Fleetwood Mac’s Lindsey Buckingham (Credit: Getty Images)

It’s not quite one of the seven wonders, but the Brentwood home of Lindsey Buckingham would be the stuff of dreams for Fleetwood Mac fans everywhere.

Star guitarist and producer Buckingham and his wife Kristen have listed their custom-built mansion in the wealthy enclave for $29.5 million, the Wall Street Journal reported.

Spanning about 10,000 square feet, the estate boasts seven bedrooms, a recording studio, a two-story tower and a billiards room. Outside, a tennis court, gym, swimming pool and guesthouse complete the 1.3-acre property.

The couple bought the land for $6.6 million in 2004, records show. They then designed and built the home themselves, with Kristen, an interior designer, leading the project.

Jeff Hyland of Hilton & Hyland is sharing the listing with Jade Mills of Coldwell Banker Global Luxury.

Best known for his role as the lead vocalist and guitarist for Fleetwood Mac, Buckingham split from the band last year. In addition to writing monster hits for the band, like “Go Your Own Way” and “The Chain,” he’s released nine solo albums.

He and his wife sold their other custom-built home in Brentwood last year for $19 million. They are in the process of building a new residence nearby. [WSJ] — Natalie Hoberman

The fire that ravaged the more than 850-year-old Notre-Dame Cathedral could put a spotlight on other historic structures around the world, Miami architect Kobi Karp said on Cheddar.

“The main concern is what other structures in Paris and in other cities around the world are in this type of jeopardy that can happen so quickly,” said Karp, founder and principal of Kobi Karp Architecture & Interior Design.

On Monday, a blaze  destroyed most of Notre-Dame’s roof and central spire. French authorities were still investigating what caused the fire, although it was likely related to the construction surrounding the historic building’s renovations. More than $678 million has been raised to rebuild the cathedral, including hundreds of millions of euros from French billionaires and retail rivals Bernard Arnault and François-Henri Pinault.

France plans to hold an international competition to come up with a replacement design for Notre Dame Cathedral’s spire. The competition will address whether the spire should be rebuilt at all and, if so, whether or not it should be identical to the one destroyed.

Karp stressed that life and fire safety measures will need to be taken into consideration when rebuilding Notre-Dame.

“We have to take steps now to bring it back and rebuild it correctly the way it was the day before the fire and at the same time bring it [up] to the life safety, fire preparation [standards],” he said.

The meticulous rebuild could take decades to complete and hundreds of millions of dollars, he added. [Cheddar] —Katherine Kallergis

Mayor Eric Garcetti (Credit: Getty Images)

Mayor Eric Garcetti continued his push for a controversial property tax measure that could impose additional financial burdens on landlords of large buildings.

In his annual State of City speech Wednesday, the mayor largely focused on ways to improve education in the city, the Los Angeles Times reported.

One of those ways, he says, is through the passage of proposed tax Measure EE, which will most affect large property owners.

On the June 4 ballot, the proposal is estimated to bring in about $500 million per year for the school district. But the tax is based on the square footage of enclosed space, meaning owners of large multifamily complexes or mansions would be taxed more heavily than others.

Opponents argue that the tax should be structured as a flat tax on every parcel — that way the burden would be spread out more evenly. It need two-thirds of the vote to pass, and could result in an additional $160 per year in assessed taxes on a 1,000-square-foot house, according to the Times.

Revenue from the proposed tax, which would expire in 12 years, would be dedicated to shrinking the budget deficit.

Separately, Garcetti — who was reelected in 2017 — mentioned that the first housing project funded through Proposition HHH is expected to open later this year. That statewide measure passed in 2016 as a way to address the homeless crisis, though the city has yet to complete one project with the funds collected. [LAT] — Natalie Hoberman

(Illustration by Zach Meyer)

Churchill Real Estate Holdings’ Justin Ehrlich made a name for himself as a New York developer snapping up distressed Manhattan buildings during the financial crisis and turning them into luxury condos.

But lately, his focus has been on another high-growth business: cannabis.

In addition to his property dealings, Ehrlich is a partner in Loudpack, an umbrella company of brands that sells a popular line of vaporizers, among other products. He’s also a partner in Greenwolf LA — a recreational marijuana shop in West Hollywood described as “the Whole Foods of dispensaries” — and has a stake in the ne plus ultra of stoner culture: High Times magazine.

Related | WeHo’s pot revolution

While the burgeoning cannabis business may seem quite different from the cutthroat world of commercial real estate, Ehrlich said the two have more in common than one might think.

“It’s the same philosophy as when we were buying up distressed properties,” he said. “There was a lot of fear in the market, and we knew whoever had cash on hand was going to clean up. It’s the same thing we’re doing now [with cannabis products]. A lot of people don’t want to touch it, because it’s very risky and it’s a lot of work.”

Ehrlich is one of several real estate players looking to get in on the ground floor of an industry with a vertical growth trajectory.

As states around the country loosen restrictions on marijuana for medicinal and recreational uses, there’s a growing class of investors clamoring for a piece of what the cannabis research firm Arcview projects to be a $57 billion industry worldwide by 2027. Since recreational consumption became legal in California at the start of 2018, cannabis companies are working harder than ever to secure licenses and properties in areas where they’re permitted. New York, Illinois and Florida are among the states now also looking to legalize marijuana for recreational use, acknowledging that doing so would not only give them a major tax revenue boost -— it could also pump billions of dollars into real estate leasing, sales and financing deals.

Related | Cannabis landlord cuts through the weeds

And a number of property investors are looking to capitalize on the increasing need for cannabis-friendly commercial space by launching specialized funds and real estate investment trusts. To date, there are around 10 REITs and private funds exclusively focused on the marijuana industry.

“The investor class in cannabis is similar to any other investment today,” said Adam Levin, whose private equity firm Oreva Capital, which included Ehrlich, bought a majority stake in High Times in 2017. The magazine’s owners are now pushing for an initial public offering at a valuation of about $225 million. “[For] people who invest in real estate,” Levin added, “there’s just all this overlap because of the opportunities cannabis investments present today.”

