A mansion in Beverly Hills, the Livingston House at 12 East 96th Street in Manhattan, and the Terra Veritatis Home in Miami Beach (Credit: Wikimedia Commons, PixHere)

Foreign buyers dropped $7.5 billion on homes in the U.S. costing over $1 million, with a major chunk of those purchases in Miami, Los Angeles, and Manhattan, according to a new report. The report, which calculated purchases between March 2016 and March 2017, saw a nearly three-quarter jump in total foreign investment in U.S. luxury real estate from the 12 months prior.

Luxury brokerages Beauchamp Estates and Leslie J Garfield & Co., compiled the data.

Almost 40 percent of the purchases were done in those three cities, with Miami accounting for one quarter of the total. Los Angeles was next highest at 9 percent, and Manhattan was third with 3 percent.

The price-per-square-foot between the three cities was lowest in Miami, but foreign investors dominated the South Florida market. There, 80 percent of luxury Miami real estate is owned by foreign buyers, compared to 20 and 27 percent in Los Angeles and Manhattan, respectively.

In Miami, where 95 percent of those properties were bought with cash, many of those buyers came from South America. For homes costing $3 million and over, three quarters in Miami are owned by foreign buyers who paid cash.

Beauchamp Estates expects Miami to see a 40 percent growth in ultra-high net worth individuals through 2026 to 1,050 total, while New York and LA will grow by 30 percent each, to 8,541 and 4,095.

In LA, buyers seem to get more house for their buck. The average luxury home purchased was 11,211 square feet. That is smaller than Miami, but on average, the properties in LA came with two and half acres of land. Miami luxury homes, meanwhile, had less than 1 acre. Manhattan apartments had 4,276 square feet of outdoor space.

The most popular neighborhoods in New York were the Upper East Side, Greenwich Village and Tribeca. In LA, Beverly Hills and Malibu topped the list. In Miami, Miami Beach, Palm Beach and North Bay Road were the most attractive.  [Realty Biz] – Dennis Lynch 

Sawgrass Mills (Credit: Ruth Hara via Flickr)

The traditional American shopping mall may not be the retail powerhouse it once was, but the best properties in the sector are still delivering for tenants and landlords across the country.

The 10 most valuable malls owned by REITs — which includes Sawgrass Mills in Sunrise — are generating between $960 and $1,450 in sales per square foot, and are worth billions, research firm Boenning & Scattergood told CNBC.

The top 10 malls in the U.S. include four locations in the Northeast. Two are in New York state, one is in New Jersey, and another is in Pennsylvania. The Ala Moana Center in Honolulu tops the list. The 55-year-old open-air mall brings in $1,450 per-square-foot and is worth $5.7 billion. General Growth Properties the Ala Moana Center, along with two more in the top 10.

But those are clearly outliers, in a sector that has been decimated by the likes of Amazon and other ecommerce retailers. Industry experts say 25 percent of U.S. malls will likely shutter in the next five years, or about “300 out of 1,100” that now exist, according to a recent report in CNN Money.

Simon Property Group, the country’s largest mall owner, leads the pack with five in the top 10. Those include Sawgrass Mills in Sunrise, which is the second most valuable mall in the country. Sawgrass Mills brings in $1,149 per-square-foot and worth a total of $4.1 billion.

The others on Simon’s list are: Roosevelt Field Mall in Garden City, New York; the King of Prussia Mall in King of Prussia, Pennsylvania, the Forum Shops at Caesars in Las Vegas; and the Woodbury Commons Premium Outlets in Central Valley, New York. [CNBC] – Dennis Lynch 

The launch event for David Beckham and his partners’ Major League Soccer franchise (Credit: Katherine Kallergis, GettyImages)

He’s gone up against the toughest bruisers and tactical minds in world soccer. But even for David Beckham, bringing Major League Soccer to Miami was a monumental challenge.

Soccer fans drowned out the sounds of Gloria Estefan’s “Conga” at the Adrienne Arsht Cente Monday as they prepared for the official launch of the franchise, brought to the city by Beckham and his partners – Marcelo Claure, Jorge and Jose Mas, and Simon Fuller. The group was joined onstage at the Knight Concert Hall by Miami-Dade County Mayor Carlos Gimenez and Miami Mayor Francis Suarez.

“The thing that I know and the thing that I tell my children is that things get difficult sometimes,” Beckham said. “The one thing in four years that’s kept me going is you guys,” he added, in a nod to the horde of fans.

After going through multiple sites, including failed bids at PortMiami, in downtown Miami and Little Havana, the investment group is focused on making Overtown work, Beckham told WPLG. In June, the county approved the $9 million land sale of 3 acres in Overtown, part of an assemblage that also includes six privately owned acres the group paid $19 million for in 2016.

But the venture nearly fell apart about two months ago, Claure, the CEO of Sprint, said at the press conference. MLS owners were also reportedly critical of the discounted $25 million expansion fee that Beckham and his partners are paying.

“About 60 days ago, we were done. We were not going to do this,” he said, crediting the MasTec brothers Jorge and Jose Mas with being the missing link the franchise needed to move forward.

The 25,000-square-foot, $200 million stadium will be built on a nine-acre development site between Northwest Sixth and Eighth streets, north of the Miami River in Overtown. Three sites in Overtown were also pitched to Amazon for its second headquarters. Miami was announced as a finalist for the $5 billion development last week.

Donald Trump and Trump National Golf Club in Jupiter (Credit: Trump National Jupiter, Wikimedia Commons)

President Trump is once again suing the Palm Beach County property appraiser, claiming that the appraised value of Trump National Golf Club is an overestimate.

The lawsuit, filed in December, marks the fifth consecutive year that Trump fights the county’s appraised value, according to the Palm Beach Post. Property appraiser Dorothy Jacks set the value of the Jupiter golf club at $19.7 million, a figure that Trump says is inflated by about $5 million. That’s despite listing the property’s value at “over $50 million” in his financial disclosures for 2016 and 2017, the Palm Beach Post reported.

Last year, the golf club was appraised at $18.4 million, resulting in a $383,171 tax bill. Trump responded to this year’s appraised value with a $296,595 check, less than the $398,315 tab he owes.

Since Trump won the election in 2016, the Trump Organization has doubled the membership fee at Mar-a-Lago to $200,000, a move that has ethics watchdogs on alert. [Palm Beach Post] – Amanda Rabines

80 Park Avenue

It looks like 2018 might be the year of the deal.

