Javier Rabinovich and Mariano Karner with the Flamingo Commons buildings

Prive Group paid about $17 million for eight buildings within an office park in Davie, as the North Miami Beach-based real estate firm expands its commercial portfolio in South Florida.

Prive’s affiliate Prive Flamingo LLC bought the buildings totaling nearly 82,000 square feet within Flamingo Commons at 12401-12585 Orange Avenue, according to a Prive spokesperson and Cushman & Wakefield.

The seller is Flamingo Commons LLC, linked to Michael Orlove.

Prive, led by Argentinians Javier Rabinovich and Mariano Karner, assumed an $11.3 million commercial mortgage-backed securities loan from Starwood Mortgage Capital, the spokesperson said.

Cushman’s Greg Miller, Miguel Alcivar, Scott O’Donnell, Dominic Montazemi and Mike Ciadella, as well as Steven Beauchamp from Mangrove Advisory, represented the seller. Jason Hochman of Cushman assisted with the assumption of the loan.

Developed in 2002, the original Flamingo Commons project included 10 buildings totaling 94,457 rentable square feet, on a 14.78-acre site. Two of the buildings were sold immediately after development.

Prive’s six one-story buildings and two two-story buildings will continue to be operated by Crexent Business Centers, the spokesperson said. The property is currently 99.4 percent to more than 200 tenants, according to the offering memorandum. Tenants include Flamingo Commons Dental, Mazzola’s West Italian Restaurant, Shades of Red Salon and The Gordon Group Luxury Cruise Planners, Cushman & Wakefield said.

Prive focuses on the commercial market in South Florida. Its office projects include Forum Aventura, a recently completed 12-story office condo building at 19790 West Dixie Highway in Ojus; and Aventura Square at 18802-18820 West Dixie Highway in Ojus, an eight-story office condo project with about 100,000 square feet of office space and 9,000 square feet of ground floor retail.

Mattoni Group president Ricardo Caporal, 5125 Biscayne Boulevard before it was demolished in July 2017, rendering of redeveloped Bayside Motor Inn site designed by Urban Robot Associates, developer Avra Jain

Two-and-a-half years ago, the city of Miami’s Historic and Environmental Preservation Board approved plans to demolish a 72-year-old Biscayne Boulevard motel and replace it with a three-story office and retail building.

But a lawsuit seeks to scrap those plans and force the Mattoni Group to build an exact replica of 5125 Biscayne Boulevard, a 6,430-square-foot MiMo-era building that was demolished in July 2017.

On Monday, Morningside residents Elvis Cruz and Robert Stebbins filed a lawsuit in Miami-Dade Circuit Court against the city of Miami and 5101 RE CO LLC, a company managed by the Mattoni Group founder and president Ricardo Caporal. Cruz and Stebbins contend that the city and 5101 RE CO LLC violated the terms of a 2014 settlement agreement between the city, developers and neighbors that required both the hotel at 5125 Biscayne Boulevard and the neighboring Bayside Motor Inn be preserved by the developers.

“This case is an example of what I believe we are going to be seeing more of — neighborhoods and individual residents being forced to take legal action to get the city to enforce its laws and the contracts it enters into,” said David Winker, an attorney for Cruz and Stebbins, via email.

The deal would enable real estate developers to build a larger building after already cashing in on previous transfers of development rights, Cruz added.
“It was a clear-as-day, blatantly dishonest action,” Cruz said via email. ”I even had assistant city attorneys tell me, off the record, that this was clearly a breach of contract. It’s another money-motivated manipulation at Miami City Hall.”

“We are in the process of reviewing the matter as we have not been served yet,” said city attorney Victoria Mendez.

The Mattoni Group did not respond to a request for comment. Developer Avra Jain, who said she retains partial ownership in the project, said she hasn’t been served with a lawsuit either. Jain also denied that the covenant has been violated in any way. “There were two buildings: one was contributing and one was non-contributing,” Jain clarified, adding: “You know I follow the rules. Nobody has been more for preservation than I have. Why would I not follow the rules?”

Jain also pointed out that the Third DCA had already ruled against Cruz in 2018. Indeed, Cruz, Stebbins, and Damian Pardo retained attorney Linda Carroll in July 2017 to file a writ of certiorari to prevent 5125 Biscayne’s demolition. Elliot Scherker, 5101 RE CO LLC’s attorney, argued that the writ was moot since the building was already demolished. The Third DCA agreed and ruled in 5101 RE CO LLC’s favor in November 2017.

Winker insisted that this lawsuit is “unrelated to that writ” filed two years ago and is “an action to enforce the settlement agreement entered… between the parties.”
“The developer and city breached the terms of the settlement agreement,” Winker added in an email.

Winker contends that both the 5125 building, which was built in 1947, and the neighboring 67-year-old Bayside Motor Inn at 5101 Biscayne Boulevard were to be preserved under a restrictive covenant that was agreed to between Jain, the city, and residents of neighboring Morningside, five years ago.

But in February 2017, Jain and the Mattoni Group presented plans to the historic preservation board that only preserved the Bayside Motor Inn. As for the 5125 Biscayne building, the developers proposed knocking it down and replacing it with a new 18,994-square-foot building, designed by South Beach-based architecture firm Urban Robot Associates, with retail on the ground floor and two floors of offices on top. That concept was approved by the board by a vote of 4 to 1.

The covenant Winker referred to ended nearly a decade of litigation surrounding both properties.

Back in 2004, Chetbro Inc. proposed demolishing the two MiMo motels and replacing them with an 87-foot tall condominium. Although initially approved by the City Commission, the decision was soon met with lawsuits filed by Cruz and other Morningside residents. By 2006, the city was siding with the Morningside residents and supporting a 35-foot height limit for the recently enacted MiMo Biscayne Boulevard District. Chetbro, however, contended it filed under zoning that allowed it to build as tall as 95 feet in height.

