From left: Tom Barrack, former Qatari Prime Minister Hamad bin Jassim bin Jaber Al Thani, and Saudi Crown Prince Mohammad bin Salman.

Play “six degrees of separation” with Middle Eastern investors active in the U.S. real estate market, and chances are Tom Barrack’s name would pop up.

The founder of Colony Capital is under scrutiny for his ties to the wealthy Middle Eastern nations of Saudi Arabia and the United Arab Emirates. Federal prosecutors are looking at whether Barrack, whose firm took in $1.5 billion from those two countries since his close friend Donald Trump won the Republican presidential nomination, sought to sway the Trump campaign and later the administration when it came to foreign-policy decisions.

Barrack, an Arabic speaker of Lebanese descent, has not been accused of any wrongdoing. But over his career, he’s developed deep ties to the Middle East and has been one of the most successful industry figures at bringing in money from wealthy investors there.

His dealings in the region date back to the 1970s, when he was a lawyer at the firm of Herbert Kalmbach, who had served as President Nixon’s personal attorney and was a prominent character in the Watergate scandal.

In 1972, a client at Kalmbach’s firm asked him to play squash with some local Saudi contacts, and he ended up partnering with the son of the king of Saudi Arabia, according to an account in The Hill.

“I had no idea who he was, but my boss said, ‘However much he wants to play, you play,” Barrack said in a 2014 speech at the Lebanese consulate in L.A. “We ended up playing three hours a day.”

Teaming up

Middle Eastern investors have poured billions of dollars into Colony Capital over the years.

After teaming with Saudi Prince Prince Alwaleed bin Talal on the Fairmont chain in 2006, Barrack partnered with the Qatar Investment Authority to buy Miramax Films for $660 million four years later. They sold the company to Doha-based beIN Media Group for an undisclosed sum.

And in 2011, amid the upheaval of the Arab Spring, Barrack swam against the current by saying he would be “looking hard” at expanding his then-$200 million worth of investments in the region.

“The time to buy is when everybody else is running for the hills,” he said at the time. “The Middle East is printing money and it’s used to operating in chaos.”

A year later, Colony sold several luxury properties in Sardinia to Qatar’s sovereign wealth fund, a move that prompted Italian prosecutors in 2017 to accuse him of avoiding taxes in the deal.

The New York Times reported that Colony has raised more than $7 billion in investments since Trump’s nomination, nearly a quarter of it coming from Saudi Arabia or the United Arab Emirates.

Barrack’s support for Trump has complicated his relationships in the region, particularly after the president’s 2015 comments on the presidential campaign trail that called for a temporary but “total and complete shutdown of Muslims entering the United States.” The Times uncovered emails in which Barrack tried to assuage United Arab Emirates Ambassador Yousef al-Otaiba’s concerns over the ban. The emails were regarding those 2015 comments, which Trump, as president in 2017, switched to a travel ban on people from majority Muslim countries. The UAE, Saudi Arabia and Qatar were never on the list of banned nations.

“We can turn him to prudence,” Barrack wrote in an email at the time, referring to Trump. “He needs a few really smart Arab minds to whom he can confer — u r at the top of that list!”
Pushing back
Barrack appears to have chosen his business over a closer role with Trump’s White House. The White House has offered Barrack at least one job before — in mid-2017 he was considered for U.S. Ambassador to Mexico, but that never happened.

Barrack says he has also pushed back on Trump over his more divisive comments about the Middle East. In June 2017, when the president called Qatar a “funder of terrorism at a very high level,” Barrack reportedly told him, “you don’t need to get involved.”

A month earlier, Qatar’s neighbors Saudi Arabia, the UAE, Bahrain, and Egypt severed diplomatic ties and blockaded the tiny nation. It was done over claims that Qatar financed terrorism and was becoming too close with regional rival Iran, which supports Houthi fighters in Yemen fighting a civil war against the Saudi-backed Yemeni government. The blockade remains in effect.

The split between Qatar and its neighbors put Barrack in a difficult spot, since he had deep connections with both sides. Two years ago, he filed plans for a 77,000-square-foot mega-mansion in Bel Air. But this palace was not for him. Barrack filed the design, sources said at the time, on behalf of former Qatari Prime Minister Hamad bin Jassim bin Jaber Al Thani.

At a February business summit in Abu Dhabi, Barrack jumped to the defense of Saudi Arabia’s Crown Prince Mohammed bin Salman after the kingdom admitted dissident journalist — and U.S. resident —Jamal Khashoggi was killed inside the embassy in Istanbul.

“… The atrocities in America are equal or worse to the atrocities in Saudi Arabia,” Barrack said, at the event hosted by CNN. “The atrocities in any autocratic country are dictated by the rule of law. So for us to dictate what we think is the moral code there when we have a young man and a regime that’s trying to push themselves into 2030 I think is a mistake.”
Barrack later apologized for the remarks, calling the October 2018 killing “atrocious” and “inexcusable.” The CIA has found credible evidence to conclude bin Salman ordered Khashoggi’s execution.

Barrack now appears to be reducing his role at Colony. The firm announced in July that he would step down as CEO as part of a merger with Digital Bridge Holdings that will see Digital Bridge CEO Marc Ganzi take the reins. Barrack will return to his role as executive chairman when the merger is completed sometime in the next two years.

Saudi Arabia’s sovereign wealth fund invested in a $4 billion Colony-Digital Bridge fund, a deal that preceded the recent merger.

Home on Haynes Avenue and Howard Hughes (Credit: Britannica and iStock)

A Beverly Hills home reportedly built for late business tycoon Howard Hughes is headed for auction after several price cuts, the latest evidence of a luxury slowdown that has crept through the Los Angeles real estate market.

The 4,600-square-foot home on Haynes Avenue has been lingering on the market for two years. Its asking price has been slashed four times, dropping roughly 34 percent to $10.9 million.

The home on Haynes Avenue

Designed by architect Samuel Wacht, the Mid-century Modern has four bedrooms and five bathrooms. There’s also a swimming pool, jacuzzi, gym and sunken living room area.

Concierge Auctions is holding the no-reserve auction via its online marketplace on Aug. 15, with bidding starting two days earlier. Josh and Matt Altman of Douglas Elliman have the listing. A no-reserve auction is a gamble because the home will be sold to the winning bidder no matter the price.

Property records show the home last traded for $7.5 million in 2016. The owner is a trustee of Debra A. Gonzalez. The home listed on the market for $16.5 million roughly a year after the purchase.