Many people know that eight is a lucky number in Chinese culture because when spoken in Cantonese it sounds like the word for “prosperity.” And it turns out 18 might carry the same good fortune.

When spoken aloud, the number sounds like the phrase “I want to be wealthy,” which could make 2018 a lucky year for real estate deals — and some brokers have already seen that in action.

Corcoran Group agent Janet Wang told the Wall Street Journal that five of her clients decided to get serious about buying when 2018 rolled around. “‘Ok, this year we’re really going to look,’” they told Wang, without specifying a reason.

One Beijing-based buyer put off closing on a New York City home in the $5 million range so they could purchase it in the new year instead, said Carrie Law, chief executive of Chinese international real estate website Juwai.com. “There may have been other factors at play, but that’s the reason they gave us,” Law said.

Lucky numbers don’t only dictate when some Chinese buyers will buy, but where. An address or price or with eight is ideal, while addresses with the number four — which sounds like “death” — are avoided.

A condo building at 80 Park Avenue is particularly popular with Chinese buyers, not only because of its address, but because it’s near 38th Street, which in Cantonese sounds like “create wealth,” according to Geovanna Lim, president of Park Avenue International Partners.

Eighteen also plays a special role in the Jewish community, since the Hebrew word for the number, “chai,” also means life. Eastern Consolidated’s Adelaide Polsinelli pointed out its significance at the REBNY gala earlier this month. “It’s a lucky number in the Jewish faith, so 2018 has to be a good year,” she said.

Chinese numerology has ripple effects for non-Chinese buyers, too. In British Columbia, where 80 to 90 percent of condo sales are to Chinese buyers, no one wants purchase a unit with an unlucky address because it will make it harder to sell later on, said Calgary-based broker Peter Ng.

Coco Tan, a broker in Silicon Valley, was skeptical about the connection. She said that if there was a bump in real estate sales at the beginning of 2018, it was more likely because buyers were waiting to see the final tax reform bill.

Law of Juwai.com, however, predicts that August will be a busy for Chinese buyers, particularly the eighth of the month. After all, in Cantonese, the date sounds like “prosperity prosperity I want to be wealthy.” [WSJ] — Chava Gourarie

Rendering of 321 at Water’s Edge (Credit: SobelCo)

SobelCo just closed on a $26 million construction loan for 321 at Water’s Edge in Fort Lauderdale.

Goldman Sachs is providing the financing, according to a press release. The developer broke ground on the 11-story, 23-unit building earlier this month with a projected completion date of early 2019.

Douglas Elliman took over sales of the boutique waterfront condo project at 321 North Birch Road last year from Engel & Völkers. Buyers are required to put 20 percent down, followed by 10 percent about four months later.

A representative from SobelCo, led by Chairman Samuel Sobel and President Jeffrey Sobel, could not be immediately reached for a sales update.

Prices start at $1.95 million and units will range from 2,600 square feet to more than 3,800 square feet. Condos will include smart home features, designer kitchens, furnishings and bedroom suites. Owners will also have a five-year membership to the private dining club at the Pillars Club nearby.

Records show the developer paid $10 million for the 27,400-square-foot site in May 2015 and announced the project, then called Oceana Fort Lauderdale, months later. It opened a sales center for 321 at Water’s Edge in 2016.

The building will also feature a private wine club and lounge, a sky terrace with a lounge and summer kitchen, pool, Jacuzzi and bar, a 2,400-square-foot gym with ocean views and electric car charging stations.

From left: Larry Silverstein, Adam Neumann,Gary Barnett, Azi Mandel and Tel Aviv (Credit: Getty Images)

In 2014, Adam Mermelstein and Azi Mandel caught wind of a novel way to score cheap financing: they could issue millions of dollars worth of bonds on the Tel Aviv Stock Exchange at far better rates than they would get from stateside lenders.

“It’s made out to seem like a walk in the park,” said Mandel, co-founder of New York-based Treetop Development with Mermelstein. “You open the treasure chest and money comes pouring out.”

The partners decided to go for it, and dropped several million to cover the exhaustive process in 2015. Their holdings were audited and rated, the company was incorporated and approved, and the offer was tendered. But the results were disappointing, so Mandel and Mermelstein walked away empty-handed.

Much has changed since then.

Even three years ago, U.S. developers raising capital in Israel was something of a novelty. Scrappy mavericks and two-man shops willing to shepherd them through a long and hair-raising process while convincing a skeptical Israeli market stood to reap outsized rewards. But as the Americans have become a familiar presence in the market, Israel’s more established financial firms are trying to muscle their business away from the pioneers. And as they do, a high-stakes game of musical chairs among Israel’s financial talent is unfolding.

Newbies

The four largest underwriting firms in Israel — Discount Capital, Leader Capital Markets, Poalim IBI and Leumi Partners — have taken a more aggressive role in the Israeli bond business in the last year. Most are subsidiaries of or affiliated with Israel’s largest banks, an advantage not lost on their clients and potential clients.

“Today, there is not a single underwriting firm in Israel, or self-respecting consultant that isn’t out traveling in the United States” scouting for potential candidates, said Yossi Levi, co-founder of Infin, a firm that specializes in bringing foreign companies to the Israeli stock exchange.

“There are busses now from Israel,” said Boaz Gilad, co-founder of Brookland Capital, an early adopter of the financing model.

The firms have all managed bond deals for American companies in recent months with more in the pipeline. Leader reeled in Larry Silverstein’s Silverstein Properties, Poalim IBI and Leumi netted Barry Sternlicht’s Starwood Capital, and Discount is working with an American giant — $20 billion co-everything-company WeWork.

The early players still have a foothold, of course, with deal flow from existing clients and a track record to lure new ones. Earlier this month, Moinian Group raised close to $175 million in bonds at the lowest rate awarded a U.S. company in Israel, guided by Ori Eisenberg of Barzell Global, who brought both Moinian and Gary Barnett’s Extell Development to Tel Aviv in 2015.

“Everyone wants a piece of the cake,” said Ziv Adato, head of investment firm Marom Capital and former analyst at Ayalim Mutual Funds.

