Mirman School Head of School Dan Vorenberg

Mirman School for Gifted Children — those whose IQs are 138 and above — is looking to expand with a new academic wing at its Mulholland Drive campus in Brentwood.

The private school filed plans for the expansion with the Los Angeles Department of City Planning. The school intends to build a 45,000-square-foot, three-floor academic building, and add improvements to existing facilities.

The expansion would accommodate students in kindergarten to 12th grade — the school is now K-8 — and up to around 535 students. It now has 300 students. The school campus spans more than 60 acres.
A school representative did not immediately return requests for comment.

Land use consultant Mark Armbruster of Armbruster Goldsmith and Delvac is representing the school, but could not be reached for comment.

The Mirman School was founded in the early 1960s and is open to students with IQs of 138 and above. Roughly 2 percent of people who take IQ tests score 130 or higher. Mensa, the most well-established high IQ society in the world, only accepts people who score 130 or higher.

Earlier this month, EF Education First school secured approval for 200 housing units at a planned private school campus in Pasadena.

WeWork’s Adam Neumann and Onni Group President Rossano de Cotiis with a rendering of Wilshire Courtyard (Credit: Getty Images and Michael Maltzan Architecture)

Onni Group closed on the 1 million-square-foot Wilshire Courtyard complex, and has chosen a high-profile first tenant.

The company signed co-working giant WeWork to four floors at 5750 Wilshire Boulevard, one of two buildings in the sprawling campus. WeWork announced the deal Tuesday.

It remains unclear how much Vancouver-based Onni paid seller Tishman Speyer for the office campus. Natixis provided the developer a $550 million loan to fund the purchase, which The Real Deal reported in June. The purchase price was reportedly close to $630 million.

WeWork’s newest Miracle Mile location marks its first in the neighborhood, and its 30th in Los Angeles. The company recently expanded in the Pacific Design Center in West Hollywood, where it offers podcast recording studios and makeup rooms. As of the first quarter, the firm’s footprint in the L.A. had grown to 2 million square feet.

Similarly, Onni has also been rapidly growing in the region. Its latest purchase comes as the firm is also expanding in Orange County. There, Onni recently paid $97 million to acquire an 8.6-acre office and retail complex, dubbed Ocean Plaza.

But Onni’s biggest push by far has been in Downtown L.A., where it’s building upwards of 4,000 residential units. It recently got the green light to build a 60-story tower at 1000 S. Hill Street, which is a block away from another Onni tower that opened late last year.

Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions (Credit: iStock)

Spurred by low interest rates, consumers are taking out more mortgages, bolstering the profits of banks’ consumer divisions. But forecasted cuts by the Federal Reserve have Wall Street trading down.

Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions, according to the Wall Street Journal. Consumer mortgages originations jumped at each of the banks, as did credit card spending.

This was largely driven by low unemployment, increased wages and the Fed’s low interest rates that have satisfied consumers who are willing to spend more.

But commercial trading business was down. Goldman Sachs, which does not have a significant consumer business, was the only bank to record a lower year-over-year second quarter profit, with a 3 percent drop in trading revenue.

In June the Fed opted to keep interest rates steady, while it considered cutting interest rates further, sparking concerns of an economic slowdown. In addition to unease about further Fed rate cuts, multiple tariff battles with China and Mexico has also unnerved traders, and contributed to the decline in Wall Street revenue.

JPMorgan’s trading revenue fell 6 percent, and its investment banking profits dropped 8 percent. The bank readjusted its net lending profits forecast to $57.5 billion, down from $58 billion for the year.

“The consumer in the United States is doing fine,” JPMorgan CEO James Dimon told analysts, the outlet reported. “The business sentiment is a little bit worse.” [WSJ] — David Jeans

Brendan Wallace (Photo by Jeff Newton)

Brendan Wallace has been everywhere these days. The co-founder and managing partner of Fifth Wall Ventures — a venture capital fund focused on bridging the gap between real estate and technology — has taken up the cause of reviving the beleaguered retail sector. And while he’s been sounding off in the media about the firm’s efforts to pair mammoth retail REITs with innovative tech and online brands, he’s also attracted the attention of the tabloids, having been romantically linked with more than one Hollywood starlet. But the 38-year-old was all business as he sat down with TRD to discuss his firm’s projects and origins.

Wallace entered the finance world with a job at Goldman Sachs and went on to join the real estate private equity division at Blackstone Group, where he would be connected to Fifth Wall co-founder Brad Greiwe. After breaking away from the firm to launch two startups, Identified and Cabify, Wallace teamed up with Grewei in 2016 to launch Fifth Wall. The Venice-based firm recently closed a $503 million fund, bringing its assets under management close to $1 billion. Its 49 partners on that fund include heavy-hitters like Macerich, Prologis, CBRE and, most recently, Hudson Pacific Properties and Related Cos. In this interview, which has been edited and condensed for clarity, Wallace chats about the future of retail, co-living and working alongside startups he’s invested in on Abbot Kinney.

