Department of Justice’s largest-ever prosecution of its kind, involving 200 agents, according to the New York Times. Fifty people in six states were charged.

Zangrillo, a main investor in the Magic City Innovation District project in Miami’s Little Haiti neighborhood, was charged with conspiracy to commit mail fraud and honest services mail fraud. According to the complaint, filed in the Southern District of Florida, Zangrillo paid off athletic department officials at the University of Southern California to designate his daughter as an athletic recruit, having someone take classes on her behalf. Zangrillo did not immediately respond to a request for comment.

He is said to have made two donations: $200,000 to the Key Worldwide Foundation and $50,000 to Women’s Athletics at USC. Though USC rejected his daughter’s application in 2017, the complaint states she was accepted after her second application, touting her rowing experience that was absent from the first application, was placed on a VIP list of transfers.

Zangrillo is founder and CEO of Dragon Global, a venture capital and real estate investment firm. In Miami, he’s co-developing the controversial $1 billion Magic City project along with Tony Cho and Plaza Equity Partners. The 17-acre development calls for a 30,000-square-foot Magic City Studios and a 15,000-square-foot innovation center with startups, co-working space and other collaborations; an office tower; retail space; workforce housing and possibly a hotel. It’s planned for land between Northeast 60th and 64th streets.

In the Los Angeles area, Isackson and his wife, Davina, were both indicted in the scheme for securing their daughter’s admission, also to USC, as a recruited athlete.

In an email in July 2016, Bruce Isackson wrote: “Thanks for the follow up call regarding the attached Key Worldwide Foundation invoice. Per our discussion can you please send me an email confirming that if [our daughter] is not admitted to UCLA as a freshman for the Fall 2016 class that The Key Worldwide Foundation will refund our $250,000.00 gift. Again, both Davina and I are greatly appreciative of all your efforts on [our daughter]’s behalf!”

Isackson is president of WP Investments, an industrial and office firm in Woodside, California. He could not immediately be reached for comment.

Beverly Hills developer Flaxman, president and CEO of Crown Realty, paid to get his son into the University of San Diego, according to the complaint. Flaxman’s company wired two payments of $125,000 each to the Key Worldwide Foundation in May and June of 2016.

The version of his son’s application that was ultimately accepted by USD in March 2016 said his son volunteered work managing an elite youth athletic team, according to the suit. Previous versions did not refer to the sport, according to the complaint. Flaxman is also said to have paid to get his daughter a higher ACT score.

Developer battles with troubled partners on North Bay Village condo project: lawsuit

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Javier Lluch and 7940 West Drive in North Bay Village (Credit: Zillow)

Miami developer Javier Lluch, known chiefly for his planned Glasshaus boutique condominium development in Coconut Grove, is continuing to fight a five-year battle against investment partners he recruited for a new project that stalled in North Bay Village.

Lluch filed his second lawsuit in Miami-Dade Circuit Court last month over the planned luxury condo project, known only as 7940 West Drive for its address in North Bay Village.

Lluch, president of Element Development, alleges that his partners Ernesto Weisson, Roberto Cortes and Fernando Haberer defrauded him, lied about their companies’ financial condition and went behind his back to purchase the North Bay Village property without compensating him for development services.

Attempts to reach the defendants or their attorneys were not successful.

The same defendants are facing a bigger, ongoing lawsuit in Miami-Dade Circuit Court alleging they were responsible for a $40 million Ponzi scheme that defrauded several family members of the late Alejandro Romay — known in Argentina as the czar of television. The bigger suit has only just reached a point where several defendants have filed initial motions to dismiss it.

Haberer worked as a financial adviser on the Romay family’s investments before getting involved in the North Bay Village project, according to court documents.

Cortes and Weisson were previously hit with a cease and desist order in 2016 by the U.S. Securities and Exchange Commission in connection with their companies. According to federal court records, Cortes and Weisson settled with the SEC on charges they violated U.S. law by failing to make adequate disclosures to investors regarding the financial condition of one of their companies, Biscayne Capital International LLC. BCI was hit by financial fallout during the Great Recession and Weisson and Cortes have pleaded in court cases that they were victims of the recession. But the Romay family has accused them of mounting a Ponzi scheme to cover up their financial woes.

In the Romay lawsuit, the defendants have argued that they were only officers or investors in BCI and were not liable for the actions or financial condition of the company. According to a report from Tribune 242 news in the Bahamas, BCI has since been liquidated on order of the Securities Commission of the Bahamas.

