The Mountain of Beverly Hills (Credit: A Bird’s Eye and Vity-Dream)

It is one of the great what-might-bes of Los Angeles real estate. A 157-acre mountaintop property once envisioned as a mansion-in-the-sky for the Shah of Iran’s family remains unbuilt and unbought.

After an earth-moving project three decades ago created 15 acres of flat land, a procession of global billionaires, Hollywood royalty and actual royalty have made the half-mile drive uphill to take in the panoramic ocean and city views.

Nothing has come of those efforts. The reasons why vary, but one thing seems clear: the current owners of 1652 Tower Grove Drive in Beverly Hills Post Office keep shooting for the moon — and shooting themselves in the foot.

Thorny legal battles set off by the sudden death of an owner, broken deals, exorbitant price tags — not to mention the sheer patience that would be required to build anything there — have kept the property, currently dubbed “The Mountain of Beverly Hills,” from joining the ranks of the swankiest addresses in L.A.

The private entrance road into the 157-acre property. (Credit: Alexei Barrionuevo)

For years, the owners have sought to create a mythology around the property, touting that it was “nearly twice the size of Disneyland.” In reality, however, the Mountain’s nearly 25 acres of usable land today is closer to the size of 19 football fields.

The owners also stressed, court records show, that the property was worth “not less than $500 million.” But that didn’t stop Aaron Kirman, a star agent at Pacific Union (now Compass), from listing the property for $1 billion three months ago. That sticker price set a new record for an L.A. listing but drew snickers from Kirman’s competitors, who see it as a PR stunt.

“Having the most expensive property that exists is great publicity” for Kirman, said Stephen Shapiro, co-founder of the Westside Estate Agency. “My guess is it will be a long time before he makes a dollar out of it.”

Setting the records straight

The biggest closed residential sale in the U.S. is $147 million for an 18-acre Hamptons estate in 2014. Hedge fund titan Ken Griffin is reportedly paying north of $200 million for a penthouse at 220 Central Park South in New York, while embattled Saudi Crown Prince Mohammed bin Salman holds the record for the priciest closed sale worldwide, paying $301 million for the Chateau Louis XIV outside Paris.

In L.A., the record closed sale came this April, when energy billionaire Michael S. Smith agreed to pay $110 million for a home on Malibu’s Carbon Beach. That deal eclipsed the $100 million Twinkie heir Daren Metropoulos paid for the Playboy Mansion.

But all of those trades featured spectacular residences of one type or another. The most anyone has paid in L.A. for a chunk of dirt is $50 million.

Flat-acre lots in nearby Beverly Park, which some agents say are comps for The Mountain — albeit without the views — are worth $20 million to $25 million. Then there is the 120-acre parcel of land in Beverly Hills that a trust linked to the late Microsoft co-founder Paul Allen hopes to sell for $150 million. 

Kirman did not respond to requests for comment. But his boss, Mark McLaughlin, who oversees Pacific Union’s operation for Compass, defended the pricing.

The view from Lot 3. (Credit: Alexei Barrionuevo)

“If it’s a marketing stunt, it worked,” McLaughlin said in an interview last month. “It’s gotten an incredible amount of attention…someone that wants a premier property in all of Beverly Hills is probably going to pay something close to it.”

Kirman received at least one offer on the property, which the owners, an entity controlled by the Noval family, turned down, McLaughlin said. He declined to give specifics on the offer.

In 2015, Victorino “Victor” Noval, the father of Franco Noval, who manages the current ownership entity, Secured Capital Partners LLC, floated the $1 billion price tag on blogs and social media, against the advice of his longtime agent, Jeff Hyland, the president of Hilton & Hyland. That September, a critical look by the Hollywood Reporter at the property’s history and at the elder Noval, who served time in prison for mortgage fraud, soon popped that trial balloon.

Two weeks after the article ran, Victor Noval claimed the $1 billion price tag was “simply untrue” and that the ownership of the property was not in dispute. He said there were no plans to sell the property, and that the owners would instead use it as a “special events site” to “benefit the community and charitable organizations.”

That plan shifted three years later, however, when Franco Noval’s entity officially listed the Mountain at $1 billion, with pricing “based on broker recommendation,” said Ronald Richards, a lawyer for Secured Capital Partners.

The view from Lot 5, with Lots 1 and 2 in the background. (Credit: Alexei Barrionuevo)

Prominent brokers said the property was worth between $100 million and $300 million. Shapiro, of Westside, said it was wildly overpriced, but given their spectacular views the six lots could fetch up to $50 million each, or $300 million in total.

Hyland said he declined to list the property at $1 billion.

“I could not risk my company’s credibility nor my partner’s by putting it out at $1 billion,” he said, adding that he had been willing to list it for $500 million.

After representing the property on and off for nearly two decades, Hyland said his firm has an exclusive listing agreement in place that guarantees a 5 percent commission.

Jeff Hyland (Photo by Adam Southard)

“I am thrilled that Compass is going to do all the legwork,” Hyland said, adding that his brokerage is “pursuing its legal remedies.”

McLaughlin declined to comment on Hilton & Hyland’s listing agreement. Richards said he could not comment on it either, because it was with a different entity than the current owner. That entity, Tower Park Properties, is controlled by Victorino Noval and Charles “Chip” Dickens, an Atlanta investor who bought the property in a no-money-down deal in 2004 for $23.75 million.

A review of two listing agreements from 2011 showed that Tower Park Properties “and/or its assignees” had given Hilton & Hyland the exclusive right to sell the property, with the relevant agreed term being two years from receipt of certificate of completion of a main residence.

Dickens declined to comment. The elder Noval, whose LA Stars entity holds a 40 percent ownership interest in Tower Park Properties, did not respond to requests for comment.

Merv and the mountain

Steve Lewis had been in the real estate game “for 10 minutes” when he thought of pitching the mountaintop property to his best friend’s father — Merv Griffin. It was 1986, and Lewis – then a 20-something struggling actor who now runs his own Beverly Hills-based brokerage, CORE Real Estate Group — had already sold one property to Griffin for $5 million.

Shams Pahlavi, the elder sister of Iran’s last shah, Mohammad Reza Pahlavi, had purchased the land in the late 1970s, and had plans in place in the 1980s to build a decadent estate for the deposed shah and his family, Lewis said.

Princess Shams Pahlavi

On a cool, clear morning, Lewis drove Griffin to the top of Tower Grove Drive. Shortly after the tour, Griffin told the agent he wanted to buy the land, Lewis said.

Entitling the property proved to be a challenge. Lewis spent months doing the rounds of various city departments. He was “dead in the water” with a seemingly insurmountable demand by the fire department to provide another way in and out of the property, when he hired Gary Morris, an experienced local developer, who successfully negotiated the last hurdle with the city.

Once the site was entitled, Lewis closed the sale to Griffin within a week. Giant earth-grading tractors with seven-foot tires then moved about 1 million cubic yards of earth off the top of the mountain. On the last day of the grading operation a 21-year-old worker died when his scraper tumbled 400 feet off the side of the cliff.

The finished project was a site with about 15 flat acres fit for the 58,000-square-foot mansion that Griffin planned to build. Much of the rest of the property was steeply sloped — “billy goat land,” as Brian Adler, the co-developer of Beverly Park, put it. Morris negotiated with the city for the right to build six homes on the property, agreeing to designate a chunk of it for the Santa Monica Mountains Conservancy.

(Click to enlarge)* Source: Map data provided by the U.S. Geological Survey’s National Geospatial Program, the Los Angeles County Assessor, and OpenStreetMap.

In all, Griffin spent $5 million for the property in 1987, and another $3 million on the grading effort. About a year later, however, the entertainer’s attentions turned to developing a separate hotel property, and he put the Mountain back on the market.

Steve Lewis, founder and president of Core Real Estate Group

Lewis spent the better part of the next decade scouring for a buyer. He shopped the property as high as $25 million, for all 157 acres.

Around 1990, a group of Saudis went into escrow for about $20 million, Lewis said, but pulled out.

“My clients wanted to get 10 lots out of the 157 acres, and the city said you can only have six,” said Joyce Rey, the Coldwell Banker agent who represented the Saudis.

There were also a series of Hollywood courtships. Steven Spielberg toured at least three times. “He spent hours up there walking around,” Lewis said, but lost interest in the midst of his divorce to actress Amy Irving.

Film producers Mario Kassar and Andrew Vajna wanted to build two homes on the mountain. They went into escrow in 1989 at $20 million, but pulled out on day 30 when Jose Menendez — who worked with Vajna at his production company — was shot to death along with his wife.

“This was a high-profile purchase and they felt vulnerable that a crazy killer could be out there,” Lewis said. (It was later determined that Lyle and Erik Menendez, “the Menendez brothers,” had murdered their parents.)

The view of Lot 2 from the edge of the property. (Credit: Alexei Barrionuevo)

Despite its panoramic views, the Mountain turned off some buyers.

