Across the city, residents sometimes have to tussle with landlords to make sure they are getting basic necessities like heat and hot water.

But at 565 Broome Street, a luxury development in Soho, one resident is fighting to make sure they get their state-of-the-art wine cooler.

Ayal Martin Hayes, who through an LLC bought the $3.6 million unit at the development, alleges in a new lawsuit that buyers-to-be were promised the specialty coolers, which were supposed to be integrated into at least some of the kitchens’ white oak cabinetry. Instead, the owner’s kitchen is missing the feature.

“This devalues the kitchen and the apartment; particularly to wine enthusiasts,” states the complaint, a class-action lawsuit filed Wednesday in New York County Supreme Court.

In an emailed statement, a spokesperson for 565 Broome said the sponsor has provided “multiple options” to deal with the issue.

“This lawsuit, which is being filed by one person over not having a $2,200 wine cooler, is frivolous and completely without merit… We look forward to vigorously responding to this issue in court,” the spokesperson said.

Hayes couldn’t be reached for comment, and the plaintiff’s attorney, Joseph Colbert, did not immediately reply to a message seeking comment.

Hayes bought the 12th-floor, 1,447-square-foot pad in April. In advertisements and in the condo’s offering plan, some units, such as the owner’s two-bedroom, two-and-a-half bath condo, were supposed to come equipped with the integrated wine coolers, the complaint says.

The complaint only lists the single owner as a plaintiff, but it was filed as a class-action lawsuit intended to cover any purchasers impacted by the lack of wine coolers.

Bizzi & Partners Development, Aronov Development and Halpern Real Estate Ventures developed the Renzo Piano-designed project, which is comprised of two glass towers standing 30 stories tall. The building’s amenities include a 55-foot indoor swimming pool, fitness center and spa.

Former Uber CEO Travis Kalanick snapped up a $36.4 million penthouse at the property, and tennis star Novak Djokovic purchased two condos in the tower in 2017.

The Corcoran Group said it was hacked Friday after a stunning email containing agent splits, marketing budgets and gross commission income was sent to the entire company.

Sources said the email came from Bill Cunningham, Corcoran’s president of sales. It landed in inboxes in mid-afternoon before being quickly retracted — but not before news of the breach ricocheted through the industry.

“It’s the most privileged information at a real estate company” aside from client information, said an industry source. “Yikes,” said another.

Corcoran CEO Pam Liebman reassured agents in an email late Friday that the alleged hack appeared to be isolated to a single email account, and that no customer data was involved. The firm plans to investigate the incident as criminal activity.

“This afternoon, we determined a Corcoran employee’s email account was compromised and three emails containing inaccurate and misleading Corcoran information were distributed within Corcoran, in a deliberate attempt to distract employees and agents, disrupt business and cause damage to Corcoran,” the firm said in a statement to The Real Deal.

Although sources within the firm initially said the documents were doctored, at least one agent who spoke on the condition of anonymity told TRD their numbers were “100 percent correct.”

Some Corcoran agents speculated foul play at the hands of a rival. “I will never EVER work for a company that engages in corporate cyberwarfare,” one agent posted on Instagram, along with the hashtag “#dontbotherrecruitingme.” The agent later removed the post.

In an ultra-competitive market, splits have become ammunition for firms battling over top producers. Agents are known to shop around offers to negotiate better deals — especially as Compass has upped the ante by offering fat checks and bonuses to agents in New York and other markets. According to industry sources, it’s standard for top producing agents to split their commission 70-30 with their brokerages— that is the split that the Eklund-Gomes Team has with Douglas Elliman, for example.

Agents in markets outside New York can command higher splits; in Los Angeles, north of 80 percent is not uncommon.

But rising commission costs have put pressure on brokerages. Over the past year, New York City’s top residential firms have tightened their clawback policies, which allows them recoup marketing dollars or salaries if an agent leaves the firm. (In April, Corcoran demanded a half-dozen Brooklyn agents to pay back between $20,000 and $100,000 in commission and marketing expenses.)

Meanwhile, Corcoran’s parent company, Realogy, has been embroiled in a nasty legal battle with Compass, which it accused of “predatory” poaching and illegal business practices in a July lawsuit. Most recently, Compass accused Realogy CEO Ryan Schneider of attempting to sell the company or form a joint venture — a claim Realogy vehemently denied.

Beverly Hills-based Compass agent Yawar Charlie said he was relieved to learn that California’s real estate brokers will be exempt from a statewide measure reclassifying independent contract workers as employees.

“Part of the draw for us in this industry is that we really get to run and create our own business,” he said. “I don’t want that autonomy taken away from me.”

Roughly 1 million contract workers in the state, including Uber and Doordash drivers and other gig economy hustlers, will be given employee status under the bill the state legislature passed this week. That would include the requisite health and other benefits; Gov. Gavin Newsom is expected to sign the bill into law.

Uber drivers and other gig economy workers were among those who pushed for the measure. But real estate agents have long maintained their status as independent contractors while also working for brokerages. Unlike drivers, the real estate industry was not pushing for change.

