(Credit: iStock)

The Chinese capital that fueled the purchase of luxury apartments and large office buildings from coast to coast in the U.S. is drying up.

Hong Kong and mainland China investments in the U.S. property market totaled $4.42 billion through October, compared with $6.81 billion in all of 2017, according to the South China Morning Post. Investor appetite has cooled amid uncertainties about the trade war between the two countries.

“Under the trade war you won’t expect too many foreign buyers looking at the [property] market anyway, and basically all Chinese investors have disappeared,” Antonio Wu, Colliers International deputy managing director for capital markets and investment services, told the South China Morning Post.

Chinese inquiries about U.S. property dropped 11.4 percent in September, the report said.

Still, some investors see it as a window of opportunity.

“In my opinion, property is still a safe haven in many markets as long as the investment is producing a decent return as the debt cost will continue to rise,” said Wu.

The report comes has the US housing market has slowed. Sales of both existing homes and new construction homes have fallen.

Earlier this year, a report noted that retreating Chinese buyers could hurt U.S. property values. Following Beijing’s tightening of capital controls, Chinese investors sold $1.29 billion worth of U.S. commercial real estate in the second quarter, while purchasing only $126.2 million. [SCMP] — Meenal Vamburkar

Developer Ty Cueva with rendering of mansion (Credit: Moso Studio)

The developers behind an elaborate, under-construction mansion in Bel Air are hoping to get more bang for their buck now that their property is near completion.

Ty Cueva of Westside Property Group, along with Dean Hallo of Hallo Construction, are relisting their 40,000-square-foot spec home for $100 million, a third more than the developers asked last year, the Wall Street Journal reported.

Located at 10697 Somma Way, the Spanish Villa-style home will include 21 bathrooms and eight bedrooms. There will also be a recording studio, bar, basketball court, full-service salon, movie theater and indoor saltwater swimming pool.

Outside, another Olympic-sized swimming pool completes the 1.3-acre lot.

The home — dubbed the “billionaire entertainer’s paradise” by Cueva — is scheduled to be completed in April. It briefly hit the market in March 2017 for $75 million.

Fredrik Eklund and John Gomes at Douglas Elliman are sharing the listing with others from their team.

At $100 million, the unfinished spec property ranks among the most expensive listings in Los Angeles. Last month, a Hollywood executive listed his property, named the Foothill Estate, for $125 million. The 18,500-square-foot property was built on three different lots, one of which was owned by legendary singer Frank Sinatra. [WSJ] – Natalie Hoberman

Marriott Hotel at 525 Lexington Avenue and Marriott Hotel CEO Arne Sorenson (Credit: Getty Images)

A dip in North America revenues has prompted Marriott to slightly lower its forecast.

Marriott, the parent company of brands Westin, Ritz-Carlton and Renaissance, said it had previously forecasted its comparable systemwide revenue per available room (RevPAR) at between 3 and 4 percent, but has lowered it closer to 3 percent, following a weaker than expected third quarter, according to the Wall Street Journal.

The forecast, described during a during an analyst conference call Tuesday, revealed the company’s third-quarter profit dipped 0.4 percent to $483 million, and total revenue dropped 1 percent to $5.05 billion. The company’s shares fell 5.1 percent Tuesday.

The company also pointed to a weaker turnout out for Yom Kippur, the Jewish holiday, which this year fell during the week.

Company CEO Arne Sorenson said that the weak performance in September applied not only to Marriott, but across the whole industry. “The sky is not falling, notwithstanding the weak September,” Sorenson said.

Hyatt Hotels Corp. and Hilton Worldwide Holdings Inc. have also reportedly lowered their outlook on growth in RevPAR.

Marriott is dealing with more than 7,000 striking workers affecting 21 properties in San Jose, San Francisco and Boston. [WSJ] — David Jeans

West Hollywood Mayor Duran and Sunset Tower, 8358 Sunset Blvd. West Hollywood (Credit: Edi Maps, Wikimedia Commons)

The West Hollywood City Council has agreed to spend more than half a million dollars to further examine the potential of extending the Metro to the notoriously traffic-heavy city.

During a meeting Monday night, the council said it will pay another $611,390 to two consulting firms that will analyze the total cost of a potential extension, WeHoville reported.

That puts the city’s lobbying efforts at nearly $2 million, considering the city already has spent $1.3 million.

Thanks to Measure M, a voter-approved measure passed in 2016 that increased taxes to fund Metro expansions, the L.A. Metropolitan Transportation Authority is considering five options for extending the Crenshaw/LAX line. Four out of the five options include West Hollywood.