The stakes

Even smallish U.S. companies are whales by Israeli standards. Bringing them to market can represent a hefty meal for the whole food chain, including brokers, consultants, lawyers and underwriters. U.S. companies can raise hundreds of millions of dollars, rather than shekels, and Israeli institutions charge them higher interest rates and higher fees than they do domestic companies, said Adato.

Where Israeli companies rarely pay more than 1 percent of the money raised, Americans pay many multiples of that. Jeff Sutton paid $10 million in expenses, or roughly 4 percent of the $240 million he raised in February, according to the shelf prospectus filed on the TASE. Los Angeles-based Hertz Investment Group paid more than $11 million to raise $160 million in November, close to 7 percent of the total. (“The underwriters’ gold mine,” ran the headline in Israeli news outlet Calcalist, which often reports on the deal fees.)

“It’s the holy grail,” an investment bank executive said of the bond deals. “It’s more worth it to land one New York company, than 10 Israeli ones.”

And the Americans are amenable. In 2017 alone, American companies raised $2.5 billion on the Israeli bond market, a 127 percent increase from $1.1 billion in 2016, according to figures from Poalim IBI. Last year, 12.5 percent of all bonds issued in Israel went to American companies. That includes both first-timers like Sutton’s Wharton Properties and Israeli road show veterans like the Lightstone Group, Joel Gluck’s Spencer Equity and Yoel Goldman, whose firm All Year Management raised more than $500 million across five deals in 2017 alone. In all, 29 U.S. companies have raised $6.5 billion in Tel Aviv since 2014, according to Poalim IBI.

For stateside developers, it means more lenders gunning for their business. Some Israeli financial firms work with U.S. firms, like Meridian Capital Partners or Ackman-Ziff, while others have boots on the ground in New York, Miami and other major markets. Others, like Discount Bank, even have offices here.

“I can’t even count how many people have come to me asking about taking us back to the market,” said Treetop’s Mandel.

While the dealmakers are widening their nets, pitching firms outside of real estate and outside New York, there are some prizes that everyone wants. “Everyone’s competing for the big players,” said one Israeli investment bank executive, name-dropping several notable New York developers. Silverstein, the executive said, met with every underwriting firm before finally choosing Leader.

Turf wars

Rafi Lipa and Gal Amit, who teamed up in 2008 to create Victory Consulting, were among the first companies that focused on getting U.S. firms to issue debt on the Israeli market. By 2017, they had brought 12 U.S. companies through the process, raising several billion shekel, and convincing the likes of Sutton, Lightstone and Brookland to seek bonds.

That book of business gave them heft in Israel’s underwriting sector.

Lipa and Amit did the consulting for their clients, while partner Poalim IBI did the underwriting and distribution. But in August, Victory split to form its own underwriting firm, and poached Poalim IBI’s CEO to run it — a move that revealed just how much Poalim IBI relied on their business.

Within days, Poalim IBI’s shares fell by 40 percent after it became clear that over 60 percent of the company’s revenue in 2017 had come from Victory’s clients, and 48 percent the year before. (By this point, most of the bond issuances were from the same clients who’d already undertaken the costly and tedious work of going public.)

When Poalim IBI’s CEO Erez Goldschmidt left to join Lipa and Amit, he brought his team to start the new venture, called Orion. It left a big void at Poalim IBI, which set off a chain reaction in the nation’s finance sector. Poalim IBI responded by poaching Ofer Greenbaum and Shai Nevo, the top executives from rival firm Leumi Partners, a division of Leumi Bank.

Clients have been shifting alliances too, sometimes as a result of the executive shakeup. Moinian, who worked with Eisenberg and the Leumi team, moved with them to Poalim IBI, while David Marx’s Marx Development Group switched from Victory to Discount.

“You can say that it’s the American business that caused the commotion in Israel’s underwriting sector,” said Adato.

What’s next?

Ronen Geles, a former executive at real estate firm Gazit Globe, was hired by Discount in 2016 to beef up the firm’s international activity. In his estimation, it’s not a zero-sum game, and the sector has room to grow.

“Everyone’s left New York,” he said. “Now, they’re looking all over the States. There’s space enough for everyone.”

But according to some, the search for more business could lead to looser underwriting standards, even as the market gets more sophisticated. Of the first 20 companies to come to the market in Tel Aviv, only two were rated below an A-. Of the 10 new companies that came to market in 2017, six were rated in the triple Bs.

If you ask InFin’s Levi, this is only the beginning. Since the process of taking a company to market takes roughly six to nine months, observers won’t see the full extent of the competition — or of the fallout — until those deals start to close. “When so many mushrooms pop up after the rain, there are bound to be failures,” Levi said.

“Every time someone else did a deal, he would go into mourning,” Victory’s Lipa said of his partner Amit.

So Lipa shared what his mother said: “If you have competitors, it seems you’re doing something right.”

151 Chilean Avenue (Credit: Palm Beach County Property Appraiser)

Powerhouse beer distributor David “Duke” Reyes and his wife Pamela Perri just dropped $11.5 million on a recently built home in Palm Beach, property records show.

Reyes is the CEO of Reyes Beverage Group, the major beer distributing company responsible for doling out brands that include Corona, Molson-Coors, Heineken USA and Miller Brewing Company.

Records show he bought the two-story, 5120-square-foot home at 151 Chilean Avenue from Adrian Tauro, an investment adviser based out of Ontario, Canada. The deal breaks down to about $2,450 per square foot.

Reyes comes from a rich family legacy – his brothers Jude and Christopher Reyes run Reyes Holdings, the exclusive distributor for Coca-Cola in the greater Chicago area and Northwest Indiana and the biggest food distributor for McDonald’s. In 2015, the family netted $8.6 billion, according to Forbes.

Tauro paid $2.8 million for the 12,500-square-foot property in 2014, records show. The four-bedroom, four-bathroom home was built in 2016.

Reyes joins a number of beverage execs to call South Florida home, like Edward M. Brown, the president and CEO of the Patrón Spirits Company, and Stephen Levin, the founder of Gold Coast Beverage Distributor, the latter of which sold to Reyes in 2015. Peter Busch Orthwein, heir of Adolphus Busch , also owns a home in Palm Beach.

From left: Charlie Kushner, Andrew Gellert and 666 Fifth Avenue (Credit: Getty Images)

The Trump administration tapped the son of a close business partner of the Kushner family to become ambassador to Chile. Andrew Gellert, president of the Gellert Global Group, is the son of George Gellert, who owns a major stake in Kushner Companies and Vornado Realty Trust’s 666 Fifth Avenue.

