One of the nation’s largest apartment builders scored a $165 million refinance on its newly-completed apartment complex in West L.A.

Mill Creek Residential secured the debt from New York-based Square Mile Capital Management on the the 376-unit Modera West LA, which opened last month.

The Westchester property, at 5901 Center Drive, includes a pool and rooftop deck, among other amenities. Modera West LA stands across from a collection of buildings known as the Howard Hughes Center, which is being repositioned.

The VTBS Architects-designed community is about 62 percent leased. Rents start at $2,475 for a one-bedroom unit, and range up to $5,265 for a three-bedroom unit.

Kevin MacKenzie, John Chun and Nick Lench of JLL arranged the financing on behalf of the borrower.

In Los Angeles, Mill Creek is also developing Modera Argyle, a 276-unit community in Hollywood; and the 248-unit Modera Hollywood.

Real estate stocks dipped slightly this week amid the Federal Reserve’s decision to cut its benchmark interest rate and new data that showed home construction hit a 12-year high. Next week will bring a slew of real estate-related data from the U.S. Census Bureau.

Of the 28 major real estate stocks The Real Deal tracks, 15 companies saw their stock prices dip since Monday’s market open. On average, the group’s prices ticked down about 0.25 percent, far less than the 3 percent average gain from last week. Meanwhile, the Real Estate Select Sector SPDR Fund, which is heavily weighted in the real estate industry, this week rose about 1.4 percent.

The trend matched that of the broader market. The S&P 500 declined just 4 points, or about 0.14 percent.

The top performer, among the real estate companies TRD follows was real estate data firm CoStar Group, which rose 4.86 percent to close Friday at $595. Meanwhile, the weakest performer was real estate services firm Newmark Knight Frank. The company’s stock closed at $9.48, a 6.23 percent dip from market open on Monday.

On Wednesday, the Fed set its target federal funds rate to between 1.75 percent and 2.00 percent, the central bank’s second rate cut since July, after several years of steady rate hikes.

The decision came the same day the U.S. Census Bureau and U.S. Department of Housing and Urban Development released their August residential construction statistics. Those showed that both single-family and multifamily construction building permits rose from July and from August 2018. The same was true for housing starts, which came in at a seasonally adjusted annual rate of 1,364,000, the highest since 2007.

Here are some data releases to watch next week:

• Monday: U.S. Census Bureau’s report on e-commerce from 2017, with data on shipments, sales and revenue from the manufacturing, wholesale, services and retail sectors.
• Wednesday: U.S. Census Bureau’s new residential sales figures.
• Thursday: U.S. Census Bureau’s 2018 American Community Survey 1-Year Estimates, with demographic, economic and housing statistics like mortgage status and rent for places with populations of at least 65,000.

Last week’s stunning data breach at the Corcoran Group has residential brokerage leaders on alert amid rising cyberattacks.

Brown Harris Stevens shut down all its internal accounting system in the hours after the attack. In the following days, one brokerage circulated a memo outlining best practices for emailing sensitive information, while other firms prompted their teams to change passwords. Other companies say they’ve taken all possible precautions to protect their data by performing daily scans of devices and software systems, and limiting access to sensitive files — even for their top executives.

“Try to hack us. You’re only going to get 3 percent of the information,” joked Eddie Shapiro, Nest Seekers International’s CEO and president. He said his company’s data is stored in digital and hard copies in decentralized locations to make a wholesale breach improbable. “When it comes to the most sensitive information, I keep it locked in a safe.”

He’s not alone. At Douglas Elliman, shredders sit at the ready in some rooms to destroy the evidence of sensitive documents, an insider said.

But, despite the industry’s best efforts, it’s undeniable to industry sources and cybersecurity experts that real estate firms are under attack.

The Federal Bureau of Investigation has tracked a rise in cyber attacks in connection to property deals. Last year, more than 11,000 people lost $150 million in hacks targeting real estate transactions.

David Navetta, an attorney who specializes in data security and privacy, said the onslaught of cyber attacks targeting the real estate industry seemed to reach heightened levels about 18 months ago.

“[Hackers] essentially figured out the ecosystem,” he said, adding that his firm staffs a 24-hour hotline with 12 lawyers to field calls after companies experience cyberattacks.

Brokerages in New York are feeling the heat. Earlier this year, Compass had an FBI agent run a seminar for agents focused on various schemes they may encounter, according to Jason Post, the brokerage’s head of communications. He said the event was scheduled after the VC-backed brokerage saw an “uptick in attempts” to breach email accounts and other attacks.

“We get attacked on a weekly, sometimes daily basis, with every possible phishing attempts and viruses and you name it,” said Shapiro. “Security is a critical part of our business.”

Mark Chin, CEO of Keller Williams Tribeca, agreed. He said his first hire three years ago when he opened the office was a systems architect specialized in data security.

Navetta’s firm, Cooley LLP, has dealt with several cases in which real estate brokerages were hacked and personally identifiable information about agents and clients were leaked. From there, companies will contract a third-party forensic investigator to find out what happened, what data was compromised and who is behind the attack. Notifications to relevant regulators, vendors, employees and clients also follow in short order once a breach has been confirmed.

Corcoran followed that playbook. After the brokerage confirmed the leak last Friday, it launched an investigation and notified both agents and other brokerages to confirm no client data was compromised. Corcoran also said it was involving law enforcement, a third-party forensic investigator and treating the incident as criminal. The brokerage declined to comment for this story.

Greg Kelley, who leads forensic investigation company Vestige and is not involved in Corcoran’s case, said costs for auditing hardware alone — which is typically done during an investigation — can run up a bill of up to $10,000 per device. He also said it’s unusual for law enforcement to get involved unless someone is physical danger or a large sum of money is involved.

Navetta, the attorney, also said Corcoran’s breach was unusual.

“Most of the time in the real estate industry when I’ve seen breaches, they’re going for the money,” he explained. “I don’t see why someone would do this, a normal hacker, without something else behind it.”

To many industry leaders, however, the sharing of this information represents an unprecedented attack. The Corcoran data exposed included agents’ earnings, splits and details of their employment agreements such as marketing budgets.

“We’ve never seen anything like that,” said Shapiro. “This is 100 percent either an inside job or some corporate espionage. 100 percent. This is not some random hacker.”

Lawrence Pearson, an employment lawyer at Wigdor LLP, noted that if a competitor was behind the breach, or used data from the breach in hiring, they could be exposed to lawsuits from both Corcoran and agents, whose compensation history was exposed.

For several insiders, Corcoran’s biggest issue is likely agents who saw the documents and may feel mistreated or undervalued by comparison.

“Agents just see that and it creates havoc,” said BHS’ CEO Bess Freedman. But underscored that the leaked documents are only a small piece of a brokerage’s overall business. “It’s not conclusive, or it’s not total,” she said.

But sources told The Real Deal earlier this week that some agents are upset about what they saw, or heard about.

“It’s like turning a family against each other,” one industry source said. “The best thing to do is never to make that list.” That’s actually protocol at other firms, according to some executives.

“It’s insane to me that would even be available to be hacked,” said Shapiro.