The California Association of Realtors, which includes more than 170,000 agents, also supported the decision to exclude brokers, spokesperson Lotus Lou said.

Some brokerage owners said they were also glad the measure won’t apply to them. They share the same concerns as other business owners, that reclassifying contract workers as employees would mean paying into health care plans among other costly employee benefit obligations.

“With profit margins increasingly thin, this would have had a devastating impact on our industry,” said Billy Jack Carter, general manager at Hilton & Hyland.

Though the measure does not apply to agents now, it could potentially affect how large teams tied to brokerages conduct business, Carter said. “It could become a breeding ground for lawsuits,” he said.

Reclassifying agents, Hilton & Hyland co-founder Jeff Hyland said, would have been a “logistical nightmare.”

Real estate agents will instead be subject to an “economic realities test” to determine worker status, according to the measure, called Assembly Bill 5.

The California Department of Industrial Relations says that “the most significant factor to be considered is whether the person to whom service is rendered — the employer or principal — has control or the right to control the worker both as to the work done and the manner and means in which it is performed.”

The bill also exempts securities brokers, commercial fishermen, and cosmetology workers, among other workers.

Charlie, who is part of the Aaron Kirman Partners team, said being a contractor also has tax benefits. There are certain expenses that agents are allowed to write off, he said. That could change if the person is required to complete a W-2 form.

Fellow Compass agent Mary Brill was also not in favor of becoming an “employee.”

“I do not want to be governed by any company, and appreciate the independence this bill allows,” she said. “Not having this exemption would open me to fixed hours and manager supervision. I like being a free agent.”

In Los Angeles this week, Toluca Lake took center stage with two home sales: one involved Kirsten Dunst and the other, a house formerly owned by a Disney heir. Meanwhile, a former Facebook executive listed his Silicon Valley mansion near the company’s Menlow Park HQ.

A home formerly owned by Roy E. Disney sold for $5.2 million, roughly $200,000 above asking price. Spanning 2,440 square feet, the property includes three bedrooms, three bathrooms, backyard and private boat dock. Other previous owners include horror film actor Boris Karloff and Oscar-winning composer Erich Korngold. Disney’s father — Roy Disney — co-founded Walt Disney Co. and was Walt Disney’s brother.

Nearby, actress Kirsten Dunst unloaded her home for $4.5 million after nine days on the market. The property originally listed for $4.7 million, the Los Angeles Times reported. There are five bedrooms, a patio with a pool and spa, and private dock. Dunst paid $2.6 million for the 4,333-square-foot pad.

In the exclusive Bel Air Crest neighborhood, married Olympians Gyorgy Nagy and Ildiko Szekeres spent $6.1 million to buy a 8,360-square-foot estate. The deal, which marks the most expensive home sale in the gated community so far this year, comes after the home lingered on the market for four years. Recently remodeled, the Mediterranean-style estate has six bedrooms, eight bathrooms, tennis courts and swimming pool. Records show the sellers were Djahangir (John) and Victoria Charchian.

Up along the coast, a former Facebook executive listed his 13,000-square-foot mansion in Atherton for $35 million. Mike Murphy and his wife, Elaine, are selling the seven-bedroom, 11-bath mansion. It is being sold as two separate properties. The larger two-acre parcel, which includes the main house, guest house and pool, is being offered for $27 million, with the smaller one-acre plot with a tennis court listed for $8 million.

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page in real time, starting at 9 a.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 3:30 p.m. PT

“The Incredible Hulk” actor Lou Ferrigno lists Santa Monica home. The actor and former bodybuilder listed his 3,500-square-foot home for $3.9 million. He and his wife, Carla Ferrigno, bought the home for $547,000 in 1980 when he was playing the “Hulk” on television. Everything about the house is modest besides except for a 1,000-square-foot gym that Ferrigno calls the best home gym in the country and where he trained Michael Jackson, Chuck Norris and others. [WSJ]

Activists say L.A.’s proposed sidewalk sleeping ban isn’t feasible for homeless. Activists mapped out how Councilmember Mitch O’Farrell’s proposed ban on sleeping near driveways, doorways, schools, parks, and other facilities, would impact the area around his Echo Park office. A separate L.A. Times analysis found that 26 percent of the city would be off limits for sidewalk sleeping. A ban on sleeping in parks closes off another 15 percent of the city. [LAT]

WeWork’s parent company could launch its IPO roadshow on Tuesday. The company plans to push ahead with the roadshow and the initial public offering despite widespread skepticism about its business model. The board should finalize a decision about when to launch the roadshow on Monday. Roadshows typically happen one or two weeks before a company goes public, and the We Company is expected to list stocks on the Nasdaq as soon as the week of Sept. 23. [NYP]

A home automation company backed by Blackstone Group is merging with a unit of SoftBank. Vivint Smart Home Inc. will create a company valued at $5.6 billion through the merger. The company makes a variety of smart home security products. [Reuters]

The $5 billion Rams-Charger stadium in Inglewood gets a new name. Officials say the stadium, now called SoFi Stadium following June’s naming rights deal with the finance services company, is 75 percent complete and will be ready to host events starting in June. The larger 300-acre Los Angeles Stadium and Entertainment District development around the stadium is set to have 900,000 square feet of retail space, apartments, a hotel, office space and a 6,000-seat theater venue. [LABJ]