The older Gellert has a close relationship with developer Charles Kushner, the father of senior White House advisor and former Kushner Companies CEO Jared Kushner, Bloomberg reported.  Apart from 666 Fifth, he was also involved in several of Kushner’s multifamily deals and co-guaranteed loans on Kushner-owned properties, according to Bloomberg.The two men both own a stake in Regal Bank, a New Jersey-based lender.

It is common for U.S. presidents to pick campaign donors as ambassadors, but picking business associates is rare, Bloomberg reported.

“Andy is a brilliant young man who has been instrumental in building a very successful family business,” Charles Kushner told Bloomberg via a spokesperson. “Our country is fortunate to have Andy serve in such an important ambassadorship.”

The younger Gellert knows Chile: the family company has exported dried fruit and nuts from the Latin American country. But he speaks only basic Spanish.

The Kushner family also has another connection to Chile: The home Jared and wife Ivanka Trump are renting in Washington, D.C. is owned by Andronico Luksic, a Chilean billionaire who owns mines and also has interests in the U.S.

Kushner Companies did not comment beyond what was in the Bloomberg report. Charles last week said he was not concerned about federal investigations into the family business. He also said 2017 was a record year in terms of transactions for the company.  [Bloomberg] — Konrad Putzier 

Condo sales dropped in Miami-Dade County last week.

The county recorded 101 sales for a total of $30.6 million, a big decline from the previous week’s $77.5 million sales volume for about 115 units. Condos last week sold for an average price of about $303,000, or nearly $275 per square foot.

The sale of the week was at Bal Harbour 101. Penthouse 2 traded hands for $3.6 million, or more than $1,000 per square foot. The four-bedroom, 3,300-square-foot unit sold after about three months on the market with Asher Ouazanan.

The second most expensive deal was at the Towers of Key Biscayne. Unit A1001 was on the market for 146 days with Maureen Jauregui before closing for $1.3 million, or about $760 per square foot.

Closing prices in the top 10 deals ranged from $610,000 to $3.6 million.

Here’s a breakdown of the top 10 sales from Jan. 21 to Jan. 27. Click on the map for more information:

Most expensive
Bal Harbour 101 #PH2, Bal Harbour | 101 days on market | $3.6M | $1,091 psf | Listing agent: Asher Ouazanan | Buyer’s agent: Asher Ouazanan

Least expensive
Courvoisier Courts #2302, Miami | 200 days on market | $610k | $467 psf | Listing agent: Riley Smith | Buyer’s agent: Andrea Fahel

Most days on market
Grand Bay Ritz-Carlton #212, Key Biscayne | 347 days on market | $732k | $862 psf | Listing agent: Alexandra Batista | Buyer’s agent: Monica Venegas

Fewest days on market
Roney Palace #1116, Miami Beach | 23 days on market | $730k | $760 psf | Listing agent: Paolo Coniglio | Buyer’s agent: Russell Brooke

Boca Raton Marriott at Boca Center and AVR CEO Allan V. Rose

AVR Realty Co. of Yonkers, New York just paid $69.3 million for the Boca Raton Marriott at Boca Center, property records show.

New York-based Carey Watermark Investors sold the 256-key hotel at 5150 Town Center Circle for about $271,000 per room. The buyer, AVR Boca Center Hotel LLC, financed the deal with a $60 million mortgage from M&T Bank.

The 12-story Marriott was built in 1987 on a 2.5-acre site and includes about 17,000 square feet of meeting space, a pool and gym. It’s near Town Center at Boca Raton.

Carey Watermark paid nearly $58 million for the Marriott in 2014 with plans to spend $7 million renovating the hotel. In South Florida, the real estate investment trust has been relatively quiet since 2015 when it paid $328.6 million for a majority stake in the Ritz-Carlton Key Biscayne.

AVR Realty, an investment and development company led by Allan V. Rose, also owns the Marriott Courtyard Convention Center Hotel in downtown Miami and apartment complexes in Davie and Pembroke Pines, according to its website.

Hotel investment sales activity is slowing picking up in South Florida. Miami’s hotel industry had one of the strongest fourth quarters of any market in the country last year, thanks in part to increased demand following the devastation caused by hurricanes in the fall.

The 38,000-square-foot, 12 bedroom, 21 bathroom property 924 Bel Air

For wealthy young buyers, bigger is better.

According to a new report, buyers aged 25 to 50 (who are willing to shell out $1 million or more) don’t just want fancy finishes and prime neighborhoods. They want 20,000 square feet or more.

Such buyers account for the majority of those shopping in the $1 million-and-up category, according to Luxury Portfolio International, a network of brokerages.

Nearly 25 percent of wealthy buyers aged 25 to 49 said they want a spread of at least 20,000 square feet, compared to just 6 percent of those 50 or older.

The other “essentials”? Hot tubs (45 percent), commercial-grade kitchen appliances (52 percent) and security cameras (54 percent). Living near great restaurants and family was also a top concern.

According to the report, three out of five respondents aged 50 and under expect to inherit at least $1 million. Thanks to a tax provision passed by former President George W. Bush, more wealthy families have been passing down those richest to the next generation.

Between 2011 and 2014, more than 171,000 families gifted at least $1 million to relatives, compared to 7,600 between 2007 and 2010. [Bloomberg] — E.B. Solomont

Keep your eyes peeled for The Real Deal South Florida‘s spring issue!

A must read for anyone in the industry, the magazine is packed with the most timely and important real estate stories. Highlights from the upcoming issue include ranking the region’s biggest developers, exploring the top tech tools that help commercial brokers ahead, and tracking what’s coming in the condo pipeline.

You can receive your copy by subscribing to The Real Deal South Florida. Click here to read the winter issue.

The deadline for artwork is March 15. For advertising opportunities, please contact us advertising@TheRealDeal.com.

The incomplete Las Olas Ocean Resort on Seabreeze Boulevard in Fort Lauderdale (Credit: lasolaseb5.com)

The financial services firm Bancorp Bank has filed a lawsuit seeking to foreclose on a troubled, unfinished Fort Lauderdale hotel resort, charging the developers have defaulted on $37 million in loans. The defendants, who were able to attract $30 million in EB-5 financing, appear to have traded on their ties to a well-respected development company, though the company denies it was involved in the project. The Senor Frog’s restaurant chain also figures into the suit. More on that later.