In November 2013, Jain, known for rehabbing the Vagabond Hotel and other Biscayne Boulevard properties, paid $2.1 million for the 5101 and 5125 buildings. Two months later, Jain entered into a settlement agreement with Morningside litigants and the city. Besides requiring the preservation of both buildings, the suit claimed that the covenant granted four times the amount of transferable development rights, or TDRs, “in order to encourage the preservation of the historic property and minimize the impact of the development of the property on the MiMo District and the surrounding neighborhood.”

City records indicate that Jain sold 339,789 square feet of development rights to four different development sites in Miami between October 2014 and July 2015. Recipient sites included Park Grove in Coconut Grove (39,739 square feet), Eve at the District in Wynwood (107,000 square feet), Brickell Heights (122,306 square feet), and Brickell Ten Condos (71,014 square feet).

Then, in June 2016, Jain sold at least part of her interest to 5101 RE CO LLC for $4.1 million.

Back in February 2017, Jain contended that the 5125 building was in horrendous shape, having sustained significant fire, water, and termite damage. “I can tell you without a doubt that the building is not worth saving,” Jain told the historic preservation board.

Cruz and the Morningside Civic Association appealed the board’s decision to the Miami City Commission in May 2017. Planning Director Francisco Garcia, however, called the restrictive covenant “immaterial to that particular application” and insisted that the 5125 building was never officially declared a contributing historic building. Iris Escarra, attorney for the Mattori Group and Jain, argued that Jain did exactly what she was supposed to do in the agreement: which was to not build an 87-foot-tall building, preserve the contributing Bayside Motor Inn Motel, and submit plans to the HEPB.

During the May 2017 commission meeting, Cruz and several Morningside residents spoke out against replacing 5125 Biscayne with a new commercial building. There were also many Upper Eastside dwellers — including from Morningside — who lauded Jain’s previous projects on the boulevard and supported her plans.

The commission unanimously sided with the developers and denied the appeal.

Winker said the decision demonstrates how the city has “gone rogue” in not enforcing its own rules. “It is ridiculous that residents and lawyers are having to spend their time suing over such obvious and egregious matters,” Winker wrote.

For that reason, Winker said his clients are also suing for monetary damages to be determined by the courts as well as legal costs.
The city is also in a legal dispute with the developers. On March 13, 2019, the city placed a lien on 5125 Biscayne Boulevard for work performed without a finalized permit and placing an illegal chain link fence along Biscayne Boulevard.

Ashton Kutcher, Adam Neumann, and Martin Scorsese (Credit: Getty Images)

Add these ideas to the pile of ambitious and strange projects WeWork’s executives have pursued: an ad-campaign directed by Martin Scorsese and an NBC television show produced by actor-cum-tech bro Ashton Kutcher.

The office space startup, whose parent firm The We Company is valued at $47 billion and expected to launch an initial public offering as soon as next month, has over-and-over again attempted to reframe its image as more than just a real estate company.

At the behest of its chief executive, Adam Neumann, WeWork has invested in a wave pool company, launched an elementary school and made other investments in health food companies.

While some of those ventures rankled investors, the latest pursuits appear to be focused on marketing the company. According to Bloomberg, Neumann and other executives sought to collaborate with Scorsese to direct an ad-campaign for the company.

A separate idea was pitched to NBC, to launch a television show similar to “Shark Tank,” that televised the company’s Creator Awards, an entrepreneurship competition. Kutcher, who is a close friend of Neumann and has advocated for the startup, would produce the show.

In the meantime, the observers and investors have raised eyebrows following reports of peculiar moves by Neumann ahead of the IPO, which included selling $700M debt and equity in recent years.

During a recent meeting with Wall Street analysts, Neumann told the audience to think of WeWork like Amazon, rapidly expanding into multiple businesses even if it doesn’t turn a profit, Bloomberg reported. Uber made a similar pitch to investors as it was gearing up for an IPO. [Bloomberg] — David Jeans 

Green Briar West Apartments (Credit: Google Maps)

The Westover Companies bought a 331-unit apartment complex near Westchester for $55 million.

King of Prussia, Pennsylvania-based Westover Companies bought the Green Briar West Apartments at 9615 Southwest 24th Street for $166,163 per unit. The seller is Green Briar West Corp., which is managed by Paul C. Green.

Westover Companies secured a $12.8 million loan from the Voya Retirement Insurance and Annuity Company to finance the acquisition.

The apartment complex totals 285,243 square feet.

Westover Companies’ portfolio includes 12,000 apartments in over 60 communities in the Philadelphia suburbs, South Jersey, Delaware, and Maryland, according to its website.

Apartment rent price growth is starting to slow in Miami after years of rising prices, according to a recent report from Berkadia.

The report signals that 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.

Barry Sternlicht (Credit: Getty Images)

On the heels of a strong second quarter for Starwood Property Trust, Chairman and CEO Barry Sternlicht spoke to analysts during an earnings call Wednesday about the slowing economy and “trade wars fought at 4 a.m. with tweets” that are eroding confidence in the markets.

The real estate investment trust reported net income up 16 percent, year-over-year, to $127 million, or 45 cents per share for the second quarter, meeting analysts’ expectations. The company’s core earnings totaled $153.9 million, up 3.7 percent compared to the same period of 2018.

Starwood Property Trust, an affiliate of Miami Beach-based Starwood Capital, lent $1.1 billion in commercial loans in the second quarter, and plans to lend a similar amount in the third quarter, Sternlicht said. Despite that, Sternlicht acknowledged that it is “tricky to lend in these markets because the cap rates feel a little artificial.”