The roster of big-time players in the sector is also growing.

Money managers BlackRock and the Vanguard Group are the biggest investors in Innovative Industrial Properties, the top-performing cannabis REIT. We Company CEO Adam Neumann is an investor in an Israeli medical marijuana company. And America’s biggest mall owner, Simon Property Group, announced in February that it would partner with cannabis firm Green Growth Brands (GGB) to open 108 shops in malls this year, which will sell products infused with cannabis extract cannabidiol, also know as CBD.

“The GGB shopping experience is exactly the type of innovation our customers want and expect from us,” Simon Malls President John Rulli said.

Into the weed

In total, 33 states have now legalized medical use, while 10 states (plus Washington, D.C.) have made recreational use legal. These early adopters have handed New York, Illinois, Florida and others a road map for what worked and what went wrong.

But the latest states are far behind places like California, Colorado and Nevada, where recreational use is already legal and the cannabis industry is in growth mode, sources say.

“I think Nevada has probably done it best,” said Michelle Bodner of the medical marijuana company Curaleaf New York, which holds one of just 10 medical licenses in the Empire State. “They started their adult-use program very slowly and were very cognizant of oversupply problems.”

Meanwhile, New York has shelved plans to legalize recreational use in its latest state budget, and a vote by New Jersey lawmakers on a similar proposal was called off in March.

How the U.S. cannabis market and cottage industries around it evolve largely depends on federal and state regulations. Too many restraints could stifle a potentially booming industry, while sweeping legalization could fuel an investor frenzy across state borders, pushing out local players, experts say. For now, as long as federal laws prohibit the cultivation or sale of marijuana, it’s a divided market.

“This is generating revenue for the states, and [state governments] may be covetous of that revenue,” said John Massocca, a stock analyst at Ladenburg Thalmann Financial who covers Innovative Industrial.

Marc Spector, principal of the New York design firm Spector Group, which works with cannabis clients, said those heavily invested in the business are eager for federal changes that would allow money to flow across state lines. “Right now, on a state-by-state basis, you are siloed with what you can do,” he said. “A growing company can’t use resources from Colorado to expand into New York.”

And while real estate is essential to the marijuana industry, there are huge barriers to entry. On top of federal restrictions, the business still conjures up images of smoke-filled dorm rooms and streetcorner drug deals for some. Many banks and other large corporations won’t go near it. The same goes for most of the big commercial brokerages, at least publicly, sources say. CBRE, JLL and Cushman & Wakefield, for example, have published only a handful of detailed reports on cannabis and real estate. At the same time, property owners are still working out the legal kinks of renting space to tenants that create or sell marijuana products.

New York attorney Jerry Goldman, co-chair of Anderson Kill’s regulated products practice, said that while landlords have been charging less of a premium on rents for dispensaries as legalization becomes more mainstream, the costs are still generally higher than in leases for other businesses. That’s largely due to uncertainty over how federal marijuana laws will be enforced on the local level.

Goldman referred to the federal “crack house” law — which makes it a felony to knowingly lease space for the manufacturing or distribution of any controlled substance — as a deterrent to leasing space to cannabis companies.

“That risk does exist until federal law changes,” he said.

High rates

Matthew Schweber, an attorney at Feuerstein Kulick who represents dispensaries, manufacturers and other marijuana companies, called it the “cannabis premium.” Schweber said he’s representing a client who was awarded a license in West Hollywood and, for those reasons, will likely pay double the rent a noncannabis company would. “It is a legal concern,” he said, noting that landlords “will say there’s the risk of foreclosure.”

If an individual or company has a mortgage on a property and leases it to a cannabis producer, that landlord is violating a clause of the mortgage, which means the bank could demand full repayment of its loan at any moment, Schweber added. The clauses stem from federal lending guidelines, and in some cases companies in the marijuana industry need to pay all cash to buy property for growing and distribution.

That’s left a huge void when it comes to financing for cannabis companies looking to lease or build out space, one that specialized REITs and private funds are stepping in to fill. Many of these new entrants buy properties, pay off the mortgages and then lease back to the operators, knowing they can get two or three times the typical rent in that area.

But the higher rates most of them charge — 150 to 200 percent in some cases — make it hard for smaller firms to break into the cannabis business, sources say. And that’s creating an uneven playing field in the industry.

“It’s very difficult for any company other than, say, a large multistate operator to be able to afford the cost of [doing business],” Schweber said, “because the real estate is as critical to their welfare as any other component of their business.”

That landscape is further kept in check by a limited number of licenses per state, which caps the number of competitive players — even in big recreational markets like Los Angeles and Denver.

In L.A., landlords still have “all the leverage in the world” over would-be tenants, said Ali Mourad, a broker at Sperry Commercial who’s worked with both cannabis tenants and landlords.

The city is expected to allow another 200 licenses over the next few years, but the process can be complicated and expensive, Mourad said. Cannabis companies have to secure a lease before they can get a license, which makes it even harder for property owners to commit to lease agreements.

“It’s still really complicated, and that’s caused confusion on the landlord side,” Mourad said. “And there’s still a stigma there. Then you have zoning restrictions, so operators are really limited to where they can go.”

Limited supply

Where there’s resistance, however, there’s also opportunity, as shown by the investors and lenders that have pounced on the burgeoning business.

The publicly traded Canadian cannabis firm Harvest Health & Recreation partnered with two family offices late last year to form a $100 million real estate fund called Aina We Would, for example. Harvest, which spun off its property holdings, will finance acquisitions and new construction projects while pursuing its own investments through the fund, including land purchases and sale-and-leaseback deals.

Aina We Would lends to other companies at an interest rate of about 12 percent, which accounts for the legal risks it takes on, said Harvest Health President Steve Gutterman. He argued that it’s a good price, citing a going rate closer to 16 percent.

A number of similar funds and REITs have cropped up in California.

