From left: Blackstone President and COO Jonathan Gray, and Blackstone CEO Stephen Schwarzman

On the heels of its blockbuster industrial deal in the United States, Blackstone Group is turning its attention to warehouses in Europe.

The private-equity giant is assembling $6.8 billion worth of its European warehouse properties into a new company that it ultimately will list publicly or sell, according to Bloomberg.

The firm is in the process of hiring an executive to run the new company, which will focus on last-mile properties and bets on continued demand from e-commerce tenants to increase the value of the properties. Last-mile properties are located in or near cities and towns and help speed delivery of products bought online.

M7 Real Estate currently oversees the properties in a venture with Blackstone, according to Bloomberg.

Blackstone last week agreed to spend $18.7 billion to buy 179 million square feet of industrial properties across the United States from Singapore company GLP Pte, one of the biggest private-equity real estate deals ever.

Management challenges and the fact many small buildings are owned by private investors make it difficult to build a large portfolio of last-mile properties in Europe. But Blackstone’s efforts got a boost in 2017 with a nearly $1.5 billion purchase of properties from Hansteen Holdings Plc, according to Bloomberg. [Bloomberg] — John O’Brien

Jason Kirschenbaum and Elevated Returns CEO Stephane De Baets (Credit: LinkedIn and Getty Images)

The former managing director of Elevated Returns, an asset-management company that specialized in single-asset real estate trusts, claims he was fed a “string of lies and deceptions” by CEO Stephane De Baets, who allegedly stiffed him on compensation.

In a lawsuit filed in New York’s Supreme Court, Jason Kirschenbaum claims he poured “significant time, resources and his own money” into a partnership with De Baets and Thosapong Jaruthavee, a Thai billionaire also known as “Mr. T.”

Kirschenbaum alleges breach of contract, breach of fiduciary duties and unjust enrichment, among other charges. He is seeking damages of an unspecified amount.

Reached for comment, a representative for De Baets said the claims were “specious” and the facts “don’t comport with reality.”

“Mr. Kirschenbaum was never a partner in any of the ventures referred to in his complaint as is explicitly shown in the contract attached to his filing,” De Baets’ spokesperson said.

The dispute dates back to the end of 2015, when Kirschenbaum said he approached De Baets with the “idea, structure and concept” of a single-asset REIT, a rarity in the real estate world.

According to the complaint, the pair started meeting at the Mercer Hotel in New York, where they discussed building an advisory company. De Baets and Jaruthavee would provide the initial assets—“certain hotels”—to create the REIT, while Kirschenbaum would run the day-to-day operations of the listing, including business development and marketing, the lawsuit claims.

In March 2016, Kirschenbaum and De Baets formalized their agreement, signing a contract that outlined compensation for the formation and listing of a single-asset REIT for the Sunset Tower Hotel in Los Angeles, the lawsuit claims.

A copy of the agreement filed with the complaint shows that Kirschenbaum was offered a 25 percent share of founders equity for the planned advisory company—adding that if the deal was unsuccessful, the advisory company would be dissolved.

“Nothing in this letter is intended to create a partnership or joint venture,” the contract stated.

After the Sunset Tower deal didn’t pan out as planned—the hotel was sold in 2017— Kirschenbaum says he worked on a single-asset REIT for the St. Regis Aspen Hotel, using the same agreement.

In February 2018, The Real Deal reported that Elevated Returns had postponed its planned public offering for the St. Regis REIT, “in order to retool our crowd funding distribution channel to create a seamless conversion of the robust traffic to our site.”

Later that year, the company sold almost one-fifth of the hotel through digital tokens.

Kirschenbaum claimed that while his original contract was centered on the earlier Sunset Tower deal, it also applied to “future deals,” pointing to three references to “future deals” in the text. Further, he said that ER Global, formed in 2018, is today worth an estimated $40 million, meaning he is entitled to a 25 percent share worth “at the very least” $10 million.

But in a letter from March 2019, reviewed by TRD, Richard Menaker, De Baets’ lawyer, said the scope of the agreement was much narrower, and no equity was owed.

“The only equity interest contemplated by the agreement was Kirschenbaum’s potential interest in a different entity, the advisory company, which would have been created only if the public offering of a NASDAQ-listed single-asset REIT venture got off the ground,” Menaker wrote. “As Kirschenbaum knows, it never did.”

Menaker’s letter went on to say that after Kirschenbaum was hired full-time in 2018, his performance became “irregular” and “unsatisfactory.” Eventually, Menaker said, he stopped coming in altogether.

Kirschenbaum’s attorney rejected the account, branding the letter “false and self serving.”

The case continues.

Kevin Rice, Principal at Diller Scofidio and a tar pit outside George C. Page Museum

Diller Scofidio + Renfro and two other architecture firms are competing to lead the design of a unique project that’s 50,000 years in the making.