“I’m sure you’re looking at your [stock] quote machines and wondering what’s going on in your world,” he said, adding that it is a “troubling time.”

He said he was “frustrated with our stock price” given the strength of Starwood’s lines of business.

He also spoke candidly about the potential for a “calamitous recession,” and criticized the “polarization of the electorates” and President Trump’s trade war with China – without naming him directly.

Rina Paniry, Starwood Property Trust’s CFO, said 19 percent of Starwood’s commercial loan originations in the second quarter were outside of the U.S., including $159 million in lending in Australia. Starwood executives again said they expect the firm’s international pipeline to grow as it adds employees in Europe and Australia.

Starwood’s affordable housing portfolio in Florida “continues to exceed expectations” with a blended rent increase of just over 6 percent, effective June 1, Paniry said. The portfolio, focused on north and central Florida, is 97 percent occupied. Sternlicht said he would be reluctant to sell those units and that it is “unimaginable that Florida is going to suffer any income downturn for the foreseeable future.”

Sternlicht said the apartment markets have strengthened as millennials increasingly choose to rent over buy. He also said that industrial continues to be the strongest asset class and that while hotels are reporting modest growth in revenue per available room, he is cautious about an oversupply of hotel rooms.

“We don’t expect anything to fall off the cliff but there is a lot of construction,” Sternlicht added. “We have to be uber careful.”

He also said that he is a “little spooked out” about San Francisco’s office market. If there is a correction, Sterlicht said the biggest exposure will be in tech valuation.

Downtown Abacoa and Michael Nortman of FLF Holdings (Credit: Google Maps)

The Tabani Group paid $18 million for the retail component of Downtown Abacoa in Jupiter.

FLF Holdings sold the 100,000 square feet of retail space on Town Center Drive and on Main Street to T Met Abacoa FL LLC and HTC Abacoa FL LLC, records show. The Tabani companies financed the deal with a $12.6 million mortgage from Citi.

Retail tenants at Downtown Abacoa include Civil Society Brewing Co., Copacabana Cuban Cuisine, Costello’s Trattoria, Freshii and Hokkaido Hibachi & Sushi.

In 2005, FLF, led by managing members Joshua Simon and Michael Nortman, acquired the space at what was then Abacoa Town Center from a financial institution and rebranded the property, bringing the retail component to over 90 percent leased, according to the firm’s website. Property records show Jupiter-based FLF paid $5.1 million for the commercial units.

JLL’s Danny Finkle, Eric Williams and Luis Castillo brokered the latest deal.

The retail is part of a master-planned development in Jupiter known as Abacoa, which is divided into more than a dozen neighborhoods with 6,000 residential units and up to 3 million square feet of commercial space. In 2016, Priderock Capital Partners paid $42 million for the newly built Dakota at Abacoa, a 190-unit apartment community at 3334 Bismark Lane.

In 2016, FLF Management, a partnership of FLF Holdings and Schaumburg, Illinois-based Crossroads Development Partners, paid $11 million for a 58.5-acre site just east of I-95 in Abacoa to build a business park.

Tabani Group, a Dallas-based commercial real estate firm, is led by Zaffar Tabani.

FLF Holdings is a real estate development and management company that focuses on value-add and income-producing properties, according to its website.

Douglas Elliman chairman Howard Lorber (Credit: Getty Images and iStock)

Douglas Elliman’s revenue soared 18 percent during the second quarter as New York City buyers rushed to close deals before a new transfer tax went into effect July 1, parent company Vector Group said Wednesday.

The New York-based brokerage raked in $243 million during the quarter, compared to revenue of $205.6 million a year ago. Despite pressure on brokerage margins throughout the industry, Elliman reported net income of $15.1 million, up from $5.9 million, thanks to the flurry of sales in late June.

“A lot of people rushed to get deals done to avoid the increase,” Chairman Howard Lorber said during an earnings call Wednesday. Although the tax tacks an additional 1 percent to 4 percent on residential purchases, Lorber said the real estate industry “did a lot of lobbying” to avoid a more onerous, recurring mansion tax.

In addition to the transfer tax boost, Lorber said the market’s well-documented decline “has surely slowed down.”

Like other residential firms, Elliman has not been immune to competitive pressure, particularly from Compass, the SoftBank-backed firm valued at $6.4 billion after its latest funding round.

“There’s no question the margins are down, without question because of increased broker payouts,” said Lorber, who cited the impact on competitor Realogy’s stock price, which was trading around $5 per share on Wednesday morning, down from a 52-week high of $23.27 per share.

Lorber said he thinks Elliman has done “better than most” in moderating payouts to agents. “It’s still a very competitive marketplace for brokers right now, especially here in New York City.” During the second quarter, Vector made “moderate” cuts to some Douglas Elliman subsidiaries, said CFO J. Bryant Kirkland III.

Overall, Vector reported total revenue of $538.4 million for the second quarter, up from $481.5 million. Net income was $39.3 million compared to last year’s $17.8 million. Total real estate revenue, including earnings from New Valley, Vector’s investment arm, rose 17.9 percent to $243.9 million during the quarter. Net income was $15.3 million, up from $2.9 million a year ago.

Though he remains “bullish” on New York, Lorber said New Valley is not investing in new condo projects in the city because high land costs make it nearly impossible to pencil out a profit.

“If you can’t sell for $3,000 a foot, you probably can’t make money,” he said. “So it’s not a market where there’s a lot of new projects in New York City.”
New Valley is still looking in South Florida. In California, it owns 50 percent of the Edition Hotel in West Hollywood, which has 190 hotel rooms and 20 condos (about 15 of which have been sold).