“I don’t have an equivalent document sitting anywhere,” said Richard Grossman, Halstead’s president, noting that he has to request limited access to see comparable information for his company. Similarly, Chin said his agents’ splits are held by his franchise’s parent company.

That aside, Grossman said news of Corcoran’s breach both shocks and saddens him.

“If it was done by somebody, you know, shame on them,” he said. “I think that’s bad for all of us.”

Frederick Peters of Warburg Realty wrote on his Forbes blog earlier this week that “the attack on Corcoran was perhaps a sad inevitability” in a business landscape now characterized by “hyper aggressive recruiting” and a “cut-throat war for talent.”

Scott Durkin, Elliman president and COO, who previously worked at Corcoran, said the breach was terrible and “not right.”

“Generally, we all have similar business practices,” he said. “I don’t wish this upon any competitor.”

This year, a slew of Los Angeles County cities have enacted temporary rent regulations aimed at boosting tenant protections amid rising rents and dwindling supply. The mishmash of measures left some landlords and multifamily investors scrambling to recalculate their bottom line and their appetite for future investment.

Then came AB 1482, a statewide rent reform bill that the Senate passed last week that sets a cap on rent increases and provides increased protection against unlawful evictions. Now those same property owners are comparing the statewide bill to the smaller measures, looking to see whether they will complement or conflict.

Gov. Gavin Newsom has indicated he would sign the bill into law. AB 1482, which will affect millions of renters across California, is expected to take effect Jan. 1.

Breaking it down

To start, any local rent control ordinance will supersede AB 1482, which only applies to units in a city or jurisdiction that isn’t covered under a local rent control law, state officials said.

The California bill sets a statewide annual rent cap of 5 percent plus the cost of living on all units older than 15 years. It also institutes a number of just-cause eviction measures. The legislation is designed to complement the patchwork of local rent rules enacted across the L.A. area in the months that followed voters’ rejection of Proposition 10. That November 2018 statewide measure would have opened the door to expanded rent control across California.

Guess who likes it?

AB 1482, meanwhile, has the support of an unlikely organization, the California Apartment Association, a trade group for property owners. That is primarily because the 5 percent cap leaves enough breathing room for landlords to operate and turn a profit, industry pros said.

“All the buyers and sellers I’ve talked to aren’t really worried about [AB 1482],” said Leo Nordine, a commercial agent who also owns multifamily properties in Santa Monica. “Five percent is pretty great.”

Landlords with properties affected by local rent control ordinances — including Santa Monica’s rent control program — are still subject to those ordinances, which often limit rent hikes to well below 5 percent.

Those local measures are limited by the statewide Costa-Hawkins Rental Housing Act of 1995. That California law allows municipalities to craft new rent regulations, but only on rental properties built before 1995.

Municipalities are free to change or tweak their measures as long as they comply with Costa-Hawkins. The city of L.A. could change its annual rent cap, for example. AB 1482 by contrast applies to units not covered by local ordinances and older than 15 years on a rolling basis.

Units built after 2004 will be immediately affected and by the time the measure sunsets in 2030, it will apply to units built as recently as 2015.

Cities with/without rent stabilization

Costa-Hawkins also froze rent stabilization ordinances already in place in 1995, and barred cities with ordinances in place from implementing any new units under rent control. For example, the city of L.A. passed a rent stabilization ordinance in 1978 and since 1995 has been barred from placing units built after 1978 under that ordinance.

Units in L.A. that are not covered under the city’s rent stabilization ordinance would fall under the new statewide measure. That means that units built between 1978 and 2004 will have a 5 percent cap — plus inflation — on annual rent increases and be subject to AB 1482’s just cause eviction rules.

The situation is simpler in cities that don’t have rent stabilization ordinances, such as Malibu. Any units built in 2004 or before are subject to AB 1482.

LA County has a version

And then there’s L.A. County. Earlier this month, the County Board of Supervisors directed staff to draw up a much-debated permanent rent control ordinance and present it to the board by the end of the year. The board is expected to approve the measure, which would take effect sometime at the end of the year or early next year.

The county’s measure only applies to units in unincorporated communities, which includes urban areas like Marina del Rey and rural towns northeast of the Greater L.A.

Like other local ordinances, the county measure would supercede AB 1482 if the board passes it. If the board rejects it, then those units would be subject to the state guidelines.

The legal landscape could drastically change if Costa-Hawkins is repealed. Activists, led by the AIDS Healthcare Foundation, are pushing for another crack at getting a statewide question on the ballot, similar to Proposition 10. Despite Prop 10’s rejection and the millions of dollars the real estate industry spent to oppose it, the expected high turnout of Democratic voters for the 2020 presidential election could push another version of it through.

That would scrap the 1995 cutoff date, allowing cities to put units built after that year under their own rent stabilization ordinances, including units that by then are subject to AB 1482. The state measure somewhat anticipates that — it bars any municipality from placing a rent cap lower than five percent plus the cost of living on any unit subject to AB 1482.

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 p.m. PT

Artisan Realty Advisors wants to build an apartment tower in Hollywood. The developer filed plans for a 23-story tower with 290 apartments — 29 affordable — at 6350 West Selma Avenue. The Transit Oriented Communities project, designed by Gensler, would also include five levels of parking. Artisan purchased the property for $61 million last year. [Curbed]

A 3-acre site Metro station could become permanent supportive housing. Flexible PSH Solutions has filed paperwork to develop a 454-unit complex for low-income housing. The project would rise near the Metro Vermont/Beverly subway station, which is currently zoned for industrial real estate. [Urbanize]

Mill Creek Residential has refinanced its new West LA apartment complex. The national homebuilder scored a $165 million loan from Square Mile Capital Management. The 376-unit complex, named Modera West LA, opened last month in Westchester. [TRD]

After a data breach last week stunned observers, Corcoran isn’t the only firm worrying about cybersecurity. You can expect more data breaches and cyberattacks, industry insiders say. Last year, the FBI found that 11,000 people lost more than $150 million on attacks aimed at real estate. [TRD]

De Blasio is out of the presidential race. The New York City mayor began his campaign in May, but had little support from the five boroughs. During his short campaign, numerous crises arose with the city’s infrastructure and campaign finance scandals dampened the Park Slope politician’s hopes for the highest office in the land. [NYDN]

Tinder co-founder Sean Rad lists Hollywood Hills home. Rad is again looking to part with a 5,600-square-foot home he bought in 2017. He listed the home for $10.9 million a year ago, but without a sale, he’s relisting it for $9.8 million. Last year he bought a larger home in the neighborhood from Westside Estate Agency co-founder Kurt Rappaport for $26.5 million. [LAT]

Another week, another big Rexford buy. The real estate investment trust paid $66.2 million in cash for an eight-building industrial complex in Torrance. Rexford plans to renovate the property, which is 91 percent leased. Together, the eight buildings total 267,000 square feet. [LABJ]

With possible development plans in the future, Silver Lake florist property is on path to landmark status. L.A.’s cultural heritage commission voted to landmark the Tokio Florist on Hyperion Avenue. It will still need approval from the City Council. The family who owns the roughly half-acre property, including 108-year-old home and a Japanese garden included, want $4 million for it. Preservationists want to prevent a future development there. [Curbed]

