18901 Southwest 106th Avenue, MMG Equity Partners CEO Gabriel Navarro (Credit: Google Maps)
Who says retail is dead?
MMG Equity Partners paid $16 million for a shopping center in Cutler Bay.
MMG Equity Partners purchased the 127,072-square-foot Centre at Cutler Bay, at 18901 Southwest 106th Avenue, for $126 per square foot, records show. Cutler Center Holdings, LLC, which is tied to Luis Boschetti, sold the property.
The retail center was built in 2008. Cutler Center Holdings, LLC bought the property for $3.7 million in 2005.
Avison Young’s Rosendo Caveiro, John K. Crotty, Michael T. Fay, David Duckworth, Brian de la Fé, Berkley Bloodworth and Emily Brais represented the seller in the deal.
MMG could raise rents and build a standalone building on the east side of the property with the potential to hold seven tenants, according to a press release. The shopping center’s current tenants include child and adult daycare centers, a career counseling center, and offices for accountants, insurance agents and real estate brokers.
Earlier this year, a joint venture between MMG Equity Partners and Global Fund sold a Publix-anchored shopping center in Boynton Beach to Juster Development Company for $19.35 million.
In 2017, MMG Equity Partners paid $17 million for the Meadows Square Shopping Center in Boynton Beach.
Retail remains strong in South Florida despite reports of struggles nationally. In Miami-Dade County, asking retail rents rose to $39.75 per square foot in the third quarter from $35.54 per square foot in the previous year, according to Colliers International South Florida.
Homebuilders are targeting areas south of Miami-Dade County like Cutler Bay as home prices in Miami’s urban core are rising. Lennar recently paid $19.5 million for a 58-acre lot near Cutler Bay at Southwest 104th Avenue.
475 Biltmore Way, Somi Center with Douglas Mandel and Benjamin Silver
A San Diego-based investor acquired two medical office buildings in South Miami and Coral Gables, in what a broker on the deal called an example of the rise in out-of-state buyers searching for higher yield in Florida.
The investor paid $33.15 million for the 50,000-square-foot buildings at 5966 South Dixie Highway and 475 Biltmore Way. The buying entities were listed as Somi Center MOB LLC and 475 Biltmore MOB LLC. The buyer is managed by JDS Real Holdings of Encinitas, California.
The sellers were listed as Somi Center LLC and Altis 475 LLC. Benjamin H. Silver and Douglas K. Mandel of Marcus & Millichap represented the sellers, which are both managed by Ingrid Morales, Sylvia Cristina Morales and Leonard Boord.
The buyer, a medical office operator, plans to stabilize the buildings, increase rental rates and improve overall operations, according to Silver and Mandel. Together, the properties are 77 percent leased. The Easton Group will manage the buildings.
Tenants at Somi Center include co-working space operator Büro with 13,000 square feet. The 50,000-square-foot Class A mixed-use building is also leased to The Halal Guys and Walgreens. The building was completed in 2017 and includes a parking garage. It’s 60 percent leased with rents in the mid $30s per square foot, triple net.
The property at 475 Biltmore Way is a 51,423-square-foot medical office building. It was recently renovated and has retail space on the ground floor, according to the release. Gross medical office rents in the building are in the high $30s per square foot. The building is near Coral Gables City Hall and Miracle Mile.
Apple CEO Tim Cook and Apple’s Cupertino headquarters (Credit: Getty Images and Wikimedia)
First it was Google, then Facebook. Now, Apple has become the latest Silicon Valley titan to pledge billions of dollars to address California’s affordable housing crisis.
On Monday, the Cupertino-based company announced a $2.5 billion housing plan, according to the New York Times. About $1 billion will go to develop affordable housing — and like Google and Facebook — the plan includes building on Apple-owned land in San Jose. Another $1 billion will help first-time homebuyers find mortgages, according to the announcement.
This year, Google has pledged $1 billion and Facebook $500 million to help address the housing crisis in the Silicon Valley-San Francisco Bay Area, consistently one of the most expensive places to buy and rent homes.
Apple’s latest plan includes $150 million to support affordable housing in the Bay Area, partially through forgivable loans and grants, as well as $50 million to address homelessness, according to the report. Apple said the money could be spent within two years.
In July, Google partnered with Lendlease on a massive plan to build master-planned communities on land it owns in Silicon Valley cities. Those communities would take shape over the next 10-15 years and include 15,000 condominium and rental units.
Facebook’s plan calls for grants and loans to develop low- and middle-income housing, including on its own land. Microsoft has a $500 million affordable housing development plan in Seattle.
Tech companies have been under increasing pressure to help relieve California’s housing crisis, one of the worst in the country. Gov. Gavin Newsom met with some tech firms about the issue before taking office earlier this year. In January, he called for tech firms to contribute $500 million to a state-run workforce housing development fund that would be matched dollar for dollar with state funds. [NYT] — Dennis Lynch
A new hotel in Dania Beach sold for $27.8 million amid a wave of new development in the Broward County city.
N&S Properties, of Weston, sold the 143-key Hotel Morrison at 28 South Federal Highway for about $194,000 per key, records show. S3 Hospitality Miami bought the 93,822-square-foot hotel, which was completed this year.
The buyer is led by Sunil and Usha Patel of Fort Lauderdale-based Kusa Hospitality, who also own the Holiday Inn Express Cruise – Airport in Fort Lauderdale.
N&S Properties, which is led by Alvaro Correa, bought the land to build the hotel for $1.8 million in 2014, records show. It sits near the Casino at Dania Beach.
Dania Beach is preparing for an influx of new development. Spirit Airlines recently announced it will consolidate its headquarters and other facilities at a new $250 million campus at Dania Pointe. Spirit’s new headquarters will be just south of Fort Lauderdale-Hollywood International Airport and will span up to 500,000 square feet.
It will be part of a larger, 102-acre development, led by New York-based Kimco Realty, which is also under construction. The project will feature 800,000 square feet of open-air retail space, 500,000 square feet of Class A office space, more than 1,000 apartment and condo units, and a dual-branded Marriott hotel.
Streamers are gobbling up remaining space in LA, but how much is left to go around? (Illustration by Brian Stauffer)
The streaming wars’ latest skirmish came in October when Apple announced it would produce the World War II series “Masters of the Air” in-house at the company’s AppleTV+ studio in Culver City.
Hollywood saw the news as proof that Apple is joining Netflix and Amazon Studios as streaming’s biggest threats to film studios, and that it would be foolish to bet against Apple, what with its $1 trillion-plus valuation.
“Apple is ready for takeoff,” the Hollywood Reporter gushed.
But Apple TV+ is also the most acute example of an issue affecting streaming giants, and perhaps the future of Los Angeles’ world-famous entertainment business: a lack of space.
Developers — most prominently Hackman Capital, Hudson Pacific Properties and Lincoln Property Company — have delivered on massive tenant improvements in order to get Netflix, Amazon and Apple to lease their L.A. buildings, transforming the city’s office market.