The defendants are listed as two LLCs, 550 Seabreeze Development LLC and Jawof 515 Seabreeze LLC. The 550 Seabreeze LLC has ties to former executives at Miami-based developer Turnberry Associates. The suit was filed in U.S. District Court in Fort Lauderdale.

The corporations both control sites for the unfinished Las Olas Ocean Resort at 550 Seabreeze Boulevard.

That 12-story complex has topped out, but is not complete and construction has stalled. A website for the project shows a livestream video of the site with nothing happening. The website also describes the developers as “a group of well-experienced executives of Turnberry Associates,” a family real estate development company that is run by Donald Soffer.

It lists a Turnberry-owned suite at the company’s Aventura Mall as a contact address. A spokesperson for Turnberry said the company “has no involvement in this project whatsoever.”

Bancorp provided 550 Seabreeze Development LLC a $50 million mortgage in 2013 with the hotel properties as collateral. Included in the loan was the property at 515 Seabreeze, which was meant for a later expansion of the hotel.

The suit alleges that the entities failed to finish the resort by its planned March 2017 completion date, failed to make its December 2017 loan payment, and made unapproved changes to its project budget in violation of the loan agreement.

The LLCs also broke the loan agreement, the suit alleges, when they terminated a lease deal with the Senor Frog’s chain of restaurants. They also booted property manager Aston Hotels and Resorts Florida LLC without finding a replacement within an agreed two-week window, according to the suit.

The 550 Seabreeze Development LLC purchased the property in 2003, a deed shows. The developers at one point sought EB-5 investors, a government program that allows foreign investors who contribute $500,000 or more to a development to obtain American citizenship. Las Olas Ocean Resort raised at least $30 million from 60 EB-5 investors through December 2015. The resort website still promotes EB-5 financing.

The resort hotel would have featured 136 rooms and a 276-vehicle parking facility, according to a May 2015 documents, and would be branded under the Preferred Hotel franchise. It called for a cafe and an “Ocean Club,” according to the document.

The project had suffered from numerous delays throughout its construction, including have to wait nine months for a Broward County approval of architectural and engineering plans. Another six-month delay was in order to comply new Federal Emergency Management Agency flood plain requirements.

The registered agent for 550 Seabreeze Development LLC is Raymond Parello, a former director of finance at Turnberry who left the firm 12 years ago, according to a Turnberry spokesperson. A 2017 annual report for the LLC filed last year, however, still lists a Turnberry suite at the Turnberry-owned Aventura Mall as the company’s mailing address. The LLC purchased the property in 2003, and Parello was named registered agent using the Turnberry address in 2005.

A parcel neighboring the hotel site, 525 South Fort Lauderdale Beach Boulevard, is also connected to the LLC and Turnberry’s Aventura Mall address, according to Broward County property records. That parcel is in the care of Stan Roman, a former employee of Turnberry who retired sometime before 2017, a spokesperson said.

A representative for 550 Seabreeze LLC could not immediately be reached for comment. Efforts to reach Parello and Roman were unsuccessful.

AVE Aviation & Commerce Center, 800 Waterford Tower and Sawgrass Pointe II

Ross Furniture Logistics takes 115,000 sf at Hialeah warehouse

Freight forwarder Ross Furniture Logistics just inked a 115,000-square-foot lease in Hialeah.

The company, of no relation to the retailer, is moving into a 215,000-square-foot warehouse at 6699 Northwest 36th Avenue, owned by Seagis Property Group of Conshohocken, Pennsylvania.

The Easton Group’s Mike Waite and Jim Armstrong brokered the deal.

Records show an affiliate of Seagis paid $10.5 million for the warehouse in 2006. Seagis also owns the Doral Logistics Center and the Airport International Center in Miami.

KSI Trading Corp signs 42,000 SF lease at Aviation & Commerce Center

Auto parts and service supplier KSI Trading Corp. just secured a 42,000-square-foot lease at AVE Aviation & Commerce Center at Opa-locka Executive Airport, according to a press release.

The tenant will move into Building J at 14350 Northwest 56th Court, bringing the 171,000-square-foot building to full occupancy.

Once completed, the 178-acre business park will include about 200,000 square feet of retail, 2.1 million square feet of office and warehouse space, and 250,000 square feet of jet hangers. Other tenants include Turbopower, Banyan Air Services and the U.S. Postal Service.

Cushman & Wakefield’s Matthew Bittel represented KSI.

FirstBank Florida signs 26,000 SF lease at the 800 Waterford

FirstBank Florida is relocating and moving into a 250,000-square-foot speculative office building at the Waterford at Blue Lagoon business park, Cushman said.

The bank, represented by Cushman’s Tony Jones and Ryan Levy, will be taking up about 26,000 square feet in the 10-story building at 800 Waterford Way. It previously occupied a neighboring office building at 701 Waterford, according to a release.

Tampa-based Hogan Group developed the business park and manages it for TIAA-CREF and Allianz Real Estate of America. Allianz paid TIAA $375 million in 2015 for a 49 percent stake in the company’s six Class A office buildings, totaling more than 1.4 million square feet.

Sawgrass International Corporate Park

Sawgrass International Corporate Park in Sunrise signed deals for about 185,000 square feet of office space, according to a press release.

Performant Financial Corporation took the penthouse at Sawgrass Pointe II, at 1200 Sawgrass Corporate Parkway, bringing the building to 100 percent leased. Cushman’s Tony Jones represented Performant.

Federated National Holding Company renewed and expanded its lease at another building within the park, Sawgrass Commerce Center A at 13800 Northwest 14th Street. The nearly 65,000-square-foot deal includes an expansion of about 16,300 square feet. CBRE’s Zach Wendelin represented Federated.

Technology company Harris Corporation inked a 28,180-square-foot lease renewal and expansion at Sawgrass Pointe I. The company grew by nearly 8,500 square feet at 1000 Sawgrass Corporate Parkway in a space previously occupied by Nuance Communications. Sandra Andersen, with JLL, represented Harris Corporation.

Avison Young represented the landlord, Vanderbilt Office Properties.

60 Wall Street and GIC’s Lim Chow Kiat (Credit: Paramount Group)

As investment from Chinese investors dwindled last year, Singapore rose to be the largest Asian investor in U.S. commercial real estate.

