From left: Ivan Kaufman and Maurice Kaufman with a rendering of Esplanade (Credit: AMAC Holdings and Alt Architect)

AMAC scored $69.7 million in construction financing for the long-planned Esplanade apartments near North Miami, following years of litigation with a joint venture partner.

New York-based AMAC’s Biscayne Boulevard Property Owner LLC is developing the eight-story, 402-unit multifamily building at 11150 Biscayne Boulevard.

Ocean Bank provided the financing. Holland & Knight’s Elena Otero represented the lender. Ocean Bank’s Federico Tunnermann and Rafael Gonzalez-Jacobo handled the loan.

Esplanade will be the developer’s first project in South Florida. Units are expected to range in size from 682 square feet to 1,425 square feet, Otero said. The project will also include a workforce housing component.

Anillo. Toledo. Lopez, LLC Architecture & Planning designed the apartment building.

AMAC and its partners paid $16.16 million for the vacant, 5.8-acre site in 2015. At the time, companies tied to Hamden, Connecticut-based Belfonti Companies; and Uniondale, New York-based Arbor Realty Trust; as well as AMAC Holdings, a separate entity of Arbor, were the buyers.

But the development failed to get off the ground as the partnership became embroiled in litigation with a dispute over control of the project and fighting over Belfonti’s role.

Belfonti sued AMAC Holdings in 2017, alleging it was improperly cut out of the deal to build the project. At the same time, Belfonti was defending against a lawsuit filed by AMAC the previous year. According to court records, AMAC owned 94 percent interest and Belfonti had a 6 percent stake when the deal closed.

In its lawsuit, Belfonti accused Kaufman and the AMAC affiliates of reneging on a signed agreement that 1st Sun and AH Biscayne would “equally share” management decisions over the project once the Belfonti affiliate acquired another 19 percent by July 2016. Belfonti alleged AMAC refused to sell it more shares to reach the 25 percent threshold.

The separate lawsuit filed by AMAC accused 1st Sun of breach of contract, breach of good faith and breach of fiduciary duty because the Belfonti affiliate had allegedly refused to sign an operating agreement giving AH Biscayne sole authority over management of the project.

Court documents show the litigation was settled in August.

From left: Colony Capital’s Tom Barrack, 8250 Milliken Avenue and Lincoln Property Co.’s David Binswanger (Credit: Getty Images, Google Maps)

Colony Capital has sold a massive four-property industrial portfolio in the Inland Empire, the latest indication it is looking to sell its entire industrial holdings.

Colony sold a 745,580-square-foot portfolio in Rancho Cucamonga to Lincoln Property Company for $104.6 million. CBRE, which represented Colony, announced the deal Wednesday.

The buyer, Lincoln Property, recently put a sprawling office campus on the market for sale. Dubbed Campus @ Warner Center, the property is on the market for $215 million.

The announcement came hours after Bloomberg reported that Los Angeles-based Colony was in discussions with Eastdil Secured to market its portfolio of warehouses and last-mile logistics properties for around $5 billion. Brookfield Asset Management could be a potential suitor, according to the report.The four properties in the Inland Empire are fully leased to five tenants, including XT Green, Carpenter Technology., Pinole Valley Trucking, THMX Holdings and ConAgra Foods. The three properties in Rancho Cucamonga are located at 11600 Millennium Court, 8250 Milliken Avenue and 9160 Buffalo Avenue, while the fourth sits at 4850 East Airport Drive in Ontario.

Colony also recently sold a 2.3 million-square-foot industrial portfolio in Dallas to Nuveen Real Estate for $136 million.

If Colony was to sell off all its industrial holdings, the deal in the neighborhood of $5 billion would top the potential Prologis deal that is in the works. Prologis is in advanced talks to purchase Industrial Property Trust from Black Creek Group for $4 billion. That portfolio spans 37.6 million square feet across industrial properties in 21 states.

Javier Lluch and Glasshaus in the Grove

The developers behind Glasshaus in the Grove secured a $13.2 million construction loan to finish building the boutique luxury condo project.

The loan was provided by Boynton Beach-based Trez Forman Capital. It was arranged by David Larson of NKF Capital Markets.

Javier Lluch and Daniel Ribeiro are developing the five-story, 23-unit condo building at 3161 Center Street that is expected to be completed by the beginning of 2020, according to Larson.

Ribeiro is the chairman of G.D8, a Brazilian development and construction firm headquartered in São Paulo. Lluch is the chairman of Miami-based Element Development.

The condo development, known for its minimalist European design, was designed by Coral Gables-based architecture firm Varabyeu Partners.

Units will range from one to three bedrooms with residences ranging from 1,080 square feet to 2,953 total square feet, including balconies and terraces. The amenities also include a zen garden, below ground parking and a rooftop pool. Units start at just under $600,000.

Trez Forman is also the lender for another condo project in Coconut Grove, Arbor Coconut Grove. The lender provided a $21 million loan in March for the 48-unit building that will be located behind CocoWalk.

Lissette Calderon and a rendering of the project (Credit: Sonya Revell)

Lissette Calderon is firmly planting her flag in Allapattah.

The Miami Urban Design Review Board on Wednesday approved the developer’s second planned apartment project in the neighborhood. The proposed mixed-use development would have 323 apartments and a 336-space parking structure at 1625 Northwest 20th Street.