West Hollywood city officials have been pushing to accelerate the extension, which Metro has scheduled for the late 2040s. But accelerating the project would put much of the financial burden on West Hollywood, meaning the project could cost the city anywhere from $70 million to $550 million.

Some council members, such as Lauren Meister, have criticized the city for spending more money on the project. Others, however, welcomed the investment as it puts the potential of the city getting a light rail extension closer to becoming a reality. [WV] – Natalie Hoberman

Public Policy Institute of California CEO Mark Baldessare, California Rental Housing Association Vice President Sid Lakireddy, and the California State Capitol

The resounding defeat of Proposition 10 has hardly silenced the debate over solutions to California’s housing crisis. But voters’ rejection of the measure says that rent control probably won’t be part of that discussion right now.

On Tuesday, nearly 62 percent of California voters voted against Prop 10, a measure to lift restrictions on rent control measures around the state.

Pollsters said the “yes” campaign couldn’t win over voters across the political spectrum who were skeptical that rent control was the right solution to the housing crisis.

“The ‘yes’ side just didn’t have the arguments to carry the day for people who may have started off supporting Prop 10,” said said Mark Baldessari, CEO of the Public Policy Institute of California. “People said housing affordability is a big problem, but [advocates] couldn’t connect the dots.”

From early on in the campaign, Prop 10 seemed destined to fail.

Around two in three respondents to a September poll by the Public Policy Institute, for example, said housing affordability was a “big problem” in their part of the state, but only a quarter said they’d vote for Prop 10.

The “no” campaign also outspent the “yes” campaign by three to one — $76 million to their $25 million. The “yes” campaign was funded almost entirely by the Hollywood-based AIDS Healthcare Foundation.

Much of the opposition’s funding came from powerful real estate players. Support for Prop 10 steadily fell leading up to Election Day, in no small part because of the real estate cash-fueled media blitz against the measure.

In the wake of their defeat, rent-control advocates said they aren’t giving up the fight. A coalition of groups called on Newsom to enact a moratorium on rent increases and seek state legislation to repeal the Costa-Hawkins Rental Housing Act passed in 1995, which placed limits on rent-control ordinances.

“The burden to act returns to the Governor and the legislature, who should work to represent Californians, not Wall Street landlords,” said Christina Livingston with the Alliance of Californians for Community Empowerment.

Left in the defeated measure’s wake is an ongoing housing crisis. In Los Angeles, rents have skyrocketed in recent years, rising by 15.7 percent in the last year, a faster rate than any other large city in the nation.

California’s housing shortage is viewed to be the worst in the country.

With Prop 10 fresh on the electorate’s minds, California’s new legislature and incoming Gov. Gavin Newsom will be expected to address the housing crisis. Newsom said he supports expanding affordable housing tax credits to spur more development, as well as measures to promote residential development near mass transit.

Many real estate developers say the solution to the housing crisis is deregulation, which could make it easier and cheaper for developers to build housing. In Sacramento, that could mean reforming the California Environmental Quality Act, which requires the study and mitigation of the environmental impacts of development.

CEQA reform is a perennial topic in Sacramento, but reforming it won’t be easy. Local groups have used legal appeals demanding CEQA reviews to try to block or delay developments. The political difficulty of reform once prompted Gov. Jerry Brown to call it “doing the Lord’s work.”

The California Rental Housing Association, which opposed Prop 10, said in a statement on Wednesday that it was “ready to work together” with lawmakers in Sacramento and plans to send lobbyists to promote CEQA reforms and other regulatory changes. The association represents 22,000 multifamily property owners across the state.

“If there’s one positive that came out of Prop 10, it hopefully will light a fire under everyone to focus on solutions,” said Sid Lakireddy, a Sacramento area developer and vice president of the group.

In the short term, Prop 10’s defeat is expected to spur activity around L.A., where developers and investors had held back over uncertainty over the measure’s outcome.

Activity started picking up in the weeks ahead of Election Day as Prop 10 looked increasingly likely to fail, said Rick Raymundo, Marcus & Millichap Senior Managing Director of Investments.

“There was definitely money on the sidelines,” Raymundo said. “Most active clients and brokers know that it’s a nice reprieve, but rent control will come out again in some form, either in 2020 or beyond.”

(Credit: iStock)

Rising interest rates are pushing mortgage applications to four-year lows.

The Mortgage Banker Association’s market composite index, a measure of loan application volume, fell 4 percent last week to its lowest point since December 2014, according to Bloomberg. The drop correlates with rise in the contract rate on a 30-year fixed loan from 5.11 percent to 5.15 percent last week.

