Managed by Q CEO Dan Teran and The We Company CEO Adam Neumann (Credit: Getty Images and and Tech: NYC)

WeWork has scooped up another startup on its quest for office-leasing dominance.

The We Company subsidiary has acquired office management startup Managed By Q, a platform that office tenants can use to hire on-demand staff like receptionists, IT support or cleaners.

The financial terms of the deal were not disclosed, but the Wall Street Journal reported WeWork used cash and stock to buy Managed by Q. The startup was founded in 2014, and was most recently valued at $249 million according to PitchBook.

This new acquisition is only the latest addition to WeWork’s suite of office services. In February, the company acquired Euclid, a platform that monitors people’s movement in physical space, offering “workplace insights.”

In 2018, they bought workplace software company Teem, which makes workplace software tools such as office analytics and desk and conference room reservations.

WeWork also owns Flatiron School, a coding platform; Case, which offers construction technology; and MeetUp, an event organizing site.

A financial report released last month showed the We Company, WeWork’s parent firm, had sustained nearly $2 billion of losses in 2018, even as their revenue climbed to $1.82 billion.

The We Company has expanded rapidly in the last year, fueled by billions of dollars of investment by SoftBank and its Vision Fund.

HUD Secretary Ben Carson (Credit: Getty Images and Wikipedia)

Los Angeles has accepted millions of dollars in federal funds by falsely claiming it developed adequate housing for people with disabilities though it failed to do so.

That’s the charge the Department of Housing and Urban Affairs has levied, the Los Angeles Times reported. The federal agency accused the city’s housing program of discriminating against people with disabilities, and said local officials failed to provide proper oversight of the developers who constructed low-income units with federal funds, according to the report. HUD Secretary Ben Carson found several instances where living space and amenities were not safely accessible to wheelchair users, and did not comply with the Americans With Disabilities Act.

Investigators also found “widespread” incidents of people without disabilities living in units that were designated as wheelchair accessible and financed with federal money. They additionally discovered grab bars placed at incorrect locations and doorways that are not wide enough to accommodate wheelchairs.

Two years ago, the Department of Justice alleged that L.A. committed fraud by asserting homes built with federal funds were fully accessible to renters with disabilities. On Monday, HUD noted that investigators went to 16 developments that were federally funded and found zero units that complied with requirements.

The city has since been unwilling to address the violations, the letter continued. A representative for Mayor Eric Garcetti disputed that claim, and argued the city has spent years working to come to an agreement with HUD.

In 2016, L.A. reached a $200-million settlement with three other nonprofit groups over the same issue. [LAT] — Gregory Cornfield

Sam Zell (Credit: Getty Images)

The “jungle” entrepreneurs of real estate are a dying breed, according to billionaire Sam Zell.

Zell, chairman of Chicago-based Equity International Group, said on Wednesday that the industry has gone from a “very jungle entrepreneurial environment” to an “institutionally driven” one over the past three decades. These days, fewer investors are playing with their own capital, he noted.

“I don’t see that reversing itself,” he said during New York University’s annual REIT Symposium. He said he counted himself and a few others, including, former Boston Properties’ CEO Mortimer Zuckerman, among the remaining “entrepreneurial” crowd. “We’ll be a nice footnote,” he quipped.

When asked by the moderator, Adam Emmerich, a partner at Wachtell, Lipton, Rosen & Katz, if he thinks recent merger and acquisition activity among real estate investment trusts is part of a larger trend, Zell said such deals are just the product of the market “catching up.” He thinks there will instead be a “dearth” of mergers in the near future.

Zell pointed to the fact that the public real estate investment trust market has increasingly “demanded low leverage” and “isn’t interested in taking risk.” He noted that capital is always available to big, liquid companies like Simon Property Group. He pointed to the fact that Simon issued equity and debt in 2009 to raise capital in the middle of the financial crisis. He said that success of that move proved that real estate could be treated like other industries.

“It’s only a question of price whereas, in the old days, there would be no available capital for real estate overnight,” he said. He compared this concept to a story about Winston Churchill, in which the former British Prime Minister haggles with a sex worker over price.

From left: Sam Zell, chairman, Equity Group Investments and Adam Emmerich, partner, Wachtell, Lipton, Rosen & Katz (Credit: Mark McQueen/NYUSPS)

“You know what you are; it’s only a question of price,” Zell said, somewhat misquoting the anecdote.

Zell’s gotten into some hot water in the past for making off-color, and in some cases offensive, remarks in public. Last year, while speaking about gender diversity at a REIT event, Zell said he promotes women based on merit and added: “I don’t think there’s ever been a, ‘We gotta get more pussy on the block, OK?’” At a subsequent event, he remarked, “Argentina is like a beautiful woman — her greatest asset is a man’s imagination.”

When asked where he’s looking to invest next, Zell wouldn’t specify emerging markets that his company is eying. He said in the absence of “rule of law” in different countries, investors in are instead vulnerable to the “rule of the jungle.”

“If you own forever in emerging markets, you end up broke,” he said. “When you get outside of the U.S. or Europe, it’s not so much where you jump to as it is where you are pushed to.”

He noted that some 3 million people have fled Venezuela amid economic and political crisis in the country.

“That’s really scary, because that could destabilize all of Latin America,” he said. (Last year, EIG and Goldman Sachs reportedly announced that they would invest more than $300 million in Argentine real estate).