Miccosukee casino

Eight Miami-Dade residents could be finding themselves on the losing end of a $5 million embezzlement scheme.

The federal government is now looking to seize Miami real estate that was purchased using the proceeds of a scheme that involved rigging gambling machines at Miccosukee Resort & Gaming between 2011 and 2015.

The properties include a condo in Miami Beach, four residential properties in Miami-Dade and one in West Miami. The defendants, four of whom were former Miccosukee employees, also put money into Florida’s Prepaid College Plan, as well as purchased cars.

According to the indictment, four of the defendants and co-conspirators tampered with the electronic gaming machines at the Miccosukee Casino so that they would generate false and fraudulent credit vouchers or tickets. The defendants then allegedly exchanged the vouchers for cash at ATMs located on the casino floor, or from floor cashiers or the casino treasury.

Charged in the indictment were Michel Aleu, 41, Lester Lavin, 43, Yohander Jorrin Melhen, 42, Leonard Betancourt, 46, Maria Del Pilar Aleu, 39, Anisleydi Vergel Hermida, 30, Milagros Marile Acosta Torres, 33, and Yusmary Shirley Duran, 40.

The eight Miami-Dade County residents were charged with computer fraud, embezzlement, money laundering, and making false statements to law enforcement.

The properties the government is seeking to seize are:

• 13104 Southwest 211th Terrace, Miami; a five-bedroom, three-bathroom single-family home.
• Unit 1203 at 5880 Collins Avenue, Miami Beach; a two-bedroom, two-bathroom condo across from the Bath Club.
• 6120 Southwest 12th Street, West Miami; a three-bedroom, two-bathroom home.
• Unit 404 at 110 Fontainebleau Boulevard, Miami; a two-bedroom, one-bathroom condo
• 4247 Southwest 165th Street, Miami; a four-bedroom, three-and-a-half bedroom townhouse.
• 15411 Southwest 143rd Avenue, Miami; a three-bedroom, two-bathroom single-family home

South Florida real estate has long been viewed as a safe place for illicit gains. Last year, luxury properties were tied to a billion-dollar scheme where top officials laundered money out of Venezuelan’s state oil company and into real estate and assets around the world.

In a separate case, in June, the U.S. government sought to seize two Miami properties tied to an alleged money laundering and bribery scheme involving Venezuelan officials and the country’s state-run electricity company, Corporación Eléctrica Nacional, also known as Corpoelec.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. ET. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 4:00 p.m.

Miccosukee casino

Feds look to seize properties tied to Miccosukee embezzlement scheme. Eight Miami-Dade residents could be finding themselves on the losing end of a $5 million embezzlement scheme. The U.S. government is now looking to seize four residential properties in Miami, West Miami and Miami Beach, purchased using the proceeds of a scheme that involved rigging gambling machines at Miccosukee Resort & Gaming between 2011 and 2015. [TRD]

Douglas Elliman chairman Howard Lorber (Credit: Getty Images and iStock)

Douglas Elliman has a new transfer tax to thank for a boost in revenue for Q2. The brokerage’s parent company Vector Group recorded an 18 percent jump as buyers rushed to close deals and avoid extra costs. [TRD]

The Tabani Group paid $18 million for the retail component of Downtown Abacoa in Jupiter. FLF Holdings sold the 100,000 square feet of retail space on Town Center Drive and on Main Street to the Dallas firm. Tabani financed the deal with a $12.6 million mortgage from Citi. [TRD]

Barry Sternlicht (Credit: Getty Images)

Barry Sternlicht is not holding back. On the heels of a strong second quarter for Starwood Property Trust, its chairman and CEO spoke to analysts during an earnings call Wednesday about the slowing economy and “trade wars fought at 4 a.m. with tweets” that are eroding confidence in the markets. [TRD]

Morningside residents sue to stop Biscayne Boulevard project. Two-and-a-half years ago, the city of Miami’s Historic and Environmental Preservation Board approved plans to demolish a 72-year-old Biscayne Boulevard motel and replace it with a three-story office and retail building. But a lawsuit seeks to scrap those plans and force the Mattoni Group to build an exact replica of 5125 Biscayne Boulevard, a MiMo-era building that was demolished in July 2017. [TRD]

The Westover Companies bought a 331-unit apartment complex in west Miami-Dade for $55 million. King of Prussia, Pennsylvania-based Westover Companies bought the Green Briar West Apartments at 9615 Southwest 24th Street for $166,163 per unit. [TRD]

Ashton Kutcher, Adam Neumann, and Martin Scorsese (Credit: Getty Images)

WeWork’s latest pursuit is an ad-campaign directed by Martin Scorsese and an NBC television show produced by actor-cum-tech bro Ashton Kutcher. The office space startup, whose parent firm The We Company is valued at $47 billion and is expected to launch an initial public offering as soon as next month, has over-and-over again attempted to reframe its image as more than just a real estate company. [TRD]

The Geo Group CEO George Zoley (Credit: PR Watch)

Prison contractor Geo Group has opened a $57 million headquarters in Boca Raton. The company is a real estate investment trust and one of the biggest prison and detention center contractors in the world .It is among the detention center operators with government contracts being investigated by Congress over alleged mistreatment of detainees. Its new headquarters, at 4955 Technology Way, is not far from its previous home base at 621 Northwest 53rd Street. [Sun Sentinel]

Prive Group paid $17 million for the majority of an office park in Davie. The real estate firm is expanding its commercial portfolio in South Florida. Prive, led by Argentinians Javier Rabinovich and Mariano Karner, assumed an $11.3 million commercial mortgage-backed securities loan from Starwood Mortgage Capital. The eight buildings the North Miami Beach-based company acquired total nearly 82,000 square feet. [TRD]