Inception Companies, a private investment firm based in Beverly Hills, launched a $50 million cannabis REIT last August. Inception is also focusing on leaseback deals with marijuana companies. And the popular L.A.-based retailer MedMen Enterprises partnered with the family office Stable Road Capital in January to form a cannabis REIT called Treehouse. Similar to Harvest, MedMen spun off its real estate assets in a deal valued at about $100 million, financed in part by Treehouse’s first capital raise of $133 million.

But there may be trouble ahead for MedMen: In March, CNBC noted that, according to a financial report the company issued in February, it did not have “sufficient funds generated from operations” to cover its “short-term and long-term operational needs.” The company, which operates in half a dozen states, had a valuation of $1.6 billion at the end of March, down from $3 billion last year.

While there are several risks to investing in cannabis-related property, the financial upsides can be significant.

San Diego-based Innovative Industrial, which specializes in medical-use marijuana farms, was the country’s best-performing REIT in 2018, netting investors a 117 percent profit — beating out Vornado Realty Trust, SL Green and other large traditional real estate players.

Massocca of Ladenburg Thalmann said companies focused on triple-net lease deals pay cap rates in the single digits for less desirable real estate, like properties leased to tenants with bad credit. Innovative Industrial, on the other hand, is investing at cap rates in the low to mid-teens, which means there’s plenty of room for it to improve a property’s fundamentals, he noted. The REIT’s performance “has risen dramatically” in the past few months, Massocca added.

At the same time, the field of financiers in the pot and real estate arena is still narrow, said Dan Leimel, CEO of the private real estate investment firm Pelorus Equity Group. The company, based in Newport Beach, California, launched its own $100 million debt and equity fund targeting cannabis-related real estate in September.

“It’s not a robust market in a sense that there’s a lot of players,” Leimel said. “Is it robust for those of us in it? Yeah.”

Jason Thomas, founder of the Denver-based cannabis real estate brokerage Avalon Realty Advisors, said there were “less than 10 large-cap” players, but estimated there were several hundred smaller investors with somewhere between $3 million and $5 million to deploy. Many are one-off investors working in local markets, he said.

But as more states legalize, REITs and private funds are jockeying to establish themselves in those markets. And the industry could be in for a major shift if the federal government lifts financing restrictions and institutional lenders flood the market.

The New York Times reported last month that nearly all of the 2020 Democratic presidential candidates favor legalization and have framed it as a racial justice issue, since nonwhite offenders are disproportionality imprisoned over marijuana offenses. Meanwhile, President Donald Trump has sent mixed signals on the issue but has said that he would back a bill protecting cannabis businesses with state licenses, the paper reported.

Leimel said increased competition pushes him to sharpen his business model. He argued that his firm will thrive on value-add deals, especially in cases where banks may only lend a portion of what operators need to build out a space or expand operations.

If and when “federal restrictions are lifted, we’re going to beat banks all day on that,” Leimel said.

A tighter lid

MedMen opened its first Manhattan dispensary last year — a sleek storefront at Ashkenazy Acquisition’s 433 Fifth Avenue that’s been compared to an Apple store.

Zeeshan Hyder, MedMen’s chief corporate de velopment officer, said the posh location was very intentional. “Our retail strategy includes being a first mover in attractive consumer markets,” he told TRD by email, noting that the Fifth Avenue lease deal “is an extension of the playbook we’ve executed on in California.”

Hyder cited the regulatory and legal environment, including zoning laws, as the biggest challenge his company faces in New York.

And those invested in the cannabis industry in New York could face even more hurdles if the state legalizes recreational use. Curaleaf’s Bodner said that when it comes to selling marijuana even for medical use, “New York is the most highly regulated state in the country.”

New York’s limited number of licenses allows those companies to operate a total of 40 medical dispensaries in the state of nearly 20 million residents, Bodner noted.

California authorities, by comparison, have issued over 10,000 commercial cannabis licenses to businesses in the state and has 49 active medical licenses.

Locally, a crackdown on unlicensed marijuana businesses is underway.

Los Angeles now has an estimated 178 illegal cannabis businesses. The City Council voted unanimously in March to give the water and power agency the authority to cut off illegal marijuana shops’ access to utilities. There are about seven unlicensed cannabis operations for every licensed operation, officials said, but the L.A. Police Department has struggled to control their growth.

MedMen’s dispensary in West Hollywood

Earlier this year, the city Department of Cannabis Regulation announced a push for enforcement regulations that would include, in addition to cutting off utilities, penalizing landlords with $20,000 daily fines for allowing unlicensed operations. 

But there’s potential for huge benefits to those landlords leasing to legally licensed cannabis businesses.

In the two years after Colorado legalized pot for recreational use, grow house leases in metro Denver rose two to three times higher than average warehouse rents in top cultivation submarkets, according to CBRE. And industrial buildings occupied by cannabis companies in that market saw their sales prices rise more than 17 percent between 2014 and 2017, to $115 per square foot from $98.

Denver’s City Council did not cap dispensaries and grow operations until April 2016, which slowed what was until then strong demand for space and likely tempered rent growth, sources say.

The values of state-compliant properties in the Los Angeles area have risen by as much as 50 percent, Pelorus’ Leimel said. That growth has been strongest with industrial buildings in blighted desert areas in northern L.A. County, he noted. Property values increase not only due to the higher rents, but also because some cannabis companies are investing millions to accommodate large-scale growing operations.

“These are high-tech spaces,” Leimel said. “Some of them look like hospitals.”

Similar strains

No matter what the regulatory difficulties, some investors across the country are ready to dive head first into new markets, including New York.

Leimel said his fund has been closely tracking the state’s cannabis market and political environment — and he suspects others are doing the same.

If New York legalizes recreational use, many think the landscape will look a lot different than it does on the West Coast. Avalon’s Thomas said the volume of licensing will play a big part in how real estate is impacted.

“A state that has a shallow pool of licenses that will likely go to the most qualified applicants is not going to perpetuate a massive green rush for properties,” he said, “because maybe we’re talking about a dozen stores and the same amount of cultivation locations.”