Known as 16 Allapattah, the 12-story project would also include 13,133 square feet of retail and 6,947 square feet of office.

Calderon’s first planned rental project is nearby, at 1569-1652 Northwest 17th Avenue. In November, Calderon’s TCG Allapattah 17 submitted a permit application for a 13-story, 192-unit apartment building on the site.

For 16 Allapattah, the design review board approved five waivers that include extending the parking structure and covering its facade with an artistic glass or architectural treatment, as well as a 4 percent increase in the building’s floor plate above the eighth story. The project also qualified for a 40 percent parking reduction as a transit-oriented development, because the site is close to the Santa Clara Metrorail Station.

A March 4 letter submitted to the city’s planning and zoning department states Calderon’s TCG Allapattah 16 is under contract to purchase the 1.6 acre site, which has a current market value of $3.9 million, per the Miami-Dade property appraiser.

In previous interviews, Calderon told The Real Deal her goal is to create a rental portfolio in emerging neighborhoods of Miami and other cities. Last September, her company Neology Life paid $61 million for the former River Oaks Tower & Marina at 1951 Northwest South River Drive, marking Calderon’s return to the Miami River where she developed her first condominium projects in the early 2000s.

Neology Life renovated and rebranded the 21-story, 199-unit building into Pier 19 Residences & Marina, also adding a private 10-slip marina, three large cabanas for residents’ use, and creating all new common areas.

Architect Stefan Behling (right) and Senior Director for Apple Retail and Design Chris Braithwaite talk about the Board Room, as part of Apple Carnegie Library in Washington, DC (Credit: Getty Images)

Millions of people flock to Apple stores every day, and most are familiar with the stores’ signature layout and aesthetic. What’s lesser known, though, is that many of these stores contain a private “boardroom,” complete with carefully curated furniture from some of the world’s top designers.

The boardroom concept was announced by Apple’s former Retail SVP Angela Ahrendts in May 2016. Today, there are about three dozen stores around the world that were either built with a boardroom or remodeled to include one.

Closed to the public, the spaces are mainly used for private events, business meetings and Apple sessions, 9to5mac reports.

The rooms feature a mix of designer pieces and custom furniture. According to 9to5mac, which attempted to catalogue the rooms based on consultations with designers and furniture suppliers, some staples include a set of Maruni’s “Hiroshima” armchairs, as well as a choice of lamps: either the Snoopy Table Lamp in black (Achille Castiglioni), or the Atollo glass by Vico Magistretti.

In keeping with the rooms’ fresh, minimalist appearance, many feature planters with white orchids, and a small selection of vases and accessories.

The boardroom inside Apple’s Upper East Side location, which opened in 2015 in a former U.S. & Mortgage Trust, is the most unique, according to 9to5mac, because it still contains the bank’s original vault. [9to5mac] — Sylvia Varnham O’Regan

Rendering of 555 Riverhouse with Avra Jain

When it came to conceptualizing 555 Riverhouse, a new mixed-use project on the Miami River proposed by an Avra Jain-led development team, New York City-based architect Carlos Zapata made several site visits to soak in the maritime activities along the city’s water way.

The result is a design featuring two striking glass-and-steel buildings that resemble cargo ships weighed down by stacks of containers, Zapata told members of Miami’s Urban Development Review Board on Wednesday. “We hope [the design] captures some of the river’s character,” Zapata said. “We wanted it to feel familiar.”

Impressed by Zapata’s concept, the development review board voted 6-0 to grant seven waivers sought by Jain and her partners in order to develop the 2.3-acre property at 555 Northwest South River Drive. The development team sought permission to extend the parking component along the project’s frontage and cover it with an artistic or glass treatment and reduce parking requirements by 30 percent, among other waivers.

In June, Jain told The Real Deal she and a partnership that included tech billionaire Robert Zangrillo paid $5 million for partial ownership of the 555 Riverhouse site. Her partners also include Joe Del Vecchio and Oklahoma City developer Zerby Interests, which is the project’s majority owner. (Zangrillo removed himself from $1 billion Magic City development in Little Haiti after he was among the parents indicted in the Varsity Blues college admissions scandal earlier this year.)

Consisting of three towers of up to 12 stories, 555 Riverhouse would entail 90,000 square feet of office space, 23,000 square feet for other commercial uses, and a condo-hotel with 169 lodging units and 39 residential units that can be rented out by the owners. Amenities include a 600-foot public riverwalk and 146 feet of view corridors. According to Jain, luxury hotel brand Sixty Hotels would run the 555 Riverhouse hotel portion and the condos would be listed in the $1 million to $1.5 million range.

In addition to 555 Riverhouse, the board also granted waivers sought for the first phase of Kenect, a two-tower apartment project by Chicago developer Akara Partners, and a twin tower project proposed by Israel’s Mishorim Development Group, a publicly traded real estate company that made its first real estate play in Miami in 2016.

A rendering of Kenect

Kenect | Developer: Akara Partners
Kenect, designed by Perkins + Will and Stantec, will be built at the Miami Worldcenter site and features 918 units in two buildings should both phases be completed. The first phase calls for a 39-story tower with 450 residential apartments, most of which will be micro units. The building will encompass 436,258 square feet of floor area with 251 parking spaces. The second phase would be a 39-foot tower with 468 units that are bigger in size from apartments in the first tower, but still average under 1,000 square feet.