He also needled Barry Sternlicht, chairman and CEO of Starwood Capital Group, who spoke at an earlier panel at the NYU event, for touting Berlin as an attractive place to invest. Zell cited a Wall Street Journal article published on Tuesday, which detailed a plan to expropriate all private, profit-seeking landlords who own more than 3,000 apartments.

“Maybe Barry didn’t read this morning,” Zell said.

From left: Clayco CEO Bob Clark and Farpoint founding principal Scott Goodman (Credit: iStock)

A pair of Chicago development firms are teaming up on a new Opportunity Zones venture, hoping to fund and build up to $20 billion in new projects over the next 10 years.

Farpoint Development and Clayco will spearhead the Decennial Group, a joint venture aiming to raise up to $1 billion for construction in Opportunity Zones “throughout America’s Heartland” over the next three years, the company announced Thursday.

The group will target developments including Farpoint’s own “Burnham Lakefront” megadevelopment plan for nearly 100 acres of city-owned land on Chicago’s South Side, along with projects in St. Louis, Birmingham, Alabama, and in Indiana.

Decennial Group has enlisted one of the Opportunity Zones architects, Steve Glickman, as a “senior adviser.” Glickman, a co-founder of the Economic Innovation Group collaborative that designed the Opportunity Zones program, founded the firm Develop LLC, which consults developers and investors raising funds for Opportunity Zone projects.

The Decennial Group venture joins a host of investment funds already raising hundreds of millions of dollars for future Opportunity Zones projects across the country. Decennial Group principals said unlike most other Opportunity Funds that seek out third-party developers with viable proposals for Opportunity Zone projects, their venture will oversee design and construction in-house for most of its projects.

Farpoint managing principal Scott Goodman and Clayco CEO Bob Clark agreed last year to deploy a “soup-to-nuts” approach to leading each project, they said during an interview Thursday. That would enable Decennial Group to ovversee the process from fundraising through ribbon-cutting, which would help them stand out from the other Opportunity Zones funds, they said.

“As this law came into effect, we were getting bombarded by calls from people trying to figure out how to invest, and it became obvious that many of the people jumping into this don’t have the capability to deploy” the capital, Clark said. He added that “delivering the whole thing in an integrated way was going to be the biggest challenge.”

The 8,700 designated Opportunity Zones nationwide open a suite of tax benefits to developers and investors who can substantially raise the taxable value of the land through projects. Governors were allowed to nominate census tracts with relatively high poverty and low median incomes, or tracts adjacent to them, for the program.

Investors can defer payments on capital gains that they reinvest in Opportunity Zones and reduce their ultimate tax bill, depending on how long they keep their investment. Stakeholders can also forgo paying capital gains taxes on the appreciation of the asset if they hold onto it for at least 10 years.

The Decennial Group said it is exploring 250 potential projects in Opportunity Zones around the country, from Indiana to rural Colorado. The group is already in advanced negotiations over developments on at least three sites.

The principals are aiming away from the coasts in order to focus on the best value and return, and to maximize social impact, Goodman said. Projects will include industrial, multifamily, office and data center construction.

The Chicago-based Clayco has overseen design and construction for industrial, commercial and civic developments across 35 states. Shawn Clark, president of Clayco development wing CRG, is also a managing partner of the Decennial Group.

Goodman co-founded development firm Sterling Bay in 1987 and oversaw its expansion in Chicago’s Fulton Market after the 2009 recession, helping plant the seeds for that neighborhood’s unprecedented development boom. He left the company in 2016 and founded Farpoint Development. Chicago city leaders later selected his new firm oversee redevelopment of the 100-acre site of the former Michael Reese Hospital.

Also joining the venture is the Chicago-based renewable energy contractor 11 Million Acres. The firm will oversee the inclusion of a power-generation element on each new development, a process Goodman said he expects will “become the norm” during the next decade.

Not all Opportunity Zones were placed in distressed areas, spurring criticism that the program may turbocharge development in up-and-coming areas while leaving long-neglected neighborhoods behind.

Some investors are also wary of putting money behind the program until lingering questions are addressed by the next round of federal regulations, which are expected in the coming weeks.

But the program is already showing an effect on property values throughout the nation. Sale prices for homes inside Opportunity Zones jumped by more than 25 percent last year, according to a recent study from Zillow.

Long Beach Mayor Robert Garcia and Long Beach Arena

Long Beach city officials have discussed demolishing the Long Beach Arena, a decades-old mainstay, as they negotiate with the Los Angeles Angels over its future stadium. The Los Angeles Times first reported the discussions.

The city has already offered the team a 13-acre parking lot next to the Long Beach Arena. Last month, the city agreed to negotiate for a larger parcel that includes the Long Beach Convention and Entertainment Center, which comprises the arena, a performing arts center, and an adjacent green belt along the city’s waterfront.

But the 572,000-square-foot Long Beach Arena is at the centerpiece of the complex. It was built in 1962 and has hosted a myriad of sporting events and concerts over the years, including events during the 1984 Summer Olympics. In 1980, it hosted the Eagles’ last and very testy concert before their first breakup.

The arena is also scheduled to host events for the 2028 Summer Olympics.

Negotiations between the Angels and Long Beach are still at the initial stages, according to the Times report. The city hasn’t conducted an appraisal of the property or an environmental impact report.