Brian Staffa, founder of the New Jersey cannabis consulting firm BSC Group, said East Coast states have kept a tighter cap on licenses overall, adding that it’s important for developers and property owners to carefully analyze demand to avoid building too big.

“Mistake No. 1 is misreading the potential market to drive project size,” he said, noting that some developers in legal states “have built out at such a scale in markets that couldn’t support it and they just bled and bled.”

—Additional reporting by Eddie Small in New York and Joe Ward in Chicago

Bank OZK’s George Gleason

Bank OZK is showing no signs of curbing its construction lending this year.

Little Rock-based Bank OZK, formerly known as Bank of the Ozarks, reported first quarter earnings that beat analysts’ estimates, as it real estate lending division originated more than $1.86 billion in new loans. That’s an increase of 86 percent compared to the first quarter of 2018.

With just over $23 billion in assets, Bank OZK is one of the largest and most aggressive condo construction lenders in Miami, Los Angeles and New York City, lending at a time when other banks are pulling back.

The bank reported first quarter net income of $110.7 million or 86 cents per share, down 2.2 percent from the same period of 2018. Bank OZK attributed the decline to a tax benefit it was able to incur in the first quarter of 2018, according to the company’s management comments. Earnings beat analysts expectations of 85 cents per share.

Total loans were $17.48 billion as of March 31, an increase of 5.2 percent from $16.61 billion from a year earlier. The bank reported no major write-offs on its real estate loans in its most recent quarter. In the third quarter of 2018, the regional bank had to write down two real estate loans it made about a decade ago which caused its stock to plummet by more than 24 percent.

Critics worry Bank OZK is being overly aggressive at a time when condo sales have slowed down in New York and Miami. Signaling this change in market conditions, the bank reported that it expects to see more repayments on its real estate loans due to “high levels of property sales, leasing and refinancing activity.”

In March, Bank OZK provided a $475 million construction loan to Square Mile Capital Management in Chicago. The project is expected to be Chicago’s sixth tallest tower with 76 stories, totaling 1.5 million square feet. The bank also provided a $96 million loan to Anbau Enterprises for a two-building condominium project in New York City’s Flatiron District in April.

Bank OZK’s stock rose 3 percent to $31.28 on Thursday at 1:20 p.m.

Peter Morton and his home (Credit: Wikipedia)

The home in the exclusive Trousdale Estates has a dark past, one that includes a brutal knife-slaying and allegations of pornography and prostitution. And now Peter Morton wants nothing to do with it.

The Hard Rock Cafe co-founder has listed the property all its memories as a $15.5 million teardown, according to Variety.

Before Morton paid $13.5 million for the home last year, it belonged to Japanese film producer Fuminori Hayashida. But he hasn’t lived there since his son, Katsutoshi “Tony” Takazato, was stabbed 58 times at the home in July 2010, by his ex-girlfriend’s boyfriend. The killer, who was convicted two years later, claimed 21-year-old Takazato had forced the woman into prostitution and pornography.

The home spans 5,240 square feet, and has four bedrooms and six bathrooms. The property, built in 1964, also comes equipped with renderings for a 16,000-square-foot spec mansion, designed by Space International.

Morton has amassed a hefty real estate portfolio in L.A. over the years. Most prominently, he holds the record for the priciest sale in the county. His son, Harry Morton, has also gotten in the game. He recently paid $25 million to acquire a home where Elvis Presley — and the elder Morton himself — once lived. [Variety] — Natalie Hoberman

Robert Ahn

UPDATED, April 19, 11:10 a.m.: Former city planning commissioner Robert Lee Ahn, whose term was marked by what has become a Downtown development boom, has joined the real estate division of Sheppard, Mullin, Richter & Hampton.

As Special Counsel in the law firm’s Real Estate, Land Use and Environmental Practice Group, Ahn will work out of the firm’s Los Angeles office, focusing on land use matters, including advising developers on entitlements.

He will also work on the L.A.-based firm’s commercial leasing, dispositions, and acquisitions, along with forming legal entities and company legal structuring.

Ahn will remain president of the L.A.’s Cannabis Regulation Commission, a 2017 appointment by Mayor Eric Garcetti.

Ahn, who was one of nine members on the Planning Commission, served from 2013 to 2017; Garcetti also appointed him to that post. His time at the commission was marked by a ramping up in development activity, as the real estate industry continued to accelerate following the Recession.

Before working for the city, he handle real estate transactions as an private attorney. He left that work during the Recession to join his family real estate firm, Western Investments and Properties, which mostly owns retail assets in Southern California.

The commission approved numerous high-rise construction proposals in Downtown L.A. during that period, as well as hundreds of new projects citywide. Developers filed 281 projects in 2016 alone.

“I learned a lot. I got a lot of insight into the planning process and we were on the front lines of development,” Ahn said on Thursday. “I got to watch the trends in the industry.”

Ahn’s foray into politics came in 2017, when he ran unsuccessfully for Congress as a Democrat to represent the 34th District. It covers Koreatown, Downtown L.A. and north to Highland Park.

Correction: This article was corrected to reflect that Sheppard, Mullin, Richter & Hampton is an L.A.-based firm.

Lyric CEO Andrew Kitchell and Airbnb CEO Brian Chesky

A hospitality startup that provides short-rentals for professionals has closed on a $160 million funding round led by Airbnb.

Lyric, which partners with landlords to provide units in multifamily buildings for business travelers, closed on the equity and debt funding round this week, according to TechCrunch. The series B funding round is a huge surge of capital for the company, which had only raised $19 million in previous funding rounds.

The platform has gained significant confidence from institutional investors, including landlords RXR Realty, Tishman Speyer and investor Adam Bain. Previous investors also signed on, including Fifth Wall Ventures, Barry Sternlicht, NEA and Tusk Ventures.