Together with strong pricing for housing around the country and a scarcity of listings, homebuyers are feeling the pressure. In some areas, high mortgage prices and low inventory are dragging down on the market.

The slowdown has prompted some lenders to shrink their mortgage divisions — Wells Fargo laid off 600 workers in August and JPMorgan laid off 400 employees nationwide last month.

Mortgage rates and commercial borrowing costs are expected to keep climbing. Federal Reserve Chairman Jerome Powell has been raising the benchmark borrowing rate to curb inflation and steady an expanding economy. Another hike is expected in December. [Bloomberg] – Dennis Lynch 

Bytedance founder Zhang Yiming, with C3

A Chinese startup with a $75 billion valuation just became the latest technology company to bet on Culver City.

Bytedance has closed on a deal to occupy nearly 119,000 square feet at C3 at Culver Pointe, The Real Deal has learned. The 282,951-square-foot, seven-story vertical creative office campus is located at 5800 Bristol Parkway.

Part social network, part news site, Bytedance owns several highly successful applications and sites like Jinri Toutiao, Tik Tok, Musical.ly, among others. The six-year-old company uses artificial intelligence to reach a mass audience.

Founded by Zhang Yiming, Bytedance recently became the world’s most valuable private tech company, surpassing ride-hailing giant Uber Technologies, according to Forbes. Japanese conglomerate Softbank, plus other investors, closed a $3 billion funding round late October, a deal which valued the Chinese firm at more than $75 billion.

Darren Eades, Scott Becket and Alyssa De Oca of JLL represented the tenant. Carl Muhlstein and Hayley Blockley, also at JLL, represented the landlord, IDS Real Estate Group.

With the Bytedance lease, the complex is now fully leased. Other tenants at the site include Henkel, Dentsu Aegis Network, Red Light Management, MMGY Global and Corgan Associates.

IDS, led by CEO David Mgrublian, developed the building in partnership with an affiliate of PNC Bank. The Gensler-designed campus has a private fitness center, an outdoor kitchen, bocce courts, a dog park and an amphitheater.

Culver City has become a tech hub in recent years, fueled in part by creative office conversions offering more attractive rates than neighboring Westside cities like Santa Monica that are in the heart of Silicon Beach. Amazon, for example, has leased Hackman Capital Partners’ entire Culver Steps, a 75,000-square-foot development at 9300 Culver Boulevard. That deal followed an announcement from Apple, which is leasing 128,000 square feet of office space in the city.

Tom Barrack (Credit: Getty Images)

Tom Barrack, who stepped down as CEO of Colony Capital in 2014, is back at the helm after the company’s stock has plummeted.

Richard Saltzman (Credit: Colony Capital)

Richard Saltzman was ousted from the position and has given up his board seat, Bloomberg reported. Saltzman oversaw Colony’s merger with NorthStar.

The company’s shares have tumbled 58 percent since President Trump’s inauguration — as it’s become evident that Colony overvalued NorthStar’s assets, the report said.

“I completely respect and embrace Tom’s interest in returning to the CEO role as the founder and driving force behind the company for decades,” Saltzman said in a statement. “I remain a substantial shareholder, and he has my full support.”

Barrack’s return to the $44 billion investment firm comes after his close relationship with Trump drew attention. During the 2016 campaign, he frequently appeared on television and was a prominent Trump ally.

Last year, Barrack sold his Santa Monica home for $34 million in an off-market deal. He purchased the site through a corporate entity in 2014 for $21 million.

News of the leadership change comes as Colony report its third-quarter earnings. The firm’s net loss attributable to common stockholders was $70 million, or 15 cents a share. Adjusted funds from operations, a measure of cash flow used by real estate investors, totaled $102.2 million, or 20 cents a share, compared with an 18-cent average estimate from two analysts, the report said. [Bloomberg] — Meenal Vamburkar

Zillow CEO Spencer Rascoff (Credit: Getty Images and iStock)

On the heels of dismal earnings on Tuesday, Zillow Group is getting pummeled on Wall Street.

Overnight, the Seattle-based listing giant lost nearly a quarter of its market cap — now $6.3 billion, down from $8.2 billion — as its stock plummeted 20 percent. Shares of Zillow opened today at $32.76 per share, down from yesterday‘s closing price of $40.74 per share.

Within hours of the market opening Wednesday, investors were frantically buying and selling shares. As of 11 a.m., Zillow’s trading volume hit 12 million —roughly five times its average trading volume of 2.4 million. Meanwhile, several Wall Street banks lowered their price estimates for Zillow, which said yesterday that revenue from Premier Agent fell short of expectations because of recent changes to the lucrative-but-controversial agent advertising program.