The George C. Page Museum campus and area around the La Brea Tar Pits — a onetime death trap for mastodons and saber-tooth cats – will both undergo a renovation, the Natural History Museums of Los Angeles County announced Friday.

The firms in the running are New York-based Diller Scofidio and Weiss/Manfredi, along with Dorte Mandrup of Denmark.

Their proposals will be unveiled in August, and the winner will be announced by the end of the year.

The winning firm will lead public engagement, master planning, design and construction over the next several years. The master plan will focus on advancing scientific research and public engagement for the next half-century.

The 12-acre campus is managed by the Natural History Museums of Los Angeles County. It is one of the only museums in the world that features active paleontological research in the middle of a major city, where visitors can watch excavators unearth fossils of ancient wildlife.

The 57,000-square-foot George C. Page Museum was designed by L.A.-based architects Frank Thornton and Willis Fagan, and opened in 1977.

The project adds to the transformation underway on Museum Row. It started with the $125-million redevelopment of the Petersen Automotive Museum. Construction is underway of the $388-million Academy Museum across the street, and in April, Brad Pitt helped the L.A. County Museum of Art win approval for its $650-million redevelopment set to begin next year.

Barry Manilow and 24146 Malibu Road, and Garry Marshall and 22440 Pacific Coast Highway

The start of June brought some sizzle to the luxury real estate market, with notable sales in Malibu and Beverly Hills. A handful of massive properties also listed — the most extravagant being a 43,000-square-foot home in Montecito.

The children of late Hollywood filmmaker Garry Marshall sold their family home in Carbon Beach for $14.2 million, about 20 percent below its original list price. Kathleen, Lori and Scott Marshall sold the 3,190-square-foot oceanfront estate through several trusts. Located on the Pacific Coast Highway, the home has five bedrooms and four bathrooms. Records show the property has been in the hands of the family since 2003. Marshall, who died in 2016, is best known for “Happy Days,” “Pretty Woman” and “The Princess Diaries.”

In Beverly Hills, a mansion with apparent ties to the former chairman of Northrop Grumman has listed his newly built estate for $47 million. Executive Kent Kresa is connected to the LLC — 512 Perugia Way — that owns the property. The 11,000-square-foot home includes five bedrooms and nine bathrooms. There’s also an infinity-edge swimming pool with spa, gym, gardens, four-car garage and walls made of shell stone. The two-story home sits on a three quarters of an acre.

Also in Beverly Hills, a home owned by late film producer Arnold Kopelson sold for $9.7 million after two price cuts. The Mediterranean-style villa, which dates to the 1930s, had been listed at $10.9 million. Spanning 10,500 square feet, it includes four bedrooms, seven bathrooms, and a library. Kopelson, who died last year, is best known as the producer on “Platoon,” which won four Academy Awards.

A Malibu oceanfront estate once owned by Barry Manilow is back on the market for sale for $10.9 million, roughly 35 percent lower than its original ask three years ago. Property records reveal the home is tied to Natalie Mogilny, who filed for separation from retired National Hockey League star Alexander Mogilny in 2012. Located on Malibu Road near the glitzy Malibu Colony, the three-story home includes five bedrooms and five bathrooms. The 4,320-square-foot home, which Manilow owned from 2002 to 2012, was recently renovated.

And finally, in Montecito, a massive property hit the market for $65 million. Patrick Nesbitt, CEO of Embassy Suites’ parent company, is selling his 43,000-square-foot oceanfront home. Among the amenities are a full-size polo field, Hermes-branded helicopter hangar and a stable for 20 horses. There are 11 bedrooms and 22 bathrooms. But there’s more. The property also includes a nightclub, “man cave” with a sports bar, a protected butterfly reserve, horse trail, Japanese garden, putting green. and a 128-foot swimming pool.

LA County is seeing more listings

Listings across Southern California shot up over the last year, but homes are sitting on the market far longer.

The latest data from local market tracker ReportsOnHousing shows 18 percent more listings in Los Angeles County as of May 30 than a year earlier, according to the Los Angeles Daily News.

In total, there were 13,650 active listings in L.A. County, according to the report. The average since 2012 have been 12,470. The increase in listings could be from sellers looking to cash in on high pricing and low mortgage rates. Uncertainty about the housing market’s future could also be fueling listings, experts say.

But it is clear that fewer potential buyers are pulling the trigger ­— the number of homes that went into escrow last month was 1 percent lower than did last year. The average number of days a home spent on the market is now up to 73 days, up from 60 days last May.

Pricing in L.A. County has more or less stagnated since peaking late last summer.

Interest rates rose last year, prompting some buyers to put off a big purchase. Mortgage applications hit a four-year low in November, but the recent drop in rates could lure those same buyers back to the market. Falling rates have also coincided with more homes flips, as homeowners see a window of opportunity.