Lyric, which primarily functions as a premium hotel operator, could intersect with Airbnb’s plans for New York, where it is in talks with RXR Realty to open apartment-style units in commercial buildings. This move will allow the home-sharing giant to walk around city laws that prevent short term rentals where the homeowner is not present, but does not apply to commercial buildings or hotels.

The funding round signals another push by Airbnb into the world of hotels, following its $465 million acquisition last month of HotelTonight. The investments are shoring up Airbnb against

Expedia and Booking Holdings, the parent of Booking.com and Priceline.

Lyric, which launched in 2014, is currently in 13 markets and provides studios, and one- and two-bedroom units that start at $200 a night. The new funding will allow the firm to double in size from 500 units to 1,000 units nationwide. [TechCrunch] — David Jeans

16540-16548 Soledad Canyon Road and Gelson’s Market (Credit: Google Maps and WEHOville)

Los Angeles investors spent a combined $66 million on the five biggest retail deals last month, roughly half the total shelled out in February.

The priciest sale was claimed by Safco Capital, which purchased a Gelson’s Market in West Hollywood for $25 million. AIDS Healthcare Foundation, an affordable housing developer, also held a spot on the list.

The Real Deal compiled its list based off property records on PropertyShark.

1. 8330 Santa Monica Boulevard | Safco Capital, $25M

An entity tied to Safco Capital, led by John Safi, bought the site at 8330 West Santa Monica Boulevard. As part of the deal, Gelson’s Market leased back the 17,830-square-foot retail store. The seller of the 1.3-acre property was Mayfair Realty, which owns Gelson’s. CGS3, a commercial real estate law firm, represented Safco, while Mayfair Realty represented itself. The property is one of three Gelson’s locations in L.A.

2.  16540 Soledad Canyon Road | Hutensky Capital Partners, $15.9M

Hutensky Capital Partners, a real estate fund manager that specializes in underperforming retail property, paid $15.9 million to acquire the retail plaza in Santa Clarita. TRC Retail, acting through an LLC, sold the 19,250-square-foot lot, located at 16540 Soledad Canyon Road. The firm, based in Newport Beach, had owned the complex since 2014, records show.

3. 611 South La Brea Avenue | Alyssa Shah, $9.6M

Alyssa Shah, an individual with ties to a Hancock Park address, purchased a retail property in the Miracle Mire area for $9.6 million. The 6,200-square-foot building, located next to the trendy Republique eatery, is currently occupied by a fabric store. Shah purchased the building, found at 611 South La Brea Avenue, through Jaxon LLC. The seller was Jason Asch, who sold the property through a trust.

4. 3400 West Olympic Boulevard | Sun Yong Park, $8.7M

Marsleon and Chung Rye Ro sold their Koreatown property at 3400 West Olympic Boulevard for $8.7 million. Records show Sun Yong Park purchased the 17,860-square-foot building through an LLC. The two-story building is fully occupied by Roland Products, which manufactures and distributes kitchen supplyware.

5. 431 East 7th Street | AIDS Healthcare Foundation, $6.6M

A subsidiary of the AIDS Healthcare Foundation paid $6.6 million to acquire two parcels in Downtown L.A.’s Skid Row. According to a statement announcing the purchase, the firm plans on building new affordable units for the homeless and extremely low-income residents. It marks the first time the affordable housing developer will build from ground-up construction rather than redeveloping aging properties. The sellers were Kiumars and Shahnaz Soleimany, who had owned the property through a trust since 2002. Located at 431 East 7th Street, the 2,890-square-foot building has two retail storefronts.

Mike Feuer, Los Angeles City Attorney

The Los Angeles City Attorney’s Office is accusing Daum Commercial Real Estate and a landlord of helping procure a space for an unlicensed cannabis dispensary in South L.A., which the city says sold pesticide-tainted pot.

The lawsuit centers on Kush Club 20, a shop located at 5527 S. Central Avenue. The property owner, registered as 5527 S. Central LLC, and its CEO, Michael Lerner, are also named defendants in the suit.

Daum and two of its brokers — Benjamin R. Spinner and James Vu — are named defendants, accused of leasing the property and “misrepresenting” the business on the lease paperwork.

Daum is based in Downtown and has offices across the L.A. area, and in Phoenix. In January, Daum represented Marcus Adams Properties in a six-property industrial portfolio deal.

Representatives from Daum, along with Spinner and Vu, could not be immediately reached for comment.

The lawsuit seeks an injunction against Kush Club 20 and an eviction of the company from the property. City Attorney Mike Feuer’s office claims that cannabis Kush Club 20 sold contained a pesticide banned for that use.

The state’s legalization of recreational cannabis, which took effect January 2018, also banned any cannabis business without state and local licenses. Feuer has been cracking down on illegal operations. As of September 2018, his office had brought 120 criminal cases against 105 allegedly illegal businesses, according to LAist.

While the legal market in L.A. has exploded, the black market remains strong. The L.A. Police Department estimates there are 300-350 illegal dispensaries operating citywide, or about double the number of licensed shops, according to CBS Los Angeles.

Earlier this year, city Department of Cannabis Regulation Executive Director Cat Packer said the city would specifically hold property owners accountable for allowing illegal operations on their properties.

Median home prices fall in LA

The housing market in Los Angeles has fallen steadily behind 2018 results, mirroring a nationwide slowdown that has not eased despite lower interest rates.

Sales dropped throughout Southern California, with double-digit declines in the Los Angeles metro and Inland Empire regions, according to a report from the California Association of Realtors.

Meanwhile, in L.A. County, the median home sale price was $525,520 in March, about 3 percent lower than February, and slightly below what it was in March 2018. Statewide, those numbers were a little better. Median home sale price rose 5.9 percent to $565,880 in March, compared to $534,140 in February.

But the number of home sales was far lower last month, compared to the same period a year ago.

The L.A. metro region posted a year-over-year sales drop of 12 percent, with home sales falling in every county. In the Inland Empire, the decline stood at 10.4 percent from a year ago. Riverside and San Bernardino counties posted annual sales declines of 9.3 percent and 12.2 percent respectively.

