Porsche Design Tower in Sunny Isles Beach

If you brand it, they will come.

That’s the lesson luxury residential developers are learning as more and more buyers are purchasing properties in high-end branded towers.

More than 400 properties are stamped with luxury brand names across the world, and 110 more of these developments will open by 2023, according to Alexandros Moulas, a director of international development at Savills Plc, Bloomberg reported.

Such developments include the 60-story Porsche Design Tower in Sunny Isles Beach and the Aston Martin Residences rising in downtown Miami. At the Porsche tower, residents can park their cars alongside their units using the building’s signature Dezervator, named after the building’s developer, Gil Dezer.

Developers can ask for nearly 31 percent more on average than for comparable non-branded properties, according to data from Savills.

Four Seasons Holdings, a hotel chain, was one of the first to pioneer this trend. It opened private residences in Boston in 1985, before expanding to Europe, the Middle East and Asia, according to Bloomberg.

In addition to luxury cars, ritzy fashion brands have become more popular overseas. Bulgari’s London residences opened in 2012. The company’s Dubai residences were completed last year, with 1,480-square-foot one-bedrooms that start at $1.2 million. [Bloomberg] — Keith Larsen

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

A federal appeals court upheld a lower court’s ruling that Zillow Group’s “Zestimates” aren’t meant to be precise appraisals of a home’s value.

Last year, a U.S. District Court judge ruled that the online brokerage did not violate consumer fraud laws through its use of the much-maligned online valuations, and earlier this month, a federal appeals court upheld that ruling, according to the Cook County Record.

The suit by a group of Chicago-area homeowners had alleged Zillow leads homebuyers to believe Zestimates are precise calculations of a home’s current market value, when in fact they’re often inaccurate.

One plaintiff said he listed his home for almost $1.5 million, but alleged a Zestimate of $1.33 million scared off potential buyers.

St. Eve had ruled Zestimates were merely an estimate of the market value of a property, and said Zillow’s website makes that clear. The appeals court agreed, rejecting the plaintiffs’ appeal.

The lawsuit is not the only legal fight surrounding Zestimates, which residential brokers say make it harder when it comes time to set a listing price with clients. A lawsuit filed in New Jersey claimed Zillow conceals Zestimates on residential listings at the request of brokerages that have “contracts” with the site. [Cook County Record] — John O’Brien

Gavin Newsom, Jennifer Siebel Newsom and their Kentfield home (Credit: Flickr)

A couple of months after closing on a mansion in the state’s capital, Gov. Newsom and his wife are selling their Marin County home.

The home in the affluent community of Kentfield is listed at $6 million and spans 4,000 square feet, according to the Los Angeles Times. Built in 1950, the property includes five bedrooms and five bathrooms, with a pool and sauna, and sits on 1.4 acres. It has a second-story deck with views of San Francisco Bay and Mt. Tamalpais.

While the governor has made the creation of affordable housing a priority, he’s looking to take full advantage of the hot Bay Area housing market. — the home is listed at $6 million. A sale near that price would fetch a hefty profit for the couple, who purchased the home for $2.2 million in 2011.

Newsom and his wife, documentary filmmaker Jennifer Siebel Newsom, closed on a 12,000-square-foot home in Sacramento in December for $3.7 million. Their family has been living temporarily in the Governor’s Mansion, a 132-year-old Victorian manor near downtown Sacramento.

Newsom took office in January amid a severe affordable housing crisis that has pushed out many middle- and low-income residents. At the same time, California is experiencing an influx of higher earners.

Newsom has ambitions for California to build 3.5 million homes by 2026, which would require significant upzoning statewide. He plans to withhold state funding from cities to push them to rezone in order to meet local housing goals. [LAT] — Dennis Lynch

Developer Barry Shy and a rendering of the tower

Developer Barry Shy is moving ahead with a 33-story apartment tower in Downtown Los Angeles.

Shy has filed permits for the 239-unit development.

The City of L.A. approved the 920 S. Hill Street project, called Hill Street Lofts, in April 2018. Shy first proposed it in 2014, together with a 38-story tower for a site a few blocks away at 601 S. Main Street, which the city also approved last year.