Pasadena startup Kitchen United closed $40 million funding round. Developer RXR Realty led the round for the remote kitchen operator, which launched in 2017. The L.A. startup plans to expand in New York, Boston, and San Francisco and will open shared kitchens in some RXR-owned properties. Former Uber CEO Travis Kalanick is leading a similar startup operation in L.A. [LABJ]

Afton Properties scoops up two apartment complexes for $186 million. The L.A. firm just closed on a $132 million deal for an 800-unit property in Lancaster. A few weeks ago, it paid $54 million for a 178-unit community in Riverside. [TRD]

Steve Schwarzman is also puzzled by WeWork’s valuation. The Blackstone Group co-founder, whose massive real estate company is worth “a few billion dollars,” said WeWork’s business model is tied to the health of the economy — which is fine, until “the world collapses.” “I sort of went, what? How do you get this?” he said Wednesday of WeWork’s pre-IPO value. “It doesn’t seem right to me given what they’re doing.” In recent days, WeWork’s valuation has fallen from $47 billion to $15 billion. [Bloomberg]

Sales of existing homes were up 1.3 percent in August, surprising economists. Sales were expected to fall 1.1 percent. Economists say the uptick, the first year-over-year gain in 17 months, is a sign that low mortgage rates are luring buyers to the market. [WSJ]

FROM THE CITY’S RECORDS:

Developer Flexible PSH Solutions wants to build a 454-unit permanent supportive housing complex at 321 N. Madison Avenue in Rampart Village. The firm is also working on a 101-unit project nearby and has the backing on local city councilmember Mitch O’Farrell. [LADCP]

A 23-story mixed-use development is in the works at 6350 W. Selma Avenue. The mix of residential, commercial, or other uses wasn’t specified in documents filed with the city Thursday, but the developer did say commercial condominiums were in the works. [LADCP]

A 110,300-square-foot storage facility is being planned at 6500 S. Avalon Boulevard in South L.A.’s Florence neighborhood. The facility would be used to store household goods, according to documents filed with the city. [LADCP]

Retired Yankees slugger Alex Rodriguez’s Monument Capital Management has raised the majority of a $50 million fund to buy up to about $200 million in real estate.

Miami-based Monument focuses on value-add multifamily real estate in secondary markets across the country. The fund, the fourth of its kind for the firm, has closed on two properties in Illinois and Tennessee and has a third under contract in upstate New York, said Erin Knight, executive vice president at Monument.

After it has deployed 75 percent of Monument Opportunity Fund IV, Monument expects to launch the fifth fund in 2020 and aims to raise about $100 million. Monument typically works with Fannie Mae as its lender, Knight said.

The fourth fund purchased a 176-unit apartment complex in Woodbridge, Illinois, outside of Chicago. Monument will invest about $1.5 million in renovations and improvements for the property, the Townhomes at Highcrest at 3514 West 83 Street.

It also closed on Sterling Hills Apartment Homes, a 216-unit community in Johnson City, Tennessee. Monument will invest $2.3 million in renovations.

The fund is also under contract to purchase a 196-unit property in Jacksonville, New York in a deal that’s set to close in October, Knight said.

Monument is under Rodriguez’s A-Rod Corp. umbrella. The ex-baseball player has purchased more than 15,000 apartment units since he founded his eponymous company in 2003, while he was still playing for the Yankees.

A-Rod Corp. is moving from Coral Gables to Miami’s Coconut Grove. The company purchased an office condo and ground floor space at Terra’s Grove at Grand Bay in July and plans to build it out.

CEOs and entrepreneurs took a liking to fixer-uppers this week, buying investment properties in the exclusive Beverly Park and Bird Streets neighborhoods. Farther west, former supermodel Cheryl Tiegs is also attempting another round at selling her Balinese-inspired home.

Anastasia Soara, founder of the eponymous makeup company, paid $19.5 million for a Beverly Park mansion. But the 9,500-square-foot pad may need a makeover or more. Marketing materials called it a “development opportunity,” which may mean it could be ripe for a new construction. Sitting on 2 acres, the property includes a gated driveway and large swimming pool. The seller was Ling-Ning Yen, a Taiwanese businesswoman who listed the property for $28 million in 2016.

Earlier this month, Rockstar Energy drink founder Russell Weiner paid $16.5 million for a pad in the Bird Streets. Now, he’s put it up for sale for $11.5 million more than what he paid. It’s very likely the six-bedroom, 10-bedroom estate hasn’t changed much in the two weeks since Weiner bought it. Weiner acquired the 12,530-square-foot estate from tech honcho Lynda Weinman. The energy drink tycoon is also still selling a mansion in Beverly Hills, now on the market for $36 million.

In Bel Air, former supermodel Cheryl Tiegs is attempting to sell her estate for the third time in six years. Tiegs listed her 4,770-square-foot home for $18.5 million, Variety reported. That’s after she tried to sell it for $12 million in 2013, and then $15 million in 2015. If sold at any of those amounts, Tiegs would make a pretty coin, considering she paid $2.5 million for the home in 1996. The Balinese-inspried property includes four bedrooms, five bathrooms and a swimming pool.

The new head coach of the Los Angeles Lakers has found a home in Manhattan Beach. Frank Vogel, who formerly coached the Indiana Pacers, spent $5.4 million for a newly-built home with five bedrooms and seven bathrooms. The 4,900-square-foot home also has an elevator, and outdoor living areas, the Los Angeles Times reported.

Adam Neumann’s vision and hype built WeWork into the largest provider of office space in the world. But his eccentric and self-serving behavior, failed IPO plans and hemorrhaging losses at the company have prompted SoftBank — its largest investor — to push for his ouster as CEO.

“Could the company survive without Adam?” said Sam Zell, the chairman of Equity Group Investments. “I’m sure they could.”

A profile last week in the Wall Street Journal revealed that Neumann smoked marijuana on a private flight overseas, prompting the jet’s owner to recall the plane.

That appears to be the tipping point for SoftBank’s founder Masayoshi Son, who is pushing to remove Neumann from the top job, according to a report Sunday from CNBC. Neumann would move into a non-executive chairman role, according to the Wall Street Journal. Representatives for the We Company declined to comment.

“What can get these guys in trouble is their egos and arrogance,” said Ray Mikulich, the chairman of commercial real estate software giant Altus Group and Colony Capital board member. “The skills and attributes that make a founder successful are not necessarily well suited for a public environment.”

The removal of a company’s founder before an IPO has precedent. At Uber, co-founder and CEO Travis Kalanick left the company after a laundry list of scandals and missteps. He was replaced by Dara Khosrowshahi, who ultimately led the company to its public offering in May.

Other founders, however, have managed to hold on to their notable startups even in the face of controversy.

Elon Musk, who remains at the helm of Tesla, has been cited in recent years for erratic behavior, including smoking marijuana on a live radio show and prompting a U.S. Securities and Exchange Commission investigation with a single tweet. Mark Zuckerberg faced pressure to leave to leave Facebook after a series of privacy-related scandals but has remained at the helm.

Neumann’s own dubious behaviors — recent disclosures include a desire to become president of the world, prime minister of Israel, the first trillionaire and to live forever — appear to be the final straw for some directors of WeWork’s parent company.