The city of Anaheim extended the Angels’ lease at Angels Stadium through 2020, and has put negotiations on ice until an appraisal of the 53-year-old stadium is completed. [LAT] — Dennis Lynch 

Access Industries Founder Len Blavatnik and Warner Music CEO Stephen Cooper, with the property

UPDATED, April 4, 3:06 p.m.: The Arts District’s newest tenant has found itself a new — but familiar — landlord.

Access Industries, the parent company of Warner Music Group, paid $195 million to acquire the recently-renovated Ford Factory building, The Real Deal has learned. The deal works out to about $720 per square foot.

Bank of America provided a $135 million acquisition loan, public records show. Shorenstein was the seller on the deal, which closed last Friday.

The purchase comes on the heels of Warner Music’s highly anticipated move into the 271,000-square-foot landmark building. The company relocated from its Burbank office last month, roughly two-and-a-half years after signing a lease with Shorenstein for the location at 777 Santa Fe Avenue.

A representative for San Francisco-based Shorenstein did not immediately respond to requests for comment. Access declined to confirm the purchase price.

The real estate investment firm bought the property for $35 million in April 2014, property records show. It signed Warner Music as a tenant in October 2016, helping spur a revitalization in the area that would attract Spotify and coupon startup Honey.

Shorenstein then embarked on a $50 million renovation of the landmark property, once used as Ford’s Model T factory and showroom. Designed by Rockefeller Kemper Architects and Rockwell Group, the refurbished space is now designed for Warner Music, and features recording studios, artist lounges, a live performance space and rooftop deck.

New York-based Access, led by Len Blavatnik, acquired Warner Music in 2011. The company also owns Faena Group, an Argentinian real estate firm, as well as a stake in the iconic Sunset Tower hotel.

The volume of mortgage applications went up 18 percent last week from the week before (Credit: iStock)

It’s a small piece of good news for banks in the slowing housing market.

There has been a mini surge in mortgage and refinancing applications spurred by falling mortgage rates, the Wall Street Journal reports. The volume of mortgage applications went up 18 percent last week from the week before, while refinancing applications rose 39 percent, reaching their highest level since November, 2016. The Journal also found that purchase applications had risen 4 percent.

This may be the result of lower mortgage rates. Last week Freddie Mac reported rates were down to 4.06 percent, the lowest since January 2018.

While higher rates are traditionally seen as beneficial to banks, allowing them to charge more for loans, they can also slow home sales and mortgage refinancing. Profitability dropped 19 percent on average between 2017 and 2018 for top 24 banks that reported their mortgage-banking results, the Journal found.

The mini-surge in refinancing, even if it is only short-lived, will be a boost for banks like Wells Fargo and JPMorgan Chase that are big mortgage lenders.

Rates would need to continue falling to keep the current refinance boom going through another quarter, Jack Micenko, an analyst at Susquehanna International Group LLP, told the Journal. [WSJ] — Decca Muldowney

Agents sent “thousands” of texts about their listings, suit claims (Credit: iStock)

Two South Florida brokerages face lawsuits alleging that their agents abused an automated texting service to market properties.

Steven Grossberg filed suit last month in West Palm Beach District Court against Coldwell Banker, alleging that he received a flood of unwanted text messages advertising the company’s listings.

The same day, Christian Larosa filed suit against Naples-based Marzucco Real Estate over similar claims.

The suits are seeking class action status.

Grossberg and Larosa are represented by the same lawyer, Michael Eisenband, who did not respond to requests for comment. Coldwell Banker also did not respond to requests for comment and Marzucco Real Estate declined to comment.

The plaintiffs in both suits claim that they were the victims of a platform called an “automated telephone dialing system” that sent “thousands” of text messages to them and others, channeled through a changing list of numbers that seem local.

The technology, the suits say, violates the Telephone Consumer Protection Act, a federal law that controls how businesses market their products to consumers over the phone.

In Marzucco’s case, an agent allegedly sent Larosa text messages asking for his email address and offering to “get your home sold within 60 days!” The messages linked back to the agent’s Zillow profile.

Coldwell Banker faces similar accusations. Rather than canvassing for sellers, the agent in that case allegedly sent Grossberg messages advertising an “OPEN HOUSE” at a specific property. Those messages linked to a website the agent had made through a lead-generation company named Listings-to-Leads.

Scott Pierce, the founder of Listings-to-Leads, confirmed that the agent was a client of his, but denied that he had sold the technology to spam Grossberg’s phone. He said that agents who use multiple tools might run into legal trouble if they aren’t familiar with the law.

“A typical real estate agent will have five, six, seven programs,” Pierce said, adding that the agent “probably never took the time to see what the law is.”

Regulators are clamping down on so-called “robocalls,” which afflict consumers across many industries. Last year, the Federal Communications Commission slapped a $120 million fine on a Florida scammer who made nearly 100 million calls, claiming association with brands like Expedia.

But few cases have involved real estate—an industry where sales agents are increasingly turning to online services as a way to close deals.

“Just because they offer it doesn’t mean you can abuse it,” Pierce said, referring to companies that offer shady services. “It’s like eating candy and wondering why you’re getting fat. You can’t take technology and abuse it and wonder why you’re getting sued.”