Age: 38
Hometown: New York City
Lives in: Venice
Family: Single, no kids

Did you always know what you wanted to be when you grew up? I went through Princeton without having a super clear-cut vision of what I wanted my career to look like. I actually worked in domestic banking in real estate at Goldman, which is how I first got my foray into real estate. I naturally gravitated towards it. Real estate is one of these industries that’s so intimate to people’s lives, and I thought that was fascinating.

What went into the decision to launch Fifth Wall? [There] is this odd slingshot effect that’s occurring right now, where the largest owners and developers of real estate in the U.S. and globally are looking to technologies and saying, “What are the synergies we can capture by adopting technology?” However, it’s not quite as simple as solving their pain points because you truly have to understand the mindset of the people that manage these real estate companies and also how they’re operated. Brad [Greiwe] and I had this experience of having worked in and experienced what it’s like to be inside a real estate company.

How did you get big names like CBRE, Macerich to invest in the first fund? It started with a fundamental belief that, if real estate organizations acted in a consortium fashion and collaborated, there were synergies that Fifth Wall and the portfolio companies would realize. That was actually a pretty novel approach. Many of these companies had tried at that point to do corporate venture capital on their own but had been plagued by the stigma associated with it. Fifth Wall was able to come to them with a product that represented the best of corporate venture capital in the sense that we could identify companies that would give them strategic value, but we were also independent.

You followed that $212 million fund with a second $500 million fund, comprising  49 partners from nine different countries. How did that come together? Our funds have always been a mix of strategic and traditional financial Limited Partners [LPs]. We started to see that Fifth Wall, as a venture fund, was realizing network effects. So we saw this opportunity to really build a large consortium — the largest consortium of corporates that have ever invested in a venture fund. The reason they’re doing that is because it’s a better model than operating independently.

We’re constantly hearing, “Retail is dead.” What are your thoughts on that? Retail is not dead — it’s changing. There will never be a 1,500-store retailer that is truly ubiquitous. You will never see a Gap again. There’s an interesting dichotomy in the sense that, yes, there is a bankruptcy that’s happening in the retail industry, but there’s also a lot of life and birth that’s happening in the real estate industry. You will see more 25 to 200-store brands that emerge as consumer choice expands.

Tell me about the retail-focused fund. It’s a consortium-based model where we brought all the largest retail real estate owners together to say, “Can we support this growing ecosystem of new brands and retail concepts that are growing and want to collaborate with large landlords?” That fund invests exclusively in brands that are opening up stores. Heyday and Untuckit [are both] digitally native brands that had been selling directly to consumers online but now have opened stores.

You recently invested in Aurora Solar, a solar software provider. What other types of companies are interesting to you in terms of their investment potential? We’ve started to look beyond the obvious opportunities to see where technologies can be very strategic to real estate owners. You have to build trust with these corporates to find those so-called “adjacent opportunities” to real estate tech. Increasingly, real estate owners are coming to Fifth Wall and asking us to help them unlock the real estate opportunities that are almost derivative opportunities from birth. We’ve seen that with co-working and co-living.

Do you think co-living will be as successful as co-working? The premise of co-living at a business model level is fundamentally the same as co-working. You’re taking an established real estate business model with long-term leases, and you’re consumerizing it. In one sense, it’s a bigger opportunity [than co-working] because everyone needs a roof over their head. In the other sense, it’s a little bit more niche in the sense that not everyone is going to want to live in a shared living space.

Neither you nor your co-founder are from L.A. Why be based in Venice — specifically Abbot Kinney? L.A. is a hub for the entertainment industry, but it’s also a hub for the real estate industry. There’s a number of our real estate partners that are based here, and technology is kind of mixing with all those industries in a unique way. Plus, I think the answer to that question is obvious if you just walk down the street.

Your company has been in the press a lot, but recently, your love life has been fodder for the tabloids. How does that feel? [Wallace was linked to actress Emma Watson earlier this year and was photographed with actress Alexandra Daddario days after TRD‘s interview with Wallace.] I don’t want to comment on that.

Downtown Los Angeles (credit: Jeff Cleary and Laurie Avocado)

Any rezoning and redevelopment plan for Skid Row and greater Downtown Los Angeles must include more affordable housing and can’t just pave the way for luxury apartments.
That was the word from homelessness advocacy groups and community organizations on Tuesday during a rally, the Los Angeles Times reported.

Representatives from groups including Los Angeles Catholic Workers, Inner City Law Center, and Los Angeles Community Action Network said they want to see new housing in Skid Row to be “deeply affordable,” and for enough housing to be built for all people living without shelter, the Times reported.

To do so, they proposed requiring one of four new rental units built in the coming decades to be reserved for low-income people, far more than the city plans to require in a recently released draft outline of the rezoning.

Debate over the future of Downtown L.A., particularly Skid Row, has been at a fever pitch since the city released the draft outline earlier this month.