“We have the benefit of being the clear No. 1 entertainment capital of the world, and that’s not going to change,” said Michael Hackman, founder and CEO of Hackman Capital, which fully leased its Culver Studios to Amazon and paid $750 million for the 25-acre CBS Television City campus in December.
Despite a flurry of blockbuster lease deals, the A-list streamers still have far less space to make content in the city compared to the old-line studios they increasingly compete against. Even though developers are scrambling to repurpose space to accommodate them, their sheer appetites will likely lead them to look outside L.A. for the real estate they need. And there’s little room to grow. L.A. County soundstage space is at 92 percent capacity, according to Film LA.
Image may be NSFW. Clik here to view.“When it comes to property,” said Michael Soto, a researcher at Transwestern, “the legacy studios basically have a 100-year head start.”
Streamers jet into LA
Once upon a time, the Los Gatos, California-headquartered Netflix had a friendly relationship with the major studio players, such as Disney, Warner Bros., Universal, Sony, Paramount and recent Disney acquisition Fox.
That started to shift in 2013 when Netflix premiered its much-acclaimed original series “House of Cards.”
Netflix “realized that if they owned original content and their own distribution path via streaming, they can achieve greater independence and competitiveness,” said Gene Del Vecchio, a marketing professor at the USC Marshall School of Business. Also, original programming meant decreased reliance on licensing content made by studios, Del Vecchio said.
But to make its own content, Netflix needed space close to actors, directors and screenwriters, not to mention grips, sound engineers and costume designers.
In other words, Netflix had to get serious about L.A.
In 2017, the company dispensed with its modest satellite office in Beverly Hills and moved into Hollywood, renting out 418,000 square feet of studio space at the Sunset Bronson lot from Hudson Pacific Properties. A year later, Netflix extended its lease at Sunset Bronson until 2031. The company simultaneously rented out Epic, a 13-story, 328,000-square-foot building across the street from Sunset Bronson, another lease that runs through 2031, and another parcel owned by Hudson Pacific.
When the dust had settled, Netflix had leased approximately 1.6 million square feet of Hollywood space. (The company also added to their space by setting up a 60,000-square-foot studio in Burbank this October.) Meanwhile, Amazon and Apple were similarly reshaping Culver City.
Last year, in a bid to ramp up its Prime video originals, Amazon moved production centers from Santa Monica to the fabled Culver Studios, filming site of both “Citizen Kane” and “Gone with the Wind.”
Hackman Capital leased the property to Amazon, and the Westside L.A. developer is expanding the studio to 721,000 square feet, an undertaking mostly financed by $620 million in Deutsche Bank loans.
“I sincerely believe their real estate acumen because everything they did on the warehouse side really proved to be ahead of the curve,” Hackman said of Amazon. “They figured out very quickly that they had to have their own studio lot, and when they know what they want, they make it happen.”
Image may be NSFW. Clik here to view.Lincoln Property Company, meanwhile, announced in March 2018 it had leased 128,000 square feet of studio and office space in Culver City to Cupertino, California-headquartered Apple’s new streaming service.
The streamers’ moves helped spur a “building boom in Culver City,” said Kevin Klowden, executive director at the Milken Institute, a Santa Monica-based economics think tank.
“Streamers have joined — and even dominate — the studio leasing market,” said JLL’s Carl Muhlstein.
Space race
But the soundstages and office spaces leased by Netflix, Amazon and Apple don’t compare to what the studios own.
Take Paramount.
Show business observers knock the 107-year-old, Hollywood-based company for routinely placing last among studios in worldwide box office revenue and lagging in production. Paramount is scheduled to release 13 movies by the end of 2019, while Netflix is set to produce 90 films.
When it comes to land, though, the tables are turned.
The Paramount lot will reach 4.1 million square feet once a $700 million, 1.4 million-square-foot expansion is completed.
The story of Paramount v. Netflix in Hollywood is similar to the dynamic in Culver City.
A 20-minute walk from the Apple TV+ studio along Washington Boulevard leads to the 2 million-square-foot Sony Pictures lot, also dating from 107 years ago. The other, even bigger studios — Disney, Warner Bros. and Universal — own millions of square feet in office and soundstage space across Burbank and Studio City.
Disney also has the Santa Monica soundstage space used by Hulu, of which it has full control following a deal with Comcast.
Disney, Warner, and Universal are all set to start their own streaming platforms within the year.
Is the space disparity of great concern for streamers? Maybe not, since real estate since content providers lend and borrow real estate.
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The grand front-porch entrance to Culver Studios.
“You see Paramount trucks on the Disney lot, and Disney trucks on the Paramount lot,” Muhlstein said, a practice that the studios may extend by leasing lot space to streamers.
But the land issue may also prompt streamers to have a wandering eye. “Netflix is making the majority of its films outside Los Angeles,” Klowden noted.
What streamers want
Streamers are not eager to discuss their real estate needs. Netflix declined comment, and messages left with Apple and Amazon were not returned.
Developers and real estate agents were also loath to talk, lest they break the militant NDAs signed with the companies. (As oneagent put it: “On background, Amazon is a very private company.”)
Sources close to Netflix did disclose that personnel in Los Angeles, not Los Gatos, make its local real estate decisions. The L.A. team includes Matt Tevenan, the company’s vice president of real estate and workplace production, and Ty Warren, vice president of physical production.
General patterns can be pieced together, in terms of what Tevenan, Warren and other streamer decision-makers look for.
“Streamers and tech companies in general prefer to invest in their core business,” said Craig Coan, a real estate attorney at Greenberg Glusker. “L.A. real estate is very expensive to buy, and I think you would rather invest capital in creating content than real estate.”
Streamers, though, are unafraid to throw money toward tenant improvements.
“Because of the volume of activity they have to create for a global audience, it doesn’t work with the traditional ‘network’ schedule … of hey, I have a show, I’ve got a pilot, I’m going to see how it goes, then I’m going to run it for a certain amount of months per year and do a year-to-year deal,” said Bill Humphrey of Hudson Pacific, the point person for Netflix’s lease at the Sunset Bronson studio.
“They are able to lease a number of stages and associated production office space, knowing that they are going to have a continuation of the content going on in those spaces and facilities on an ongoing basis for many years,” he added.
The investment could be for soundstages — which require high ceilings, specific acoustics and lots and lots of parking. Money could also go toward designing office spaces replete with the sofas and Ping-Pong tables tech companies are known for.
Humphrey believes that his firm has an edge, given its concentration of Hollywood properties. “Creative people I talk to say Hollywood is central, because you’ve got studios and the lot production in the Valley — in Burbank especially. You’ve got Paramount down the street and you’ve got Fox and Sony toward Culver City.”
Also toward Culver City is the Amazon-occupied Culver Studios, which Hackman Capital purchased for $85 million in 2014 with an eye toward the streamers and their increasing demand for space.
Hackman said the streamers have “unique and very specific” requirements, including 40- to 50-foot ceiling height, wardrobe space, room to build set designs, and other physical compartments.
Such environments can triple rents, Coan said.