PG&E agrees to pay $11 bill to resolve wildfire-related insurance claims. The bankrupt utilities company settled with a group of insurance companies and investors accounting for around 85 percent of claims against the company related to deadly fires in 2017 and 2018. PG&E still hasn’t settled with claims from individuals who lost loved ones or property in fires sparked by the company’s equipment, who collectively say they’re owed $40 billion. [LAT]

A small-lot development is in the works in Highland Park. Plans call for 18 units across three parcels at 6021-6029 E. La Prada Avenue. Real estate investment crowdfunding platform Fundrise is involved in the project. [Urbanize]

California high-speed rail project delayed from land-deal mismanagement. Seven years after the project to connect the state with a high-speed train, the state authority overseeing the project still needs to acquire hundreds of parcels for the rail line. The authority also owns and must manage hundreds of acres of land it acquired for the project. Contractors are filing hundreds of millions of dollars in claims because of the delays. [LAT]

Bernie Sanders is making a call for national rent control. The $2.5 trillion affordable housing plan would also focus on ending homelessness. It would expand public housing, increase the amount of affordable housing and limit annual rent increases to no more than 1.5 times the inflation rate or 3 percent. The campaign will release the full plan within the next month. [NYT]

WeWork’s IPO valuation just keeps getting lower. Sources have now told Reuters that the co-working giant may seek a valuation between $10 and $12 billion for its initial public offering, a dramatic decrease from the $47 billion valuation it hit in January. Its dropping valuation could impact other real estate startups as well. [Reuters]

And it turns out Adam Neumann is no Mark Zuckerberg. The WeWork co-founder’s reluctant decision to cede some of his powers as the company prepares to go public is an indication that the era of founders taking their companies public while still maintaining strong voting power is over. [Bloomberg]

Markets are starting the week on a high note. TRD’s analysis of 28 real estate stocks found that they did better than the S&P 500, increasing by more than 3 percent. However, 19 of the companies saw their share prices plunge on Friday. CoStar Group’s value fell the most, dropping by 7.7 percent to close on Friday at $570.11, while Newmark Knight Frank did the best, rising by 14.4 percent to close at $10.11. [TRD]

A criminal hack at the Corcoran Group on Friday caused the entire company to get an email with agent splits. The email also included marketing budgets and gross commission income, according to TRD. The email came from Corcoran sales president Bill Cunningham and was retracted quickly. The hack appeared to be contained to one email account, and customer data was not involved. Corcoran plans to investigate the hack as criminal activity. [TRD]

FROM THE CITY’S RECORDS:

A three-story apartment building with 10 units is planned at 1602 W. Adams Boulevard in West Adams. Holtz Architecture is designing the building. [LADCP]

WeWork’s parent company is reportedly planning to postpone its initial public offering following weeks of scrutiny over the co-working firm’s valuation and corporate structure.

Sources told the Wall Street Journal that the IPO roadshow would be put on hold until at least mid-October, following the Jewish High Holidays, despite earlier reports that WeWork’s IPO roadshow would kick off as early as this week.

WeWork’s co-founder and CEO Adam Neumann has been under significant pressure since the company’s IPO prospectus was filed in August. The filing revealed $47 billion in U.S. landlord commitments over 15 years and just $4 billion in committed revenue, as well as huge personal loans issued by the company to Neumann and other executives.

The company faced further criticism over revelations that its board was entirely male, and that Neumann was paid $5.9 million to sell the rights of the word “We” to WeWork. Nuemann later returned the payment and appointed a female board member.

Last week, Neumann reduced the power of his voting rights to 10 votes per share from 20. And although he still has voting control, the board can now remove him as CEO. The change in corporate governance last week also limited Neumann’s ability to sell stock in the three years that followed the IPO.

WeWork planned to raise at least $3 billion in its IPO on the Nasdaq Stock Exchange, but rumors swirled last week that limited investor appetite could see a valuation fall below $20 billion.

WeWork’s largest outside investor, SoftBank, has also urged the company to postpone the offering, pointing to the cool response from investors.

WeWork lost $1.61 billion last year, with revenue totaling about $1.82 billion.

[WSJ] — Sylvia Varnham O’Regan

Blackstone Group has been an active investor in Southern California real estate in the last few years, but now has made one of its biggest moves.

The company acquired four Los Angeles-area rental complexes totaling 862 units from TruAmerica Multifamily, a frequent partner.

The deal totaled $312 million, more than 50 percent over the amount the Century City-based TruAmerica paid for all four in early 2015.

A spokesperson for Blackstone would not comment on the deal. TruAmerica could not be immediately reached for comment.

A few days after the portfolio deal closed, TruAmerica picked up three North Carolina apartment complexes totaling 830 units for $108.7 million. The company is still buying up properties in Southern California. Last year, it acquired two apartment complexes in Orange County, one in Fountain Valley and another in Huntington Beach, for around $176 million total.

