The Real Deal’s Alexei Barrionuevo discusses the state of L.A.’s retail market with Bryan Witkow (The Tenant Group), Owen Fileti (LA Realty Partners), Jay Luchs (NKF) and Elizabeth Clark (Pacific Union/Compass) at TRD’s Commercial Real Estate Showcase and Forum in Century City.

Stuart Miller (Credit: iStock)

Miami-based Lennar Corp. is in advanced talks to sell its real estate lending unit, Rialto Capital.

Private-equity firm Stone Point Capital is considering buying Rialto for an undisclosed price, the Wall Street Journal reported. Lennar indicated in April that it might sell Rialto as part of a larger effort to focus on home building and sell or spin off noncore subsidiaries.

The change comes as Lennar and other home builders face a housing market on the downswing. Home-builder sales in the U.S. slowed 3 percent in September compared to the same time last year, according to a survey of 400 builders. Supply and land costs are on the rise, while builders continue to struggle to find enough skilled labor.

Last week, Lennar reported earnings of $453.2 million in the third quarter or $1.37 per share, beating analysts expectations of $1.19. Still, the company expects fourth quarter home deliveries to fall to 14,500 from its previous forecast of 15,000 due to the impacts of Hurricane Florence.

Earlier this year, the company acquired competitor CalAtlantic Group in a $5.7 billion deal, making Lennar the country’s largest homebuilder by revenue. [WSJ] — Kathryn Brenzel

William Holden, the building on Ocean Avenue

A penthouse with ties to William Holden, the late award-winning actor, is being marketed for sale for $15 million.

Holden, who rose to fame in the 1950s with “Sunset Boulevard,” once owned the entire building on 535 Ocean Avenue, the Wall Street Journal reported. He also lived in one of the units until his death in 1981, though it’s not clear if it’s the same penthouse that is now on the market.

The 8,000-square-foot penthouse boasts five bedrooms. There’s also a 2,300-square-foot rooftop deck with hot tub, six parking spaces, and of course, sweeping ocean views.

Howard Murad, a dermatologist and beauty entrepreneur, and his wife, Loralee, are the sellers. They purchased the property in 2011 for $10.5 million, property records show.

Murad recently spent $150,000 upgrading the home’s outdated interior decor, he told the WSJ.

Rochelle Maize of Nourmand & Associates has the listing.

In addition to “Sunset Boulevard,” Holden starred in “Stalag 17,” “The Bridge on the River Kwai” and “Network.” He struggled with alcoholism. While intoxicated at his apartment in Santa Monica, he suffered a serious fall, hit his head and died at age 63. [WSJ] — Natalie Hoberman

Realogy’s Ryan Schneider (Credit: iStock)

It’s not the greatest time to be a Realogy shareholder.

Thanks to a convergence of factors — from the slowing U.S. housing market to heightened brokerage competition — shares of the company’s stock closed at $19.73 on Oct. 5. That’s down 41.2 percent year-over-year, even as the S&P 500 rose 13.39 percent during the same time.

Put another way: The New Jersey behemoth that operates the Corcoran Group and Coldwell Banker has lost more than $2 billion in market value in the last 12 months.

“It’s been a perfect storm for Realogy, honestly,” said John Campbell, an analyst at Stephens Inc. “The way the stock is acting is that it’s essentially what Blockbuster was to Netflix and RadioShack to Apple… People view it as the dinosaur.”

Realogy executives aren’t taking things lightly. During an Aug. 3 earnings call, the word “change” was uttered more than 30 times — with regard to right-sizing its office footprint and curtailing agent payouts.

“We’re focused on moving quickly,” CEO Ryan Schneider said. “I know shareholders expect better results.”

Below are four headwinds Schneider and his lieutenants are facing.

1. Housing slowdown

The U.S. housing market propped up Realogy for several years, but rising interest rates, higher sale prices and fewer new homes have been a drag on its performance. “Unit sales have slowed,” said Jason Deleeuw of Piper Jaffray & Co. The company is more vulnerable than its peers, he said, because its NRT division — which operates Corcoran, Citi Habitats and Sotheby’s International Realty — is so concentrated in high-end markets like California, New York and Florida.

