Victorino Noval and the Mountain of Beverly Hills (Credit: Getty Images and Redfin)

On Thursday, the enormous plot of land known as The Mountain of Beverly Hills was expected to sell to the highest bidder at an auction in in Pomona.

But just as the initial $1 billion listing for the 157-acre property fizzled, the auction never took place.

Owner Secured Capital Partners, which has filed for bankruptcy protection and is tied to convicted felon Victorino Noval, refused to let their decades-long hold on one of the city’s most sparkling pieces of land slip from their grasp. At least yet.

Any interested buyers, which are believed to have included Amazon’s Jeff Bezos, would have had to cough up at least $200 million at auction to cover the debt on the property. In February, after no takers, the property was slashed from $1 billion to its current $650 million listing.

Through legal maneuvers, deed adjustments and bankruptcy filings, Secured Capital pushed the auction back to next week. Here’s how that happened:

On Monday, three days before the scheduled auction, Secured Capital transferred ownership of the property back to its previous owner, Tower Park Properties, court records show.

Tower Park, which is also controlled by Victor Noval’s family, had an open Chapter 11 bankruptcy case, and thus a reorganization plan.

That plan specified that the lender, the estate of Herbalife founder Mark Hughes, is not allowed to foreclose on the property without providing a 21-day notice.

It also specifies that the lender must prove that the borrower, Tower Park, is at risk of defaulting on the loan. But the lender — Hughes’ estate — did neither, an attorney for the Novals wrote in a legal filing.

Ronald Richards, another attorney representing Secured Capital, said he expects to have an indication from the court about how the matter will play out by next week. He also expects the auction, which was pushed to Aug. 20, “is not going to happen.”

Attorneys representing the Hughes estate did not respond to requests for comment.

The Noval family has owned The Mountain since 2004, when Hughes loaned around $190 million to fund Tower Park’s purchase. In 2016, Tower Park transferred ownership of the property — with the liens attached — to Secured Capital.

But Secured Capital has been unable to repay the debts, and on May 29, a day before the Hughes trust could foreclose on the four liens, the firm filed for bankruptcy protection. A judge denied that request roughly two months later, setting the stage for the Mountain’s foreclosure.

Santiago Calatrava with the Constitution Bridge in Venice and the Oculus (Credit: Getty Images)

A Venice court has fined world-renowned architect Santiago Calatrava for going $5 million over budget on a bridge.

The original budget for the Constitution Bridge on Venice’s Grand Canal was $7.7 million, according to the BBC. But the structure had numerous problems after its opening in 2008, including flimsy steps and mismatched tubes.

The issues are reminiscent of the problems at another iconic Calatrava project: the Oculus, the centerpiece of the World Trade Center.

The structure’s retractable skylight began leaking after a 2018 ceremony. The Port Authority, which owns the part-transit hub and luxe-shopping center, has spent $30,000 on Flex Tape to try and seal the tear. The landlord has blamed construction work for the problems.

But there’s been other snafus at the property. In 2017, two men were mildly injured when the escalator went awry. And according to the Port Authority, the software that controls the motors for each of the 40 panes of glass malfunctioned in August, restarting several times.

Calatrava originally designed the Oculus to pivot on both sides before opening. But a decade ago, that plan was scrapped to reduce costs at the World Trade Center, when the $2 billion budget was soaring.

In Venice, the local court accused Calatrava of macroscopic negligence,” and said the allegations were taken very seriously because Calatrava is “a respected, world-famous professional, with a very high level of competence.”

The architect has denied any issues with the Venice bridge. He was fined $87,500. [BBC] — Georgia Kromrei

Ryan Serhant and 416 Washington Street (Credit: Getty Images and Google Maps)

A case of dual agency is coming back to haunt “Million Dollar Listing: New York” co-star Ryan Serhant.

In a new lawsuit, the star agent is accused of misleading the buyer of a Tribeca condominium and selling the pad to him at a “falsely inflated” price. The suit seeks $1 million in damages and a full accounting of the money Serhant made on the deal, in which he represented both buyer and seller.

The suit also names Nest Seekers International and the buyer’s financial advisor, Elad Rahamim of Wells Fargo.

According to the complaint, California-based real estate investor and physician Aaron Coppelson hired Serhant in 2015 to help him find an investment property in New York. Communicating through Rahamim, Coppelseon said Serhant steered him to a 2,517-square foot condo at 416 Washington Street asking $4.495 million that would be worth “well over $5 million” in a short period of time.

Calling the apartment a “gold mine,” Serhant allegedly said it was a deal Coppelson “could not pass up.” According to court filings, Serhant also told Coppelson the seller was under water and needed to sell quickly, therefore the asking price was around 20 percent lower than comparable properties.

In the complaint, Coppelson said he went for it — passing on other deals to buy the Tribeca property for $4.375 million, records show.

He only found out that Serhant was representing the seller, too, about a year later, according to the suit.

Whether Coppelson overpaid will be argued in court, but he clearly bought at the peak of the market. In 2018, condo and co-op sales had the largest year-over-year decline in five years since the financial crisis, according to a Douglas Elliman/Miller Samuel report. The average sale price for co-ops and condos in 2018 dropped 3.6 percent to $1.97 million, while inventory was up 11.8 percent.

In an email to The Real Deal, Serhant confirmed that he sold Coppelson the apartment. “He seemed very happy with his purchase at the time,” Serhant wrote, suggesting that most of Coppelson’s grievances are with his financial advisor.

“Since then our firm has listed a number of his properties as well, both in NY and LA,” Serhant said. “No fraud took place. I wish him the best of luck with the sale.”

In 2017, Coppelson listed the apartment at 416 Washington for $4.75 million with Nest Seekers’ Ron Ovadia, according to StreetEasy. After several price chops, it is now asking $3.995 million.

Coppelson has also had real estate troubles in Los Angeles. According to a federal complaint unsealed last year, Coppelson hired Jeffrey Yohai, the former son-in-law of Paul Manafort, to broker a deal for a basketball player to rent his L.A. home for two months for $160,000. According to the complaint, the player lived in the home but the money never made it to Coppelson. Instead, court documents claimed, Yohai planned to get Coppelson’s money from a marijuana grower who owed him money. Yohai allegedly showed up at Coppelson’s house and tried to pay him with a large bag of marijuana, but Coppelson refused. Yohai pleaded guilty to real estate fraud charges in early 2018, but new charges were brought in November.

In recent months, the concept of dual agency has been under the microscope.
In 2018, a class-action lawsuit accused brokerage Houlihan Lawrence of “predatory” behavior, claiming that dual agency is a fundamental part of the firm’s business plan. Houlihan filed a motion to dismiss the suit, but this past May, New York’s Supreme Court allowed it to proceed.

Dual agency is entirely legal in New York, where a 2011 law upped disclosure rules. (Brokers are supposed to receive their clients’ consent.) Nationally, the Consumer Federation of America has called on states to ban the practice.

AIDS Healthcare Foundation CEO Michael Weinstein and the Amoeba Music store (Credit: Getty Images and Wikipedia)

Two nonprofits have launched a full-fledged effort — lawsuit included — to save the iconic Amoeba Music store on Sunset Boulevard from the wrecking ball,  where it would be replaced by a residential high-rise. But unusually, the party that could stand to benefit if the effort is successful is not happy.

The owners of Amoeba Music in Hollywood have spoken out against Coalition 2 Preserve LA and AIDS Healthcare Foundation, which filed a join lawsuit in July to stop GPI Companies from bulldozing the store and building the luxury apartment building.

Their efforts, said co-owner Jim Henderson, have hurt Amoeba’s relocation plans and could ultimately cause them to shutter their doors, according to Curbed.

“Amoeba does not support the Coalition’s lawsuit and finds it counter-productive,” Henderson said in a statement Friday. “The Coalition to Preserve LA has overstepped its bounds in using Amoeba as a pawn in its game and now threatens the very existence of the business it is claiming to hope to preserve.”