The largest of the four properties in the recent portfolio sale, both in terms of sale price and unit count, is the Vicino Apartments. It spans 14 acres at 12350 Del Amo Boulevard in Lakewood. The 368-unit complex includes an unspecified number of condominium units.

In the suburban span of northwest San Pedro, Blackstone picked up the 160-unit Harborview Apartment complex for $68.8 million. The complex dates from 1984 and spans 7.6 acres, according to L.A. County records.

The two other are neighboring apartment complexes in Santa Clarita — the 176-unit Canyon Ridge Apartments and 158-unit Canyon Crest Apartments. The two sit just off Newhall Avenue near California Route 14 and its split with Interstate 5. Blackstone paid roughly $51 million for each.

In February, Blackstone unloaded a 210,000-square-foot office building in Santa Clarita for $42 million.

UPDATED, Sept. 17, 2019, 9:34 a.m.: Real estate and presidential politics will once again converge in Beverly Hills tonight.

Prolific Los Angeles apartment developer Geoff Palmer is set to host a fundraiser for President Donald Trump’s reelection campaign at his home.

The dinner, which is expected to raise $5 million for the campaign, is one of a series of fundraising events the president will attend during his two-day stop in California. The events include a lunch in the Bay Area and breakfast in L.A., and will benefit Trump Victory. Combined, they are estimated to bring in $15 million for the campaign, according to reports.

The Hollywood Reporter first detailed the fundraising event.

Palmer owns a Spanish Colonial-style home on North Arden Drive in Beverly Hills. Two years ago, he paid $10.3 million for the Paul Williams-designed home. It encompasses 6,889 square feet, has a wraparound terrace covered in roses, and a backyard that includes a pool, fireplace, cabana and dining area with a barbecue and pizza oven.

Sources also say Palmer owns a much larger estate behind the famed Beverly Hills Hotel.

Palmer has been one of Trump’s biggest backers, having donated millions of dollars to pro-Trump political action committees in the lead-up to the 2016 presidential campaign and throughout his presidency. In April, he donated $355,000 to Trump Victory, the joint entity that funds the president’s reelection campaign and the Republican National Committee, according to CNBC. He also gave $2 million to America First Action, a Trump-friendly super PAC.

Palmer’s firm, G.H. Palmer Associates, owns 11,633 residential units in Southern California. Earlier this year, the billionaire developer was accused of illegally withholding thousands of security deposits from tenants in a class-action lawsuit. More than two dozen tenants had previously sued Palmer for alleged unwarranted charges.

In 2016, Palmer donated $2 million to Super PAC Rebuilding America Now, which was co-founded by fellow real estate mogul and Trump supporter Tom Barrack of Colony Capital.

During the 2018 election cycle, Palmer is believed to have donated more than $4 million to the Republican Party.

This is not the first time that Trump has tapped a real estate connection for a fundraising event in L.A. Last year, former Tampa Bay Buccaneers owner Ed Glazer hosted an event for Trump’s reelection campaign at his 19,300-square-foot estate at Beverly Park. Glazer is president of the family-run commercial real estate firm First Allied Corp.

During that visit, Trump stayed at the InterContinental Hotel in the 73-story Wilshire Grand Center in Downtown. He is expected to return to the hotel during this visit, a source said.

Every day, The Real Deal rounds up Los Angeles’ biggest real estate news. We update this page in real time, starting at 9 a.m. PT. Please send any tips or deals to tips@therealdeal.com

This page was last updated at 9:15 a.m. PT

Co-working and technology firms are leasing the most in L.A. According to a recent report from Cushman & Wakefield, the sector is outpacing the leasing velocity of the more entrenched media and entertainment businesses. So far this year, technology and co-working companies signed more than 1.7 million square feet of leases collectively, while media and entertainment companies signed leases for roughly 585,000 square feet. [LABJ]

Officials will discuss troubled District Square project. The Charles Co.’s long-awaited District Square project, originally set to bring a Target to South L.A., is still in limbo. The L.A. Planning Commission will discuss the latest plans today. The plans, which have been drastically changed to include 577 residential units, still faces pushback from locals who are upset the developers haven’t included an affordable housing component. [LAT]

A permanent supportive housing for disabled homeless is heading to Mar Vista. The L.A. City Council is expected to vote today on whether the offices of nonprofit Disability Community Resource Center should be demolished to make way for housing. It could hold as many as 38 units for homeless people with disabilities. [Curbed]

Arts District developers cut parking in their updated project plans. The Arts District Center, a mixed-use development envisioned by property owner Kevin Chen in partnership with China Building Technique Group, will now feature 304 parking spaces. That’s down from the original 513 spaces. There will be 129 condos, a 113-room hotel, and retail components. [Urbanize]

Former NBA player and coach — and now analyst — Mark Jackson may take an “L” on his Calabasas home. Jackson, who spent some time as an L.A. Clipper guard, has slashed the price of his 10,000-square-foot mansion to $4.3 million. That’s about $400,000 less than what he paid for it a decade ago. [LAT]