2. Commission payouts

In order to retain top agents, Realogy (like other traditional brokerage firms) has been steadily offering agents higher splits. Realogy’s splits aren’t out of line with what everyone else is paying, but rising payouts have eaten into the bottom line. Three years ago, for example, the average split was 68 percent, according to Campbell’s research. Today, it’s close to 73 percent. (Last year, Realogy shelled out $53 million in commissions during a single quarter.)

“People are questioning, when does that stop,” Campbell said. He believes Realogy will generate $749 million in EBITDA (earnings before interest, taxes, depreciation and amortization) this year; but he said the number would be $250 million to $300 million higher if splits were at 2015 levels.

3. Too many offices

Thanks to online portals and mobile technology, agents can close deals from the road, their car or even Starbucks. But Realogy’s balance sheet is still weighed down with office leases. In its most recent annual report, the company said it has 1,021 leases nationwide totaling 4.9 million square feet. (Rent was $192 million in 2017, up from $186 million in 2016, according to company financials.)

During the Aug. 3 earnings call, CFO Tony Hull said Realogy averages 66 agents per office, up from 63 agents a year ago. But Campbell estimated that if the offices were 80 percent occupied, Realogy would see another $130 million in EBIDTA. “It’s a big number,” he said.

4. Pressure on traditional brokerage model

From 30,000 feet, investors see Realogy as a proxy for the traditional brokerage model — which is under fire.

Anthony Paolone of JPMorgan Chase cited the “enormous” amount of private capital being thrown at new brokerage concepts like Compass. “Astute competitors have that capital behind them [and] are competing for the long-term,” Paolone said.

Some investors think Realogy underestimated Compass early on; the company is now valued at $4.4 billion, after a $400 million round last month led by SoftBank and Qatar Investment Authority. Campbell put it this way: “People are fearful that a competitor that’s been a thorn in the side of Realogy is getting larger and more dangerous.”

Hines CEO Jeffrey Hines at the Campus at Playa Vista (Credit: Hines)

Hines has entered into a contract to sell the Campus at Playa Vista office property for $335 million, more than $60 million less than the price it agreed to in September.

Heitman, a Chicago-based investment firm, agreed to purchase the 325,000-square-foot campus for $400 million, The Real Deal previously reported.

The property was purchased by a Delaware entity, according to a filing with the Securities and Exchange Commission. Hines and Heitman could not be reached to confirm the identity of the entity nor to discuss the final purchase price.

There is $10 million in the contract that is contingent on “certain leasing conditions” by November 2019. Hines expects the deal to close by the end of November. At $335 million, the sale comes out to $1,030 per square foot.

The four-building campus is home to Belkin International, the University of Southern California’s Institute for Creative Technologies and a Hines office. It includes a 9,000-square-foot private terrace and a 944-vehicle garage. Across the street is a nine-acre park designed by Michael Maltzan.

Hines purchased the property for $218 million in 2016 from Tishman Speyer and listed it and a number of other office properties with Eastdil Secured in July. Eastdil Secured also could not be reached for comment.

Playa Vista is quickly becoming the new epicenter of Silicon Beach, the tech-heavy neighborhoods along L.A.’s Westside that include Santa Monica and Venice. Google recently moved into its massive offices at the cavernous Spruce Goose Hangar. Facebook, which once leased at the Campus at Playa Vista, is close to signing a 260,000-square-foot lease at the Brickyard campus there as well.

Justin Bieber and Hailey Baldwin (Credit: Ricky Vigil M/GC Images)

UPDATED October 9, 4:42 p.m.:

A new marriage has apparently not done much for Justin Bieber’s fear of commitment.

The Canadian pop singer is dropping nearly $100,000 a month to rent a 7,000-square-foot home in the San Fernando Valley enclave of Toluca Lake, according to PEOPLE.

Bieber agreed to rent the home, which is listed off-market for $8.5 million, in a short-term arrangement that pushed up the monthly fee, a source told the magazine.