Amoeba sold the property to GPI for $34 million in 2015, with the intent that it would relocate in another Hollywood location nearby. But landlords who have been witnessing the drastic efforts to preserve the store are now put off by Amoeba, scared that the same situation could happen to them if they choose to rent space to them.

Michael Weinstein, the vocal leader of AHF, responded by saying they are not “using Amoeba,” but rather “fighting for the integrity of our community and to preserve what makes it interesting.” [Curbed] — Natalie Hoberman

From left: Google CEO Sundar Pichai, Facebook CEO Mark Zuckerberg, and Microsoft CEO Satya Nadella (Credit: Getty Images)

Real estate is a serious and important industry that impacts billions of people every day. But there’s also a lot of stuff happening in it that’s pretty weird and funny. Small Talk is a new column from The Real Deal’s Eddie Small that takes a humorous look at some of the big issues going on in the industry.

I, for one, was thrilled to learn that tech companies are going to solve the housing problem.

I know, I know: it’s confusing. Because for a long time, tech companies were the ones causing the housing problem, but now they’re doing the opposite. If it helps, keep in mind that we went through this type of reversal before around 2016, when we switched from thinking tech companies were solving everything to knowing they were ruining everything, so it will probably only be a few more years before we can go back to being mad at them about housing again.

But at the moment, they’re the problem solvers. Google recently pledged to spend $1 billion to create 20,000 new units of housing in California’s Bay Area, and Microsoft and Facebook have each pledged to donate $500 million to build affordable housing in Seattle and the Bay Area, respectively. Mark Zuckerberg himself will play a leading role in Facebook’s fund, saying that his goal is simply “to improve the community and make people forget about pretty much every article that has been written about Facebook over the last three years. Remember when this was just a site where you listed off a bunch of movies that you liked?”

Microsoft announced its new fund at the beginning of the year, and it is widely expected to finalize the corporation’s transition from “symbol of all that is wrong with 1990s capitalist greed” to “tech company that looks downright quaint compared to the one where all the Nazis hang out and the one with all those anti-suicide nets at its factories.”

Facebook followed suit, in a move seeming to acknowledge that even when a company has a simple and straightforward goal like completely upending how humans interact with each other, it can still come with some unintended consequences. Turning humans into hollow, like-obsessed shadows of their former selves who no longer remember how to genuinely connect with another person in real life, for instance. And also driving up housing prices.

And now Google has joined in, with company CEO Sundar Pichai saying that $750 million of their effort will be repurposing land the company already owns from commercial or office space to residential. These properties are expected to attract the ever-increasing demographic of people who are worried that Google does not know enough about them yet and would like the search giant to become their landlord as well.

So all together, the three companies will be putting $2 billion toward housing. And all together, the three companies made more than $89 billion during the second quarter of 2019 alone. So it’s probably safe to say that supporting affordable housing isn’t actually a big priority for any of them, likely ranking very far below “earning money” and slightly less farther below “seeing if we can get people really into FarmVille/Zunes/Google Wave again.”

But that’s not the biggest problem with these funds. The biggest problem is that, despite some rumors you may have heard, Seattle and the Bay Area are both completely different places from New York. This means New York will not be seeing any of that sweet affordable housing money from these tech giants and will instead have to rely on getting it from more obscure sources, such as developers with decades of experience building affordable housing and the government. You know, places without any real power.

Luckily, there is a pretty straightforward solution to this. All we need to do is convince a tech company to massively expand its presence in New York City, wait patiently for a few years as its immense wealth and high-salaried workers gradually make housing prices even more expensive than they already are, spend a few more years mounting a grassroots public relations campaign to make that company feel at least slightly embarrassed about how it’s making housing prices more expensive, and then eagerly collect our $1 billion prize, or whatever the equivalent of $1 billion will be by the time this whole process plays out. It’s as easy as that.

The only caveat here is that the tech giant obviously can’t be Amazon. If the aborted attempt by Amazon to bring its second headquarters to New York City taught us anything, it’s that everyone in New York hates Amazon, except for all the people in New York who love Amazon and all the people in New York who have conflicted feelings about Amazon but use it anyway because it really is that convenient and cheap.

So, do any other tech companies come to mind? My first choice would definitely be Friendster. Those guys are way overdue for a comeback.

Donald Trump and Greenland

No one seems certain how to take the news that the President Trump is interested in buying Greenland. Is it a joke? Is it even possible? Would Mexico pay for it?

Though numerous Greenlandic politicians have weighed in to unequivocally rebuff Donald Trump’s reported interest in acquiring their homeland, the president himself has not yet commented publicly on the Wall Street Journal report that first publicized his private hope for the Arctic nation.

Sources have said that Trump is interested in Greenland for its natural resources, strategic location for national security purposes, and because buying the territory could represent a windfall (or should we say snowfall?) for his presidency in the annals of history, à la Alaska.

On the off-chance Trump’s request for his White House counsel to investigate acquiring the Arctic island hasn’t frozen in its tracks, here are some things you should know about Greenland and its real estate.

1. Greenland is technically part of Denmark, but is an autonomous territory with its own domestic government. Self-governance was achieved in 2009.
2. Greenland is an island which is roughly 836,000 square miles in size. For comparison, that means the territory is about nine times the size of the United Kingdom; the U.S. is about five times the size of Greenland.
3. It’s the least populated territory on the planet. Greenland’s capital, Nuuk, which shares some similarities to Manhattan, has 18,000 residents, which is roughly a third of the country’s total population. It only has a few real estate brokerages.
4. The most expensive house for sale on a local Greenland listing platform is about $800,000 and no one can buy land in the territory. Instead, “buyers” are granted the right to use the land.
5. Greenlandic is the official language (locally known as Kalaallisut), but residents are also taught Danish and English.
6. As of Friday morning, there are only six Airbnb properties available for rent in Nuuk over the coming week. They range from $142 per night to $48.
7. There are 16 major towns in Greenland and, yet, no roads connect each settlement. The only roads are in and around existing towns. Instead, residents travel via boat in the summer and snowmobile or dog sled in the winters.
8. In 2018, the U.S. officials campaigned to block China from financing three airports in the country. Denmark provided the cash instead.
9. More than 80 percent of the land in Greenland is covered by ice that is melting due to global warming, creating opportunities for resource extraction and dumping 900 million tons of land particles into surrounding oceans.
10. The territory is believed to hold about 10 percent of the world’s rare-earth metals. Offshore Greenland reportedly holds 30 percent of the world’s gas reserves and 10 percent of its remaining oil reserves.

Sources: Reuters, WSJ, New York Times, BBC, NeighborhoodX, Brookings Institution, the Government of Greenland, Airbnb, Lynges.gl, The Telegraph

Mike Trout and his home at Harbor Ridge, and Rob Lowe and home in Montecito.

This week, actor Rob Lowe and his wife, Sheryl Berkoff, relisted their massive home in Montecito, while Oscar winner Emma Stone bought two homes in the Westside. Two sports stars also made moves. Mike Trout of the Los Angeles Angels picked up a mansion in Newport Beach and soccer star Jermaine Jones sold his place in Calabasas.