The trade war could put a damper on the industrial real estate boom. Net industrial leasing activity for the next two years will be less than the past two years, according to a new report from trade group NAIOP. Trade and manufacturing activity has been impacted by new tariffs, but demand for last-mile logistics facilities has stayed strong thanks to the spread of e-commerce. [WSJ]

Colony Capital is going all in on tech-centric real estate. Trump pal Tom Barrack’s firm is set to sell up to 90 percent of its $20 billion commercial real estate portfolio by the end of 2021, using the proceeds to buy data centers, mobile phone towers and fiber, and to expand its digital real-estate investment management business. “I’m terrified by legacy assets,” Barrack recently told investors. [WSJ]

Compass is now offering A.I.-driven property search tools. The batch of newly-launched tools was first revealed by CEO Robert Reffkin on Monday during an appearance on CNBC, and will use users’ search and viewing history to recommend listings. The SoftBank-backed firm now says an IPO is “likely,” rather than just “possible” as was the case a few years ago. [Inman]

FROM THE CITY’S RECORDS:

A developer has filed plans to demolish an existing car dealership and build an 80,000- square-foot dealership at 20539 West Ventura Boulevard in Woodland Hills. The current dealership is a Keyes Automotive.

SoftBank-backed construction startup Katerra is bringing on a new CFO as part of a series of changes to its executive team.

Matthew Marsh, a former executive at James Hardie and General Electric, is joining as the company’s new chief financial officer. In addition, Katerra has hired former private equity exec Mollie Fadule as the new head of its affordable housing program, and it’s appointed Lisa Picard, president and CEO of EQ Office, as a new board director.

Katerra, which has raised $1 billion since its founding in 2015, markets itself as a technology company that offers a full suite of general contracting, engineering, design and other building services.

Just last year, the company was battling delays and quality control issues as it tried to expand.

According to the Information, Katerra’s flagship factory in Arizona had to be shut down because of permitting issues, and quality control issues hampered construction. A former Katerra manager told the news site that “every day is a fire drill.”

The company, which has raised more money since those reports last year, has made a series of other organizational changes in recent months, including the acquisition of UEB Builders and Fortune-Johnson General Contractors, as it looks to grow into other markets.

The latest executive appointments follow the hiring of former oil-industry executive Paal Kibsgaard as the firm’s new chief operating officer in August.

Before moving to Katerra, Marsh was the CFO and executive vice president at James Hardie, and spent 16 years at General Electric Company. Fadule co-founded private equity firm Cephas Partners in 2012 to work with affiliates of the Blackstone Group.

Across the U.S., developers have been finding new ways to transform lagging shopping malls by converting them into creative offices or residential complexes.

But in the Los Angeles area, real estate investors are still actively buying and selling smaller shopping centers, which have proven staying power.

In the latest move, Combined Properties sold a 121,800-square-foot property inside the Walmart and Target-anchored Foothill Ranch Towne Center in Orange County.

The developer unloaded the property for $22.25 million, according to Newmark Knight Frank, which advised on the sale. Combined Properties, which specializes in value-add shopping centers and mixed-use properties, had purchased the Lake Forest property four years ago. The property is fully leased to five tenants, including At Home Furnishings.

The buyer was an unnamed private family trust.

NKF’s Pete Bethea and Rob Ippolito and Glenn Rudy represented the seller.

Combined Properties, which has offices in Beverly Hills and Washington, D.C., did not return calls for comment.

The sale comes at a time where mega-developers are buying underperforming regional malls and adapting them to other, more in-demand uses, from multifamily to creative office.

Lennar Corporation, one of the nation’s largest homebuilders, scooped up the Santa Anita Plaza in Arcadia for $36.6 million in June. The deal included approved plans to transform the 58,000-square-foot center into a mixed-used property, with 80 residential units and 11,000 square feet of new retail space.

Hudson Pacific Properties and Macerich teamed up to reimagine the struggling Westside Pavilion mall in L.A. into a creative office campus, with a smattering of entertainment and retail. Google inked a lease for 584,000 square feet office space at the location, which won’t open until 2022.

Another WeWork executive is headed for the door.

Sarah Pontius, the firm’s global head of real estate partnerships, this week reached a “mutual agreement” with the company to leave the firm, people familiar with the matter told The Real Deal. One of those people said she would remain under contract until the end of the year, but would not say in what capacity.

WeWork declined to comment, and would not make Pontius available for an interview. Pontius did not respond to requests for comment.

Her departure comes as WeWork’s parent company has flip-flopped on plans for an IPO, and it
follows a string of high-profile exits from the office-space giant. This month, WeWork’s chief communications officer, Jennifer Skyler, left after nearly four years, an exit preceded by Dominic McMullan, vice president of communications, who departed in July.

Ted Stedem, WeWork’s global head of business and financial operations, left the company in August, shortly after the departure of WeWork chief brand officer Julie Rice, who joined the company after co-founding fitness startup Soul Cycle.

Pontius was brought on in November last year to set up regional operations and establish partnerships using her New York City real estate connections. She was recruited from CBRE where she was senior vice president in New York. Before that, she worked for a decade at Brookfield Property Partners, reaching the position of vice president.