The home’s owners, Howard Atkins and Kathleen McIntyre of San Francisco, bought it for $4.9 million in 2009, according to property records. Atkins is a former CFO of Wells Fargo & Co.

The Spanish contemporary home was overhauled two years ago, which boosted the square footage. It now has five bedrooms and seven baths, and a 1,200-square-foot garage. More importantly for the singer, it has a professional recording studio, along with a pool, spa and private dock with two paddle boats.

Bieber’s master suite features a massive walk-in closet and a luxurious spa-like bathroom and windows that showcase the home’s lake views.

TMZ first reported the rental.

Last month, Bieber married Hailey Baldwin, a model and television personality, in a secret ceremony in New York City, PEOPLE reported. He is known to rent properties in various places, including in Miami Beach and the Hamptons, where in 2016 home builder Joe Farrell let Bieber stay for free in a mansion that normally rents for $80,000 a week. [PEOPLE] — Alexei Barrionuevo

New York City skyline, going green! (Credit: iStock)

Following considerable pushback from landlords, the Environmental Protection Agency is pausing its plans to update the system for energy efficiency ratings.

Changes to the system would affect office and industrial buildings, the Wall Street Journal reported. The move came after some landlords said their properties would be unfairly penalized.

More than 200,000 properties in the country participate in the Energy Star program. Though it’s not mandatory, many landlords participate because tenants are increasingly seeking energy-efficient buildings.

The EPA informed owners about the new rating system in August. The updated methodology would take into account new technologies like motion-sensitive lights and cloud-based energy-management systems, according to the Journal. But some owners said it was confused and unfairly downgraded some buildings.

Energy Star ratings can affect occupancy levels and the rents building owners can charge — which in turn affect property values.

Earlier this year, Chicago was deemed to have the greenest office market in the country. The city has the highest percentage of office buildings that are LEED or Energy Star certified, with 70 percent of office complexes owning that designation. Second and third place went to San Francisco and Atlanta, respectively. [WSJ] — Meenal Vamburkar

The project site

An individual with ties to multifamily developer TDC Pacific Properties has proposed a new, 40-unit building in Koreatown.

The seven-story building at 502 S. Harvard Boulevard would also include three units for extremely low income residents, according to documents published Tuesday with the Department of City Planning.

In exchange for the affordable housing — and for building near two Metro stations — the developer is requesting greater flexibility with the open space and yard setback requirements under the Transit Oriented Communities program.

Darryl White, CEO of TDC Pacific, filed the application under the entity MNW Harvard LLC.

The entity paid $2.3 million for the site in December 2017, property records show. An old age home existing on the property was demolished earlier that year.

Developers have been filing a growing number of plans to build in Koreatown, one of the denser neighborhoods in Los Angeles. Last month, a new firm named Brooklyn Cos. made its first big purchase in the neighborhood, spending $11 million to acquire a 45,000-square-foot property on Western Avenue. The family-run firm plans to spend another $2.4 million on upgrading the apartment building, which will be rebranded to the St. Charles.

Blackstone’s Kathleen McCarthy and Ken Caplan with a map and photo of the industrial property (Credit: Blackstone and Gramercy Property Trust)

The Blackstone Group closed on the $7.6 billion acquisition of industrial real estate investment trust Gramercy Property Trust, the companies announced Wednesday.

Blackstone is paying $27.50 per share, which is 15-percent above Gramercy’s closing price the day before news of the deal broke. The Financial Times first reported the deal in May.

Gramercy owns 81 million square feet of real estate, mostly single-tenant industrial buildings. It has holdings across the country, including in New York, New Jersey, South Florida, Los Angeles and Chicago.

Blackstone, which is buying the REIT with its Real Estate Partners VIII fund, recently launched a new, $18 billion distressed real estate fund.

Eric Baker and property on Canon Drive

Eric Baker, CEO of online ticket marketplace Viagogo, has spent $23.5 million to acquire a 10,300-square-foot mansion in the Beverly Hills Flats.

The executive paid all-cash for the home, which was listed at $50,000 more than what Baker paid, Yolanda’s Little Black Book reported.