Last summer, Lowe and his wife relisted their 20-room Montecito estate for $47 million.  After a year on the market, they slashed the price 9.5 percent on the Oakview Estate, which is now listed for $43 million. It features koi ponds and rose gardens. The Brat Pack actor and his wife also listed it six years ago for $42 million. Don Nulty modeled the house after Mount Vernon, George Washington’s estate in Virginia. Eric Haskell of the Agency and Luke Ebbin of Compass have the listing.  [TRD]

Trout, the highest paid athlete in the country, has caught a 9,000-square-foot manse in Newport Beach for $9.2 million. It’s located on Ridgeline Drive in the Harbor Ridge gated community. The three-story home includes six bedrooms, seven bathrooms and an elevator. It was built in 1982 and recently remodeled. The property also includes a private pool and spa. [Variety]

Stone, who won an Academy Award for her role in “La La Land,” paid a combined $5.6 million for two homes on the Westside — one in Westwood for a family member, and one in Malibu. The Malibu property spans 3.2 acres on the Pacific Coast Highway. The home in Westwood is a 1920s Spanish-style cottage with 2,300 square feet of space. [Variety]

Jones, a soccer star for the Ontario Fury, scored a $5 million sale for his equestrian home in Calabasas. Of course it includes a regulation soccer field. The property spans 12 acres with a 7,500-square-foot main house, a horse stall and art studio. Jones, a midfielder for the Fury, had paid $4.8 million for the Spanish hacienda in 2017. It was built the year before, and includes a saltwater swimming pool. [LAT]

The Mountain, whose owner owes the estate of the late Mark Hughes $200 million, photo above (Credit: Realtor, Wikipedia)

A bankruptcy court judge overseeing who gets to own the 157-acre plot of land known as The Mountain of Beverly ruled Monday that lenders can foreclose on the property.

The decision, court documents show, marks a near death blow for the owner, Secured Capital Partners, which put the property on the market last summer for a whopping $1 billion. Secured Capital had filed paperwork for bankruptcy protection in May, and temporarily delayed a planned auction of the property by transferring ownership to Tower Park Properties last week. The property remains on the market, now for $650 million.

The auction, which was planned for Aug. 15 in Pomona, is now scheduled for Tuesday. It is unclear whether Secured Capital or Tower Park, whose owners are tied to convicted felon Victorino Noval, will mount another attempt to keep the land.

Any interested buyer would have to bid at least $200 million to cover the existing liens on the property, from the previous owner, the estate of Herbalife founder Mark Hughes. The Hughes trust has been trying to foreclose on The Mountain for several months, but has been delayed by Secured Capital’s legal tactics.

Lawyers representing both parties did not immediately respond to requests for comment.

The Noval family was able to prevent last week’s auction by transferring ownership of The Mountain from Secured Capital to Tower Park. Both entities are controlled by the Noval family.

Tower Park — which also filed for Chapter 11 bankruptcy — had a reorganization plan that specified the lenders had to provide a 21-day notice before they could foreclose on The Mountain. They also had to prove that Tower Park was at risk of defaulting on its loans.

But the bankruptcy court judge has ruled that Tower Park’s bankruptcy case “does not prevent the lenders from proceeding with the foreclosure sale.” It also struck down Secured Capital’s request for bankruptcy protection last month, siding with the lenders in both cases.

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

The Mountain of Beverly Hills foreclosure moves ahead. A bankruptcy court judge ruled Monday that the lender — the estate of Mark Hughes — can foreclose on the 157-acre spread. The property, now on the market for $650 million, is scheduled to be sold to the highest bidder at auction on Tuesday after last week’s auction was canceled. [TRD]

Swift Real Estate Partners made a swift, profitable exit out of North Hollywood. The San Francisco-based investment firm sold the Academy Tower office building to a joint venture of Rockwood Capital and Artisan Realty Partners. The new owners paid $91.2 million, which was $30 million more than what Swift paid for the Lankershim Boulevard property three years ago — before renovations. [TRD]

In San Pedro, a multifamily developer plans a 101-unit building. The project is tied to Adam O’Neill, who heads up two Los Angeles-based firms, Stonebridge Real Estate Group and Square One Homes. It would include 89 market-rate and 12 affordable units, and is an area that has received added attention because of its Opportunity Zone designation. [TRD]

A six-bedroom pad in Malibu’s Billionaire’s Beach listed for $44 million. The seller is Vadim Shulman, a Ukrainian business tycoon. The 9,500-square-foot home includes 150 feet of beachfront, plus the largest home spa ever permitted in Malibu. [TRD]

President Trump is feeling nostalgic for quantitative easing. In a tweet, he called for a 1 percent cut on interest rates and said the Federal Reserve should restart its crisis-era money-printing program. The Fed cut rates this month, which for real estate could mean lower borrowing rates. [CNBC]

The Liddel at 10777 Wilshire Boulevard

L.A. luxury apartments have a big first half for investors. According to a new Savills report, the city’s luxury residential rentals showed the best returns for investors from January through June of any major market city in the world. The 5.4 percent yield was better than the other top 20 major cities that Savills tracks. New York was third. [Mansion Global]

Designs revealed for new senior residential complex. The 57-unit complex at 1122-1136 S. Roxbury Drive would be developed by Duke Development, and designed by Albert Group Architects. The four-story construction would be a mix of one- and two-bedrooms and include 113-vehicle underground garage. [Urbanize]

In L.A., commuting is getting worse. It’s never been fun for residents to commute to work, but a new report from Apartment List shows how bad it is. For more than 150,000 people, the commute time is a total of three hours to and from work. These “super-commuters” are the norm for East Coast residents, but despite L.A.s’ efforts to give developers incentives to build near public transit hubs, the study suggests West Coast residents will now increasingly suffer that fate. [Curbed]

Donald Trump (Credit: Getty Images)

Trump is blaming warning signs of a recession on a conspiracy. President Donald Trump claims it’s the result of a conspiracy of organizations hoping to see him lose reelection. These include Federal Reserve chair Jerome Powell, who he has accused of purposefully acting against him, other countries that he says are trying to harm America’s economic interests and the news media. So far, real estate has held its own in the stock market amid broader economic concerns. [NYT]

Softbank CEO Masayoshi Son

SoftBank, the biggest backer of real estate startups, will lend billions to its employees to invest in its second Vision Fund. The company plans to loan its workers as much as $20 billion to buy stakes in the venture-capital fund, according to the Wall Street Journal. CEO Masayoshi Son could account for up to $15 billion of it. The unusual move would double SoftBank’s exposure to a startup economy that has started to show signs of weakness, especially when it comes to initial public offerings. [WSJ]

FROM THE CITY’S RECORDS:

A developer has submitted plans for a 101-unit mixed-use apartment building with ground floor retail at 2111 & 2139 South Pacific Avenue in San Pedro. The development would include 89 market-rate and 12 very-low-income units. The apartment complex would replace an existing bar.

Clockwise from top left: 12165 Iredell Street, 410 Evelyn Place, 8590 Hollywood Boulevard, 11600 Amanda Drive and 1608 Thayer Avenue

The top five residential sales in Los Angeles County last week included four price chops, as has become common, and a property registered as a city historical monument.

The five combined for $29 million, about $1 million less than the total from the previous week.

The most expensive sale last week was for an $8 million Trousdale Estates home. The other properties are located in Studio City, Hollywood Hills and Westwood.

Price and property details were found using Redfin and records on PropertyShark.

410 Evelyn Place | Trousdale Estates | $8 million
A home on the northern edge of the Trousdale Estates in Beverly Hills covers 2,700 square feet, and has six bedrooms and six-and-a-half bathrooms. The deal penciled out to $2,963 per square foot. The home was built in 1960 and the gated property itself spans 24,370 square feet. It was was first listed for $8.3 million in April, and it last sold for $4.25 million in January 2016. It also includes an infinity pool and spa, and a patio bar. It was owned by OSB Investment LLC, which is based in Sherman Oaks, and tied to Osnath Siag, who was previously president at The Blvd Agency, according to reports. Jonathan Nash and Stephen Resnick with Hilton & Hyland had the listing. Karlyn Nelson with Nationwide Real Estate Execs represented the new owner.

8590 Hollywood Boulevard | Hollywood Hills | $5.9 million
Located just above the Sunset Strip, the home spans 4,334 square feet with three bedrooms and four-and-a-half bathrooms. It was built in 1925, but spent the past three years being renovated. The 4,545-square-foot lot now includes an infinity edge pool. It was owned by an entity named Brickhouse LLC. The sale price penciled out to about $1,350 per square foot. The home was previously listed for $6.5 million in April, and last sold for $2.5 million in 2015. Caroline Berkman Lewis with Douglas Elliman and Boni Bryant with Compass shared the listing. The Agency’s Mauricio Umansky represented the buyer.