Hughes is believed to have owned the home in the 1960s, according to a previous report in the Los Angeles Times. During his ownership, he was known for hosting Hollywood’s elite at the one-story home.

President Donald Trump and China’s President Xi Jinping at a press conference in Beijing in 2017

The multibillion-dollar trade war between the United States and China hit a boiling point this summer, with the real estate industry caught in the crosshairs.

In June — more than a year after firing his first salvo and levying tariffs on solar panels from China — President Donald Trump threatened the People’s Republic with another $350 billion in taxes on goods. Chinese President Xi Jinping quickly responded by jacking up tariffs on $60 billion of U.S. goods.

Much of the attention about the trade war, which is closing in on 400 days, has been on U.S. consumers getting hit with price increases on everything from washing machines to computers.

But the real estate industry is also feeling the effects. For developers, that will come largely in the form of pricier raw construction materials such as steel, cooling equipment and granite countertops. And that will make it trickier to plan and budget new projects.

“From a development perspective, you’re doing your deals two to four years out, so you want more predictability and less volatility,” developer Daren Hornig of Hornig Capital Partners told The Real Deal in May. “If we could just put this one behind us and get this trade deal resolved, that would make a lot of people globally very happy.”

Trump and Xi held high-profile talks at the G20 Summit in Japan in June. But there’s been little sign of progress since, and last month, China reportedly urged the Trump administration to “make up its mind” about reaching a trade deal.

Although Trump’s main target has been China, the White House has also imposed tariffs on goods from Canada, India, Mexico and the European Union — arguing that those trading partners (all historically U.S. allies) have taken advantage of U.S. policy and dumped cheap products on the market here while also undercutting domestic manufacturing. Each of those partners has retaliated with its own levies on U.S. goods.

Below is a rundown of some of the key trade stats and their impact on the industry.

5,745

The number of products from China the Trump administration has placed tariffs on, including everything from building materials and furniture to semiconductors and cellphones. That’s amounted to $250 billion in goods since last year. In return, China has taxed $110 billion worth of U.S. imports coming into its shores.

92%

The drop in Chinese U.S. investment in 2018’s first half, according to consulting firm Rhodium Group. While that decline began with China’s capital controls, trade war tensions helped “close the spigot,” per Forbes. U.S. home purchases by foreign buyers (the majority from China), meanwhile, tumbled 36 percent between April 2018 and March 2019, a recent NAR report noted.

25%

The increased foreign steel tariffs Trump implemented last year, up from 10 percent. The hike sent prices for rolled steel — used in some of New York’s latest supertalls, including One Vanderbilt and the Spiral — soaring to a decade-high of $920 a ton last July. But last month, prices were much lower at about $557 per ton, pushed down by domestic manufacturers ramping up production and new imports from Canada and Mexico.

$100M

A high-end estimate of how much the steel tariff would push up the price to build the shell and core of a 90-story building in Hudson Yards, according to the global consultancy Turner & Townsend. The U.K.-based firm estimates that 1.2 million tons of steel went into new buildings across the five boroughs over the past year.

#2

New York City’s rank on the list of most expensive cities in the world when it comes to construction. Average construction costs here (across six building types) were $368 per square foot in 2018 versus $417 in San Francisco, which ranked No. 1. Those costs jumped 3.5 percent in NYC last year and are projected to rise another 3 percent in 2019.

148

The number of times Donald Trump has tweeted the word “tariff” or “tariffs” since launching his presidential campaign in 2015, according to the Trump Twitter Archive. By comparison, he’s tweeted “wall” 460 times.

260,000

The amount of estimated jobs the trade war has cost the U.S. economy through June 2019, according to Moody’s Analytics chief economist, Mark Zandi. That amounts to more than a month’s worth of employment growth. Among the jobs lost, about 130,000 were in manufacturing, 80,000 were in transportation and distribution, and the remaining 50,000 were across several other industries.

600

The number of U.S. companies — including such mega retailers as Costco, Walmart and Target — that wrote to Trump in June urging him to end the trade war. Many have said that  price increases will be inevitable if it doesn’t end soon. Trump, of course, is relying on a strong economy to buoy him to reelection.

Larry Green, Unibail-Rodamco-Westfield’s EVP for US Development, and a drawing of the planned stadium (Credit: Unibail-Rodamco-Westfield)

The developer of the $1.5-billion megaproject planned for Warner Center is facing another hurdle.

The founder of the community group Coalition for Valley Neighborhoods is appealing the project, concerned the city never required affordable housing units for the development’s massive residential component, according to the Los Angeles Daily News.

The redevelopment in Woodland Hills is set to include a 7,500-seat stadium, 1,400 residential units, 244,000 square feet of retail space, 630,000 square feet of office space, and a 570-room hotel.

The appeal from Woodland Hills resident Gina Thornburg came less than two weeks after the developer, French commercial real estate firm Unibail-Rodamco-Westfield, won support from city planning officials for the enclosed stadium.

Large developments — and their developers — frequently encounter opposition from neighborhood groups seeking to halt construction. Last month, the Coalition to Preserve L.A. and AIDS Healthcare Foundation filed a lawsuit hoping to halt GPI Companies’ plan to build a residential tower that would replace Amoeba Records in Hollywood.

In a different case in June, the city denied an appeal against Mitsui Fudosan America’s 41-story tower set for Downtown.

While the appeals rarely prevent development, they can also serve to pressure city and elected officials, and to highlight a community concern.

In the case of Warner Center, Unibail-Rodamco-Westfield itself has appealed the city’s decision to reduce the number of stadium seats from the originally proposed 15,000, down to what is now 7,500. Larry Green, executive vice president for development for Unibail-Rodamco-Westfield said in a statement, “with this appeal, we are simply refining the plan in accordance with the relevant city process.” [Daily News] — Gregory Cornfield

Toni Morrison (Credit: Getty Images)

“I live in places that I love. And I’d hate to lose them,” Toni Morrison told a reporter for The Telegraph in 2012. At the time, she was doing press for her latest book, “Home,” and its title generated countless inquiries into what the word meant to Morrison personally. At the same time, interest about the places the Nobel laureate lived throughout her life dates back decades – helped along by the strong role that “place” plays in her novels as well as the details of her personal residential history.

