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Olympia’s digital signage and balconies may get the axe at LA City Council

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Shenglong Group Chairman Yi Lin, a rendering of Olympia and City Hall (Credit: Wikipedia)

City Century will likely be forced to tweak its three-tower Olympia project in Downtown Los Angeles if it wants approval from the City of L.A.

The L.A. City Planning Commission approved the $1 billion project last week but is asking the City Council to require considerable changes to the project at 1001 W. Olympic Boulevard. The commission wants the Shenglong Group affiliate to axe the large digital ribbon signage facing the 110 freeway and make balconies facing the freeway decorative only, according to Curbed.

Commissioners said functional balconies facing the 110 freeway were unhealthy. Commissioner David Ambroz said there was a “cancer” of signage in the city and that the piecemeal approval of large digital signs hasn’t allowed the city to take into consideration their collective effect on the Downtown L.A. streetscape.

Three other projects near L.A. Live have large digital signs — the completed Circa project and the under-development Fig + Pico and Oceanwide Plaza projects, the latter of which is currently stalled.

The commission also took issue that none of the 879 residential units at Olympia are affordable, although City Century is paying $18 million into an affordable housing fund. The project now goes to the City Council for consideration.

As currently configured, the Olympia project includes three towers of between 43 and 65 stories above a four-story podium.

Along with residential units, Olympia includes a 1,000-key hotel, 20,000 square feet of retail space, and 163,000 square feet of open space and amenities. [Curbed]Dennis Lynch 


It looks really bad for Purplebricks right now

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Purplebricks CEO Eric Eckardt (Credit: iStock)

All is not well for rapidly expanding discount brokerage Purplebricks. The company’s shares fell the most on record after the brokerage lowered its outlook for the second time since early December.

The company slashed sales guidance for the year by 20 percent — as it expands in the U.S. and Australia, where the housing markets have slowed. Its chief executives in the U.S. and U.K. are also leaving the firm, Bloomberg reported.

Shares fell as much as 39.4 percent, the most since Purplebricks started trading in December 2015. The drop in investor sentiment comes as Purplebricks is facing headwinds across its markets. In the U.S., its marketing push hasn’t yielded expected sales, while Brexit negotiations in the U.K. have decreased home sales.

The company expects to bring in revenue of 130 million pounds to 140 million pounds this year, or $170 million to $183 million. That’s down from an initial estimate of as much as 185 million pounds, or $242 million.

“Given the tough trading backdrop in its key regions and the recent changes to customer propositions in the U.S. and Australia, revenue visibility is low and the near term growth outlook has weakened,” Peel Hunt analysts wrote in a note.

Last month, the discount brokerage said it would take a more traditional approach in the U.S. The company is changing its business model to offer sellers varying listing fees, which are only charged if and when a home is sold. The modified approach, aligns the Purplebricks more with traditional business models, in which agents are paid when a deal closes.

Purplebricks entered the U.S. market in 2018, with the flat-rate listing fee of $3,200 — later increased to $3,600. Now, consumers can search on the website to see what the fee is in their ZIP code. Fees have ranged from $4,950 in Las Vegas to $5,950 in Queens and $8,950 in Manhattan.

The pivot came as real estate companies’ shares have struggled. Last year, Purplebricks and fellow discount brokerage Redfin took a hit thanks to the broader housing market. Purplebricks’ entrance to the U.S. was pricey: The company’s expenses for the first eight months in the U.S. were more than double that of the first eight months in Australia. [Bloomberg] — Meenal Vamburkar

Diamond manufacturer lists modern Bel Air spec for $48M

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(Credit: iStock)

Another spec home has hit the market for sale, adding to the flurry of high-end properties in search of a buyer in a softening Los Angeles market.

A 20,000-square-foot Bel Air compound, built over four years by a diamond manufacturer, is being marketed for sale for $48 million, the Wall Street Journal reported.

It’s the first spec home ever built by Rafael Zakaria, a Los Angeles-based diamond dealer. Zakaria grew up in a real estate family, and built the home with the intention to sell.

The modern property features seven bedrooms and elaborate amenities, such as Portuguese limestone and Italian Calacatta marble. It also includes a 20-person movie theater, wine cellar, gym, spa and five fireplaces.

Outside, there is a tennis court and 200-foot circular infinity pool with fixed, floating recliners.

Zakaria paid $6.6 million for the property in 2013, property records show. He then tore down the existing home to make room for his elaborate spec.

Branden and Rayni Williams of Hilton & Hyland share the listing with Aaron Kirman of Compass.

Nearby, another mega-mansion is being marketed for $88 million. The eight-bedroom house spans about 25,000 square feet, with an additional 20,000 square feet of outdoor space. Ardie Tavangarian, founder of Arya Group, built that estate. [WSJ] — Natalie Hoberman

The Mountain of Beverly Hills just got a $350M price chop

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1652 Tower Grove Drive (Credit: Realtor)

UPDATED on Feb. 21, at 1:30 p.m.:  When the so-called “Mountain of Beverly Hills” hit the market seeking a record-breaking $1 billion last summer, it drew snickers from real estate industry experts who balked at the price tag of the undeveloped land.

Now, less seven months later, its sellers have cut its ask by 35 percent to $650 million, The Real Deal has learned. It re-listed on the Multiple Listing Service Wednesday.

The 157-acre mountaintop spread in Beverly Hills Post Office still surpasses any other listing on the market. It’s unclear how the new sticker price will affect the chances of a sale.

“They still have a long way to go,” Steve Lewis, founder of CORE Real Estate Group and the original listing agent three decades ago, said Thursday.

Stephen Shapiro, the co-founder of the Westside Estate Agency, said he anticipates it will “still be a struggle” to find a buyer at $650 million.

“I just don’t know what the likelihood of an arm’s length transaction is here,” he said. “It’s a long hard road.”