12165 Iredell Street | Studio City | $5.3 million
A Tuscan Villa-style home in Studio City, it was built in 1948, and now includes six bedrooms and five bathrooms over 5,810 square feet. The sale comes out about $900 per square foot. The property, located in the Fryman Estates area, includes a guest suite. The gated lot is 37,952 square feet. The home belonged to Joel and Diane Steiger, who last purchased it for $2.2 million in 2003. It was listed for $5.8 million in May. Elizabeth Summers with Coldwell Banker Residential Brokerage and Monty Iceman with Berkshire Hathaway HomeServices California had the listing. Richard Yohon with Sotheby’s International Realty represented the buyer.

1608 Thayer Avenue | Westwood | $5.1 million
A home on Thayer Avenue that was remodeled this year spans 6,000 square feet and includes five bedrooms and five-and-a-half bathroom. The sale came out to $849 per square foot. The modern-style home was built on a 7,194-square-foot lot. According to the listing, the property was offered at $5.3 million in June. It was previously purchased for $1.74 million before it was remodeled. Stephen Pannesco and Nicole Joel with Coldwell Banker Residential Brokerage had the listing. F. Ron Smith with Compass represented the buyer.

11600 Amanda Drive | Studio City| $4.9 million
Named the Lechner House, the home at 11600 Amanda Drive is a Los Angeles Historic Cultural Monument designed by Rudolph Schindler in 1947. It sold for $4.88 million — about $82,400 above the asking price — after it hit the market following the completion of a decade-long restoration. It was restored by Pamela Shamshiri, design principal of Studio Shamshir, who also owned the home. Shamshiri purchased the property for $1.9 million in June 2008. It includes four bedrooms and three-and-a-half bathrooms over 3,539 square feet. The home, which was influenced by Native American cave dwellings, traded for $1,380 per square foot. The lot spans 15,913 square feet. Tori Horowitz with Compass had the listing. Stefani Schmacker, also with Compass, represented the buyer.

Jacob Sudhoff and Scott Durkin (Credit: Sudhoff Companies, Emily Assiran, iStock)

Douglas Elliman is launching in Texas.

The brokerage announced Tuesday a joint venture with Sudhoff Companies, a real estate marketing and sales company based in Houston that specializes in new development.

Elliman’s new office in Houston will be staffed by 50 brokers, said Scott Durkin, the brokerage’s president and chief operating officer. The firm plans to expand its resale division early next year — and eventually move into Dallas and Austin.

“Houston is a lot like Palm Beach, a lot like Beverly Hills, Los Angeles and parts of Long Island,” Durkin said. “The buyer is a buyer that we knew we wanted to be part of their lives, but we didn’t know the right people, yet, and now we have found the right person and company that has our DNA and speaks our language.”

The joint venture — almost a year in the making — will see Sudoff operations folded into the Elliman brand. Jacob Sudhoff, president of his namesake firm, will serve as chief executive officer of Douglas Elliman, Texas.

Durkin said part of the draw was Sudhoff’s involvement in new construction and “vertical living.”

The firm will represent approximately $500 million in current new development, including Houston’s newest luxury condominium, the Hawthorne, and command an estimated 85 percent market share in Houston’s new development market for condominiums, according to Durkin.

He said the expansion was a natural next step because Texas was a feeder market to other states, and a number of the firm’s existing clients came from Houston.

“Houston is not a market where people are leaving; it’s a market where people are coming into,” he said.

In New York, Elliman is a huge player. With 1,999 agents and $8.99 billion in closed sales, it is the biggest brokerage in the city, according to The Real Deal’s latest ranking.

Although it is a dominant force in new development, Chairman Howard Lorber acknowledged the sector’s constraints in New York City during an August 7 earnings call. Vector Group — Elliman’s parent company — is not investing in new condo projects here because Lorber said high land costs make it nearly impossible to pencil out a profit. It’s made new development plays elsewhere in recent years, including the acquisition of independent Boston-based firm Otis & Ahearn in 2017.

Generally, Elliman expands in new markets through the acquisition of firms, such as its buy of Teles in Beverly Hills. Overnight, the deal made Elliman one of the largest residential players on the West Coast.

Elliman is not the only New York firm to recently expand into Texas. In 2018, Compass rented 24,000 square feet of office space in Dallas to house its newest regional headquarters, after announcing a partnership with Dallas-based Collective Residential earlier in the year. The brokerage also has agents in Austin and Houston.

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

Ahrya Fine Arts at 8556 Wilshire Boulevard (Credit: Laemmle Theatres)

Arthouse movie chain Laemmle Theatres may fall to Netflix and its ilk. Low attendance and the dominance of home-streaming may be forcing the West L.A.-based family company to put up its nine locations for sale. Laemmie’s movie houses include two in Beverly Hills and one in Santa Monica. Company president Greg Laemmle said he was “exploring a number of different options.” [LADN]

Reggie Bush is looking to score on the sale of his Pacific Palisades pad. The former NFL player and USC standout wants $10 million for the 7,500-square-foot contemporary he bought in 2014 for $7.8 million. Bifolding walls on both levels of the home provide views of the Pacific. Bush is now a college football commentator for Fox Sports. [LAT]

Beverly Hills BMW dealership trades for $70 million. The four-acre dealership on Wilshire Boulevard has a 93,000-square-foot showroom and a 246,000-square-foot auto repair facility, but also has redevelopment potential. An extension of the Metro Purple Line will run under Wilshire Boulevard, and the city of Beverly Hills is rezoning the area to allow for more dense development. [LABJ]

Clockwise from top left: 12165 Iredell Street, 410 Evelyn Place, 8590 Hollywood Boulevard, 11600 Amanda Drive and 1608 Thayer Avenue

A home in Trousdale Estates topped last week’s priciest residential sales in L.A. In addition to that $8 million property, homes in the Hollywood Hills, Studio City, and Westwood also made The Real Deal’s roundup of top sales. [TRD]

Uncertainty over $18 billion Tubbs fire liabilities sends PG&E stocks cratering. A bankruptcy judge ruled that jurors should decide whether the troubled California utilities provider should be liable for damages related to 2017’s deadly Tubbs fire in Santa Rosa. The fire killed 22 people and destroyed more than 5,600 structures. [LAT]

Jacob Sudhoff and Scott Durkin (Credit: Sudhoff Companies, Emily Assiran, iStock)

Douglas Elliman is entering the Texas market. The brokerage announced on Tuesday a joint venture with Houston-based Sudhoff Companies to launch in Houston with a 50-agent office. They plan to expand to Dallas and Austin. As part of the deal, Sudhoff Companies will be folded into the Douglas Elliman brand. [TRD]

(Credit: iStock)

Major mREIT dividend cuts are a potential recession indicator. Three of the largest real estate investment trusts that package and sell residential mortgage-based securities have cut dividends this year. The cuts followed an inversion of yields on three-month and 10-year treasuries in March, which made it more expensive for the mREITs to borrow money to buy up long-term mortgages. [TRD]

New tariffs against Chinese imports could impact apparel retailers. One analyst estimated that 25 percent tariffs on apparel could cause as many as 12,000 stores to shut down. About 40 percent of all clothing and 70 percent of shoes sold in the U.S. are made in China, and a 10 percent tariff against these products kicks in on September 1. [WSJ]

The We Company’s Adam Neumann (Credit: Getty Images)

The We Company is somehow worth 10 times as much as this public competitor. Office operator IWG, best known for its Regus brand, filed for bankruptcy after the dot-com crash. The firm’s experience has often been used as a point of reference for WeWork’s business model, as it nears its IPO. [WSJ]

FROM THE CITY’S RECORDS:

Developer Wiseman Residential has filed plans for a 77-unit apartment complex on the corner of Venice Boulevard and Glencoe Avenue in Venice. Wiseman requested height bonuses granted to developments in Transit Oriented Communities. [LADCP]

An entity tied to Adam O’Neill of Square One Homes and Stonebridge has filed plans for a 109-unit, mixed-income apartment building on 13th Street and South Pacific Boulevard in San Pedro. The development would include 97 market-rate and 12 very low income units. [LADCP]

Witkoff Group’s Steve Witkoff and a rendering of the project at 500 Broadway

The Witkoff Group landed a mezzanine construction loan for its 249-unit luxury apartment project in Downtown Santa Monica.
The New York-based firm, led by founder Steve Witkoff, is building the mixed-use complex — which includes more than 50,000 square feet of retail space — at 500 Broadway.