It also means lease agreements of 12 to 14 years. That’s double the typical lease agreements for soundstage space.
“These leases are longer than usual, probably because of the magnitude of the improvements,” Coan said.
While the streamers take great care with their leases, where they lease is less important.
Why Hollywood and Culver City emerged as streaming hubs is “simply because of availability,” Coan said.
“Culver City is generally going through a process of redevelopment,” said Matthew Ball, the former head of strategy at Amazon Studios and now a venture capitalist in the media space. “It is less hyperdeveloped than Santa Monica or Venice.”
What the future holds
Entertainment and real estate market experts alike portrayed Netflix, Amazon, and Apple as consummate real estate pragmatists, companies that are not animated by any grand vision or belief in the primacy of a particular locale.
“Studio space demand has escalated, but I don’t think there is a drastically different change in where shows are made,” said Ball.
The former Amazon executive gave the example of a show that’s made in New York state one year, learns its soundstage is to be occupied by another show and then sets up shop in Vancouver for the next year.
L.A. figures into the streamers’ equation as the most important market, Klowden said, but also one with drawbacks.
Lack of space is the biggest disadvantage, but L.A. also has more expensive labor and less generous tax credits than states including Georgia and New Mexico.
The same October 2018 week that Netflix announced its Epic building lease, the company said it would accept $14.5 million in state and local tax credits to build a production space in Albuquerque.
Netflix also announced plans for 260,000 square feet of office and soundstage space in New York City this April.
The streamers’ flexibility about location leaves developers unsure how much more to build, though they are moving ahead full steam on a few projects.
Developers could get creative in finding more space. “Abandoned shopping centers are arguably a resource,” Coan said. “You could convert an old Sears into a soundstage.”
Other L.A. neighborhoods, like Atwater Village and El Segundo, and perhaps Netflix’s Burbank move indicate a foray into the valley. The question is what developers can move quickly enough to satisfy streamers’ ravenous but specific real estate appetite. “These streamers,” Coan said, “are looking for space everywhere.”
Miami condo sales increased in the last week of October.
A total of 152 condos sold for $52 million in Miami-Dade County last week, compared to the 117 units that sold for a combined $48.5 million the previous week. Condos last week sold for an average price of about $343,000 or $288 per square foot.
Unit 3101 at Jade Residences in Brickell led the week’s top sales. The three-bedroom, 3,415-square-foot condo sold for just under $2 million, or $584 per square foot, after 122 days on the market. Alina de la Vega of One Sotheby’s International Realty represented the seller. Ruth Palma brought the buyer.
The second most-expensive sale was the $1.65 million trade of unit 46B at the Four Seasons Residences, also in Brickell. The condo sold for $715 per square foot. Joel Dominguez brokered both sides of the deal.
Here’s a breakdown of the top 10 sales from Oct. 27 to Nov. 2. Click on the map for more information:
Most expensive
Jade Residences #3101 | 122 days on market | $2M | $584 psf | Listing agent: Alina De La Vega | Buyer’s agent: Ruth Palma
Least expensive
South Carillon Beach Condo #1205 | 595 days on market | $1.13M | $792 psf | Listing agent: Alexandra Sierra | Buyer’s agent: Kayce Driscoll
Most days on market
South Carillon Beach Condo #1205 | 595 days on market | $1.13M | $792 psf | Listing agent: Alexandra Sierra | Buyer’s agent: Kayce Driscoll
Fewest days on market
Oceania #PH41 | 19 days on market | $1.45M | $348 psf | Listing agent: Evgeniya Penovska | Buyer’s agent: Yulia Basova
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 throughout the day. Please send any tips or deals to tips@therealdeal.com
This page was last updated at 9 a.m.
New defendants could be added to a $1.2B Venezuelan money laundering case tied to luxury real estate in Miami. A money laundering case where federal prosecutors allege Venezuela’s political elite allegedly laundered billions of dollars throughout the world, including into real estate in Miami, could see new defendants, according to the Miami Herald. Alejandro Betancourt, who co-founded a power company called Derwick Associates, along with other unidentified conspirators and officials, could be added as defendants to an indictment, the Herald reported. [Miami Herald]
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Softbank CEO Masayoshi Son (Credit: Getty Images)
Softbank’s investments are coming under scrutiny after WeWork’s demise. WeWork troubles have led to more scrutiny for Softbank’s $100 billion Vision Fund, which also invested in dog-walking app Wag and indoor farm Plenty. Analysts are estimating SoftBank and the Vision Fund will take billions of dollars in losses as they mark down the value of many investments, according to the Wall Street Journal. [WSJ]
Marriott International posts big drop in earnings. Marriott International saw its profits drop 23 percent in the third quarter as growth in the hotel business slows down. Marriott expects revenue per available room to grow by just 1 percent or 2 percent. The company said political demonstrations in Hong Kong have constrained growth, according to the Wall Street Journal [WSJ].
Katerra CEO Michael Marks strolled onto the Las Vegas stage, his name and title projected onto a giant black screen. In a style that’s become a cliché among Silicon Valley startups, he was about to unveil the construction firm’s new products to an audience of more than 200 people.
“We’ve been working hard, quietly behind the scenes for the last few years,” Marks said at the February event. “This is our coming-out party.”
At the time, the company had every reason to be a confident debutante: Just one month earlier, SoftBank Group’s Vision Fund had committed another $700 million to the startup — bringing the firm’s rumored valuation to more than $4 billion.
And since it opened its doors in 2015, the unicorn has grown rapidly through a series of acquisitions, reaching a staff of 8,000 globally and doubling down on cutting-edge forms of construction, including prefabrication and buildings made of engineered wood.
The company’s meteoric rise, however, hasn’t been without growing pains.
In its four years, Katerra, which is headquartered in the San Francisco Bay Area, has already had three CEOs and is now on its third chief financial officer. And according to a story late last month on the news site the Information, the company has pulled out of “at least half a dozen apartment and hotel projects in the U.S.”
The Information also reported that the company has laid off more than 100 staffers in three states.
Like other SoftBank-backed startups, including WeWork and Compass, Katerra has yet to turn a profit and has ambiguous plans for an initial public offering. And with WeWork’s recent implosion — the company abandoned its planned IPO and saw its valuation slashed by nearly $40 billion — Katerra and the other companies SoftBank has bet big on are facing heightened scrutiny.
Image may be NSFW. Clik here to view.SoftBank declined to be interviewed for this story, but told the Information that the company is approaching $2 billion in revenue this year. Marks, meanwhile, noted that SoftBank is not the company’s only investor — Foxconn and venture capital firm DFJ have also backed the company.
Katerra, he said, plans to turn a profit sometime in 2020 and is sufficiently capitalized, meaning it doesn’t need to go public, though it may do so after 2021. Marks said it’s healthy that WeWork’s issues have triggered introspection among other companies, but he argued that Katerra’s strategy doesn’t need revision.
“I don’t feel one iota of additional pressure,” Marks told The Real Deal in an interview. “We’re not at all like WeWork.”