The plan does have stringent affordability requirements for units built in the core of Skid Row, a 50-block area between Downtown’s rapidly changing east side and the Arts District, but local groups want that requirement widened.

The proposal is meant to house all of the 2,700 people living on the streets in Downtown, where a total of 8,000 people are considered homeless.
Under the draft proposal, developers would be allowed to build market-rate housing along the edges of Skid Row and would be eligible for density bonuses if they include some affordable units in those projects. [LAT] — Dennis Lynch

Bellwether Enterprise Real Etate Executive Vice President Tom Kenny and Talaria at Burbank

PGIM has extended a 10-year $126.5 million mortgage to Cusumano Real Estate Group for a recently completed 241-unit mixed-use complex in Burbank.

The local firm completed the four-story Talaria at Burbank complex in February and opened it in May. The property is just outside Warner Bros.’ studio campus at 4301-4325 W. Olive Avenue.

The complex includes a Whole Foods grocery store and a restaurant on the ground floor and mostly one- and two-bedroom units above. The complex was in development for nearly two decades, according to the San Fernando Valley Business Journal.

It’s Burbank’s only LEED-certified residential building, according to a press release from Bellwether Enterprises, an Irvine commercial mortgage firm that arranged the deal with PGIM.
Bellwether expanded to L.A. and San Diego in 2017. In March, the firm advised on refi deals for two Arts District properties owned by investor Daryoush Dayan.

PGIM is a subsidiary of Prudential Financial and is highly active in L.A. as an investor, particularly in the industrial sector. Its last big investment play was January’s acquisition of a Chatsworth manufacturing plant for $37 million. The investment was made in partnership with Xebec Realty Partners.

In November, PGIM sold a Huntington Beach office campus Ares Management for $124.5 million.

A map of the US with flags from China, Canada and India

Foreign investment in residential real estate in the U.S. has taken a tumble.

Foreign buyers purchased $77.9 billion worth of existing U.S. homes between April 2018 and March 2019, a 36 percent decline compared to the $121 billion recorded the previous year, according to a report from the National Association of Realtors released Wednesday.

Buyers from China topped the list, outspending those from other countries for the seventh consecutive year with about $13.4 billion worth of home purchases. That still represented a sharp decline — 56 percent — from the prior year.

Canadians ranked second, spending $8 billion on residential properties last year. About 75 percent of them were the most likely to pay all cash while half of Chinese buyers paid all cash. Buyers from India spent the third most, $6.9 billion. The United Kingdom ranked fourth at $3.8 billion and Mexico was fifth at $2.3 billion.

Within the U.S., 20 percent of foreign investment was spent in Florida, which comes out to about $15.6 billion between the spring of 2018 and 2019. California attracted 12 percent of the nearly $80 billion international buyers spent, or about $9.35 billion. Texas was the third most popular state for foreigners, accounting for 10 percent of such purchases.

While Florida has been known to attract foreign and out-of-state investment due to its favorable tax laws, California is not so friendly. It has the highest state income tax in the country.

Slower economic growth worldwide and a strong dollar have contributed to the pullback, said Lawrence Yun, chief economist at NAR.

“The magnitude of the decline is quite striking, implying less confidence in owning a property in the U.S,” he said in a statement accompanying the report.

The top five countries reported an annual drop in total sales volume. Chinese investment, especially, could continue to drop. The Chinese government recently cautioned students considering studying in the U.S. — who historically spend billions on homes near their schools — from studying in America. The continuing trade war between the Trump administration and China could also be a contributing factor, experts said.

Dr. Dre and the house

It’s on to “The Next Episode” for music mogul Dr. Dre.

The legendary hip-hop producer and founder of Beats Electronics has put his longtime home in Woodland Hills up for sale for $5.25 million, the Los Angeles Time reported. The 16,200-square-foot residence is on a manor on Chatsboro Street in a guard-gated community.

The three-story house was built in 1987 and has been extensively renovated. It includes eight bedrooms and 13 bathrooms, and it features two kitchens, a movie theater, an office, indoor spa, an elevator and a 150-gallon fish tank. The property also includes a saltwater swimming pool and patios.

Dr. Dre, who famously grew up in Compton, purchased the home in 1999 — the year he released “2001” — for $2.35 million.

He owns other properties in Los Angeles County, including a home in a gated Pacific Palisades community that he purchased last month for $2.25 million and a Brentwood compound that he purchased five years ago from Super Bowl champion Tom Brady and supermodel Gisele Bundchen for $40 million. Last year, he also purchased an estate in Calabasas for $4.9 million. In 2016 he sold a 9,700-square-foot Hollywood Hills residence for $32 million.

David Smith of Keller Williams Realty holds the listing.

The billionaire and Grammy Award-winning artist was a key member of the iconic L.A.-based rap group N.W.A. before he founded Aftermath Entertainment and Beats Electronics. [LAT] — Gregory Cornfield

Michael Landon and the home in Malibu (Credit: Getty Images)

Amid Los Angeles’ stalling high-end residential market, the widow of television star Michael Landon sold her Malibu home for more than twice what she paid four years ago.