A rendering of Mishorim Towers

Mishorim Towers | Developer: Mishorim Development Group
Mishorim wants to build twin towers featuring 800 residential units, 120 hotel rooms, 7,100 square feet of commercial space and 264 parking spaces. One tower would measure 63 stories and the second tower would stand at 55 stories. Mishorim paid $18.2 million for the site at 555 Northeast First Street in October 2018. It is currently a parking garage.

Blackstone Group CEO Stephen Schwarzman (Credit: Getty Images)

Blackstone Group’s earnings declined over the past three months as distributable earnings from the firm’s real estate segment fell by nearly a quarter from the same time last year.

The firm’s overall net income for the second quarter of the year fell to $305.8 million, or 45 cents per share, a significant decline from the $742 million a year ago, executives announced on the company’s earnings call Thursday morning.

At the same time, distributable earnings rose to $708.9 million, or 57 cents a share, exceeding most analysts’ expectations.

In particular, distributable earnings from the firm’s real estate segment fell by 24 percent year-over-year to $329.3 million, while private equity, hedge fund solutions and credit segments all saw distributable earnings rise significantly.

“The past few months have been a remarkable period for Blackstone characterized by transformation and continued momentum,” Blackstone CEO Stephen Schwarzman said during the call. “In addition to our ongoing business evolution, we’ve completed our corporate conversion, and the market response, as you know, has been quite positive.”

“If we continue to grow as the reference institution in our industry and meaningfully expand our potential investment base through conversion, it’s reasonable to assume that we should close the valuation gap between our firm and other top companies,” Schwarzman added.

It was the company’s last quarter as a partnership. The alternative investment firm completed its conversion to a corporation on July 1.

Blackstone’s conversion to a C corporation, made possible by tax law changes that lowered the highest corporate rate to 21 percent from 35 percent, allows the firm to tap a more diverse pool of investors.

The company spent several weeks after its April announcement on an extensive “roadshow” to introduce or re-introduce itself to investors. “The schedule was exceptionally high quality and included over 100 institutions, more than half of which were new to the alternative sector and Blackstone, and/or were materially restricted previously from owning P2Ps,” Blackstone CFO Michael Chae said on the call.

Thanks to the conversion, Blackstone has now become eligible for inclusion in many market indices such as S&P Total Market, MSCI and CRSP, and expects to be added to those in the fall.

In the questions segment of the earnings call, Blackstone executives shared their views on impacts from broader market issues, such as the impact of the U.S.-China trade war.

“I think the good news for us is that we don’t have that many businesses in the global supply chain, either retailers or big exporters, so the impact there directly to our portfolio is not quite as significant,” COO Jonathan Gray said. “The real question is will it leak more broadly into the economy or markets.”

“So far, the more dovish tone from central banks has outweighed the slowdown from trade,” Gray added, noting that many central banks have either reduced interest rates or signaled an intention to do so in response to the slowdown in trade.

The decline in interest rates made it more challenging for Blackstone to find opportunities to deploy the capital it has raised, especially in infrastructure. “I think the good news for us is that we’re operating at a very large scale,” Gray said. “By playing where the air is thinner, which is really the strength of our infrastructure business, we’ve got a better competitive dynamic.”

The past quarter saw Blackstone make one of the largest industrial real estate deals in history, buying a 179 million-square-foot warehouse portfolio from Singapore’s GLP for $18.7 billion.

Last week, Blackstone halted all improvement works at the 11,000-unit Stuyvesant Town and Peter Cooper Village complexes in New York, saying that it was “in the process of evaluating capital investments” in the properties in light of the state’s new rent laws.

Apartment rent growth is slowing in downtown Miami (Credit: iStock)

Amid an influx of new high-end apartments in Miami, rent growth is starting to slow down in downtown Miami and South Beach, according to a new report.

The report from Berkadia shows that the average monthly apartment rent in downtown Miami and South Beach rose only 0.8 percent in the second quarter of 2019, year-over-year, to $2,112. That compares to an annual increase of 2.7 percent the previous year.

The slowdown in rent price growth shows that after years of rising prices, rents are starting to stabilize in Miami amid a glut of inventory from new apartments and condos that are being rented out. In West Miami and Doral, monthly rents actually decreased 2.2 percent to $1,850, the report shows.

However, the report indicated that the average occupancy rate for apartments in South Florida remains high, at 96.1 percent.

From June 2018 to June 2019, 4,815 apartments were delivered in South Florida. Since 2014, more than 20,000 Class A apartment units have come to market in Miami, according to a TRD analysis of data from Integra Realty Resources, which creates residential reports for the Miami Downtown Development Authority. In Miami-Dade County, nearly 2,200 leases have been signed on the so-called “shadow rental market” so far this year, up from fewer than 100 shadow rentals in 2014.

Todd Glaser with 125 Via Del Lago in Palm Beach (Credit: Realtor)

Miami Beach developer Todd Michael Glaser sold a gut-renovated Palm Beach estate for $16.1 million, property records show.

Glader’s 125 Via Del Lago LLC sold the eight-bedroom, 9,271-square-foot mansion at 125 Via Del Lago to 125 VDL LLC, which is managed by a Providence, Rhode Island law firm. It’s unclear who the true buyer is. Goldman Sachs provided a $9.72 million loan to the buyer.

Suzanne Frisbie of Premier Estate Properties was the listing agent and brought the buyer, Glaser said. The home first hit the market in October for $22.5 million and most recently was asking $17.9 million.