South Korea-based Mirae Asset Daewoo provided the $31 million loan. Bridgerock Realty Advisors arranged the financing, according to a Bridgerock release.

In May, Mirae and Deutsche Bank extended $300 million in debt to Witkoff Group and Howard Lorber’s New Valley Group for the West Hollywood Edition project, a 13-story luxury hotel and condo development.

The most recent project is the only multifamily development with more than 200 units in Downtown Santa Monica, according to Bridgerock. It will have 56,000 square feet of retail space and 524 parking spaces. It’s a few blocks from the Downtown Santa Monica Metro Expo Line stop, as well as the Santa Monica Place shopping mall and Santa Monica Pier.

Witkoff has been involved with the project since 2017. KRE Capital and Dune Real Estate Partners first proposed the development, but Witkoff Group then came on board as the developer.

All 249 units are market-rate. Santa Monica officials approved the project so long as Witkoff funded a five-story, 64-unit affordable apartment complex at 1626 Lincoln Boulevard, called the Arroyo. The Arroyo opened in December and is managed by the Community Corporation of Santa Monica.

Witkoff Group broke ground last year and at the time, completion was anticipated sometime next year.

The firm is most active in New York, but Witkoff said earlier this year that high land and construction costs there have forced him to look to other cities. Besides Los Angeles, Witkoff Group is active in Florida and Las Vegas.

“I can’t do anything in this town today,” he said at a February forum event. “The land is too expensive.”

Construction consultancy firm Rider Levett Bucknall found last year that construction costs in L.A. are even higher than New York. The study put L.A. behind only San Francisco and Portland for costs.

(Credit: iStock)

Real estate pros and economic pundits spent the better part of last week trying to decipher the greater implications of the treasury yield inversion, an economic indicator that has historically preceded a recession.

But earlier this year a different set of benchmark rates inverted, and it’s already had a significant impact on one sector of the real estate market: residential-mortgage real estate investment trusts.

Three of the largest REITs that buy up residential mortgages and package them into securities have cut their dividends so far this year. The cuts came after the yields on three-month and 10-year treasuries inverted in March for the first time in over a decade. (Last week’s inversion that sent the market into an uproar was on two-year and 10-year treasuries.)

READ MORE:
The economy may be starting to slow. Real estate is taking notice 

Annaly Capital Management, the country’s largest residential mortgage REIT, cut its dividend in May from $0.30 a quarter to $0.25 a quarter. The same month another large mREIT, AGNC Investment Corp, cut its dividend from $0.18 to $0.16 cents.

And in June Two Harbors Investment Corp cut its dividend from $0.47 to $0.40.

“That was a little surprising to see them cut,” said Brock Vandervliet, an analyst at UBS who covers Annaly Capital management. “For Annaly that was basically the first cut in five years, so that was a big deal.”

Such dividend cuts are significant for mREITs, which investors buy primarily for their high quarterly payouts. Some of the highest yield mREITs pay out dividends of 12 percent or more, compared to a yield of 2 to 2.2 percent for the Standard & Poor’s 500 Index.

Though mortgage REITs are just a small part of the $11 trillion home loan market, they’ve been ramping up over the past several quarters.

They operate on a simple premise: Borrow short-term debt (sometimes as short as overnight, but more commonly 30 or 90 days) to buy up a pool of very long-term assets – 30 year mortgages.

The model works well as long as borrowing costs are lower than the payouts from the mortgages they buy. But when the yields on three-month debt were suddenly paying more than 10-year notes in March, the equation flipped and it suddenly became more expensive for the REITs to borrow.

Stock prices for Annaly and AGNC took a sharp hit in April of about 13 percent and 10 percent, respectively, and both took another dive earlier this month.

A spokesperson for Two Harbors declined to comment, while representatives for Annaly and AGNC did not respond to requests for comment.

But on Annaly’s first-quarter earnings call in May, company president Kevin Keyes addressed the dividend. He said the company could maintain its dividend, but in order to do so it would have to increase leverage.

And with more uncertainty over the Federal Reserve’s future moves on interest rates, he said, that strategy seems too risky.

“This quarter’s reduction was really a function of frankly things we can’t control in the marketplace,” he said. “Long story short, we see a lot more risks in this market today than we have in the past couple of years, as it relates to generating that similar return.”

(Illustration by Brian Stauffer)

Life, liberty and the pursuit of shopping. So goes the American Dream — the mall-slash-amusement park in New Jersey’s Meadowlands that has weathered three developers, two designs and one calamitous recession.

Indeed, the first phase of the $5 billion, 3 million-square-foot complex is finally poised to open in late October with a portion of the shops and restaurants launching alongside several nonshopping attractions, including an indoor ski slope dubbed Big Snow America, according to the project’s developer, Triple Five Group, which is based in Canada.

But there are some serious questions about whether American Dream, which was first conceived of nearly two decades ago when the retail landscape was healthier, can succeed.

For starters, it’s opening at a time when brick-and-mortar retail is facing an existential crisis fueled by the rise of online shopping.

And the way some of the mall’s development cost has been financed, which has essentially diverted property and sales tax money to pay off municipal bonds that back American Dream, has bothered critics who would have preferred the public money be spent on schools.

In addition, some are concerned about the location of the project — which sits just off the New Jersey Turnpike in the shadow of the MetLife football stadium. Roads are already too busy in that area, they say, and boosting public transit options would siphon critical taxpayer dollars.

Delays have also plagued the project, which former Gov. Chris Christie referred to as an eyesore and which was sued by the New York Giants and the New York Jets to stop construction. Numerous deadlines have come and gone, like the one that had the mall opening in time for the 2014 Super Bowl.

“It has been a bad idea since day one,” said Jeff Tittel, the senior chapter director of the New Jersey Sierra Club, of a project he calls “American Scheme” for sucking valuable time, energy and money away from what he considers more worthwhile public investments.

So the fact that American Dream is nearing the finish line after so many ups and downs, near-deaths and 11th-hour saves is a feat in itself, officials, developers and brokers said.

“It’s a huge gamble,” said Marcus & Millichap Senior Vice President Joseph French Jr., a mall specialist who’s predicted that 1,000 of the country’s 1,300 shopping malls will close in the next 20 years.

“But in concept,” French said, “I’m not willing to bet against it.”

That’s largely because the complex is something of an extreme test case, bordering on a last-ditch effort, for the American mall — one that hopes to lure in visitors with dining and over-the-top entertainment first and foremost, and then keep them there long enough that they will also get around to shopping afterwards.

The complex has partnerships with fast-growing media companies including DreamWorks, Coca-Cola, Nickelodeon, Lego and Vice Media. And in addition to the ski slope, it will include water and amusement parks, a skating rink and other flashy attractions.

In total, 45 percent of the 3 million square feet will be devoted to retail, with 55 percent earmarked for entertainment. That ratio, French said, is a smart update to the old mall paradigm and could be the key to the project’s success.

Go big or go home

Looming over the turnpike on 130 acres of state land, according to the state authority that operates the property, American Dream is clearly banking on its sheer size and its high-profile partnerships to turn itself into a destination.

It will include a DreamWorks movie-themed water park, a Nickelodeon Universe amusement park, a Legoland Discovery Center, an aquarium, a Ferris-style wheel and a sprawling food hall with an 800-seat area called Coca-Cola Eats.