Lawyer Andrew White and his wife, doctor Elisa Newman, were the sellers.

The Mediterranean-style home has seven bedrooms and seven bathrooms. Amenities at the sprawling property include an expansive backyard, screening room and a gym with private bath and sauna.

There’s also a saltwater pool, full-size tennis court, and a two-story guest house.

Joyce Rey and Jade Mills of Coldwell Banker had the listing. Fred Bernstein at Westside Estate Agency represented Baker.

Before he founded Viagogo, Baker co-founded Stubhub, another online ticket resale firm. Viagogo, founded in the United Kingdom but based in Switzerland, has been the subject of a number of lawsuits accusing the firm of price gouging.

Baker’s recent purchase in Beverly Hills is just one of many expensive trades taking place in the tony city. Last week, Ellen DeGeneres and Porta de Rossi cashed in $35 million for their home in the neighborhood, while David and Victoria Beckham scored $33 million for their 13,000-square-foot mansion, also in Beverly Hills. Film producer Gary Gilbert also paid $26.5 million for a house in the Flats, located near Baker’s new digs. [YBB] –– Natalie Hoberman

HNA Group Chairman Chen Feng and 850 Third Avenue (Credit: Wikipedia and 850 Third Avenue)

Troubled Chinese conglomerate HNA Group is selling off another $11 billion in assets in its latest move to steady the ship.

Included is New York’s 850 Third Avenue, though most of the 80 total are in China, according to Reuters.

HNA bought the office building in 2016 for $463 million and secured a $342 million refinancing loan for it in June.

The buildings for sale were listed in two documents sent to prospective investors in August, and it’s not clear how many have already been sold. One set of documents listed 23 of the buildings with targeted sales in 2019.

The selloff is a result of mounting pressure from creditors and Chinese regulators. HNA has already sold or agreed to sell around $20 billion in assets since January. The company’s debt was listed at $95 billion through June, which was down 10.7 percent from the end of 2017, according to Reuters.

Earlier this year, HNA sold off a stake in Deutsche Bank and listed a stake in Hilton spinoff Park Hotels & resorts. In September, HNA gave up 80,000 square feet of prime Hong Kong office space that it never moved into but rented for $1.5 million a month.

HNA is led by chairman Chen Feng and has a highly diversified business. [Reuters] — Dennis Lynch 

Clockwise from left: Los Angeles, London, Hong Kong, and New York skylines (Credit: Wikipedia, Michael Vadon via Flickr, and iStock)

Total global commercial real estate investment reached $1.8 trillion over the past year, a record amount.

New York City once again led the way, with more money poured into real estate than any other city, according to a new Cushman & Wakefield global capital market report of the top 50 cities.

But other metro areas are catching up.

While New York saw $49.6 billion invested from June 2017 to June 2018, that was 3.4 percent below the previous year, according to the Cushman report: “Winning in Growth Cities.”

Los Angeles ranked second with $40.7 billion, which represented a 4.8 percent gain over the previous year.

L.A. was the strongest industrial market, according to the report. Roughly $9 billion was spent there, up 21.4 percent from the year before. The industrial market in L.A. is incredibly tight, thanks in part to its strong consumer base and access to the ports of Los Angeles and Long Beach, the two largest in the world.

Rounding out Cushman’s top five worldwide were: London ($35.4 billion, which was 12% higher), Paris ($34.6 billion, which was 42% higher) and Hong Kong ($32.5 billion, which was a whopping 67.9% higher).

The total amount of global investment excludes development sites.

New York’s retail sector actually grew nearly 31%, to $7.4 billion, according to the report. That tied it with L.A. for the second highest investment behind Hong Kong. But there are reasons why New York’s retail sector probably isn’t celebrating. A recent Douglas Elliman survey of Manhattan found that 20 percent of storefronts were vacant.

Chicago, meanwhile, camel in at No. 10 with $18.5 billion, representing a 7.2% increase from last year. That was helped by the sharp rise in industrial investment, up 41.4% to $4.8 billion. Retail investment dropped, however, by about 20% to $2.5 billion.