The non-waterfront property was first built in 1928 and designed by Marion Sims Wyeth on a 36,246-square-foot lot. Glaser redeveloped the interiors and exteriors and landscape architect Harry Nelson designed the landscaping and gardens.

The home includes three fireplaces, two galleries, an elevator, sauna, wine cellar, massage and fitness room, separate guest house, poolside cabana, full house generator and a cooling tower.

Property records show Glaser’s LLC paid $10.95 million for the estate in November 2017.

Glaser has been an active spec home builder, and recently built the 27,000-square-foot mansion at 22 Star Island for Lennar Corp. chairman Stuart Miller, a property that reportedly has a whisper price in the upper $60 million range.

The Miami Beach developer has since shifted his attention to the Palm Beach area.

In October of last year, Glaser and partners Philip Levine, Scott Robins and Jonathan Fryd paid $9 million for the site at 111 Atlantic Avenue in Palm Beach where they are building two luxury spec houses.

Related Chairman Steve Ross and Time Warner Center at 25 Columbus Circle (Credit: Getty Images and iStock)

There’s a funny footnote to Stephen Ross’ decision to put his Time Warner Center penthouse on the market this week for $75 million. The Related Companies founder and chairman didn’t pay a dollar for it — at least not in the traditional sense.

Sources said the penthouse was a “distribution” from the project’s development team — a partnership between Related and AREA Property Partners, which was founded by the Mack family and Apollo Global Management.

The penthouse at 25 Columbus Circle (Credit: Corcoran)

By taking a distribution instead of pocketing his share of the cash profits from the project, Ross likely avoided a hefty income tax bill.

“If you take cash profit out of the deal, you have to pay income tax on it,” said one developer, who spoke on the condition of anonymity. “If you take a unit as distribution, it’s a non-taxable event. You don’t have to pay taxes until you sell it.”

It’s a not-uncommon practice among New York City developers, and the savings can be substantial.

The top income tax rate for 2018 is 37 percent, said Pamela Capps, a tax lawyer and partner at Kramer Levin, compared to the top capital-gains rate of 24 percent. “It’s also possible that down the road they could defer the gain further by doing a 1031 exchange,” Capps said. (Ross has said he intends to purchase a condo at Related’s 35 Hudson Yards, the megaproject where Related is also moving its offices.)

At the Time Warner Center, property records show Ross, whose net worth Forbes estimates at $7.7 billion, closed on the condo in December 2006 for $0. A decade later, he transferred ownership of the unit to a corporate entity, 25PH Columbus Circle LLC. No money changed hands then either, records show, but in 2010, Ross obtained a $21 million mortgage from Deutsche Bank.

“My understanding is it is his plan to buy it,” Bruce Warwick, Related’s vice chairman, told the Observer in 2007. At the time, he said he believed Ross would pay $30 million for the pad — the price listed in the condo offering plan. There’s no paper trail for such a transaction, however, and the 2006 deed has “Box I” checked off, indicating there were “Other Unusual Factors Affecting Sale Price.”

There’s a long list of developers who live in their own buildings, including Larry Silverstein at 30 Park Place, Harry Macklowe at 432 Park Avenue, Ziel Feldman at the Marquand and Ian Schrager at 160 Leroy. Financial arrangements vary widely — and it’s not always clear whether a distribution is taken. For some developers who bought in their own buildings at the project’s inception, the profits have been handsome.

The median sales price in Manhattan rose 25 percent between the fourth quarter of 2006 and 2018, according to data from appraisal firm Miller Samuel. In the luxury market, the median sales price rose 88 percent during the same time. For what it’s worth, Ross, who is asking a whopping $9,064 a foot, is seeking a premium of 150 percent from the original $30 million listing price. The 8,274-square-foot pad has five bedrooms, a 42-foot living room and custom wood and marble flooring.

To take a unit as distribution, developers need approval from their limited partners. It’s not always possible to do and if they’re not taking a distribution, developers typically pay a “minimum release price,” which correlates to the value the lender has assigned to each unit, sources said. A handful of insiders may also buy the unit at cost.

Distributions happen more often with units that are most likely to grow significantly in value over several years. “It’s an investment vehicle,” said Ed Mermelstein, an attorney and founder of One and Only Holdings LLC, a real estate advisory firm.

Steve Witkoff, for example, shelled out $48 million in 2016 to buy five sponsor units at his 150 Charles Street, including a penthouse, four-bedroom, three-bedroom, two-bedroom and a studio, according to records. He sold one recently for $33 million.

Larry Silverstein paid $32.6 million for an 80th-floor penthouse at Silverstein Properties’ 30 Park Place in April 2018, records show. And in 2014, JDS Development Group’s Michael Stern paid $16 million for his condo at Walker Tower, which his firm developed with Property Markets Group. In June, Stern listed the pad for $28 million.

The We Company’s Adam Neumann (Credit: Getty Images)

Adam Neumann has cashed out more than $700 million from the We Company in advance of the company’s initial public offering.

It’s not often that private companies publicize such deals ahead of going public, according to the Wall Street Journal, and Neumann’s is one of the largest known such transactions.

Startup investors generally do not like it when founders cash out before an IPO, as it can raise questions about how confident they are in the company. But sources told the Journal that Neumann’s borrowings against some of the shares he has in the We Company could show that he is still confident about the company’s future.