In the past month, Wall Street investors have expressed unease about the We Company’s financial metrics and corporate governance policies. On Monday, the company confirmed that the IPO had been pushed back, but said it would proceed before the end of 2019.

During an all-hands meeting Tuesday, We Company executives told employees that the company needed to refine its message for investors before a roadshow could take place, CNBC reported.

Hurricane Dorian never made landfall in Florida, but the near miss still had a sizable impact on Florida’s hospitality industry around Labor Day weekend.

Demand for hotels in the Florida Keys fell by 50 percent and revenue per available room dropped by 59 percent during a seven-day period from Aug. 30 through Sept. 5, according to a report from the hotel data company STR.

Daytona Beach’s hotel industry took the second biggest hit. Demand for hotels fell 37.4 percent, while revenue per available room in Daytona Beach dipped by 47 percent.

In Fort Lauderdale, hotel demand dropped 26 percent and revenue per available room fell 34 percent. Similarly, hotel demand in Miami fell 28.5 percent and revenue declined 38 percent, according to the report.

The hospitality industry is critical to the Florida Keys economy, especially during the winter season when snowbirds flock to the island chain. After Hurricane Irma, room demand in the Florida Keys dropped 44 percent in September 2017 from the previous year, according to Visit Florida.

Alison Hoyt, STR’s senior director of consulting & analytics, said Hurricane Dorian should not have a significant impact on hotel revenue or occupancy in Florida in the months ahead.

“Fortunately with Dorian, reports suggest that most U.S. markets avoided large-scale destruction, especially when you consider the devastation in the Bahamas, so we don’t expect an extended impact in the U.S. data,” Hoyt said in statement.

However, the hospitality industry in the Abaco Islands and Grand Bahama will likely be decimated for years, according to industry experts. The Abaco Islands and Grand Bahama have a total of about 2,250 hotel rooms, which equates to 15 percent of the total hotel inventory in the country, according to Rick Newton of Resort Capital Partners, which tracks the hospitality industry.

Co-working and technology firms are leasing office space at a far faster pace than media and entertainment firms for the first time in Los Angeles. And to no one’s surprise, Google and WeWork are propelling that drive.

A recent report from Cushman and Wakefield reveals tech companies leased 1.1 million square feet of space so far this year, while co-working firms leased another 613,000 square feet. The combined 1.7 million square feet is almost triple the 585,300 square feet that media and entertainment companies leased so far this year.

Rounding out the top five were retail firms, which took 417,500 square feet; and the finance sector, which had 253,800 square feet. The Los Angeles Business Journal first reported on Cushman findings.

In 2019, the surge in office leasing for technology and co-working companies was largely driven by Google and WeWork. Google leased the entire Westside Pavilion, a 584,000-square-foot mall that’s being redeveloped into office space. WeWork, meanwhile, has been on an expansion tear. The co-working giant has signed deals for new spaces in the Arts District, Miracle Mile, and Downtown L.A. among others.

While entertainment companies are still actively expanding their office space — HBO leased an entire under-construction project in Culver City in April — the pace at which they are growing has significantly slowed since last year.

Last year, media and entertainment firms leased the most with more than 2 million square feet of space. Much of that was from Netflix, which inked a deal for 680,000 square feet of office space in Hollywood.  The streaming company also leased an additional 170,000 square feet in Hollywood this year.

Steve Ballmer will hand the city of Inglewood a check for $100 million, with $75 million of that going toward the construction of affordable housing in a city with rapidly rising real estate prices.

The billionaire owner of the Los Angeles Clippers, who is bankrolling the arena project himself, is using the money as a peace offering aimed at affordable housing advocates that have sued to block its construction.

The development, which would centralize all of the NBA team’s operations under one roof, has been the subject of two lawsuits. Construction plans call for the arena to be built on 22 acres of city-owned land, which affordable housing advocates oppose in a city that has seen a rapid increase in development and housing prices.

The 900,000-square-foot arena, dubbed Inglewood Basketball & Entertainment Complex, would allow the Clippers to separate from the Lakers and the Staples Center, where they currently play. The new stadium will also include the Clippers’ corporate headquarters, training facilities, sports medicine clinic, educational spaces and restaurants.

Uplift Inglewood Coalition filed its lawsuit against the city last summer after Inglewood officials approved Ballmer’s plan with construction expected to start in 2021 and take three years to complete. In their suit, they argue that the land should be used for affordable housing exclusively.

In a statement, Uplift Inglewood member D’Artagnan Scorza called Ballmer’s $100 million commitment a “victory,” but added that the group’s efforts “don’t stop here.” The lawsuit is ongoing, and the case could be headed to trial in November.

Meanwhile, New York Knicks owner James Dolan and his Madison Square Garden Company also sued the city and the Clippers franchise, but for a different reason.

Join The Real Deal at 12:00 p.m. on Wednesday, Sept. 18, for a live webinar with Ira Zlotowitz, founder and president of Eastern Union Funding, as he details the process and benefits of bridge loan syndication and how anyone can participate.

Register here.