While the median number of days it took to sell a single-family home in L.A. fell to 25 in March from 35 in February, that was still more than a year ago. In March 2018, the median number of days it took to sell a home was just 17, according to the survey.

Statewide, homes sales were down 8.2 percent in March compared to the same period last year.

Clockwise from top left: Warner Bros. strikes major deal for its Burbank Studios, more U.S. retail stores have shuttered this year than all of last year, Blackstone Group plans to change its corporate structure effective July 1 and home sellers file another suit against NAR claiming inflated buyer-broker commissions.

Blackstone Group plans to change its corporate structure effective July 1
Blackstone Group plans to become a corporation in an effort to “make it significantly easier for both domestic and international investors to own [its] stock,” CEO Stephen Schwarzman said. The change in corporate structure will go into effect on July 1, the company said. The move follows in the footsteps of competitors KKR and Ares Management corp., which already changed their corporate status. News of the conversion came a day after the Wall Street Journal reported the group was thinking about selling its Cosmopolitan hotel and casino in Las Vegas, tapping Deutsche Bank and PJT Partners as it mulls “strategic alternatives” for the property. [TRD]

Home sellers file another suit against NAR claiming inflated buyer-broker commissions
Another antitrust lawsuit is claiming that the National Association of Realtors is involved in inflating buyer-broker commissions, Inman reported. The latest suit alleges NAR and four major brokerages — Realogy, HomeServices of America, RE/MAX and Keller Williams — are “conspiring to require property sellers to pay the broker representing the buyer of their properties, and to pay an inflated amount” in 20 different areas. A Minnesota home-seller filed a similar suit against NAR last month. NAR called the most recent lawsuit “baseless” and said it “contains an abundance of false claims.” [TRD]

More U.S. retail stores have shuttered this year than all of last year
More brick-and-mortar stores have closed in the first few months of 2019 than in all of 2018, according to the Wall Street Journal. A total of 5,864 stores closed across the country last year, the outlet reported, citing data from Coresight Research; this year, 5,994 stores have already closed. Chains including Payless ShoeSource, Gymboree Group and Charlotte Russe Holding, however, have already announced closures this year, and malls are still struggling. “I don’t think malls are out of the woods yet,” S&P Global Ratings analyst Ana Lai told the outlet. [TRD]

MAJOR MARKET HIGHLIGHTS

Warner Bros. buying Burbank Studios property as part of $1B deal
Warner Bros. plans to buy the lion’s share of its 35-acre Burbank Studios property from Worthe Real Estate and Stockbridge Real Estate Funds as part of a deal valued at around $1 billion. The company, which is about the celebrate its centennial, said it will also move into two Frank Gehry-designed buildings that Worthe and Stockbridge are currently developing on the property’s seven remaining acres. As part of the deal, Worthe and Stockbridge will buy four Warner Bros. properties, including its ranch on Hollywood Way. Warner Bros. is expected to move its operations from the four properties to Burbank Studios. [TRD]

San Francisco surpasses New York City as the most expensive place to build
San Francisco is now the most expensive place in the world to build, according to a new Turner & Townsend International Construction Market survey. The city’s average building cost of $417 per square foot surpassed New York’s $368 per square foot cost, the survey said. New York, however, still has higher labor costs than San Francisco, with an average $101.30 per hour and $90 per hour, respectively. Builders several in U.S. markets face a number of challenges, including tariffs and a shortage of skilled labor, the report said. [TRD]

Google backs out of plans to open first permanent retail store in Chicago
Google is no longer planning to open its first retail store in Chicago, the Chicago Tribune reported. The tech behemoth was in “advanced negotiations” to launch its store in a 14,000-square-foot space in Fulton Market last year, but decided not to move forward with the deal, according to the outlet. Google declined to comment on the reversal, and Newcastle Limited, which owns the building the company had planned to move into, couldn’t be reached for comment. Google has opened a number of pop-up shops across the country, but hasn’t ever opened a permanent retail location. [TRD]

Indiana vacation town with three residents is up for sale
An entire Indiana town has hit the market for the first time in two decades, the New York Post reported. Rock Hofstetter, who bought Story, Indiana back in 199, is now selling it for $3.8 million, according to the outlet. The town near Indianapolis has around 12 buildings and three human residents, but Hofstetter and two co-owners run a bed-and-breakfast called the Story Inn that has made the town a popular vacation spot. The three plan to rent the inn from whoever ends up buying the town. [TRD]

NYC landlord sent threatening letter to rent-regulated tenants, lawsuit claims
A New York City landlord allegedly sent two rent-regulated tenants a handwritten note along with their rent statement that said: “If you love your children, leave the building.” The Upper West Side couple have filed a lawsuit claiming Simon Baron Development sent the note as they were negotiating a buyout; the couple occupies two units in the building that are valued at around $18 million. Simon Baron, for its, part, has filed five lawsuits against the couple in an attempt to evict them from the building. The couple’s lawsuit claims they received the letter after rejecting a $1 million buyout. [TRD]

Florida man who owns $8M private island stole from Kmart, police say
A Florida man who owns a number of properties off of Key West, including a private island he bought for $8 million, was arrested for stealing from a Kmart store, according to the New York Daily News. Andrew Lippi, who bought Thompson Island last month, bought several items from the store and got refunds by either returning a different item, or returning them without their original pieces, according to the outlet. One of the items Lippi bought was a Keurig coffee maker; he allegedly returned the Keurig container the next day with a basketball inside. [TRD]

Behati Prinsloo and Adam Levine with their home (Credit: Getty Images and Zillow)

The “Moves like Jagger” man must have a thing for moving.

Hot on the heels of buying Ben Affleck and Jennifer Garner’s former pad, Maroon 5 frontman Adam Levine and his wife, Behati Prinsloo, have listed their Beverly Hills mansion for $47.5 million, according to the Los Angeles Times. That’s nearly $10 million more than what they paid for the home last year.