That’s all in addition to the regular retail — 350 stores with a mix of national brands and pop-ups filling 1.5 million square feet. Those shops will inhabit more traditional real estate: long halls punctuated by atriums, though a giant tree-shaped sculpture from Burning Man — illuminated with 75,000 LEDs and playing music — will also be on display in a seeming bid for the hipster crowd.

As of early August, 85 percent of the retail space was leased, according to Triple Five, a private, family-owned company that has stakes in several other industries, including oil and gas and tech startups. Saks Fifth Avenue will occupy a two-level, 120,000-square-foot space; the posh retailer’s annual rent is $2.1 million, or about $18 a square foot, according to a 2017 appraisal of the property by CBRE.

Other tenants include Tiffany & Company, Hermès and Dolce & Gabbana, all of which will be housed in a luxury wing. Victoria’s Secret, Uniqlo and Sephora will also have outposts at the mall, which has annual asking rents of $100 to $500 a square foot, said Don Ghermezian, Triple Five’s CEO, who added that concessions such as improvement allowances have not been granted.

Saks’ rent is significantly lower because it’s the mall’s anchor tenant, according to a Triple Five spokeswoman.

But commercial brokers say the other rents seem very steep. By comparison, Roosevelt Field — the upscale Long Island mall anchored by Nordstrom, Neiman Marcus and Bloomingdale’s — commands about $50 to $200 a square foot, French said.

At American Dream, the higher asking rents have not hindered lease negotiations, according to Ghermezian. Some tenants have even expanded their planned footprints, he said. Lululemon Athletica, for example, opted to take 12,000 square feet, up from 4,600. And Barneys New York is still scheduled to open, even after the company declared bankruptcy this summer.

But that’s not to say the megamall is immune from today’s harsh retail realities.

Toys “R” Us — which filed for bankruptcy in 2017 and later liquidated its stores — was an original anchor tenant.

Similarly, Cirque du Soleil was supposed to have a permanent home in the complex, according to early reports, but that no longer seems to be the case. In August, a Cirque du Soleil spokesperson, somewhat cryptically, called the earlier reports “rumor.”

Construction on the American Dream site first began in 2004

Scattered amongst the brand-name retailers will be pop-up shops that will feature locally based startups with leases of less than six months, said Ken Downing, the chief creative officer, who joined Triple Five last spring after a 28-year run at Neiman Marcus.

Triple Five owns two other major malls — the 5.3 million-square-foot West Edmonton Mall in Alberta, Canada, and the 4.2 million-square-foot Mall of America near Minneapolis. Both of those gigantic properties are 95 percent occupied, Ghermezian said.

And the developer isn’t the only one still betting on the mall model.

Brookfield Properties is opening SoNo Collection, a 700,000-square-foot mall in Norwalk, Connecticut, that will have a Nordstrom, Apple store and Bloomingdale’s, according to news reports. Like American Dream, SoNo will also have pop-up shops.

The dominant trend in the region has been for shopping centers to reinvent themselves to avoid collapse.

Taking the space of a former Saks store at the Mall at Short Hills, a 1.4 million-square-foot property owned by Taubman Properties about 20 miles from American Dream, is an Industrious co-working facility, for example.

Likewise, at the nearby Westfield Garden State Plaza, which in 1957 was the first suburban mall in New Jersey, a J.C. Penney that closed in 2018 will be razed to make way for dozens of smaller shops, according to news reports. More strikingly, European owner Unibail-Rodamco-Westfield plans to add apartments and greenery on parking lots there. A call left with the mall’s managers was not returned.

Ghermezian said the pop-up stores at American Dream are not fillers for empty storefronts, as is often the case with vacant shops in New York. “We are not doing it to make storefronts look full,” he said.

As for the conventional tenants, leases stipulate that they need to embrace “experiential retail” in their stores, which could take the form of Instagram-worthy backdrops.

“It’s not necessary to have the same stores as on Rodeo Drive or Madison Avenue,” said Downing. “Customers are looking for a store that has a little personality.”

Dreams vs. reality

Industry sources predict that the complex will see big crowds for its opening and that the rotating pop-ups will keep customers coming back.

But maintaining the 110,000-a-day visitor level that Triple Five is aiming for — largely on par with its Minnesota property — will be challenging, they added.

Others suggest the possibility of an unpleasant Catch-22.

“If they don’t meet those numbers, the mall becomes a giant white elephant, with serious implications for the site and the region,” said Tittel of the Sierra Club. “If they do hit it, it will be car-maggedon all the time.”

By comparison, Walt Disney World in Florida averages 142,000 visitors per day, according to 2017 figures. And all of New York City sees 178,000 visitors on a daily basis, according to 2018 data.

“I don’t think the 110,000 number is a make or break for the project,” said Alan Marcus, the founder of the Marcus Group, a public relations firm that represented American Dream till 2014.

Triple Five’s business plan, as spelled out in the 2017 CBRE appraisal, assumes $117 million a year in retail rents and $82 million a year in ticket sales from the amusement parks to start.

Keeping visitors on-site for six hours — another Triple Five goal — may also be  tough. The national mall average is one hour, even if most malls don’t have wave pools and hockey rinks.

“Most people think it’s a reach,” said GFP Real Estate Chair Jeff Gural, who’s a managing partner in a group that operates the horse racing track within the Meadowlands Sports Complex. “But I think it’s a spectacular project and I wish them well,” Gural, who’s not involved with the American Dream project, added.

One of the biggest financial obstacles for the mega-mall is that it’s located in Bergen County, which bans shopping on Sundays under local “blue laws.”  The exact toll of that restriction is tough to gauge, brokers say, and may be offset by the fact that New Jersey doesn’t charge sales tax on clothes, which has historically siphoned business away from New York. The restaurants, roller coasters and ski slope can remain open on Sundays.

How visitors will get to the East Rutherford site is another outstanding question.

American Dream, whose visitors are mostly expected to come by car, has 11,000 parking spaces and access to another 22,000 around MetLife Stadium, provided there’s no football game, concert or other event.

Concerns that the mall will cause traffic and congestion nightmares during home games has already led to one legal battle: The Jets and Giants — who had veto power over any expansion plans at the Meadowlands — sued Triple Five in 2012 to stop the project. (Triple Five counter-sued, saying the teams were hurting its ability to get loans. The two sides signed an undisclosed settlement in 2014.)

(Click to enlarge)

Public transportation could be just as problematic as driving.

New Jersey Transit has allocated $8 million to expand three bus lines to American Dream, which will have its own self-funded transit center. While Ghermezian said that would be ready in time for this fall’s opening, the existing train line — which is now only used for big events and football games — may not be enough.

Even though trains are now supposed to run hourly, that will require more conductors, which New Jersey Transit has in short supply, argued Janna Chernetz, deputy director of the transit advocacy group Tri-State Transportation Campaign. Bringing tens of thousands of visitors to the mall every day — plus the 17,000 people who are supposed to work there — will have negative effects far and wide, said Chernetz, who’s a “strong critic” of the project. She also questions how many shoppers, burdened with bags, will want to take mass transit home from the mall.

“But we are at the point where we have to make the project work,” Chernetz said, adding that Triple Five should pony up for any train expansions.

Others argue that putting the developer on the hook wouldn’t be fair, noting that the Giants and Jets have, for better or worse, never had to significantly chip in for infrastructure improvements.

“If the teams say jump, the state says, ‘How high?’” Marcus, the mall’s former spokesman, said.

Indeed, because of its job-creation function, he said, American Dream should get state support. “People love to be negative about projects,” Marcus added.

For its part, Triple Five seems to be pulling out all the stops to ensure that transportation is not a make-it-or-break it issue for the project.

It’s running private shuttle buses, which will pick up visitors at sites in Manhattan, at airports and at ferry stops on the Hudson River. Favored customers can also potentially book two Rolls-Royces, Ghermezian added. And there are three landing pads on American Dream’s roof for those with the means to helicopter in.