Joon Choi, principal at Harbor Associates, with 2380 Conejo Spectrum Street in Thousand Oaks. (Credit: CBRE)

Harbor Associates has signed a biotech firm and a publishing company to separate leases at its Thousand Oaks office campus, the latest in a busy couple of months for the investment firm.

The lease deals total nearly 100,000 square feet in Harbor’s Conejo Corporate Campus at 2380 Conejo Spectrum Street in Thousand Oaks. The Commercial Observer first reported the signing.

The two leases totaled $16 million at the 11.4-acre office campus in Ventura County, according to industry sources familiar with the deal.

Atara Biotherapeutics, a San Francisco-based biotech company, already moved into the entire second floor. And New York-based SAGE Publishing is set to occupy the ground floor space by June. SAGE also leases the entire 99,250 square-foot building in the same complex at 2400 Conejo Spectrum Street.

CBRE brokered the deal.

Harbor Associates purchased the campus in February 2018 for $22.9 million, and converted it into a multi-tenant building. The Long Beach-based investment firm also recently secured leases for two additional biotech and life-science companies for about 70,000 square feet at its property next door at 1525 and 1535 Rancho Conejo Boulevard.

The recent deals come shortly after Harbor Associates purchased a 20-year-old office park in Encino with 213,000 square feet of space for $47.9 million. The firm has been busy over the last year since announcing a $500-million plan to acquire office properties.

Beverly Hills City Council (Credit: Flickr)

Municipalities around Los Angeles like Inglewood, Glendale and Long Beach have been strengthening their rent regulations over the last several months, instituting new protections for renters, including caps on rent increases and mandatory relocation fees.

Now, one very unlikely city may top them all. Beverly Hills, with its famous ZIP code and eight-figure spec mansions, has created some of the strongest renter stabilization measures in the L.A. area. Those measures, which also protect the wealthiest tenants, may be getting even stronger.

This week, the local City Council established a rent stabilization commission, the city’s first body dedicated to rent regulation matters in decades. The new commission will operate under the city’s already updated and strengthened rent stabilization ordinance from 2017.

That year, the city lowered its rent increase cap from 10 percent down to 3 percent, with upward flexibility based on the Consumer Price Index. The maximum allowed increase is 7.5 percent. The cap applies to all rental units regardless of their price. It also requires landlords to register their units, and to pay tenant relocation fees in case an eviction is found to be without “just cause.” Other municipalities are only now starting to consider similar measures.

Just 41 percent of housing units in Beverly Hills are owner-occupied. Many of those units were built before 1995, which means most of that stock is eligible for rent stabilization. The Costa-Hawkins Rental Housing Act of 1995 barred any units built after that year from coming under rent regulations.

In November, voters statewide soundly rejected a measure to repeal Costa-Hawkins. But in the months since, cities around L.A. have worked to strengthen rent regulations that apply to older buildings, or temporarily impose rent-hike freezes.

A short time before that Proposition 10 vote, Beverly Hills stepped up its ordinance again, requiring landlord pay relocation fees even for “just cause” evictions.

Owners of multifamily buildings in the Westside enclave have fought hard against the city’s rent regulations, arguing they would spur more conversions to condos, which would force mom-and-pop owners out of the market.

Former mayor and now-Councilmember Julian Gold said the rent stabilization efforts date back to 2015, when “we were hearing about some really abusive landlords and horrific living conditions.”

Though Beverly Hills has a median household income of nearly $104,000, nearly 1 in 10 residents live below the poverty line, according to U.S. Census information from 2017.

Still, the city’s median monthly rent stood at around $2,000 between 2013 and 2017. That was about 63 percent higher than the median rent in the city of L.A. during that period, which was $1,300.

Beverly Hills also has a substantial number of renters. Mark Elliot, founder of the Beverly Hills Renters Alliance, said that around 7,700 households — or half of all households in the city — fall under the rent stabilization ordinance.

Now, much of the analysis and decision-making will rest with the new rent stabilization commission. It will be comprised of two landlords, two renters and two unaffiliated members. The commission will take over all rent regulation-related duties, including determining future rent hike caps.

The commission will vote on new measures as recommendations to the City Council, which will make the final vote. The Council gave the new commission 10 proposals to review then submit their recommendations. Those include an increase in the amount of time a tenant has before being evicted, to six months from 90 days. It also includes a mandate that landlords pay relocation fees if they or a family member will take over a tenant’s unit.

Not everyone is in favor of the rent stabilization measures because the ordinance applies to all rental housing, including those luxury units.

“This measure protects people paying $10,000 per month for luxury properties,” said Dan Yukelson of the Apartment Association of Greater Los Angeles, a landlord advocacy group.

Councilman Gold, who considers himself “in the middle” on the issue, said that could change in the future. The commission may consider a maximum monthly rent cap for rent stabilization protection. But, he cautioned, there were few units that would actually meet that number.

Home prices are being reduced in major markets (Credit: iStock)

One more indicator of a housing market slowdown: More homes are being sold at prices below asking.

That’s according to a new first-quarter report by housing investment startup Knock, Bloomberg reported. The results could also be an indicator of the cities most at risk from the market cool down.

Miami led Knock’s top 10 list, with about 88 percent of single-family homes purchased after the seller lowered the price. Chicago ranked second, with 82 percent of homes sold at a discount from the initial asking. New York City ranked eighth, with more than 77 percent of homes sold at a price reduction. Los Angeles was not on the list.