Cindy Landon unloaded the beachside home on Seafield Drive for $15.7 million, after paying $7.5 million for it in 2015, records show.

The home was renovated and expanded during the time Cindy Landon owned the property. It now has 6,900 square feet of space, five bedrooms and six bathrooms. It also features access to the beach, a koi pond and a garden.

The sale price was about 13 percent below the $18 million Landon had listed it for when it hit the market a year ago.

Cindy Landon’s son, Sean Landon, a broker with The Agency, had the listing. He declined to reveal the name of the buyer, saying it was a “very successful” and well-known entertainer. The buyer was represented by Edward Fitz with The Agency, who did not comment.

Michael Landon, an actor, director and producer, starred in television shows that included “Bonanza,” “Little House on the Prairie” and “Highway to Heaven.” He died in Malibu in 1991.

Malibu, known for its celebrity-inhabited homes, has seen a flurry of recent transactions. In the past month, Kelsey and Camille Grammer’s former mansion hit the market for $20 million, snowboarding legend Shaun White listed his compound for $27.3 million; and NBA superstar Kevin Durant sold his home for $12.2 million.

From left: Lendlease CEO Steve McCann and Google CEO Sundar Pichai

UPDATED, July 17, 6:36 p.m. Eastern: Google has already found a partner for its most ambitious real estate project yet.

On Wednesday, Google announced that it has tapped Australia-based construction giant Lendlease to co-develop $15 billion worth of master-planned communities in Silicon Valley.

Under the terms of the agreement, Google and Lendlease will redevelop the tech company’s properties in Mountain View, Sunnyvale and San Jose, California, over the next 10 to 15 years. The firms will jointly undertake the master planning and development, which would see mixed-use communities replace office space and empty land. Lendlease is aiming to start work in 2021.

It’s part of a larger housing plan Google announced last month as an answer to the housing crisis it and other tech firms have created in Silicon Valley.

In an interview following the announcement, Lendlease’s CEO Americas Denis Hickey estimated the project will include 15,000 units of condominiums and rentals. The entire development work will see a total of 15 million square feet, not including office space.

Hickey said the Google-Lendlease team has already begun working with local governments on rezoning and master planning. The process, he said, is “well underway.” Lendlease said it was the largest deal in its 61-year history.

The search giant and the contractor are intimately familiar with one another —Lendlease in 2017 was selected to build Google’s $435 million London headquarters, which was designed by Bjarke Ingels and Heatherwick Studios and is expected to be completed in 2021. Lendlease also worked with Google on a discontinued headquarters in Sydney.

A few months ago, the tech giant poached Lendlease’s top real estate executive in San Francisco, Alexa Arena.

Lendlease is the go-to general contractor for luxury high-rise condo towers in New York City, having built Harry Macklowe and CIM Group’s 432 Park Avenue, World Wide Group and Rose Associates’ 252 East 57th Street, Vornado Realty Trust’s 220 Central Park South and Hines’ 53 West 53rd Street.

Back in 2015, the firm launched a development arm, its first New York project being 277 Fifth Avenue as part of a joint venture with the Victor Group.

The Sydney Morning Herald reported that the latest Google deal will increase Lendlease’s global development pipeline to about $70 billion.

Kathryn Brenzel contributed to this report.

Editor’s note: This version includes comments from Lendlease’s Denis Hickey.

David Richter, chief business officer of Lime (Credit: Getty Images; David Richter photo via LinkedIn)

E-scooters could mean a boost in real estate values in congested U.S. cities.

This is the assertion of David Richter, the chief business officer at e-scooter startup Lime, which has deployed thousands of scooters in cities across the country.

Speaking at a conference hosted by Fortune Tuesday, Richter said that the rise of e-scooters, coupled with an increase in bicycle use and ride-sharing, could drive down traffic from traditional car use.

In turn, urban planners could redesign neighborhoods with fewer parking spaces and less traffic, which could increase the value of real estate, Richter said, according to Fortune. Another panelist, Ken Washington, the chief technology officer of Ford, reportedly said that in San Jose, California, some new developments were being built without parking garages, as city planners focus on decongestion.

The e-scooter craze has drawn significant investment. Lime, which has raised $765 million, is now is available in 100 U.S. cities and 27 international cities. In February, the San Francisco-based startup raised $310 million in a series D funding round that valued the firm at $2.4 billion. That round was led by Bain Capital Ventures, Andreessen Horowitz and Fidelity Ventures.

But not everyone is cheering on the wave of e-scooters. In Los Angeles, a city council advisory board imposed a voluntary ban on Lime and another firm, Bird, from deploying more scooters while it determined regulations around their use. Some residents there complained about the scooters being parked haphazardly or being used on sidewalks. [Fortune] — David Jeans

From left: Colony Capital’s Tom Barrack, 8250 Milliken Avenue and Lincoln Property Co.’s David Binswanger (Credit: Getty Images, Google Maps)

Colony Capital has sold a massive four-property industrial portfolio in the Inland Empire, the latest indication it is looking to sell its entire industrial holdings.