The story across the Southern California region is similar to L.A. County, although escrows across the region rose just under 1 percent over the last year. Some individual counties are seeing more drastic movement. The numbers were gloomy in Orange County. The number of listings rose 27 percent, market time was up 19 days to 85 and sales were down 1 percent, according to the report. [LADN] — Dennis Lynch 

One Santa Fe, 300 South Santa Fe Avenue (Credit: The Blue Ground and iStock)

Landlords in Los Angeles are increasingly choosing to partner with the extended-stay home-share companies because they provide a way to fill vacancies in units. But not everyone is happy about it.

Housing advocates argue that such rentals are exacerbating the region’s affordability problem by reducing the already strapped stock of rentals, according to the Los Angeles Times.

Extended-stay apartments, also known as corporate rentals, are often more expensive than typical apartment rentals because of the lease flexibility and amenities offered.

Rates for a one-bedroom unit on Blueground’s platform, one of the growing extended-stay companies, might range from $2,990 to $5,890 per month, depending on the location.

Opponents of extended-stay rentals argue that the high turnover rate of corporate tenants create an opportunity for landlords to raise prices on rent-controlled units. Startups like Blueground say they are not partnering with landlords who push tenants out.

City officials are grappling with how to regulate extended-stay rentals, similar to the kinds of issues that arose with the advent of Airbnb and other home-share companies. [LAT] — Natalie Hoberman

50 United Nations Plaza

The United States is officially an owner at 50 United Nations Plaza.

The U.S. Mission to the United Nations picked up a 37th-floor sponsor penthouse at the Turtle Bay tower for $15.85 million, according to a public record posted Friday afternoon. For the full-floor, roughly 5,900-square-foot home, that comes out to $2,689 per square foot.

It was not immediately clear if the new purchase was for the same unit Uncle Sam had already been renting, beginning with former U.S. Ambassador Nikki Haley, and if the pad will house Acting U.S. Ambassador Jonathan Cohen. A request for comment wasn’t immediately returned.

The New York Times reported last fall that the U.S. dropped $52,701 to install custom mechanical curtains at Haley’s residence, pointing to a $58,000-a-month penthouse on the 40th floor of the building.

Regardless, the U.S. appears to have gotten a deal for its latest purchase. Zeckendorf Marketing had put it on the market in 2015 for $24.25 million, according to StreetEasy.

Zeckendorf Development and Global Holdings developed the 43-story, 88-unit luxury building, located steps from the UN Secretariat Building. Designed by Foster + Partners, the building comes with a 75-foot pool, sauna and fitness center.

The U.S.’s new residence is also just one flight down from another full-floor penthouse unit recently bought by the British Consulate for $15.9 million.

The buy, which The Guardian reported is for Antony Phillipson, the UK’s trade commissioner for North America and consul general in New York, drew backlash from some across the pond as a lavish expense, particularly amid Brexit negotiations.

And in 2015, some in New Zealand called the purchase of a 3,000-square-foot, $7.9 million pad — meant for the head of New Zealand’s mission to the United Nations — on the 18th floor also too extravagant.

Cadre CEO Ryan Cadre, Jared Kushner, and Josh Kushner (Credit: Getty Images)

Cadre has long drawn scrutiny for potential conflicts of interest as its co-founder and special adviser to the president Jared Kushner acts as international envoy overseas.

A new report from the Guardian raises more such questions about the real estate startup. Since Kushner joined the Trump administration in 2017, Cadre has received $90 million in foreign funding through a Cayman Islands-registered entity run by Goldman Sachs, the publication reported, citing corporate filings and interviews.

“It was one of the only assets that Kushner retained and it continues to collect foreign investors without transparency,” Virginia Canter of watchdog group Citizens for Responsibility and Ethics in Washington said.

The identity of the foreign investors is unknown, though sources told the Guardian that a small portion of the funds came from Saudi Arabia, while other funds could be traced back to anonymous entities in the British Virgin Islands.

SoftBank’s Saudi-backed Vision Fund declined to invest in Cadre last year, amid conflict-of-interest concerns stemming from Kushner’s relationship with the kingdom.

“Cadre does not have access to any information about the Goldman Sachs clients who have invested in these vehicles,” a Goldman spokesman said. The investment bank partnered with Cadre in early 2018 to invest $250 million in client money through the platform.

Kushner, his brother Joshua and Goldman Sachs alum Ryan Williams co-founded Cadre as a platform for “democratizing” real investment. After entering the White House to serve as an adviser to his father-in-law, President Donald Trump, Jared Kushner kept a stake in the company while selling off other assets.

Kushner’s attorneys say he has stepped down from Cadre’s board and that his stake in the company is less than 25 percent. According to his most recent financial disclosures, Kushner’s stake is worth between $25 and $50 million. [The Guardian] — Kevin Sun

Artemis’ Richard Banjo and Olive Hill’s Tim Lee with the property

Olive Hill Group and Artemis Real Estate Partners have teamed up to recapitalize a six-story office building off the Third Street Promenade, The Real Deal has learned.