“Whatever we can do to get the New York customer as quickly and as easily as possible, we will do,” Ghermezian said.

Triple Five CEO Don Ghermezian

The survivor

If American Dream seems like the product of a different era, it’s understandable. It’s been on the drawing board for years.

In 2002, New Jersey’s Sports and Exposition Authority issued a request for proposals to develop parking lots next to the now-defunct arena known as the Izod Center.

The Mills Corporation, a mall developer that had kicked around proposals for other parts of the Meadowlands since the 1990s, teamed with the Mack-Cali Realty on a mall-and-entertainment complex to pitch its idea.

The complex was approved in 2003 and broke ground a year later. Several components of that original plan — it promised a Legoland attraction, a Ferris wheel and a ski slope — made it to the final blueprint.

But its façade, which had blue and green checkered patterns, like bathroom tile, and orange and brown stripes elsewhere, was widely panned.

As governor, Christie called it “the ugliest damn building in New Jersey and maybe America.”

By 2006, Mills was over budget and in need of funding. It turned to investors including Colony Capital, the private equity firm founded by Thomas J. Barrack Jr., a confidant of President Donald Trump who is currently under federal scrutiny about foreign influence (Barrack hasn’t been officially accused of wrongdoing). After Lehman Brothers collapsed in 2008, jeopardizing $500 million in construction financing, Colony also ran into trouble.

Talks with the Related Companies to join the project came to a dead end, and a group of lenders led by Credit Suisse eventually foreclosed on the $2 billion, nearly complete site.

In 2011, Triple Five — passed over in the initial RFP — stepped in to rescue the property. It soon whitewashed the façade and reimagined the project, keeping the ski slope in place but expanding the complex to 3 million square feet from 2.2 million.

The company’s founder, Jacob Ghermezian, emigrated from Iran to New York in the 1940s and worked as a Persian rug dealer for more than a decade before relocating to Canada and expanding into real estate in the 1960s. The family made timely bets on housing and hotels in Edmonton during the area’s 1970s oil boom and later began to diversify.

Triple Five’s holdings in New York today include the Community Federal Savings Bank in Woodhaven, Queens, according to bond sale records.

The price of dreaming

Triple Five has a 75-year, $160 million lease for its site, though previous developer Mills prepaid the ground rent through 2024.

Triple Five has also benefited from major subsidies for the project, even if some of those tax breaks and credits are tools commonly deployed with economic development.

The first phase of the $5 billion complex is finally poised to open in late October, but critics say it’s out of touch with the way consumers shop today.

Rather than full property taxes, American Dream is responsible for so-called payments in lieu of taxes. In a complicated financing arrangement, those PILOTs will both flow to East Rutherford and help pay off $1.1 billion in tax-exempt municipal revenue bonds sold in 2017 to support the project.

New Jersey also waived sales tax requirements for the project, with that anticipated revenue also backing the unrated bonds, whose lead underwriter was Goldman Sachs.

The bonds are structured to pose no downside for taxpayers, as bondholders assume all the risk, according to Ghermezian. The high-yield bonds, which mature in 2056, were overperforming a year after being issued, according to news reports.

“There is zero risk whatsoever [to taxpayers],” said Ghermezian, who added that his family’s equity stake is about $650 million, or about 13 percent of the development’s total value.

Triple Five is no stranger to asking taxpayers to help foot the bills. In the mid-1990s, the company was planning on building a mall in Silver Spring, Maryland, also named American Dream. But the $585 million project ultimately collapsed because Triple Five was demanding too much of a subsidy from the public, up to $300 million, officials said at the time.

Meanwhile, the New Jersey mega-mall’s $1.7 billion in private construction financing, from a group of lenders led by JPMorgan Chase, comes due in 2021. To secure that loan, Triple Five had to put up a 49 percent stake in its Mall of America for collateral, meaning the Midwestern property could potentially get a new minority owner if American Dream imploded.

But Triple Five’s spokesperson  noted that “such recourse is normal for construction financing.” The risk from such recourse is modest “with American Dream opening in just weeks,” she wrote in an email.

Key to the Meadowlands project, analysts say, was the deal with Coke, announced in June. They say it represents a unique effort at branding a mall in the manner of a sports arena. The 10-year multimillion-dollar agreement allows Coke to affix a large billboard on American Dream’s façade, at an as-yet-undetermined spot. (It should be noted that Pepsi sponsors MetLife Stadium, and its sign faces American Dream.)

Inside the mall, Coke will host events with athletes and other celebrities; the beverage giant will also have an interactive store with a podcast studio. Coca-Cola Eats, the massive food hall, will also be a branded feature with global cuisine and various Coke beverages.

“I think it was a real coup to get Coke,” Marcus said.

There have been smaller innovations as well. H Mart, the fast-growing Asian grocery chain, took 35,000 square feet, which will include a bar and a stage for small concerts. Putting grocery stores in malls — once a frowned-upon practice — is a necessary play today, said Chuck Lanyard, the president of Paramus-based retail brokerage the Goldstein Group, who represented H Mart in the lease deal.

“Malls all over the country are really in trouble,” Lanyard said. “Very wisely, it’s not just about retail but also entertainment.”

When American Dream opens on Oct. 25, critics will likely see an albatross of a project that is far removed from how consumers shop today — despite the bells and whistles. But others may appreciate the audacity of such a large mall-reinvention effort.

“If malls want to survive, they are going to have to do something like this,” Lanyard said. “But American Dream has gone many steps further.”

(Click to enlarge)

The Mountain’s sale, to a lender linked to the Mark Hughes Trust, was a tiny fraction of the massive property’s asking price. (Credit: Realtor, Wikipedia, iStock)

The Mountain of Beverly Hills, which hit the market last year with a bang for a record $1 billion, has fizzled out, selling for just $100,000 at a foreclosure auction.

The buyer and only bidder was the lender, an entity linked to the Mark Hughes Trust. The Wall Street Journal first reported the story.

The sale marks a monumental disappointment for the Mountain’s now former owner, Secured Capital Partners. In July 2018, the company got maximum exposure for its splashy listing on the 157-acre parcel above the Beverly Hills Post Office. It enlisted star broker Aaron Kirman to market the property, and received a mountain of publicity. But the dream soon faded and eight months later in February, the price was slashed to $650 million.

At the auction in Pomona on Tuesday, the gavel banged down at a tiny fraction of the original listing.

Any interested buyers would have had to bid at least $200 million to cover the lender’s debt on the property. But no other bidders showed. The Hughes Estate had owned the property previously.

On Monday, a judge overseeing a bankruptcy case that centered on massive property ruled that the lenders could move ahead with the foreclosure.

Secured Capital had filed paperwork for bankruptcy protection in May, and temporarily delayed the auction — originally scheduled for last week — by transferring ownership to Tower Park Properties. Both entities are tied to convicted felon Victorino Noval.

The judge ultimately ruled that Tower Park’s bankruptcy case “does not prevent the lenders from proceeding with the foreclosure sale,” paving the way for Tuesday’s auction. It also struck down Secured Capital’s request for bankruptcy protection last month, siding with the lenders in both cases. [WSJ] — Natalie Hoberman

Adam O’Neill and the development site (Credit: Google Maps)

Stonebridge Real Estate Group/Square One Homes has doubled down in San Pedro.

An entity tied to Adam O’Neill— who is president of locally based Stonebridge Real Estate Group and a principal at Square One Homes — followed a Monday filing for a large multifamily project in San Pedro with another up the street the following day: a 109-unit project at 1309-1321 S. Pacific Avenue.

The Monday filing was for a 101-unit project about a half mile south at 2111-2139 S. Pacific Avenue.

O’Neill and his firms could not be immediately reached for comment on Tuesday.

Both projects include 12 units reserved for “very low-income” renters and a request for a density bonus and height limit increase.

The latest project on S. Pacific Avenue would replace a series of low-rise commercial buildings. The developer does not appear to formally own the properties yet. Each of the lots are owned by separate entities or individuals.