In Florida, Tampa, Orlando and Jacksonville also ranked in the top 10 with lower-than-asking prices. The drop in Florida prices could also be due to the high number of second homes in those markets. Buyers are more wary of paying higher prices for second homes, and those prices are generally the first to fall during a downturn, according to Bloomberg.

The overall drop in prices aligns with a number of recent nationwide housing indicators and reports that show the post-recession housing boom is coming to an end.

Along with pricing declines, there are also fewer new homes being built. Nationally, new-home groundbreakings in the U.S. fell 8.7 percent in February, the biggest drop in eight months, according to data from the Census Bureau and Department of Housing and Urban Development.

In January, existing home sales dropped to 4.95 million, the lowest number since November 2015, according to a recent report from the National Association of Realtors. [Bloomberg] — Keith Larsen

CityView CEO Sean Burton with rendering of the airport

New details released as part of the massive expansion for Los Angeles International Airport show plans to build two terminals that would add up to 23 new domestic and international gates.

The update came in a environmental report that described efforts to improve runway efficiency and safety and passenger traffic through the airport, according to the Los Angeles Times.

That expansion is part of a $14 billion ongoing effort to drastically renovate the nation’s second busiest airport. Those include a highly anticipated $5 billion automated tram service dubbed the “People Mover,” which would connect Metro stations to traffic-choked airport.

Roughly two years ago, city officials broke ground on the $1.6 billion Midfield Satellite Concourse, a 750,000-square-foot concourse at the international terminal with a dozen new gates.

In October, the airport entered into a $2 billion contract with 11 companies to develop and operate a car rental facility there. It would consolidate 20 car rental operations spread around the area for a total of 5.3 million square feet.

Los Angeles World Airports, which owns the airport, expects to complete the new terminals by the 2028 Summer Olympic Games. [LAT] — Natalie Hoberman

RBS CEO Ross McEwan and Barclays CEO Jes Staley

The Bitcoin bubble seems to be inflating and deflating each month, but some major banks are more certain about the future of blockchain, especially when it comes to real estate transactions.

Barclays and Royal Bank of Scotland Group are among 40 companies that have signed on to test a new property-trading platform developed by real estate blockchain startup Instant Property Network, according to Bloomberg.

IPN isn’t the only game in town, but few others have the backing of major financial institutions. The U.S. saw its first government-verified property transaction recorded entirely on the blockchain last year, when Propy recorded a proof-of-concept sale. In that transaction, Katherine Purcell transferred her property in Burlington, Vermont — for $10 — to her limited liability corporation.

IPN claims it can reduce residential transaction times from months to weeks by putting all the information needed for a deal — such as property records, contracts, and payments —in one place on the blockchain. That would reduce the back-and-forth between buyer, seller, bank, and other parties.

The blockchain — the system used to verify digital currency transactions — is a public ledger that records all interactions and transactions. It is considered as secure or more secure than traditional methods because copies of the transactions can be kept by any users and those copies are constantly verified against each other. That makes it extremely difficult to fake transactions.

Blockchain-based property startups have received millions in funding over the last couple of years for a variety of platforms, including house-flipping and private equity fund investment.

IPN’s platform would allow all parties to monitor the progress of a transaction and access materials in real time, according to the Bloomberg report. The company claims the platform, applied globally, could reduce the costs for transactions by a total of $160 billion each year. The next version of the platform will roll out in the fall. [Bloomberg] — Dennis Lynch 

Clockwise from top left: SoftBank Group mulls adding $15B to its Vision Fund, Compass plans to buy New York City-based Stribling & Associates, Google adds a vacation rental feature to its hotel booking platform and Cushman & Wakefield launches a nationwide sports and entertainment practice.

SoftBank mulls adding $15B to giant Vision Fund
Japanese conglomerate SoftBank Group is considering adding an additional $15 billion to its $100 billion Vision Fund and may end up raising capital for another fund, Bloomberg reported. Since 2017, SoftBank has invested $70 billion from its Vision Fund in technology-focused real estate startups like Compass and the We Company, both of which have made a number of acquisitions within the past year after receiving such funding. Sources told Bloomberg that SoftBank has considered “persuading state-backed investors in Saudi Arabia and Abu Dhabi to waive their rights to debt repayments or taking out more bank loans.” [TRD]

Compass grows again, adding Stribling & Associates
The ever-expanding Compass agreed this week to purchase Stribling & Associates, marking the venture capital-backed brokerage’s first major acquisition in New York City. It wasn’t immediately clear how much the brokerage planned to pay for Stribling, a boutique that closed $1.62 billion in sell-side deals in Manhattan last year. Stribling president Elizabeth Ann Stribling-Kivlan praised Compass in an interview with The Real Deal. “To work with a company focused on making the agent as relevant as possible, and ensuring their livelihood is paramount to this… you can’t say that about every firm in this city or country,” she said. The Real Deal subsequently reported on the rapid changes and increased competition in the brokerage business that helped push Stribling into the arms of Compass, which so far this year has absorbed other brokerages in Northern California and South Florida. [TRD]

Google gets into the vacation rental business
Having already launched a hotel booking platform, Google is now letting its users book vacation rentals, Skift first reported. Mobile users can use the platform to book entire vacation homes rather than just single rooms and desktop users will be able to do so in a few months. “Our goal is to provide the best possible search experience for users looking for a place to stay,” a Google spokesperson told the outlet. “Increasingly, we see that users are interested in alternative accommodations when traveling.” The platform currently works with partners such as Expedia, HomeAway, Hotels.com and TripAdvisor. [TRD]