The Beverly Hills home (Credit: Zillow)

Located at Loma Vista Drive, the 10,370-square-foot mansion boasts five bedrooms and 12 bathrooms. The property includes also a guest house, tennis court, screening room, outdoor deck and oval-shaped swimming pool. Kurt Rappaport of Westside Estate Agency has the listing.

The Beverly Hills home (Credit: Zillow)

It also has a history of celebrity residents, including the creator of “Will & Grace” and the tennis star Pete Sampras.

Levine and Prinsloo bought the home a little less than a year ago for about $36 million, property records show.

The couple have had an especially busy few years, selling two L.A.-based homes just last year. They also recently picked up the 16,000-square-foot mansion in the Pacific Palisades that had belonged to Affleck and Garner for $32 million. [LAT] — Natalie Hoberman

New York, Los Angeles and Chicago (Credit: iStock)

Amazon’s pull-back and Albany’s political tumult aren’t enough to keep international real estate investors from seeing New York City as the safest place in the world to park their money.

A survey of about 200 real estate investors and investment managers from 24 countries identified New York as the “most stable and secure” city in the world to do business, and 39 percent said they want to “increase exposure there,” according to Crain’s.

About 20 percent of members of the D.C.-based A Fellowship for International Real Estate said they want to increase their exposure in Los Angeles. Five percent called Los Angeles the “most stable and secure” investment target, putting it just behind Paris, Boston and Singapore.

But roughly another third of respondents said they want to “decrease exposure” in New York, and 18 percent say they plan to cash out of investments in Chicago. Four percent said they likely will divest from real estate assets in Miami.

With a hard-line new Cook County Assessor and looming public pension obligations, Chicago is poised to see steep tax hikes on commercial properties that could scare away investors.

About 30 percent of investors said they predict the overall U.S. real estate landscape will become “less attractive” over time, while 15 percent said it would be “more attractive” and the rest predicted it would stay the same. [Crain’s] — Alex Nitkin

Mill Creek Residential CEO William MacDonald and a rendering of Modera Argyle

Mill Creek Residential has taken a big step forward with its planned 276-unit mixed-use project in Hollywood.

The city has published its environmental review for the Modera Argyle, wrapping up a year-and-a-half-long process that sets it up for a final vote. The public can still appeal the findings of the city’s Draft Environmental Impact Review report.

Mill Creek’s seven-story project would rise at 1546 North Argyle Avenue, at the corner of Selma Avenue. It’s near Mill Creek’s own Modera Hollywood project under construction along with other larger development projects in the works.

Mill Creek wants to include either 24,000 square feet of ground-floor retail and restaurant space or a 27,000-square-foot grocery store. The Dallas-based company — with a local office in Costa Mesa — plans to set aside 13 units for low-income renters. There would be 412 subterranean parking spaces.

The company expects to complete Modera Argyle in 2023 after 30 months of construction. Half a dozen buildings at the 1-acre development site would be demolished for the project.

Dallas-based Mill Creek owns at least one other Hollywood property — in 2015 the firm purchased a development site on the corner of Highland and McCadden avenues for $39.9 million.

Nearby, Relevant Group is building a hospitality super-complex — the firm has already completed one of four planned hotels near the corner of Selma and Wilcox avenues, in addition to a large restaurant and event space at the former Citizens News building.

Essex Property Trust is also constructing a 200-unit apartment complex nearby at 6240 Sunset Boulevard. CIM Group recently restarted work on a nearby 63-unit project, also on Sunset Boulevard.

From left: Blackstone’s Jonathan Gray, Kathleen McCarthy, and Kenneth Caplan with the Parker Towers at 104-20 Queens Boulevard in Queens

Blackstone Group will pay about $1.1 million in refunds to rent-stabilized tenants at Parker Towers, though the payout doesn’t signal an end to a lawsuit over illegal rent increases at the Queens complex.

The lawsuit was initially launched in March 2018 against the Jack Parker Corporation, which accused the real estate company of illegally deregulating apartments in the 1,327-unit Forest Hills rental complex despite receiving tax breaks under the J-51 program, which requires landlords to keep their apartments rent stabilized. Jack Parker then sold the towers to Blackstone in November for $500 million, after which the firm was named as a defendant in the suit.

Blackstone has been reviewing leases at the property with an independent auditing firm to figure out which rent-stabilized apartments have not been treated as such, and what the appropriate rents and refunds for tenants should be, according to court documents. So far, the firm has determined that approximately 110 units should receive rent and/or utility reductions, and about 82 units should be re-regulated. The average rent reduction per unit is about $230 per month, and the refunds total about $1.1 million overall.

“We are pleased that we were able to voluntarily address this issue quickly and fairly for our residents,” Blackstone spokesperson Jennifer Friedman said in a statement. “We will continue to review the prior owners’ lease files with the expectation of resolving any remaining issues expeditiously.”

Law firm Newman Ferrara is representing the tenants in the lawsuit. Founder Lucas Ferrara said his firm has not independently verified these numbers yet and maintained that Blackstone did not use the right formula to arrive at them, meaning a court could ultimately find that the tenants are owed more money. He also stressed that the lawsuit is still ongoing and in its initial stages.

However, Ferrara was still appreciative of the refunds the firm is already issuing.

“We appreciate that the new landlord is taking steps to recognize these tenants’ rent stabilization rights following the actions of the prior owner,” Ferrara said in a statement. “While we believe that these tenants are entitled to additional relief, we look forward to working with ownership to reach a fair and equitable solution for our clients.”

Aaron Carr of the Housing Rights Initiative, which performed the initial research that led to the lawsuit, sounded a similar note in his statement.

“The $1.1 million payout is likely a fraction of what is owed, but this is a significant first step in a series of steps to restoring the rights of hundreds of tenants.,” he said.

Daniel Ansell of the law firm Greenberg Traurig, the firm representing Blackstone in the suit, had no comment.