The We Company, which has been bankrolled by SoftBank’s Vision Fund, was valued at $47 billion at the time of its last investment round. It’s expected to move forward with an IPO late this year or early next year.

Neumann, who co-founded WeWork nine years ago, has cashed out over the years through a mix of debt and stock sales, according to the Journal. The size of his current ownership in the company is unknown, and he’s set up a family office to invest the proceeds.

The We Company’s vice chairman Michael Gross has been spending money as well, recently paying $28 million for a Brentwood tennis court estate, according to Variety.

Other company leaders who have cashed out prior to IPOs include Zynga CEO Mark Pincus, who cashed out more than $109 million, and Groupon co-founder Eric Lefkofsky, who sold more than $300 million worth of stock in the company. [WSJ] – Eddie Small

Opportunity Zones map and Bridge Investment Group chairman Robert Morse

Everyone in real estate may seemingly be talking about Opportunity Zones, but few industry players have started closing on such projects.

That’s what makes Bridge Investment Group’s recent announcement unique. The Salt Lake City-based real estate firm said earlier this month that it has already deployed $509 million into a dozen Opportunity Zone projects in eight metropolitan areas across the country. The list of projects includes multifamily, office and industrial properties.

The Opportunity Zone program itself gives developers and investors the ability to defer and potentially forgo paying capital gains taxes if they buy and hold a property in specially designated locales, many of which are in distressed areas, for at least five years.

Large investors such as Brookfield Asset Management, EJF Capital, RXR Realty and Starwood Capital Group have raised hundreds of millions of dollars to pour into Opportunity Zones, but Bridge is one of the first to actually start buying property and putting shovels in the ground.

Bridge’s chief strategy officer David Coelho

In a recent interview with the The Real Deal, Bridge’s chief strategy officer David Coelho provided a sneak peek into how the firm is investing in Opportunity Zones and dealing with a bevy of complex regulations surrounding the program.

Avoiding the “tulip craze”

The increased interest in Opportunity Zone sites has created a major problem. In an effort to reap a windfall from thirsty investors, many property owners have drastically raised the prices on properties in such zones. One South Florida developer has compared the phenomenon to the tulip mania of 1637, when the price of tulips in the Netherlands rose exponentially before collapsing.

Bridge, however, has managed to largely avoid the land speculation game. The firm, which has $16 billion in assets under management, focuses on value add opportunities by working with local partners who already have properties under their control in Opportunity Zones. Bridge then invests in those properties, often by doing deals where the underlying real estate was purchased before prices spiked in the aftermath of the Opportunity Zone legislation, which was shoehorned into the Trump administration’s 2017 federal tax overhaul.

“We are not out there actively bidding on Opportunity Zone development sites, we are primarily working with partners that have land under control,” Coelho said. “When we lose the ability to execute in that manner is probably when will stop investing in Opp Zones.”

If they’re not already too expensive, another issue with Opportunity Zones is that many are not yet development ready. This is especially true in New York City, where land prices are already high and if an investor wants to qualify for the program’s tax benefits one must either double the value of the property or have a plan for new development.

“New York is a particularly tough market,” Coelho said. “We get solicited all the time to buy land in the boroughs and that’s just something we are not interested in doing.”

Complications arise

Some developers have stayed away from the Opportunity Zone program in large part due to the thicket of regulations they must navigate to in order to qualify for tax breaks. Bridge’s Coelho said such rules make it difficult to structure deals and deploy capital into Opportunity Zone projects.

With a few exceptions, the rules require investors to deploy capital 31 months after raising it which can often be tough for real estate firms. Developers are used to coping with complications that arise and unforeseen costs that can emerge during the course of a particular project. Sometimes developers must raise more capital or change their plans.

Coelho said he has found that adding new capital is complicated if you want to bring in new Opportunity Zone funds to a project, as investors will then have to wait longer in order to reap the full tax benefits. As a result, Bridge made sure its Opportunity Zone projects were fully entitled and shovel ready before making an investment.

“The inability to fully inject equity capital at future stages means that you have to have your capital plans really planned at the front end,” Coelho said. “These deals have to be more or less packaged and ready to go.”

Bridge has invested in various Opportunity Zone sites around the country, including in Atlanta, Los Angeles, the New York borough of Queens, Sacramento, Salt Lake, the Bay Area in San Francisco, the suburbs of Washington, D.C., and Portland, Oregon.

Coelho said his firm’s Opportunity Zone deals were in places where Bridge would have already invested regardless of any special designation, using the refrain that Opportunity Zones don’t necessarily turn a bad real estate deal into a good one.

“These aren’t pioneering deals by any stretch, they are in established markets,” Coelho said.

Critics of the Opportunity Zone program worry that only wealthy developers are benefiting from its tax breaks and that the money will go toward areas that have already been developed or are gentrifying, such as former hospital site in Chicago home to a $2 billion mixed-use redevelopment project and the $4 billion SoleMia mixed-use project in North Miami.

But Coelho claims that such tax breaks give Bridge and other firms the incentive to do deals and build projects faster. While these areas may already have the attention of developers, supporters believe the advent of Opportunity Zones has helped jumpstart their development efforts.

“The Opportunity Zones initiative gives us a little bit of push to get these deals across the finish line,” Coelho said.