Toni Morrison (Credit: Getty Images)

A look at the places Toni Morrison called home. For the Nobel Laureate, who died Monday, home and “a sense of place” were central to her greatest works. Among her homes: a converted boathouse on the banks of the Hudson River in the community of Grand View-on-Hudson, purchased for $120,000 in the late 1970s. [TRD]

Luxury movie theater chain iPic Entertainment filed for Chapter 11 bankruptcy. The filing comes months after it opened its eight-screen theater in downtown Delray Beach, a delayed and expensive project for the company. The Boca Raton-based firm had $291 million in debt and $157 million in assets as of May 15. [TRD]

President Donald Trump and China’s President Xi Jinping at a press conference in Beijing in 2017

The trade war’s impact on real estate, by the numbers. From rising construction costs to the sharp decline in Chinese investment, the escalating multibillion-dollar trade war between the United States and China has impacted real estate in many ways. And that’s not counting the impact of an overall economic slowdown. [TRD]

Airbnb acquires corporate extended-stay platform Urbandoor. In addition to boosting Airbnb’s supply of corporate-friendly properties, the acquisition will also allow Airbnb to take advantage of Urbandoor’s established relationships with multifamily owners. The terms of the transaction were not disclosed. [Techcrunch]

Compiled by Katherine Kallergis

Allapattah 17 and Lissette Calderon

Developer Lissette Calderon scored a $24.4 million construction loan for a planned 192-unit apartment building in Allapattah.

Calderon’s Neology Development Group is using the loan to build Allapattah 17, at 1569-1652 Northwest 17th Avenue. Calderon secured the loan from MidCap Financial, a subsidiary of Apollo Global Management, according to a release.

The 14-story building will have studios, one-, two- and three-bedroom apartments.

Charles Foschini, Chris Apone, Lourdes Carranza-Alvarez and Shannon Wilson of Berkadia’s Miami office arranged the loan on behalf of Neology Development Group. The loan is non-recourse, 3-year, floating rate loan with one 12-month extension option.

In July 2017, Calderon’s entity paid $1.7 million for the Allapattah property that was home to a laundromat, records show.

Calderon is also planning another mixed-use development in Allapattah, 16 Allapattah, with 323 apartments and a 336-space parking structure at 1625 Northwest 20th Street. The 12-story project will also include 13,133 square feet of retail and 6,947 square feet of office.

In previous interviews, Calderon told The Real Deal that her goal is to create a rental portfolio in emerging neighborhoods of Miami and other cities. Last September, 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.

Investors and developers continue to target Allapattah, an industrial neighborhood west of Wynwood and east of Miami International Airport.

Among them, Moishe Mana has been assembling land on the eastern edge of Allapattah, just west of his Wynwood holdings.

And Robert Wennett has hired starchitect Bjarke Ingels to design plans for a residential, office, retail and hotel project in Allapattah that will rise between Northwest 21st and 22nd streets, and between Northwest 13th and 12th avenues.

Miami beach skyline (Credit: iStock)

A North Miami Beach resident is heading to federal prison for leading a $3.5 million mortgage fraud scheme in South Florida, the mortgage fraud capital of America.

Shayeh Dov was sentenced to over seven years in prison and ordered to pay more than $3 million in restitution after targeting the Orthodox Jewish community in South Florida and New York with fake investments.

Dov pleaded guilty to conspiracy to commit wire fraud in February for his role in the fraud, which began in May 2012 and continued until May of this year, according to the U.S. Attorney’s Office for the Southern District of Florida.

Court records show that Dov stole money from investors in the Orthodox Jewish community by promising them lucrative investments in mortgage notes. He used the money to pay for personal and travel expenses, like gambling, mortgage payments on his home, trips to the Bahamas, Israel and New York, and luxury car loans, including for a Maserati and Range Rover. The funds were not used to purchase the mortgage notes promised to investors.

Dov presented investors with opportunities to purchase distressed or foreclosed mortgage notes through companies he controlled – P&S Inc., Notez LLC, and Notes LLC – for properties in Broward, Miami-Dade and other counties in Florida.

Even after Dov pleaded guilty earlier this year, he again committed mortgage fraud for an additional $75,750 note and violated his bond, the sentencing document shows.

“Dov used the close-knit bonds of this community to con investors. In essence, the defendant was a predator that fed on the goodwill and trust of the Orthodox Jewish community,” according to the sentencing.

Earlier this year, a federal judge in Miami sentenced California man George French Jones to more than nine years in prison for his role in a mortgage fraud and identity theft scheme in South Florida.

Mortgage fraud is on the rise as more buyers are inflating their incomes in order to qualify for new purchases. States like Florida, New York, New Jersey, Washington, D.C. and New Mexico are most at risk, according to data from CoreLogic.

Zillow CEO Rich Barton (Credit: Twitter and iStock)

Zillow Group’s bet on instant homebuying boosted its second-quarter revenues 84 percent to $599.6 million, the company said Wednesday.

Revenue for Zillow Offers — which debuted last year — totaled $248.9 million for the quarter. Meanwhile, Zillow Mortgages revenue rose 40 percent to $26.9 million.

In a statement, co-founder and CEO Rich Barton described demand for Zillow Offers as “incredibly impressive” and said the program is on track to hit an annualized run rate of $1 billion in revenue. Zillow said more than 69,000 homeowners requested an offer from Zillow to purchase their home during the second quarter, up 94 percent from the prior quarter.

“We’re in the early stages of a bold expansion of our company that opens up exciting opportunities for our customers, partners, shareholders and employees,” Barton said.