Shy listed the Main Street site in mid-2017, but continued working the 38-story project through the city approvals process. In December of that year he was forced to reconfigure the Hill Street project over concerns about a lack of parking. Architect David Takacs is designing both projects.

Hill Street Lofts is slated to include 5,700 square feet of ground-floor retail space, along with parking for 295 vehicles across one subterranean level and six levels above ground.

It would replace a parking lot that Shy bought in 2014 for $24 million. The site is behind the popular Ace Hotel.

Isaac Kassirer with 1569 Lexington Avenue and 411 East 118th Street

More known for backing single-family loans, Fannie Mae and Freddie Mac have seen their involvement in rental mortgages grow dramatically since 2008. Though the agencies aim to promote affordable housing with cheap, government-backed loans, critics say these loans can have the opposite effect.

While housing advocates mostly agree that Fannie and Freddie loans for affordable housing and in rural areas have benefited renters significantly, their financing of market-rate apartments in major cities can end up attracting investors to gentrifying neighborhoods and increasing rents.

In one notable case, Isaac Kassirer’s Emerald Equity Group received a $189 million Freddie Mac mortgage last month to refinance much of its extensive $358 million East Harlem “Dawnay Day” portfolio, despite being sued by tenants at three buildings for charging market rates on rent-stabilized units, the Wall Street Journal reported. The sides are currently in settlement talks.

“The irony here is that it’s the exact kind of thing that Fannie and Freddie are supposed to mitigate,” said Aaron Carr of the nonprofit Housing Rights Initiative, whose investigations led to the lawsuits.

Kassirer called the lawsuit meritless, and Fannie and Freddie denied being responsible for any increase in rents.

In 2018, Fannie Mae and Freddie Mac guaranteed $95.7 billion in rental apartment mortgages, more than 11 times higher than the pre-recession peak in 2003, which was just $8.2 billion.

Though Fannie and Freddie’s proponents argue that cheaper, government-backed loans can reduce the pressure on landlords to raise rents, critics say it can also provide further incentive to do so.

“Fannie and Freddie are the cheese at the end of the maze,” Carr said.

Meanwhile, the ongoing national debate over the mortgage guarantors’ future has brought new attention to their multifamily activities. At a Senate confirmation hearing last Thursday, the Trump administration’s pick to head the Federal Housing Finance Agency, Mark Calabria, said that he doesn’t believe the multifamily program needs “the same sort of changes” he has in mind for single-family mortgages. [WSJ] — Kevin Sun

A concept drawing of the new theater and the existing theater at 1345 W. First Street (Credit: Gareth Simpson via Flickr and Google Maps)

A puppet show that has called Westlake home for 55 years has found a new space for its 2,000 plus handcrafted puppets.

The landmark Bob Baker Marionette Theater will move to a former movie theater in Highland Park by November, the Los Angeles Times reported.

The theater inked a 10-year lease at the 10,000-square-foot property at the corner of York Boulevard and North Avenue 50. It plans on renovating the theater, as well as building rooms for workshops, smaller performances and a Bob Baker museum.

Originally built as the York Theater, its new location has been used as a Korean church as of late. In the past, it’s also been a barbershop and a organ sales and repair shop.

The beloved theater has been in a flux since its late eponymous founder, Bob Baker, sold the theater’s original building to a developer in 2013 for $1.3 million, according to property records.

Real estate investor Eli Elimelech is now moving forward with plans to redevelop the space, at 1345 West 1st Street in Westlake, into a 104-unit apartment complex.

When he first proposed the project five years ago, Elimelech met serious opposition from perservationsts who opposed the theater’s shuttering. He then struck a deal that would allow the theater to reopen at the property in 2020, with new facilities and a small museum.

At one point, the theater also explored the option of hosting traveling puppet shows around Southern California in lieu of having an established home.

The theater opened in 1963, and was designated a Historic-Cultural Monument in 2009. [LAT] — Natalie Hoberman

(Credit: iStock)

The federal EB-5 program has been extended yet again, this time until Sept. 30.

The visa program was again included in the larger federal spending package that President Trump signed Friday, averting another partial government shutdown.