Unlike the project filed Monday, the larger project is not in a federal Opportunity Zone. The federal program provides significant tax breaks to entities that finance development projects in underserved areas.

Much of San Pedro is covered under the program and developers have taken advantage. South Bay Developers LLC is planning a 99-unit OZ project on W. 5th Street in Pan Pedro.

Investment giant Starwood Capital Group has a $500 million OZ fund and in May put some of that money into developer Holland Partner Group’s 375-unit project under construction on S. Palos Verdes Street.

Many other parts of L.A. are covered under the program as well. Large parts of South L.A., as well as other South Bay areas north of San Pedro, can be developed and funded through the program.

JPI CEO Brad Taylor and a rendering of the South Gate project

Development firm JPI snagged construction financing for its 244-unit luxury multifamily development in South Gate.

The $80 million in debt will go toward the Jefferson on Imperial, which is now being developed. It will be the first new multifamily construction in 30 years in the South Gate area, according Dekel Capital, the Century City-based firm that arranged the loan. The lender was not named.

Located at 10920 Garfield Avenue, the property spans 4.1 acres, and had previously been a retail center.

The new four-story building will offer a mix of one-, two-, and three-bedroom units. JPI, which has developed 32 multifamily communities in California and Arizona, broke ground in March and expects the initial apartments to be delivered by October 2020.

WHA, a Southern California-based architecture firm with offices in Los Angeles, Orange County and the Bay Area, designed the project. Alliance Residential Company will manage, market and lease the property.

Texas-based JPI has multifamily developments around the country, and at least four in Anaheim, including the 400-unit Jefferson Stadium Park.

Elsewhere in South Gate, Safco Capital recently paid $29.5 million for a shopping center at 5800 Firestone Boulevard. It was owned by Catellus.

Clockwise from left: 145 North Mapleton Drive, 8408 Hillside Avenue, 10372 West Sunset Boulevard, 9641 Royalton Drive, and 2496 Lancelot Lane

The top five homes that hit the market last week in Los Angeles County are selling for nearly double the total from the previous week.

Combined, they added up to $152.9 million.

The most expensive listing is a $55 million “modern fortress” in Holmby Hills, complete with two guardhouses. The top two homes were built this year, and four of the listings are either on Sunset Boulevard or just off of it. All five are located in the hills of Los Angeles.

The top five also includes one in Holmby Hills that belongs to baseball agent Dennis Gilbert, and another in Beverly Hills Post Office that is nearly 90 years old and belongs to a Hearst heir.

The data and information was pulled from the Multiple Listings Service and Redfin.

145 N. Mapleton Drive | Holmby Hills | $55 million
This so-called “modern fortress” includes seven bedrooms and 14 bathrooms with 15,350 square feet of space. It also includes a theater, a gym and a sports court. If it trades at its asking, it would be about $3,583 per square foot. The compound was remodeled, and completed this year. It sits on a 36,364-square-foot lot just off Sunset Boulevard. The property, which also includes a guardhouse and two guest suites, last sold for $12 million in September 2017. Ginger Glass with Compass has the listing.

8408 Hillside Avenue | Hollywood Hills | $43.9 million
Built this year, the home was designed by the architecture firm Saota, and includes five bedrooms and nine bathrooms over more than 20,000 square feet. It also features a theater, a wine cellar, a glass elevator, and a spa with both wet and dry saunas. A sale at listing price would equal about $2,189 per square foot. The lot spans about 22,255 square feet with a 175-foot linear pool near West Hollywood. It last sold for $2.25 million in 2013. Jason Oppenheim with the Oppenheim Group and David Parnes with The Agency have the listing.

10372 W. Sunset Boulevard | Holmby Hills | $27.5 million
Back in the coveted Holmby Hills neighborhood, a home designed by Paul Williams hit the market for about $4,403 per square foot. Records show the mansion belongs to Dennis Gilbert, who was an agent for now retired West Coast baseball stars including Barry Bonds, Mike Piazza, Ricky Henderson, Jose Canseco, Trevor Hoffman and more. The home includes 6,246 square feet, with five bedrooms, seven bathrooms, and a personal gym. The guarded 1.3-acre lot includes a guest house, a clubhouse, staff quarters and chauffeur’s quarters, a pool, a tennis court and a Koi pond. Gilbert purchased the home just off Beverly Glen Boulevard for $7.2 million in 2012. Kurt Rappaport and Kevin D. Booker with Westside Estate Agency Inc. have the listing.

9641 Royalton Drive | Beverly Hills Post Office | $13.5 million
A home that belongs to David Whitmire Hearst, heir to the famed publishing magnate; and the estate of the late Larry Cohen, director and screenwriter who died in March; hit the market in the coveted 90210 ZIP code. The Hacienda-style home was built in 1930 and is on the market for the first time in 55 years. It’s located on a 1.5-acre lot next door to Casa Royal Beverly Hills in the Post Office area, just off Coldwater Canyon Drive. If it sells at sticker price, the deal for the 7,280-square-foot home would equal about $1,854 per square foot. It includes five bedrooms and seven bathrooms. Susan Smith with Hilton & Hyland has the listing.

12496 Lancelot Lane | Bel Air | $13 million
A home was built in 1990 and spans 9,350 square feet. The price would come out to $1,390 per square foot. It features four bedrooms, six bathrooms, a game room, a bar, and a gourmet kitchen. The gated, 30,317-square-foot property includes a pool, a spa, a gym, a clubhouse, a playground, Koi pond, a putting green, and tennis and basketball courts. It last sold for $7 million in 2014. Jade and Tiffany Mills with Coldwell Banker Residential Brokerage has the listing.

WeWork CEO Adam Neumann and 21-33 Irving Place (Credit: Getty Images and Google Maps)

A landlord is suing to get out of a lease agreement with WeWork amid fears the co-working company can’t support its lease.

The office space giant, whose parent the We Company is expected to go public next month, currently occupies multiple floors at 21-33 Irving Place in Manhattan. The landlord — identified as Belvedere Management Co. in property records — claims that when WeWork signed its lease in 2016 with a special purpose entity, it signed a guaranty that its holding company was worth more than $150 million.

In the lawsuit filed Tuesday in New York State Supreme Court, the landlord alleges that in June it received a notice from WeWork stating the holding company had undergone a “reorganization,” which created a new entity known as WeWork Companies LLC that would now back the lease.

The landlord states that it has no proof that the new holding company has a net worth of “at least” $150 million.

But after the We Company’s S-1 disclosure last week to the U.S. Securities and Exchange Commission, which was met with a media storm and serious questions about the startup’s accounting methods and corporate governance, the landlord became concerned about WeWork’s ability to fulfill the lease.

“Recent financial reports in the media, however, cast great doubt on the financial viability of WWC LLC,” the complaint reads. “Defendants are effectively foisting on the Landlord a guarantor not of its choosing, without the required prior notice and prior proof that the substitute guarantor has a net worth of at least $150 million.”

A spokesperson for WeWork denied the accusations in the suit. 

“Earlier this year, WeWork completed a corporate reorganization to become The We Company,” the spokesperson said in a statement. “This process had no material impact on the guarantees we provide to landlords. Landlords are critical partners to our business, and we highly value our relationships and our mutual success.”

A representative for Belvedere did not immediately respond to a request for comment. 

The lawsuit signals growing unease from WeWork stakeholders as the company marches toward a much-hyped IPO. Landlords, some who have leased entire buildings to the startup, and investors have been divided on how its business model — leasing office space and subletting it at a premium — will perform in the face of an economic downturn.

But last week’s disclosure provided some clarity on the company’s financial wherewithal and its business practices. Among them, the company has issued massive loans to its CEO Adam Neumann and other senior employees, and the company said it would not comply with traditional corporate governance guidelines. In summarizing the disclosure, one analyst told Bloomberg that the S-1 filling was a “masterpiece of obfuscation.”