Private equity firm makes play in CRE arena
Insight Venture Partners has made another key acquisition in the commercial real estate technology space, picking up SiteCompli, a New York-based software startup focused on building operations, The Real Deal first reported last week. The deal, which closed quietly earlier this year, saw SiteCompli be absorbed into Insight portfolio company Property Brands. Jason Griffith and Ross Goldenberg, who founded SiteCompli in 2008, will stay on as co-CEOs of the company. Terms of the deal were not disclosed and representatives for New York-based Insight and Knoxville-based Property Brands did not return requests for comment on the matter. [TRD]

Cushman starts sports, entertainment practice
Following in the path of commercial real estate services rivals CBRE Group and JLL, Cushman & Wakefield has launched a nationwide sports and entertainment practice, Crain’s Chicago Business reported. The new team will be led by Chicago-based executive managing directors Craig Cassell and Michael Sessa and the firm also plans to bring aboard executives from Atlanta, New York and San Francisco. The practice will advise “pro teams, colleges and municipalities as they build, redevelop and maintain their sports venues,” the outlet reported. The launch is just one of many changes that Cushman has made since it went public last year. [TRD]

MAJOR MARKET HIGHLIGHTS

Miami tops US list of most rent-burdened cities
Los Angeles and New York may be known for their high rents, but Miami tops the list of the most rent-burdened cities in the country, according to a new Freddie Mac report, which noted that renters living in the area don’t earn as much as they do in other cities. Meanwhile, affordable housing supply in many municipalities hasn’t kept up with the demand for it, Freddie Mac said. “That’s pushing affordable rents out of reach for millions of American families,” said Steve Guggenmos, vice president of multifamily research and modeling at Freddie Mac. San Diego, Los Angeles, New York and Orlando took the other top spots on Freddie Mac’s list. [TRD]

Chicago resi brokerage expands into Georgia
The Windy City’s top residential brokerage, @properties, is expanding into Atlanta by investing in Georgia brokerage Ansley Atlanta, The Real Deal reported. The partnership will allow Ansley Atlanta to use @properties’ resources, including its “pl@tform” technology suite; @properties, meanwhile, will be able to establish itself in a new market. Outside of Chicago, @properties already has offices in New Buffalo, Michigan, and Lake Geneva, Wisconsin, but has not yet expanded beyond the Midwest. In a statement, @properties co-founder Thaddeus Wong noted that the brokerage has been working to “selectively bring pl@tform to new markets through other independents.” [TRD]

Bravo star Serhant expands NYC team with new hires
Nest Seekers International’s Ryan Serhant, the super-agent of “Million Dollar Listing” fame, has expanded his team in Manhattan with four new brokers, The Real Deal reported. John Bataille, Scott Fava, Nick Hovsepian and Nicole Palermo joined Serhant’s squad within the past month, bringing the size of the team to 64 brokers. Bataille and Hovsepian came aboard from the Corcoran Group, Fava joined from Compass and Palermo defected from Brown Harris Stevens. The moves come about two months after Serhant snagged former Corcoran agent Mike Fabbri. [TRD]

Private equity exec lists $22.5M mansion after tax passes
The managing director of a private equity firm put his Upper West Side mansion on the market — a day after New York legislators passed a budget that includes a mansion tax. Cerberus Capital Management’s Jonathan Gallen is seeking $22.8 million for the townhouse, which has six bedrooms, seven bathrooms, a library, a garden and a terrace. The new tax, which could go into effect as soon as July, amends the existing transfer tax. A buyer would pay $225,000 on the home under the old tax, and around $844,000 under the new provisions. Both Gallen and his broker, Cathy Franklin of the Corcoran Group, declined to comment on the listing. [TRD]

Honolulu has a megaproject to rival Hudson Yards
The master plan for a Hudson Yards-esque megadevelopment in Honolulu has been named the best in the country for 2019, Forbes reported. Dallas-based real estate company Howard Hughes Corporation is building the development known as Ward Village along the coast of Honolulu. The 60-acre project, which includes thousands of apartments and around 1 million square feet of commercial space, is focused on wellness. Simon Treacy, president of Howard Hughes’ Hawaii branch, told the outlet the project aims to “create environments where people will talk to each other, spend time outdoors and build a very diverse community.” [TRD]

Chemical processing plant spurs Rust Belt development
Construction of a new chemical processing plant is spurring a new spate of housing construction in the Rust Belt region, the New York Times reported. Energy giant Royal Dutch Shell is building the plant along the Ohio River, around 30 miles from Pittsburgh. The plant is expected to create around 600 full-time jobs — as well as around 6,000 temporary construction jobs —  and will be the “first sizable new factory” built in the area since 1992, according to the outlet. A local real estate company’s chairman called the plant “the best thing to happen in our region in 40-plus years.” [TRD]

HBO could take 240K sf of Culver City space
HBO, the cable giant that is now a division of AT&T’s WarnerMedia, has inked a lease for 240,000 square feet of space at the mixed-use Ivy Station complex in Culver City, California, sources familiar with the deal told The Real Deal. The $350 million project, which is currently under construction, includes apartments, a hotel and restaurants, as well as retail and office space. Sources told TRD that HBO will lease the entire office portion of the complex. The network isn’t the first media firm that has relocated to Culver City; Apple and Amazon already have their own offices in the area. [TRD]

LA City Attorney Mike Feuer

Los Angeles is suing a local contractor, alleging the company defrauded homeowners of more than $1 million in a scam involving the construction of so-called “granny flats.”