The property’s sellers — Secured Capital Partners LLC — have received at least one offer. Last month, developer Scott Gillen offered to pay $400 million for the six lots. The selling entity, controlled by the Victorino Noval family, reportedly countered at $600 million to no avail.

Listing agent Aaron Kirman of Compass has the listing. Representatives for Kirman and the sellers did not immediately respond to requests for comment.

The sprawling property, which has nearly 25 acres of usable land on six graded pads, has a storied history that includes the late television and radio mogul Merv Griffin, Iranian and Saudi royalty and Hollywood hotshots like Steven Spielberg and Tom Cruise, The Real Deal previously reported.

It gained nationwide attention when it listed at $1 billion, a record for L.A. County.

When he won the listing last July, Kirman told the Los Angeles Times that he planned to spend up to $1 million on marketing the massive swath of land, including jetting around the world to spur interest among Russian billionaires and Middle Eastern royals. His team also was supposedly planning a “Hollywood-style video” to showcase the property.

That apparently hasn’t happened yet. And on Thursday Kirman’s website still listed The Mountain at $1 billion.

In bizarre saga of Bo Dietl’s MeToo investigative platform, Douglas Elliman is apparently not a client

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Bo Dietl (Credit: Getty Images)

On Wednesday morning, an unexpected email hit the inboxes of New York media reporters. It said that Bo Dietl, the private eye and former mayoral hopeful, had created a “MeToo investigative platform” that would allow employees to report sexual misconduct and harassment. The email also said that Douglas Elliman was a client, and there would be a joint press conference on Thursday featuring Dietl and two top staffers at Elliman.

There was one significant problem: Elliman employees were totally blindsided, a person familiar with the situation told The Real Deal on Thursday.

The brokerage “never had and never will engage in such a platform,” the person said.

On Thursday, Dietl also backed down on the company’s participation.

“If they choose not to have a statement that they are involved with me in any way, I respect that,” he said on Thursday. “I apologize to Howard Lorber and Douglas Elliman.” He went on to say that he would not confirm or deny the identity of his clients. (On Wednesday, he told The Real Deal that Elliman was a client but hadn’t wanted to talk about it publicly.)

Dietl blamed his public relations firm, Ronn Torossian’s 5W PR, for an invitation that referred to Elliman as the first corporate client of the platform. He also said the invitation falsely stated that Elliman’s general counsel and vice president of human resources would be featured speakers at the event. 5W hasn’t commented on what happened.

The press conference — which was slated for Thursday morning — was canceled on Wednesday just a few hours after the firm sent out the invitation. According to 5W, it was canceled due to “inclement weather.”

Dietl said his firm is now hosting the press conference on March 6 and has invited the city’s top builders, real estate investment trusts and other companies to attend. Elliman won’t participate, sources said.

The announcement yesterday was surprising for several reasons. Real estate companies — and corporations in general — don’t typically advertise their human resources practices. Additionally, Dietl has repeatedly been linked to investigations involving Roger Ailes — the Wall Street Journal reported in 2017 that Fox hired Dietl to discredit two of Ailes’ accusers.

“Just because a company hires us, doesn’t mean they need it,” Dietl said. “If a corporation hires us, that does not mean there is a problem. What they are saying is ‘I want to let my employees know that there’s another avenue to report the findings.'”

He said the platform would help curb legal action against corporations by providing an independent avenue for employees to file complaints of misconduct or harassment. He added that his system could help “remediate” situations “before something happens that’s really bad.”

“We can maybe get to that person who is making those bad jokes, and say hey, wait a second, you can’t say something like “wow, you have great legs” because that’s offensive to that female. These are things that we can stop and remediate from the beginning. Times have changed with the political correctness… Look, I’m 68 years old, what I used to do when I was 23, you can’t do today. People have to realize this.”

Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over

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Spencer Rascoff and Rich Barton (Credit: Getty Images)

Zillow Group is replacing CEO Spencer Rascoff with co-founder and former CEO Rich Barton, the company said in an SEC filing Thursday.

Rascoff, also a co-founder, led Zillow as CEO from 2010 through its IPO — and will remain with the company until March 22. He’ll stay on the board of directors after Barton takes over.

Barton has been executive chairman since stepping down as CEO. The move comes as Zillow has faced challenges amid slowing home sales and rising interest rates. The company’s stock is down more than 25 percent in the last 12 months.

A 48-acre estate in Brentwood re-lists for $29M

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The Amber Hills Estate in Brentwood has been relisted for $28.5 million

The sprawling 48-acre Amber Hills Estate in Brentwood has hit the market again after the owner sliced $3 million off its asking price.

Originally listed for $31.5 million last June, the property on Mandeville Canyon Road was posted at $28.5 million last month, according to Realtor.com.

The new price tag is nearly double the $14.6 million what hedge fund manager and current owner David Ganek paid for it in 2014.

The main residence includes 12,000 square feet of space, with 13 bedrooms and eight bathrooms. It was designed in the 1940s by architect Paul Williams for opera singer John Charles Thomas.

The estate also features a tennis court and four other structures, including a pavilion, guesthouse, caretaker’s house, and a maintenance building. The centerpiece is a lake with bridges and waterfalls.

Ganek purchased it from Glorya Kaufman, the widow of Donald Kaufman who co-founded KB Home with Eli Broad. Over the years, Hollywood icons Dick Powell and June Allyson have also owned the home.

Susan Smith with Hilton & Hyland has the listing.

Brentwood is one of the priciest neighborhoods in Los Angeles, and is home to many business moguls and celebrities. NBA superstar LeBron James has shown he has game in the real estate market as well, as he now owns two homes in Brentwood. [Realtor.com] — Gregory Cornfield

WeWork signs 40K sf lease in North Hollywood

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WeWork signed a 40,000 square-foot lease at 5161 Lankershim Boulevard (Credit: Getty Images and Google Maps)

Co-working giant WeWork is expanding its footprint in the San Fernando Valley.