“We were surprised by the magnitude of the slowdown,” Deutsche Bank analyst Lloyd Walmsley wrote in a Nov. 7 research note. Although “the company seems to be nimbly addressing” the issues, he said, “with no clear indication of how 2019 will shape up … it makes it tough for us to have a positive view on next year.”

On Wednesday, investment banking firm Stifel lowered its price target for Zillow to $34 from $40 — a 15 percent drop.

“Although management is confident updates addressing agents’ concerns can remediate these issues, we remain cautious on the growth of Zillow’s core business over the intermediate term,” analyst John Egbert wrote in a note explaining the investment rationale.

On Tuesday, Zillow said Premier Agent revenue was lower than expected after agents protested recent changes to the program. In April, Zillow began vetting prospective buyers and handing off live leads by phone. But that meant agents were getting around four leads per month instead of 10. In New York, LG Fairmont — a firm whose business model is based on buying leads — stopped advertising on Zillow altogether, as The Real Deal reported.

Nearly 70 percent of Zillow’s revenue comes from Premier Agent, which pulled in $232.7 million during the quarter, up 18 percent though short of its target of $237 million to $239 million. “Regardless of lead quality, many agents tell us that they also value a higher quantity of leads,” CEO Spencer Rascoff conceded during an earnings call Tuesday. He detailed several changes Zillow has already made to solve some of the pain points, adding that “Premier Agent issues are very solvable.”

For example, Rascoff said Zillow is now capping the lead price in some ZIP codes to improve the return on investment, and it will change screening questions for buyers to give agents more leads.

But analyst Bradley Bening of Carig-Hallum Capital Group noted that it “will take time and evidence to regain investor confidence.” And Tom White, an analyst at D.A. Davidson, said that “at best,” improved revenue from Premier Agent wasn’t likely until 2019.

“For shorter-term investors, [Zillow] seems to have a lot on its plate,” he wrote in a Nov. 7 note. “Two consecutive quarters of lowered guidance will not instill confidence around execution.”

Beyond Premier Agent woes, some analysts believe Zillow is also falling victim to a slowing housing market. Brent Thill, an analyst at Jefferies, pointed out that it’s the third time Zillow has lowered its guidance for the year. “The results underscore the fact that [Zillow] is not immune to the challenged macro environment within U.S. real estate,” he wrote in a research note.

Some believe Zillow may have too much on its plate given the market headwinds. The listings giant just completed its acquisition of Mortgage Lenders of America, and earlier this year it waded into the home-flipping business.

Mark Mahaney at RBC Capital Markets said the Premier Agent churn coincides with Zillow taking a big risk by getting into the iBuyer business, although the segment is, in his words, “exploding.” But in a research note he cautioned: “We believe Zillow has many of the competencies to succeed in this market, but it’s unclear if it has all of them.”

During the third quarter, Zillow said its “Homes” segment, which includes Zillow Offers, generated $11 million in revenue after buying 168 homes and selling 36.

“Homes is growing extremely quickly,” said Rascoff, who added that in October Zillow bought 130 homes and sold 32. “We’re now doing in a month what we basically did in all of Q3, and soon we’ll be doing in a week what we did in all of Q3.”

But Deutsche Bank’s Walmsley wasn’t as bullish. In a Nov. 5 note, before the company reported its earnings, he wrote that he thinks Zillow’s Homes team “still lacks software necessary to scale up as quickly as the company originally hoped.”

Given that and other headwinds, analysts wrote, “We are biased to assume more negative surprises given the magnitude of new initiatives underway at Zillow.”

A house in the Whitney at Bedford development

Riverside County

Home sales have cooled some-what across Riverside County — there were 6.7 percent fewer home sales in August 2018 compared with the same period last year, according to CoreLogic — largely due to a scarcity of options that people can realistically finance.

“Lack of affordable inventory is one of the main culprits of this summer’s slowdown,” said Andrew LePage, a CoreLogic analyst. “Unlike the frenzied market of the mid-2000s, would-be homebuyers today don’t have access to the sort of risky subprime and other loans that fueled a lot of the home buying late in the last economic cycle.” 

But national homebuilders are putting some more inventory on the market. 

In the city of South Corona, a community called Bedford is being constructed by various developers. The 275-acre spread was once a lemon grove and will eventually hold more than 1,600 homes, with prices ranging from $300,000 to $600,000. Among the first units on the market are 41 residences from Aliso Viejo-based New Home Company in the Whitney neighborhood. Bedford also includes 10 acres of office, entertainment, retail and hotel space.