Morrison died on August 5, 2019, from complications due to pneumonia at a hospital in the Bronx. She was born Chloe Ardelia Wofford on February 18, 1931, in Lorain, Ohio, a town that would figure into the setting of her breakout debut, The Bluest Eye, published in 1970. While Morrison left the Midwest for Howard University in her teen years, her sister, Lois, continued living in Lorain throughout her life. At some point, many of the homes on the street where the sisters grew up were demolished.

“Now that was an erasure of place that was very disturbing to me,” Morrison said during the same Telegraph interview. “It’s absence. Not just one house. But where all those memories were. It’s death, in a sense.”

Morrison briefly returned to her hometown after her marriage ended. From there, the newly single mother of two young sons relocated to Syracuse, New York, to attend Cornell University, later taking a job as an editor with Random House. When she was transferred to the publisher’s scholastic division, she moved her family of three to Queens. “I never lived in Manhattan,” she told The New Yorker. “I always wanted a garden.”

In the late 1970s, she acquired a property that would become part of her legacy: a converted boathouse on the banks of the Hudson River in the community of Grand View-on-Hudson, purchased for $120,000. In late December of 1993, the same year Morrison won the Nobel Prize in Literature, a cinder jumped from the fireplace and the historic house began to burn. Firefighters arrived at the scene to find flames shooting through the roof, and it was so cold water they sprayed to put it out miraculously managed to preserve several manuscripts. Ultimately, she rebuilt, with upgrades: bookcases, a patio, a private dock, and continued to live there, twenty-five miles north of Manhattan.

There were other homes, too. One in Princeton, where she taught; an apartment building upstate, owned with her sons and intended to house artists; a building across the street that functioned as a performance center. In 2015, journalist Rachel Kaadzi Ghanah visited Morrison at her home in Tribeca, “one of the biggest apartments” Kaadzi Ghanah had ever seen in the city, filled with built-in bookcases, plush sofas and armchairs, a long dining room table, and antiques, overlooking Lower Manhattan.

But, as the site of pilgrimages, memories, and many pages of Morrison’s history, it was the Grand View-on-Hudson house–the one that was nearly destroyed and then resurrected, that stands out among the rest as the home Toni Morrison built.

Gavin Newsom (Credit: Facebook and iStock)

The cost of homebuilding in California is too damn high, specifically, what city and counties charge developers. That was the conclusion of a new study released by state officials, confirming what developers have long known to be true.

The report, released by the Department of Housing and Community Development, also reveals that local construction fees fluctuate drastically statewide, according to the Los Angeles Times.

In Sacramento, those city and county-imposed fees on a home are less than $9,000. In Fremont, a suburb in the Bay Area, fees can reach up to $35,000.

In some cities, they can translate to 18 percent of median home prices. The high costs of building have contributed to slowing home growth in the state, exacerbating the region’s affordability crisis, the report found.

The study was ordered as part of Assembly Bill 1484. The 2017 measure aimed to identify how to limit the fees imposed on homebuilding.

Municipalities often use revenue from developers’ fees to fund parks, infrastructure projects and traffic control. The study warns that limiting fees could drastically impact that funding, and recommends the state finds ways to adjust property tax laws to account for the difference.

In May, the California Housing Partnership estimated that L.A. County needs to build around 517,000 more homes priced at very low-income levels. [LAT] — Natalie Hoberman

5525 W. Sunset Boulevard (Credit: Google Maps and iStock)

Hoping to take advantage of city incentives for affordable housing construction, a local developer has added more than 100 units to its plan for a rental project in Hollywood.
Wilshire-based developer Reliable Properties had been nearing a city decision on its mixed-use project on Sunset Boulevard last year before its most recent upsizing plan.

On Tuesday, the firm filed plans to build a 412-unit complex with 36,000 square feet of commercial space at 5525 W. Sunset Boulevard. That’s 119 more units than it had previously filed for at the 2.2-acre site.

Last January Reliable Propeties released a final environmental impact report for the original project, a move that is typically one of the last steps before the city issues a final decision.

The site is also in a federal Opportunity Zone, which means investors could get significant tax breaks for putting money into the project.

Led by Jack Nourafshan, the firm first started working on the original version in 2015, four years after purchasing the site for $15 million. Nourafshan could not be immediately reached for comment.

Reliable Properties is hoping to boost the density of the project through the city’s Transit-Oriented Communities incentives program. That program provides density bonuses and other incentives for market-rate rental projects near transit whose developers set aside a portion of units as affordable.

Like Reliable, some developers have redrawn their existing plans to take advantage of the incentive program, which took effect in 2017, and has already proven popular.
Reliable wants to set aside a quarter of the units as affordable — an unusually large amount — in exchange for a 70-percent increase in units. The firm also wants liquor licenses for two restaurants and a grocery store planned in the on-site commercial space.

The property happens to be across Sunset Boulevard from the Target store that sat unfinished from 2012 until earlier this year, as opponents fought to scuttle the project. The city allowed construction to resume in March.

Reliable is also working on a 409-unit project in Palms. It filed plans for that development in May 2018. It was one of the largest multifamily projects proposed last year.

From left: Compass CEO Robert Reffkin and Chris Cortazzo, with one of Cortazzo’s listings, 0 Zumirez Drive, Malibu

Chris Cortazzo, the longtime Coldwell Banker star agent who had more than $500 million in sales volume last year, has jumped to Compass.

Cortazzo — who has taken his 16-person team with him — will be based in the same Malibu office, joining Compass at a time when the Softbank-backed behemoth is preparing its initial public offering. The New York-based firm recently raised another $370 million in a Series G round, propelling its valuation to $6.4 billion.

Compass announced the move in a release on Wednesday. In a statement accompanying the release, Cortazzo cited Compass’ “tools and support system” as a reason for joining the firm. He could not be reached for further comment.

He’s one of many top producers Compass has recruited in recent years and represent a major loss for Coldwell Banker. Cortazzo, who had been with Coldwell for 25 years, ranked as the company’s longtime No. 1 agent nationally and internationally.

Cortazzo’s departure — along with the nine other agents and seven staff — is a major blow to Coldwell. It comes as Coldwell looks to scale back in Los Angeles. Sources told The Real Deal last month that the company is closing one of its Beverly Hills locations and shifting 150 agents.

Jamie Duran, president of Coldwell’s Southern California region, confirmed the company was having discussions about closing one of the two offices, though no plans were final, she said last month. At one point, the firm had three offices in the 90210 ZIP code.

Realogy — which is Coldwell’s parent company — has been struggling lately amid Compass’ high-profile moves and cash infusion. Realogy’s stock price was trading at less than $5 Wednesday morning, nearly 80 percent below its share price last year.