EB-5 gives foreign investors the opportunity to obtain a green card if they invest at least $500,000 in a development project and create at least 10 jobs. It has received a number of short-term extensions over the past three years, with Congress unable to agree on a more permanent measure.

EB-5 faces a number of pressing issues, including weakening demand from Chinese visa seekers — who comprise a large share of the applicants — because of increasingly long wait times. Just 617 new EB-5 immigration petitions were filed with United States Citizenship and Immigration Services in the third quarter of 2018, the lowest quarterly figure in at least five years, according to data released by USCIS.

The program has been credited with creating hundreds of thousands of jobs and contributing billions of dollars to help finance large-scale commercial projects.

But notable fraud cases involving EB-5 projects have also surfaced.

One of the most high-profile EB-5 projects came to a halt in October in New York. Investors walked away from their plans to build a massive Ferris wheel in Staten Island, a project that attracted 412 EB-5 investors. It marked one of the largest EB-5 failures yet.

In Chicago, a group of Chinese investors sued Symmetry Property Development in February to return some $50 million invested in a failed River North tower project.

JDS Development Group’s Michael Stern recently said EB-5 may be in its “last cycle,” and predicted the current spate of lawsuits will be the first of many. “I think that the wave of litigation is just starting,” he said in October during The Real Deal Miami Showcase and Forum.

GM Cruise, a San Francisco-based driverless car company, signed a 47,100-square foot lease in Pasadena. (Credit: Flickr)

Look both ways before crossing, Pasadena.

GM Cruise, a driverless car company, signed a lease earlier this month to occupy more than 47,000 square feet at 465 N. Halstead Street. The San Francisco-based company will pay $11.4 million for the space in the two-story office building.

Recently renovated, the complex is also home to tenants OE Waves, PNC Bank, Giant Magellan Telescope Organization, and 24-Hour Fitness. CBRE represented the landlord, Everwest Real Estate Investors, and announced the deal.

LA Realty Partners, which represented GM Cruise, said the lease was for seven years.

The real estate market is bracing for the effects autonomous vehicles will bring once they’re available for consumers on a mass scale. The technology could shift the traditional rules that govern real estate values, particularly concerning mass transit and the need for on-site parking.

A 2018 report by consulting firm McKinsey & Co. estimated that driverless vehicles could reduce the need for parking nationwide by 61 billion square feet.

Tech and media companies dominated the office real estate market in Los Angeles for much of 2018, contributing to 2.4 million square feet of positive net absorption, according to CBRE. Companies like Netflix and Amazon Studios leased upwards of 1.7 million square feet in the fourth quarter.

In Pasadena, 18.4 percent of office inventory traded in 2018, the highest percentage over the past six years. Last month, Co-working firm Space signed an 11-year lease for 49,000 square feet, and Compass signed for 22,250 square feet, both at Playhouse Plaza in Pasadena.

Jamie Hodari and Jonathan Wasserstrum

Flexible office space firm Industrious has sold a commercial subletting platform it acquired two years ago as part of its early expansion plan.

PivotDesk, an online service that allows companies to advertise free space in their offices to small firms or freelancers, was sold in recent months to SquareFoot, a Manhattan-based startup that provides commercial real estate listings and an online brokerage service, the buyer announced Tuesday.

The intermediary space between office tenants and co-working firms, which PivotDesk fills, is growing rapidly, and so far firms such as Hubble, which is backed by JLL Spark; and LiquidSpace, have each grown with successful fundraising.

Industrious’ initially purchased PivotDesk in 2017, to expand its business outside the traditional offerings of flexible office space, but decided to sell when it was approached by SquareFoot. Neither party disclosed the price of the sale.

“PivotDesk wasn’t really central to the strategic priorities of the company,” said Jamie Hodari, Industrious’ chief executive. “So when we got an offer we liked, it made sense to find a home that was a tighter fit for what PivotDesk wanted to accomplish.”

The acquisition will bolster the ranks of SquareFoot’s product, which has raised $13.4 million since it launched in 2013. The firm’s chief executive, Jonathan Wasserstrum, said the acquisition would further establish the firm as a “one-stop shop for all small- and medium-business office space needs.”