Colony sold a 745,580-square-foot portfolio in Rancho Cucamonga to Lincoln Property Company for $104.6 million. CBRE, which represented Colony, announced the deal Wednesday.

The buyer, Lincoln Property, recently put a sprawling office campus on the market for sale. Dubbed Campus @ Warner Center, the property is on the market for $215 million.

The announcement came hours after Bloomberg reported that Los Angeles-based Colony was in discussions with Eastdil Secured to market its portfolio of warehouses and last-mile logistics properties for around $5 billion. Brookfield Asset Management could be a potential suitor, according to the report.The four properties in the Inland Empire are fully leased to five tenants, including XT Green, Carpenter Technology., Pinole Valley Trucking, THMX Holdings and ConAgra Foods. The three properties in Rancho Cucamonga are located at 11600 Millennium Court, 8250 Milliken Avenue and 9160 Buffalo Avenue, while the fourth sits at 4850 East Airport Drive in Ontario.

Colony also recently sold a 2.3 million-square-foot industrial portfolio in Dallas to Nuveen Real Estate for $136 million.

If Colony was to sell off all its industrial holdings, the deal in the neighborhood of $5 billion would top the potential Prologis deal that is in the works. Prologis is in advanced talks to purchase Industrial Property Trust from Black Creek Group for $4 billion. That portfolio spans 37.6 million square feet across industrial properties in 21 states.

Architect Stefan Behling (right) and Senior Director for Apple Retail and Design Chris Braithwaite talk about the Board Room, as part of Apple Carnegie Library in Washington, DC (Credit: Getty Images)

Millions of people flock to Apple stores every day, and most are familiar with the stores’ signature layout and aesthetic. What’s lesser known, though, is that many of these stores contain a private “boardroom,” complete with carefully curated furniture from some of the world’s top designers.

The boardroom concept was announced by Apple’s former Retail SVP Angela Ahrendts in May 2016. Today, there are about three dozen stores around the world that were either built with a boardroom or remodeled to include one.

Closed to the public, the spaces are mainly used for private events, business meetings and Apple sessions, 9to5mac reports.

The rooms feature a mix of designer pieces and custom furniture. According to 9to5mac, which attempted to catalogue the rooms based on consultations with designers and furniture suppliers, some staples include a set of Maruni’s “Hiroshima” armchairs, as well as a choice of lamps: either the Snoopy Table Lamp in black (Achille Castiglioni), or the Atollo glass by Vico Magistretti.

In keeping with the rooms’ fresh, minimalist appearance, many feature planters with white orchids, and a small selection of vases and accessories.

The boardroom inside Apple’s Upper East Side location, which opened in 2015 in a former U.S. & Mortgage Trust, is the most unique, according to 9to5mac, because it still contains the bank’s original vault. [9to5mac] — Sylvia Varnham O’Regan

Architect Michael Kollin and the planned Lasky Hotel

The Los Angeles hotel construction boom shows no signs of slowing down, with the latest being a 66-key boutique hotel project.

The owners of the existing Maison 140 Hotel at 140 S. Lasky Drive plan to replace the aging building and an adjacent parking lot with the new four-story hotel, according to Urbanize. The ownership entity, Ingram Holdings, plans to call the new structure, the Lasky Hotel. It recently received a greenlight from city planning officials. A timeline for construction hasn’t been released.

The project is around the corner from the Beverly Hilton and neighboring One Beverly Hills site, where Hilton owner Beny Alagem is developing a large mixed-use condo and hotel complex. Architect Norman Foster is designing the One Beverly Hills project.

The Lasky Hotel project, meanwhile, will include ground-floor retail, a rooftop deck and inner courtyard area.

The Maison 140 Hotel dates to the 1930s. It has 44 rooms and spans about 14,500 square feet. Ingram Holdings purchased the property through an LLC in 2012 for $11.5 million. Property records suggest Utah-based Hartland Hotel Group is also involved in the project.

Kollin Altomare Architects is the designer, positioning the Lasky as “a small-scale version of the grand European hotel.” The Long Beach-based architect is prolific in the hospitality industry. The firm has designed hotels for major brands and smaller boutique companies. Its work in L.A. includes the ground-up Sheraton Los Angeles San Gabriel and a redesign of the Viceroy L’Ermitage in Beverly Hills. [Urbanize] — Dennis Lynch 

Kinka Usher and his Alhambra-inspired estate (Credit: The Agency)

Always wanted to live in a palace on the Mediterranean, but never wanted to leave California? An estate in Montecito inspired by Spain’s historic Alhambra palace is hitting the market for $35 million.

The 2.4-acre estate is anchored by a 11,500-square-foot home inspired by the centuries-old Alhambra palace in Granada, Spain. The estate incorporates many of the palace’s design elements, including Corinthian columns and Moorish mosaics, according to the Wall Street Journal.