Cortazzo, a Malibu native, ranked second on The Real Deal’s annual list of top brokers, pulling in $500.8 million from 36.5 deal sides in 2018. Among his bigger listings is La Villa Contenta, a Malibu home spread across 4.5 acres, priced at $62 million; and a Guy Dreier-designed mansion for $65 million.

Ryan Gorman, president of NRT, the brokerage-owning entity of Realogy that includes Coldwell, wished Cortazzo well.

“Chris has been an integral part of Coldwell Banker for many years, and we wish him the greatest in work and in life,” he said in an e-mailed statement. “Chris will always be part of the Coldwell Banker family, and we look forward to continuing to work with him on transactions in Malibu.”

Barry Sternlicht (Credit: Getty Images)

On the heels of a strong second quarter for Starwood Property Trust, Chairman and CEO Barry Sternlicht spoke to analysts during an earnings call Wednesday about the slowing economy and “trade wars fought at 4 a.m. with tweets” that are eroding confidence in the markets.

The real estate investment trust reported net income up 16 percent, year-over-year, to $127 million, or 45 cents per share for the second quarter, meeting analysts’ expectations. The company’s core earnings totaled $153.9 million, up 3.7 percent compared to the same period of 2018.

Starwood Property Trust, an affiliate of Miami Beach-based Starwood Capital, lent $1.1 billion in commercial loans in the second quarter, and plans to lend a similar amount in the third quarter, Sternlicht said. Despite that, Sternlicht acknowledged that it is “tricky to lend in these markets because the cap rates feel a little artificial.”

“I’m sure you’re looking at your [stock] quote machines and wondering what’s going on in your world,” he said, adding that it is a “troubling time.”

He said he was “frustrated with our stock price” given the strength of Starwood’s lines of business.

He also spoke candidly about the potential for a “calamitous recession,” and criticized the “polarization of the electorates” and President Trump’s trade war with China – without naming him directly.

Rina Paniry, Starwood Property Trust’s CFO, said 19 percent of Starwood’s commercial loan originations in the second quarter were outside of the U.S., including $159 million in lending in Australia. Starwood executives again said they expect the firm’s international pipeline to grow as it adds employees in Europe and Australia.

Starwood’s affordable housing portfolio in Florida “continues to exceed expectations” with a blended rent increase of just over 6 percent, effective June 1, Paniry said. The portfolio, focused on north and central Florida, is 97 percent occupied. Sternlicht said he would be reluctant to sell those units and that it is “unimaginable that Florida is going to suffer any income downturn for the foreseeable future.”

Sternlicht said the apartment markets have strengthened as millennials increasingly choose to rent over buy. He also said that industrial continues to be the strongest asset class and that while hotels are reporting modest growth in revenue per available room, he is cautious about an oversupply of hotel rooms.

“We don’t expect anything to fall off the cliff but there is a lot of construction,” Sternlicht added. “We have to be uber careful.”

He also said that he is a “little spooked out” about San Francisco’s office market. If there is a correction, Sterlicht said the biggest exposure will be in tech valuation.

Red Oak owner and CEO, Vanessa Bergmark and Marvin Gardens owner Todd Hodson

To compete with Goliath-sized real estate agencies, some David-like independent brokerages are acquiring former direct rivals to stay in the game.

The Bay Area’s Red Oak Realty is set to become the largest independent brokerage in the East Bay with its acquisition of Marvin Gardens Real Estate, according to Inman. Marvin Gardens’ 60 agents will join Red Oak, which had 100 agents.

In a statement, Red Oak said the new company “will generate over $1.2 billion in sales volume and over 1,200 transactions.”

Marion Henon and Todd Hodson, owner of Marvin Gardens, will become sales managers, and Vanessa Bergmark will remain the CEO at Red Oak. It will be the largest brokerage for areas like Berkeley, Albany, El Cerrito, Richmond and Kensington.

The move comes as Compass continues to cut into market share in Northern California. The Softbank-backed company launched in the Bay Areas area in 2016 and has grown through acquisitions into a 3,000-agent brokerage over 97 offices in the region. In March, Compass acquired the 1,300-agent Alain Pinel Realtors — which had 33 offices in Northern California.

Meanwhile, Red Oak said its strategy was to double down on a specific area rather than expand geographically in the face of that increased competition.

Similar to Red Oak, Seven Gables Real Estate revealed earlier this year that it had merged with Star Real Estate, which are both small Southern California brokerages. [Inman] — Gregory Cornfield

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 12:30 p.m. PT

From left: Robert Reffkin and Chris Cortazzo, with one of Cortazzo’s listings, 0 Zumirez Drive, Malibu

Compass poaches Coldwell Banker star agent Chris Cortazzo. The Malibu specialist, who did $500 million in sales volume last year, is the latest big broker to defect to the behemoth Softbank-backed brokerage. The signing comes as Compass is reportedly preparing for an initial public offering. [TRD]

Reliable Partners upsizes mixed-use plans in Hollywood. The firm was nearing a city decision on a 293-unit project on Sunset Boulevard, but now it wants to bulk up to a 412-unit complex by taking advantage of incentives. [TRD]

Barry Sternlicht (Credit: Getty Images)

Barry Sternlicht “frustrated” with Starwood stock price. Starwood Property Trust reported solid numbers in Q2, but CEO Sternlicht said in an earnings call that “trade wars fought at 4 a.m. with tweets” are eroding confidence in the markets, referring to President Trump’s social media posting platform of choice in the wee hours of the night. [TRD]

Douglas Elliman has a new transfer tax to thank for a boost in revenue for Q2. The brokerage’s parent company Vector Group recorded an 18 percent jump as buyers rushed to close deals and avoid extra costs. [TRD]

WeWork’s latest pursuits involve Martin Scorsese, Ashton Kutcher and an NBC show. The office space company sought the entertainment industry icons for marketing efforts, in another example of the startup trying to move away from its image as a traditional real estate company. [TRD]

Spec home builder Windsor Smith lists latest mansion in Brentwood. Smith is listing the Neoclassical-style, 13,000-square-foot home for $33 million. Smith is known for selling her first home to actress Gwyneth Paltrow and her second to Paltrow’s then-husband Chris Martin, lead singer of Coldplay. [WSJ]