From left: Corporate Pointe at West Hills, 27200 Tourney Road, and 1302 6th Street

While January didn’t see deals as large as December, a lot of office space traded hands nonetheless.

The top five sales of the first month of 2019 totaled just under $250 million. The month saw big plays by a handful of national players, including Brookfield and Blackstone.

The top two deals were both in the San Fernando Valley. The largest deal in terms of price and square footage was an office campus in Canoga Park, north of Warner Center and near the edge of Los Angeles County. The second-largest of the month was in Santa Clarita.

1. Corporate Pointe at West Hills, Canoga Park | $163M
Fairfax Financial’s purchase of this suburban office complex on the edge of L.A. County topped all other sales in January combined, which isn’t surprising given its size. The 10-building campus sits on 80 acres and has around 1 million square feet of rentable office space.

Fairfax, based in Toronto, purchased the complex from another Toronto-based company, real estate titan Brookfield Property Partners. Brookfield paid $86 million for the complex in 2013.

2. 27200 Tourney Road, Santa Clarita | $42M
Blackstone unloaded two properties last month for a total of $113.6 million. One of them was this business park in Santa Clarita’s Valencia neighborhood. The buyer was an entity tied to Alex Ghassemieh of the West Hollywood-based family firm Atlantic Pearl Investments, the developer of the Mr. C Beverly Hills.

The sale of the 212,800 property pencils out to around $533 per square foot. It was built in 1983.

3. 1302 6th Street, Santa Monica | $18.4M
Tooley Investment Company, a Santa Monica firm, paid around $1,219 per square foot for this office complex near downtown Santa Monica. The building dates from 1978. The sellers were Lionel Ruhman and Elza Ruhman, a couple living in Pacific Palisades.

Co-working companies have been steadily gobbling up Santa Monica office space. Knotel, a rival of WeWork, is the latest to plant a flag in the seaside city, leasing 12,388 square feet at 429 Santa Monica Boulevard, a couple blocks away from Tooley’s new office property.

4. 1215 E. Main Street, Alhambra | $14.8M
Alabama-based developer B2 Partners quickly sold this medical office property to Jinbo Holdings LLC shortly after completing it and leasing it to dialysis giant DaVita, Inc. for a 15-year term. The developer purchased the 1.2-acre property in 2016 for $5.5 million.

Jinbo Holdings LLC is run by a local family, according to the broker who represented them, Grady Liu of MacroReal Commercial. DaVita is a Fortune 500 company with 2,400 dialysis clinic locations around the country, including nearly 400 in California.

5. 11532 San Vicente Boulevard, Brentwood | $9.5M
This low-rise office building spans about 9,000 square feet and was purchased by the Shekar Family Trust for about $1,048 per square foot. The seller was Moise Emquies, a fashion designer, and Carol Emquies, an interior designer. They purchased the building for $4 million in 2012 via an LLC . The building dates from the 1960s.

(Credit: iStock)

The U.S. housing market keeps slowing down, with January having marked the sixth consecutive month of declining sales.

It was also the biggest year-over-year inventory increase in a decade — 6.4 percent — according to Re/Max’s National Housing Report for January. But the drop in sales and rise in inventory could make homes more affordable to more potential buyers, according to the report.

For years, low housing inventory pushed up demand, pricing many potential buyers out of the market. That trend seems to finally be reversing.

Falling home sales are keeping houses on the market longer, which is helping control housing costs, according to the Re/Max report, which examined the housing market in 54 U.S. metro areas.

Home sales in January dropped by 11 percent year over year, according to Re/Max. Only one market in the U.S. posted a year-over-year growth in home sales in January: Billings, Montana, population 110,000. The median sales price for a home sold in January was $234,000, an increase of 4.6 percent from January 2018, according to the report. That’s down from the 6.7 percent increase in sales price recorded the same time last year.

December 2018 was the only month since January 2012 to show a year-over-year drop in median home sales price nationwide.

Re/Max CEO Adam Contos called the inventory increase “a positive for homebuyers, as the market continues to swing their way.”

After years of increasing housing costs, sales figures are starting to trend in the buyer’s favor.

Last month, nine of the 54 metro areas Re/Max surveyed had a housing supply at or above six months, which indicates a buyer’s market. Miami led the way with a nine-month supply. That was up from 7.5 months in Re/Max’s October report.