The firm signed a lease for 40,000 square feet at 5161 Lankershim Boulevard in North Hollywood, the Commercial Observer reported. Building owner Beacon Capital Partners purchased the 197,000 square-foot office for $69 million in 2017.

WeWork plans to open the space in the summer for up to 600 people. Last July, animation studio Bento Box Entertainment signed a 27,300 square-foot lease in the same building.

WeWork has rapidly continued to pick up space this year to add to its massive Los Angeles footprint. Just this month, the firm igned a 78,000 square-foot lease at 1031 South Broadway in Downtown; a 70,000 square-foot lease at 9830 Wilshire Boulevard in Beverly Hills; and a 60,000 square-foot lease at Hudson Pacific’s Maxwell project at 405 Mateo Street in the Arts District.

North Hollywood has seen a spurt of recent activity in both residential and commercial real estate. The Delijani family is moving forward with a 179-unit project set for 10850 West Riverside Drive. And in December, Faux Library Studio Props signed a lease for almost 90,000 square feet on Hart Street.

Developer Edgar Zalyan also wants to build a 37-unit, five-story building near Lankershim Boulevard. He purchased the property for $1.2 million in July. And last month, Trader Joe’s signed a lease for almost 16,000 square feet at the former Laurel Plaza Shopping Center in North Hollywood. [Commercial Observer] — Gregory Cornfield


AIDS Healthcare Foundation sues Crossroads of the World redevelopment

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AHF CEO Michael Weinstein and Harridge’s Crossroads of the World redevelopment

The AIDS Healthcare Foundation hasn’t given up its fight to derail Harridge Development Group’s redevelopment of Crossroads of the World.

The nonprofit group filed a lawsuit against the city of Los Angeles to delay or stop the $1 billion Hollywood project, according to Curbed. AHF claims the city violated the California Environmental Quality Act, or CEQA, when it approved the project.

The suit comes six months after the City Council voted against AHF’s application to landmark two properties at the Crossroads of the World site in an attempt to slow down the project.

The AHF is one of the most active opponents to development in L.A. and is especially active in Hollywood, where it’s headquartered. It’s also sued Hudson Pacific Properties and Crescent Heights over projects in the area.

In the case of the Crossroads of the World, located at Sunset Boulevard and Las Palmas, AHF and ally group Livable LA argue the city failed to properly consider environmental impacts of the project. They say the city also erred in approving a version that requires demolishing 82 rent-stabilized units at the site.

The city approved a configuration with 950 residential units, a 308-room hotel, and 190,000 square feet of commercial space. Harridge will set aside 105 units as affordable. The project has nine buildings, including three towers.

It’s at least the second suit against the project. The Art Deco Society of Los Angeles sued to halt the project in 2017 in order to preserve the 1920s-era Hollywood Reporter building. Last year Harridge agreed to incorporate the building into the development. [Curbed]Dennis Lynch 

Ahead of restructuring, Re/Max’s revenue ticked up in Q4

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Re/Max CEO Adam Contos

Re/Max’s yearly and quarterly revenues are up, despite a “correcting market,” the company disclosed in an earnings report Thursday.

Revenue at Re/Max rose 4.8 percent in the fourth quarter of 2018, hitting $50.8 million, according to reporting by Inman. This was higher than the previous consensus estimate of $50.27 million. Net fourth quarter income was $6.3 million.

“We are pleased with our fourth quarter performance as our differentiated business model continued to demonstrate its strength in a correcting market,” Adam Contos, RE/MAX Holdings CEO, said in a statement.

Yearly revenue for 2018 was also up at $212.6 million, a year-over year increase of 9.8 percent. Net income for the year was $27 million.

In the third quarter of 2018, TRD reported that the brokerage had lowered its guidance for full-year revenue to $210 million to $213 million, down from $213 million to $216 million, due to a “shifting market.”

The company attributed the increase in revenue to acquisitions. But the brokerage’s most reliable recurring revenue streams come from franchise fees and annual dues.

The company doubled their Motto Mortgage franchises, ending the year with 78 offices. Revenue from franchise fees alone was up 8 percent at $101 million.

In early February, Re/Max announced it would be reorganizing its franchise structure to consolidate 10 regions into four, and focus on training and recruiting. [Inman] – Decca Muldowney

Former 7-Eleven CEO cuts price for Redondo Beach manse to $12M

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Jim Keyes chopped the price of his home by 34 percent

Jim Keyes, the former CEO of Blockbuster and 7-Eleven, has cut the asking price for his Redondo Beach mansion down to $11.9 million.

That’s a $6-million discount, or 33 percent less than the $17.9 million he originally listed the 9,200-square-foot home for in 2017. Keyes paid about $6.4 million for the property on Esplanade Drive in 2015, the Los Angeles Times reported.

He has since remodeled the three-story home’s interior into a modern contemporary space. It features an elevator, five bedrooms, six bathrooms, an eight-car garage, a media room, and a wine cellar.

Keyes was the president and CEO of 7-Eleven Inc. from 2000 to 2005 before he joined Blockbuster as chairman and CEO, where he stayed until 2011. He now serves as the chairman of Wild Oats Marketing LLC.

Brett Miller and Destiny Davis of Douglas Elliman hold the listing with Edward Kaminsky of Strand Hill Christies International Real Estate.

Listing prices for an increasing number of houses are being slashed, particularly at the upper end of the price spectrum. TRD’s recent analysis of luxury sales showed that some of the wealthiest enclaves are seeing big price cuts and a decrease in high-end closings.

Meanwhile, the City of Redondo Beach recently approved plans for a large-scale redevelopment of the South Bay Galleria Mall that will bring 300 new rental units, a 150-key hotel and 217,000 square feet of retail space. Leo Pustilnikov, principal at SLH Investments, is also in negotiations to purchase multiple city-controlled leases on Redondo Beach Harbor. [LAT] — Gregory Cornfield

National Cheat Sheet: Payless files for bankruptcy, 1M accounts hacked on Zillow’s NYC platform Streeteasy … & more

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Clockwise from top left: Amazon realized bringing HQ2 to NYC would be ‘difficult at best’: report, StreetEasy data breach lands a million user accounts on the dark web, CRE brokerage scoops up Industrious’ spare-office-space platform and Payless will shutter thousands of stores amid second bankruptcy filing.