The North Bay Village property is still undeveloped, according to property records. 7940 West Drive LLC, led by Gustavo Trujillo, paid $4 million for the property in 2015, records show. Lluch was the operating manager of the entity when it was formed in 2014.

Other litigation is pending against the project. Ecuadorian citizen Juan Javier Cordovez has also sued Weisson and Cortes, alleging he has the right to foreclose on the property due to a loan he made on the project of $567,000. In that case, Cortes recently filed a notice that he is defending himself pro se — without an attorney.

In 2015, a judge ordered the companies associated with the defendants to pay Lluch $3.2 million in damages for similar issues.

Cooling West Coast housing markets tilt field back toward buyers

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Houses in Seattle (Credit: iStock)

Buyers looking for homes in cities like Seattle, San Jose and Oakland this spring will have more negotiating power than they did during previous years, thanks to surging inventory tugging prices down across the western United States.

Home sales hit 11-year lows in Southern California and in the San Francisco Bay area in January, and prices in the Denver and Portland areas fell this year for the first time since 2012, according to Bloomberg.

And in King’s County around Seattle, home prices fell by about 3 percent per square foot, the first year-over-year decline since 2012, Redfin data show. And between January 2018 and 2019, Seattle-area sellers cut the prices on about one-sixth of homes, twice the rate of the prior 12-month period, according to Trulia.

Seattle-area home inventory in February more than doubled year over year, forcing sellers to accommodate a buyer pool suddenly replete with options, per Redfin data. During the same period, inventory spiked 82 percent in San Jose, 41 percent in Oakland and 37 percent in Portland and Denver.

Across the country last year, home inventory jumped by 6.4 percent and sales dropped by 11 percent as the national market continues to cool, according to a Re/Max report last month.

[Bloomberg]Alex Nitkin

West Palm Beach approves luxury condo project

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Rendering of Forte in West Palm Beach 

Two Roads Development and Alpha Blue Ventures scored approval for a luxury condo project in West Palm Beach.

The West Palm Beach City Commission OK’d Forté, a 42-unit waterfront condo building planned for 1309 South Flagler Drive, on Monday night, according to a release. Construction is expected to begin later this year and be completed within two years of groundbreaking.

The 24-story tower, designed by Bernardo Fort-Brescia of Arquitectonica, will feature a sculpture garden and art walk, library, wine storage, grand lobby and great room, pool, spas, two dedicated house cars for residents’ use, a theater and a fitness center.

Units will average 2,400 square feet and there will be two units on each floor. The building will also have a two-story penthouse with a rooftop infinity pool. Sales are expected to launch in July, with prices ranging from $3.8 million to $7.5 million. 

Rendering of Forte in West Palm BeachIn Miami, Two Roads Development built Biscayne Beach and is developing Elysee Miami, both luxury condo towers in the city’s Edgewater neighborhood. The West Palm Beach-based firm closed on a $138 million construction loan from JPMorgan Chase for Elysee in August.

Alpha Blue Ventures, a joint venture between founder Marius Fortelni and managing partner Scott Maslin, specializes in “unique high-quality real estate projects” in New York and southeast Florida.

Few new condo towers have been built recently in West Palm Beach. Developer Al Adelson is nearly done with construction of the 25-story condo building at 1112 South Flagler Drive.


Ben Carson says HUD will give preference to developers who build affordable housing in Opportunity Zones

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HUD Secretary Ben Carson and a map of Opportunity Zones (Credit: Getty Images)

Housing and Urban Development Secretary Ben Carson said the agency will give preference to developers and investors who build affordable housing in federal Opportunity Zones when it comes to certain grants.

In an interview with The Real Deal on Tuesday, Carson said HUD will give added weight to proposed affordable developments in the Opportunity Zones, looking to make that construction a more competitive option for builders. But he acknowledged the agency could not mandate the construction of affordable housing in the 8,700 designated Opportunity Zones nationwide.

“If you are doing a project within an Opportunity Zone and you are applying for one of our grants, you get some preference,” Carson said during the interview. “So that, along with the tax advantages, will drive people to look at those (areas). We are also offering very specific technical assistance to help them coordinate their efforts.”

The preference point system marks one of the first Opportunity Zones initiatives by HUD, and could have a significant impact toward pushing developers to build affordable housing in Opportunity Zones.