The modest home sales price increases show demand is still there, Contos said. With healthy demand, increasing supply and cooling prices, homebuyers could be in a good position when the market heats up in the spring.

“The spring selling season shapes up to be as interesting as any we have seen in years,” Contos said.

(Credit: iStock and StreetEasy)

Now you can shop for StreetEasy user accounts on the dark web.

In an email to users Tuesday, StreetEasy said login information for accounts on the site had been hacked by an “unauthorized party” and are currently for sale on the dark web. The company said some financial information might also have been accessed in the hack.

“The stolen data includes email addresses, usernames, and encrypted passwords,” StreetEasy’s communications director, Emily Heffter, said in a statement. “In our investigation, we determined that phone numbers, the last four digits, card type, expiration dates and billing addresses of some mostly expired customer credit cards may also have been accessed.”

Heffter said the hacked information did not include full credit card numbers or CVV/CVC codes.

An unknown hacker is currently selling one million stolen StreetEasy accounts on the dark web alongside information stolen from other sites including MyFitnessPal, Houzz and ClassPass, according to reporting from Tech Crunch. It is not clear when the hack took place.

The same hacker is responsible for posting 841 million records for sale on the dark web, stolen from 30 different companies, according to the tech-news site. A review by TechCrunch did not find any financial data in the hacked information.

StreetEasy said the hacked information was stored on a 2016 database backup. In its email, the company encouraged “potentially exposed users” to reset their passwords, and to monitor their credit card accounts for unauthorized activity.

“We are taking a number of actions to strengthen our internal safeguards to protect against future attempts to gain unauthorized access to our systems,” Heffter said, but declined to comment on specific steps the company will take.

In August 2018, StreetEasy was targeted as part of an anti-Semitic hack that also targeted Snapchat, Citi Bike and the New York Times. All the sites were using maps from the third-party company Mapbox. The hacker changed the display name on their maps from Manhattan to “Jewtropolis.” The attack affected StreetEasy’s building pages, which consolidate information about properties.

The hack was identified within hours.

801 S. Figueroa

The General Consulate of the state of Kuwait signed a new lease for its cultural office, moving from Century City into a 25-story office tower in Downtown Los Angeles.

The country’s cultural office will take 20,900 square feet at 801 S. Figueroa Street, Barings Real Estate Advisors owns the 465,000-square-foot building. The office advises and assists students from the Persian Gulf country who are studying in the U.S.

Barings purchased the property from Mani Brothers Real Estate Group in 2014 for $178.2 million. Other tenants include China Trust Bank, insurance company Tokio Marine HCC, and law firm Manning & Hass.

Mani Brothers paid $105 million for the building in 2003, or around $240 per square foot, at the time a record for price per square foot for a downtown office building. The tower was built in 1991.

Next door to the 801 building, Brookfield Properties is planning to build a 781-unit condominium tower next door.

Kuwait’s cultural office leaves 2029 Century Park East, one of the Century Plaza Towers buildings. The country also maintains an office in Beverly Hills.

Savills Studley’s Luke Raimondo represented the cultural office in the lease, while Cushman & Wakefield’s John Eichler represented Barings.

California Housing Partnership Southern California Director Paul Beesemyer and the William Mead Houses, a public housing project near DTLA

Los Angeles County, like much of California, is in an affordable housing crisis with not enough new units coming online to meet demand. A new report highlights that fact, showing that landlords in the county have converted more than 5,250 affordable rental units over to market rate since 1997.

That means more than a third of all affordable units statewide have been converted over to market rate, according to the study from the California Housing Partnership, first reported by Curbed. The total breaks down to an average of five rental units per week moving to market rate over the course of 22 years.

California Housing Partnership, a San Francisco-based nonprofit said another 12,100 units in L.A. County are “at risk” of moving to market rate. It advised that state and local action was “urgently needed” given California’s is short 1.5 million units for affordable to low-income residents.

Just two months into his term, Gov. Gavin Newsom has set lofty goals to address the affordable housing crisis. He wants to launch a “Marshall Plan” for affordable housing to build 500,000 units per year, which will require significant upzoning statewide.