Sources said the recapitalization is worth $119 million. The companies announced the deal Monday, but declined to disclose the value. Artemis assumed Olive Hill’s existing debt on the property, a source added.

Located at 520 Broadway, the property spans 112,750 square feet. The building was recently brought to full occupancy when law firm Goodwin Procter leased 20,500 square feet. Other tenants at the building include WeWork, Boston Private Bank and Flywheel Sports.

Tim Lee, principal at investment firm Olive Hill, said it was the first time the company had partnered with Artemis.

Olive Hill, based in Downtown L.A., paid seller Tishman Speyer $117 million to acquire the Class A office building in December 2017. At the time, the building was 82 percent occupied.

Its newest partner, Washington D.C.-based Artemis, is an investment management firm that specializes in commercial real estate. The firm recently invested $155 million for a 95-percent stake in another WeWork-occupied building in New York, known as the Ironworks.

Commercial space in Santa Monica continues to command some of the highest rents in the city, given its tight vacancy rate and rising interest from technology tenants. In March, StarPoint Properties sold the ground underneath an office building on Ocean Avenue for $65 million. Terra Capital leases the land and owns the 100,000-square-foot building on the land, located a few blocks away from where Frank Gehry’s project is rising.

Masayoshi Son (Getty Images)

SoftBank, one of the world’s most active investors in real estate startups since Masayoshi Son founded the company nearly 40 years ago, is still plowing ahead full speed.

The telecommunications giant, which launched its $100 billion Vision Fund in late 2016, is looking to take the fund public and launch a second one of at least that size, the Wall Street Journal reported last month.

Son, 61, has been using the fund — backed by Saudi Arabia, Abu Dhabi and Apple, among others — to invest in industries ranging from dog walking to residential brokerages. And the Japanese billionaire’s “300-year vision” is fueling dozens of relatively young companies looking to shake up their respective fields, including WeWork, Compass and Katerra on the real estate side. SoftBank also acquired the old-school asset management firm Fortress Investment Group in December 2017 for $3.3 billion in an all-cash deal.

The Vision Fund’s $450 million investment in Compass the same month and additional $400 million funding with the Qatar Investment Authority last September were huge wins for the company, as it cemented its status as the most valuable residential brokerage in the U.S.

Son’s rise to kingmaker hasn’t been without some major setbacks, though. SoftBank lost nearly all of its value during the dot-com burst, and the company recently faced investor backlash over one of its biggest planned deals. Son had to dramatically scale back his billion-dollar bet on WeWork due to concerns from sovereign wealth backers in Saudi Arabia and Abu Dhabi.

Whether or not that tempers Son’s future investments remains to be seen, but here’s a closer look at some of the numbers behind SoftBank’s ascent.

SoftBank’s Otosan mascot

$63B

The amount Son has invested in companies that have caught his attention in recent years. The Vision Fund made 22 investments worth a combined $21 billion in 2017 and 43 more worth $31 billion in 2018, according to research firm Preqin. So far this year, it has done 27 funding rounds with a combined value of $11 billion.

$47

SoftBank’s stock price as of May 24. Its shares hit a high of $56.08 and a low of $31.08 within the past year. SoftBank had a market cap of about $101 billion as of late last month, and its stock price was roughly in line with that of Nippon Telegraph & Telephone — one of the company’s top competitors.

Adam Neumann

$14B

The difference between the Vision Fund’s potential and actual investments in WeWork. Though Son had planned to invest $16 billion in the co-working giant, it dialed that back to $2 billion in January following concerns from several key backers. The original planned investment would have given SoftBank a majority stake in WeWork.

99%

The amount of value SoftBank lost during the dot-com crash. The company was worth more than both Sony and Toyota, at about $17 billion, by 2000. But it was one of many victims of the bubble burst with its stock price falling from $1,865 in 2000 to just $14.53 in 2002. CNN reported that the slide caused Son to lose $70 billion in a single day.

1981

The year Son founded SoftBank as a computer parts store when he was 24. The company went into the publishing business a year later, launching the monthly magazines Oh! PC and Oh! MZ. Since software in Japan is called “soft,” the literal meaning of the company’s name is “a bank of software.”

$23B

Son’s approximate net worth in late May 2019, per Forbes, which placed him at No. 43 on its latest global billionaires list and No. 2 on its list of the 50 richest people in Japan. He ranked No. 1 in his home country in 2018 but was replaced this year by Fast Retailing founder Tadashi Yanai.

3

The max number of years Son says he wants to spend raising his next fund. SoftBank’s founder, who’s been approaching both existing and new investors, told Bloomberg that he wants to raise a new $100 billion fund every two to three years to create successors to the first one.

800

The number of people SoftBank hopes to employ under its investment arm by 2021. Rajeev Misra, CEO of SoftBank Investment Advisers UK, said at a conference in April that he wants to double the number of employees in his division from 400 over the next 18 to 24 months.