The Opportunity Zones program, passed as part of President Trump’s 2017 tax overhaul, gives investors and developers the ability to forgo and defer paying some capital gains taxes if they invest in any of the designated zones. Investors have set up massive funds but most are waiting to deploy capital until more regulations are released from the U.S. Treasury Department and the IRS. The latest round of guidance has been expected in the following weeks, and Carson confirmed that.

The Opportunity Zones program, which has been popular with developers and investors, does not require affordable housing construction. That reality has created skepticism that the program will just benefit the wealthy developers for projects that would have been built anyway.

Until recently, HUD had largely been quiet on how the agency would fold Opportunity Zones into its mission.

Last month, Carson announced the Federal Housing Administration’s low-income housing tax credit financing pilot program was expanded to incorporate Opportunity Zones projects.

Carson told TRD that his agency is also working with other federal agencies and programs to coordinate efforts, so that developers can combine the Opportunity Zone tax benefits with other tax credits, such as the New Market Tax Credit.

“All of these things can really be utilized in conjunction with those” Opportunity Zones investments, Carson said.

Carson also reaffirmed HUD’s controversial initiative, announced in August, to encourage cities to change their zoning regulations in order to build affordable housing.

“We are making it known to people that we are going to look more favorably upon their applications if they are willing to work on removing the barriers. We are talking zoning restrictions,” Carson said.

The former Republican presidential candidate, who last month was quoted saying he would likely return to the private sector after completing his four-year term as secretary, now said he is open to staying on for a second four-year term after the 2020 presidential election.

“My preference would be to go back to the private sector, that would be my preference now,” he said. “But there are some very important things that need to be done.”

Go big and go home: Inside LA’s mansion expansion quest

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An illustration of trucks hauling dirt (Credit: iStock)

Fred Rosen still remembers the chaos that enveloped Bel Air when the mansion-expansion trend went into overdrive.

About five years ago, dozens of trucks began snaking through the neighborhood’s narrow roads ferrying dirt and cement, as residents and spec developers carved out hillsides for massive new homes, many exceeding 35,000 square feet.

Developer Nile Niami

“You would wake up in the morning and see a convoy of maybe 50 hauling trucks down Stone Canyon Road,” said Rosen, the former chief executive of Ticketmaster and a resident of the area. Many of those trucks, he said, were coming from Airole Way, where spec developer Nile Niami was building a 100,000 square-foot property dubbed The One.

Unbeknownst to neighbors at the time, the construction effort involved digging over 47,000 cubic yards of dirt out of the hillside, city records show, requiring at least 4,500 trips in 10-ton trucks. Niami plans to list the home for $500 million.

Rosen rallied his neighbors in a mini-revolt against City Hall. The result was 2017’s Bel Air mansion ordinance, a more rigid version of the ordinance imposed on the rest of Los Angeles. While many of the hauling trucks are now gone, the wealthy enclave is still grappling with the legacy of its McMansion years. Between 2014 and early 2017, the city issued 28 permits for mansions in Bel Air of 17,500 square feet or larger, most of which are still under construction, according to an analysis by The Real Deal. The projects are exacerbating a spec-home building spree that rattled longtime Bel Air residents and is dramatically altering the landscape of the area, not to mention its real-estate market.

As of Wednesday there were 12 homes in Bel Air of 15,000 square feet or larger currently sitting empty and unsold in, according to MLS data cited by Steve Lewis, President of CORE Real Estate Group in Beverly Hills.

“These are white elephants,” Rosen said. “Half these houses are going to wind up in foreclosure.”

Sizing up the market

After more than two years of back-and-forth, the city passed an ordinance for Bel Air restricting the amount of dirt that could be removed from a property to 6,000 cubic yards. That addressed the problem of massive dirt movement, the residents’ biggest gripe.

Paul Koretz, the city councilmember whose district includes Bel Air, also pushed through a rule requiring any home over 17,500 square feet to have a public hearing. “That virtually capped all homes” at that figure, Koretz said, “because homeowners didn’t want to deal with uncertainty.”

In the run-up to the ordinance, though, owners rushed to file permits for dozens of projects that would avoid the de-facto cap and the dirt-movement restrictions, grandfathering in plans for yet more large, boxy properties.

“There were people that were pushing permits through so they had entitlements, which would circumvent the new law coming in,” said Stephen Shapiro, the co-founder of Westside Estate Agency, a residential brokerage focused on luxury homes in Beverly Hills, Malibu & Bel Air.