Part of his plan is to withhold state funding from cities that fail to meet state-administered affordable housing goals. He’s also asked Silicon Valley tech companies to lend developers $500 million to boost affordable housing construction.

In many cases, affordable units are lost because landlords decide not to renew contracts with government entities that subsidize rents to keep them affordable. As part of its report, the California Housing Partnership said local governments work with landlords to keep units affordable.

Local governments in L.A., including the county and the City of Glendale have taken up new rent control measures to keep rents low.

Los Angeles has also pushed more affordable development with its Transit Oriented Communities program. [Curbed] — Dennis Lynch 

14534 West Burbank Boulevard and 12003 Main Street (Credit: Google Maps)

Two months after newly elected Gov. Gavin Newsom announced a “Marshall Plan” for affordable housing, some Los Angeles developers appear to be heeding the governor’s ambitious call to action.

Two developers have proposed projects that would bring a combined 111 units for low-income residents in Sherman Oaks and South Los Angeles, according to city documents.

In Sherman Oaks, Mercy Housing, an affordable housing developer, is proposing building 55 units for senior housing. Out of the 55 units, 37 would be set aside for low-income residents, while another 17 are reserved for very low-income residents.

The four-story building would require demolishing three existing residential units on the site, located at 14534 West Burbank Boulevard.

Meanwhile, another affordable housing developer — Affirmed Housing — has filed plans for a new project in the Broadway-Manchester area, located east of Inglewood.

The San Diego-based company is requesting approvals to build a five-story structure that would include 56 units of permanent supportive housing. Located at 12003 South Main Street, the complex qualifies as Tier 4 of the Transit Oriented Communities program.

Last year, city officials passed a new rule benefiting developers who build permanent supportive housing, or housing for the homeless, as a way to encourage development. The law essentially stripped City Council members of their power to veto homeless housing projects in their neighborhoods.

Still, affordable housing continues to be a serious problem in the county. A new report from the California Housing Partnership reveals that landlords have converted more than 5,250 affordable rental units to market rate since 1997. That’s about a third of all affordable units statewide.

LA City Ethics Commission President Melinda Murray and City Hall (Credit: Wikimedia)

With an FBI probe into potential ethics violations involving real estate deals swirling around Los Angeles City Hall, the city’s own Ethics Commission has taken a major step towards barring developers from donating to elected officials.

The Ethics Commission voted on Tuesday in favor of a proposal that would ban donations from developers to political candidates and officeholders, as well as their associates and all non-individuals, including companies, according to the Los Feliz Ledger.

Such a law would upend the typical cozy relationship developers have with city officials. Developers vying for city contracts or approvals on large projects often donate dollars to officials with decision-making power over those approvals.

It would also bar any lobbyists or prospective city contractors who have lobbied a city official in the last year from donating to “pet charities” at the request of a city official. That’s a common practice at City Hall and is central to an FBI investigation of alleged misconduct by L.A. Councilmember Jose Huizar and others.

City officials have received nearly $50 million in such payments since 2014. Mayor Eric Garcetti received $40 million of that.

The measure was proposed by Councilmember David Ryu, who first proposed it in 2017. The measure died in committee over concerns it limited free speech in violation of the U.S. Constitution.

The ethics commission vote moves the proposal back to the City Council’s Rules, Elections, and Intergovernmental Relations committee. An approval there would send it to the full City Council for consideration. Council President Herb Wesson chairs the committee. One of his deputies is of interest to the FBI in its investigation of alleged pay-to-play between developers and City Hall officials. [Los Feliz Ledger] — Dennis Lynch 

The Anaheim GardenWalk includes approximately 430,000 square feet of space (Credit: CBRE)

After going bankrupt almost a decade ago, the Anaheim GardenWalk complex in Orange County has traded hands for $80 million.

STC Management, based in Whittier, purchased the three-story retail center from Acturus on behalf of local and Taiwanese investors. Acturus, a New York City-based real estate operator, purchased the three-story retail center out of bankruptcy in 2012 for a reported $73 million.