Payless will shutter thousands of stores amid second bankruptcy filing
Payless ShoeSource has filed for bankruptcy and plans close all of its remaining 2,500 stores, Reuters reported. The Kansas-based chain, which first filed for bankruptcy back in 2017, wasn’t able to find a buyer; it now plans to hold liquidation sales at all of its outposts. Payless has already closed hundreds of stores, including the approximately 700 stores that shuttered after its first bankruptcy. Chief Restructuring Officer Stephen Marotta told the outlet its first bankruptcy “left the company with too much remaining debt, too large a store footprint and a yet-to-be realized systems and corporate overhead structure consolidation.” [TRD]

StreetEasy data breach lands a million user accounts on the dark web
An “unauthorized party” hacked one million StreetEasy accounts and is selling them on the dark web, the company said Tuesday. As part of the hack, “email addresses, usernames, and encrypted passwords” were stolen, StreetEasy’s communications director Emily Heffter said in a statement, adding 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.” The hacker didn’t actually obtain full credit card numbers or CVV/CVC codes, she noted, adding that the company was working to “strengthen [its] internal safeguards” to avoid future hacks. [TRD]

Declining housing sales and increased inventory could be good for buyers: report
The U.S. housing market has now seen declining sales for six consecutive months, according to Re/Max’s National Housing Report for January. At the same time, the market saw a 6.4 percent increase in inventory year-over-year — the highest increase in ten years, the report said. Those factors combined could lead to a more affordable market for homebuyers, the report concluded. The increase in inventory is “a positive for homebuyers, as the market continues to swing their way,” Re/Max CEO Adam Contos said. “The spring selling season shapes up to be as interesting as any we have seen in years,” he added. [TRD]

CRE brokerage scoops up Industrious’ spare-office-space platform
Manhattan-based startup SquareFoot has snapped up Industrious’ commercial subletting platform, PivotDesk. The flexible office space company first bought PivotDesk back in 2017 when it was expanding, but the platform “wasn’t really central to the strategic priorities of the company,” Industrious’ chief executive Jamie Hodari explained. “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,” Hodari added, without providing exact numbers. SquareFoot’s purchase is part of its effort to become a “one-stop shop for all small- and medium-business office space needs,” its chief executive Jonathan Wasserstrum said. [TRD]

MAJOR MARKET HIGHLIGHTS

Amazon realized bringing HQ2 to NYC would be ‘difficult at best’: report
As the New York real estate industry continues to reel over news that Amazon has abandoned its plans for a headquarters in Long Island City, more details are surfacing about its seemingly abrupt decision, with a source telling the New York Times that the tech behemoth grew concerned about local politicians’ anti-Amazon crusade. “Amazon had to think about what a long-term relationship with New York City would look like, and based on the experiences with local and state politicians to date, concluded it would be difficult at best,” the source said. A company executive also reportedly called the political climate “really rough.” [TRD]

Host Hotels’ $610M purchase sets record in Miami-Dade County
Barry Sternlicht’s Starwood Capital Group and LeFrak have sold a luxury beachfront hotel to Host Hotels for $610 million — the highest per-room hotel sale on record in Miami-Dade County. One Hotel South Beach has 429 rooms, which means that each room went for approximately $1.42 million as part of the deal, which was brokered by Hodges Ward Elliott. Host Hotels currently owns 88 properties across the country, as well as five international properties, for a total of 52,000 rooms. The previous per-key sale record in the county was the Raleigh Hotel in Miami Beach, which sold for $103 million, or $1.24 million a key. [TRD]

Billionaire Ken Griffin donates another $1M to Chicago mayoral campaign
Fresh off the heels of his record-breaking Manhattan penthouse purchase, billionaire Ken Griffin has donated another $1 million to Bill Daley’s mayoral campaign in Chicago, Crain’s reported. Griffin already donated $1 million to Daley’s campaign earlier this month, at which point he said in a statement that he was “proud to support Bill Daley.” Daley, a former investment banker and U.S. Secretary of Commerce, has also received contributions from Michigan Avenue Real Estate Group owner Thomas Meador and Equity Commonwealth chairman Sam Zell. [TRD]

JLo and A-Rod shell out $6.6M for Jeremy Piven’s Malibu beach house
Jennifer Lopez and Alex Rodriguez have bought actor Jeremy Piven’s beach house in Malibu, Yolanda’s Little Black Book reported. The singer-actress and former Yankee, who recently celebrated their second anniversary, paid $6.6 million for the three-story home, which has a number of amenities, including a sauna and a screening room. The couple recently re-listed a Park Avenue condo they bought last year. They also own two other homes in Los Angeles, according to Yolanda. Piven purchased the home for $3.5 million back in 2004. [TRD]

RedfinNow and Zillow Offers make their way to Texas
Texas has two new direct-to-consumer home buying and selling programs. Redfin has launched RedfinNow in Dallas and Zillow has launched Zillow Offers in Houston, the companies said in separate statements on Monday. Zillow had already expanded its program to a number of cities, including Atlanta, Las Vegas and Phoenix. Redfin, however, hadn’t expanded its program beyond California. The two companies will face competition in Texas from platforms including Opendoor and Offerpad. Zillow is working with Mark Dimas Properties in Houston. [TRD]

New Orleans condo market takes a hit amid short-term rental legislation
Regulations that ban whole-home rentals in most of New Orleans’ French Quarter have “really screwed up” the area’s condo market, Patrick Knudson, broker at Dorian Bennett Sotheby’s International Realty, told the Financial Times. The regulations have resulted in price chops in the area. But in other parts of New Orleans, prices are actually rising. An eight-bedroom home seeking $9.25 million is the French Quarter’s priciest listing right now, according to the outlet. [TRD]

After 2 foreclosures, owner gets Pasadena villa back, and has listed it for $19M

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1145 Arden Road, officially called the Arden Villa (Credit: Zillow and iStock)

When a famous Pasadena mansion re-listed for nearly $9 million less than its original ask last month, it appeared to be little more than another high-end property taking longer to sell in a cooling market.