For some properties, pre-ordinance status has become a major selling point.

Take the Park Bel Air on Tortuoso Way, which hit the market in January asking $150 million. The 10.6-acre site directly across from Hotel Bel Air and features three contiguous lots with permits to build homes of about 60,000 square feet each.

The Hollywood producer Steve Bing acquired all nine homes on the street, then tore them down and built a small home for himself, before selling the site to a hedge fund, said Shapiro, who formerly had the listing. The current owners, the London firm DOMVS, and Junius Real Estate Partners, a division of JPMorgan, spent some five years creating three finished lots, and secured permits for massive home designs.

“You could literally start construction the day after you close,” said Douglas Elliman’s Connie Blankenship, the current listing agent. “You can’t do what we can do here any longer, with the current building codes and restrictions.”

Meanwhile, on Chalon Road, Thomas Barrack Jr., the Colony Capital CEO and pal of President Donald Trump, is nearly done building out an eight-acre compound with a 77,000-square-foot mansion being designed by Peter Marino. Barrack is building it on behalf of the royal family of Qatar. Other competing giant offerings, including the Mountain, a 157-acre plot in Beverly Hills Post Office now listed for $650 million, and a 120-acre site owned by an entity linked to the late Paul Allen asking $150 million, don’t have plans or permits in place for mega-mansions, Blankenship said.

Massive spec mansions on the market right now include Bruce Makowsky’s 38,000-square-foot estate at 924 Bel Air Road, asking a much-reduced $150 million, and the Mohamed Hadid-developed mansion at 901 Strada Vecchia, which is the subject of an FBI probe and a lawsuit from neighbors who want to see it torn down.

Tom and Jerry

When Rosen decided to act, he learned that unlike in Santa Monica and Beverly Hills, there were no limits in Bel Air on the amount of dirt that could be excavated. That led builders to opt for massive, amenity-filled subterranean spaces.

LA City Councilmember Paul Koretz

“If you had 10 of those homes going in at once it was like a war zone,” Koretz said.

Residents also chafed at city rules that allow workers to do construction from 7 a.m. to 9 p.m. on weekdays, and from 8 a.m. to 6 p.m. on Saturdays

In the race to build, drivers of giant earth-moving vehicles were going twice the posted speed limit, Koretz said. He said someone on his staff once followed dozens of dirt-hauling vehicles that were backed up on Stone Canyon Road all the way to Niami’s The One, with its 20 bedrooms, bowling alley, four pools, and a 40-seat theater.

“We required that owners only send one vehicle into Bel Air at a time,” Koretz said. “And that they have identification numbers for each of the major projects, so we could trace who they were working for.”

The “cat and mouse game” between homeowners and the city continues. With new limits on dirt hauling, some homeowners have turned to proposing 30,000-square-foot patios to expand de-facto square footage, and continue to build elaborate underground caverns, he said.

Bel Air isn’t alone

While Koretz points to Bel Air as the most extreme example of mansion expansion gone rogue, other parts of L.A. have also weathered convoys of dirt-hauling trucks.

In 2014, an off-duty cop was killed in Trousdale Estates when a cement truck ran over a pickup truck and overturned. That led Beverly Hills to impose a 30-day suspension on heavy-haul deliveries from construction sites around the area.

Other areas of L.A., notably the Bird Streets in Hollywood Hills, are only now getting dirt-movement restrictions in place. The exclusive neighborhood’s narrow streets were choked last summer with construction trucks and dumpsters working on spec homes and major renovations. An ordinance passed last year cut back construction hours.

While L.A. was working to limit out-of-control mansion-building, the gated city of Hidden Hills in the San Fernando Valley — a favorite among celebs like Kanye West and the Kardashians — actually loosened rules in the past three years to allow for even larger homes.

Two years ago, spec developer Kasey Walker sold a 13,000-square-foot home to Canadian singer The Weeknd for $18.2 million. Walker now plans to build an 18,000 square-foot mansion just up the street, on a five-acre parcel on Long Valley Road she purchased from Miley Cyrus last year.

The new estate, which she plans to list for at least $28 million, will feature a basement with a bowling alley, parking for up to 10 cars and a lounge-type theater.

“If you build something special, nothing is an issue,” Walker said of the restrictions.

Back in Bel Air, an expansion like the one contemplated by actress Salma Hayek and her billionaire French husband François-Henri Pinault hardly moves the needle these days.

In December, the couple filed plans to tear down their nearly 8,000 square-foot home and build a new home over twice that size.