Still, some sources said WeWork’s struggles could reflect poorly on the construction startup.
Miles Tabibian, co-director of real estate and construction at early-stage tech investor Plug and Play, said there’s already anxiety over tech valuations in Silicon Valley.
“There are always detractors,” he said. “I don’t think WeWork helped.”
At the same time, Katerra is taking on a sector in real estate that’s been one of the slowest to adopt technology. While the company’s strategy of being a one-stop shop — a designer, supplier and builder — allows it to ensure new technology is used at every layer of the construction process, it also means the firm is taking on far more risk both in terms of capital and liability.
John Fish, the CEO of Suffolk Construction, conceded that the construction industry has failed to embrace technology and is facing mounting pressure to evolve as a possible recession looms and costs rise — driven in part by the U.S.-China trade war. But, he said, VC-backed firms don’t necessarily have all the answers.
“The industry is at a crossroads,” he said. “[But] I don’t think Katerra’s strategy is a panacea for driving costs to the bottom.”
An unimaginative space
Until recently, the details of Katerra’s plans to become profitable might not have mattered much. But that may no longer be the case for companies that SoftBank has showered with cash.
“Given what happened with WeWork, profitability is going to become an issue. I would think before Katerra tried to go public, they’ll have to become profitable,” said Frank Sciame, head of the eponymous construction and development company.
Sciame, however, seemed to draw a distinction between the two startups.
“WeWork is in a class of its own,” he said. “They really were trying to redefine the real estate world.”
Katerra hasn’t faced the same level of scrutiny that WeWork and Compass have, but it doesn’t have as much direct competition as those firms.
Architect Michael Green — whose eponymous firm was acquired by Katerra last year — called WeWork a “completely different animal.” The co-working firm is more of a traditional landlord than a tech company.
In addition, Green said the $1 trillion-plus-a-year U.S. construction industry is due for disruption and noted that very few firms have the financial capability to make that happen.
“The space is such an empty, vacuous, unimaginative environment that those who do invest enough to be able to step in at scale are probably those who reap the benefits the most,” said Green, whose firm focused on buildings designed with mass timber. “I think it’s hard to compare a construction tech company to a traditional tech company in any way because you need more money, but you also have access to a lot bigger profitability down the road.”
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Katerra built a 1,334-square-foot home in 48 hours in Saudi Arabia and won a contract there to construct 4,101 homes nationwide
Katerra has, indeed, been buoyed by soaring interest in construction-focused tech.
Since 2008, investors have poured more than $27 billion into the sector in the U.S., according to the global consulting firm McKinsey & Company. In the first half of this year, investment in the sector totaled $4.2 billion, putting 2019 on pace to exceed 2018’s $6.1 billion, according to the Wall Street Journal.
Katerra appears to be the dominant fundraiser in the space, though other unicorns have emerged. Procore, a construction management software company, is valued at $3 billion, and Uptake — which uses artificial intelligence to monitor repair needs at buildings — is valued at $2.3 billion.
Jeevan Kalanithi, CEO of OpenSpace — a company that uses artificial intelligence to create 360-degree, navigable maps of construction sites — said there’s an opening right now to change the landscape as a younger generation steps in and the industry copes with a shortage of skilled workers.
“The industry lost 1 million people as a result of the 2008 financial crisis, and it never really came back,” said Kalanithi, whose firm has raised $17.5 million and is working with Tishman Speyer on the Spiral office tower in Manhattan.
Still, the construction tech sector has some maturing to do.
Kelly Benedict, head of Lendlease’s innovation department in North America, said there’s been a deluge of flashy new tools that, while impressive, amount to a “bunch of solutions looking for problems to solve.”
“There’s a graveyard of failure,” she said. “What tech is getting traction, what is emerging and what’s really going to stick?”
And traditional firms, like Lendlease, are also getting in on the action, either by launching their own tech-focused initiatives or investing in startups. Developers have also started doing more in-house. JDS Development, for instance, does its own construction, and the Related Companies owns a construction management arm and a glass manufacturing firm.
Among construction tech companies, there have been two main strategies: Either focus on one discrete problem — such as safety hazards on construction sites — or take on the entire construction process.
Image may be NSFW. Clik here to view.Katerra has favored the latter approach. In the past two years, the company has acquired at least eight construction, architecture and supply firms.
Katerra has more than 300 projects in its pipeline and, as of October, it had 22 U.S. projects under construction where it’s serving as the designer, supplier and general contractor. These projects include the Catalyst Building, a five-story timber office property in Washington state; a 97-unit multifamily project in Hayward, California; and Fort Apache, a 192-unit multifamily project outside Las Vegas. (It has yet to take on a project in New York City).
In September, the company opened its own factory for cross-laminated timber (CLT) — billed as an environmentally friendly alternative to concrete and steel — in Washington. It’s now manufacturing wooden components for buildings up to 18 stories.
Green said that the public’s comfort level with CLT has grown exponentially over the last few years, but there’s still a long way to go in educating key players about the material. In New York, for example, such structures are still limited to seven stories.
Mihir Shah, co-CEO of JLL Spark — the venture capital and innovation arm of the commercial brokerage — said Katerra’s soup-to-nuts strategy makes sense for a fragmented industry like construction.
“In order to get something efficient, you have to get all members of the ecosystem to adopt technology,” said Shah, which isn’t invested in Katerra. “That’s why Katerra is taking a different approach. It’s like ‘You know what? We’ll be all parts of the stack.’ In construction, unless they’re all in that rhythm, it doesn’t really work.”
“They’ve basically bought every part of the ecosystem so they can do it all and experiment well,” Shah added.
Startup growing pains
Katerra was founded by three tech and finance veterans: Marks, Fritz Wolff and Jim Davidson.
Marks served as CEO of electronics company Flextronics (now called Flex) — which handles multiple aspects of the manufacturing and design of products — and did a stint as CEO of Tesla before founding private equity firm Riverwood Capital. Wolff was a top exec at his family’s real estate private equity firm, the Wolff Company. And Davidson founded tech investment management company Silver Lake.
Part of the impetus for launching Katerra, Marks said, was a suggestion from Wolff, a longtime friend and partner, to create another company that was vertically integrated like Flextronics.
“He said, ‘What you should do is you should create a Flextronics for the construction industry,’” Marks recounted.
In Katerra’s early days, the firm billed itself as a smart home-construction company. But by 2017, it was referring to itself — first and foremost — as a technology company. That’s perhaps not surprising for a SoftBank-backed company: Compass and WeWork have adopted similar branding strategies.
Marks acknowledged that identifying as a tech-forward company is in vogue, but he said that in Katerra’s case, it’s not just lip service. He noted that Katerra has more than five dozen patents and develops custom robotics and artificial intelligence software. The firm doesn’t just deal with “a drone flying over a site and seeing how much dirt was moved” and then refer to itself as a tech company, he said.
Still, like WeWork and Compass (to a lesser extent), it’s seen significant executive turnover. Marks replaced the company’s second CEO, Brad Knight, two years ago. In September, Katerra tapped its third CFO, Matthew Marsh.