Data from Real Capital Analytics and Cushman & Wakefield show that Singaporean investors spent a total of $9.5 billion on U.S. properties, while Chinese investment dropped 66 percent to $5.9 billion, Bloomberg reported.

It was the first time since 2012 that Singapore outspent China.

Sovereign wealth fund GIC accounted for nearly 75 percent of Singapore’s dollar volume, including a 95 percent stake the fund bought in 60 Wall Street in a deal that valued the 50-story office tower at $1.1 billion – one of the few billion-dollar sales of the year.

“We expect Singapore to continue to be the single largest source of Asian investments in the U.S. real estate markets,” said Cushman’s Priyaranjan Kumar, executive director of the firm’s capital markets for Asia Pacific.

Singapore ranked as the No. 3 biggest investor worldwide in U.S. commercial real estate behind Canada and France. The city-state’s investments in commercial real estate around the globe climbed by roughly 40 percent to $28.4 billion in 2017, surpassing the record year of 2015. [Bloomberg] – Rich Bockmann

(Credit: S&P)

Home prices continued their upward streak in November.

The 20-city index registered a 6.4 percent growth rate year-over-year, marking the biggest increase since June 2014. The monthly data was released Tuesday by the S&P CoreLogic Case-Shiller index.

The November gains were spread unevenly. The best performing cities were again in the West. Seattle led the nation with a 12.7 percent annual increase in November 2017 compared to November 2016. That was followed by Las Vegas and San Francisco.

Los Angeles also outperformed the average, with a 7 percent annual increase.

In the New York metro area, home prices rose 5.7 percent.

Miami, meanwhile, saw a 4 percent increase.

Prices in Chicago, Cleveland, Detroit, Charlotte saw annual decreases.

While 2017 showed a consistent rise in home prices through November, the growth rate outpaced the rise in wages. That could lead to an affordability crunch for first-time buyers. In addition, the tax bill, which passed in December, will introduce new factors to the housing market that could affect the home price increases.

Miami, Los Angeles, New York City and Chicago skylines (Credit: Max Pixel, Public Domain Pictures, Pexels)

Renters in the nation’s largest cities could save as much as $2,200 a year on rent if they wait for the right time of the year to sign a lease, according to a newly released report.

Renthop found that rents during the most expensive and least expensive months last year fluctuated by 4 percent to 5.4 percent for one-bedroom apartments and from 2.3 percent to 5.8 percent for two-bedroom apartments.

In most cities, rents are highest from late spring to early fall and drop over the winter months. New York City saw the biggest difference in seasonal pricing in terms of absolute price. One- and two-bedroom pads were cheapest in February, with median prices at $3,000 per month and $3,400 per month, respectively. The median price for a one-bedroom apartment jumped to $171 by July and two-bedroom pricing jumped $191 by June.

The spread wasn’t so drastic in Los Angeles. November and December were the best months to rent, with pricing 4 percent to 4.1 percent lower than in peak months — June for one-bedrooms ($2,085-per-month) and September for two-bedrooms ($2,603-per-month). That means a renter could theoretically save $1,236 with a one-year lease by waiting three months to sign on the dotted line.

Rents in Miami fluctuated very little last year, perhaps because of the balmy year-round weather and fewer college-age renters, which Renthop theorized fueled some of the seasonality. The five cities with the highest enrolled student percentage had an average seasonal variation of 4.4 percent, 1 percent higher than those with the lowest population of students.

Rents were just $37 and $51 higher between the best and worst months in Miami for one- and two-bedroom apartments, respectively. The cheapest month to rent was December and the most expensive was July.

Chicago two-bedroom apartments fluctuated the most between peak and off-peak rental months, in terms of percentage. The median rental rate in September, $2,335 per month, was 5.8 percent higher than March when it was $2,200 per month.

From left: Natalia Karayaneva, Andrew Hinkes and William Kakon (Credit: Pixabay, iStock, Images Money via Flickr)

Daniel de la Vega is a Bitcoin believer. But his faith comes with a catch.

As president of One Sotheby’s International Realty, he had seen the potential of the cryptocurrency and others like it to shake up the real estate market.

But de la Vega’s research also gave him pause. Concerns over the currencies’ extreme volatility and vulnerability and the potential lack of transparency among cryptocurrency buyers have so far kept him on the sidelines.

“I’m open to it but I just don’t encourage it,” he said. “I believe it’s still very risky. I would just need to be surrounded by the right professionals.”

As of Tuesday, 1 Bitcoin was worth about $10,000. The cryptocurrency peaked in December at $19,500 and fell to about $9,000 in early January.

For Bitcoin investors, the residential real estate market offers some stability from the whiplash highs and lows. A property’s price gets locked in based on its value in dollars. Someone paying for the property in Bitcoin or other cryptocurrency would pay the amount at a precise date and time.

Bitcoin operates through a series of blocks of code known as blockchain that creates a record of every transaction and every access point. Keyholders, who each have a unique access code, can access a blockchain from virtually anywhere and can share important data with all parties in a transaction. But the system is also vulnerable to hacking, as seen most recently when the Japanese exchange Coincheck reported losing $530 million in cryptocurrency.

In the residential real estate world, though many brokers are excited about its potential, cryptocurrency has yet to enter the mainstream. In South Florida, cash remains king.

In all of Florida, there has been only one known Bitcoin-to-Bitcoin deal, which closed in late December. That was for a $275,000 Miami condo purchased by a Bitcoin entrepreneur.

William Kakon, who launched the international cryptocurrency real estate listing company Blockchain RE with his brother, Nathan, has been involved in three cryptocurrency deals in Florida. None of them was fully completed with cryptocurrency. He has worked on fully cryptocurrency deals abroad, however, using both Bitcoin and Ethereum, which is currently valued at more than $1,000.

To avoid engaging in shady deals, Blockchain RE uses “Anti-Money Laundering” and “Know Your Customer” software, both designed to determine the source of funds that are paying for a property.

“It’s a very, very simple process. A lot of people don’t really understand how it works,” he added.

But for every digital currency evangelist there is a skeptic.

Diego Arnaud, founder and CEO of DA Luxury Realty, said his clients, most of them with a net worth of more than $20 million, aren’t interested in the digital currency world. Volatility isn’t their biggest concern. “There’s a negative perception in cryptocurrency that [buyers] can’t be traced,” he said.