“People hated the location in that they didn’t like driving up this long road to get there,” Lewis said. “And they had to consider how long it would take to build a home there.”

In 1997, Mark Hughes, the founder of Herbalife, bought the land for $8.5 million. Three years later, with plans to construct a mega-estate well underway, he died at 44 of an accidental overdose.

Hughes’ death set off an ownership struggle that continues. A group of trustees, including Conrad Klein, a lawyer for Hughes, wanted to develop the project as Hughes had intended. They clashed with Suzan Hughes, the Herbalife founder’s third ex-wife and mother of his sole heir, Alexander Hughes. Left out of the will, Suzan objected to using funds from his trust to develop the property and wanted to sell it as soon as possible, court documents show.

Hilton & Hyland got the listing. In October 2000, they listed it for $29 million on the Multiple Listing Service, where it lingered for nearly three years.

The agents then tried peddling it off-market. Hyland said they wanted to wait for the Hughes estate lawsuits to be resolved before doing “an international outreach.”

In 2003, Adler and Morris made a presentation to Suzan Hughes and the board about forming a joint venture to develop the property into Beverly Park West. She “flatly said no,” Adler recalled.

Several months later, the estate sold the property to Dickens, the Atlanta investor, agreeing to lend him money from the trust as long as he developed the property.

The Vineyard

The new owners hired Morris for a second grading operation. By 2008, he had divided the lots that made up the original 15-acre plot into six plots of two to five acres each, expanding the overall useable land to between 20 and 25 acres. He also installed a private street up the middle and put in water and utilities.

“We spent over $1 million just to get the water up there,” Morris said.

Morris also installed areas for gardens and vineyards. Hyland renamed the property “The Vineyard” and winemaking became part of the marketing pitch, with a Napa vintner even printing preliminary wine-bottle labels.

The property has been used to host celebrity-filled charity events. (Credit: Alexei Barrionuevo)

Earlier media reports stating that the property came with permission to build 1.5 million square feet of living space across multiple buildings were grossly overstated, according to Morris.

“That is just nonsense,” he said. Each lot, he said, could have a main house and accessory structures of 17,500 square feet without a site plan review. With further entitlements, owners could get up to 50,000 square feet, including a basement — for a total of 300,000 square feet of residential floor area on the entire property.

“That is the best you are ever going to get,” Morris said. “And that is not guaranteed.”

Richards, the attorney, did not acknowledge any inaccuracy in previous reports, saying only that “there is always a range of opinions when it concerns what is buildable.”

Risky business

It was Lot 6, the highest of the bunch with a sloped toboggan-run like feature, that attracted Tom Cruise. In a 2007 off-market deal, the movie star, Australian billionaire James Packer and a third investor were set to buy four lots for just over $80 million. Cruise wanted Lot 6 for an estate and Lot 5 for a soccer field. He went into escrow on Lot 6 for $25 million. When Cruise backed out due to complications with filming “Valkyrie” in Germany, the other two investors also decided to pass, Hyland said.

Lot 6, which Tom Cruise had in escrow for $25 million. (Credit: Alexei Barrionuevo)

Since the Cruise deal, the owners’ expectations about the property’s market value have ballooned. Hyland said that in 2014 he took an American entrepreneur around the property who promptly offered $210 million — $35 million per pad — and the owners turned it down.

Tom Cruise (Credit: Getty Images)

About six months ago, the elder Noval went to Hyland with the idea to rebrand the property as The Mountain of Beverly Hills, and to list it for $1 billion. Hyland advised against it.

The owners did it anyway, using Kirman, who made headlines last year when he sold the palatial Danny Thomas estate in Beverly Hills for $65 million — less than half the original asking price of $135 million.

Kirman plans to spend up to $1 million on marketing, including jetting around the world wooing Russian billionaires and Middle Eastern royals, the Los Angeles Times reported. His marketing director, Andy Butler, said in early August that Kirman’s team also planned a “Hollywood-style video” for the property. It hasn’t happened yet.

While Kirman is buyer hunting, two legal fights continue to simmer.

Tower Park Properties is suing the Hughes trust representative for breach of contract, alleging it “sabotaged” a settlement agreement in order to try to squeeze Tower Park into defaulting on its loans so it would have to give up the property.

That alleged effort was largely successful. With little money of its own, Tower Park borrowed millions of dollars from trust-controlled lenders to develop the property. It filed for bankruptcy protection in 2008. Tower Park is seeking damages of “not less than the fair market value of the property,” which it says is no less than $500 million.

In 2013, the parties agreed to settle the debt for $57.5 million — a heavy discount from the more than $80 million that was owed. But upon learning of the privately mediated agreement, Alexander Hughes sued to disavow it and refused to accept the agreed payoff, setting off five more years of legal challenges.

Tower Park transferred ownership of The Mountain in 2016 to Secured Capital Partners — which is to say, it kept it in the Noval family.

In a separate court action, the parties are still bickering over the total debt on the property. The Hughes trust claims that with accrued interest the debt has ballooned to more than $130 million, according to one person familiar with the matter. Lawyers for the Hughes trust did not respond to requests for comment.

Richards said that whatever the court decides, the debt is “hundreds of millions of dollars less than the current market value.” The property, he said, will be sold “free and clear of all liens with a gold standard sellers policy.”

Steeped in mystery

In addition, the Mountain continues to bleed about $1 million per year in property taxes, insurance, and upkeep, according to tax records and a person familiar with the property.

Some 30 years after first getting involved with the property, Morris, the developer, and Lewis, the original broker, are still perplexed about why no one is living up there.

“I don’t think there was a noticeable apprehension on the part of potential buyers,” Morris said. “It was a changing attitude on the part of the owners in terms of what they could sell it for.”

Lewis agreed, saying the expectations ballooned to “fantasy proportions.” But, he said, the right buyer simply may not have appeared yet.

“Mark would have seen it through,” he said of Hughes. “Plenty of people have the money. In the end it comes down to a buyer with the attention span to pursue a crazy project that will take many years to finish.”

Natalie Hoberman contributed reporting.

Michael LoGrande and, from top, Robert Herscu, Nick Jones and Zach Vella (Credit: Urban Land Institute, Wikipedia Commons, Getty Images, The Real Deal)

As the case surrounding Michael LoGrande, a former city employee who has admitted to illegally lobbying the city, gets a whole lot murkier, it’s also now roped in some of Los Angeles’ most active developers.

Documents show the former Los Angeles planning department chief was also being paid $18,000 per month in consulting fees by the city during the time he was violating city ethics laws, the Los Angeles Times reported. He also worked closely with developers HQ Development, Vella Group and VE Equities, all of which had major projects that they were trying to get off the ground during his tenure.

A report by the Ethics Commission found that LoGrande had committed four violations in early 2016, which is the same time he secured a consulting contract with the city. The three-month consulting gig, ending April 2016, was touted as a way for LoGrande to properly wrap up his work before his replacement came in.

While consulting the city, LoGrande helped expedite a conversion project HQ Development was working on in Hollywood. HQ, led by Australian businessman Robert Herscu, has many adaptive reuse projects scattered around the city.

LoGrande also unsuccessfully tried to help an unidentified hotel developer avoid zoning changes in Hollywood, as well as to reduce fees for a project in Woodland Hills.

Once his contract ended, LoGrande legally lobbied the city on behalf of Soho House & Co., Vella Group and VE Equities. Email documents show LoGrande was also communicating with people involved with their projects in late 2015, while he was still running the planning department. It’s unclear whether there was foul play involved.

Vella Group and VE Equities were working on a project in the Arts District at the time. The New York-based firm has become an active investor in the city, and recently paid $51 million for a 200,000-square-foot office campus in El Segundo.

Last week, LoGrande admitted to repeatedly breaking the “revolving door” law, which prohibits officials from lobbying elected leaders or decision-makers during the first 12 months following their departure. He agreed to pay a $281,250 fine — the largest fine ever levied against a current or former city employee. [LAT] — Natalie Hoberman

From left: Rotem Rosen, Zina Sapir, Tamir Sapir, Bella Sapir, Elena Sapir, and Alex Sapir (Credit: Getty Images)

Rotem Rosen isn’t just seeking $103 million from the estate of Tamir Sapir.

To corroborate claims that he saved Sapir’s real estate empire from ruin during the financial crisis, Rosen’s legal filings paint a picture of a family unable to manage their finances without him.

Pointedly, he claims his former business partner and the late billionaire’s son, Alex Sapir, “mishandled and misused” assets from the elder Sapir’s estate — by making improper distributions to beneficiaries, hiding certain assets and investing in companies (on behalf of the estate) in which he holds an interest.

“Alex has taken numerous actions to benefit himself, his holdings, or specific Sapir family members at the expense of the Estate,” court documents claim.