Miami, which came in at No. 20 with $11.3 billion, saw a 20.4% drop in total investment from the previous year.

L.A saw similar dollar figure investment in the retail sector, up 51 percent year-over-year, and a drop in office investment of 9.2 percent to $12 billion. All cities outside the U.S in the top 10 saw double digit percentage growth in investment. Investors spent $34.6 million on real estate in Paris and $32.5 million in Hong Kong — growth of 42 percent and 68 percent, respectively — putting them behind London at 4th and 5th in the world. Of all cities in the top 10, Hong Kong saw the most significant growth and one of the few to see growth across all major sectors of the market: retail, office, and industrial.

5891 W. Olympic Boulevard (Credit: FreeStockPhotos.biz)

A Beverly Hills developer is planning a six-story multifamily project near Little Ethiopia that leans on the Transit Oriented Communities program.

A filing for the project calls for a 46-unit structure with five units set aside for low-income renters. The project is slated for a parking lot at 5891 W. Olympic Boulevard, at the corner of S. Spaulding Avenue. The lot is 6,700 square feet.

The developer is an entity run by Emanoel Sadighpour, whose company bought the property for $2.1 million in 2014.

The city’s TOC program, which started last fall, provides developers with density bonuses and other incentives for building affordable units near major transit options. Developers have filed for more than 1,000 affordable units through the program as of July.

Sadighpour is requesting a 70 percent increase in density, a boost in floor-to-area ratio, and a reduction in the number of required parking spaces, down to 23. He also is asking for an additional 22 feet in height to build up to 67 feet. While the property abuts a single-family neighborhood, it’s also near a number of taller commercial structures along Olympic Boulevard.

Multifamily development is chugging along in the area. Amoroso Companies wants to build a 123-unit project on W. Pico Boulevard. David Neman also wants to build a 54-unit mixed use property in nearby Beverly Grove.

28 Liberty Street (Credit: Twitter and SOM)

UPDATE, Oct. 10, 10:27 a.m.: The real estate arm of Fosun International is reportedly looking to sell its 60-story Financial District tower 28 Liberty for an eye-watering $1.6 billion.

The Chinese industrial conglomerate bought the tower for $725 million in 2013, when it was called 1 Chase Manhattan Plaza and owned by JPMorgan Chase. Fosun quickly embarked on a repositioning of the 2.2 million-square-foot building, sinking millions into a renovation and attracting tenants like Booking.com, financial trading firm Broadway Technology and the New York Attorney General’s office.

According to Real Estate Alert, which first reported that the building is for sale, 200,000 square feet of office space remains unleased. CBRE is marketing the building on behalf of Fosun. If it trades at asking price, the building would go for about $730 a square foot.

A representative for Fosun denied the report and said that the company was open to “having a strategic partner for 28 Liberty,” but would retain majority ownership.

The investment sales market in Lower Manhattan has been quiet this year. In 2017, Paramount Group and Morgan Stanley sold the 1.8 million-square-foot 60 Wall Street for $1.04 billion ($555 psf), and Brookfield Property Partners sold a 49 percent stake in 1 Liberty Plaza to Blackstone Group for $759.5 million, which valued the 2.3 million-square-foot tower at $1.55 billion.

In 2018, Fosun has signed the London Stock Exchange Group and information-services firm Wolters Kluwer to a combined 200,000 square feet in leases. Alamo Drafthouse is set to open a 10-screen multiplex at the property, and Danny Meyer is opening a sprawling restaurant on the 60th floor.

Fuson refinanced the property late last year with an $800 million loan from Deutsche Bank and HSBC. [Real Estate Alert] — David Jeans

Update: This story has been updated to include a comment from Fosun’s spokesperson.

Pierre Koenig and Case Study House No. 21

One of the most iconic and striking mid-century homes built as part of the Case Study House Program has hit the market again, this time for $3.6 million.

At only 1,280 square feet, in an open-floor layout, the 1958 home in the Hollywood Hills is hardly a mega-mansion. Instead, Case Study House No. 21, also known as the Bailey House, is a study in revered minimalism.