The property, at 321 W. Katella Avenue, went up for sale more than a year ago. It has 430,000 square feet of leasable space, with tenants that include House of Blues Anaheim, Bowlmor Bowling Center, AMC Theatres, 24 Hour Fitness, Cheesecake Factory, P.F. Chang’s, and California Pizza Kitchen.

CBRE announced the deal and represented the seller.

Anaheim GardenWalk retail center

The GardenWalk is a block east of Disneyland Resort and the Anaheim Convention Center. It was designed in 2007 by Callison Architects and Lyons Warren Engineers + Architects to be the “adult dining and entertainment alternative” to Disneyland.

GardenWalk was also designed to accommodate 399 timeshare units on top of its 2,900-stall parking garage. JW Marriott is separately adding 466 units next to the GardenWalk, and a 400-unit hotel is set to be built at the northwest corner of Katella Avenue and Clementine Street.

Lennar Corporation also wants to add a 162-unit mixed-use complex on a seven-acre site nearby in Anaheim. Landmark Companies also recently secured a $71-million loan for an Embassy Suites near Disneyland. And last July, Advanced Real Estate Services acquired the Stadium House, a 251-unit property at 2100 E. Katella Avenue.

From top left, clockwise: 1231 South Hill Street, Benedict CEO Ryan Somers and 4608–4640 Arden Way, marketed as “The Parker”, LACERA CEO Lou Lazatin, and The pool at the Landing at Long Beach (Credit: Google Maps and Wikipedia)

The year started off with some sizable multifamily investments in Los Angeles, including one sale that topped the most-expensive sale of 2018.

The top five multifamily sales in January include locations throughout the region, from El Monte to Long Beach. They combined for $390.9 million – nearly double the sum of the top five sales in December.

1. 1231 S. Hill Street | $180.1M
Mack Real Estate Group purchased the mixed-use building at 1231 S. Hill Street from the Los Angeles County Employees Retirement Association for $180.1 million on January 8. Later in the month, the association announced it would invest $250 million into the international real estate market this year in hopes of getting higher returns.

2. The Landing at Long Beach | $72M
Friendly Franchisees Corp. acquired the 206-unit apartment complex at 1613 Ximeo Avenue in Long Beach for $72 million. The property includes 18 two-story buildings and spans about nine acres. The firm secured a $43.1 million loan for the purchase.

The seller of the Landing at Long Beach was Western National Group, an Irvine firm that paid $46 million for the complex in 2012.

3. 269 S. La Fayette Park Place | $71.6M
On the last day of January, Blackstone Group sold its property at 269 S. La Fayette Park Place in Rampart Village for $71.56 million. The buyer was Roberts Companies.

The 147-unit building was completed in 1970 and includes 123,500 square feet of space.

4. The Parker | $40.5M
Uhon, Inc., a private equity firm tied to Chinese developer Shenzhen Yuhong, paid $40.5 million for a 177-unit apartment building at 4608 Arden Way in El Monte. The seller was Benedict Canyon Equities.

It is one of the only multifamily properties of its size in the area. The apartments sit across from the 1.2 million square-foot industrial redevelopment site for the Goodman Logistics Center.

5. Villa Elaine Apartments | $26.7M
Slate Property Group, a New York City-based real estate investment and development firm, paid $39 million to acquire two multifamily properties in Hollywood, including the 102-unit Villa Elaine Apartments at 1245 Vine Street. The other building is located at 1665 Sycamore Avenue.

The off-market deal was Slate’s first investment in Los Angeles. The five-story Villa Elaine Apartments is one of the many historical sites in Hollywood. Built in 1925, it was once the home of Frank Sinatra, Orson Welles and Man Ray. It’s since been used as a popular filming location.

A family trust controlled by Chandler Jones sold both properties, records show. Both buildings had remained in the trust for more than 50 years.

Nicholas Mastroianni, Daniel Brodsky, and Greenland USA CEO Hu Gang and a rendering of Pacific Park in Brooklyn (Credit: L&L Mag)

Brooklyn’s 22-acre Pacific Park megaproject has hit another snag — this time with the project’s EB-5 loan.

Roughly a quarter of a $249 million mezzanine loan that Chinese EB-5 investors pooled together for the next phase of the project will have to be redeployed after one of the development sites traded hands, sources told The Real Deal.