But in what’s shaping up to be a family showdown, the estate and Alex Sapir are rejecting Rosen’s “fabricated” claims, which are based on “false or misleading allegations and omitted facts.”

In court filings, the estate said Rosen is simply seeking leverage in his divorce from Tamir’s daughter, Zina, whom he wed in 2007. Zina filed for divorce in April.

Beneficiaries of Sapir’s estate — including Zina and Tamir’s second wife Elena — have also sided with Alex Sapir. In a July 2019 court filing, Tamir’s adult children called Rosen’s accusations a sham.

Representatives for Rotem Rosen and the Sapir family declined to comment beyond the court filings. But Michael Ryan, a court-appointed guardian for Tamir Sapir’s young children, summed things up during a June 28 court appearance.

“Reading between the lines… the real parties in interest here are [Zina] Sapir and Rotem Rosen,” he said, according to a transcript of the proceeding. “It’s really a divorce battle fought on a different field.”

Roots in the financial crisis
The basis of Rosen’s claim is an agreement Tamir Sapir struck with his son and Rosen in the throes of the financial crisis.

A few years after marrying Zina Sapir in 2007, Rosen joined his new brother-in-law Alex in business. In 2011, Rosen and Alex Sapir formed ASRR LLC, a 50-50 venture, to help save the family from financial ruin. “Even Tamir’s personal credit card was restricted,” Rosen’s attorneys said in court documents. In a 2009 court filing in Nevada, Alex Sapir “pleaded poverty,” stating the Sapir Group was more than $250 million in debt and had just $4,000 in cash and cash equivalents. In 2010, Sapir defaulted on the mortgage and mezzanine loan at 100 Church, which SL Green bought at auction for a “ridiculously low amount of $10,000.”

Rosen claims in court documents that Tamir Sapir agreed to pay ASRR 10 percent of the net value of any restructuring deal it facilitated. Rosen admits that he was paid while the elder Sapir was alive and, to a “limited extent” after his death in 2014. For instance, he was paid $75 million for helping to restructure the Sapir Organization’s debt, including HSBC loans valued at $180 million.

11 Madison Avenue (Credit: Google Maps)

But Rosen said he was not compensated for some of the more lucrative deals — including the repositioning and selling of 50 Murray, 53 Park Place and 11 Madison, which SL Green bought for $2.6 billion in 2015.

In court documents, Rosen alleges that while Alex Sapir initially said the estate would pay Rosen and ASRR for that work, after a “falling-out between Alex and Rosen in 2017, followed by a separation of certain of their business ventures in 2018, Alex backtracked.”

However, documents filed on behalf of the estate allege there is no written agreement for the work and payment Rosen claims he’s owed. As a 50 percent owner of ASRR, Alex Sapir certainly would have known about one, court documents state.

What’s more, Rosen didn’t file a claim seeking payment until February 2019, which the filing points out, a divorce with Zina was imminent. Finally, the estate points out that Rosen failed to mention that until 2014, he was compensated for his role as CEO of the Sapir Org. In that capacity, he earned $600,000 a year and Zina Sapir was paid $11,600 weekly. “Rosen claims that ASRR is due compensation for the very same services for which he was personally compensated,” the filing stated.

Estate shenanigans
In an attempt to compel the estate to provide a full financial accounting, Rosen says Alex Sapir mishandled Tamir’s estate even before he died. According to court filings, Alex assumed power of attorney for his father when Tamir Sapir fell into a coma in February 2013, after suffering a heart attack and brain damage. Tamir Sapir died in September 2014, around which time his fortune reportedly shrunk from $2 billion to $600 million.

In court documents, Rosen posited that in paperwork preceding Tamir Sapir’s death certificate, Alex Sapir intentionally listed his father as divorced (even though he was married to Elena Sapir) to prevent Elena from claiming a portion of Sapir’s assets.

Rosen also said Alex Sapir made “improper distributions” to family members “with the goal of buying the silence of any beneficiary that might challenge his power over the Estate.”

Alex allegedly gave his mother and Tamir’s first wife, Bella, $25 million for a debt related to her 2006 divorce from Tamir. And he struck a deal to pay $750,000 to Tamir’s sister (Rozita Sofia), who previously threatened to sue Alex for violating his power of attorney for Tamir. Finally, he bought a $12.7 million townhouse for Elena Sapir, Tamir’s second wife, who lives there with their children, Eli and Zita Sapir.

According to Rosen, Sapir failed to disclose some of his father’s assets to the court — including Tamir’s jewelry collection, a wine collection that was stored at Rosen’s apartment at 250 Mercer, and Tamir’s collectible Ford Motor cars, which are now housed at Bella Sapir’s Hamptons home.

In a June 2019 court filing, Alex Sapir categorically denied Rosen’s allegations. He said there was no intentional concealment of assets from the asset. And he offered a simple explanation for the townhouse purchase: that he used his discretion to buy the home for Elena, whom Tamir Sapir supported financially while he was alive.

“This point is reinforced,” court filings state, “by the fact that none of the beneficiaries — who are all fully familiar with the administration of the Estate — is seeking an accounting or removal” of Sapir as executor.

Self-dealing
But among Rosen’s accusations, there is one with potential business implications: that Alex Sapir engaged in self-dealing, using the estate’s money for his own benefit.

In two instances — related to the Nomo Soho Hotel and Sapir’s Surfside development project — Rotem alleges that Alex Sapir obtained loans from the estate at favorable and/or below-market terms, benefitting Sapir Corp. At Surfside, Bella Sapir and Alex’s sister, Ruth Sapir-Barinstein, purchased two units for a total of $20 million. The suit alleges they also agreed to loan Sapir $3 million each.

The suit also claims that Alex Sapir bought out Rosen’s stake in their joint venture through a partnership owned by his half-brother and half-sister, both minors.

In court documents, Sapir said the allegations of self-dealing are “patently false.” He said Rosen set of carefully selected “facts” range from “misleading to plainly untrue.” Further, he said each transaction was “subject to commercially reasonable terms” made at arms-length and involving an audit committee. Each deal earned a “commercially reasonable return” for the estate.

Untangling Sapir’s estate
Settling Tamir Sapir’s complex estate has been a laborious, court filings for both parties reveal.

Although Rosen claims Alex made improper disbursements, Alex’s attorneys have cited the complexity of Tamir’s empire, which was comprised of at least 30 separate businesses and property in Manhattan, Mexico, Vermont and New Jersey.

They also said Sapir’s estate had been under audit by federal and state tax authorities since his death. In 2017, the IRS rejected Sapir’s valuation of certain properties and deductions, and suggested its value was $1.029 billion (about $500 million more than the estate claimed) and imposed $250 million in penalties. The estate whittled that down to $30 million and settled last year.

In court documents, he said the estate is solvent with more than $300 million in assets. But, court documents also state that Sapir is prepared to create and maintain a reserve fund with enough money to satisfy Rosen’s allegations. A full accounting of how Alex Sapir has handled the estate would be a “burdensome and costly” process with no benefit to the estate.

In addition, “numerous controversies” around Sapir’s beneficiaries will have come up, prompting each to lawyer up. Those lawyers have been meeting regularly for months to work out an amicable resolution.

“This Court should not permit Rosen, the soon to be ex-husband of Zina Sapir and now family outsider, to interfere with these objectives,” court documents state.

Douglas Yearley of Toll Brothers

UPDATED Wednesday August 21, 2019, 4:07 p.m.: Amid a softening luxury market, homebuilder Toll Brothers is developing lower-priced properties as it reaches out to higher-earning millennials. But the company is still enduring a difficult period, and its third quarter results released Wednesday saw a nearly 25 percent drop in net income year over year.

The company reported a net income and earnings per share of $146 million and $1 respectively, down from a net income $193.million and $1.26 over the same period last year.

While the value of its signed contracts had ticked up to $1.87 billion, contracts were still down 3 percent from the same period in 2018, disappointing analysts and causing the stock to sink more than 6 percent.

Toll Brothers’ chairman and CEO Douglas Yearley pointed to positive “tailwinds” in the form of low mortgage rates, limited supply and strong employment.

“While our third quarter contracts were down modestly, we are off to a good start in our fourth quarter,” he said in a statement.

Toll Brothers’ City Living segment, which includes the New York City and Chicago metro areas, saw contracts down as well. The company reported 40 contracts totaling $63.5 million with an average price per unit of $1.58 million. That was down from 49 contracts of $80.7 million at $1.6 million per unit.

The results were an improvement on the second quarter, however, which saw net income of $129 million and $0.87 earnings per share.

Meanwhile, the company’s first quarter results were its worst since 2010, with home contracts plummeting 24 percent year over year with a net value of $1.16 billion.

Building off last quarter’s increased demand, Yearley said Toll Brothers has expanded its buyer segment, pricing homes between $275,000 and $3 million.