“In Bel Air, that wouldn’t be shocking,” Koretz said. “To get into the shocking range would be if they went from 7,500 to 50,000 square feet. That is where you get the controversy.”

Boutique hotel developer pays $15M for PH at the Bristol

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The Bristol

South Florida boutique hotel developer Clifford Lane paid $14.7 million for a penthouse in the Bristol condominium in West Palm Beach.

Lane and his family’s trust purchased condo 2501 at 1100 South Flagler Drive from the development group, Flagler Investors, led by Al Adelson and Gene Golub, records show. The Bristol is still under construction and the unit’s square footage is not yet recorded in property records. Some buyers are purchasing raw units and are able to close on their condos and finish them themselves before the rest of the project is completed, Adelson said previously.

Units at the luxury condo building range from 3,600 square feet to 14,000 square feet, and are priced from about $5 million to more than $40 million.

Construction crews topped off the 69-unit Bristol in January. It broke ground in 2016 and secured a $206 million construction loan from the Blackstone Group in 2017.

Lane founded the Lane Organization in 2011, which owns the 139-room Waterstone Resort Marina in Boca Raton, according to the company’s website. He formerly headed Data Device Corp., a supplier of data interfaces for the aerospace, defense, space, and industrial sectors.

The Bristol is one of the few new luxury condo developments in West Palm Beach. Last year, former Wall Street honcho Donald C. Carter bought a condo at the Bristol for $6.75 million. Also last year, the former general counsel at Fidelity paid $6.85 million for a unit at the building.

CoStar files two federal suits alleging illegal access and copyright infringement

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CoStar CEO Andrew Florance (Credit: iStock)

CoStar Group filed two copyright infringement lawsuits against firms it claims repurposed its data and illegally shared subscriptions.

The $17 billion real estate data giant, which has enjoyed a surge in market cap and share price in recent weeks following strong 2018 financial results, is known to go down the legal route to protect its data, and has filed dozens of lawsuits against firms it has accused of copyright infringement.

In one federal complaint filed Monday against New York-based Baron Realty Group in the Eastern District of New York, CoStar alleged that the commercial real estate firm did not pay for the service and then stole “tens of millions of data points” before making its own database for Baron employees.

A separate complaint also filed Monday against Realty Insight, alleged the New York-based commercial firm purchased CoStar subscriptions and then “secretly” resold them to five other commercial real estate firms.

Both firms could not be reached immediately for comment.

CoStar said in a statement that the lawsuits “continue the company’s long-running efforts” to protect its intellectual property, and end the defendants’ “cycle of theft and send the message to would-be thieves that CoStar will pursue legal action.”

In October, CoStar filed seven federal copyright-infringement lawsuits against firms it accused of stealing its data and illegally obtaining a subscription.

Delray Beach approves first oceanfront condo project in over 30 years

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John Farina, president and CEO of US Construction, and a rendering of Ocean Delray (Credit: Buzz Buzz Home)

The Delray Beach City Commission granted final site-plan approval Tuesday for Ocean Delray, the first development on the city’s oceanfront in more than 30 years.

National Realty Investment Advisors (NRIA) and US Construction Inc. expect to clear the development site at 1901 South Ocean Boulevard by demolishing the 66-year-old Wright by the Sea Hotel in late April.

Construction of 19-unit Ocean Delray will start immediately after the demolition project and is expected to conclude in the fourth quarter of 2020.

The developers have priced the units at Ocean Delray from the upper $4 million to $9 million. The three-story building is being designed by South Florida architect Randall Stofft, who also designed the Seagate Hotel and Residences in Delray Beach.

Ocean Delray units will range from 3,373 square feet to more than 4,400 square feet. Terraces will add as much as 2,300 square feet of additional living area. Floor plans have three to five bedrooms and four-and-a-half to six-and-a-half bathrooms.

Each unit will have a private, air-conditioned garage with an electric car charging unit and a private elevator. The units will be named after such famous artists as DaVinci and Van Gogh. IMI Worldwide Properties is handling sales of Ocean Delray units.

Amenities will include beachfront lounges and cabanas, a swimming-pool lounge suite with personal full-height lockers and changing rooms, and a fitness room equipped with Peloton exercise machines.

New Jersey-based NRIA acquired the Wright by the Sea Hotel in 2018 for $25 million. The 1.8-acre property has more than 200 feet of frontage on the ocean.

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