Despite the iBuying program’s impressive run, Zillow Offers comes at a price.

Zillow said its second-quarter losses widened to roughly $72 million, compared to just $3 million last year. The Homes segment accounted for most of those losses — some $71.1 million, up from $10.1 million a year ago.

Zillow said it made $1,578 on each home it sold during the quarter. “Over time, our unit economics should benefit more from other adjacent services, like mortgage origination, title and escrow,” Barton said in a letter to shareholders.

Until now, the Seattle-based listings giant has made the bulk of its money by selling ads to agents via Premier Agent. Last year, as revenue growth from Premier Agent started to drop, the company bet heavily iBuying and mortgages — though investors haven’t been completely swayed by the pivot. Zillow’s stock closed at $49.56 a share, compared to $65.57 a share in June 2018.

Steve Eisman — who bet against the subprime mortgage market before the downturn — has a short position in Zillow, which he told The Real Deal in July he believes is running out of ideas to grow its home-listing business.

On Wednesday, Zillow said Premier Agent has normalized. But revenue for the program was relatively flat at $231.9 million, compared to last year’s $230.8 million.

Barton has described Zillow’s plan to buy homes and offer mortgages as a moonshot opportunity.

“We are dreaming of our own moon landing,” he said during an earnings call Wednesday. “In Q2, we stepped on the gas, launching seven markets — a rate we [intend] to match in Q3.”

Since the start of the year, Zillow has expanded Zillow Offers to seven more cities; on Wednesday, it said it would add four more by mid-2020 for a total of 26, including Cincinnati, Tucson, Oklahoma City, and Jacksonville.

JV Acquisitions Jaime Godur and Pompano Beach Festival Flea Market

Two agents are suing Boca Raton-based JV Acquisitions over alleged unpaid commissions on the $56 million sale of the Festival Marketplace in Pompano Beach.

Agents Claudia Herrera and Christopher Bauso allege in the suit filed in Broward County Civil Court that JV Acquisitions and its principal Jaime Godur owe them about $1.3 million for the sale of the 37-acre property. IMC Equity Group bought the flea market at 2900 West Sample Road in 2018, and plans to renovate the property.

The complaint alleges that broker JV Acquisitions and Godur took all the commissions and “misappropriated the entire commission for their own personal gain.”

Kevin Mason of KPM Law Firm, who represents Godur and JV Acquisitions, declined to comment.

The lawsuit is allegedly tied to two separate agreements between Herrera and Bauso and JV. According to the complaint, on about July 29, 2015, Herrera and JV entered into an agreement in which they would equally split commissions obtained through the “buying and selling of real estate properties nationwide.”

The complaint also alleges that JV Acquisitions orally agreed that Bauso would receive a 20 percent referral fee from the gross commission earned on any deal for introducing Godur to the CFO of the seller, R/S Associates of Florida.

According to the suit, Herrera and Godur allegedly created marketing materials for the flea market so that it could be promoted to potential buyers. And in about November 2017, an interested buyer made an offer to purchase the property.

Godur allegedly concealed this offer from Herrera so that she would instead focus on rebranding the mall, even though she would be entitled to a share of any commission, according to the complaint. Godur also allegedly concealed this information from Bauso.

Attorneys Joshua B. Alper and Aiman Farooq of Morgan & Morgan represented Herrera and Bauso in the lawsuit.

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. ET. Please send any tips or deals to tips@therealdeal.com

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Robert Shapiro

Los Angeles developer Robert Shapiro, the former CEO of South Florida-based Woodbridge, pleaded guilty to leading a $1.3 billion Ponzi scheme. In Miami federal court on Wednesday, Shapiro admitted he “misappropriated” up to $95 million of funds from mostly elderly investors to pay for luxury L.A. estate, artwork, travel, jewelry and more. He’s facing up to 20 years in prison for wire and mail fraud conspiracy, plus another five years for tax evasion. [Miami Herald]

Zillow’s bet on iBuying boosted revenues to $600 million, but it still lost $72 million. Revenue for Zillow Offers, which debuted last year, totaled $248.9 million for the quarter. Meanwhile, Zillow Mortgages revenue rose 40 percent to $26.9 million. In a statement, co-founder and CEO Rich Barton said Zillow Offers is on track to hit an annualized run rate of $1 billion in revenue. [TRD]

Two agents are suing JV Acquisitions over alleged unpaid commissions on the $56 million sale of the Festival Marketplace in Pompano Beach. The agents are alleging that JV Acquisitions and its principal Jaime Godur owe them about $1.3 million for the sale of the 37-acre property. IMC Equity Group bought the flea market at 2900 West Sample Road in 2018, and plans to renovate the property. [TRD]

A Florida man was sentenced in a mortgage fraud scheme that targeted the Orthodox Jewish community in South Florida and New York. Shayeh Dov stole money from investors in the Orthodox Jewish community by promising them lucrative investments in mortgage notes, using the money to fund his lavish lifestyle. He’s heading to prison for seven years, and was ordered to pay more than $3 million in restitution. [TRD]

Lissette Calderon (Photo by Sonya Revell)

Developer Lissette Calderon closed on a $24M construction loan for a new apartment project in Allapattah. Calderon’s Neology Development Group is using the loan to build Allapattah 17, a 192-unit building at 1569-1652 Northwest 17th Avenue. MidCap Financial is the lender. [TRD]

FROM PROPERTY RECORDS

Ocean Bank provided a $45 million loan to Eurocon LLC for the Element Miami Doral, at 3285 Northwest 107th Avenue. The 284-key hotel was built between 2013 and 2015.