But others direct blame for WeWork’s misgivings at the board, which includes representatives from investors SoftBank and Hony Capital. Scott Galloway, a marketing professor at New York University and outspoken skeptic of WeWork’s valuation, said that the board appears to exist to enable Neumann’s control of the company.

“Adam’s not the problem, but a weak board that has let him engage in self-dealing and set no boundaries,” Galloway wrote in an email. “Good boards are fiduciaries for all stakeholders.”

Some see a benefit to Neumann leading the company in the public markets — in part because the process of finding an equally skilled fundraiser would pose a challenging task, said Rett Wallace, CEO of Triton Research Inc.

“It’s not super clear you can get others to do that,” said Wallace, who previously worked as an investment banker with Allen & Company and Morgan Stanley. “If you take the cult leader out of it, everything collapses.”

However, if the IPO does not go ahead, the company’s future relies on Neumann’s ability to attract further investment from SoftBank — an unlikely scenario given Sunday’s reports.

The fallout began last month, when Neumann and other We Company executives were caught off guard by negative feedback to its IPO prospectus.  Among the disclosures were inexplicably large loans and payments to Neumann, failed ventures and no path to profitability in the foreseeable future.

The company said last week it would delay its IPO but promised to complete it before the end of the year. It’s also taken steps to right the ship.

The firm said it would unwind a $5.9 million payment to Neumann for the use of the “We” trademark. In the event he dies or is incapacitated, his wife Rebekah Neumann is no longer assigned to pick his successor.

Some say the concessions don’t go far enough: Neumann still holds a majority voting control of the We Company’s board. Who decides on his future with the company should be made by shareholders, Zell said.

“There’s a bunch of people who are $12 billion invested in this thing,” he said. “They’re the ones who should make the call.”

The best part about the stock market is how much of a sure thing every investment is, and the best part about startups is that they are all guaranteed to become incredibly prosperous businesses. So when the guaranteed success of a startup meets the guaranteed success of the stock market, any investments are guaranteed to make you so much money that the word “guaranteed” will quickly start to sound weird based on how often you’re using it.

And that brings us to WeWork.

The massive company, which has the complementary goals of subleasing office space and revolutionizing human society, is expected to hold its initial public offering this fall, and everyone from recent business school graduates to established titans of finance has reacted with a resounding cry of, “Wait, what exactly do these guys do again?”

The basic answer is “everything.” As far as I can tell, in an ideal WeWork world (quick side note: how has the company not launched a division called WeWorld yet?), a person would wake up in their WeLive apartment, drop their kid off at a WeGrow school, go to their job in a WeWork building, pick up dinner on the way home at WeTraderJoe’s, and then go to sleep in a giant, collaborative WeBed. And, of course, they would take occasional breaks to WeWee.

But as the company prepares to go public, it has also started to release more information about how it actually works. This has led to several concerns about WeWork’s ability to accomplish many of its lofty goals, such as changing the concept of what an office looks like and existing beyond December.

The company’s landlords are feeling particularly anxious about the WeWork IPO. One even told The Real Deal that there were certain things in the company’s initial disclosure report that he would “rather not have seen,” although he did add, “Obviously, I’m sure a lot of it can be explained.” Coincidentally, “I’m sure a lot of it can be explained” is almost the exact same reaction my mom had when I was 19 and she came home to find a giant vomit stain on our basement couch. So hopefully WeWork’s explanation will be better than mine was.

Another group dealing with some WeWork IPO anxiety is SoftBank, which you may remember as the company that previously felt good enough about WeWork to invest more than $10 billion in it. The conglomerate has now somewhat reversed course and is urging WeWork to shelve its IPO plans, which feels a bit like your parents subsidizing your music career for 10 years before politely asking you to think about law school.

WeWork has made some changes in response to these concerns. It will postpone its IPO until at least mid-October, and it is putting more restrictions on what CEO, Future President of Earth and Messiah Adam Neumann can do. He will not be allowed to make real estate deals going forward, for instance, and he will give back the $5.9 million the company paid him for trademarking use of the word “we,” which is probably good news not just for WeWork but for the English language in general.

But despite these concerns, the company is still planning to go public. So given that WeWork seems set on making its stock market debut no matter what, all of these issues are ultimately leading up to one major question. And that question, of course, is: if I try to copyright the term “WeWorld” now, will I eventually be able to sell it back to WeWork for an exorbitant fee? And also, should I plan to buy stock in WeWork?

The answer to the first question is a resounding yes. It’s a little tougher for me to answer the second question, given that my entire experience with the stock market so far consists of pretending to buy some shares in Dell during the “Stock Market Game” in sixth grade before getting bored and going back to playing MarioKart. So, for now, I’m just going to say “maybe,” and hopefully that will leave everyone satisfied.

And if it doesn’t, just check back in with me about buying WeWork stock in, say, five or 10 years. I’ll probably be able to have a more definitive answer for you then.

The first phase of a big affordable housing project is in the works in Rampart Village.

Developer Flexible PSH Solutions filed plans with Los Angeles for what will be a 454-unit permanent supportive housing development, according to records. The site is now comprised of several small commercial buildings and parking lots on Beverly Boulevard between, Juanita and Madison avenues.

Besides five manager units, all the units will be for varying brackets of low-income tenants. The first phase of the multi-building project will be around 100 units in two buildings. The project is currently named Enlightenment Plaza.

Flexible PSH head John Molloy said this is the firm’s first project, though he spent several years running the prolific affordable developer PATH Ventures.

In June, Flexible PSH asked the city to provide Measure HHH affordable housing funds for the 454-unit development. The $1.2 billion bond program is meant to fund 10,000 units of supportive housing through 2026, although the program has been slow going and has drawn criticism, including from L.A. City Controller Ron Galperin.

Jim Reis, a senior vice president at land use consultancy Craig Lawson & Co. is working with Flexible PSH on the development. He said the team could break ground as early as next June if Gov. Gavin Newsom signs a bill on his desk that would fast-track HHH projects through the state’s often sluggish environmental review process.

Flexible PSH has tapped the People’s Concern organization to run on-site supportive services, Reis said. Flexible PSH is also working on a multifamily project in Skid Row.

An expansive and completely rebuilt mansion that claims to have the biggest zero-edge infinity pool in Beverly Hills has been treading water on the market for more than a year.

Now, owner and developer Gala Asher has slashed its $135 million asking price by 18 percent, the latest major price reduction to hit the uber-luxury market in Los Angeles.

The 38,000-square-foot “Wallingford Estate” re-listed for $110 million, marketing materials show. Despite the dramatic reduction, if it sold at that price it would join an exclusive club of homes selling in the nine figure-range amid the mushy market.

Located on Wallingford Drive near the Beverly Hills Hotel, the 5-acre property includes a main house, 5,000-square-foot guest house, two-bedroom guard house, sports facility, and caretaker house.

Combined, there are 12 bedrooms and 24 bathrooms on the property. Amenities include the 155-foot swimming pool, basketball court and a private spa.

Asher bought the estate from Korean businesswoman Jeoung Lee in 2016 for $22 million. Records show the buying entity is also tied to developer Ed Berman, who has worked with Asher in the past.

The estate, which was originally built in 2000, was then rebuilt and expanded.