Hackman Capital Partners is James Cameron’s new landlord in Manhattan Beach. The investment firm has been gobbling up studios left and right. Now it’s purchased the 22-acre Manhattan Beach Studios for $650 million, as well as the studio operating company MBS Services, from Washington, D.C.-based Carlyle Group. The campus is the headquarters of James Cameron’s production company Lightstorm Entertainment. The Real Deal first reported the camps were in advanced discussion in June. [LAT]

State says development costs are too high amid housing crisis. A report from California housing officials says state lawmakers should urge counties and cities to make fees more predictable and transparent in order to lower costs for developers, arguing that high costs are preventing housing production. [TRD]

Compass has a competitor in the East Bay. Red Oak Realty is now the largest indie real estate brokerage in the area after acquiring Marvin Gardens Real Estate, which will increase the firm’s headcount to 160 brokers. [Inman]

Toni Morrison (Credit: Getty Images)

The places that late Nobel laureate Toni Morrison called home. The idea of “place” played a central role in the Ohio-born writer’s work. She spent most of her adult life living in and around the New York City area, including in Queens and Manhattan’s Tribeca neighborhood, but it was her house in Grand View-on-Hudson that is most well-known. [TRD]

California officials threaten to sue Cupertino if it doesn’t meet housing goals. State housing officials say the city that Apple calls home is at risk of missing its goal of approving 1,064 new units by 2023. A local group has sued the city over approval of a 2,400-unit project near Apple’s headquarters. The city would likely miss its housing goal if the project is axed. [San Francisco Chronicle]

A rendering of the plaza that American Airlines has purchased naming rights for (Credit: LASED)

American Airlines first to sign naming deal at Rams-Chargers stadium in Inglewood. The airline will have exclusive naming rights to a 2.5-acre plaza at the massive L.A. Stadium and Entertainment District complex. The development team has yet to sign a deal for the naming rights to the actual stadium, but Bay Area-based lender Social Finance Inc. is reportedly in talks for the rights. [LABJ]

Walgreens to shutter 200 stores nationwide. The Deerfield-based drug store giant has not said which stores will close, and added that employees and patients will face minimal disruption by being shifted to other locations. Walgreens is seeking to cut $1.5 billion in costs and will also close 200 stores in the United Kingdom. [Chicago Tribune]

Wayne LaPierre (credit: Gage Skidmore on Flickr)

National Rifle Association chief Wayne LaPierre sought investment from the firm’s former ad agency to buy a $5 million Dallas mansion. The deal, which ultimately didn’t pan out, emerged in a probe by the New York Attorney General’s office into the group’s operations. [WSJ]

SoftBank’s Masayoshi Son is banking that his firm can offload Sprint in a merger with T-Mobile. The mobile carrier has been a thorn in the side of SoftBank, and racked up $47 billion in debt. He said Wednesday that shedding Sprint will allow him to focus on Softbank’s Vision funds, valued at $200 billion. [Bloomberg]

FROM THE CITY’S RECORDS:

A developer filed plans for a 412-unit mixed-use complex with 36,000 square feet of retail space at 5525 W. Sunset Boulevard, now a strip mall. [LADCP]

Compiled by Dennis Lynch

Starwood Capital Group CEO Barry Sternlicht and Lantana campus (Credit: Getty Images and Ehrlich Yanai Rhee Chaney Architects)

Starwood Capital Group is nearing a deal to purchase the remaining two buildings of the Lantana office complex in Santa Monica for $220 million, The Real Deal has confirmed.

The buildings, collectively known as the south campus, span 203,000 square feet, valuing the deal around $1,080 per square feet. That’s about $70 less per square foot than what David Ellison’s company, Skydance Media, paid for the other two buildings on the property earlier this year. Skydance paid $321 million for its portion.

Artisan Realty Advisors and Brightstone Capital Partners were the sellers. They paid $400 million for the 484,840-square-foot campus in 2016.

Mark Laderman, managing partner at Artisan, declined to comment. Miami-beach based Starwood, led by CEO Barry Sternlicht, did not respond to requests for comment.

Eastdil Secured brokered the deal. Real Estate Alert first reported the story on the Starwood deal.

The buildings, located at 3003 and 3301 Exposition Boulevard, are fully leased by Beachbody. Beachbody, which is responsible for home fitness videos P90X, subleased 50,000 square feet at 3003 Exposition Boulevard — the former IMAX headquarters — to the Tennis Channel in March 2018.

Skydance, the production studio behind “Star Trek Beyond,” paid $321 million for the north campus buildings in March. Lantana North and Lantana West, as the buildings are named, encompass 278,860 square feet. Nearly half of that space is leased to WeWork.

On Wednesday, Starwood Property Trust, an affiliate of Starwood Capital, reported net income was up 16 percent to $127 million in the second quarter.

Zillow CEO Rich Barton (Credit: Twitter and iStock)

Zillow Group’s bet on instant homebuying boosted its second-quarter revenues 84 percent to $599.6 million, the company said Wednesday.

Revenue for Zillow Offers — which debuted last year — totaled $248.9 million for the quarter. Meanwhile, Zillow Mortgages revenue rose 40 percent to $26.9 million.

In a statement, co-founder and CEO Rich Barton described demand for Zillow Offers as “incredibly impressive” and said the program is on track to hit an annualized run rate of $1 billion in revenue. Zillow said more than 69,000 homeowners requested an offer from Zillow to purchase their home during the second quarter, up 94 percent from the prior quarter.

“We’re in the early stages of a bold expansion of our company that opens up exciting opportunities for our customers, partners, shareholders and employees,” Barton said.

Despite the iBuying program’s impressive run, Zillow Offers comes at a price.

Zillow said its second-quarter losses widened to roughly $72 million, compared to just $3 million last year. The Homes segment accounted for most of those losses — some $71.1 million, up from $10.1 million a year ago.

Zillow said it made $1,578 on each home it sold during the quarter. “Over time, our unit economics should benefit more from other adjacent services, like mortgage origination, title and escrow,” Barton said in a letter to shareholders.

Until now, the Seattle-based listings giant has made the bulk of its money by selling ads to agents via Premier Agent. Last year, as revenue growth from Premier Agent started to drop, the company bet heavily iBuying and mortgages — though investors haven’t been completely swayed by the pivot. Zillow’s stock closed at $49.56 a share, compared to $65.57 a share in June 2018.

Steve Eisman — who bet against the subprime mortgage market before the downturn — has a short position in Zillow, which he told The Real Deal in July he believes is running out of ideas to grow its home-listing business.

On Wednesday, Zillow said Premier Agent has normalized. But revenue for the program was relatively flat at $231.9 million, compared to last year’s $230.8 million.