The L.A. city attorney filed the suit against Eco Solar Home Improvement of Montebello and affiliated companies. The Los Angeles Times first reported on the filing, which City Attorney Mike Feuer announced Thursday.

The city charges that Eco Solar pushed homeowners into taking out government-backed loans they could not repay in order to fund the conversion of garages into accessory dwelling units, or granny flats. Once they received their money, the companies abandoned those projects, according to the city.

The contractors pressured homeowners to apply for loans through the Property Assessed Clean Energy federal program, the suit contends. Those PACE loans are provided by private lenders and facilitated through local government authorities, but the contractors typically sign up homeowners.

Critics say contractors regularly mislead homeowners about how the loans work in order to get them to apply. The PACE loans are meant to fund clean energy improvements.

Los Angeles legalized granny flats last year as another way to ease the housing crisis. Homeowners can pull in extra cash renting out the units, but they’re not eligible for PACE loans.

The city alleges that Eco Solar pressured homeowners to provide false information, signed up some homeowners for loans without their knowledge and targeted Spanish-speaking homeowners.

Eco Solar did not return calls for comment, according to the Times. [LAT] — Dennis Lynch

Next week brings a few new real estate events to Los Angeles.

On Thursday, April 11, the USC Gould School of Law is hosting its Real Estate Law & Business Forum at the Jonathan Club, 545 South Figueroa Street from, 7 a.m. to 5 p.m. This event features discussions on federal Opportunity Zones and the phasing out of LIBOR. Speakers include Michael Hackman of Hackman Capital Partners and Kirk Goodrich of Monadnock Development.

Also on April 11, Real Estate News Television is holding its Downtown Los Angeles State of the Market Conference for 2019 at the Los Angeles Grand Hotel Downtown, 333 South Figueroa Street, from 7 a.m. to 11:30 a.m. Attend for networking opportunities and a discussion on the Los Angeles market. Jeff Lasky of Hudson Pacific Properties and Kent Handleman of Lincoln Property Company will be among the speakers at the event.

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

New financial tools have come to market that will help boost your score

Here’s some good news for anyone whose credit scores aren’t quite as high as they’d like them to be: Three new financial tools have come to market — or soon will be available — that could give your scores a shot of adrenalin when you need it most.

These aren’t “credit repair” rip-offs, where you shell out hundreds or thousands of dollars to sleazeball companies. Far from it. All three tools come from well-established players: FICO, developer of the ubiquitous FICO score; Experian, one of the national credit bureaus; and CreditXpert, a financial-technology company whose products are used extensively in the mortgage arena.

Now completing its pilot-test phase, FICO’s “Ultra” score is expected to be widely available from lenders this summer. It raises scores by importing data from your checking, banking, savings and money-market accounts into your credit report when calculating your score. If you have some savings, maintain your bank accounts over time, and avoid negative balances, it’s likely you’ll get a higher score. Seven out of 10 consumers who exhibit good banking and savings behavior should see increased scores using Ultra, according to FICO. (FICO scores range from 300 to 850; the lower the score, the greater the risk of future default.)

Experian’s new “Boost” option, introduced in March and now becoming available nationwide, offers another score-enhancement approach. It imports your on-time utilities and telecom payments and includes positive data into your score calculations, raising scores in the majority of cases. The lower your starting score, the bigger the improvement. According to Experian, three-quarters of consumers with scores below 680 saw an increase in their scores from Boost. Jeff Softley, chief marketing and revenue officer for Experian Consumer Services, told me he got a 28-point bump to his own scores.

“Wayfinder” from CreditXpert is different. Working with their loan officer, borrowers select a target credit score they’d like to achieve to qualify for a loan or get the best interest rate and terms possible. The Wayfinder software then runs dozens of scenarios to get the borrower that score within a designated time period by taking steps to modify accounts in their credit reports. Say you have a 640 score but need at least a 680 to get an interest rate lower than you’ve been quoted. Your loan officer plugs your 680 target into the software and the program delivers specific steps you can take to achieve that score within days or weeks. Plans might call for a partial paydown of one or more accounts that are needlessly depressing your current score. But since you may not want to spend the money, Wayfinder offers alternatives that won’t cost as much but might take a month or more to complete. Score improvements average around 27 to 30 points, but have ranged as high as 179 points, according to CreditXpert’s managing director, David Chung.

All three of these tools could be of practical use to you if you find yourself in a score pinch. You simply need to ask your loan officer about them. But UltraFICO and Boost come with a crucial handicap for anyone seeking a home mortgage: Under current regulatory restrictions, the two biggest sources of mortgage money cannot accept the FICO scores they produce. Fannie Mae and Freddie Mac both confirmed to me that at least for the time being, their underwriting systems don’t permit either UltraFICO or Boost. Both can be used for most other credit purposes using Experian credit reports, such as applying for credit cards or auto loans, but not for mortgages destined for purchase by Fannie or Freddie.