From left: Fredrik Eklund and Stephen Kotler (Credit: Getty Images and Jeff Newton)

UPDATED, July 18, 3:16 p.m.: On July 10, Douglas Elliman star broker Fredrik Eklund told his 1.1 million Instagram followers he and his family would be moving from New York City to Los Angeles, where the brokerage has eight offices.

“LA has some of the world’s most exciting new development projects coming,” Eklund boasted in his announcement. Within days, more than 90,000 people had liked the post.

But Eklund’s shift to the West Coast comes at a time when Elliman — a juggernaut in New York City — still trails some of its biggest competitors in sales volume in the L.A. area. It also comes as high-end home sales in L.A. have slowed, a combination of “aspirational prices” — which Elliman itself acknowledged — and ample supply spec homes that have been hitting the market.

In October, the team of Eklund — a star on Bravo’s “Million Dollar Listing New York” — and John Gomes expanded into L.A. At the time, it added four agents on the West Coast and now has 64 agents split between New York, L.A, and Miami.

In New York, the Eklund-Gomes team is a force. It closed $721 million in sales last year in Manhattan, Brooklyn and Queens, making it No. 1 in The Real Deal’s annual broker rankings. As of April 15, it had $291.7 million in listings, good for fourth on another TRD ranking. And Eklund himself is now selling a $52.7 million penthouse in the Tulip Building in New York’s Soho neighborhood, as well as a $35 million unit in the West Village.

For that kind of success on the West Coast, Eklund said he had to dedicate his time.

“To be truly successful in L.A., one of us had to spend a lot more time there setting up,” Eklund said in an email response to questions from TRD. “I’m glad to take that role.”

In the beginning

Elliman opened its first office in L.A. in March 2014, at 9440 Santa Monica Boulevard in Beverly Hills. Led by CEO of Western region, Stephen Kotler, the firm has since grown to eight offices in the county, with a total of 453 agents.

In California, it has 19 offices with 723 agents overall.

The company had a total $1.8 billion in closed sales volume for L.A. County in 2018, according to a spokesperson at the firm. The figure does not include off-market deals. That’s a small fraction of its total sales volume nationwide, which was $28.1 billion last year.

As of July 8, the firm had 171 homes on the market for a combined $1.1 billion spread across L.A., according to an analysis of single-family and townhouse listings on the Multiple Listings Service.

That’s about 57 percent less than Compass, which had 850 listings amounting to $2.7 billion in total volume. Hilton & Hyland and the Agency had $2.6 billion and $1.6 billion, respectively.

Elliman is hoping some of the million dollar man’s magic will help boost that volume: Eklund recently secured listing for an $18 million mansion in Beverly Hills. He’s also vying for a $60 million listing in Beverly Park.

“I’m already very, very busy and I don’t take that for granted,” Eklund said in an e-mail. “I don’t mind being the underdog, in fact I like it. But it’s the new development that will set me apart a bit I think. I’m already working on a couple of the best projects out there.”

Elliman’s biggest names in L.A. are the Altman Brothers, the only team in the city to have their own office.

Josh and Matt Altman, who appear on “Million Dollar Listing Los Angeles,” were also the only Elliman team to crack The Real Deal’s ranking of top brokers this year. They came in eighth place, pulling in $236.1 million off 23.5 deal sides in 2018.

The brothers also ranked as the top team in L.A. during Elliman’s annual awards celebration in, dubbed “The Ellies.” Josh Altman, regarding Eklund’s move to L.A., “happy to have him in our territory.” But he added, “as far as anyone in the business being intimidated, last time I checked sharks are the top of the food chain…”

While Eklund said he plans to “take it slow” in L.A., he ultimately wants to have what he has in New York — a 10,000-square-foot office for his team alone. But, “that takes time and patience,” he wrote. “I have a lot of people to meet and a lot to learn in California.”

Other top teams in L.A. include Pugh Tomasi & Associates, Ernie Carswell and Associates, the Chad Lund Team and Tracy Tutor Team, according to Elliman’s ranking by top gross commission.

Elliman has scored some big listings in recent months. Connie Blankenship is listing the Park Bel Air development site for $150 million. The Altman Brothers are selling a Holmby Hills mansion for $78 million and Stefani Stolper is looking for a buyer for Muhammad Ali’s former Hancock Park estate. That’s on the market for $17 million.

Going vertical

Elliman has made a recent push to expand its new development offerings, to include luxury rentals. “Vertical living is finally happening” in L.A., Eklund wrote in his July 10 Instagram post.

Jim Jacobson heads Douglas Elliman Development Marketing division in L.A, which includes 20 people.

In the fall, the team will begin leasing Astéras Kings, a 25-unit project that’s being built in West Hollywood by developer Astéras. Leasing for the one and two-bedroom units starts at around $5,500.

A rendering of the Astéras Kings development

Jacobson said the division has been partnering with developers on for-sale projects for several years, making it easier to facilitate efforts on rental projects developers may be working.

And in an “adjusting” market, it also presents a way for the firm to protect itself against any decline in sales.

“If we can be successful in high-end rentals, and continue to grow that side of our business and our portfolio, we can weather the storm,” Jacobson said. “Whether that’s rentals on the high-end side, or when the market flips back again and we’re killing it on the for-sale side, we can straddle both lines very easily.”

Moving wealthy Angelenos to high-rises hasn’t exactly been easy, however. In Downtown Los Angeles, there’s a glut of multifamily units that are still on the market, sitting vacant as thousands of units are being built nearby.