Ginger Glass of Compass still has the listing. She could not be reached for comment.

Episode 2 of the spinoff series of the magazine column “By the Numbers” tallies up the most fascinating stats about the real estate empire of Related founder and majority owner Stephen Ross. Ross’ developments and holdings span far beyond the $25 billion Hudson Yards megaproject on Manhattan’s Far West Side. Watch this video to find out more.

Voice-over by Adam Pogoff

After retiring from professional basketball, Miami Heat legend Dwyane Wade put his waterfront Miami Beach home on the market for $33 million last week.

The six-bedroom, 13,800-square-foot mansion at 5980 North Bay Road includes a wine room – likely with some bottles from his winery, D Wade Cellars — a game room, outdoor basketball court and a home theater.

Wade isn’t the only basketball player with an impressive pad in South Florida. Wade’s current and former teammates have also made a splash in real estate, buying luxury homes in Pinecrest, Coconut Grove and Miami Beach.

Below is a list of where current and former Miami Heat players bought or sold homes in South Florida.

LeBron James

After LeBron James depleted Miami Heat fans’ hopes of winning a championship and took his talents to Cleveland, he sold his mansion at 3590 Crystal View Court in Coconut Grove for $13.4 million in 2015.

The home has a 4,500-square-foot guest section with a lounge and game room, an infinity-edge pool, an outdoor kitchen and a concrete dock with space for two 60-foot yachts. The house also has a private theater, office and a wine cellar fit for a sommelier.

When he put the 12,178-square-foot home on the market in October 2014, James originally wanted $17 million, which was $8 million more than what he paid in 2010.

Chris Bosh

Former Miami Heat power forward Chris Bosh and Big 3 member still owns a home just down the street from Wade’s Miami Beach pad.

The ex-Heat star and his wife, Adrienne Williams Bosh, own a 12,400-square-foot estate at 6396 North Bay Road that they put on the market at the end of 2017 for $18 million.

Bosh paid $12.3 million for the seven-bedroom North Bay Road estate in 2010, a year after it was completed. The property includes an infinity-edge pool, boat dock, outdoor kitchen, gym and guesthouse.

James Johnson

The player who bears the nickname “Bloodsport” for his black belt in karate, bought an estate in Pinecrest for $5.2 million last year.

James Johnson bought the seven-bedroom, 7,700-square-foot home at 8955 Southwest 63rd Court in May 2018. The property initially hit the market in 2016 for $5.35 million, and again in November 2016 for nearly $5.3 million, according to Realtor.com. Johnson was previously renting the house.

The house features a home theater, pool and spa, and an outdoor kitchen.

Erik Spoelstra

Miami Heat head coach Erik Spoelstra flipped his Coconut Grove house, selling it at a slight loss in 2017.

In May 2016, Spoelstra paid $2.6 million for the five-bedroom home at 3720 Poinciana Avenue. He listed it in January 2017 for $2.7 million, hoping to make a profit, but sold it for $2.5 million in February 2017.

Built in 1937, the Coconut Grove home sits on a 32,706-square-foot lot with tropical landscaping and a canopy of oak trees. It was recently renovated and features high-end appliances, vaulted wood ceilings, a gourmet kitchen, pool, and a cottage suite with its own kitchen.

Anfernee “Penny” Hardaway

“Lil’ Penny,” who played briefly with the Miami Heat before retiring in 2007, sold his Pinecrest mansion for $2.6 million.

Anfernee “Penny” Hardaway initially listed the 8,639-square-foot home at 5940 Southwest 108th Street for $3.8 million in 2017. The home has six bedrooms, seven-and-a-half bathrooms and features a basketball court, home theater, gym, swimming pool and six-car garage.

Hardaway is now the head basketball coach at the University of Memphis.

Hassan Whiteside

Right after signing a four-year, $98 million contract, Heat center Hassan Whiteside bought a new Miami Beach home for $7.3 million in 2016 . Whiteside’s house at 528 Lakeview Court spans 5,406 square feet on 17,676-square-foot property.

Built in 2014, the home features an open floor plan with a gourmet kitchen, pool, bar, summer kitchen, cabana, a guest house with a private entrance, staff quarters, and a large dock.

This summer, Whiteside was traded to the Portland Trail Blazers.

Dion Waiters

Despite holding the nickname “Waiters Island,” Dion Waiters chose to buy a non-waterfront mansion in Pinecrest in 2017.

Waiters paid $7.4 million for the mansion at 5745 Southwest 94th Street, property records show. It marked the priciest sale in Pinecrest in 2017.

The custom-built 17,700-square-foot house has nine bedrooms and 10-and-a-half bathrooms. It features a Balinese architectural style and a 20-foot-high ceilings, three terraces and a six-car, two-sided garage.

Mike Miller

Mike Miller was always known for his outside shooting, which could explain why he bought a house away from Miami.

Miller sold his Pompano Beach mansion at 2308 Bay Drive for $5.24 million in 2016. The 9,717-square-foot, three-story home is located in the posh Hillsboro Shores neighborhood of Pompano Beach. Through its large floor-to-ceiling windows, the home overlooks a wide inlet that connects the ocean to Florida’s Intracoastal Waterway.

Ray Allen

Right after Ray Allen’s Heat career ended, he laid down roots in Miami and bought a 10-bedroom Coral Gables home for $11 million. Billionaire medical entrepreneur Miguel Fernandez sold the mansion at 5 Tahiti Beach Island Road to a trust tied to Allen in 2014.

The more than 37,000-square-foot property includes a private beach. Other features include a library, elevator, gym, sauna and spa bath. Property records show the trust tied to Allen still owns the property. Allen retired from the NBA in November 2016 and was inducted into the Naismith Memorial Basketball Hall of Fame in 2018.

Pat Riley

Miami Heat President Pat Riley and his wife, Christine, paid $8.1 million for unit 507 in the south tower of the luxury condo-hotel Four Seasons Residences at the Surf Club in Surfside earlier this year, records show.

The unit has four bedrooms and five-and-a-half bathrooms.

Fort Partners completed the project in 2017. It includes 150 condo units, a 72-room hotel, a Le Sirenuse restaurant and a Thomas Keller restaurant.

The top five priciest listings in Los Angeles County last week totaled $213 million, roughly $66 million more than the previous week. That bump was largely driven by developer Gala Asher’s massive Wallingford Estate in Beverly Hills, which relisted for $110 million. The list also had celebrity connections, including a very famous game show co-host whose Beverly Hills mansion is on the market. Would anyone like to buy a vowel?

The remaining three that hit the market — in the Bird Streets, Sunset Strip and Bel Air — all are listed for $18 million and up. The listing prices on Los Angeles homes continue to far exceed the closed sales totals, suggesting sellers may be eager to unload their pricey properties in a volatile market.

The data and information was pulled from the Multiple Listings Service and Redfin from Sept. 17-23, 2019.

2571 Wallingford Drive | Beverly Hills | $110 million

Developer Gala Asher reduced the price of his massive Wallingford Estate, which was slashed from its original $135 million list last year. The palatial estate, located near the Beverly Hills Hotel, sits on 5 acres and includes a 31,000-square-foot main house, 5,000-square-foot guest house and a sports facility. It also claims to hold the biggest zero-edge pool in Beverly Hills. Asher bought the pad for $22 million in 2016, then later completed a renovation and expansion. Ginger Glass of Compass holds the listing.