It turns out the so-called “Arden Villa” — the home made famous by the 1980s soap opera, “Dynasty” — is far from a typical re-listing.

Guang “Geoffrey” Ren, who is now seeking $19.5 million for the 17,600-square-foot estate, lost the home to foreclosure 20 years ago, according to Yolanda’s Little Black Book. He reacquired it, then almost lost it in foreclosure again.

Ren initially put the home on the market in December 2017, asking $28 million.

The compound features a Palladian-inspired Italianate house with 10 bedrooms and 11 bathrooms, as well as a 2,430-square-foot guesthouse, a tennis court, and two pools. It served as a famous filming spot, best known for Linda Evans and Joan Collins iconic lily pond catfight in “Dynasty.”

Ren apparently has had a long-running fixation with the property. He purchased it for the first time in 1993 for $2.8 million. Then four years later he lost it in foreclosure, causing the home to end up in the hands of two Hollywood hotshots. Peter Tolan, a television and film producer, bought the home in the early 2000s, and later sold it to David Zander, a co-founder of a commercial production company.

For reasons that remain unknown, Ren dropped $20 million to purchase the home again in May 2013. He took out a hefty $18 million loan for the deal.

Yet Ren never moved into the home, and put it on the market four years later for the same asking price. Records show that he was $3.5 million behind in mortgage payments at the time, and a public foreclosure auction was scheduled for March 2018.

Ren ended up scoring some last-minute refinancing, and the public auction was cancelled. Though he spends most of his time in China, Ren also owns a 4-acre compound nearby in Villa Heights. [YBB] — Natalie Hoberman

Black Creek considers selling warehouse REIT worth $3.5B

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Black Creek CEO Raj Dhanda and several properties from Industrial Property Trust (Credit: Black Creek and Industrial Property Trust)

It could be good news for the tight industrial property market.

Real estate investment firm Black Creek Group is considering selling an industrial property REIT that could fetch up to $3.5 billion, including debt.

Industrial Property Trust is an untraded REIT with 240 properties, with a total of around 37.6 million square feet, according to Bloomberg. The properties – 96 percent of which are leased – are a mix of bulk warehouse use and “last mile” storage, and tenants include Amazon and Fed Ex.

The REIT’s projected net operating income for 2020 is roughly $181 million, according to documents reviewed by Bloomberg.

Black Creek is looking to either sell or recapitalize the REIT, an unnamed source told Bloomberg. The firm attempted a similar sale last year, but canceled it after other large warehouse portfolios hit the market.

In July, 2018, TRD reported that Black Creek were partnering with Chicago-based Dayton Street to develop two large industrial buildings near Chicago’s O’Hare airport. [Bloomberg] – Decca Muldowney

 

Los Angeles awards $63M for 10 affordable housing projects

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The LA County Board of Supervisors and Meta Housing Corporation’s Lamp Lodge redevelopment in DTLA

The Los Angeles County Board of Supervisors has approved $63 million in funding for 10 affordable housing projects across the county.

The 10 projects total 684 units of housing. Five of them are located in the city of L.A., the other five are in unincorporated L.A. County, West Hollywood, Pomona, and Inglewood, according to Urbanize.

The five projects in the city of L.A. have previously received funding. New funds total around $16 million. The others will receive around $38.5 million. The money is distributed through the Community Development Commission.

Prolific affordable developers are among those receiving funding, including Meta Housing Corporation, L.A. Family Housing, and AMCAL Multi-Housing. Meta is redeveloping an SRO building in Downtown L.A. with 82 units of permanent supportive housing.

Agoura Hills-based AMCAL has built more than 2,600 affordable units across L.A. County. It received $5.2 million for a 61-unit project in Pomona. The largest project to receive money is a 111-unit development in West Carson by PATH Ventures.

All 10 of the projects in line for funding have secured money from other pools, including from Measure H and Affordable Housing Trust. Measure H, a county measure that passed in 2017, created a $1.2 billion bond measure to tackle homelessness.

Earlier this month, the county awarded $4.5 million in Measure H funds to five designers as part of a contest to design less expensive housing for people experiencing homelessness. [Urbanize] — Dennis Lynch 


“I fear they have become the culture”: Richard Meier’s accusers say firm is whitewashing his misdeeds despite the #MeToo movement

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From left: Stella Lee, Judi Shade Monk, and Lucy Nathanson (Photo by Emily Assiran)

On a recent trip to Germany, Stella Lee met a fan of Richard Meier, the prolific architect who has faced several sexual misconduct accusations over the last year. The person was upset — not by the nature of the allegations — but by the fact that it had tarnished the designer’s reputation.

“There remain many who continue to admire his work, and I can appreciate that because the work itself is high quality and played a significant role in the high-end residential real estate boom in New York City,” said Lee, who along with seven other women have publicly accused the architect of misconduct during their tenures at his firm. “It doesn’t change the fact that the brand is damaged and that the firm’s figurehead has abused his position.”

Yet it’s that name and brand the firm’s current principals remain committed to. And nearly a year after a New York Times investigation revealed a slew of misconduct allegations, five of Meier’s accusers told The Real Deal that the firm hasn’t done enough and is whitewashing the architect’s alleged misdeeds.

Earlier this month, TRD revealed Meier remains a consistent presence at the firm, despite a previous report that he would “step back” from day-to-day operations. In a recent interview, Richard Meier & Partner’s newly-named managing principal Bernhard Karpf said that Meier, in fact, shows up at the Midtown office twice a week on average. And he explained why the firm continues to operate as “Richard Meier & Partners Architects,” with no immediate plans for a name change.