The home is one of less than two dozen structures still standing from a program started in 1945 by John Entenza, the publisher of Arts & Architecture magazine. Entenza challenged some of the biggest architects of the day — including Richard Neutra, Eero Saarinen, and Charles and Ray Eames — to design and build inexpensive homes that could be easily replicated to house the country’s booming post-war population.

Case Study homes often fetch hefty prices on the market, given their size and architectural importance. Actress Kristen Wiig paid $3 million for Pasadena’s Case Study House No. 10 in December 2017. Case Study House No. 18, in Pacific Palisades, hit the market in April for $10 million.

House No. 21, designed by architect Paul Koenig, was last listed in 2016 at $4.5 million. Aaron Kirman of Pacific Union International and Edward Reilly of Keller Williams have the current listing.

The home has two bedrooms and two bathrooms, and is a simple rectangle with floor-to-ceiling glass windows and a steel frame with steel paneled walls. The bedrooms are separated from the living room and kitchen by a central outdoor court. There’s also a shallow moat-like pond surrounding the structure.

Koenig himself helped restore the home to its mid-century condition in the 1990s with a few small updates, including installing a new stainless steel kitchen.

Reilly said he and Kirman are marketing to clients who will appreciate the house for its pedigree.

“We’re marketing to two different clients,” he said. “Those in the architectural world who appreciate it for what it is historically, and to the art world — to people who look at the house as a piece of art.”

The home is on the National Register of Historic Places and was designated a Los Angeles Historic Cultural Monument in 1999, shortly after Koenig’s restoration.

Art dealer PJ Park is the current owner. Park’s mother bought the home in 2007 for $3.2 million and Park then opened Seomi International Gallery there, according to the Los Angeles Times. The gallery mostly promotes art by South Korean artists.

At one point, Park moved his family in, but he has since decided to relocate to a home better suited for his children, Reilly said.

Koenig’s own Brentwood home, while not a Case Study house — but one that he also designed — hit the market last year for $3.8 million. 

Digital subscribers will get an exclusive first look at the new issue

The Real Deal LA’s fall 2018 issue is almost here, and it’s jam-packed with juicy stories and rankings.

Next week, digital subscribers will get first dibs on reading the magazine, including our examination of what Opportunity Zones could mean for Los Angeles developers, our look at how Election Day could impact the industry and a peek behind the curtains at all the consolidation among residential brokerages.

The issue also features a ranking of top hotel trades, a piece tracking the brokerages who have seen the most turnover and plenty more.

Not a subscriber? Don’t miss out — subscribe now for early access to the magazine.

Richelieu Dennis and the home (Credit: Getty Images)

The chief executive of a beauty products company has purchased a swanky home in the Hollywood Hills for $15.7 million.

Richelieu Dennis, who heads New York-based Sundial Brands and who recently acquired lifestyle brand Essence, purchased the 12,109-square-foot spec home from a spec developer, according to Yolanda’s Little Black Book.

The deal closed in August, according to property records, but Yolanda revealed him as the buyer on Wednesday. He is linked to the entity that bought the home, Magenta LLC. The seller is listed as Magnetic Terrace Investors LLC.

The glassy contemporary home has six bedrooms and seven bathrooms, and features a 2,500 square-foot living room, a Tuscan-style garden with mature olive trees, as well as a boomerang-shaped swimming pool overlooking the Sunset Strip of West Hollywood.

The property was listed about a year ago for $21.9 million by Branden and Rayni Williams of Hilton & Hyland. Adjacent to the Bird Streets, where sales have been sluggish, it lingered on the market. Josh and Matthew Altman of Douglas Elliman re-listed it in March for $18 million.

It was built on the site of the former home of Tom Mankiewicz, the late screenwriter who worked on several James Bond films, according to Yolanda.

The Altmans had both sides of the transaction.

Dennis, a native of Liberia, started his beauty-products company with a college roommate and his mother by selling handmade soaps on the streets of Harlem. They later created haircare and skincare brands such as SheaMoisture and Nubian Heritage. Unilever acquired the parent company Sundial Brands last year.