“We are carefully and slowly expanding the price point,” he said during the company’s Wednesday earnings call. He said Toll Brothers is aiming to capture first-time millennial homebuyers with larger budgets.

Yearley added that move will speed up the pace of sales, though it will take some time for those results to show in the company’s reports.

Toll Brothers continues to focus on projects where the company knows it can build immediately, he said. Earlier this month, the firm bought its first New York City property in years for $44 million. It was the site of a controversial hotel on the controversial Marrakech Hotel on the Upper West Side. When asked about it, and the company’s outlook on New York City’s struggling condo market, Yearley declined to comment.

“New York has felt better this summer,” he said vaguely. The city accounts for “only 3 percent of our business at the moment, but it feels better this summer.”

Barclays’ analyst Matthew Bouley noted that Toll Brothers has generally been “pulling back” in New York, and City Living’s business has been shifting into joint ventures outside of Manhattan. “It’s a pullback from NYC on-balance sheet exposure to off-balance sheet joint ventures in other regions,” he wrote in an email.

In June, the penthouse at the Toll Brothers’ condo at 1110 Park Avenue finally sold at half its original price, meanwhile, the firm completed its 140-unit condo at 121 East 22nd Street in Gramercy Park, which is aiming for a $450 million sellout.

Clarification: A quote from Bouley was added to clarify his point.

From left: Governor Gavin Newsom, Assemblymember David Chiu, Senator Holly Mitchell, and Senator Nancy Skinner (Credit: Getty Images)

California lawmakers have less than a month to vote on stronger statewide rent control and other tenant protections before this legislative session ends, and as property owners continue to voice their opposition.

Although housing advocates are working on a new version of Proposition 10, its failure at the statewide ballot last November — after strong lobbying against it from the real estate industry — led local several municipalities to create their own temporary rent control measures. Prop 10 would have opened the door to rent control if it has passed. Now, as an increasing number of local governments statewide adopt tenant protection measures, some landlords have been pushing back by raising rents on tenants while they still have the chance.

Gov. Gavin Newsom has said one of his top priorities this legislative session is to help lobby for the proposed statewide cap on rent hikes so he can sign it into law. The governor also gave support to a bill that would suspend local restrictions on developments, helping drive the measures to the end of the session. He said he would support even stricter regulations than some of the proposals currently being debated.

Here are the important housing and rent control bills now under consideration in the Assembly and state Senate. Sept. 13 is the final day any statewide bill can be passed.

Assembly Bill 1482
This is the rent control bill that everyone is watching.

If approved, it would limit rent increases each year to 7 percent plus inflation, or 10 percent, whichever is less. When Assemblyman David Chiu announced the bill in March, he said millions of Californians were one rent increase away from becoming homeless.

According to a study released this month by UC Berkeley, 1.2 million additional homes in Los Angeles County would benefit from rent control if this bill was approved. That includes about 374,100 units in L.A. alone.

Assembly Bill 1481, which would have required landlords to provide an approved reason to a third-party before evicting a tenant, died in May. But legislators added the provisions of that bill to AB 1482. The added provisions would address the increasing number of evictions: approximately 160,000 families appear in eviction court each year.

TheCalifornia Apartment Association — which represents property owners — opposes both measures. It say eviction protections make it harder for landlords to remove bad tenants, and will give investors more reason to move their projects out of the state.

Senate Bill 330
Newsom, who has called for the creation of 3.5 million units of housing in the next seven years, said he supports the proposal to suspend some local development restrictions.

SB 330, or “The Housing Crisis Act,” is aimed at lowering the cost and barriers to permits and construction in hopes of speeding up new housing in the state to help the affordability crisis.

If approved, the bill would suspend for 10 years any local restrictions and regulations that have become obstacles to new housing. It would enact a moratorium on “downsizing” neighborhoods, where the number of units has added limits at the municipal level, and it would prohibit local housing moratoriums and housing caps.

The bill would also impose a ban on raising housing fees, increasing or enforcing parking minimums, or enacting new design standards. It would establish a 12-month timeline for processing all housing permits, and cap the number of public hearings related to a new housing development to a total of three.

Senate Bill 329
Similar to laws recently approved in cities like L.A. and Santa Monica, SB 329 would prohibit the discrimination of Section 8 voucher holders.

Low-income tenants say it has become increasingly difficult to get access to housing because landlords favor higher-paying renters. According to a report by the Urban Institute, 76 percent of landlords in L.A. County with units affordable to voucher tenants refused to accept them, and nearly half the people who received Section 8 vouchers in L.A. saw them expire in 2017 before finding a place to live.

The Senate bill would prohibit blanket bans on vouchers and discrimination against people using vouchers to pay for rent by adding protections to the Fair Employment and Housing Act. Landlords would still be able to screen tenants for suitability, but they wouldn’t be able to refuse a tenant solely on the basis that the tenant intends to use housing assistance, according to state Sen. Holly Mitchell, who represents L.A.

From left: Jerry Perenchio, architect William Hefner and renderings of the property (Credit: Getty Images, Redfin)

A land-only listing in Bel Air belonging to the estate of the late billionaire Jerry Perenchio has hit the market.

For $15 million, the buyer gets the 1.41-acre lot, along with plans to build a 16,000-square-foot mansion. The property is across Bel Air Road from Perenchio’s crown jewel, the massive Chartwell Estate. It remains on the market for a staggering $195 million.

Mansion plans for the vacant lot were created by architect William Hefner. Drew Gitlin with Berkshire Hathaway and Jeffrey Hyland with Hilton & Hyland have the listing.

The property includes a vineyard that Perenchio used on the eastern side of the winding road from his massive home. Perenchio, who was chairman and CEO of Univision, died in May 2018.

Perenchio purchased the Chartwell Estate from the family of Arnold Kirkeby, a hotelier and investor.

The two Bel Air properties are part of Perenchio’s sprawling portfolio in Southern California. Last year, his family listed another Bel Air mansion on a 1.3-acre property, which also features a vineyard. In Malibu, the Perenchios are also selling a 3,700-square-foot home, as well as about 40 acres of undeveloped land after the city purchased 30 acres from the portfolio in April 2018.

The market for land-only listings, along with luxury homes, has not been strong in Los Angeles lately. Most recently, the 157-acre Mountain of Beverly Hills, which went on the market last summer for $1 billion and failed to sell after a $350 million price chop, sold at foreclosure auction this week for $100,000.

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. ET. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 4 p.m.

Kanye West (Credit: Getty Images)

Kanye West tears down affordable dome housing prototype in his backyard. The rapper got into trouble with the city of Calabasas for building a handful of dome-like affordable housing prototypes in his backyard without permits. He had to either permit them or tear them down by mid-September. He’s now torn at least one down. [TMZ] 

Michael LoGrande and, from top, Robert Herscu, Nick Jones and Zach Vella (Credit: Urban Land Institute, Wikipedia Commons, Getty Images, The Real Deal)

A case of double dealing by ex-city planning chief. Michael LoGrande — who admitted to lobbying on behalf of developers after stepping down from his post — was also being paid $18,000 per month in consulting fees by the city while he was violating city ethics laws. [TRD]

Bel Air lot owned by late Jerry Perenchio hits market for $15 million. The 1.4-acre vacant property comes with plans for a 16,000-square-foot mansion. It’s directly across Bel Air Road from the Chartwell Estate, the massive home owned by the media mogul who died in 2017. [TRD] 

The latest on rent control and housing bills state lawmakers are debating. Among the proposals are a proposal to institute a 7-percent cap on rent increases statewide, as well as a bill meant to lower the costs of developing in California. [TRD] 

Toll Brothers reports 25 percent drop in year-over-year net income. The massive homebuilder said contracts in the third quarter were down 3 percent compared to the same period last year. [TRD] 

Knotel CEO Amol Sarva (Credit: iStock)

Knotel raises $400 million, raising valuation to around $1.3 billion. The co-working firm got a capital infusion from Japanese firms Mori Trust, Itochu, and Mercuria Investment, as well as Kuwait-backed Wafra. Newmark Knight Frank, Norwest Venture Partners, and Sapir Organization also participated in the round of funding. The round of funding makes Knotel a “unicorn” with a valuation over $1 billion. The company’s largest competitor, the We Company, is readying for an IPO. [TRD]

Reseda pushes back on L.A.’s homeless shelter plan. The neighborhood council opposes building shelters at any of the five city parking lots identified by Councilman Bob Blumenfield. Residents want the city to look at other parts of the district. Opponents claim a shelter would lower property values and hurt businesses, a running refrain from communities as the city tries to expand it temporary homeless shelter program. [LADN] 

Reseda pushes back on L.A.’s homeless shelter plan. The neighborhood council opposes building shelters at any of the five city parking lots identified by Councilman Bob Blumenfield. Residents want the city to look at other parts of the district. Opponents claim a shelter would lower property values and hurt businesses, a running refrain from communities as the city tries to expand it temporary homeless shelter program. [LADN]

A Westminster senior living complex sells for top dollar. Zinn Group sold the 310-unit property for $71 million. The firm had owned HW Senior Living Apartments for 30 years. The buyer was a Delaware-based entity. Berkadia represented Zinn in the deal.