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Marks said the changes, along with the layoffs, were made as part of the company’s growth strategy. “I think that’s healthy and natural. It’s not a sign of distress,” Marks said. “You don’t go from 0 to 8,000 [employees] without needing to make some changes in personnel.”
The Information reported, however, that on several projects, the company’s all-in-one model “couldn’t save as much money on construction as initially thought” and that there were cost overruns on dozens of projects.
Katerra focuses on offsite construction, meaning that while it manufactures prefabricated parts, the components are assembled at the building site.
Daniel Timianko of Brooklyn-based FullStack Modular, which acquired Forest City’s modular operations in 2016, said that while Katerra is using new materials (wood) and manufacturing its own supplies, it employs a fairly traditional construction process.
While FullStack delivers an entire building superstructure that essentially snaps into place, Katerra provides prefabricated parts that are installed piecemeal.
“What happens on the site is exactly the same as a general contractor. They are not disrupting the onsite construction trade,” he said. “They are using wood, so Katerra can’t build a skyscraper. We can.”
Modular construction has started to gain momentum in New York — the city is using it for affordable housing construction. But the method is far from mainstream, and one high-profile project that did use it, the B2 Tower at Forest City’s Pacific Park, was plagued with delays and other issues.
But Katerra has demonstrated that its approach can lead to efficiencies.
In May, it inked a contract with Saudi Arabia to build 4,101 homes nationwide. The deal came after it won a contest to build a 1,334-square-foot home in 48 hours.
Go big or go home
In January 2018, Marks appeared on CNBC to discuss the $865 million funding round Katerra had just closed. At the time, SoftBank, which led the round, valued the firm at $3 billion. “We were actually hoping for a bigger valuation, but it’s fair,” he said.
A year later, SoftBank’s additional $700 million brought that number up to over $4 billion. And some have reported that it’s valued at $5 billion.
But whether Katerra’s valuation will stand is a question that at least some are asking.
Public relations executive Ed Zitron, who founded the San Francisco-based tech-focused PR firm EZPR, said Katerra seems to have fallen into a “big sexy Valley trap,” noting that it’s raised a ton of money and is spending rapidly but has been forced to lay off staff. From a branding standpoint, he said Katerra and other companies need to stop following the “WeWork template.”
“When there are comparables to WeWork, which are spending a lot of money without being profitable, laying off people, that’s when you start saying, ‘Huh, maybe there is a consistency with SoftBank’s investments,’” said Zitron. “If they don’t want to be associated with WeWork, maybe they should stop looking like WeWork.”
Jake Fingert, general partner at real estate venture firm Camber Creek, which isn’t invested in Katerra, said a highly capitalized company like Katerra poses a potential investment risk. The economics just don’t make sense yet, he said, noting that it will take a while for the firm to reach a scale where its massive investment in factory space is surpassed by revenue. Still, he said that Katerra has an edge because it has “patient capital in its corner.”
“Having deep pockets and the ability to wait that out, in itself, is an advantage,” he said.
And JLL’s Shah said future investors are not likely to be too deterred by WeWork’s recent problems, especially if Katerra shows a long-term profitability plan.
“I don’t think you can get too bent out of shape by one or two examples,” he said. “If you come to [Silicon Valley], are people a little more cautious? Are they thinking about profitability for later-stage growth? I think that’s true.”
Zach Aarons of MetaProp, also a proptech venture firm, said that while he doesn’t have direct knowledge of Katerra’s finances, companies that raise a ton of capital are playing “a numbers game” that threatens to “totally obliterate your ability to have a successful exit other than an IPO.” He noted that WeWork’s potential IPO raised questions about what it would trade at compared to a traditional real estate company. Katerra could face a similar challenge when it goes to market.
“When you think about Katerra, if they are trying to be a GC or they’re trying to be a lumber mill, what premium would they fetch as it relates to the valuation multiple?” he said. “It creates a go big or go home dynamic.”
776-858 Military Trail and Denholtz Properties CEO Steven Denholtz (Credit: Google Maps)
Denholtz Properties picked two Deerfield Beach office buildings for $27.65 million in a booming office market.
The Red Bank, New Jersey-based real estate investment firm purchased a 157,438-square-foot portfolio at 602-668 and 776-858 Military Trail for $175 per square foot. Ivy Realty sold the buildings, months after selling a portfolio of four buildings next door.
Denholtz Properties secured a $20.59 million loan from BankUnited to acquire the property.
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602-668 Military Trail
CBRE’s Christian Lee and José Lobón represented the seller in the transaction. The property is 98 percent leased. The building was built in 1998. The office portfolio features an above-market parking ratio of 4.0 per 1,000 square feet, according to a release.
The property sits less than 1.5 miles from two I-95 interchanges as well as 2.8 miles from the Florida Turnpike and Sawgrass Expressway interchange.
Ivy Realty, a Greenwich, Connecticut-based real estate investment firm, has acquired more than $2.2 billion in assets.
In February, Ivy Realty sold four commercial buildings totaling about 247,000 square feet at 712 South Military Trail to Brookfield Property Partners for $36.3 million.
The company recently sold an office building in August just off Lincoln Road in Miami Beach for $10.1 million.
Denholtz Properties owns commercial and residential properties in New Jersey, Pennsylvania and Florida, including the 10-story Tampa Bay Times building in Tampa.
Even after controversial CEO Adam Neumann’s spectacular ouster, WeWork remains the most talked about company in the business world. Watch this video for the most telling stats of WeWork’s fall from grace.
Daniel and Mayi de la Vega, Michael Thorpe and Kimberly Thorpe
One Sotheby’s International Realty acquired Treasure Coast Sotheby’s, giving the Miami-based brokerage a foothold in the Vero Beach and Melbourne markets, The Real Deal has learned.
The acquisition adds 100 agents and two offices to One Sotheby’s, bringing the luxury brokerage’s total to more than 900 agents and 18 offices in South Florida and up the state’s east coast. It’s the sixth firm that One Sotheby’s has purchased over the past two years.
Michael Thorpe and Kimberly Thorpe founded Treasure Coast Sotheby’s International Realty in 2010 and the couple will remain with One Sotheby’s, said Daniel de la Vega, president of One Sotheby’s. The couple ranks in the top 1 percent of sales in Indian River County. The Treasure and Space Coast brokerage has closed on more than $1.5 billion in sales since 2015, according to a spokesperson for One Sotheby’s.
Larger brokerages like One Sotheby’s and the Keyes Company have been acquiring smaller firms in South Florida amid rising costs and commission splits.
De la Vega said the brokerage business is a “hyper competitive environment” and that the Thorpes wanted to return to focusing solely on selling real estate while One Sotheby’s implements its tools and practices, including its customer relationship management (CRM) system and next year, its new website and intranet.
One Sotheby’s is taking over the Sotheby’s affiliate office leases at 1401 Highway A1A in Vero Beach and 301 Ocean Avenue in Melbourne Beach, de la Vega said. Kelly Martin will be managing broker of the merged offices.