Some of the accusers never thought much would change at the firm.

“I never found it very convincing, this idea of [Meier] stepping down,” Lee said.

During the recent interview with TRD, Karpf said the firm’s name represents a shared “vision” and teamwork. He evaded questions about the allegations against Meier, calling it “last year’s news.” This week, the firm said in a statement that “we are a diverse and inclusive workplace committed to fostering an environment in which all our employees are comfortable and secure. Today, while very mindful of the past, we are working on new opportunities and projects and continue to deliver iconic design and execution to our clients.”

For Lucy Nathanson, Karpf’s words stung. In the spring of 1995, when she was Meier’s personal assistant, she said she was summoned to his apartment to do some last-minute work, as the New York Times previously reported. She said Meier placed a book of 19th Century French pornography in front of her. When she was waiting for the elevator so that she could leave, Meier pressed up against her with an erection, she said.

Earlier this month, Nathanson told TRD that Karpf — who wasn’t a manager at that point — noticed that she seemed upset.

“Oh god, Lucy, it hasn’t happened to you has it?” Karpf asked, according to Nathanson. It was then that it dawned on her that there could be other victims.

The two then went to the kitchen, where Nathanson described what had occurred at Meier’s apartment, she said. Nathanson said Karpf let her cry on his shoulder and advised her to sue Meier, though she eventually decided against it. When asked about Nathanson’s assertions, a representative for Karpf declined to comment.

A few weeks later, Nathanson lost her job due to what Meier called a “restructuring,” she said. Karpf’s characterization of the scandal as “last year’s news,” Nathanson said, is self-preservation.

Nathanson said Karpf is trying to “save himself and his job and his status. I just feel so betrayed.”

She noted that she had considered Karpf a good friend and thought he was “a terrific guy.”

Judi Shade Monk, who worked at the firm from 2003 to 2008 and has accused Meier of grabbing her underwear through her dress at a holiday party, said Meier’s behavior with women was well-known in the office. But pre-#MeToo, the reaction was different.

“Women just rolled with it,” she said. “If you have professional, high-level aspirations, then this is an occupational hazard. Even when these things are unsolicited, it was as if it was our fault. That women were too tempting and men couldn’t be expected to control themselves around us. The blame wasn’t on the man. In hindsight, it’s absurd.”

At the time of the holiday party, she was new at the firm, and said she didn’t want to leave because it would seem like she, rather than Meier, was the problem.

She said the current principals of the firm — Karpf, Vivian Lee, Reynolds Logan and Dukho Yeon — were her mentors when she worked there. By not rebranding, Monk believes the firm is failing to recognize the cultural shift #MeToo brought about.

“They are outstanding people and great architects. I hate to see them be tarnished by hanging their hat on this,” she said. “Richard’s behaviors expose everyone’s livelihoods. Every single person in that firm is vulnerable, and they don’t deserve that.”

The precise nature of Meier’s continued involvement could potentially have legal implications for the firm.

Employers have no legal obligation to get rid of someone accused of, or known to have committed, sexual harassment, according to Larry Pearson, a labor and employment attorney at Wigdor LLP. But not doing so when the person has been accused multiple times of harassment could “seriously undermine” a company’s ability to argue that it doesn’t tolerate harassment or is responsive to such complaints, he added.

In the event of legal action against a company, leaving such a person in a position of unaltered influence “carries significant legal exposure,” Pearson said. But the individual’s degree of influence in decision-making is a “key factor” in determining what discipline the organization is meting out and what it is willing to tolerate, he added.

“Even if the person is just acting as a rubber stamp it leaves open the question of how much influence they really have,” he said.

Further, any employees who enable or ignore issues of harassment, discrimination or retaliation could be held personally liable, regardless of their position in a company hierarchy.

Monk noted that while the principals were promoted when Meier “stepped back,” no new partners have been named to the firm. Current and future clients, she said, should get clarity on just how involved Meier is.

“They need to have the confidence in themselves that they are bigger than that name,” she said. “It’s time to implement a transition plan that will take them into the future. Because the firm’s success is theirs as much as it is Richard’s.”

Stella Lee, who has said that Meier exposed himself to her at his apartment, noted that the architect is famous but not “Harvey Weinstein-famous.” People recognize his name, but don’t always remember the Times story. His accusers weren’t well-known figures in the industry either, which “limits their ability to generate the common knowledge acceptance of these accusations the way someone like Gwyneth Paltrow might be able to accomplish,” she said.

“That’s the problem here,” she said. “It then leads to a sort of willful cultural amnesia.”

Part of the response, too, could be that the firm is banking on a culture in the real estate industry that may not be receptive to the #MeToo movement, she said, pointing to Karpf’s comments that clients have continued to do business.

“A lot of what Bernie [Karpf] was saying points to the fact that these developers care only about the bottom line,” she said. “These development companies are often run by an old boys’ club culture that would rather sweep this type of behavior under the rug rather than support and stand up for an ethos in which this is no longer acceptable.”

Liz Lee, who worked as a communications coordinator at the firm from 2002 to 2004, was summoned to Meier’s apartment, and when she arrived, he was naked, the Times previously reported. He later, Lee said, put his hand on her buttocks.

“You feel bad for the principals who have been beaten down into this position of defending the namesake,” she told TRD. “It’s a very unhealthy environment that they are just surviving in.”

Karin Bruckner, who worked at the firm from 1989 to 1992, told the Times last year that Meier had rubbed up against her while she was standing at the copy machine. The firm, she said, needs to get away from the perceived starchitect image — the idea that one person is the “lone genius” behind the work. That would, however, require structural change and transparency, she said.

“The issue is so much bigger than sexual harassment,” Bruckner said in an email. “These people are wildly gifted and capable. I wish they could step out of Richard’s shadow. But they must change the culture, and I fear they have become the culture.”