The home was built by prominent French-born commercial director Kinka Usher, who was inspired by a childhood trip to the 35-acre palace. The Alhambra was built and expanded during the 14th and 15th centuries by Moorish rulers, then altered and expanded by Spain’s later rulers in the following centuries.

The palace has a unique mix of architectural styles, all of which Usher incorporated into the Montecito estate. Usher purchased the property about a decade ago and built the estate over two years. Most of the floors are imported from Europe.

The main house has an attached guest house and the grounds have a koi pond and Japanese-style pavilion, bocce and pickleball courts and an olive orchard. The Agency’s Billy Rose has the exclusive listing. Usher told the Journal he’s selling the home to spend more time at his real European estate on the Italian island of Capri, outside Naples.

It’s one of many properties to hit the market this year in the haute seaside town outside Santa Barbara.

In May, actor Jeff Bridges listed a more modest four-acre property for $8 million. An 8,000-square-foot mansion owned by late Discount Tire founder Bruce Halle is on the market for $12.5 million.

The massive 43,000-square-foot home of Embassy Suites CEO Patrick Nesbitt is asking $65 million. [WSJ] — Dennis Lynch

Blackstone Group CEO Stephen Schwarzman (Credit: Getty Images)

Blackstone Group’s earnings declined over the past three months as distributable earnings from the firm’s real estate segment fell by nearly a quarter from the same time last year.

The firm’s overall net income for the second quarter of the year fell to $305.8 million, or 45 cents per share, a significant decline from the $742 million a year ago, executives announced on the company’s earnings call Thursday morning.

At the same time, distributable earnings rose to $708.9 million, or 57 cents a share, exceeding most analysts’ expectations.

In particular, distributable earnings from the firm’s real estate segment fell by 24 percent year-over-year to $329.3 million, while private equity, hedge fund solutions and credit segments all saw distributable earnings rise significantly.

“The past few months have been a remarkable period for Blackstone characterized by transformation and continued momentum,” Blackstone CEO Stephen Schwarzman said during the call. “In addition to our ongoing business evolution, we’ve completed our corporate conversion, and the market response, as you know, has been quite positive.”

“If we continue to grow as the reference institution in our industry and meaningfully expand our potential investment base through conversion, it’s reasonable to assume that we should close the valuation gap between our firm and other top companies,” Schwarzman added.

It was the company’s last quarter as a partnership. The alternative investment firm completed its conversion to a corporation on July 1.

Blackstone’s conversion to a C corporation, made possible by tax law changes that lowered the highest corporate rate to 21 percent from 35 percent, allows the firm to tap a more diverse pool of investors.

The company spent several weeks after its April announcement on an extensive “roadshow” to introduce or re-introduce itself to investors. “The schedule was exceptionally high quality and included over 100 institutions, more than half of which were new to the alternative sector and Blackstone, and/or were materially restricted previously from owning P2Ps,” Blackstone CFO Michael Chae said on the call.

Thanks to the conversion, Blackstone has now become eligible for inclusion in many market indices such as S&P Total Market, MSCI and CRSP, and expects to be added to those in the fall.

In the questions segment of the earnings call, Blackstone executives shared their views on impacts from broader market issues, such as the impact of the U.S.-China trade war.

“I think the good news for us is that we don’t have that many businesses in the global supply chain, either retailers or big exporters, so the impact there directly to our portfolio is not quite as significant,” COO Jonathan Gray said. “The real question is will it leak more broadly into the economy or markets.”

“So far, the more dovish tone from central banks has outweighed the slowdown from trade,” Gray added, noting that many central banks have either reduced interest rates or signaled an intention to do so in response to the slowdown in trade.

The decline in interest rates made it more challenging for Blackstone to find opportunities to deploy the capital it has raised, especially in infrastructure. “I think the good news for us is that we’re operating at a very large scale,” Gray said. “By playing where the air is thinner, which is really the strength of our infrastructure business, we’ve got a better competitive dynamic.”

The past quarter saw Blackstone make one of the largest industrial real estate deals in history, buying a 179 million-square-foot warehouse portfolio from Singapore’s GLP for $18.7 billion.

Last week, Blackstone halted all improvement works at the 11,000-unit Stuyvesant Town and Peter Cooper Village complexes in New York, saying that it was “in the process of evaluating capital investments” in the properties in light of the state’s new rent laws.

Grace on Spring, Griffin on Spring, and Holland Partner Group CEO Clyde Holland

Holland Partner Group has sold a pair of multifamily towers in Downtown Los Angeles’ Fashion District neighborhood for a combined $403 million, The Real Deal has learned.

The buyer of the properties, known as the Griffin on Spring and the Grace on Spring, was Denver-based Daydream Apartments. The owner-operator also facilitates homesharing for residents, allowing them to rent out vacant units.

Property records reveal Daydream bought the properties through Iconiq Capital, a San Francisco-based venture capital firm. The Grace sold for $203.5 million, and the Griffin sold for $199.6 million.