75 Beverly Park Lane | Beverly Hills | $38 million

A 15,000-square-foot mansion in the exclusive Beverly Park community hit the market for $38 million recently. Records show the home is tied to longtime “Wheel of Fortune” co-host Vanna White. Though the property remains in White’s name, she hasn’t lived there since her and her ex-husband George Santo Pietro divorced in 2002, Mansion Global reported. The Tuscan-style estate boasts eight bedrooms, 10 bathrooms and a wine cellar. It first hit the market for $47.5 million in 2017. Mauricio Umansky of the Agency has the listing.

9133 Oriole Way | Bird Streets| $27.9 million

Russell Weiner, the founder of Rockstar Energy drink, has put his newly purchased home in the Bird Streets back a mere two weeks after buying it. He also tacked on $11.5 million to its asking price. The modern home is now on the market for nearly $28 million. Weiner bought the home from tech entrepreneur Lynda Weinman. It spans 12,530 square feet, and includes six bedrooms and 10 bathrooms. Katelyn Byrd of Coldwell Banker Residential Brokerage has the listing.

8854 Thrasher Avenue | Sunset Strip | $18.8 million

A modern residence designed by Studio Dardo re-listed for $18.6 million last week, roughly $10 million less than what it originally listed for in February 2018. Spanning 10,000 square feet, the spec home includes five bedrooms and 10 bathrooms. There’s also a swimming pool, gym and sweeping city views. The home last traded for $6.7 million in 2013, and was most recently listed for $26 million in July. Blair Chang of the Agency has the listing.

809 Nimes Place | Bel Air | $18.5 million

Third time’s the charm? Former supermodel Cheryl Tiegs is trying to sell her Balinese-inspired home in Bel Air for the third time in six years. The 4,770-square-foot home is on the market for $18.5 million, which is $3 million more than its 2015 asking price. Tiegs bought the home for $2.5 million in 1996. The home includes four bedrooms, five bathrooms and a swimming pool. Jade Mills and Tiffany Mills of Coldwell Banker share the listing.

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 4:18 p.m. PT

A preservation battle is underway at Eva Gabor’s longtime home. City officials ordered the owner, which records list as Core Development Group’s Philip Rahimzadeh, to stop any demolition work at the Holmby Hills estate. The Paul Williams-designed home is being considered as a potential city landmark, meaning any demolition or remodeling has to be put on hold while its status is under consideration. [Curbed]

Los Angeles County’s top five listings totaled $213 million last week. The group included Gala Asher’s $110 million Beverly Hills estate and a property connected to “Wheel of Fortune” co-host Vanna White. [TRD]

Affordable housing developer Flexible PSH Solutions has a big project in the works. The firm is starting the first phase of its 454-unit permanent supportive housing development in Rampart Village. [TRD]

Adam Neumann has started discussions about his future role at WeWork. He could possibly transition into the role of chairman or stay on as CEO with an independent chairman joining the board. Neumann has faced growing criticism about his role at the company as WeWork attempts to hold an initial public offering before the end of the year, but the discussions have put a board challenge from investors on hold for now. [Reuters]

WeWork has made some unique design choices on its IPO prospectus. Normally, companies rank banks linearly on the cover of their offering documents, putting the lead bank with the most input in the top left. But WeWork decided to have the names of banks like JPMorgan and Goldman Sachs encircle its logo instead. “Sadly,” wrote Wall Street Journal reporter Lauren Silva Laughlin, “the protective ring of Wall Street institutions around We Co. failed to save it from a stalled offering.” [WSJ]

PG&E closes $11 billion settlement with insurance companies over deadly wildfires. The deal covers insurance companies and hedge funds seeking compensation for payouts to damaged and destroyed homes from several fires over the last few years. It does not cover private civil claims made by victims themselves. [WSJ]

Tom Petty’s former home on Lake Sherwood sells below asking. The late rocker’s 5,300-square-foot home saw several price cuts and was most recently listed at $4.7 million before selling for $4 million. The home was built in 1931 and features stone and bare wood walls and floor. A stone pathway in the backyard leads to 125 feet of lake frontage, a boat ramp, and a dock. Petty died two years ago. [LAT]

Silver Creek Development eyes 2021 groundbreaking for unusual WeHo development. An initial study distributed by the City of West Hollywood anticipates a May 2021 groundbreaking for the unique Morphosis-designed project. The 15-story project would replace the Viper Room club at 8850 Sunset Boulevard with a super-modern podium building spanning the entire block. Many new projects in the area have faced some opposition. [Urbanize]

SoftBank is pushing for Adam Neumann to be ousted as WeWork’s CEO. The bank is WeWork’s largest investor but has become frustrated with Neumann’s behavior, the company’s troubled plans for an initial public offering and its hemorrhaging losses, according to The Real Deal. Neumann and other executives did not expect such a negative reaction to the company’s IPO prospectus last month and have since said they will delay WeWork’s IPO. They have made other changes as well, but some critics maintain they are not enough. [TRD]

Fannie Mae and Freddie Mac could start keeping their profits again this week. The expected agreement between the pair of mortgage finance companies and the Trump administration would be a major step toward letting the firms build up capital and operate as private companies again, according to the Wall Street Journal. They would be allowed to keep about one year’s worth of profit ($20 billion) under the deal, years after the government essentially nationalized them following the 2008 financial crisis. [WSJ]

Homebuilder Toll Brothers is planning a 220-unit mixed-use apartment complex in Santa Ana.

The Pennsylvania-based luxury developer wants to construct the two-building complex on a pair of neighboring parcels at 114-117 E. 5th Street, according to Urbanize. Toll Brothers is calling the Orange County development 4th + Main.

The larger of the two buildings would reach seven stories, have 12,350 square feet of ground-floor retail space, and 196 residential units. The smaller building would have the remaining 24 apartments. Architect MVE + Partners is designing the development.

Units are planned between 570 and 1,250 square feet and will be a mix of studio, one-, and two-bedroom units.

Toll Brothers mostly builds luxury single-family suburban communities, but has developed multifamily assets since the mid-2000s. The company is struggling with a tepid luxury market. Its new home orders plummeted 24 percent in the first quarter of the year.

Performance hasn’t picked up since then and in August the firm said it would develop lower-priced properties and target higher-earning millennials.

The 4th + Main project is under review by the Santa Ana Planning Commission. A staff report recommends that the commission approve the project, according to the report. [Urbanize] — Dennis Lynch

Before Rudy Giuliani married Judith Nathan on the lawn of Gracie Mansion in 2003, friends urged him to get a prenuptial agreement, according to a source familiar with the relationship. Despite two previous divorces, Giuliani refused — a decision that could complicate matters in his protracted and messy divorce some 16 years later.

Throughout the marriage, the unpredictable former mayor of New York and private lawyer to President Trump purchased multiple luxury homes with his wife, a former nurse who had also been married twice before.

The couple’s properties include a sprawling home in the Hamptons and a two-bedroom condo in Palm Beach now on the market for $3 million.