Compiled by Katherine Kallergis

From left: Compass CEO Robert Reffkin and Chris Cortazzo, with one of Cortazzo’s listings, 0 Zumirez Drive, Malibu

Chris Cortazzo, the longtime Coldwell Banker star agent who had more than $500 million in sales volume last year, has jumped to Compass.

Cortazzo — who has taken his 16-person team with him — will be based in the same Malibu office, joining Compass at a time when the Softbank-backed behemoth is preparing its initial public offering. The New York-based firm recently raised another $370 million in a Series G round, propelling its valuation to $6.4 billion.

Compass announced the move in a release on Wednesday. In a statement accompanying the release, Cortazzo cited Compass’ “tools and support system” as a reason for joining the firm. He could not be reached for further comment.

He’s one of many top producers Compass has recruited in recent years and represent a major loss for Coldwell Banker. Cortazzo, who had been with Coldwell for 25 years, ranked as the company’s longtime No. 1 agent nationally and internationally.

Cortazzo’s departure — along with the nine other agents and seven staff — comes as Coldwell looks to scale back in Los Angeles. Sources told The Real Deal last month that the company is closing one of its Beverly Hills locations and shifting 150 agents.

Jamie Duran, president of Coldwell’s Southern California region, confirmed the company was having discussions about closing one of the two offices, though no plans were final, she said last month. At one point, the firm had three offices in the 90210 ZIP code.

Realogy — which is Coldwell’s parent company — has been struggling lately amid Compass’ high-profile moves and cash infusion. Realogy’s stock price was trading at less than $5 Wednesday morning, nearly 80 percent below its share price last year.

Cortazzo, a Malibu native, ranked second on The Real Deal’s annual list of top brokers, pulling in $500.8 million from 36.5 deal sides in 2018. Among his bigger listings is La Villa Contenta, a Malibu home spread across 4.5 acres, priced at $62 million; and a Guy Dreier-designed mansion for $65 million.

Ryan Gorman, president of NRT, the brokerage-owning entity of Realogy that includes Coldwell, wished Cortazzo well.

“Chris has been an integral part of Coldwell Banker for many years, and we wish him the greatest in work and in life,” he said in an e-mailed statement. “Chris will always be part of the Coldwell Banker family, and we look forward to continuing to work with him on transactions in Malibu.”

The Bristol (Credit: Realtor and iStock)

A Palm Beach dermatologist paid $5.6 million for a condo at The Bristol in West Palm Beach.

Dr. Samuel Mandel and his wife Annette bought condo unit 1103 at 1100 South Flagler Drive from the development group Flagler Investors. The 25-story, 69-unit tower’s units range from 3,600 square feet to 14,000 square feet, priced from about $5 million to more than $40 million.

Mandel and his wife are well-known art collectors and also have owned property in New York City.

The Bristol is the first new luxury condo project to be built in West Palm Beach in over a decade. Flagler Investors is led by Al Adelson and Gene Golub.

Adelson previously told The Real Deal that the luxury condo is nearly sold out, except for two units that it will sell at a later date. A large portion of the sales have come from former estate owners in Palm Beach who were looking to downsize or wanted to move into a condo, according to Adelson.

Buyers at the Bristol include beauty mogul Sydell Miller, who closed on a full-floor penthouse for $42.6 million in March. Recently, real estate developer Stuart Bernstein and his wife Wilma paid $5.3 million for unit 803 at the luxury condo development.

In late June, Washington, D.C. parking garage mogul Irwin Edlavitch and his wife paid $5.6 million for unit 1203 at The Bristol.

The site on Monday

A gas line ruptured at the construction site of a new AC Hotel by Marriott in Miami’s Edgewater neighborhood on Thursday morning, days after a gas leak shut down traffic at the same property.

A hazmat team in on the scene at 3400 Biscayne Boulevard, according to city of Miami Fire Rescue Captain Ignatius Carroll.

On Monday, the gas leak temporarily shut down the southbound lanes of Biscayne Boulevard between Northwest 33rd and 36th streets, near Midtown Miami and the Design District.

3H Group is the developer behind the 153-room hotel, which is under construction on the former site of the Midtown Inn Miami. In April 2018, 3H closed on a $21.3 million construction loan for the project. Hemant Patel’s Arti Hersi Inc. also owns a stake in the project.

Kobi Karp designed the seven-story hotel, which will feature a restaurant and bar, a rooftop pool, fitness center and meeting rooms. It will also share a 217-space parking garage with the adjacent Hampton Inn & Suites Miami Midtown.

In July, a gas explosion at a Plantation shopping center injured nearly two dozen people. Portions of the shopping center, owned by Edens, are expected to be demolished now that the building is structurally unsound, the city’s fire chief previously said.

Michael Tillman and Soleste Grand Central

Michael Tillman’s PTM Partners and Estate Investments Group scored a $55 million loan from Bank OZK to build an 18-story apartment project in an Opportunity Zone in Overtown.

The developers are building Soleste Grand Central, a 360-unit multifamily building at 218 Northwest Eighth Street in Miami near the MiamiCentral train station.

The project will be a mix of affordable housing and luxury apartments. Forty units, or 11 percent, will be set aside for affordable housing. The project has already broken ground and is expected to go vertical this fall.

The development group also secured about $18 million in mezzanine financing from Nationwide Real Estate Investments, in addition to the construction loan.

The deal marks one of the first construction loans given to an Opportunity Zone project in South Florida.

The federal program gives tax incentives to developers and investors who invest in distressed areas throughout the country. Many developers have expressed interest in the program, but few have actually started putting shovels in the ground and building projects.

The deal also shows how banks and lenders will look to finance Opportunity Zone sites.