With additional reporting by Erin Hudson

One of Trump’s biggest donors is accused of ripping off L.A. tenants

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Donald Trump, Geoff Palmer and Downtown Los Angeles (Credit: Wikipedia)

UPDATED on Feb. 22, 2019, at 3:26 p.m.:  A lawsuit claims that billionaire developer Geoffrey Palmer, one of President Donald Trump’s largest donors, has denied apartment tenants across Los Angeles of millions of dollars in security deposits.

Palmer’s company, G.H. Palmer Associates, allegedly kept the deposits of some 11,000 former renters illegally, NBC reported. The accusations were detailed in a class-action lawsuit filed by San Diego attorney Jimmie Parker.

Parker alleges Palmer’s company “systematically and in bad faith” retained deposits by failing to properly document charges.

Landlords are required by law to provide reasons for keeping deposits when tenants move out. Instead, Palmer Associates justified withholding them using generic descriptions of “maintenance charge,” or “cleaning charge,” the lawsuit claims. More than two dozen tenants had previously sued Palmer for unwarranted charges.

G.H. Palmer Associates did not respond to The Real Deal’s request for comment.

The firm controls some 11,600 apartments and is worth $4.5 billion, according to its website.

Palmer has been one of Trump’s largest donors, contributing millions to his legal defense and campaign, including at least $6 million to the Rebuilding America Now political action committee, which is reportedly under investigation by special counsel Robert Mueller.

In 1991, Palmer was charged with paying employees to donate to a campaign that opposed the incorporation of what is now Santa Clarita. He has since also been involved in lawsuits over development projects and affordable housing, including one lawsuit for demolishing the last cottage in Bunker Hill. [NBC] —Gregory Cornfield

Who provides the more accurate home valuation: Zillow or Redfin?

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(Credit: Wikipedia and iStock)

When you type in a home’s street address to obtain an online valuation from the two biggest players in the field — Zillow’s Zestimate or Redfin’s Estimate tools — how good is what you get?
Both are used by millions of home shoppers, owners, realty agents, anyone curious about what a house in their neighborhood might be worth. Both also have been criticized for estimates that are off the mark; some homeowners have actually sued Zillow over their Zestimates, though unsuccessfully. Zillow’s own CEO, Spencer Rascoff, famously sold his Seattle home for 40 percent below its Zestimate.

Accuracy matters a lot in this arena because many buyers and sellers use the online estimates to price their homes or make purchase offers, literally handing sellers or buyers the estimates as part of their bargaining strategy. This is despite both companies’ warnings that these are not appraisals, only algorithm-based computer estimates. They are starting points, not holy writ.

So which company’s estimate is the more accurate? For two years, Redfin has claimed that it produces estimates that are superior, based on the results of an independent study. When it values homes that are on the market, Redfin says its median national error rate is just 1.77 percent. That is, the selling price, compared with the estimate, is within that margin of error half the time. On houses that are not for sale, Redfin’s median error rate is 6.66 percent. Redfin has a total of 74.4 million properties in its valuation database — 1.3 million on the market and listed for sale, 73.1 million off the market.

But now it looks like bragging rights for accuracy could be shifting to Zillow. Following an international contest involving teams of data scientists, Zillow announced that its median error rate on valuations of the 110 million U.S. homes in its database will soon drop to 4.0 percent or even below, from the current 4.5 percent. Zillow does not provide a breakout that distinguishes between its error rates for homes already listed on the market and off-market homes, so there is no direct comparison to Redfin’s claimed 1.77 percent figure for listed houses. But the overwhelming majority of homes in Zillow’s 110 million-property database are off-market, which are more challenging to value because there’s usually less detailed information available on them. Note the difference in Redfin’s 1.77 percent error rate for listed homes versus its 6.66 percent rate for off-market homes. Given this, Zillow’s claim that it will have a 4 percent composite error rate on 110 million homes — the vast majority of them off-market — looks better.

An error rate of 4 percent or less would put Zillow close to a standard that many appraisers consider passable for their own work. Ryan Lundquist, an appraiser in the Sacramento, California, area, told me that for many colleagues, a 4 percent median error rate “would be a fairly acceptable range.”

Pat Turner, an appraiser in the Richmond, Virginia, market and a longtime skeptic about automated valuations, says the only way Zillow could ever get to a median error rate of 4 percent would be in “cookie cutter” subdivisions, where houses are similar and comparable properties are plentiful. In neighborhoods with greater diversity of home types, ages, interior improvements and land sizes — or in non-urban areas where comparable homes and data are hard to find — he seriously doubts the claim.

Does it really matter what these companies say about improvements in their error rates? Absolutely — if you make use of Zillow Zestimates or Redfin Estimates. If they don’t produce value estimates you can rely on within their published error rates, why would you waste your time looking at them?

But remember: “median national error rate” can be a tricky concept. “National” does not mean your local market. Your neighborhood may have a much better — or far worse — error rate than the national medians. Before using either tool, it’s a good idea to go their web pages and check how far off their estimates tend to be where you live. You can find them at www.zillow.com/#acc and www.redfin.com/redfin-estimate.

And focus on the key term “median.” In Chicago, the median Zestimate error rate is an impressive-looking 3.8 percent; but 41.4 percent of Zestimates are not within 5 percent of the actual sale price. That’s sobering. In Washington, D.C., the median error rate is 3.1 percent. But fully a third of Zestimates aren’t within 5 percent of being accurate.

Venezuela opposition leader spurs renewed interest among SoFla real estate investors amid turmoil

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Nicolas Maduro and Juan Guaido (Credit: Wikipedia and Google Maps)

As Venezuela descended into economic turmoil in recent years, real estate values plummeted and investors looked elsewhere, including to South Florida. Eventually, that too dried up, as the government’s grip tightened and the country grew more isolated. Now, as Venezuela’s opposition leader vies for control amid a humanitarian crisis, some of those investors are turning their attention back to the country, sensing or hoping for a light at the end of the tunnel.