And in downtown Riverside, Imperial Hardware Lofts, which officially opened in August, offers renters a taste of L.A.-style amenities. The 91-unit property in the historic downtown area has a community lounge for residents and guests, a fitness center, a pool and a sixth-floor rooftop for cocktails. Rents start at $1,630. Also in the building is The Salted Pig, allegedly the Inland Empire’s first gastropub. The building was originally erected in 1900 and occupied by Imperial Hardware.

The Village@Beach

Orange County

A sprawling new retail and residential development is underway in north OC.

In late September, Brookfield Residential broke ground on its latest development; with Frontier Real Estate Investments, the company is building a mixed-use development in Stanton. Located off Beach and Garden Grove boulevards, the project will transform 10 acres of former retail space into some 95,000 square feet of shops and restaurants, plus 208 for-sale residences on an additional 12 acres. The retail and restaurant venues will be under The Village@Beach banner, to be developed by Newport Beach-based Frontier, while Brookfield Residential is overseeing construction of the gated community of Lantana@Beach. Designed by Orange County-based Robert Hidey Architects, the Brookfield project will be comprised of 208 homes ranging from 730 square feet to 1,843 square feet and priced between $400,000 and $600,000. Residents will have access to a public pool and outdoor event space, and a series of walkways will connect residents with The Village@Beach. The expected prices in the new residential development are significantly cheaper than O.C. overall, where the median selling price of a new construction home was $1.06 million as of early August, up 24 percent from the same period a year ago, according to CoreLogic.

Tru by Hilton San Bernardino Loma Linda

San Bernardino County

A new industrial project is  causing a stir in Bloomington.

A parcel of 17 acres of land in the middle of a residential part of the town was approved in September to be rezoned for commercial development — a move that has angered local residents. JM Realty’s 334,000-square-foot warehouse and distribution center, which will be built in the heart of the unincorporated community, was approved for construction. According to the San Bernardino Sun, the Slover Distribution Center will be less than 1,000 feet from the local high school and less than a mile from a middle school. Local residents are concerned about traffic and air pollution issues.

And just east of the 215 Freeway, Los Angeles-based ICO Real Estate Group was approved to purchase and develop 6.56 acres. Labeled as the 5th Street Gateway Project, the redevelopment will transform 27 parcels of existing commercial property into new commercial and residential space. In the past five years, ICO has been involved in the renovation, expansion and redevelopment of a number of San Bernardino office and retail spaces.

Also slated for the city of San Bernardino is a new boutique hotel, Tru by Hilton. The 98-room hotel will be called Hilton San Bernardino Loma Linda, and it’s one of 23 Tru brand hotels planned by the hospitality empire over the next couple of years. Another addition: In July, San Manuel Casino, in the city of Highland, broke ground on a $550 million expansion, which will add a 450-room hotel, 3,000-seat event center and other facilities.

The Campus at Horton

San Diego County

In downtown San Diego, an almost empty 10-acre mall is poised to be transformed.

As one of the largest redevelopment projects in downtown San Diego in years, The Campus at Horton begins construction early next year.

In September, Los Angeles-based Stockdale Capital Partners bought the property from Paris-based Unibail-Rodamco-Westfield for an undisclosed amount. Most of the tenants, including Nordstrom, have already left the site. Slated for completion in 2020, the project will transform the 1980s-era mall into about 1 million square feet of mixed-use commercial and retail space, with a park and public boardwalk designed to attract tenants in the tech and creative world.

Any added office space could be a boon to the area, considering that only two new office buildings have been constructed in downtown San Diego in two decades, according to Stockdale Capital Partners Managing Director Dan Michaels. Office rents throughout the county have remained stable in the second quarter of 2018, up only 1.9 percent from the same time the previous year, to a current average of $2.72 per square foot, according to independent commercial real estate firm Kidder Mathews. Over in Silicon Valley, rates averaged $4.47 per square foot in Q2.

On the residential front, sales of previously owned single-family homes in August 2018 were down 18 percent from the previous August throughout San Diego County, according to the San Diego Association of Realtors. Experts credit rising home prices and mortgage loan rates for the drop.  

The priciest single family residence sold in the county in August was a 6,500-square-foot property in La Jolla, which went for $8.85 million. The median price on single-family homes in August was $670,000, up 2.5 percent from July.

Andris Pukke and the Sanctuary Belize development (Credit: Google Plus and Belize Real Estate Property for Sale)

The Federal Trade Commission and U.S. Attorneys in Maryland temporarily shut down an alleged $100 million real estate scam in Belize, the FTC announced Thursday.

The FTC said the scheme was the largest real estate fraud the agency has uncovered in its history.