The acquisition gives One Sotheby’s access to markets that include Indian River Shores, Cocoa Beach and Merritt Island.
De la Vega said Vero Beach “is still a tremendous value in my eyes” where an oceanfront property can sell for as little as $3 million.
“We want to help drive up prices and demand in Vero Beach,” he added.
One Sotheby’s was attracted to Melbourne, which is part of Florida’s Space Coast, in part because of the large millennial population and what’s going on with SpaceX in the nearby Cape Canaveral, de la Vega said.
The Miami-based firm’s previously expanded farther into Palm Beach County last year when it acquired fellow Sotheby’s affiliate Nestler Poletto Sotheby’s International Realty, a nearly 80-agent firm with offices in Boca Raton and Delray Beach, in October 2018. A year earlier, One Sotheby’s closed on the acquisition of Coastal Sotheby’s International Realty in Palm Beach Gardens, Jupiter and Stuart.
Celebrities from Jennifer Aniston to Sting to Oprah Winfrey regularly make headlines when they buy or sell lavish homes, but a handful of actors, athletes and public figures have taken their real estate investing to the next level.
Retired all-star Yankee Alex Rodriguez — who was featured on The Real Deal’s cover last month — is a case in point. His firm, A-Rod Corp., has purchased more than 15,000 apartments nationwide since 2003 and is currently partnering with New York developer Ofer Yardeni and residential powerbroker Adam Modlin to buy $1 billion worth of multifamily buildings in Manhattan.
While A-Rod’s may be an extreme case, there are plenty of others getting in the game. Among the athletes who have put money into developing or rehabbing commercial real estate are former NFL defensive end Elvis Dumervil (who played for the Broncos and the Ravens), retired Miami Heat center Alonzo Mourning and former Yankees’ first baseman Mark Teixeira.
Rodriguez said his initial reason for getting involved in real estate (early in his baseball career) was a fear that he’d blow his fortune and go bankrupt. He said athletes, in particular, need to be concerned about protecting their wealth.
“I think you have a responsibility to yourself and a fiduciary duty to your family,” he said. “Real estate, with the right partner, is a great hedge to the W2 income you earn as an athlete. While your career earnings potential downgrades, your real estate [assets] appreciate.”
But it’s not just athletes. Oscar-winning actor and environmentalist Leonardo DiCaprio is currently preparing to open an eco-resort in Belize, and U2 frontman Bono has reportedly invested in a company called Nude Estates, which owned a stake in a shopping mall in Lithuania.
Meanwhile, some, such as Taylor Swift, just have an extensive collection of houses. The pop star reportedly owns homes in California, New York, Tennessee and Rhode Island worth more than $80 million combined.
Here’s a closer look at some celebrities and their real estate investments.
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Shaquille O’Neal
7′ 1″
Shaquille O’Neal’s height. The basketball legend is investing in his hometown of Newark via a 33-story, 370-unit tower, which is slated to be the city’s largest residential project. He’s teaming up with Boraie Development — who he also partnered with on a 168-unit Newark tower — on the $150 million project, dubbed “The House that Shaq Built.” It’s unclear how tall the ceilings will be, but Shaq is taking the penthouse, so the assumption is high.
300
The number of acres on the property where rapper Kanye West had planned to build a Star Wars-themed low-income housing community in Calabasas, California. But West didn’t secure permits for several of the dome-like structures, and the project may now be on hold.
$145M
A rough tally of what comedian Ellen DeGeneres and wife Portia de Rossi have spent on eight California homes since 2004. The couple’s biggest flip seems to have been the Brody House in L.A., which they bought for $39.88 million in 2014 and then sold months later to Napster founder Sean Parker for $55 million.
72
The number of bungalows and estate villas that DiCaprio is planning at his eco-resort, which is slated to open in 2020 on the 104-acre private island he bought in Belize in 2015. DiCaprio is partnering with the head of New York real estate and wellness company Delos — whose board he’s a member of — on the project.
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Queen Latifah
$14M
The cost of a 76-unit residential project Queen Latifah is investing in — also in her hometown of Newark. The singer, actor and producer is co-president of the Blue Sugar Corporation, which is partnering with New Jersey-based GonSosa Development on the project. It will include 16 affordable rental units and 20 three-family townhomes with market-rate units.
134
The number of units at a planned affordable housing project in North Miami that longtime Miami Heat player Udonis Haslem is investing in. Haslem Housing Venture, which was formed in 2017, promotes low-income housing in Miami-Dade County. The power forward is partnering with Magellan Housing on the project.
70
Image may be NSFW. Clik here to view.The number of companies actor and serial entrepreneur Ashton Kutcher and his business partner have reportedly invested in. One of the most high-profile is Airbnb, the apartment-sharing unicorn they backed in 2011. The two have also invested in Uber, Spotify, Pinterest, Warby Parker and others.
18K
The number of seats slated for David Beckham’s new soccer stadium in Fort Lauderdale. Beckham, who owns Major League Soccer’s Inter Miami CF, is aiming for the team to play its first two seasons there while constructing a bigger stadium in Miami. Then, the Fort Lauderdale complex will be used as a training facility. The retired soccer legend’s partners on the project include SoftBank’s Masayoshi Son and Marcelo Claure.
Sources: The Architect’s Newspaper, NJ.com, the Sun Sentinel, New York Post, TMZ, Forbes, Business Insider, Trulia, New York Times, TRD
Panattoni Development Company’s Carl Panattoni, Gratigny Logistics Park
Panattoni Development Company paid $24.3 million for the 20-acre site of a dairy farm and plans to build a speculative warehouse project.
The new industrial development at 3000 Northwest 123rd Street near Opa-locka will be known as Gratigny Logistics Park. It sold for $1.2 million per acre, according to a press release.
ZSF/WD Opa Locka, LLC, which is an affiliate of Zurich Insurance Group, sold the property.
Newmark Knight Frank’s Nick Wigoda and Steve Medwin represented the buyer and CBRE’s Christian Lee, Chris Riley, and José Lobón represented the seller.
The Zurich Insurance affiliate bought the property for $4.3 million in 1999, records show.
Nearby, Panattoni Development Company is completing construction of Eastview Commerce Center, a $100 million, 800,000-square-foot Class A business park at Northwest 24th Avenue and Northwest 119th Street. The project is more than 50 percent pre-leased, according to the release.
Newport Beach, California-based Panattoni specializes in office and industrial buildings and is one of the most active private industrial developers in the United States, according to its website. Carl Panattoni founded the company in 1986.
Institutional investors are searching for land to build new industrial properties in South Florida. Rents are steadily starting to fall, though, as more industrial properties are coming to market.
In the third quarter of 2019, average asking rents for warehouses in Miami-Dade County dropped to $8.50 per square foot from $11.18 per square foot in the third quarter of the previous year, as 792,365 square feet of industrial space was completed, according to a report by Colliers International South Florida.
Chad Carroll, Cyril Matz and Fernando Alves with unit 2501 at Oceana Bal Harbour
Brazilian retail mogul Élvio Gurgel Rocha closed on a unit at Oceana Bal Harbour for $8.15 million.