A joint venture between the U.S. arm of China’s Greenland Group and Forest City Realty Trust announced last September that it would sell 664 Pacific Street, dubbed B15, to the Brodsky Organization, along with another two sites to TF Cornerstone.

But Brodsky chose not to assume the EB-5 debt on the property, where a 300-unit rental project was planned, a source told TRD. In order to go through with the sale, Greenland asked the U.S. Immigration Fund – the regional center that arranged the loan – to release its lien against the property. For investors, that means a piece of the loan proportional to the value of the site, $63 million, will be paid back.

That money will have to be redeployed, which could pose a challenge for USIF and the project’s 498 EB-5 investors.

“Due to the status of the EB-5 program today and the waitlist that some of you are facing, we understand there are a number of you who may be facing age-out issues or have personal/family reasons for wanting to terminate the EB-5 process,” Nicholas Mastroianni’s USIF wrote last month in a letter to investors, which was reviewed by TRD. “We are happy to cooperate with you to process a proportionate return of your capital contribution based on the amount of the EB-5 Loan.”

USIF told investors that the joint venture had repaid $41 million of loan and expects to pay back an additional $22.2 million by Feb. 28. The company did not respond to requests for comment, and a representative for Brodsky was not immediately available for comment.

The company said that the Pacific Park project has created enough jobs so that 491 of the investors have successfully received their conditional green cards, and some will begin filing their petitions toward the end of this year for their permanent status.

But as the EB-5 green card backlog grows, it’s taking longer for the United States Citizenship and Immigration Services to issue permanent-visa status for the program’s participants.

That’s created problems for the regional centers that have to keep investors’ money “at risk” in order to fulfill the program’s requirements.

USIF last year faced a lawsuit filed by 124 investors who wanted to stop the center from redeploying funds from the Times Square hotel development at 701 Seventh Avenue into a similar hotel project across the street at 702 Seventh Avenue known as TSX Broadway.

The investors in September withdrew their lawsuit, and in December USIF announced it successfully redeployed the 701 money into a $494 million mezzanine loan for TSX Broadway.

As for the $186 million remaining on the loan at Pacific Park — which was meant to cover a $1.2 billion chunk of the development — investors have yet to be paid back because that financing has yet to expire. The letter from USIF states that the loan carries a maturity date of Dec. 31, 2020 with two one-year extension options.

In the meantime, Forest City Realty Trust saw its own shakeup, resulting in its $6.8 billion purchase in December by Brookfield Asset Management.

President Trump last week extended the EB-5 program until Sept. 30 as part of the newly-signed federal spending package. It marked the latest short-term extension in the last few years.

The Redondo Beach City Council and the South Bay Galleria

Forest City’s South Bay Galleria Mall in Redondo Beach is the latest dying mall headed for redevelopment.

The Redondo Beach City Council unanimously approved a large-scale redevelopment of the mall that will add new retail space and hundreds of residential units, according to Urbanize.

Forest City is teaming with Australian developer QIC to add 300 rental units, a 150-key hotel and 217,000 square feet of retail space to the mall’s 30-acre property. The partnership will likely break ground next year, with construction expected to be completed by 2023.

Gensler is designing the redevelopment. The site is next to both alignment options for the extension of the Metro’s Green Line. Both scenarios would put a station next to the site, Urbanize reported.

Forest City built the mall in 1985. The space has suffered amid declining brick-and-mortar sales and a bigger consumer shift to online retail. It’s one of a handful of malls in the Los Angeles area that being redeveloped.

Capri Capital Partners got the go-ahead last summer to move on a similar large redevelopment of the Baldwin Hills Crenshaw Plaza mall.

Macerich and Hudson Pacific Properties are turning the Westside Pavilion into creative office and have already leased its entirety to Google.

Forest City and QIC first proposed the South Bay Galleria Mall redevelopment in 2017. The first version of the project had more residential units and higher building heights, but received some local pushback, including those concerned about added traffic it would bring. Later that year, Redondo Beach city officials enacted a temporary ban on mixed-use development.

The developers reacted by scaling the project back, reducing building height and the number of residential units.

[Urbanize] — Dennis Lynch