The “Sanctuary Belize” development drew investors from across the United States to buy at least 1,000 lots in the Central American country, where they could build their dream retirement homes in a community developed with every conceivable luxury amenity, including an American-staffed hospital, “world-class” arena and an international airport. Investors were told their lots would double or triple in value in two or three years. Convicted felon Andris Pukke, an American who also used the aliases Marc Romeo and Andy Storm, placed ads on Fox News to attract retirees, according to the FTC.

But only about 10 percent of the lots bought by investors over more than 15 years were ever developed. During those years Pukke was even indicted and served prison time in connection with a separate get-out-of-debt scheme. The FTC alleges Pukke continued to direct the Belize fraud from jail, despite assurances from his cohorts to investors that Pukke was no longer involved.

“Instead of getting their dream home buyers found themselves in a nightmare,” said James Kohm, the assistant director of FTC’s enforcement division, who called Pukke a “hardcore recidivist scammer.”

(Promotional video for Sanctuary Belize)

Prosecutors believe the Sanctuary Belize developers are about half a billion dollars short of the capital they would have needed to complete the development. They regularly pitched a “no debt” financing model to potential buyers, which ultimately meant the project was low on liquidity, especially since Pukke is alleged to have siphoned off money from his investors to pay off a loan connected to his bail and finance a personal home in California. The government says Pukke lives in Newport Beach, California.

In addition to Pukke, more than 25 other people and entities are named in the new civil complaint, including Sanctuary Belize principal Luke Chadwick and Atlantic International Bank, a Belize-based institution, which the FTC said is the first foreign bank it has ever brought an action against.

The FTC created an undercover sting operation, it said Thursday, forming a fake company that it used to get information from those directly involved in the scheme.

Pukke could not be reached by phone.

Renderings of the 21-story project at 3800 W. 6th Street

A restaurateur is planning to develop a new 21-story mixed-use project in Koreatown.

A draft environmental impact report details a tower with 122 condominiums, and a neighboring eight-story structure with a 192-room hotel, and just under 14,500 square feet of retail space, according to Urbanize. Retail space would occupy the first two floors of the latter structure and the hotel would occupy the floors above it.

L.A.-based LARGE Architecture is designing the project, slated for 3800 W. 6th Street.

The entity developing the property shares an address with Gateway Secured, a Koreatown EB-5 regional center. Local restaurateur Chul Heay Shin purchased the site in 2015 for $10 million. The entity entered the scene in April 2016, buying a 50 percent stake in the property, and five months later bought Shin out for $2.6 million, according to property records.

Shin appears to still be involved, showing up in planning documents for a 16-story hotel and condo tower filed there early last year. Shin is also working on a 200-room hotel development on Olympic Boulevard.

The development would replace low-rise commercial space, including an auto service center. It would span the north end of a block along Sixth Street between S. Serrano Avenue and Hobart Boulevard.[Urbanize] – Dennis Lynch 

Jeffrey Yohai and Paul Manafort (Credit: Twitter and Getty Images)

While awaiting sentencing on real estate fraud charges he pleaded guilty to last year, Paul Manafort’s former son-in-law took up a curious hobby: he concocted a variety of real estate scams that totaled more than $21 million, according to federal prosecutors.

Jeffrey Yohai, who was married to Manafort’s daughter Jessica in 2013, was arrested in Los Angeles last week on the new charges and has a bail hearing set for Wednesday.

Yohai tried to dupe lenders into providing loans based on false and inflated property appraisals, federal officials said. He also arranged short-term rentals of a luxury home and pocketed the profits without paying the property’s owner, according to a criminal complaint. According to Politico, he also sold fake tickets to Coachella and pawned $20,000 worth of stolen guitars and musical equipment. Yohai and Manafort’s daughter Jessica got a divorce last year.

Yohai falsely told victims of his scheme that he has “turned state’s evidence” on Manafort, according to an FBI agent who filed an affidavit in support of Yohai’s arrest. The agent also works with Special Counsel Robert Mueller’s investigation.

In September, Manafort forfeited five properties–four in New York City and one home in the Hamptons–in exchange for hanging onto the contents of one of his four seized bank accounts and his Arlington, Virginia home. Together, the properties are estimated to be worth a combined $21.7 million.

Real estate has played a prominent role in the former Trump campaign manager’s trial. Evidence presented in the case includes more than 200 pages of invoices and job descriptions for some of the more than $7 million Manafort spent on renovating properties, using funds alleged not to have been disclosed to the IRS. Though he was never charged or brought in as a witness in the Mueller inquiry, a jury found Manafort guilty of providing fraudulent information to a bank to secure a loan on California properties he invested in with Yohai. [Bloomberg] — Meenal Vamburkar

Mitch O’Farrell and the lot

In the battle of NIMBYs vs YIMBYS, the YIMBYs were just handed a small victory.