At issue is how to divide those assets. It’s a complicated affair. Despite urgings from a judge, the couple has been unable to reach a settlement and a trial has been scheduled for January.

Earlier this year, Judith Giuliani, 64, agreed to move out of the couple’s Upper East Side co-op — after reportedly refusing to leave — and relocate to their four-bedroom Hamptons home. In recent months she has become increasingly visible on the Hamptons scene and regularly attends charity and social events, according to a source familiar with the relationship.

Meanwhile, the exposure on the divorce has stirred up a tide of negative sentiment against her and pushed it into the public domain. A source familiar with the relationship described Judith Giuliani as a “transparent social climber” who was “intensely disliked” by many members of her husband’s inner circle. However, another source familiar with the couple rejected that characterization, saying she was a “good person” who had been unfairly portrayed in the media by people who were paid by her 75-year-old husband and depended on him.

As the couple’s divorce plays out in bruising detail, here’s a look at the properties at stake.

New York City co-op

Unit 10W, 45 East 66th Street, New York

Rudy Giuliani purchased this 10th-floor apartment for $4.77 million in 2002, the year before he married Judith. Listing agent Eric Lustgarten, formerly of Brown Harris Stevens, said the apartment was “all about entertaining” and featured large amounts of dining and living space. In 2014 Giuliani tried to block a proposal to build a new penthouse on top of the existing 11th-floor penthouse, but the plan was approved that December. Until May of this year, Judith Giuliani was reportedly living in their two-bedroom, nine-room unit. It’s unclear who occupies it now.

Palm Beach condo

Unit 127B, Palm Beach Towers, 44 Cocoanut Row, Palm Beach, Florida

The Giulianis bought this Palm Beach property in 2004 for $410,000, according to public records kept by the Palm Beach County Clerk and Comptroller. The 1,272-square-foot unit, which has two bedrooms and two bathrooms, is estimated to be worth $600,000.

Second Palm Beach condo

Unit 5D, Southlake Building, 315 S. Lake Drive, Palm Beach, Florida

The couple paid $1.4 million in 2010 for this 1,944-square-foot unit in the Southlake condo — a curved, salmon pink structure built in the 1960s. The dwelling, which the couple renovated and redecorated after they moved in, was put on the market this year for $3.3 million and later reduced to $3 million. It has two bedrooms, two bathrooms and a “spa-like marble bath,” according to Trulia. Waterfront Properties’ Toni Hollis has the listing.

Hamptons home
353 Lopers Path, Water Mill, New York
The couple bought this 7,272-square-foot home in 2004 for $815,000, records show. The four-bedroom property features a large outdoor pool and is set on sweeping grounds framed by thick hedges. As part of the couple’s court proceedings, Judith Giuliani is reportedly required to cover the landscaping costs at the property, which is today worth an estimated $4.4 million.

Individual properties
Both Rudy and Judith Giuliani own properties individually, although it’s unclear what role these properties will play in the divorce proceedings. Last year, after his wife filed for divorce in April, the ex-mayor moved into a new apartment at 86th and Park Avenue where he celebrated his 74th birthday with guests including former NYPD Commissioner Bernie Kerik and former Attorney General Michael Mukasey. It is unclear whether Giuliani owns the property or rents it.

Property records show that Judith Giuliani owns a house on Noyack Road in Southampton that predates her third marriage.

Neither party could be reached for comment.

Do you know more? Email tips to so@therealdeal.com

UPDATED, Sept. 24, 2019, 5:04 p.m.: Adam Neumann stepped down Tuesday as WeWork’s CEO as the company moved to salvage a planned initial public offering — if not the company itself.

The chief executive’s exit concludes talks that began in recent days between Neumann and his company’s investors and board members. The Wall Street Journal first reported the news.

“In recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive,” Neumann said in a statement. He will move into the role of non-executive chairman.

The removal of the eccentric Neumann — whose identity is entwined with that of WeWork’s — from the top post comes less than a decade after he founded the firm with Miguel McKelvey. Launched in Soho in 2010, WeWork now has locations in 111 cities and is the largest tenant in New York, Washington, D.C., central London and other locations. Earlier this year it rebranded as the We Company.

At the start of 2019, it received a $47 billion valuation from its largest investor, Japanese conglomerate SoftBank. But in recent weeks, botched plans for an IPO have caused that figure to plummet and raised questions about its viability. The company has leased space at a mind-boggling pace and must come up with tens of billions of dollars to keep it.

Artie Minson, the company’s CFO, and Sebastian Gunningham, its vice chairman, will replace Neumann as co-CEOs; the company said it will not search externally for a chief. In a statement the two executives said it is “an incredible honor to lead WeWork during this important moment in the company’s history.”

In recent days Neumann had faced a wave of pressure to resign — particularly from SoftBank, which has poured $10 billion into the office-space startup over the last few years. Chief among his opponents is SoftBank’s founder Masayoshi Son, who had previously been a champion of Neumann’s leadership. In its statement Tuesday, WeWork did not address SoftBank’s role in Neumann’s departure.

The company could make other drastic changes in coming weeks. WeWork executives have discussed with its lenders laying off up to one third of its workforce, or as many as 5,000 employees, according to the Information.

Bruce Dunlevie, who represents early investor Benchmark Capital on WeWork’s board, said in a statement that he is “thrilled to have Artie and Sebastian take the baton from Adam to lead the next phase of growth.” Benchmark, also an investor in Uber, was reportedly behind the push to oust CEO Travis Kalanick ahead of the ride-sharing startup’s IPO.

A recent Journal profile brought to light a litany of erratic behavior and proclamations by Neumann. Those reports followed a bungled plan for an IPO as investors were turned off by disclosures in the company’s prospectus. The startup’s S-1 filing with the U.S. Securities and Exchange Commission revealed that it faces massive losses and has issued huge loans to executives. Neumann alone had taken almost $1 billion in personal loans and credit lines from WeWork and its lenders. Minson, one of the two new co-CEOs, was also among those who borrowed millions from the company.

After criticism from investors and broader market, WeWork reduced Neumann’s voting power and said it would unwind a $5.9 million payment to him for the use of the “We” trademark.

Updated: This story has been updated to include further details of Neumann’s departure. It has also been updated to state that the company will not search for an external CEO.

A powerful statewide trade organization lobbied behind the scenes to extend Assembly Bill 1482, what’s being called California’s most sweeping rent control measure in decades. That effort paid off and earlier this month, the bill passed the state Senate with a 10-year-term, up from its proposed three years.

The push came from an unlikely place: the California Apartment Association. The real estate trade organization represents landlords and property owners, a group that doesn’t usually seek to extend the life on a massive rent control bill. In fact, CAA had publicly opposed the rent control measure from the start.

But after successfully negotiating a seven-year sunset clause, extended to 10 years, CAA dropped that opposition. The California Business Roundtable — a group of 200 CEOs that counts Blackstone’s Stephen Schwarzman among its members — also supported the bill. A spokesperson for Blackstone said that the firm also approved of AB 1482 because it “provides certainty and encourages new construction.”

Billed as the state’s most comprehensive rent reform legislation in decades, tenant advocates say it is not nearly as transformative or tenant-friendly as measures in New York state and Oregon.