Wayfinder, by contrast, is designed for the mortgage market. The higher scores it leads to are acceptable because they reflect credit report changes that can be incorporated into scoring models that Fannie and Freddie have used for years. So if you’re shopping for a mortgage and need a higher score, Wayfinder is worth checking out with your loan officer.

Another key fact you should know about Wayfinder: It’s not free. It costs around $15 to $18 if you want to run it on your files at each of the big three credit bureaus. Plus it typically involves “rapid rescoring” of your credit reports by a vendor working with your loan officer, and that can cost another $75 to $150. But if the process lands you a loan that costs thousands of dollars less over the years, the small upfront expense should be worth it.

Magellan president David Carlins and Aqua Tower (Credit: Wikipedia)

Ares Management bought JPMorgan Asset Management’s majority stake in the rental portion of Aqua Tower, the wavy Jeanne Gang-designed building that presides over Magellan Development Group’s Lakeshore East district.

Los Angeles-based Ares paid nearly $190.5 million for the stake in the building, according to Cook County property records. Magellan held onto its partial stake.

The 86-story tower has 474 apartments and 224 condos above the 334-key Radisson Blu Aqua Hotel. All three sections of the tower are owned by different entities.

The new ownership venture secured a $144.9 million loan on the rental portion of the property from HFF, records show. Magellan President David Carlins signed on behalf of the borrower, an entity called Aqua Chicago Property Owner LLC.

Magellan and JPMorgan hired JLL in September to market the apartments. The bank’s asset management arm had paid $182 million for its majority stake in 2010, according to the Chicago Tribune.

Representatives of Magellan, JPMorgan and Ares all declined comment on the sale.

Completed in 2009, Aqua is the tallest operating tower in Lakeshore East and the ninth-tallest in the city. But it will soon be overtaken by the 101-story Vista Tower, which is set to open late next year. Canada-based shopping mall developer Triple Five reportedly was close last year to buying Dalian Wanda Group’s majority stake in Vista, but backed out.

In October, Magellan won approval to build four more towers in Lakeshore East. Three will be co-developed by Lendlease.

From left: Mark Bridge, Janet Ray, and Dan Klein

An Orange County Marcus & Millichap Capital Markets team has jumped to Cushman & Wakefield. The five-person multifamily team is led by managing director Mark Bridge. He is a former first vice president and director for Marcus & Millichap’s National Multi Housing Group.

Joining Bridge are Michael Whitaker, CJ Arehart, Gary Gong, and Amanda Fitzpatrick. Fitzpatrick joins the firm as brokerage coordinator, while the three others join as associates. The team will work out of Cushman’s Irvine office.

Attorney Janet Ray has joined real estate law firm Blackacre and its small team of attorneys. Ray joins the Manhattan Beach-based firm after two years with Shoreline. Prior to that, Ray spent 18 years as senior counsel for bulk retailer Smart & Final, where she handled disposition of the company’s properties and leasing among other tasks.

Ray worked in private practice before her years at Smart & Final. She also spent three years with the Los Angeles office of the Securities and Exchange Commission, where she left as branch chief.

Rising Realty Partners’ Dan Klein has been promoted to vice president of asset management and development. Klein joined the Downtown L.A. firm in 2014 as an associate with the management and development team and was promoted once before in 2017, to senior associate. Before Rising, Klein worked for Marshall & Stevens. In his new position, Klein will handle leasing, construction management, development analysis, and investors relations.

Actor Jim Belushi and Ari Emanuel (Credit: Getty Images) 

This week, Brentwood took center stage as Hollywood entertainment folks looked to unload their homes in the pricey Westside neighborhood.

A sprawling compound once home to both Cher and Eddie Murphy is the latest target of another price reduction. The 14-acre estate has relisted at $48 million, down from its original ask of $85 million in 2016. Originally built for Cher, the property includes a 20,000-square-foot mansion, tennis court, cabana and five horse stables. Combined, there are 11 bedrooms and 17 bathrooms on the property, the Los Angeles Times reported. The current owner, Vicky Walters, and her late husband, real estate developer Raul Walters, bought the home from Murphy in the 1990s. It most recently listed at $69 million.

Actor and comedian Jim Belushi listed his Brentwood villa for $28 million. He shaved about $10 million off the original ask after removing an adjoining half-acre lot. The “According to Jim” star has been shopping the 11,800-square-foot mansion on South Burlingame Avenue since 2017. It includes six bedrooms, 11 bathrooms and a screening room. Outside, a guesthouse and swimming pool complete the grounds. Belushi paid $8.3 million for the property more than a decade ago.

Agent-to-the-stars Ari Emanuel seems to be having better luck in Brentwood, however. The William Morris Endeavor co-CEO sold his estate for $19.4 million roughly four months after listing. He also got above asking price, a rarity in today’s world of constant discounts. David Brown bought the 8,000-square-foot home, which includes five bedrooms and a guesthouse. Emanuel paid $17 million for the home in 2015, records show.

In Montecito, the widow of billionaire Discount Tire founder Bruce Halle is shopping her 8,000-square-foot estate for $12.5 million. That’s about half the amount the couple invested in the property. Diane Cummings Hall, heiress to the Sara Lee company, and her late husband paid $16 million for the pad in 2016, later pouring in about $8 million for renovations. Sitting on 2.7 acres, the home includes three bedrooms and five bathrooms. It also features ocean views.