A Los Angeles City Planning and Land Use committee voted to advance plans to build housing on the site of a former gas station, after a deal was struck with the building’s owner, the Los Angeles Times reported.

Rather than demolishing the former Silver Lake Texaco Service Station, William Hefner, the architect and building owner, will relocate the property along the L.A. River. Hefner partnered with local group River LA to come up with new renderings for the site, which will feature a retro cafe.

Hefner applied for permits to build a 14-unit apartment building in June. Council member Mitch O’Farrell initiated a landmarking process in March to prevent any demolition work.

Conservationists were up in arms over the historic building, arguing the steel-frame structure was an example of the Streamline Moderne architecture style. But critics argued that the site, which has not been used for decades, is missing key features like signage or fixtures that would deem it worth preserving.

Another individual, car shop owner Koko Bakchajian, even offered to buy and restore the property as the committee deliberated on its decision, Eastsider LA reported.

The City Council still needs to make a final decision on the matter.

Historic-cultural nominations have grown in popularity in recent years as history buffs — and development opponents — turn to the designation to thwart new development. With a Historic-Cultural Nomination in place, preservationist groups can add substantial amounts of money and time to any project, deterring some developers from building altogether. [LAT] – Natalie Hoberman 

Rendering of the project and CEO Mark Bolour of Bolour Associates (Credit: Ankrom Moisan Architects)

A large live-work loft development in the Arts District that was first proposed in 2014 is again moving forward, with plans to demolish the existing warehouse to make way for the complex. It would add to the growing list of construction projects in the booming area.

Beverly Hills-based Bolour Associates wants to build a 310-unit apartment complex at 527 S. Colyton Street. The 12-story building would encompass 320,000 square feet. The number of units — expanded two years ago from the original design — will include studios to three-bedrooms, Urbanize reported. Thirty of the units would be set aside for very low-income families. There will also be 27,400 square feet of commercial space.

A 10,000 square-foot warehouse is set to be razed to make way for the new development.

Portland, Oregon, based Ankrom Moisan Architects designed the project, which is highlighted by a seven-story opening for an open-air plaza. Construction is expected to last more than two years, with the opening slated for 2023, according to a city report.

Bolour acquired the property for $5.4 million in 2014, property records show. Nearby, Bolour and Greystar are building a 320-unit mixed-use project called the AMP Lofts.

The projects are among several planned in the area. Last month, the City Council approved AvalonBay’s live-work project that will bring 475 units to the district. And Tishman Speyer is planning a three-building office campus spanning 203,000 square feet there as well.[Urbanize] —

Gregory Cornfield

Once a cavernous workspace for Howard Hughes’ sprawling Hercules plane, Google’s Spruce Goose hangar is now a modern canvas for the tech company’s ambitious push into Los Angeles.

But its former role as Hughes’ aviation workspace has not been forgotten in Google’s build-out of the four-story structure in Playa Vista.

Photos and specs released this week by the tech giant reveal the structure that Google built into the 319,000-square-foot hangar, which brings total square footage up to 450,000 square feet. Google moved in last month.

There are callbacks to the history of the hangar, which Hughes used to build the H-4 Hercules in 1943. The massive plane’s structure was built out of wood because of wartime metal shortages, earning it the name Spruce Goose from the press. It’s still the largest wooden aircraft ever built, having a wingspan of 320 feet.

There are art installations from eight local artists, including a large “Perception Sculpture” of metal spheres that from one angle reveal an image of Howard Hughes’ H-4 Hercules “Spruce Goose” in the main atrium space.

The new Spruce Goose has elevated walkways that connect each story and has conference rooms, food options, a gym, and a 250-person event space.

There are Silicon Valley-esque amenities too, like a platform where employees can toss paper airplanes at a target on the hangar floor below.

Google installed skylights on the ceiling of the hangar to let in natural light. Some of the original Douglas Fir used to build the hangar was repurposed into furniture and used to reconstruct the central ceiling spine of the structure.

Google leased the hanger in 2016, two years after dropping $120 million on 12 acres of land next door. Google has been tight-lipped about the hangar until this week, and is still mum on its plans for its neighboring acreage.

Premier tech companies soon followed to Playa Vista, including Facebook and Yahoo. Google’s move into Playa Vista puts the purpose-built community on par, if not on top of, other neighborhoods in Silicon Beach, the stretch of tech-heavy communities near L.A.’s waterfront that includes Venice, Santa Monica, and Culver City.