Earlier this year, Blackstone allegedly moved to evict two residents from Parker Towers using what the tenants’ attorney described as “incorrect and deliberately misleading” eviction notices. In response to this, a judge ruled that a state court would have to screen all future communications Blackstone had with tenants.

This temporary restraining order was lifted in an April 18 stipulation, court documents show. Ferrara said they consented to this because Blackstone has acknowledged the rent-stabilization status of tenants at Parker Towers. Management has also withdrawn the eviction notices.

Blackstone purchased Stuyvesant Town and Peter Cooper Village in 2015 with Canadian pension fund Ivanhoé Cambridge for $5.3 billion, one of the largest deals in recent history in New York. The companies have pledged to keep 5,000 apartments in the complex affordable for 20 years, and the city pledged to give them $220 million in financial aid.

Isela Gracian, president of East LA Community Corp, and the project site at 113 S. Soto Street (Credit: Google Maps)

East LA Community Corporation, an affordable housing developer, is adding to its list of projects for low-income tenants in the Boyle Heights area.

This week, the corporation applied for a five-story mixed-use development with 63 residential units of affordable housing and 4,265 square feet of ground-floor commercial space.

The project, if approved will rise above 113 S. Soto Street, on the same road as two other affordable housing properties that the firm manages. The site includes six parcels totaling 47,000 square feet. It includes an empty lot next to the light rail Soto Station.

East LA Community Corporation manages about 20 properties in the East Los Angeles area. Last year, the city approved the firm’s Cielito Lindo Apartments in Boyle Heights — a four-story building with 28 units for low-income residents.

In the past two years, Boyle Heights has struggled to secure affordable housing. There have been rent strikes and backlash over gentrification and at the prospect of homeless housing developments.

Boyle Heights also saw one of the biggest projects completed in L.A. last year with the Big Bear development. It includes a 491,000-square-foot industrial facility, an office building and truck yard at 1400 South Los Palos Street.

U.S. new home construction is down (Credit: iStock)

Adding another sign that the housing market is slowing down, new home construction in the U.S. fell last month to its lowest level since May 2017, despite declining mortgage rates.

The news could signal that homebuilders are having a difficult time constructing cost efficient homes amid rising supply and labor costs.

In March, overall construction starts dropped 0.3 percent to a 1.139 million annualized rate, according to Bloomberg. This is down from a rate of 1.142 million in February.

In particular, single-family starts fell 0.4 percent to 781,000 in March, the slowest pace since September 2016.

Permits, which economists use as an predictor of future building, fell 1.7 percent to a 1.27 million rate.

There have been a number of indicators that show that the post-recession housing boom is coming to and end. Home-price growth has slowed for 10 consecutive months in April and inventory has been rising. This comes about despite mortgage rates falling to its lowest level in about a year with the 30-year fixed rate at just over 4 percent, which makes owning a home more affordable for buyers. [Bloomberg] — Keith Larsen

From left: Behati Prinsloo and Adam Levine with their home, and Peter Morton and his home (Credit: Getty Images, Zillow and Wikipedia)

In this week’s celebrity real estate, two big-name musicians have listed their equally big-ticket homes. Fleetwood Mac lead guitarist Lindsey Buckingham and Maroon 5 frontman Adam Levine are now sellers. Levine and his wife, Behati Prinsloo, led the way with their $47.5 million listing in Beverly Hills, bought just a little less than a year ago.

Levine and Prinsloo’s asking price on their home is nearly $10 million more than what they paid for it last year. The 10,370-square-foot mansion boasts five bedrooms, 12 bathrooms, a guest house, tennis court, screening room, outdoor deck and oval-shaped swimming pool. The star couple recently bought Ben Affleck and Jennifer Garner’s former house in the Pacific Palisades.

Buckingham and his wife Kristen have listed their custom-built mansion in the wealthy enclave for $29.5 million. Spanning 10,000 square feet, the estate boasts seven bedrooms, a recording studio, a two-story tower and a billiards room. Outside, a tennis court, gym, swimming pool and guesthouse complete the 1.3-acre property. The couple bought the land for $6.6 million in 2004. They’re in the midst of moving into another custom-built home in the same neighborhood.

The 23-time Grand Slam champion Serena Williams sold her home on Stone Canyon Road for $8.1 million. The tennis pro had listed the 6,100 square-foot house for $12 million in 2017. She later cut the price to $10 million. It has six bedrooms and seven bathrooms, as well as a full-service salon. The grounds include a large pool and pool house, gardens, and a covered patio.

In Beverly Hills, two-time Academy Award-winner actress Jodie Foster found a buyer to buy her 7,500-square-foot home. She sold it less than two months after listing it for $15.9 million. Along with the five bedrooms and seven bathrooms, the home has a theater room, a second-story deck space to take advantage of the westerly views, and a backyard pool and patio area.

Zillow CEO Richard Barton and Compass CEO Robert Reffkin (Credit: Zillow, Compass, iStock).

Zillow Group slammed Compass with two lawsuits late Friday, alleging the SoftBank-backed brokerage hired three executives in violation of their non-competes as it staffed up its nascent tech hub in Seattle. The lawsuits also claim that Compass actively sought to obtain proprietary information from Zillow to avoid building its own technology.

The suits — one filed in federal court and the other in Washington state court — also name Robert Chen, Zillow’s former head of artificial intelligence; Michael Hania, an enterprise sales executive; and Chester Millisock Jr., a software engineer.

“Compass actively recruited these employees in order to avoid the costs associated with open and honest competition and to obtain Zillow’s confidential and proprietary information,” court documents allege.

In the suits, Zillow said all three of its former executives violated 12-month non-competes with Zillow. They allegedly took proprietary information from Zillow in the days before they left the company, copying confidential customer lists, financial information, sales data and technical information on thumb drives and to DropBox.

In a statement, Zillow said it supports healthy competition to drive innovation. But, “Compass’s practices are something different; they are unlawful, and because we have a responsibility to protect our intellectual property, we are taking action,” the company said.

Compass said it was still reviewing the complaints and could not immediately provide a comment.

Check back for updates.