Harridge Development CEO David Schwartzman, Thibault Christian Stracke, and the property (Credit: Google Maps)

Amid Los Angeles’ softening high-end residential market, Harridge Development Group’s CEO has sold his Bel Air home for about what he paid for it four years ago, The Real Deal has learned.

David Schwartzman sold the Mid-century home for $6.24 million to Thibault Christian Stracke, global head of credit research at investment firm Pimco.

Schwartzman paid $6.25 million for the property in 2015, records show. For the purchase, Stracke secured a $4.4-million loan from Bank of America, according to records.

The 4,300-square-foot home is located on Vestone Way, and includes five bedrooms and 6.5 bathrooms. The property spans nearly three acres and features a pool and a gated motor court with a four-car garage.

Gregory Dean of the Dean Company had the listing. Chad Lund of Douglas Elliman represented Stracke.

L.A.’s luxury housing market in the middle of a widespread slowdown, and Bel Air is not immuned. Serena Williams recently sold her home for nearly $4 million less than it had originally listed. On the much higher-end, celebrity surgeon Raj Kanodia recently cut the price of his spec home by $60 million and last week, the price for a massive 258-acre plot of land was cut by 40 percent to $75 million.

Earlier this year, Wilshire-based Harridge won city approval for its Crossroads of the World megaproject in Downtown, after three years in the entitlement process. The mixed-use development calls for 950 residential units, 308 hotel rooms and 190,000 square feet of commercial space.

The firm also has several other developments in the pipeline, including a mixed-use project with 555 residential units in Koreatown, a 676-home project in San Pedro, and an 18-acre condominium community development near where the L.A. Rams stadium is being built in Inglewood.

Michael Hackman and MBS Media Campus

Hackman Capital Partners is in advanced discussions to purchase a 22-acre production studio in Manhattan Beach for up to $700 million, The Real Deal confirmed.

The deal would mark the second large film and television campus acquisition for Hackman in six months. In December, it purchased the 25-acre CBS Television City campus for $750 million.

CoStar first reported the news on the Manhattan Beach discussion talks.

Known as the MBS Media Campus, the Manhattan Beach property spans 280,000 square feet of office space and includes 15 sound stages. Lightstorm Entertainment, a production company founded by filmmaker James Cameron, has its office onsite.

Carlyle Group has owned the property, formerly known as Manhattan Beach Studios, since 2007. It paid Oaktree Capital Management $150 million for the property.

A representative for Hackman did not immediately return requests for comment. Carlyle Group declined to comment.

Hackman has been on a studio expansion tear since 2015, when it paid $85 million to acquire the historic Culver Studios in Culver City. The property has been leased by Amazon Studios.

Hackman made its biggest splash with the $750 million purchase of the CBS Television City campus in Fairfax in December. The campus, which includes a 515,000-square-foot office building, was once home to iconic shows including “The Ed Sullivan Show.”

Shaun White and 7163 Birdview Avenue (Credit: Getty Images)

Snowboarding legend Shaun White has put his two homes in Malibu’s exclusive Point Dume neighborhood on the block.

White, a three-time Olympic gold medalist whose nickname is The Flying Tomato, is selling the compound for a combined $27.3 million, according to Variety. The homes are next to each other and are being marketed as two separate properties.

The larger, 2,175-square-foot home is on the market for $14.5 million. It includes three bedrooms and four bathrooms, a private patio and two separate family rooms. White bought the home for $9 million in 2013, and most recently rented it out to singer Frank Ocean. Mike Fleiss, producer of the reality show “The Bachelor,” owned the home before White.

Also on the market is the property’s two-story guest house. Listed for $12.8 million, the 2,160-square-foot home features three bedrooms and two bathrooms.

White paid Brian Kariger, founder of Dictionary.com, $10.75 million for the pad in 2016.

Chris Cortazzo and Lily Harfouche of Coldwell Banker have the listings.

White has also owned several properties in the Hollywood Hills, and a penthouse in Manhattan’s East Village. [Variety] — Natalie Hoberman

Strategic Legacy Vice President Michael Sabet and a rendering of 11410 W. Burbank Boulevard

A Downtown Los Angeles developer and Tokyo-based investor are looking to build an 84-unit apartment complex in North Hollywood, in an area that has seen a flurry of development and that provides city incentives.

Strategic Legacy Investment Group and Sanei Architecture Planning Co. Ltd are eyeing the project for 11410-11420 W. Burbank Boulevard, according to the filing. They seek approval to demolish the existing commercial and residential construction.

Sanei Architecture purchased the property last July for $5 million and gave Strategic Legacy the right to develop the property a short time later.

It is near a Lankershim Boulevard office building where WeWork is opening a new outpost. It’s also less than a half mile from the Metro Red Line’s North Hollywood Station, which allowed Strategic Legacy to boost unit count and through the city’s Transit-Oriented Communities program.