There are also statewide limitations. All three of the Florida deals that Kakon did involving digital coins were ultimately reflected in dollars, out of necessity.

While blockchain contracts are accepted as legal tender in states like New York and Arizona, that’s not yet the case for the Sunshine State. But a bill introduced in the Florida House of Representatives earlier this month could legalize blockchain data and smart contracts. It would validate signatures registered through a blockchain as part of the electronic record, according to the proposed legislation.

But just as difficult as negotiating state law can be getting real estate investors as comfortable with digital currency as they are with the dollar. Digital currency proponents maintain Bitcoin and similar exchanges are simple, fast and effective methods of payment.

The problem is, most consumers don’t know how they work.

Educating the public has been part of the job for Michel Triana, founder and CEO of Intelerit, a Fort Lauderdale-based predictive real estate analytics platform for U.S. investors. The vast majority of sellers still want payment in dollars, he said. For some portions of a deal, that may not change soon, Triana acknowledged.

That includes the title and escrow process, said Marlen Rodriguez, president of the HomePartners Title Services, an affiliate of the Keyes Company real estate firm. Major insurance underwriters only accept dollars, she said.

As long as buyers convert their Bitcoin or Ethereum to cash for the title and escrow process, there would be no problem.

Once the seller converts the digital currency to dollars to pay the title company, “there’s nothing unique about that transaction moving forward,” said Andrew Hinkes, a partner at the law firm Berger Singerman.

In very rare cases, a buyer and seller will agree to skip the title process.

But for de la Vega of One Sotheby’s, those kinds of transactions only reinforce his feeling that now isn’t the right time for cryptocurrency in the real estate world.

“It’s about the gray area,” he said. “I don’t know how these people have gotten Bitcoin, how it has been exchanged.”

Closing a real estate deal using digital currency can be a complicated process. Here are some important points to keep in mind along the way:

Get comfortable

Surround yourself with real estate pros who are also fluent in cryptocurrency, particularly attorneys, said Ragnar Lifthrasir, founder of the blockchain real estate startup Velox.RE. Ask those same people if they own any digital coins.

“Anyone in real estate needs to get skin in the game. They need to own the coin themselves,” Lifthrasir said. “Until they’re comfortable using it themselves, they don’t know what they’re talking about.”

Agree on a price

The biggest step in the digital currency process is to agree on a price, then lock in a closing date and time. That’s when the dollar price will be agreed on in cryptocurrency. The purchase and sale agreement should include language about the risk involving cryptocurrency, said Hinkes of Berger Singerman.

Pay the necessary parties in dollars

Some attorneys, real estate agents, title and escrow agents will require you pay them in dollars. For that, you would need to convert your Bitcoin to dollars. Services like Bitpay or Changelly can convert the digital currency to cash.

What about title?

The seller may have liens on the property or an unpaid mortgage. If a seller has $500,000 left on his or her mortgage, they would convert that portion of cryptocurrency into dollars and pay the mortgage. “The title work is exactly the same,” Kakon said. But, he added, “you need somebody who really understands cryptocurrency.” Because most title and escrow companies aren’t set up to accept Bitcoin, “They just might not be sure,” added Lifthrasir.

Recording the deed

In the future, cryptocurrency supporters hope that recording deeds will be done with blockchain. The startup Propy recently launched a pilot program in Vermont to use blockchain technology to record real estate deals. Velox.RE created a similar program in Chicago’s Cook County.

Propy CEO Natalia Karayaneva said the technology could be replicated in South Florida. For now, deeds are recorded with each county’s property appraiser.

(Photo Illustration by Lexi Pilgrim for The Real Deal)

When a busted partnership between a pair of brokers at Newmark Knight Frank gave rise to fight over a $1.1 million commission, a panel of three colleagues stepped in to settle the dispute.

The senior broker, Lawrence “Chip” Porter, claimed he was entitled to the 50/50 split for the Urban Soccer lease at the Brooklyn Whale Building. His argument was that they had verbally agreed to the split as partners, and their relationship with the tenant began while they were still a team. Junior broker George Valliades had a different take. He argued that Urban Soccer broke off talks after that initial meet and then came back to the table. He felt he was under no obligation to split his haul with his former partner.

What separated this quarrel from a run-of-the-mill commission dispute was the fact that Porter happened to be the son-in-law of Newmark president Jimmy Kuhn.

And that’s when things got interesting.

On the day of the arbitration, Kuhn showed up at the proceedings and “became outraged and caused a disturbance outside the room,” Valliades claimed in a lawsuit he filed against the company following the arbitration. The scene had “a visible impact on the panel and ultimately, on their bias,” he said.

James Kuhn (photo by STUDIO SCRIVO)

The three-person panel decided in favor of Porter. Valliades is no longer with Newmark.

Brokerage is an eat-what-you-kill business, often described in terms of a lawless frontier where the rules of engagement can be codified with a handshake instead of a pen. Those are the perfect conditions, insiders said, to create the sort of gray areas where commissions hang in the balance.

“When people work on entirely commission, it’s possible for somebody to do a lot of work and wind up not getting paid,” said Henry Bergman, an attorney at the law firm Moses & Singer. “Also, when you’ve got one broker working with another broker, they tend to develop different views on who’s worthier.”

While brokers and managers told The Real Deal that the number of commissions disputes represents just a fraction of the thousands of deals inked every year, the stakes are high enough that when they do occur, both sides usually dig in. For seasoned dealmakers and their firms, millions of dollars often hang in the balance when they go to the mat to claim what they believe to be theirs. And for upstart brokers, a disputed commission could be the biggest deal of their careers.

And regardless of how many commission agreements get signed, or how rigorous the arbitration process set up by the firm, industry experts said that disputes happen at every level of the business.

“It’s the Wild West to some degree,” said Michael Weiser, president of GFI Realty Services. “Perhaps some brokers will say they’re going to shoot you before they pull out the gun, but they’re still taking out the gun.”

Procuring Cause

At the heart of every real estate commission – whether it’s a residential or commercial deal – is the legal idea of a procuring cause. A licensed broker is entitled to a commission when he or she has a contract and plays a direct role in consummating a deal, according to law.

But there’s a lot of room for interpretation, and experts said disputes often arise when one side of the deal questions just how significant a role the broker played in putting everything together.