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

A Holmby Hills “fortress” topped last week’s priciest resi listings in L.A. The Mapleton Drive home spans 15,350 square feet and is on the market for $55 million. Also listed were a 20,000-square-foot home in the Hollywood Hills asking $43.9 million and another Holmby Hills mansion asking $27.5 million. [TRD]

Douglas Durst

“Perhaps it has a business model that can be as successful as ours.” That was Douglas Durst’s rebuke of a WeWork claim that its business model can withstand all economic cycles, “something created by no other real estate company ever.” In a letter published by Crain’s, Durst proceeded to list the legacy of his family company, which has withstood wars, recessions, depressions, booms and busts. [Crain’s]

Opportunity zones across the U.S. (Courtesy of Enterprise Community Partners)

Landlords are using co-working companies to fill space in Opportunity Zones. A major challenge for building owners has been to draw businesses, and tenants, to distressed areas. The answer, for some, is to introduce co-working companies to their buildings, which in turn, attract startups, and entrepreneurial activity, giving those areas a boost. [NYT]

Dr. Dre makes quick $4.5 million sale of Woodland Hills home. The music and media mogul listed the 16,200-square-foot home in July for $5.3 million. The home dates from 1987 and includes eight bedrooms, a dry sauna, and a saltwater swimming pool. [LAT]

FROM THE CITY’S RECORDS:

Senior housing developer Decro has filed plans for a new 40-unit permanent supportive housing project at 5050-5054 North Bakman Avenue in North Hollywood. [LADCP]

Steve Wynn and 1960 South Ocean Boulevard (Credit: Sotheby’s and Getty Images)

Embattled casino mogul Steve Wynn paid $43 million for an oceanfront estate in Palm Beach, property records show.

Emma Cisneros of 1960 South Ocean Blvd. LLC, part of the billionaire Venezuelan family that owns a media conglomerate, sold the eight-bedroom, 24,600-square-foot mansion at 1960 South Ocean Boulevard. The buyer is 1960 LLC, in the care of a Las Vegas company tied to Wynn’s Wynn Fine Art.

Juan Pablo Molyneux designed the 2.25-acre property in Palm Beach, according to the listing. It was on the market with Cristina Condon of Sotheby’s International Realty for $56 million, but first hit the market in 2018 for $59 million, according to Zillow. The home includes a billiards room, a chef’s kitchen with butler’s pantry, a wine cellar and staff quarters, loggias, terraces, a guest and pool house and more.

Records show that the seller paid $33.6 million in 2005 for the property.

In July, the Cisneros family sold a 3-acre property at 555 Leucadendra Drive in Coral Gables for $23 million.

Wynn, Wynn Resorts’ former chairman and CEO, resigned from the company he founded in February 2018 after multiple allegations of sexual misconduct were revealed by the Wall Street Journal. In addition, his ex-wife filed a lawsuit alleging that he paid a manicurist $7.5 million after forcing her to have sex with him.

Wynn, who sold the lot at 1350 South Ocean Boulevard last year for over $20 million, was previously rumored to have made an offer on the former estate of Broadway producer Terry Allen Kramer at 1295 South Ocean Boulevard.

The latest sale adds to a string of ultra high-end deals to close in Palm Beach over the past few months. Kramer’s estate sold her property in June for about $105 million, not including commissions, creating a new single-family home sale record on the exclusive island.

A rendering of the proposed hotel project on Whitley Street (Credit: Daryoush Safai)

Hotel construction in Los Angeles is booming, particularly in Hollywood. But residents of one project are hoping to put the brakes on development.
L.A. officials approved a 156-room hotel at 1719-1731 N. Whitley Street, but now residents of six rent-controlled apartment buildings that would be razed are appealing the decision, according to Urbanize.

The developer, Whitley Apartments, has owned the property since the mid-1990s. Architect Daryoush Safai is designing the hotel, which would rise 10 stories above a three-level subterranean garage.

Palms-based Whitley Apartments is seeking demolition and construction permits to make way for the hotel. The entity is controlled by an individual named Fariborz Moshfegh.

Residents say their landlord intimidated them in an attempt to force them to vacate. The L.A. Tenants Union is supporting the appeal, according to a post on NOlympics LA, a site managed by the L.A. chapter of the Democratic Socialists of America.

Hotel projects in Hollywood regularly face opposition from locals, but the city has generally denied those appeals. So far this year, KOAR Institutional Advisors has received approval for a 191-key hotel on Schrader Boulevard and Relevant Group received approval for the 114-key Selma Wilcox hotel in March, despite appeals.

Relevant Group is building two other hotels nearby. [Urbanize] — Dennis Lynch 

Green Sage founder Ken Greer , Lotus Property CEO Faisal Ashraf, and the Cannery on San Leandro Street

A real estate investment firm scored a $55 million loan for its plan to redevelop a former fruit cannery in Oakland into a massive cannabis-focused facility, The Real Deal has learned.

The loan ranks as one of the biggest single-asset real estate financing deals in the cannabis industry. The two-year loan replaces existing debt on the project and proceeds will be used to complete the redevelopment.

Denver-based Green Sage secured the debt to transform the 441,000-square-foot property — comprised of two buildings — turning it into a place where tenants will research, cultivate and distribute cannabis.

The loan was provided by a Canadian lender. Lotus Capital Partners, a New York-based firm that arranged and announced the deal, declined to identify the lender’s name. Jon Ikenna of Lotus said the project is about 75 percent complete.

The Tinnery building on San Leandro Street

Green Sage, which specializes in the cannabis industry, will redevelop the Art Deco-style Cannery and Tinnery buildings on San Leandro Street, on the West shore of the San Francisco Bay. The project is being called Cannery & Tinnery.

Green Sage bought both buildings in 2017, records show. It paid $14 million for the Cannery building, which housed 25 live-work units.

For decades, Del Monte Foods produced the tin cans for its food products at the Oakland complex. It was then converted in the 1970s, and has been home to a community of artists since. Shortly after Green Sage made its redevelopment plans public, a heated battle between the artists — who lived there and opposed the project — and the cannabis firm ensued.

That prompted Oakland officials to pass a law protecting residents who live in cannabis-friendly “Green Zones.” The law, passed in March 2018, restricts cannabis businesses from operating in locations previously used as live-work or residential spaces.

Half a dozen tenants encompassing different aspects of the cannabis supply chain have signed onto the project, Ikenna said. The range of tenants helped reduce risk, making it a more attractive option to institutional investors, he added.

In April, luxury cannabis manufacturer Coda Signature, also based in Denver, inked a deal to lease 21,000 square feet at the Tinnery building. It plans to hire about 200 workers once it opens.

While investment in cannabis-friendly industrial properties is growing in Northern California, a much more consumer-friendly movement is taking place down the coast. This month, the nation’s first cannabis lounge is expected to open in West Hollywood. The owners behind the Lowell Cafe scored their local business license in July, and are awaiting a state license.

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

Illegal pot shops are on the rise in L.A., and Weedmaps will stop promoting them. The popular online cannabis shop finder has taken fire for including unlicensed shops alongside legal shops in its directory. Authorities have used Weedmaps to find and shut down unlicensed shops in the past, as Los Angeles County did to take down a South L.A. shop earlier this summer. The company doesn’t seem to be slowing down though. In June, Weedmaps’ parent company signed a 115,000-square-foot lease at the Row DTLA.