Bilzin Sumberg’s Alexandra Lehson, Jay Sakalo and Jon Chassen represented PTM Partners and Estate Investments Group in securing and closing the financing for Soleste Grand Central.

“The development team’s ability to secure capital for Soleste Grand Central underscores the strong demand for both multifamily investments in Miami’s urban core and the tax benefits derived from long-term investments within Opportunity Zones,” Bilzin Sumberg’s Lehson, Sakalo, and Chassen said in a statement.

Monthly rents at Soleste Grand Central will be about $1,950 for a one-bedroom, which is less than comparable rents of other Class A apartments in Brickell or downtown Miami, Tillman previously told The Real Deal. The group paid $9.7 million for the site earlier this year.

Estate Investments Group, led by Robert Suris, has completed and sold more than $200 million in residential real estate assets in the past two years, according to a press release. It’s also developing the 200-unit Soleste Bay Village in an Opportunity Zone site in Palmetto Bay.

The lender, Little Rock, Arkansas-based Bank OZK, has become one of the more active construction lenders in South Florida, NYC and Los Angeles. Last year, the $23 billion asset bank made a $558 million construction loan to Jules Trump’s The Estates at Acqualina, a condo project with two 50-story towers at 17901 Collins Avenue in Sunny Isles Beach.

Realogy CEO Ryan Schneider (Credit: iStock)

After months of free-falling, Realogy’s stock soared more than 19 percent on Thursday as the company said it grew its agent base “for the first time in a long time.”

But overall, the company’s second-quarter revenue dropped 5 percent year over year to $1.7 billion. Net income remained in the black but profits slid 44 percent to $69 million, from $123 million a year prior. At NRT, the division that includes the Corcoran Group and Coldwell Banker, the volume of closed deals dropped 5 percent to 95,251.

During an earnings call Thursday, company executives played up key points of Realogy’s turnaround plan: A $70 million cost-savings plan, new partnerships (like one announced last month with Amazon) and a plan to get commission expenses under control even while retaining and recruiting agents in an uber-competitive market.

In recent days, Realogy’s stock has been trading around $5 per share, down more than 77 percent from around $22 a year ago. The conglomerate’s stock jumped to $6.06 per share after the call Thursday. That was a 19 percent bump from $5.08 at market close yesterday, but the figure settled at $5.84 as of publication time.

In a major bright spot for the quarter, Realogy said NRT grew its agent base by 2 percent to 51,000 during the second quarter. “We’re trying to recruit people with the most potential,” said CEO Ryan Schneider, who said Realogy has been using machine learning to guide recruitment.

But the fight is hardly over.

This week, Compass hired Coldwell Banker’s long-time No. 1 agent, Chris Cortazzo, who is based in Malibu and whose 16-person team closed more than $500 million in sales last year.
“Especially in some of the California cities and Chicago, the competition intensity is spinal tap 11 kind of thing,” Schneider said during the earnings call.

Unlike competitors who throw bonuses at new agents, Schneider said when Realogy has the choice between losing money and retaining agents, it won’t lose money.

“If you want the highest split possible, you can go to RE/MAX,” he said, referencing its high-commission split model. “Our value proposition isn’t just the money… We have to be competitive on that, but we’re also trying to emphasize the benefits we bring with the products, partnerships, power of scale, referrals.”

Realogy has been fighting off intense competition on multiple fronts.

Last month, it filed a scathing lawsuit accusing Compass of illegal business practices and attempts at price fixing.
It also announced a blockbuster partnership with Amazon, called “TurnKey,” in which homebuyers get $5,000 in Amazon home services and product and Realogy agents benefit from leads.

“Look, we’ve got big dreams for the thing. We want it to be as big as possible,” Schneider said Thursday. “Obviously we have a partner who does things very large.”

Although the Amazon deal temporarily boosted Realogy’s stock price, analysts have said they’re not sure it’s a panacea.

As part of its turnaround, Realogy gave updates on the $70 million cost-savings plan it announced earlier this year. The company said it cut $22 million in costs during the second quarter, and reduced its total debt by $113 million. Its corporate debt is still $3.5 billion as of June 30.

In a statement, CFO Charlotte Simonelli projected more sales in the third and fourth quarters would lead to financial improvements. The company is “committed to using our strong free cash flow to reduce our debt and to invest in our business,” she said. “Making Realogy much more efficient is and will be a priority for me,” she added during the earnings call.

eXp Realty CEO Glenn Sanford (Credit: iStock and Twitter)

eXp Realty, the fast-growing virtual brokerage, has reported a “record” $266.7 million in revenue in the second quarter of 2019 — a 104 percent year-over-year increase.

In its latest earnings report, the firm also reported $2.2 million in net losses, up 16 percent on the previous year. Transaction volume increased by 94 percent, year over year — totaling $10.3 billion. The firm said it did 35,837 deals, up 80 percent.

“As agents join eXp Realty and build their business, we’ve noticed a steady increase in productivity,” CEO Glenn Sanford said in a statement.

While traditional firms are struggling with profitability, eXp has been able to attract agents by offering high commission splits, revenue-sharing and stock options. Sanford co-founded the cloud-based brokerage in 2009 in Bellingham, Washington. By 2018, it had 15,570 agents, up from 2,401 in 2016. In the last quarter, its agent headcount climbed to more than 20,000.

The brokerage, which doesn’t have any brick-and-mortar locations, recently launched in New York, where in the spring it tried to woo agents at information sessions at the Park Lane Hotel. It has also recently landed a string of top agents and their teams, including Hoboken-based David Devoe, who moved from Keller Williams with 32 agents and 10 staffers.

Compass, one of the fastest-growing residential brokerages in the country, has around 13,000 agents and is targeting as many as 20,000 by the end of the year.