Barton has described Zillow’s plan to buy homes and offer mortgages as a moonshot opportunity.

“We are dreaming of our own moon landing,” he said during an earnings call Wednesday. “In Q2, we stepped on the gas, launching seven markets — a rate we [intend] to match in Q3.”

Since the start of the year, Zillow has expanded Zillow Offers to seven more cities; on Wednesday, it said it would add four more by mid-2020 for a total of 26, including Cincinnati, Tucson, Oklahoma City, and Jacksonville.

Convene CEO Ryan Simonetti and a rendering of 22 Bishopsgate

An under-construction skyscraper in London was the battleground for a trio of well-capitalized flexible office space firms in growth-mode.

New York-based Convene, a startup that partners with commercial landlords to offer meeting spaces and amenities in office buildings, ultimately won out. The firm signed a 100,000-square-foot lease at 22 Bishopsgate in central London, the firm’s chief executive Ryan Simonetti told The Real Deal. It will be the firm’s first international location.

Simonetti said negotiations for the space began early 2018, and that Knotel, WeWork and U.K.-based The Office Group were among the firms vying for the location. The Office Group, which is majority owned by Blackstone Group, “looked at 22 [Bishopsgate] a couple of years ago,” but “didn’t bid or make a proposal,” its chief executive Olly Olsen said in an email. Knotel and WeWork declined to comment.

“We’ve realized that things in London take a little bit longer than they do in New York to get done,” Simonetti said.

Securing space in premier buildings has been a favored move by co-working and flexible-space firms seeking to establish themselves in a new market. In New York, an early location locked in by Dutch firm Spaces was a 110,000-square-foot space at the Chrysler Building. When The Office Group sought to open its first New York location, it was reportedly in a bidding war with Knotel and WeWork at the Flatiron Building.

London has become a hotbed of co-working activity, with almost 12 million square feet leased to flexible office space companies (about 4.6 percent of the office market), according to a Cushman & Wakefield report published in April. It has become center stage for both European and American firms to prove their mettle. Last year, WeWork became the largest office tenant in central London with almost 3 million square feet, and Knotel has 13 locations there, spanning 160,000 square feet. The Office Group, based in London, has 32 locations there.

Renderings of Bishopsgate

Convene’s new location — a 1.3 million-square-foot tower being developed by Lipton Rogers and a subsidiary of AXA Investment Managers — is abundant with amenities, including a rock-climbing wall that overlooks the city and lobby that doubles as an art gallery. Rents in the building range from $85 to $100 a square foot, the Financial Times reported in June.

Under the lease terms, Convene will provide a 50,000-square-foot space across two floors for meetings and conferences and another 50,000 square feet will be allotted to its flexible workspace product, known as WorkPlace, for small- and medium-sized companies.

AXA will be a major tenant in the building, along with Nasdaq and law firm Cooley. In January, insurance firm Aspen withdrew its lease from the building, as it sought to downsize its operations, according to London-based Estates Gazette, a real estate industry magazine.

Since it launched in 2009, Convene has raised $260 million, and is backed by some of the most prominent U.S. office landlords, including Brookfield Asset Management, RXR Realty and the Durst Organization.

In July 2018, Convene raised $152 million in a series D funding round, which valued the company at more than $500 million. Simonetti said the firm is currently in negotiations for another funding round, which he expects to announce in coming months.

Convene has rolled out locations at a rapid rate, and expects to have 30 locations by the end of 2019. Seven of those locations will include the firm’s WorkPlace offering, which pits the company against other co-working firms that primarily offer office space.

Last year, Convene signed a 116,000-square-foot lease at RXR Realty’s 530 Fifth Avenue, and in June, it announced a partnership with Hines to open locations across the Texas landlord’s portfolio.

Realogy CEO Ryan Schneider (Credit: iStock)

After months of free-falling, Realogy’s stock soared more than 19 percent on Thursday as the company said it grew its agent base “for the first time in a long time.”

But overall, the company’s second-quarter revenue dropped 5 percent year over year to $1.7 billion. Net income remained in the black but profits slid 44 percent to $69 million, from $123 million a year prior. At NRT, the division that includes the Corcoran Group and Coldwell Banker, the volume of closed deals dropped 5 percent to 95,251.

During an earnings call Thursday, company executives played up key points of Realogy’s turnaround plan: A $70 million cost-savings plan, new partnerships (like one announced last month with Amazon) and a plan to get commission expenses under control even while retaining and recruiting agents in an uber-competitive market.

In recent days, Realogy’s stock has been trading around $5 per share, down more than 77 percent from around $22 a year ago. The conglomerate’s stock jumped to $6.06 per share after the call Thursday. That was a 19 percent bump from $5.08 at market close yesterday, but the figure settled at $5.84 as of publication time.

In a major bright spot for the quarter, Realogy said NRT grew its agent base by 2 percent to 51,000 during the second quarter. “We’re trying to recruit people with the most potential,” said CEO Ryan Schneider, who said Realogy has been using machine learning to guide recruitment.

But the fight is hardly over.

This week, Compass hired Coldwell Banker’s long-time No. 1 agent, Chris Cortazzo, who is based in Malibu and whose 16-person team closed more than $500 million in sales last year.
“Especially in some of the California cities and Chicago, the competition intensity is spinal tap 11 kind of thing,” Schneider said during the earnings call.

Unlike competitors who throw bonuses at new agents, Schneider said when Realogy has the choice between losing money and retaining agents, it won’t lose money.

“If you want the highest split possible, you can go to RE/MAX,” he said, referencing its high-commission split model. “Our value proposition isn’t just the money… We have to be competitive on that, but we’re also trying to emphasize the benefits we bring with the products, partnerships, power of scale, referrals.”

Realogy has been fighting off intense competition on multiple fronts.

Last month, it filed a scathing lawsuit accusing Compass of illegal business practices and attempts at price fixing.
It also announced a blockbuster partnership with Amazon, called “TurnKey,” in which homebuyers get $5,000 in Amazon home services and product and Realogy agents benefit from leads.

“Look, we’ve got big dreams for the thing. We want it to be as big as possible,” Schneider said Thursday. “Obviously we have a partner who does things very large.”

Although the Amazon deal temporarily boosted Realogy’s stock price, analysts have said they’re not sure it’s a panacea.