Green Sage founder Ken Greer , Lotus Property CEO Faisal Ashraf, and the Cannery on San Leandro Street

Oakland commercial cannabis redevelopment project gets financing package. Real estate investment firm Green Sage secured $55 million in debt to turn the 441,000-square-foot former fruit cannery into a cultivation and distribution facility. It is one of the largest single-asset real estate financing deals in the cannabis industry. [TRD]

Gwyneth Paltrow (credit: Georges Biard via Wikipedia)

Gwyneth Paltrow hired a book curator to help remodel her Brentwood home. The actress and Goop founder hired Juniper Books founder Thatcher Wine to curate 500 to 600 books to fill her shelves when she remodeled the home. [Observer]

City of LA approved $49 million in bond financing for South L.A. affordable projects. The three projects to receive funding are planned with 172 affordable units between them. Affirmed Housing, LINC Housing Corporation, and Clifford Beer Housing are developing them individually. [Urbanize]

Doris Day’s former Beverly Hills home hits the market for $14.5 million. The 4,300-square-foot home was built in 1922 on around two-thirds of an acre with four bedrooms and 3.5 baths. There’s a swimming pool and a basketball half-court. The home is likely to be demolished and the property redeveloped, as many aging homes in the Golden Triangle have been over the last several years. [LAT]

Wafra Capital buys controlling interest in fix-and-flip lender Anchor Loans. The New York-based investment arm of Kuwait’s public pension fund has been a minority owner in Anchor since 2015, providing equity and access to debt and capital markets. Calabasas-based Anchor provides short-term loans, typically one-year terms, to flippers for their renovation projects. It originated $1.4 billion in loans last year. [CO]

Planned 156-room hotel in Hollywood hits a snag. Residents of rent-controlled apartment buildings at the development site say their landlord is trying to force them out of their apartments so he can build a hotel. They’ve appealed the city’s approval of the project. The tenant rights group L.A. Tenants Union is supporting the appeal. [TRD]

Producer Ryan Ahrens sells Malibu compound for $13 million. The property spans an acre near Point Dume and includes a five-bedroom main house and a guesthouse. Chris Cortazzo of Compass had the listing. Ahrens is the co-founder of Argent Pictures and his credits include “American Made” and “Birth of a Nation.” [LAT]

WeWork rival Industrious had raised $80 million. The flexible-office-space firm’s Series D funding round brings its total funding to more than $220 million, and puts pressure on rival WeWork ahead of its initial public offering. Industrious adopted a new business model last year, which has seen it move away from traditional leases and into partnerships with landlords and building owners. CEO Jamie Hodari said relying on management contracts was “more sustainable, thoughtful and less risky,” and said he intended to phase out existing leases. The position is at odds with rival WeWork, which has $47 billion in lease commitments over the next 15 years. [Bloomberg]

In a quick 180, President Trump changed course on tax cuts. Trump says he will not pursue payroll and capital gains tax cuts to boost the U.S. economy, despite stating days ago that the White House was considering such measures. [WSJ]

Now, a presidential hopeful has taken aim at WeWork’s valuation. Democratic candidate Andrew Yang — whose signature policy, the “freedom dividend” would award Americans over 18 a basic income of $1,000 each month — has called out WeWork’s $47 billion valuation on Twitter, calling the figure “utterly ridiculous.” Earlier this week, developer Douglas Durst in a letter to Crain’s questioned whether the co-working giant’s model could withstand a downturn. [Business Insider]

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]

1600 E. Venice Boulevard (Credit: iStock)

Prolific developer Wiseman Residential is planning a 77-unit apartment complex in Venice, which would be one of its larger recent projects.

The Sawtelle-based firm is requesting a density bonus and maximum height increase for the development, which would rise at 1600 E. Venice Boulevard, according to records. The requests were made through the city’s Transit-Oriented Communities program. Wiseman filed for the project through an entity called Venice Wave LP.

The TOC program allows developers to add more units to developments near transit — which are often market-rate — if they make some of those units affordable. Wiseman did not specify in the filing how many units it plans to set aside as affordable.

The picked up the development property for $5 million in March, and demolished an aging apartment building there.

Wiseman builds and manages around 30 properties mostly on the Westside and in Hollywood. The firm’s last proposal in Venice was for a 44-unit project on Lincoln Boulevard last April. More recently in May the firm filed plans for a four-story project with 16 units in West L.A.

Venice is one of the hottest rental residential markets in the L.A. area. The influx of tech companies and their young, affluent employees is driving demand and pricing.

Prime Minister Mette Fredriksen and President Donald Trump (Credit: Getty Images and iStock)

Over the last week, a story that’s entirely emblematic of the Trump era gained momentum and died shortly thereafter: the president made headlines with his stated aim to buy Greenland from Denmark. But it’s a deal that the Danish government has made clear is not on the table. Now, bitter recriminations are all that’s left of the new U.S. territory that was never to be.

Below are the events that transpired.

Aug. 16, 8:09AM: The Wall Street Journal reported that the president had been floating the idea of purchasing Greenland — which was never listed for sale — to advisors for months. Current and former White House officials observed in the article that adding Greenland to U.S. territory would be tantamount to Andrew Jackson’s acquisition of Alaska for Trump; the idea also aligns with the Pentagon’s recent efforts to block China from building airports on the island.

August 19: “Greenland is not for sale,” Prime Minister Mette Fredriksen told a Danish newspaper earlier this week. “Greenland is not Danish. Greenland belongs to Greenland. I strongly hope that this is not meant seriously.”

Denmark’s Prime Minister Mette Frederiksen: “Thankfully, the time where you buy and sell other countries and populations is over.” pic.twitter.com/JOCASC5TEK

— Kenneth P. Vogel (@kenvogel) August 21, 2019

Aug. 19, 8:07 p.m.: Trump shared a photo of a giant golden Trump-branded tower plopped on a rocky shoreline along with the text “I promise not to do this to Greenland!” At that time, the visit was still on.

I promise not to do this to Greenland! pic.twitter.com/03DdyVU6HA

— Donald J. Trump (@realDonaldTrump) August 20, 2019

Aug. 20: On Tuesday evening, White House spokesman Judd Deere confirmed that Trump would no longer be traveling to Denmark.

Aug. 20, 7:51 p.m.: Trump announced via Twitter that he had cancelled an upcoming trip to Copenhagen, where he had been invited by Queen Margrethe II, following Prime Minister Mette Fredriksen’s statement that there was “no interest in discussing the purchase of Greenland.”

Denmark is a very special country with incredible people, but based on Prime Minister Mette Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time….

— Donald J. Trump (@realDonaldTrump) August 20, 2019

Aug. 21, 1:24 PM: Before departing on a trip to Kentucky, Trump told reporters outside the White House that Fredriksen was “nasty” in her comments about not selling Greenland. “I thought it was not a very nice was of saying something. But all they had to do is say, no, we’d rather not do that or we’d rather not talk about that.” He added that the slight was to America, not him personally.

Aug. 21, 2:10 p.m.: As of the time of this posting, Greenland is still not for sale.

Terreno Realty CEO W. Blake Baird

Amid Los Angeles’ slowing housing market, the demand for industrial properties has remained strong, perhaps stronger than anywhere else in the country.

The latest play is from Terreno Realty Corporation, which is back in Southern California with the purchase of a five-building property near Downtown, according to Commercial Observer. The $18 million price tag includes about 53,000 square feet of space and nearly 2 acres of land. The portfolio is 90 percent leased to seven tenants; the leases expire within the next three years.

The seller was Los Angeles Mono Street, an entity tied to Alan and Wendy Hart. They purchased the property in the 1980s. The buildings are near the Los Angeles River, at 130-134 and 140-148 South Anderson Street, 1319 Mono Street and 135-151 S. Utah Street.

San Francisco-based Terreno owns and operates approximately 215 industrial properties with more than 13 million square feet of space around the country, including L.A., New York, the Bay Area and Miami.

The DTLA and Arts District areas continue to attract much of the industrial activity. A restaurant supply company purchased a last-mile distribution center near Downtown for $14.8 million in July, and a firm led by Mayer Separzadeh paid $20 million for a block-long assemblage in April.

Terreno has been buying and managing properties in Southern California since the industrial market started to take off. In 2017, the firm purchased a fully-leased 23-acre Lynwood industrial property for $31.4 million, and later that year picked up three properties for a combined $78 million. [CO] — Gregory Cornfield

Homebuilding shares are close to their highest levels of the year thanks to low mortgage rates (Credit: iStock)

Signs may be pointing to a potential recession, but low mortgage rates have boosted homebuilding shares, which are nearing their highest levels of the year.

A composite of homebuilding stocks — known as the SPDR S&P Homebuilders ETF — is up 29 percent in 2019, far surpassing the S&P 500’s 17 percent gain, according to the Wall Street Journal.

Texas-based LGI Homes, which focuses on first-time buyers, has seen its stock jump 77 percent this year, while Miami-based homebuilder Lennar has increased 32 percent and KB Home has risen 47 percent, the Journal reported.

The rise in homebuilder stock prices is largely due to the fall of mortgage rates which have dropped to their lowest levels since late 2016. This has made it cheaper for homebuyers to buy and refinance a home.

The Federal Reserve’s decision to lower interest rates last month also helps homebuilding stocks because it makes financing cheaper for developers to build homes.

Not all homebuilders are faring well, however. Toll Brothers, which develops luxury homes, saw third quarter net income drop 25 percent from the same time last year. The company which released earnings on Wednesday, said overall contracts were down, but it saw positive signs in a recent move to develop lower-priced properties as it reaches out to higher-earning millennials.

The renewed interest in homebuilders comes as many indicators show the housing market continues to slow because of affordability concerns and rising construction costs.

Just last month, a Case-Shiller index showed home price growth slowed to 3.4 percent in May on a yearly basis, down from 3.5 percent in the previous month.