Property records show Marc Farbstein, CEO of Hollywood-based Premium Digital Control & Automation, sold his three-bedroom, 3,992-square-foot unit at 10201 Collins Avenue. Lincoln Capital Investments LLC, tied to Gurgel Rocha, is the buyer, according to a source. The deal breaks down to $2,041 per square foot.
Gurgel Rocha, of São Paulo, Brazil, is a director at Guararapes-Riachuelo, the largest fashion group in Brazil and the parent company of the retail chain Lojas Riachuelo, one of the country’s biggest department store chains, according to Reuters.
Farbstein, previously chairman and CEO of a major incentives company in New Jersey, paid $10.11 million for Oceana Bal Harbour unit 2501 in 2017.
That means he sold it for about 19 percent less than what he paid two years ago. Resellers of luxury units are reducing their asking prices in an effort to cut their losses amid an overwhelming supply of condos.
Chad Carroll and Cyril Matz of Douglas Elliman represented the seller, while Fernando Alves of Charles Rutenberg Realty brought the buyer. The unit first hit the market in 2018 for nearly $12 million, and returned to the market in March of this year asking about $9.5 million.
The unit is decorator-ready, which means that while the kitchen and bathrooms are installed, it does not yet have flooring, window treatments and closets. It also has a wraparound terrace, floor-to-ceiling windows, a gourmet kitchen and access to Oceana’s amenities.
Developer Eduardo Costantini completed the 28-story development in 2016. Arquitectonica designed the development, and Piero Lissoni designed the interiors, the private restaurant and the penthouse bathrooms. Enzo Enea designed the pool deck landscape.
Earlier this year, a South Carolina newspaper family’s trust paid $7.1 million for a condo at Oceana Bal Harbour.
The 5.5-acre site was formerly known as the Bal Harbour Beach Club before Costantini’s Consultatio purchased it in 2012 for $220 million.
Compass CEO Robert Reffkin, CTO Joseph Sirosh, and Jaideep Ganguly (Credit: GitHub, iStock)
Compass has tapped the brakes on new brokerage offices in the U.S. But it’s doubling down on tech talent in India.
The SoftBank-backed brokerage announced plans Tuesday to launch a tech campus in Hyderabad focused on developing mobile apps. In a statement, CTO Joseph Sirosh cited the city’s “deep pool” of software development talent.
Over the past year, New York-based Compass said it has more than tripled its tech team nationwide to a total of 400. “This injection of talent is enabling us to launch new features, including AI-powered recommendations,” Sirosh said.
To run the new office, which will be in Hyderabad’s HITEC City, Compass said it hired Jaideep Ganguly, who spent nine years as Amazon’s director of software development.
Previously, Ganguly was director of engineering at Microsoft. At Compass, he will be vice president of engineering under Sirosh.
Compass said the Hyderabad tech hub will be the company’s fourth. One opened in Seattle last year and Compass also has tech hubs in New York and Washington, D.C., the company said.)
Although Compass has touted its technology since its launch in 2012, it has been forced to defend its offerings in recent months. After launching a proprietary consumer relationship manager, or CRM, last year, Compass bought Contactually, a CRM popular among competing firms. Several former Compass executives told The Real Deal last month that the firm faces a challenging road.
In April, Zillow filed two lawsuits accusing Compass of poaching three tech executives and trying to get proprietary information to accelerate its own tech development. The suits were settled in July.
In the wake of WeWork’s failed IPO and huge valuation drop, Compass has tried to distance itself from the co-working company — another SoftBank-backed firm claiming to be changing the real estate industry with tech and culture. “There’s nothing about what’s happening at WeWork that changes what’s happening at Compass,” CEO Robert Reffkin told TRD in October. Defending Compass’ valuation, he said it was set by multiple investors, not just SoftBank.
JLL saw a major revenue boost during the third quarter following its megamerger with HFF.
Revenue at the global brokerage increased by 13 percent to $4.5 billion, and fee revenue increased by 14 percent to $1.8 billion, according to the company. The firm’s leasing and capital markets divisions fueled most of the growth.
“We are very happy to see that the first combined quarter went better, frankly, than we expected,” CEO Christian Ulbrich said on JLL’s third quarter earnings call Tuesday morning. He attributed this to the strong performance of the legacy teams at HFF and JLL during a major transition for both companies.
“You always expect some distraction,” he said, “so we were very proud that they were totally focused on our clients and continued to do what they are best at.”
Mitch Germain, a REIT analyst at JMP Securities, echoed this point, writing in a note on the earnings report that JLL “produced top- and bottom-line outperformance.”
“We view the quarterly result as better than anticipated,” he wrote, “as the HFF integration appears to be running smoothly.”
JLL’s $2 billion purchase of HFF officially closed about four months ago, and there has been a lot of turnover since it was first announced, with several of HFF’s top teams muscling out many of JLL’s top brokers. One of the highest profile departures happened in August, when the former head of JLL’s debt arm Aaron Appel left the firm with his colleagues Adam Schwartz, Jonathan Schwartz and Keith Kurland to form their own company, AKS Capital Partners.
Mo Beler, the former head of JLL’s investment sales division, left the firm earlier this year as well.
Ulbrich maintained on the call that the merger was proceeding smoothly in terms of personnel, and the only major area still needing focus was integrating the technology at the two formerly separate firms.
“It’s going well on the people side. We will be back to normal cost of business very soon, and we’ll focus again on where our growth opportunities are in 2020,” he said. “So I think on that end, the merger will be very much behind us pretty soon.”
Airbnb CEO Brian Chesky and Jersey City Mayor Steve Fulop (Credit: Twitter, iStock, Airbnb)
After a fraught campaign in which both Airbnb and the hotel lobby were accused of underhanded tactics, Jersey City residents are heading to the polls Tuesday to decide whether to restrict short-term rentals.
The ballot was prompted after hosts challenged an ordinance passed in June that puts 60-day cap on short-term rentals at properties where the owner is not on site, and bars short-term rentals in buildings with more than four units.
The ensuing battle pitched residents against residents, and the startup against its former ally, Jersey City Mayor Steve Fulop. Jersey City in 2015 struck an agreement with Airbnb to collect a 6 percent hotel tax on homes rented on the platform – a first of its kind in the tri-state area and a sign that lawmakers were open to accepting and regulating Airbnb.
But in recent months, Airbnb has poured $4.2 million into an opposition effort led a political action committee, “Keep our Homes.” On the other side, the Hotel Trades Council and the Sharebetter Coalition (which is bankrolled largely by the hotel industry) spent a little over $1 million on a campaign in support of regulation.
Jersey City is a relatively small market for the $31 billion startup, with just 3,000 listings and 1,500 hosts. However its proximity to New York City — where Airbnb has been locked in a dispute about regulations for years — raised the stakes of the campaign. The outcome will be closely watched by observers across the country as Airbnb, which is expected to go public next year, seeks to clear up its lingering regulatory issues.