Strategic Legacy plans to boost density, height, and reduce setbacks in exchange for reserving nine units as affordable through the city program.

Other multifamily developers are also hot on North Hollywood. Investor Alan Kleinman is planning a 119-unit project north of Strategic Legacy’s site, at the site of Debbie Reynolds’ famous dance studio on Lankershim Boulevard. Not far from there, Sherman Oaks-based investor Nir Paz wants to build a 65-unit project.

Clarion Partners CEO David Gilbert, Douglas Emmett CEO Jordan L. Kaplan and The Glendon

Douglas Emmett has added a 350-unit residential and retail complex in Westwood to its large Westside portfolio.

The Santa Monica-based real estate investment trust paid Clarion Partners $365 million for The Glendon at 1060 Glendon Avenue, it said in announcing the acquisition. The REIT intends to complete the renovations Clarion started on the 11-year-old property.

The Glendon also has 50,000 square feet of ground floor retail space. The retail and multifamily portions are 97 percent leased.

Clarion paid $300 million for the apartment complex from its developer, Casden Properties, in 2014. The property was then renamed from Palazzo Westwood Village. Casden completed and opened the complex in 2008.

Douglas Emmett said it is considering bringing in a partner to reduce its capital interest in the property.

Douglas Emmett owns half a dozen office buildings in Westwood, but the Glendon is its first residential property in the neighborhood. But the REIT is a major investor of multifamily properties. The acquisition brings its total apartment portfolio to around 4,000 units in Santa Monica, Brentwood, and now Westwood. It also owns properties in Hawaii, according to the company.

The firm’s office portfolio is larger than its multifamily portfolio and is concentrated in Westside markets, but the REIT also owns assets in the San Fernando Valley. It’s now seeking city approval to build a 67,000-square-foot office building on its Trillium campus in Warner Center.

Jay Sugarman (Photo by Emily Assiran)

Jay Sugarman, chairman and CEO of the real estate investment trust iStar, hates being called a developer. The Princeton graduate much prefers “creator” or “innovator,” though “financier” or “ground-lease evangelist” might be more accurate. Sugarman’s firm, which he founded as a part of Starwood Capital Group in 1993 before taking it public five years later, has closed more than $40 billion in debt and net leasing deals. And in 2017, iStar launched Safehold — the first public company to focus exclusively on ground leases. That marks a significant shift in Sugarman’s business strategy. This past February, iStar announced plans to sell off nearly $500 million in assets over the next two years to help grow its ground-lease business. At the same time, Sugarman and his associates are tasked with transforming a 1.25-mile stretch of Asbury Park as the master developer for the city’s waterfront. Under the $1 billion-plus redevelopment plan, they plan to add more than 2,000 homes and 300 hotel rooms to the New Jersey beach town over the next decade. Sugarman and his wife, designer Kelly Behun, live in Hell’s Kitchen with their two sons. The couple also own a home they recently had built in Southampton.

DOB: April 12, 1962
Lives in: Manhattan
Hometown: Houston
Family: Married with two sons (ages 16 and 19)

Where did you grow up? I was born in Houston. [My family] moved to London when I was eight, and we moved to Pittsburgh when I was 11. I went to nine schools in 10 years.

What did your parents do? My father was with an oil company, Gulf Oil, so we moved around. But when I found New York as a freshman in college, I knew I was a New Yorker. I’ve been a New Yorker ever since.

What was it like moving from school to school? That was interesting. You’re a new kid, so you always had to figure out how to get inside. These people have all been together their entire lives; how do I connect with that really quickly? So you become incredibly observant. You watch first and try to figure out, where’s the power? Where’s the code? How do I crack this? How do I get in with the people I want to be friends with? And you’ll always be a little bit of an outsider. You’ll never be part of the history. So you have to be a little quirky, you have to be a little different, so people go, “That’s interesting.”

In what way? When I lived in London, I was a big “Monty Python” fan, so I had that kind of British sense of humor. [I] don’t drink, don’t smoke, don’t swear, don’t do any of that, so immediately you’re an outsider. But that also gives you a chance to observe people and see what makes them tick and be friends with them in maybe a different way. That’s kind of what we do here: Normally people do it this way, but what if you turned it this way? I think that’s what drives me.

Is there anything else that set you apart at the time? I have one of the world’s largest romance comic book collections, because the art of the 1960s is fantastic and nobody really paid any attention to it. And it comes in a format where you can buy it for 10 cents. “Girls’ Love Stories” “Girls’ Romances,” “Young Love,” “Young Romances,” “Heart Throbs,” “Secret Hearts” and “Falling in Love” were the big seven titles. A lot of those storylines were purchased by the daytime soap operas.

How did you get into real estate? Around 1990, I was working for two high-net-worth families, trying to find ways to invest their capital with a partner. We both looked in the Wall Street Journal for two weeks in a row, and every headline was “Real estate is the worst business.” I knew nothing about real estate. But when you see something for two weeks be absolutely thrashed in the media, and you realize that it’s the largest part of the capital markets in the U.S., you sort of sense that there’s an opportunity. So we decided we needed to start a real estate business right then and there.