BuildFax also recently reported that that single-family housing permit authorizations nationally decreased by 2.75 percent in June, year-over-year. [WSJ]  — Keith Larsen

From left: Paul Manafort with Trump Tower, Jeffrey Epstein, and Bernie Madoff with 133 East 64th Street (Credit: Getty Images, CityRealty, and Wikipedia)

UPDATED: August 23, 3:24 p.m. In early July, after an unsealed criminal indictment revealed that New York prosecutors would move to seize Jeffrey Epstein’s Upper East Side mansion, broker Jason Haber, of Warburg Realty, put in a phone call to the Southern District.

“I said if there is going to be a process for the disposition of real property, I’d like to be considered for that,” he said.

In the wake of the financier’s suicide, there has been intense speculation about what will happen to his luxury properties in New York, Palm Beach, New Mexico, Paris and the Virgin Islands. The criminal case against him has been dismissed — a defendant’s death means a pending case can’t proceed — but the government could still mount a civil forfeiture case against any one of his US properties, in which case they could be seized and sold, and proceeds would go to victims.

If Epstein’s Upper East Side mansion was forfeited, Haber is one of many New York brokers who would be interested in selling it. But how would they get such a listing?

A representative from the United States Marshals Service — an agency within the Department of Justice — said the Marshals’ asset forfeiture division contracted with a third party, Colliers International, to oversee the sale of forfeited properties.

It’s Colliers, rather than the government, that has the responsibility to select brokers.

Dan Feldman is the director of the firm’s government services department. He said that when a property is forfeited, his team will do an assessment, looking at location, price, demand and other factors. From there, they conduct interviews with a select pool of brokers.

“We want someone who has made a name for themselves selling that type of product,” he said. “We get a lot of people coming up to us and saying, ‘I’d love to list a $10 million property for you,’ and we’ll say, ‘Great, what have you done?’ And then they’ll send their experience and they’ve sold $200,000 houses.”

Colliers secured its contract in 2017 and commenced work on it in early 2018. (Before Colliers won the contract, the sale of forfeited properties was outsourced to multiple different companies.) The commercial brokerage oversees the sales of an estimated 600 to 700 forfeited properties per year on behalf of the government. Brokers’ names are included in each listing.

According to Colliers, Feldman’s team is “the only comprehensive services platform focused on government real estate on a national basis.” In addition to the Marshals, they also have a contract with the Federal Deposit Insurance Corporation to market and sell properties.

While high-profile homes get the most attention, Feldman said the average sales price for forfeited properties was under $500,000. He said the stigma of forfeiture didn’t hurt their asking price, and most went for “at or above” what the previous owner paid.

Commissions were taken from the sales proceeds to cover both the buy and sell sides of the transactions, and fees varied by product type. (Feldman said they were calculated based on a formula laid out in its initial proposal to the Marshals.)

All the forfeited properties currently on the market are showcased on a nondescript website called Real Look, in addition to StreetEasy and other websites. A quick search of the New York properties on Real Look brings up a listing for the Soho apartment that once belonged to Paul Manafort, President Trump’s former campaign chair, now serving a seven-year prison sentence for a raft of criminal offences. The 2,061-square-foot condo was one of five properties forfeited as part of a plea deal with the Department of Justice in 2018.

Manafort’s other seized properties, worth an estimated $21.7 million in total, include a one-bedroom condo in the Trump Tower, listed for $3.6 million, and a 5,564-square-foot Hamptons estate that features hundreds of red flowers planted in the shape of an M.

The agent associated with Manafort’s Trump Tower and Soho listings, Kenneth Laino of the Manhattan Network, declined to comment for this article, saying he had referred The Real Deal’s questions to his employer. He would not clarify who his employer was.

Asked about this, Feldman said that brokers who work on forfeited properties are made to sign confidentiality agreements.

Jason Haber has never worked on a forfeited listing, but Epstein’s mansion was not the first inquiry he’d made about a property connected to crime. In 2009, he pitched himself to market Bernie Madoff’s penthouse apartment, which had been seized after the investment advisor’s multi-billion-dollar Ponzi scheme was discovered in late 2008.

After the call, Haber said he was invited to view the penthouse.

“The apartment was covered with US Marshals,” he said. “In the bathroom, Madoff’s electric razor was still out. In his closet, there must have been 15 white polo shirts: the exact same polo shirts, just stacked. It was kind of surreal because it was as he left it.”

Haber didn’t get the listing, which instead went to Sotheby’s International Realty brokers Anne Corey and Serena Boardman. (It sold for $14.5 million in 2014.) In the years since, he has been contacted multiple times about other forfeited properties. “I guess my name is on file,” he said.

Feldman said Colliers received a lot of calls from brokers about forfeited properties, particularly after they’d been in the news. He declined to comment on whether the firm had received any calls about Epstein’s portfolio.

Inside the Epstein home

According to The New York Post, Epstein signed a will and testament just two days before his death. In it, he left his nearly $600 million fortune to a trust, though details about its beneficiaries are not known. Epstein’s only potential heir was his brother, Mark Epstein, but the will reportedly added that Mark only had a claim to his brother’s extensive holdings if Jeffrey hadn’t left behind the document.

Lawyers for Epstein’s accusers have vowed to pursue civil claims against his estate, and two lawsuits have already been filed. In one, Jennifer Araoz accuses Epstein of sexually abusing her from the age of 14, and her account offers a rare glimpse inside the Upper East Side townhouse where much of the abuse is alleged to have taken place.

Araoz says Epstein’s “massage room” had a ceiling “painted to look like a blue sky with clouds and angels to give the appearance that you were in heaven.” His master bedroom, meanwhile, featured “a large jacuzzi and prosthetic breasts on the wall in the bathroom that he could look at or play with while in the bathtub.”

Jed Garfield, managing partner of Leslie J. Garfield, said he had shown the house as many as eight times in recent years, and while the interior was over the top, he didn’t find it creepy.

“People want to fit the interior into the story of depravity,” he said. “But if Epstein didn’t live there, you wouldn’t say, ‘Wow this is some pedophile’s house.’”

In the wake of Epstein’s death, Garfield said he planned to contact Darren Indyke, a longtime employee of Epstein and one of the executors of his will, to ask about the mansion.

“I would say, ‘I have no idea what the estate’s planning on doing but I’m very familiar with that house and, prior to Epstein’s death, I was showing it on a semi-regular basis. Would you be interested in hiring me to sell it?’” he said.

Haber said the seven-story townhouse would certainly attract interested buyers, given its size and location, but brokers could have a difficult time overcoming the property’s past.

“You’d probably have to de-Epstein it,” he said, adding that any future sale was likely still a long way off. “Take out as much stuff as you can.”

But Garfield thought the property’s former owner wouldn’t make a difference to buyers.

“I don’t think people care,” he said. “It may even add to the attraction of it.”

“It becomes a house with a personality — not just another house.”

Correction: This article has been amended to clarify the status of Mark Epstein as potential heir and beneficiary to the Epstein estate. 

Holland Partner Group’s Clyde Holland and Taix Restaurant (Credit: Google Maps)

The city’s oldest French restaurant will soon be replaced by a new mixed-use development.

Ne t’inquiète pas. Some of it will live on.

Development firm Holland Partner Group has acquired the site of Taix French Restaurant in Echo Park, where it plans to build a six-story complex with 170 units and 13,000 square feet of ground-floor retail, according to Eastsider.

In July, an entity linked to Holland Partner paid $12 million for the property on Sunset Boulevard, according to property records.

Taix first opened in Downtown Los Angeles in 1927, and later moved to its Echo Park location in 1962. The eatery will be demolished to make way for the mixed-use complex but a smaller version of Taix is expected to be rebuilt on site. Its neon sign, bar and lounge will be preserved at the new spot.

Holland is also planning on developing a separate housing complex at Taix’s parking lot at Reservoir and Liberty streets. That development is expected to include around 49 units, according to Eastsider.

Holland’s investment in Echo Park comes on the heels of its $403 million sale of two apartment towers in Downtown L.A. last month. The firm had developed the towers, located in the Fashion District. [Eastsider] — Natalie Hoberman 

David Koch, 740 Park Avenue and 110 East 76th Street (Credit: Getty Images, StreetEasy, Google Maps)

David Koch, the billionaire industrialist who was a major funder of conservative politics and New York City’s second-richest resident, died Friday. He was 79.

With a net worth of $50.5 billion, he was tied with his brother Charles as the 11th-richest person in the world, according to Forbes. In June 2018, Koch retired from Wichita-based Koch Industries, his family’s massive company whose businesses ranged from paper manufacturing to oil refineries.

Born in Wichita in 1940, Koch made New York his home in recent decades — and he made some splashy real estate plays in the city.

740 Park Avenue (Credit: StreetEasy)

In the 1990s, Koch spent $9.5 million to buy the former home of Jacqueline Kennedy Onassis at 1040 Fifth Avenue. He sold it for $32 million in 2006, two years after moving to larger digs at 740 Park Avenue.