Both towers, designed by MVE+Partners, span 24 stories each. Combined, they hold 575 units and 12,500 square feet of retail space. Amenities include a gym, rooftop area, yoga studio and swimming pool.

Holland built both buildings, which opened less than a year ago. In a release, Daydream said Holland will continue to manage the buildings for the time being.

Daydream, founded last year, has been on an expansion tear. The firm recently paid Holland $304 million to acquire another multifamily tower in Denver, purchased with a $200 million loan from Deutsche Bank. Last month, Daydream also picked up two other buildings in Seattle.

Heidi Patalano

Our summer issue is live! Check out all of the stories, available to subscribers here. 

Here’s a look at few of the highlights:

Known for its super slick marketing campaigns, uber-luxury listings and reality TV-famous co-founder (Mauricio Umansky — whose wife, Kyle Richards, stars on Bravo’s “The Real Housewives of Beverly Hills”), The Agency has a polarizing presence on the resi playing field. Former agents make claims of stolen clients and listings, and industry rivals allege the firm uses inflated sales numbers. Haters gonna hate, right? But as The Agency contends with a weighty lawsuit, agent defections and rumors of a brokerage sale, our associate editor Natalie Hoberman investigates the current state of affairs at the rapidly expanding firm.

And while the City Council enjoys its summer recess, other fixtures in City Hall aren’t taking off for any R&R. The real estate industry’s lobbyists are hard at work building industry-friendly support for policies (and begging for zoning changes). Staff reporter Dennis Lynch takes us behind the scenes to see who’s got their hands on the levers of power.

Other highlights in this issue include our look at the biggest commercial sales within the city’s Opportunity Zones (page 22) and our sit-down with Fifth Wall co-founder Brendan Wallace. The Venice-based venture capital firm’s new $503 million tech fund has heavy hitters like CBRE, Macerich and Hudson Pacific Properties signing on as partners. Not too shabby.

Enjoy the issue!

From left: Colony Capital’s Tom Barrack, 8250 Milliken Avenue and Lincoln Property Co.’s David Binswanger (Credit: Getty Images, Google Maps)

Colony Capital has sold a massive four-property industrial portfolio in the Inland Empire, the latest indication it is looking to sell its entire industrial holdings.

Colony sold a 745,580-square-foot portfolio in Rancho Cucamonga to Lincoln Property Company for $104.6 million. CBRE, which represented Colony, announced the deal Wednesday.

The buyer, Lincoln Property, recently put a sprawling office campus on the market for sale. Dubbed Campus @ Warner Center, the property is on the market for $215 million.

The announcement came hours after Bloomberg reported that Los Angeles-based Colony was in discussions with Eastdil Secured to market its portfolio of warehouses and last-mile logistics properties for around $5 billion. Brookfield Asset Management could be a potential suitor, according to the report.The four properties in the Inland Empire are fully leased to five tenants, including XT Green, Carpenter Technology., Pinole Valley Trucking, THMX Holdings and ConAgra Foods. The three properties in Rancho Cucamonga are located at 11600 Millennium Court, 8250 Milliken Avenue and 9160 Buffalo Avenue, while the fourth sits at 4850 East Airport Drive in Ontario.

Colony also recently sold a 2.3 million-square-foot industrial portfolio in Dallas to Nuveen Real Estate for $136 million.

If Colony was to sell off all its industrial holdings, the deal in the neighborhood of $5 billion would top the potential Prologis deal that is in the works. Prologis is in advanced talks to purchase Industrial Property Trust from Black Creek Group for $4 billion. That portfolio spans 37.6 million square feet across industrial properties in 21 states.

From left: Fredrik Eklund and Stephen Kotler (Credit: Getty Images and Jeff Newton)

UPDATED, July 18, 3:16 p.m.: On July 10, Douglas Elliman star broker Frederik Eklund told his 1.1 million Instagram followers he and his family would be moving from New York City to Los Angeles, where the brokerage has eight offices.

“LA has some of the world’s most exciting new development projects coming,” Eklund boasted in his announcement. Within days, more than 90,000 people had liked the post.

But Eklund’s shift to the West Coast comes at a time when Elliman — a juggernaut in New York City — still trails some of its biggest competitors in sales volume in the L.A. area. It also comes as high-end home sales in L.A. have slowed, a combination of “aspirational prices” — which Elliman itself acknowledged — and ample supply spec homes that have been hitting the market.

In October, the team of Eklund — a star on Bravo’s “Million Dollar Listing New York” — and John Gomes expanded into L.A. At the time, it added four agents on the West Coast and now has 64 agents split between New York, L.A, and Miami.

In New York, the Eklund-Gomes team is a force. It closed $721 million in sales last year in Manhattan, Brooklyn and Queens, making it No. 1 in The Real Deal’s annual broker rankings. As of April 15, it had $291.7 million in listings, good for fourth on another TRD ranking. And Eklund himself is now selling a $52.7 million penthouse in the Tulip Building in New York’s Soho neighborhood, as well as a $35 million unit in the West Village.