Every week in Los Angeles County, there is usually a yawning gap between the five priciest homes on the market and the five priciest residential sales.

In the latest installment, the five priciest home sales last week totaled just $32.2 million, while the top five listings totaled $147.5 million.

For the most part, aspirational pricing in L.A. is still alive and well.

Last week, the top home sat on the market for just four days, though at $7.9 million, the Encino sale was far below the usual top spot-taker.

The other homes were in pricey neighborhoods like Bel Air, Beverly Hills and Brentwood.

The data and information was compiled from the Multiple Listings Service and Redfin dating from Sept. 9-16.

3822 Green Vista Drive | Encino | $7.9M

The 9,000-square-foot home fetched more than $200,000 over its asking price, after a mere four days on the market. It had previously sold for $1.8 million in 2016. Robby Sutton of Hilton & Hyland handled the recent sale for the buyer. The listing broker was Dennis Chernov of Keller Williams.

10750 Chalen Road | Bel Air | $6.8M

This five-bedroom, 5.5-bathroom home sold below its original $7.3 million list price in June. The 4,851-square foot house features a garden, pool and spa. Sally Forster Jones of Compass represented the seller. Arlene Rutenberg of Coldwell Banker represented the buyer.

2660 Benedict Canyon Drive | Beverly Hills | $6.3 M

This five-bedroom, six-bath was relisted for $1 million below original $6.9 million price tag, before selling for $6.3 million. The property includes a long gated driveway and motor court parking for 20 cars. It also includes a pool with a 50-foot waterfall, spa, sauna and cabana area. Roger Perry of Rodeo Realty was the listing agent, and Kevin Stewart of The Agency represented the buyer.

441 South Lucerne | Hancock Park | $5.9M

This Arthur Kelly-designed home — he also designed the Playboy manse — features a new chef’s kitchen, wine cellar, gym and garage with two electric-car charging stations. The five-bedroom, five-bath, 5,164-square-foot home also includes maid’s quarters, detached guest house and playground. It went for about $100,000 below asking.

350 Fordyce Road | Brentwood | $5.3M

The 5,391-square-foot home has five-bedroom and 5.5 bathrooms. The sale was a price chop from the $5.9 million it originally listed for in January. Myra Nourmand and Rochelle Maize of Nourmand & Associates listed the property. Lobat Kohan Ghodoushim, also of Nourmand, represented the buyer.

For the first time in decades, a presidential candidate is pushing for nationwide rent control.

Democratic contender Bernie Sanders unveiled the key points of his $2.5 trillion housing plan on Saturday, calling for national rent control standards as well as the investment of billions of dollars to end homelessness, overhaul public housing, create mixed-income housing and establish community land trusts across the country.

The release of Sanders’ plan, which is expected to be rolled out in full over the next couple of weeks, could mark a shift in how housing is discussed in the lead up to the 2020 presidential election. Candidates Elizabeth Warren and Julián Castro already released their own housing plans with little fanfare, and during the last Democratic debate, no questions were asked about affordable housing.

But the prospect of establishing nationwide rent control fuels a growing trend in the U.S., which some attribute to a demographic expansion of renters in the past decade and a return of class politics. Though rent control largely fell out of favor after the 1950s, with more than 30 states explicitly banning it, the policy has experienced a recent resurgence. California is poised to implement a statewide cap on annual rent increases just a few months after Oregon approved its own statewide limit. New York just expanded its protections of rent stabilized tenants, stopping short of a rent cap, which is expected to be on the table in some form the next legislative session.

Sanders’ plan would limit rent increases to one and a half times the rate of inflation or 3 percent, whichever is higher. A representative for Sanders’ campaign declined to comment further.

Rent control, Sanders style

Sanders’ first attempts to enact rent control as mayor of Burlington, Vermont, failed. Although he was elected in 1981 on a platform of expanding tenants’ rights, measures to enact a tax on rental property speculation and apartment registration were scuttled by the city council, and rent control was voted down in a referendum in 1982. In 1989 the progressive senator’s “just cause” eviction bill was rejected by Burlington voters.

After this “failed foray into rent control,” according to John Davis, co-founder of Burlington Associates in Community Development, “[Bernie] learned from this defeat and moved on, adopting a progressive, multi-faceted housing agenda that did not rely on governmental control of rents.”

Economists and landlords argue that rent control hurts existing housing stock and cools new development. Lawrence White, an economics professor at New York University, said cities should instead focus on easing land-use restrictions to encourage the construction of housing.

“I can see the political attractiveness [of rent control]. There are a lot more tenants than there are landlords out there,” he said. “But it’s just a horrible way of trying to deal with any housing problems.”

He questioned the viability of finding rules that make sense for the whole country.

“Gee, how do you establish rules that apply to Missoula, Montana, to Center City, Philadelphia, to Tampa, Florida, let alone Queens and Brooklyn?” he said. “We have great difficulty administering a rent control program in New York City. I can’t imagine doing it on a nationwide basis. It’s just chaos.”

Lawrence Yun, chief economist with the National Association of Realtors, agreed that “rent control would be a terrible solution” to the affordable housing crisis, adding that it would deter landlords from maintaining existing housing stock.