What was it like managing investment funds for the Burden, Vanderbilt and Ziff families? I had come out of business school and worked for a guy called Richard Rainwater. He had mentored me by saying, “If you really wanna see what you can do, get in front of a pool of capital that allows you to do anything.” Families can think in unconventional ways because they don’t have shareholders and they don’t have boards of directors. Both the Ziff and the Burden families, for whatever reason, hired my partner and I at a very young age and let us think that way. And we made plenty of mistakes, but we also learned quickly how to be two steps ahead.

During the financial crisis, you forfeited 2 million restricted shares in iStar that weren’t performing well. What were the biggest lessons you learned from that time? You can never afford to take your eye off the ball. I was going to retire in 2005 and I got very close to making that decision, and then the world changed. I wasn’t looking forward anymore. You can’t do that. That’s when you get caught. I had a cardinal rule: Liquidity is everything. But we got sloppy on liquidity. It killed us. Personally, it cost me a lot of years of my life, but I refuse to see a great company not come back, and we’ve been fighting ever since. It’s forced us to learn a whole new set of skills.

What was your first interaction with Asbury Park? I brought a date here 30 years ago. That was my first time in Asbury. It was a ruin. It was beautiful … But it was the wrong place to bring a date. I had a roommate who played Bruce Springsteen every minute of every day, so I was somehow subconsciously being drawn to Asbury Park, but I didn’t know it.

Why do you think there’s been some skepticism that a $6 million penthouse can sell in Asbury Park? Human beings aren’t that different, wherever you go. If you give them a great design, and a beautiful environment and a wonderful city and an incredible lifestyle, think about what that would cost you in New York or Montauk or the Catskills … We’ve suffered from headlines that say we’re selling $6 million condos. They don’t mention the $400,000 townhouses and some of the other projects we’re bringing. But this has to be aspirational.

What other projects are you working on? The ground-leasing business is really all-consuming right now. We’re the largest owner of bowling alleys in the world. We have built a great relationship with the largest operator of bowling alleys, company called Bowlero. We have 10,000 lanes in our portfolio. When you think about places where unconventional thinking can unlock a lot of value, nobody thinks of bowling as a business. But as a real estate business, it’s really interesting to us.

Why did you decide to become the managing owner of Keystone Sports [and the Philadelphia Union MLS soccer team]? I love sports. I love the unpredictability of it. I have two young boys, not so young anymore. That’s all we did together. Our hallway was our batting practice, pitching practice, soccer field. I knew the thing that would keep us together as a family for a long time was having something like that to always share. The good news is Philadelphia was within an hour-and-a-half radius of New York, so I knew I could go be an active participant, but it was far enough away that when the fans started yelling, I could retreat back to New York. We’re 10 years in, and we’re starting to figure it out.

How have you responded to criticism from Philadelphia Union fans regarding the need to recruit more top talent to the team? We’re trying to build a team that develops players. I think if we spend a lot of money on development, when others aren’t, we will have a very sustainable winning strategy when the league is much bigger. If we spend $10 million on a player, and he gets hurt, we’ve kind of got nothing left. It hurts when the fans are on you all the time, but winning solves a lot of problems in Philadelphia. So we just need to start winning.

What are your hobbies, aside from bowling and running a sports team? I practice with U.S. Open champion table tennis player Michael Landers. I love learning skills like that, that are outside the mainstream. I get to play with my kids at a wildly different level than I’ve ever played before.

Does your wife play? She hates sports. She’s a great designer, though, and has an incredible eye for spaces. Wish I could use her in these projects, but we’ve never crossed that line.

You and your wife have thrown some lavish parties at your Hamptons estate over the years [for charities and friends]. What was the most memorable of those? We try to keep that part of our life compartmentalized.

Have you ever hosted a fundraiser to encourage healthy eating, given that your last name contains “sugar”? I do have a big investment in a company called Moon Juice, which is one of the best adaptogenic, plant-based food companies out there. It’s got Sex Dust, Brain Dust, Beauty Dust, Power Dust, Spirit Dust and Dream Dust. If anything helps you feel better about life, it’s lowering your stress levels.

What’s your biggest vice? Cotton candy. There couldn’t be anything worse. But man is it good. If I go to a carnival, I want cotton candy. I’ll say that.

—Edited and condensed for clarity

Southern California Coalition Executive Director Adam Spiker and City Hall

The legal cannabis industry is asking Los Angeles officials to crack down on illegal retailers in the city.

The cannabis industry group, Southern California Coalition, sent a letter to the city, urging officials to raid illegal shops selling “tainted” products and confiscate products and cash, according to the Los Angeles Times. Currently, the city does not seize products or cash following raids.