As part of its turnaround, Realogy gave updates on the $70 million cost-savings plan it announced earlier this year. The company said it cut $22 million in costs during the second quarter, and reduced its total debt by $113 million. Its corporate debt is still $3.5 billion as of June 30.

In a statement, CFO Charlotte Simonelli projected more sales in the third and fourth quarters would lead to financial improvements. The company is “committed to using our strong free cash flow to reduce our debt and to invest in our business,” she said. “Making Realogy much more efficient is and will be a priority for me,” she added during the earnings call.

Robert Shapiro pleaded guilty in a Miami federal court on Wednesday.

Robert Shapiro has pleaded guilty in federal court to charges related to a $1.3 billion Ponzi scheme he led as the CEO of Woodbridge Group of Companies.

Shapiro admitted that he “misappropriated” between $25 million and $95 million in investor funds to fuel his lavish lifestyle and over-the-top luxury purchases, according to the Miami Herald. Most of Woodbridge’s clients were elderly people who unwittingly invested their retirement funds in what turned out to be a Ponzi scheme.

Woodbridge representatives told investors the money would be invested in real estate, such as hotels and luxury properties, including many in the Los Angeles area, where Shapiro was living when he was arrested in April.

The guilty plea means the 61-year-old avoids a trial. He faces up to 20 years in prison for wire and mail fraud conspiracy, along with a maximum of five years for tax evasion. His sentencing is set for October 15.

Last fall he agreed to pay $120 million to the Securities and Exchange Commission as part of a civil settlement with the federal watchdog agency, which will be used to compensate Woodbridge’s victims.

The scheme first started to show cracks in late 2017, when news broke that the SEC was investigating the company for fraud. The SEC continues to pursue charges against Woodbridge associates and in December, the agency charged 13 individuals and 10 companies related to Woodbridge.

Lawyers tasked with recovering funds for investors are also pursuing compensation from Comerica Bank, where Woodbridge held accounts, alleging the bank “turned a blind eye” to the scheme. [Miami Herald] — Dennis Lynch

eXp Realty CEO Glenn Sanford (Credit: iStock and Twitter)

eXp Realty, the fast-growing virtual brokerage, has reported a “record” $266.7 million in revenue in the second quarter of 2019 — a 104 percent year-over-year increase.

In its latest earnings report, the firm also reported $2.2 million in net losses, up 16 percent on the previous year. Transaction volume increased by 94 percent, year over year — totaling $10.3 billion. The firm said it did 35,837 deals, up 80 percent.

“As agents join eXp Realty and build their business, we’ve noticed a steady increase in productivity,” CEO Glenn Sanford said in a statement.

While traditional firms are struggling with profitability, eXp has been able to attract agents by offering high commission splits, revenue-sharing and stock options. Sanford co-founded the cloud-based brokerage in 2009 in Bellingham, Washington. By 2018, it had 15,570 agents, up from 2,401 in 2016. In the last quarter, its agent headcount climbed to more than 20,000.

The brokerage, which doesn’t have any brick-and-mortar locations, recently launched in New York, where in the spring it tried to woo agents at information sessions at the Park Lane Hotel. It has also recently landed a string of top agents and their teams, including Hoboken-based David Devoe, who moved from Keller Williams with 32 agents and 10 staffers.

Compass, one of the fastest-growing residential brokerages in the country, has around 13,000 agents and is targeting as many as 20,000 by the end of the year.

What the downsizing spells for the luxury retailer’s various landlords remains unclear (Credit: Getty Images)

Barneys this week filed for bankruptcy and announced its plan to shutter 15 of its 22 luxury department stores. What the downsizing spells for the luxury retailer’s various landlords remains unclear, at least for the moment.

Retail experts told The Real Deal that negotiations are likely and that concessions from the landlords could be possible to prevent Barneys from vacating some locations.

“To lose that tenant in this market wouldn’t be very smart, because who’s going to replace them?” said Peter Brauss, a managing principal at Lee & Associates.

From Brooklyn to Santa Monica, Philadelphia to the Fashion Outlets of Chicago, the closures come amid an evolving retail landscape, battered by rising competition from e-commerce.

“A perfect storm,” said Robin Abrams, a vice chairman in Compass’ commercial division — and one that other retail chains have been weathering in recent years.

The Barneys locations that will remain open include its 275,000-square-foot flagship at Ben Ashkenazy’s 660 Madison Avenue in Manhattan — where annual rent nearly doubled — along with another in the city, and stores in Beverly Hills, San Francisco, and in Massachusetts. Abrams predicts that the Chapter 11 proceedings could potentially bring Barneys and its landlords to the negotiating table.

“It would make sense for them [Barneys] to approach their landlords and talk about some kind of compromise, whether it be renegotiating deal terms, downsizing space, or all the things they had talked about before they filed,” she said. “My guess is that they will have those conversations, and that, if they are to maintain some of these high-profiles, expensive spaces, it will be based on some terms with a little flexibility.”

Brauss predicts similar talks would take place, but acknowledged anything is possible.

In the event that Barneys were to vacate that location in the future, Brauss can see an office space-retail hybrid emerge. “But keep in mind, that’s an enormously capital-intensive thing to do. You’re talking about — I don’t know — $200, $300 per square foot to convert from retail to office space, and you’re probably going to have to do a new lobby, and it’s going to take two or three years before that all gets done.”

“So unless you’ve got a plan in your pocket and you’ve got oodles of cash to spend,” added Brauss, “your best bet is to try to keep these guys one way or another.”

Reports of Barneys’ potential bankruptcy surfaced in July, after news that rent at the flagship store at 660 Madison, which accounts for nearly half of all sales, had jumped last January to $30 million from $16 million. A representative for landlord Ashkenazy declined to comment.

On Tuesday, Daniella Vitale, Barneys CEO and president, indicated next steps would include a review of current leases; the company now has until Oct. 24 to find a buyer and avoid liquidation.

The company on Wednesday secured a new offer from Brigade Capital Management and B. Riley Financial that will pay out $75 million and also inject an additional $143 million for operations costs while Barneys looks for a buyer.

The events also fall in line with wider trends across the high-end retail industry at large. “The days are over where you can support tons of flagships,” said Abrams. “You may have one or two to drive sales, but overall: You need to be profitable.”

But all is not lost for the retail industry, Abrams said. While pop-up stores and repurposed malls and department stores continue, short-term and long-term retail deals are returning. “We’re getting back to healthier times and starting to see people not as frightened when it comes to locking in retail leases, and that’s a really good thing.”