“Performance often becomes an issue. Did a broker produce a ready, willing and able buyer?” explained new-development specialist Nancy Packes, who previously served on the Real Estate Board of New York committee that arbitrates residential brokerage disputes. “Typically, that’s where these things tend to get hairy.”

A broker with an exclusive to sell a home or an apartment, for instance, will show it to many potential buyers during the exclusive term and keep a list of those names. Should the exclusive expire and one of those potential buyers returns to do a deal with a new broker, the thinking goes, the original agent should be able to produce the list and prove their role in the deal. But that’s the kind of gray area where a dispute can arise.

[TRDPullQuote align=”right”] “Perhaps some brokers will say they’re going to shoot you before they pull out the gun, but they’re still taking out the gun.” [/TRDPullQuote]

On the commercial side of the business, when it comes to the world of large, institutional deals, most of these details and contingencies are spelled out in lengthy employment contracts and exclusive agreements. But in the rough-and-tumble world of street brokerage, exclusives are fewer and farther between.

“An open-listing world is a sea of gray to start with,” said Weiser, who said that more often than not, he sees disagreements arise when multiple brokers are involved and there’s no exclusive listing. “You don’t have to be doing something wrong; you can be doing your job well and you’re bound to run into conflicts.”

Muddying the waters is the fact that in real estate, unlike other parts of contract law in New York State, a written contract is not required. Verbal agreements and handshake deals will hold up in court as binding contracts, and in many corners of the business that’s how deals get done.

And it’s not just other brokers that dealmakers have to worry about. Sellers, clients and landlords have also been known to try in withhold a commission check.

“The defenses are myriad. There are a thousand different reasons not to pay them,” said Errol Margolin, a partner at the law firm Margolin & Pierce, who represents the Corcoran Group in many dispute cases. “People just don’t like brokers. They hate them. If they can cut the broker out of the deal, they will try. A lot of brokers aren’t careful. If they don’t dot their Is and cross their Ts, they can lose.”

The cautionary tale

It’s probably a telling sign that there are nearly as many formal systems to mediate commission disputes as there are disputes themselves.

Most of the large institutional firms require their agents to arbitrate disputes in-house, and formally document agreements on commission splits. For disagreements between brokers at different firms, REBNY offers its own arbitration process.

A spokesperson for REBNY said the board oversees around eight to 12 arbitrations a year, but declined to comment further on the details of the process. REBNY keeps standing committees of brokers, attorneys and other industry players to sit in on arbitration panels when an issue comes up.

Mitchell Konsker

And of course, there’s always the option to go to court. One of the highest-profile court cases in recent memory came to an end in December when Cushman & Wakefield dropped its appeal to a lawsuit filed by a team of top brokers when they left for rival JLL in 2011.

After nearly 14 years with Cushman, the team led by Mitchell Konsker claimed they were owed millions. The two sides reached a settlement in 2014 on the base salary owed, but then spent several years in court arguing over attorneys fees and the bonus that the brokers were entitled to on the bigger deals. Known at Cushman as the 5-10-15 schedule, the brokers could earn a bonus that ranged from an extra 5 percent on deals worth more than $300,000 to 15 percent on deals over $800,000.

Konsker and his team had originally sued for no less than $8 million in wages and another $4 million in compensatory damages. But the sum they spent nearly four more years tussling over before Cushman dropped its appeal was just $150,000.

The brokers involved in the lawsuit and representatives for Cushman declined to comment. But a source with knowledge of the proceedings said ego played a big part in both sides going toe-to-toe for so long. In the retail world, Douglas Elliman’s Faith Hope Consolo took some hits in the press for a lawsuit brought by her former partner Joseph Aquino, who alleged that the brokerage withheld $1 million in commissions from him and used the funds to pay for Consolo’s lavish lifestyle. (A judge later dismissed the suit, and Aquino moved on to another firm.)

Cases like these put dealmakers in the headlines for the wrong reasons, and there’s always the concern that battling over a commission check can damage a reputation, possibly turning others away from potential deals with a broker.

But one broker disputed this view, saying that players will generally overlook a person’s past if there’s a profitable deal to be had.

“If you have two choices, to go with the good person or the bad person, you’re going to go with the good person,” the broker said. “But you don’t always have that choice. If there’s a deal to be made, you’re going to make that deal happen.”

But oftentimes parties prefer to resolve these matters out of public view, because there can be consequences to airing dirty laundry.

In 2016, for example, Cushman broker James Rougan filed a lawsuit claiming fellow broker Jeffrey Heller failed to honor their agreed-upon 50/50 split on the 470,000-square-foot lease they negotiated on behalf of Amazon at Vornado Realty Trust’s 7 West 34th Street.

[TRDPullQuote align=”right”] “People just don’t like brokers. They hate them. If they can cut the broker out of the deal, they will try. A lot of brokers aren’t careful. If they don’t dot their Is and cross their Ts, they can lose.” [/TRDPullQuote]

Cushman fired Rougan less than a week after he filed the lawsuit, but that wasn’t the end of the fallout. Sources said Amazon was incensed by the squabbling between the agents and the bad press that ensued.

At some point down the line, Amazon switched brokers to a team at JLL headed by Derek Trulson, who represented the e-commerce giant when it inked a 360,000-square-foot deal in September at Brookfield Property Partners’ 5 Manhattan West.

Sometimes, there can be a more nefarious disincentive to pursuing a commission.

Adam Leitman Bailey, a real estate attorney, said he once represented a broker in a dispute with a heavyweight who hired a private investigator to dig up dirt on his client. The investigator, he said, found out the broker’s husband had an embarrassing health issue, and threatened to release the info as blackmail.

“It would have been very embarrassing,” said Bailey, who added that they settled the case, but didn’t get the full settlement. “Out of all the cases in my life, not one bothered me as much as that injustice.”

But while a battle for a commission check can get seared in one’s memory, most brokers have picked up and moved onto the next deals.

Colliers International president Joe Harbert said that while he hasn’t seen many disputes in his 30 years, he’s always got “one or two cooking.”

“There are probably repercussions,” he explained. “It’s time-consuming. It’s painful. Sometimes it’s hard after the fact to talk to that person.”

But there’s also the view that when there’s a deal, it means there’s money on the table, and no dealmaker worth their salt would let the threat of a little squabbling get in the way.

“’Eat what you kill’ means I’ve got to go find my own business,” Harbert added. “It doesn’t mean you’ve got to go eat your neighbor.”