Here are two real estate events taking place in Los Angeles next week:

On Nov. 13, Bisnow is hosting its Future of Culver City event from 8 a.m. to 11 a.m. at Marina Del Rey Marriot, 4100 Admiralty Way. Come and learn about Culver City’s thriving office market, the challenges ahead for developers and more. Aliza Karney Guren of Karney Properties, Tom Wulf of Lowe Enterprises, Joseph Miller of Runyon Group, among others, will give speeches at the event.

On Nov. 15, the National Real Estate Boxing Association is hosting its Los Angeles Real Estate Rumble from 6 p.m. to 9 p.m. at CTRL Collective, 12575 Beatrice Street. Attend this charity boxing event and mingle with leading professionals in real estate, lending and construction.

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

Bert Dezzutti and a rendering of the California Market Center renovation

Brookfield Properties will pour $170 million into rehabilitating the historic California Market Center, a bulky 1.8 million-square-foot showroom in the heart of where Downtown L.A. meets the Fashion District.

CMC, once a haven for fashion merchandisers, has been struggling amid the rise of online shopping and changing consumer preferences. The property, at 110 E. 9th Street, is currently less than 50 percent leased.

As part of the overhaul, Brookfield will replace the building’s facade with floor-to-ceiling windows. There will also be new bridges linking the three interconnected buildings, as well as several outdoor decks replete with lush landscaping.

Gensler is designing the remodel, which will include 150,000 square feet of ground-floor retail and restaurants by the time it is completed in 2020.

A rendering of the California Market Center renovation

The Los Angeles Times first reported the news.

The office landlord acquired a controlling interest in the sprawling apparel showroom in June 2017 in a deal that valued the property at nearly $440 million. Jamison, which paid $135 million for the site in 2004, retains a stake in the center.

Brookfield announced it would be repositioning the asset at the time of the deal, though details regarding the renovation remained scant.

Nearby, a developer has been attempting to repurpose another fashion and furniture showroom. The 9.7-acre site, known as the Reef, has been the subject of much debate in recent years as PHR LA Mart, the owner, secured approvals to transform the property into a mixed-use development with a hotel, condo units, apartments and retail.

Barry Sternlicht and Miami Beach (Credit: Max Pixel)

Starwood Property Trust’s Barry Sternlicht isn’t worried about rising interest rates. In fact, it’s the opposite. “We’re going to make a lot of money,” he told analysts during a conference call with analysts on Friday.

Starwood reported slightly lower third quarter earnings due to high acquisition costs, yet its results met analysts’ expectations.

The Miami Beach-based real estate investment trust, an affiliate of Starwood Capital, said Moody revised its ratings outlook to positive from stable.

The company reported third quarter net income of $84.5 million or 33 cents per share, down 4.4 percent compared to the same period of previous year. The decline is due to the company closing on its $2.5 billion acquisition of a GE energy-finance business in September. It included $9.9 million.

For the quarter, Starwood reported $285.7 million in revenue, up 26 percent from $226.8 million in the third quarter of 2017.

The company’s commercial and residential lending businesses reached record levels, with assets of $16 billion and commercial loans of $7.5 billion. The commercial and residential lending segment reported total revenue of $158.6 million.

Starwood Chairman and CEO Sternlicht was optimistic during the call. “I’m really excited about rising [interest] rates, which help our earnings per share.” He called himself “one of the few people cheering” for rising rates.

His mother called him twice while he was on the conference call. “My mother is calling,” he told analysts, joking that perhaps she had a question on earnings.

Sternlicht said he was “really not excited about our stock price, but scale in this business should help our credit status.” Starwood’s stock was up 1 percent at 3 p.m. to $21.92 per share.

CEO Ben Lambert of Eastdil Secured with photos of The Onyx

Investment continues to heat up in Glendale this year, most recently with a big sale of a mixed-use project near the Galleria in the city’s central business district.

The Onyx, a six-story, 183-unit project at 301 N. Central Avenue, sold for $86.2 million, Bisnow reported. Burbank-based Chandler Pratt & Partners traded the property to a private buyer.

The project includes studio, one-, two- and three-bedroom apartments, as well as a few townhomes, and 4,500 square feet of ground-floor retail on a 33,200-square-foot lot. KTGY designed the building.

Eastdil Secured represented both the seller and the undisclosed buyer. The building is near the Americana at Brand and the Glendale Galleria retail destinations.

Earlier this year, the DreamWorks Animation campus in Glendale sold to a South Korean partnership for $297 million. And last week, Children’s Hospital Los Angeles expanded its lease in Glendale by 26,000 square feet at 800 Brand Avenue. [Bisnow] – Gregory Cornfield