Venezuela’s opposition leader Juan Guaido — backed by the U.S. and dozens of other countries — “has invigorated a lot of interest in Venezuela,” said Craig Studnicky, principal and co-founder of ISG Miami. “A lot of Venezuelans [in South Florida] are lining up to do cheap real estate deals in Venezuela.”

Vicky Fulup, senior counsel in the Miami office of Holland & Knight, said her Venezuelan friends who listed their homes for sale before leaving the country in recent years, hadn’t gotten any offers — until recently. In the last few weeks, she said, “the brokers have been calling them like crazy.” The real estate movement, she said, “has been incredible in the last two weeks.”

A change in Venezuela’s regime could benefit the country’s real estate market and eventually bring Venezuelan buyers back to Miami, local industry pros said.

But now, most Venezuelans struggle to pay for basic items as inflation soars. On Friday, President Nicolas Maduro shut the border to Brazil and said he may also close the border to Colombia to block incoming aid.

Over the last three years, more than 3 million people have fled the country, according to United Nations estimates. Over the same period, foreign investment from South America into the U.S. has largely dropped off.

Between 2012 and 2015, condo buyers from Venezuela represented roughly 25 percent of Latin American real estate sales in Miami, Studnicky said. Now, that figure is essentially down to 1 percent, he said.

Several brokers say it will be a long time before Venezuelan nationals are again buying real estate in Miami.

Sergio Pintos, who has worked for ISG Miami and Property Markets Group, believes it will be another two to three years before the country begins to improve. Most of the major real estate brokers left Venezuela in recent years, he said, and are no longer doing business in their home country or in Miami. Even if conditions improve quickly, most Venezuelans don’t have enough wealth to buy property, and those who do, he said, have ties to the Maduro government.

But Fulup, who was born and raised in Venezuela, is more optimistic. Once the oil and gas sector reactivates, she said, real estate, hospitality and other industries will follow. Despite the chaos, Fulup added, property values are already rising. Fulup is now part of a new group at her firm, made up of 20 partners working with clients with interests in Venezuela. The group’s expertise lies in real estate and hospitality, sanctions and trade, corporate and tax, international disputes and energy and natural resources.

“Even though people left in massive numbers, they always kept a foot firmly grounded in Venezuela. They kept their businesses, they kept their residences,” she said. Those who remained and who have the means, “will definitely be at the forefront when things change and pick up.”

Alicia Cervera of Cervera Real Estate expects that a change in government would create wealth in Venezuela that would eventually arrive in Miami. Most wealthy Venezuelans have already moved their money out of their home country, she said. And while some are still buying in Miami, Cervera said, the number is not “as much as we would like to see.”

But like other Latin American countries that faced political and economic instability, and whose investors returned to South Florida, Cervera said the same will happen in Venezuela.

“Colombia is back, Brazil is back, Mexico is here. … The bottom line is that Miami tends to win when there’s a good turn in the politics and Miami tends to win when there’s a problem,” Cervera said.

Here are LA County’s top 5 retail sales of January

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From left: 1408 3rd Street Promenade, Santa Monica and 6501 San Fernando Road (Credit: LoopNet and Google Maps)

The new year has already started off stronger than the tail end of 2018, when the most expensive retail sale amounted to $46.4 million.

In January, the five most-expensive retail sales combined to $80.8 million, a little less than double the total from December. The priciest deals spanned from Santa Monica to Claremont, with the most expensive one taking place on busy Third Street Promenade.

Data was compiled from property records on Property Shark.

1408 3rd Street Promenade, Santa Monica | $24.5 million

Blatteis & Schnur, Inc., a real estate firm based in Century City, paid $24.5 million to acquire a three-story building at 1408 3rd Street Promenade in Santa Monica. The sellers were tied to a trust controlled by Arno and Adelheid Roscher, records show. They had owned the property since at least 2005. Spanning 17,000 square feet, the property includes office space over retail. The deal closed Jan. 24.

2. 6501 San Fernando Road, Glendale | $16.5 million

Super King Markets, acting through an LLC, purchased a 51,000-square-foot retail plaza in Glendale for $16.5 million. Sikouhi Malkhassian and Varoush Ferkassian, also behind an LLC, sold the property at 6501 San Fernando Road. It was anchored by Golden Farms Market, an international supermarket, before the store closed earlier this year. Super King already has a few locations in L.A. County, including one near Atwater Village.

3. 5935 West Pico Boulevard, Mid-City | $14.1 million

Amoroso Companies sold a vacant shopping center in Mid-City, less than a year after it filed plans requesting approvals to build a mixed-use project on site. The company sold the 25,800-square-foot lot to Cityview, an investment management and development firm, for $14.1 million. In May 2018, Amoroso, which is based in Calabasas, filed plans to build 123 units at the property. It’s unclear whether the deal, which closed Jan. 16, includes entitlements for the mixed-use project.

4. 2209 East Baseline Road, Claremont | $13.8 million

AEW Capital Management, based in Downtown Los Angeles, purchased a shopping plaza in Claremont for $13.8 million. The retail center, located at 2209 East Baseline Road, includes a Jersey Mikes, UPS store and dry cleaners. The sellers were LStar Ventures, a privately held real estate firm based in North Carolina. The firm owned the property since 2014, when it paid $2.8 million for it.

5. 1875 West 190th Street, Torrance | $12 million

Sares-Regis unloaded a 20,000-square-foot lot at 1875 West 190th Street in Torrance for $12 million. The buyers, CalBay Development and Investments, are based in the South Bay and focus on developing retail properties. Records show the property was once part of Toyota’s sprawling campus in Torrance, which Sares-Regis bought in 2017 for $270 million. The real estate firm has since shed some of those holdings, including the neighboring property at 2050 West 190th Street.

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