Jacobson said some of the biggest challenges in selling high-rise buildings comes with educating the buyer that “this is the new wave of homeownership.” His team is also selective about the projects they partner with, picking developments they know they can sell.

In addition to Asteras, the development team is also selling condos at the West Hollywood Edition, built by Witkoff Group and New Valley Group. New Valley is run by Howard Lorber, chairman of Elliman. In the past, it sold Tower 1 at Greenland Group’s Metropolis project.

A rendering of the 8899 Beverly project

Eklund’s team will partner with Jacobson’s team to sell Townscape Partners’ under-construction condo project at 8899 Beverly. The upscale complex, designed by Olson Kundig, is slated to have 48 residential units, according to a representative for the project.

Eklund declined to comment on specifics, but had little doubts about its success.
This is the “best new project in L.A,” he said.

Here are some real estate events to look out for next week:

Host: Miami Finance Forum
Date: July 23rd
Time: 12 p.m. to 2 p.m.

The Miami Finance Forum is holding a lunch & learn event on Opportunity Zones at The Capital Grille, 444 Brickell Avenue from 12 p.m. to 2 p.m. Come to this event to learn how Opportunity Zones are having an impact on the real estate industry. Joshua Kaplan of Bilzin Sumberg will be the guest speaker at the event.

Host: ULI Southeast Florida/Caribbean
Date: July 25th
Time: 6 p.m. to 8:30 p.m.

ULI Southeast Florida/Caribbean is holding a networking happy hour event at La Estación American Brasserie, 550 Northwest First Avenue from 6 p.m. to 8:30 p.m. Attend to enjoy an evening of drinks and connecting with professionals.

To search for future industry events or browse past ones, click here. And to submit more industry events, please reach out to events@therealdeal.com.

Blackstone CEO Stephen A. Schwarzman, the Exchange Lofts apartments at 115 Northeast Third Avenue in Fort Lauderdale

An affiliate of Blackstone sold the Exchange Lofts apartment complex in downtown Fort Lauderdale for $23.2 million.

Blackstone sold the 87-unit project at 115 Northeast 3 Avenue for $266,666 per unit to Mexico City-based Hasta Capital, records show. The property totals 127,604 square feet.

Walker & Dunlop provided a $15.5 million loan to Hasta Capital to acquire the property, according to records.

In 2015, Blackstone bought the property from Greystar Real Estate Partners for $22.6 million. The original building was built in 1962 and housed the historic Southern Bell Exchange building.

Monthly rents at the complex range from $1,759 to $2,895, according to apartmentfinder.com.

Hasta Capital, led by Mark Hafner, focuses on residential and multifamily assets in Latin America and the U.S. It’s U.S. headquarters is in Lakewood Ranch, Florida, and it has acquired apartments in the Washington, D.C. metro area, Seattle, and Houston, according to its website.

Blackstone is an active buyer of South Florida real estate. A few weeks ago, the private equity firm scooped up three Broward County hotels for $43.2 million. In May, Blackstone paid $208.8 million for a pair of neighboring apartment complexes in Doral.

Blackstone CEO Stephen Schwarzman (Credit: Getty Images, iStock)

The ink isn’t dry on Blackstone Group’s $18 billion buy of a U.S. warehouse portfolio, and it’s already negotiating to sell part of it.

The company, which finished its transition into a corporation this month, is drumming up interest from potential buyers for pieces of the GLP Pte portfolio, Bloomberg reported. Prologis is in private discussions to buy one such portfolio, valued at $1 billion.

Blackstone’s $18.7 billion deal for the Singaporean company’s 179 million-square-foot warehouse portfolio is one of the largest industrial real estate deals ever.

Selling non-core or non-strategic pieces of a recently required purchase isn’t uncommon. Blackstone applied the same strategy in 2007 when it sold off parts of its $40 billion acquisition of Equity Office Properties Trust.

On the whole, the warehouse sector has seen little supply, high demand and high prices, with available industrial and logistics real estate rising slightly for the first time in 34 quarters, according to a CBRE report. Demand for warehouse and distribution reached an 18-year high in 2018.

Large owners are optimistic that there will continue to be institutional investment in industrial real estate. As Prologis negotiates for a piece of Blackstone’s new holdings, it’s also in advanced talks to buy another $4 billion portfolio from Black Creek Group which spans 37.6 million square feet.

Colony Capital is weighing the sale of its $5 billion industrial in holdings on the heels of selling another warehouse portfolio for $104.6 million. [Bloomberg] — Georgia Kromrei

George Gleason (Credit: iStock)

Bank OZK, one of the country’s most aggressive condo construction lenders, signaled in its most recent earnings report that its real estate lending growth is slowing down.

The bank’s organic loan portfolio increased 11 percent in the second quarter of 2019, year-over-year. That’s after increasing 28.6 percent in the second quarter of 2018, compared to the previous year. The Little Rock-based regional bank said in a conference call with analysts that its future loan growth is expected to slow down due to an increased amount of repayments on its real estate loans.

During the conference call, Bank OZK CEO George Gleason said the bank was surprised by how quickly some of the projects were getting repaid. In the second quarter, the bank reported repayments of $1.54 billion in its real estate lending division, up from $1.1 billion in the first quarter.

Bank OZK reported second quarter net income of $110.5 million, down 3.7 percent from the same period of 2018, partly due to these repayments.