At a pro-Airbnb event at El Cocotero restaurant in Jersey City last week, Airbnb host Felicia Palmer told a small crowd that she used the extra income to support her family. “I am not here to represent Airbnb because Airbnb has enough corporate representation, money and resources,” she said. “I’m here to represent working families; neighbors like me and you who are responsibly and legally earning an income with Airbnb.” Restaurant owner Luis Quintero said he supported Airbnb because his sister, a single mom, relied on the income she got from renting an extra room in her house.
But the Hotel Trades Council and its allies, including housing group Jersey City Together, say the law doesn’t target individual homeowners. They say it’s designed instead to go after commercial operators who come to Jersey City from New York and buy properties in bulk as a way of getting around New York’s ever-tightening regulations.
“We have seen the impact of big, commercial, short-term rental operators firsthand as we have knocked on doors in rent-controlled buildings and as we have talked to members of our congregations who see the impact on their neighborhoods,” Jersey City Together’s Diane Maxon said in a statement.
Another point of contention that has emerged between the camps is about what the law will actually do. Airbnb supporters argue it amounts to a total “ban” on listings — “ban the ban!” is a campaign chant — but Mayor Fulop, who sponsored the law, said they’ve got it wrong.
“I think [the law] is fair and reasonable, he told listeners during an impromptu dial-in to the Brian Lehrer radio show on Monday. “Most of the reasons that people bring up that they’re voting ‘no’ are just really rooted in misinformation.”
He defended his decision to push for restrictions despite initially welcoming Airbnb to Jersey City four years ago. “When I supported it in 2015, there were about 300 Airbnbs in the city and it was home-sharing in the truest sense…that’s changed over the last four years,” he said.
“It’s no longer Mrs. Smith sharing a room or an apartment — it’s companies coming across the river from New York that are buying five and ten houses on a block and turning them into illegal hotels.”
Airbnb spokeswoman Liz DeBold Fusco said Fulop’s U-turn had pulled the rug out from under residents who were benefiting from the boost to local tourism that Airbnb had generated.
“These thousands of residents may be in serious financial jeopardy, with some even at risk of foreclosure or bankruptcy — all because of the Mayor’s short-term rental ban, crafted at the behest of the hotel industry’s special interests,” she said.
Insurance mogul Irvin Saltzman and his wife Robin sold their Palm Beach estate for $7.6 million.
Saltzman sold the 5,610-square-foot house at 225 Seabreeze Avenue for $1,354 per square foot, records show. Robert Berg of Key Largo purchased the property.
The house is in the center of the tony island town. The Mediterranean two-story house has four bedrooms and five-and-a-half bathrooms. It sits on a 0.4-acre lot and was built in 2008 by Paul Wittmann of Wittmann builders.
Saltzman purchased the house for $6.3 million in 2014, records show.
Trina Lane of Waterfront Property & Club Community represented the seller in the deal. The buyer was represented by Samantha Curry of Douglas Elliman.
Saltzman founded Penn-America Group in 1975. It works with small businesses that have limited access to larger standard lines insurers and are seeking insurance in the excess and surplus lines markets, according to its website.
The ultra-high-end residential market in Palm Beach boomed over the summer, during what is typically the off-season. Fourteen single-family homes totaling more than $343 million in sales volume closed in July, according to MLS and Palm Beach County data compiled by Premier Estate Properties.
Hedge funder Steven Schonfeld is reportedly under contract to purchase Sydell Miller’s Palm Beach oceanfront estate for close to $200 million, breaking the record for the most expensive home sale in the ritzy enclave.
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 throughout the day. Please send any tips or deals to tips@therealdeal.com
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Softbank CEO expresses regret over WeWork investment. “My own investment judgment was really bad. I regret it in many ways,” Masayoshi Son said at a news conference in Tokyo following SoftBank’s earnings release, according to the Wall Street Journal. Speaking of WeWork co-founder Adam Neumann, who was ousted as CEO in September, Son said, “I shut my eyes to a lot of his negative aspects.” [WSJ]
Miami’s District 1 race is heading to a runoff. The District 1 seat for outgoing Miami commissioner Wifredo “Willy” Gort is going to a runoff between former state senator Alex Diaz de la Portilla and auto parts retailer Miguel Angel Gabela, according to the Miami Herald. District 2 incumbent Ken Russell won overwhelmingly on Tuesday in a district that covers downtown Miami, Edgewater, Coconut Grove and Brickell. [Miami Herald]
The stakes are high as Jersey City residents vote on Airbnb. After a fraught campaign in which both Airbnb and the hotel lobby were accused of underhanded tactics, Jersey City residents were heading to the polls Tuesday to decide whether to restrict short-term rentals. [TRD]
A rendering of the The Epic in Dallas, Texas, Westdale CEO Joe Beard and the Tel Aviv Stock Exchange Bull (Credit: Westdale, Wikipedia)
After a late-2018 shakeup saw Israeli investors rethink their interest in U.S. real estate bonds, one new entrant to the market is already coming back for more.
Dallas-based Westdale Asset Management, which debuted on the Tel Aviv Stock Exchange with a 500 million–shekel (about $140 million) Series A bond issuance in April, is now looking to raise another 180 million shekels (roughly $52 million) for its Series B, according to rating documents filed with the exchange Tuesday.
The upcoming bond series has received a rating of ilA+ from Maalot, a subsidiary of S&P Global. That’s one notch lower than the ilAA- rating of Westdale’s Series A bonds, mainly because the Series B bonds will be unsecured corporate bonds.
Westdale’s first bond series was secured by three Texas properties, including the office portion of the company’s flagship development, the 8-acre Epic complex in downtown Dallas. The majority of bonds issued in Tel Aviv are unsecured, but issuers such as Brooklyn’s Spencer Equity and All Year Management have been known to provide secured bonds as a way to boost investor confidence.
Westdale’s Series B bonds will be more like normal Tel Aviv bonds in another respect as well: They will be issued via a Dutch auction on the coupon rate. The developer issued its Series A bonds through a less common “book building” deal, in which the underwriter committed to hold some of the bonds and could choose which investors to include.
A representative for Westdale did not respond to a request for comment.
The firm, whose properties are mainly located in the southern United States, has had a great first half year in Tel Aviv. After opening at slightly above par value in April, Westdale’s Series A bonds have risen steadily and are now trading at more than 108 cents on the dollar.
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Locations of properties in Westdale’s bond-issuing entity portfolio, from a Tel Aviv Stock Exchange prospectus.
Westdale’s recent success with Israeli investors came on the heels of months of upheaval in the Tel Aviv bond market, which started with concerning disclosures from a few U.S. firms and developed into a market-wide crisis of confidence.
In August, Westdale announced that it had secured rideshare company Uber as the anchor tenant for its second planned office tower at the Epic complex with a 450,000-square-foot lease. Uber will occupy the recently completed first tower in the meantime.
Elsewhere in the country, the real estate investment trust is also seeking to develop a mixed-used development in the Wynwood neighborhood of Miami.