Roosevelt Institute fellow and CUNY assistant professor of economics J. W. Mason attributes vehement opposition to rent control to an analysis that ignores the significant social and economic benefits of people remaining in their homes.

“It’s practically the first thing you see in an economics textbook: the diagram of losses due to rent control,” Mason said. But the Marxist scholar disagrees with convention. Rising market rents are not attributable to buildings getting better, Mason said, but to the surrounding neighborhood becoming more desirable.

“Rents are a payment for a monopoly due to a legal right, not because of a contribution to production,” he said. “And rent-regulated housing stock in places like New York City and San Francisco is very old.”

A bet on community land trusts

Sanders’ plan also calls for the creation of 2 million units of mixed-income housing and $50 billion in grants to fund the creation of community land trusts (CLTs), in which nonprofits acquire land in order to operate affordable housing on a permanent basis. Sanders helped secure initial funding for a community land trust in Burlington when he was mayor in 1984. That trust — the Burlington Community Land Trust — eventually merged with another to form the Champlain Housing Trust, which is now the largest of its kind in the country.

Nixon Peabody’s Erica Buckley said an infusion of capital on the national level could go a long way in sparking interest in CLTs and getting local governments more comfortable with the model. Cooper Square, New York’s first and most prominent CLT, was formed in 1991, evolving from the neighborhood’s previous efforts to protect itself from Robert Moses’ “slum-clearance” project. Even in New York, where the concept has gained traction in recent years, hurdles remain in the form of funding and local approvals.

Buckley, who previously headed the state Attorney General Office’s Real Estate Finance Bureau, said she’s worked with the Department of Housing Preservation and Development for more than two years to figure out an acceptable ground lease deal for the Interboro Community Land Trust. The AG’s office has set aside funding for CLTs in the past, most recently pledging $8 million in February toward expanding local ones. But more funding sources are necessary, she said.

“While [CLTs] are great — they remove housing from the speculative marketplace — people also think they solve all sorts of problems that they don’t,” Buckley said. “It doesn’t magically create subsidies.”

Three years later, Tom Barrack has buyer’s remorse.

As his firm, Colony Capital, embarks on a $325 million venture into digital infrastructure, it first needs to offload much of its real estate portfolio from its disastrous merger with NorthStar Realty Finance Corp.

Share value of the Los Angeles-based Colony still hasn’t fully recovered from that 2016 deal. Barrack and other Colony execs have acknowledged they misstepped when they closed the $19.9 billion all-stock transaction for NorthStar, according to the Wall Street Journal.

“It’s on me,” said Barrack, the firm’s CEO and executive chairman, during an investor conference last week, the Journal reported. He accepts responsibility for the merger, which he said was mispriced and “shouldn’t have happened.”

Colony officials said they want to sell as much as 90 percent of its $20 billion portfolio of traditional real estate assets — senior living facilities, hotels, warehouses, and others — ahead of a $325 million merger with digital infrastructure investment firm Digital Bridge Holdings.
Many of those properties are former NorthStar assets with high levels of debt, according to the Journal.

Barrack stepped down as CEO in 2014 but remained executive chairman of the company when the NorthStar deal closed. He returned as CEO in November 2018.

The clock is ticking for Colony to sell those assets: Colony and Digital Bridge aim to complete the merger within two years. As part of the deal, Barrack is set to step down as CEO to be replaced by Digital Bridge CEO Marc Ganzi. [WSJ] — Dennis Lynch

Mea culpa, or smart and thrifty PR play?

Short-term rental giant Airbnb has pledged $25 million toward the development and preservation of affordable housing in Los Angeles and San Francisco, according to the L.A. Times.
Using one metric for estimating the cost of building affordable housing, the Times estimated that $25 million could pay for just 76 new homes.

Nowhere in the state is the housing crisis more pronounced than in LA and San Francisco, and elected officials have laid some of the blame directly at Airbnb’s doorstep. Critics in both regions say Airbnb’s platform has incentivized landlords to effectively remove units from the housing stock.

Airbnb, valued at $35 billion, has fought most efforts to regulate its users’ practices, but in L.A. a restrictive ordinance went into effect in July, permitting only primary residences to be rented out, and at a cap of 120 days.

Airbnb’s pledge isn’t likely to have a widespread impact on either L.A. or the Bay Area’s housing issues, but the company called its pledge a pilot program and said it would expand its investments if the pilot program was successful.

CEO Brian Chesky said the investment program, which also includes small business loans and community investments, has “the potential to generate solid returns for our company and make communities stronger,” according to the Times.

After years of fueling rising home prices and rents in the Bay Area in particular, recently several other large tech firms have have made similar pledges. In January, Facebook pledged $500 million toward affordable housing in the area.
Google pledged $1 billion to create more housing in the Bay Area. A month later, the company announced it was providing large undeveloped parcels around Silicon Valley for $15 billion in planned communities to be built and managed by Lendlease.

Microsoft plans to front up to $500 million to build homes affordable for middle- and low-income residents around Seattle. [LAT] – Dennis Lynch