The bank had $18.2 billion in deposits at June 30, a 1.6 percent increase from $17.9 billion at June 30, 2018.

Gleason said on the conference call that the bank is seeing fewer opportunities for construction loans in New York City since there are fewer new projects and competition from banks and debt funds is increasing.

“Lenders in certain markets are very aggressive on price,” Gleason told analysts. “We’ve been clear without exception that we are not going to sacrifice our credit standards.”

With just under $23 billion in assets, Bank OZK is one of the largest and most aggressive condo construction lenders in Miami, Los Angeles and New York City, lending at a time when other banks are pulling back.

The bank reported no major write-offs on its real estate loans in its most recent quarter. In the third quarter of 2018, the bank had to write down two real estate loans it had made about a decade ago which caused its stock to plummet that day by more than 24 percent.

Critics worry Bank OZK is being overly aggressive at a time when condo sales have slowed down in New York and Miami.

The bank’s stock was up 3 percent to $29.57 at 1:30 p.m. on Friday.

Barneys at 660 Madison Avenue (Credit: Getty Images)

Barneys, a symbol of New York City luxury fashion, is reportedly weighing a second bankruptcy, after the retailer’s $16 million annual rent jumped to $30 million at its Madison Avenue flagship. The move comes after a city arbitrator decided last year to allow Ben Ashkenazy to nearly double the rent on the 275,000-square-foot flagship store at 660 Madison Avenue. About one-third of Barneys’ revenues comes from that store.

Ben Ashkenazy

The company has hired law firm Kirkland & Ellis, consultants MII Partners and investment bank Houlihan Lokey, to consider either bankruptcy, renegotiating leases, or bringing in a strategic advisor, the New York Times reported.

“Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business,” Barneys said in a statement.

Barneys has been planning to open its first flagship store in the Southeast at Bal Harbour Shops in South Florida, which is undergoing a $400 million expansion.

Barneys’ 20-year commercial lease on Madison Avenue, which expired in January, contained a clause that allowed Ashkenazy to raise the rent to fair market value. While Barneys balks at the new sum, things could have been worse. Ashkenazy, who acquired 660 Madison in the previous Barneys bankruptcy, had originally asked for $60 million.

In March, Barneys was reportedly in talks to give up several of its floors in order to cut back on the $30 million in rent. Barneys claimed the story was false.

Peter Marino, the architect behind the Madison Avenue flagship, said that a new tenant is not likely to replace Barneys. “It’s crazy to double the rent; half of Madison Avenue is empty,” he told the Times.

The news comes at a difficult time for brick-and-mortar retail: Lord & Taylor, Calvin Klein and Saks Fifth Avenue have also closed stores. [NYT] — Georgia Kromrei

The Real Deal’s 6th annual Miami Showcase & Forum

The Real Deal’s sixth annual Real Estate Showcase & Forum on October 17th at Mana Wynwood is set to draw yet another powerful crowd of influencers in real estate. More than 3,500+ attendees, including financiers, developers and brokers, are expected to gather for this exclusive one-day event that gives businesses a chance to connect with decision-makers who have a direct impact on their company’s growth.

Our previous showcases were sellout successes with speakers such as Richard LeFrak, LeFrak; Edgardo Defortuna, Fortune International; David Martin, Terra; Art Falcone, Falcone Group; Alicia Cervera Lamadrid, Cervera Real Estate; Gil Dezer, Dezer Development; Howard Lorber, Douglas Elliman; Robert Reffkin, Compass; Michael Stern, JDS Development Group; Mauricio Umansky, The Agency; Jules Trump, The Trump Group and many others!

Some of this year’s discussions will focus on Opportunity Zones, affordable housing, condo development, real estate technology and exploring Miami’s neighborhoods.

Douglas Elliman, Fortune International, Citibank, Brown Harris Stevens, Samsung, California Closets, Allure Development and many other brands have already signed up to sponsor the event. For information on sponsorship opportunities contact forum@therealdeal.com

Our schedule of events and list of panelists are being updated daily, so be sure to check out our event page here to get the most up-to-date info! Tickets are available for purchase here.

4510 Prairie Avenue and Mathieu Massa

Spec home builder and French restaurateur Mathieu Massa sold a waterfront home in Miami Beach’s Nautilus neighborhood for $7 million.

Massa’s 4528 Prairie LLC sold the six-bedroom, 6,291-square-foot house at 4510 Prairie Avenue, according to a press release. Massa Construction Group built the house, which was designed by Choeff Levy Fischman.

It hit the market in 2017 for nearly $8 million. Julian Johnston of Calibre International Realty represented Massa.

The two-story home features interiors by Dunagan Diverio Design Group; European oak and stone floors; designer lighting and a Lutron control system; an outdoor kitchen and dining area; lounge space and a pool.

The $7 million sale marks a record for waterfront homes on the Biscayne Waterway in Mid-Beach, according to Johnston. He declined to comment on the buyer.

Property records show Massa paid $3 million for the two lots at 4510 and 4528 Prairie Avenue in 2014. He built a spec home on the second lot in 2018, which is on the market for $7.75 million.

He also developed the spec home at 1826 West 23rd Street, which hit the market in 2017 for nearly $18 million.

Massa also owns Mr. Hospitality, which runs Baoli Miami, Marion in Brickell and El Tucan. He’s an heir to a family that founded a large tire company in Europe which eventually sold to Continental Tire of Germany in 2011, according to Massa Investment’s website.