Earlier this year Dennis purchased Essence, including the eponymous magazine, for an undisclosed amount, from Time Inc. [Yolanda’s Little Black Book] — Alexei Barrionuevo

Hankook Property Management’s Kee Whan Ha and 1000 S. Vermont Avennue

A full-block redevelopment plan in Koreatown is seeking city approval this week.

Hankook Property Management wants to build a 228-unit apartment building with 53,500 square feet of commercial uses at 1000 South Vermont Avenue, at the intersection of W. Olympic Boulevard, according to documents found by Urbanize.

The seven story building, which would have 565 parking spaces, has been in the works since 2016.

The Hannam Place development would include a mix of studio, one-, and two-bedroom units, with 30,800 square feet of commercial space designated for a supermarket.

The market will presumably be another outpost for Hannam. Kee Whan Ha, the owner of Hankook and a food chain, is a well-known businessman in the Koreatown community who helped organize neighbors to defend the community during the 1992 Los Angeles riots.

Hannam Place would replace a gas station, 32 apartment units, and about 9,000 square feet of commercial space. Hankook bought the 38,200-square-foot parcel in 2011 for $5.6 million.

Koreatown is experiencing a boom in redevelopment projects, large and small. Local mainstay Jamison Services has steadily filed new residential projects in the neighborhood over the last few years. Most recently the developer filed for a 226-unit project on St. Andrews Place and revised its plans for a mixed-use development on S. Western Avenue. [Urbanize] – Dennis Lynch 

From left: Tim Sloan, Janet Yellen, and Jerome Powell (Credit: Getty Images and Free Icons PNG)

Former Federal Reserve chair Janet Yellen, her successor Jerome Powell, Wells Fargo CEO Tim Sloan and Goldman Sachs all agree on one thing: commercial real estate prices are too damn high.

Cap rates have been falling across the country, leaving investors with minuscule returns. Goldman Sachs claimed back in May that commercial real estate may be overvalued by 16 percent. And yet there is no sign of a price correction. The reason: real estate investors continue to have easy access to cheap debt.

Mortgage real estate investment trusts and debt funds increased their commercial real estate lending by 42 percent between 2016 and 2017, Bloomberg reported, citing data from Green Street Advisors. The rise of non-bank lenders more than makes up for cautious banks, who increased their lending by just 4 percent.

The rise of non-bank lenders has been particularly pronounced in New York’s construction market. Three of the top 10 construction lenders in The Real Deal’s January ranking are debt funds.

Buoyed by cheap debt, property investment continues to rise. Consulting firm Deloitte recently said it expects deal volume to increase by 13 percent over the next 18 months. [Bloomberg] — Konrad Putzier

Andrew Raitt, founder and CEO of Verono and the site

Verono Investments has added another multifamily project to its Los Angeles pipeline.

The firm, acting behind an LLC, filed plans to build a new, 45-unit building in Hollywood. The move came two weeks after Verono requested approvals to build its second multifamily project in Boyle Heights.

Located at 5301 W. Sierra Vista Avenue, the proposed mixed-use building would include 40 market-rate units with the remaining five set aside for low-income residents, according to the Department of City Planning.

The developer is seeking a density bonus and greater leniency with the open space requirements through the Transit Oriented Communities program.

Property records show Andrew Raitt, founder and CEO of Verono, paid $2.2 million for the property in August 2016 through his LLC, Sierra Vista 1.

Hollywood has become a hotbed for mid-rise multifamily projects in recent years. Earlier this year, another developer filed plans to build a seven-story, 51-unit residential building at 6753 W. Selma Avenue. Due to its proximity to the Hollywood/Vine Metro station, that project is also being considered as part of the TOC program.

But Hollywood isn’t the only neighborhood Raitt has been eyeing.

Late September, the CEO filed plans to build a 34-unit apartment building on Pleasant Avenue in Boyle Heights. His firm is also working on the Percy Apartments, another 30-unit building nearby that will include three-bedroom apartments.