Illegal retailers present a serious threat to some legal brick-and-mortar pot purveyors. Unlicensed shops outnumber legal ones in the city, which pay taxes and must abide by quality-control standards and local regulations.

Because of those reasons, the Southern California Coalition said that licensed shops can’t compete with the unlicensed ones.

Landlords have largely avoided heat from the city for renting out their spaces to unlicensed shops, but officials have started to pursue them as well. Earlier this year, the city’s top cannabis regulator said L.A. should should start enforcing the laws it has on the books.

Those include a $20,000-per-day fine to landlords for allowing unlicensed operations on their properties, along with cutting off utilities, and padlocking retail spaces.

In April, the L.A. city attorney sued the DAUM Commercial Real Estate agents who brokered a deal for an illegal shop, as well as the landlord and the retailer. City Attorney Mike Feuer’s office has brought 120 criminal cases against 105 allegedly illegal businesses as of September, it has said. [LAT] — Dennis Lynch

Rendering by Andmore Partners

The Koreatown development boom doesn’t appear to be in danger of fizzling out any time soon.  And thanks to Los Angeles’ incentive programs, investors are pouring more money into the area, and upsizing.

The latest is a 52-unit residential development that is now seeking incentives to add 13 more units, according to Urbanize. The site, at 719-723 S. St. Andrews Place, is owned by St Andrews Palace LLC, which is linked to an individual named Ha Seoup Bang, records show. The LLC acquired the site for $4.13 million in 2017.

The new plans will set aside seven units for extremely low-income residents. It seeks to take advantage of the cit’s Transit-Oriented Communities program, which developers have been using to increase project density. The bonuses are allowed for market-rate residential construction projects that include affordable housing near public transportation.

The six-story building would include studio, one-, and two-bedroom units. The project was designed by Andmore Partners, and will feature a fitness center and a pool lounge.

Koreatown has had a flood of multifamily redevelopment and conversion projects over the past few years, among them Jamison, which is a prolific developer in the area. But the firm is not the only one investing there.

Urban Commons plans to build a six-story mixed-use project with 209 units at Crenshaw and Olympic boulevards. That same firm is working with Townline and Forme Development on a 256-unit project at 550 Shatto Place. [Urbanize] — Gregory Cornfield

The Real Deal is hosting its annual Los Angeles Residential Showcase and Forum on Friday, June 21, at The London West Hollywood. This year’s forum will focus on how social media and guerrilla marketing play into securing exclusive listings, as well as analyze the impact of new trends and challenges in L.A.’s hottest neighborhoods.

Joining this influential group of speakers is moderator Jennifer Berman of Berman and Pollinger. Berman is one of the leading luxury brokers in Los Angeles with 20-plus years of experience in sales leadership. She is also part of the cast of CNBC’s new real estate show, “Listing Impossible,” premiering this summer. Berman’s dynamic personality is sure to add some fun to the mix.

The powerhouse lineup of speakers also include Joyce Rey of Coldwell Banker; Michael Williamson of Sotheby’s, George Penner of Deasy Penner Podley, Aaron Kirman of Compass, Ernie Carswell of Douglas Elliman, Josh Flagg of Rodeo Realty, Ivan Estrada of Douglas Elliman, Billy Rose of The Agency, Josh Altman of Douglas Elliman, and F. Ron Smith of Compass.

Sponsors for this event include Agent Image, Bosch, Gaggenau, Kay Properties and Investment, Side Inc, Real Estate Innovation Network, Smith & Berg Partners and Thermador.

Check out our event page daily for the latest forum updates. Tickets are still available, but selling out quickly.

Partners Capital Solutions Gary Leff and the property

A Hidden Hills spec home that shaved $2.5 million off its original asking price still managed to secure the highest sale ever in the exclusive neighborhood.

The nearly 15,000-square-foot mansion sold for $22.2 million, exceeding the previous mark of $19.75 million set by uber power couple Kim Kardashian and Kanye West about five years ago.  The Los Angeles Times first reported the most recent sale, which closed last week.

The sale comes amid an overall softening in Los Angeles’ high-end residential housing market.

Records show the LLC, Hidden Paradise Investors, has owned the property since 2015, when it paid $4.4 million for the land. The LLC and registered agent, Heather Farley, are tied to Partners Capital Solutions, which is a private portfolio lender.

The buyer remains unclear. The property — the largest in the Hidden Hills neighborhood — first hit the market seeking $25 million in February.

Located on Paradise Valley Road, the sprawling mansion sits on 7.4 acres and has six bedrooms and nine bathrooms. The property includes a 65-foot swimming pool, a 1,600-square-foot barn, sand volleyball court, and more than half-a-mile of private golf cart trails.

Marc and Sara Shevin of Berkshire Hathaway HomeServices had the listing. Jordan Cohen of RE/MAX Olson & Associates represented the buyer. The Shevins declined to confirm the identity of the seller. Farley and Cohen could not be reached.