For that kind of success on the West Coast, Eklund said he had to dedicate his time.

“To be truly successful in L.A., one of us had to spend a lot more time there setting up,” Eklund said in an email response to questions from TRD. “I’m glad to take that role.”

In the beginning

Elliman opened its first office in L.A. in March 2014, at 9440 Santa Monica Boulevard in Beverly Hills. Led by CEO of Western region, Stephen Kotler, the firm has since grown to eight offices in the county, with a total of 453 agents.

In California, it has 19 offices with 723 agents overall.

The company had a total $1.8 billion in closed sales volume for L.A. County in 2018, according to a spokesperson at the firm. The figure does not include off-market deals. That’s a small fraction of its total sales volume nationwide, which was $28.1 billion last year.

As of July 8, the firm had 171 homes on the market for a combined $1.1 billion spread across L.A., according to an analysis of single-family and townhouse listings on the Multiple Listings Service.

That’s about 57 percent less than Compass, which had 850 listings amounting to $2.7 billion in total volume. Hilton & Hyland and the Agency had $2.6 billion and $1.6 billion, respectively.

Elliman is hoping some of the million dollar man’s magic will help boost that volume: Eklund recently secured listing for an $18 million mansion in Beverly Hills. He’s also vying for a $60 million listing in Beverly Park.

“I’m already very, very busy and I don’t take that for granted,” Eklund said in an e-mail. “I don’t mind being the underdog, in fact I like it. But it’s the new development that will set me apart a bit I think. I’m already working on a couple of the best projects out there.”

Elliman’s biggest names in L.A. are the Altman Brothers, the only team in the city to have their own office.

Josh and Matt Altman, who appear on “Million Dollar Listing Los Angeles,” were also the only Elliman team to crack The Real Deal’s ranking of top brokers this year. They came in eighth place, pulling in $236.1 million off 23.5 deal sides in 2018.

The brothers also ranked as the top team in L.A. during Elliman’s annual awards celebration in, dubbed “The Ellies.” Josh Altman, regarding Eklund’s move to L.A., “happy to have him in our territory.” But he added, “as far as anyone in the business being intimidated, last time I checked sharks are the top of the food chain…”

While Eklund said he plans to “take it slow” in L.A., he ultimately wants to have what he has in New York — a 10,000-square-foot office for his team alone. But, “that takes time and patience,” he wrote. “I have a lot of people to meet and a lot to learn in California.”

Other top teams in L.A. include Pugh Tomasi & Associates, Ernie Carswell and Associates, the Chad Lund Team and Tracy Tutor Team, according to Elliman’s ranking by top gross commission.

Elliman has scored some big listings in recent months. Connie Blankenship is listing the Park Bel Air development site for $150 million. The Altman Brothers are selling a Holmby Hills mansion for $78 million and Stefani Stolper is looking for a buyer for Muhammad Ali’s former Hancock Park estate. That’s on the market for $17 million.

Going vertical

Elliman has made a recent push to expand its new development offerings, to include luxury rentals. “Vertical living is finally happening” in L.A., Eklund wrote in his July 10 Instagram post.

Jim Jacobson heads Douglas Elliman Development Marketing division in L.A, which includes 20 people.

In the fall, the team will begin leasing Astéras Kings, a 25-unit project that’s being built in West Hollywood by developer Astéras. Leasing for the one and two-bedroom units starts at around $5,500.

A rendering of the Astéras Kings development

Jacobson said the division has been partnering with developers on for-sale projects for several years, making it easier to facilitate efforts on rental projects developers may be working.

And in an “adjusting” market, it also presents a way for the firm to protect itself against any decline in sales.

“If we can be successful in high-end rentals, and continue to grow that side of our business and our portfolio, we can weather the storm,” Jacobson said. “Whether that’s rentals on the high-end side, or when the market flips back again and we’re killing it on the for-sale side, we can straddle both lines very easily.”

Moving wealthy Angelenos to high-rises hasn’t exactly been easy, however. In Downtown Los Angeles, there’s a glut of multifamily units that are still on the market, sitting vacant as thousands of units are being built nearby.

Jacobson said some of the biggest challenges in selling high-rise buildings comes with educating the buyer that “this is the new wave of homeownership.” His team is also selective about the projects they partner with, picking developments they know they can sell.

In addition to Asteras, the development team is also selling condos at the West Hollywood Edition, built by Witkoff Group and New Valley Group. New Valley is run by Howard Lorber, chairman of Elliman. In the past, it sold Tower 1 at Greenland Group’s Metropolis project.

A rendering of the 8899 Beverly project

Eklund’s team will partner with Jacobson’s team to sell Townscape Partners’ under-construction condo project at 8899 Beverly. The upscale complex, designed by Olson Kundig, is slated to have 48 residential units, according to a representative for the project.

Eklund declined to comment on specifics, but had little doubts about its success.
This is the “best project new project in L.A,” he said.