Still, a fleet of flagship stores does not necessarily carry the same allure it may have in the past, and one lesson for landlords remains consistent: Times have changed.

“If I brought Barneys to you a year ago, you’d have been like: fantastic, great tenant, let’s do it,” said Brauss. “These days, I think you want a tenant that is going to stand the test of time, that you look at and understand why they are going to be around in 10 years.” And, if you can’t, then consider: “Maybe I shouldn’t be doing this deal.”

Gavin Newsom

Gov. Gavin Newsom has endorsed the Legislature’s “long overdue” plan for rent control and said he wants even stricter regulations than the ones proposed.

His support could help boost Assemblyman David Chiu’s AB 1482, which would limit annual rent increases statewide to 7 percent plus inflation for three years and prevent landlords from evicting tenants without providing a reason, the Los Angeles Times reported. Similar proposals have otherwise struggled to advance or gain enough support from the Legislature or the general public.

In order to persuade the California Association of Realtors to drop its opposition, Chiu weakened the restrictions from a 5 percent cap that would have lasted a decade. But the group remains opposed to the bill after Chiu added the provision to limit evictions.

But at an event for funding to protect renters from evictions, Newsom said, “I think we can take it another notch up.”

According to a study from UC Berkeley, about 9.5 million renters in California spend at least 30 percent of their income on housing costs.

Last year, voters defeated Proposition 10, which would have expanded rent control more than AB 1482. The bill’s creator, AIDS Healthcare Foundation, is collecting signatures for a similar version for the 2020 ballot, but Newsom said he hopes to avoid that.

Local municipalities and the L.A. County Board of Supervisors have extended their own rent control measures since Prop. 10 failed. Inglewood and Glendale imposed restrictions on rent increases similar to AB 1482 and added new regulations for evictions. [LAT] — Gregory Cornfield

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page at 9 a.m., 12:30 p.m., and 4 p.m. PT. Send any tips or deals to tips@therealdeal.com

This page was last updated at 12:30 p.m. PT

What the downsizing spells for the luxury retailer’s various landlords remains unclear (Credit: Getty Images)

What’s next for Barneys’ landlords? The luxury retailer has filed for bankruptcy and will shutter 15 of its 22 department stores. While the retailer’s future is unclear, experts told TRD that negotiations are likely and that Barneys could be prevented from vacating some locations based on concessions from the landlords. [TRD]

Anaheim’s 30-acre “Sinkin’ Lincoln” is getting a makeover. The property has had many lives: It was an orange grove, a landfill, a go-kart track and a mobile home park. Now, the City Council has approved a deal with a joint venture of Zelman Development Company and Greenlaw Partners to redevelop the site into a 73,000-square-foot retail center, up to 65 townhomes, green space and possibly a hotel later. [Bisnow]

Virtual brokerage eXp Realty is continuing its rapid growth. The company reported a “record” $266.7 million in revenue in the second quarter of 2019 — a 104 percent year-over-year increase — while its losses were up 16 percent from the previous year. [TRD]

Robert Shapiro pleaded guilty in a Miami federal court on Wednesday.

LA luxury developer Robert Shapiro pleads guilty. The former CEO of Woodbridge Group of Properties admitted he “misappropriated” up to $95 million of funds from mostly elderly investors to pay for a luxury L.A. estate, artwork, travel, jewelry and more. Shapiro faces up to 20 years in prison for wire and mail fraud conspiracy, plus another five years for tax evasion for steering the $1.3 billion Ponzi scheme. [Miami Herald]

Starwood Capital Group CEO Barry Sternlicht and Lantana campus (Credit: Getty Images and Ehrlich Yanai Rhee Chaney Architects)

Starwood is nearing a deal to buy part of Santa Monica’s Lantana office campus. Barry Sternlicht’s company is set to pay around $220 million for the so-called south campus portion of the four-building complex. David Ellison’s Skydance Media bought the two north campus buildings in March for $321 million. [TRD]

Deal to give historic Buff and Hensman home to USC falls apart. The owner of the Pasadena home, Carol Soucek King, agreed to give the 1979 home to her alma mater, in 2007. King said an “unmendable chasm in the vision of heritage conservation” with the university prompted her to renege on the deal. [Curbed]

Gov. Gavin Newsom backs statewide rent cap. The governor called such a measure “long overdue” on Wednesday. There is one rent cap proposal pending in Sacramento that would bar annual hikes above 7 percent for the next three years on buildings older than a decade. Newsom said he wanted to incorporate in the bill more protections for renters. [LAT]

Celebrity chef Giada de Laurentiis picks up Pacific Palisades bungalow. De Laurentiis paid $4.9 million for the late 1950s home, which comes in at just over 3,600 square feet with five bedrooms. The interiors were recently renovated, including the kitchen. [Variety]

Parkview Financial provides loan for 65-unit apartment project in Koreatown. The $16 million is on the six-story project slated for 719 St. Andrews Place. The developer is a Brentwood-based entity, St. Andrews Place LLC. [Multihousing Pro]

Deal nears to redevelop West Covina’s BKK landfill. Singpoli BD Capital Group would partner with the City of West Covina to turn the former landfill into a 218-acre park. The proposal includes horse and hiking trails, zip lines, and a solar and greenhouse farm. [The Hub LA]

Zillow CEO Rich Barton (Credit: Twitter and iStock)

Zillow’s bet on iBuying boosted revenues, but firm still saw losses. Revenue for Zillow Offers boosted Zillow’s second-quarter revenues 84 percent to $599.6 million, according to its latest earnings report. The company’s second-quarter losses widened to roughly $72 million, compared to just $3 million last year. [TRD]

Climate change is worsening the affordable housing crisis. A new report from the Center for American Progress has found that the national housing crisis disproportionately affects minority communities and the disabled, who also have limited access to resources to recover from natural disasters linked to climate change. [Scientific American]

Housing sentiment reached a record high in July. A monthly index from Fannie Mae has found that consumer confidence in housing his a record high in July, partly due to falling mortgage rates and strong employment. Meanwhile, according to a Redfin report, bidding wars fell to their lowest rate since 2011. Miami was the least competitive market last month, with New York also seeing lower than average activity. [CNBC]

Inflated bond ratings are back. Artificial bond ratings, one of the causes of the financial crisis, still persist a decade on, according to an analysis by The Wall Street Journal, which also found that the main ratings firms have altered some criteria for determining the riskiness of bonds, leading to temporary jumps in market share. [WSJ]

Compiled by Dennis Lynch