Koch paid $18 million for the Park Avenue co-op — an 18-room duplex at one of Manhattan’s most exclusive addresses. Dubbed “the world’s richest building,” the board reportedly requires buyers to have a net worth of at least $100 million. Koch’s neighbors included Blackstone’s Stephen Schwartzman and hedge funder Israel Englander.

But in 2016, a fire that started in the sixth-floor apartment of Ezra Merkin, former associate of Bernie Madoff, resulted in extensive water damage to the Koch’s abode. The family was forced to live in a hotel while it was repaired, according to Page Six. A few months later, the co-op was stripped of its limestone facade, after part of the stone crumbled and crashed to the ground. In 2016, Koch placed the unit in a trust, property records show.

Last year, Koch and his wife, Julia, paid $40.25 million in cash for an Upper East Side townhouse sold by developer Joseph Chetrit. The 36-foot wide mansion at 110 East 76th Street spans 15,000 square feet with a sprawling master suite, two wet bars and courtyard with inlaid tile.

880 Meadow Lane (Credit: Google Maps)

Koch also had homes in the Hamptons, Palm Beach and Aspen. He owned a $23.2 million mansion on Meadow Lane in Southampton (which drew protestors to some political fundraisers hosted there.)

150 South Ocean Boulevard (Credit: Google Maps)

In Palm Beach, Koch paid $10.5 million for an estate at 150 South Ocean Boulevard in 1998. The 13-bedroom, 20,378-square-foot mansion was built in 1920 on nearly 2 acres of land across the street from the ocean, according to property records.

The impact of Koch’s money was felt throughout New York. He believed he had a “moral obligation” to give charity, he previously told the Wall Street Journal. He referred to himself as a “sugar daddy” for charitable causes, and said he’d rather spend his fortune to support great institutions over a “bigger house or a $150 million painting.” He donated more than $1.3 billion to charity, including hundreds of millions of dollars to the city’s hospitals and cultural institutions. That was along with some other pet causes, including advancing libertarian candidates and spending heavily to counter efforts to address climate change.

Katherine Kallergis contributed reporting.

Compass CEO Robert Reffkin (Credit: iStock)

Two Douglas Elliman agents are taking on Compass with a new platform that overlaps with the VC-backed brokerage’s non-traditional lending service for sellers.

Cousins John Giannone and Jac Credaroli last month launched a loan origination platform, dubbed Feeasy, that provides quick cash to renters, sellers or buyers who need some extra liquidity to seal a real estate deal.

Giannone and Credaroli, who work on the Lauren Muss Team at Elliman, said they came up with the idea after two years of working as agents and running into countless situations where renters, buyers and sellers struggled to come up with cash for brokers fees, staging or didn’t have enough funds to guarantee a lease.

They teamed up with family friend Stanley Moskowitz, the former CEO of Petroleum & Franchise Capital, a commercial finance lender, who is now Feeasy’s chairman and a “significant” minority shareholder.

“There was a need for liquidity in the market that most people just didn’t have,” said Moskowitz. He pointed to the nearly $15,000 average cost it currently takes to rent a New York City apartment as an example.

Feeasy facilitates loans earmarked for services related to real estate, including moving costs, first month’s rent, security deposits, painting and staging. The Feeasy platform connects borrowers with a lending partner that provides unsecured fixed-rate loans of up to $50,000 to borrowers for five year terms. According to Feeasy’s website, the lending partner is San Francisco-based lending platform, Upgrade, whose loans are originated by Utah industrial bank WebBank.

Annual percentage rates and applicable fees depend on the lender’s algorithm which assesses applicants’ credit history. According to Upgrade’s site, APRs for an unsecured loan ranges from nearly 8 percent to more than 35 percent plus origination fees of between 1.5 percent and 6 percent. Feeasy receives a flat fee for every approved and funded borrower, according to its founders. To date, founders say the platform has facilitated $450,000 in loans.

The loan application is processed instantly and uses the borrower’s credit history to determine whether the borrower gets approved. Beyond sending Feeasy’s website to a client, the broker has no further involvement in the loan, and Feeasy itself does not have any involvement in the application once it has been submitted to the lender.

“We created the product really for ourselves, made by brokers for brokers,” said Giannone. “It was really a means of us adding value to our deals and adding value to our clients.”

Rival brokerage Compass has tapped into a similar idea with the launch of its own quasi-lending service, Compass Concierge. The program allows sellers who list with Compass agents to have the brokerage pay for upfront costs related to services that will help sell their home, such as painting or staging. Upon sale, Compass sends the client an invoice for the services. If a sale does not occur, the client is still invoiced. A spokesperson noted that Compass does “not take any kind of collateral or security interest.”

Feeasy, however, is not limited to a brokerage or transaction type, and, its founders argue, the terms of the loans they facilitate are more flexible.

“You could pay [the loan off] or hold the note for three to five years,” said Moskowitz.

Its founders say they’re aiming for the platform to be used nationally and not just by real estate agents.

Feeasy also has agreements in principle with staging company, Showhomes, and Brooklyn-based real estate agency Bedford Brownstone Realty. The founders claim they have 35 such agreements, however they clarified that Feeasy does not pay referral fees to its partners.

Credaroli said they told Muss and “management” at Elliman about Feeasy before it launched in early July, but there is no agreement between the two companies. Elliman declined to comment. Muss told TRD that Feeasy is a “totally separate business” from her team.

Nationally, unsecured personal loan debt is skyrocketing, despite being considered risky. It’s the fastest-growing type of consumer debt and the market hit an all-time high last year, according to consumer reporting agencies.

Moskowitz declined to comment on the credit scores of would-be borrowers who apply for loans through Feeasy, remarking that its the lender, not their platform, that approves loans.

“It’s their money they can do what they want,” he said. “My goal is to hit nine figures of annual volume.”

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

Beverly Hills real estate agent charged with burglarizing celebrity homes. Between late 2016 and mid-2018, Keller Williams agent Jason Emil Yaselli directed his accomplice, Benjamin Eitan Ackerman, to burglarize more than a dozen homes of celebrities, many during open house events, authorities say. Victims include musicians Usher and Adam Lambert, former NFL player Shaun Phillips, and “The Real Housewives of Beverly Hills” stars Paul and Dorit Kemsley. [CNN]

Governor Gavin Newsom (Credit: Gage Skidmore)

Gov. Gavin Newsom wants SoCal cities to plan for 1.3 million new homes. The state is pressuring local jurisdictions to zone and allow for more than a million new homes over the next decade. Lawmakers in jurisdictions across Southern California recently announced that they would collectively plan for just 430,000 homes through 2029. [LAT]

Pasadena tech office trades for $30 million. Graymark Capital Inc. and Eightfold Real Estate Capital purchased the 219,000-square-foot Eaton Canyon Tech Center with plans to renovate interiors and exteriors. The property is 58 percent leased. [LABJ]

Witkoff Group breaks ground in Santa Monica. With construction funds in hand, Steven Witkoff is wasting no time getting to work on a 249-unit project at 500 Broadway, one of the largest multifamily projects in the oceanside city. Witkoff recently secured $31 million in mezzanine construction financing for the project.. [Urbanize]

Holland Partner Group’s Clyde Holland and Taix Restaurant (Credit: Google Maps)

Holland Partners Group to replace Taix restaurant with apartments. The firm has acquired the site of the Taix, a French restaurant in Echo Park, and plans to demolish it and build a 170-unit complex with 13,000 square feet of ground floor retail. Holland will build a smaller version of the restaurant on the site, which has been its home since 1961. Taix first opened in 1927 in Downtown L.A. [TRD]

Industrialist and billionaire David Koch dies at 79. Koch, who backed conservative politics, had a net worth of $50.5 billion, and donated more than $1.3 billion to charity. Most recently, he dropped more than $40 million on a Manhattan townhouse and also had homes in Aspen, Palm Beach and Southampton. [TRD]

Here’s how brokers get listings from the Justice Department. In the case of Jeffrey Epstein’s properties in New York, Palm Beach, and elsewhere, the government contracted with Colliers International, which will then choose listing agents. [TRD]

Keller Williams Midtown is paring down its expenses in the latest sign of a difficult market. An internal email shared with TRD revealed that the franchise of the Austin-based brokerage is relocating from its current 29,000-square-foot office space on 1155 Avenue of the Americas to a WeWork at 575 Fifth Avenue. [TRD]

FROM THE CITY’S RECORDS:

A developer filed for a 36-unit TOC project in Rampart Village. The five-story project would rise at 154 S. Occidental Boulevard. The building would have a rooftop deck. [LADCP]

A 22-story commercial project is in the works in West Adams. An entity filed for the unusually tall commercial building on Thursday. It would rise at 5850 W. Jefferson Avenue, a property owned by Samitaur Constructs. Shoemaker Nike signed a lease for an office there and earlier this year sued Samitaur for failing to deliver the space on time. [LADCP]