AB 1482 caps rent increases at 5 percent plus the consumer price index, which has been well above the median annual rent increases in high-priced Los Angeles, San Francisco and San Diego. It does implement “just cause” eviction protections statewide, which places stricter limits on evictions.

Two key provisions of the measure gave the real estate industry comfort. AB 1482 would not prevent deregulation of vacant units, meaning a landlord could still substantially raise the rent on a rent-controlled unit that is vacated. Under the measure, cities cannot implement rent hike caps lower than 5 percent even if the 1995 Costa-Hawkins Rental Housing Act ever gets repealed. Costa-Hawkins bans California municipalities from enacting their own rent limits.

AB 1482 lets the real estate industry avoid having to contend with multiple local rent laws, tenant advocates and industry pros say.

Tenant advocates who continue to push for the repeal of Costa-Hawkins say that the new measure doesn’t do enough to protect the renter and still lets landlords reap considerable profits.

California’s measure comes amid a deepening housing crisis. More than half of the unsheltered homeless in the U.S. are in California, according to a Housing and Urban Development report. And more than half of California renters are “rent-burdened,” paying more than 30 percent of their income toward rent, according to a Harvard study.

Blackstone’s support

Blackstone’s support for the latest version of AB 1482 was in sharp contrast to the firm’s opposition to Proposition 10, last year’s failed statewide ballot measure that would have greatly opened the door to rent control. Voters rejected Prop 10 last November, but it has prompted several cities in Greater L.A., along with L.A. County, to adopt their own temporary rent freeze measures. Those measures would for the most part remain on the books under AB 1482.

Blackstone, which has been an active investor in the Los Angeles area and in California, also opposed New York state’s recent expansion of tenant protections.

“There were very different arguments on these very different pieces of legislation,” a spokesperson for Blackstone said of the New York rent reform package and Prop 10. “The devil is in the details.” The spokesperson did not go into details.

Not everyone in the real estate industry was on board with AB 1482.

CAA’s support drew the ire of another trade group: the California Association of Realtors, a group that primarily represents smaller landlords and real estate brokers. The organization, which said it was “disappointed” with CAA’s support of AB 1482, successfully lobbied to exempt single-family homes and condos from the bill. The exemptions do not apply in the case of limited liability corporation owners, real estate investment trusts or corporations, which accounts for the membership base of CAA.

For CAA, meanwhile, the 10-year sunset clause creates certainty for multifamily investors and lenders. They can now underwrite deals with AB 1482’s rent caps and tenant protection measures in mind, said Dan Tenenbaum, a founding principal of Brentwood-based Pacific Crest Realty. Tenenbaum is on the 17-member board of directors for CAA’s Los Angeles chapter.

“The apartment industry wants certainty. When you ask most developers, their biggest concern is the unknown,” Tenenbaum said.

Maintaining Costa-Hawkins

Tenenbaum said there is another upside to the rent control measure for the real estate industry: supporting a bill the industry could live with may diminish ongoing calls to repeal or amend Costa-Hawkins.

The statewide measure bars local governments from regulating apartments built after 1995. Tenant advocates, led by the AIDS Healthcare Foundation, tried and failed to repeal the law through the Prop 10 ballot last year. Real estate interests spent more than $75 million to fight the measure, which voters soundly rejected.

Now, tenant advocates are nearing enough signatures to bring back a similar ballot measure, which they are calling the Rental Affordability Act. It would amend Costa-Hawkins, allowing cities to eliminate vacancy decontrol, something the real estate industry strongly opposes. Critics call it Prop 10 2.0, and the CAA has vowed to fight as vigorously against it as the original version. That new ballot measure would also allow for units built in 2004 or before to be regulated, the same as AB 1482.

“[AB 1482] counteracts the additional attractiveness of Prop 10 2.0 by saying ‘there’s already effectively rent gouging limits that are being placed,’” Tenenbaum said. “It won’t solve the problem, but it moderates the story that people get significant rent increases.”

CAA communications director Mike Nemeth said that CAA’s engagement on AB 1482 was about “making AB 1482 something our members could live with,” but acknowledged that its ultimate form may play to the 13,000-member organization’s favor in the 2020 election.

“We expect that AB 1482 will take some wind out of the sales of the Prop 10 2.0 campaign,” he said. “And while we don’t support the bill, if it helps preserve Costa-Hawkins and allays more local rent control ordinances, it’d be a welcome side benefit.”

Opponents of rent caps — namely the real estate industry — often argue that caps encourage landlords to raise rents by the maximum allowed each year to “bank” money for renovations or emergencies.

A Zillow analysis from earlier this month found that about 7 percent of California renters saw a rent hike above the AB 1482 cap, but that percentage was higher in hotter markets — around 12 percent of renters in the Bay Area and 30 percent of renters in Vallejo and Sacramento saw hikes above the cap.

Data from the Bureau of Labor Statistics cited in the AB 1482 supporting documentation noted that the proposed cap of 5 percent plus the Consumer Price Index is well above the 2017 median rent increases in three major urban areas. In practice, the allowed annual rent increase would be about 8 percent under the legislation.

“The bill prevents gouging on a one-off basis, but does not stabilize rents,” said René Christian Moya, campaign director for Housing Is a Human Right, the AIDS Healthcare Foundation’s housing advocacy division. “AB 1482 cannot stand on its own. This is not rent control.”

Moya agrees with industry insiders that the measure may be an attempt to pacify more radical demands for rent control, just as the tenant movement is gaining steam nationwide.

“Of course the real estate industry would want this to happen. But for all the money that they have, landlords are a small minority of the state of California,” Moya said.

Compass‘ chief operating officer Maëlle Gavet is leaving the residential brokerage next month, according to sources familiar with the matter. Gavet’s exit is the most notable in a string of recent departures from the SoftBank-backed firm.

In an email to agents Tuesday, CEO Robert Reffkin called her departure a “mutual decision.”

“Maelle will be moving on to focus her attention on a new opportunity outside of Compass,” he wrote. “The company will not be hiring a replacement for her role.”

“Growing Compass alongside Robert and our amazing employees and agents has been one of the most rewarding and energizing experiences of my life,” Gavet said in a statement Tuesday. ” I am incredibly proud of all that we accomplished.”

Gavet, a former top executive at Priceline Group, was hired with much fanfare in 2017. But in recent months, sources have described tension between her and CEO Robert Reffkin over the strategic direction of Compass.

“She was not the Sheryl to his Mark,” one source said.

Inman reported the news of the departure earlier Tuesday.

In June, Compass said it was reorganizing its C-suite to streamline roles. Gavet was put in charge of Compass’ people and culture departments, along with marketing and “New Ventures.” Reffkin said he would oversee a  tech team, including product and engineering.

Gavet is the latest in a string of departures from Compass. Most recently, Jason Post, head of communications, said he was leaving. In June, three executives in marketing and product resigned or were forced to quit amid tension between Reffkin and Gavet. Chief people officer Madan Nagaldinne and general counsel David Carp have also left since February.

Compass was most recently valued at $6.4 billion after a $370 million Series G funding round in July. At the time, investors speculated that the round signaled the firm would be targeting an initial public offering. Reffkin fueled that speculation, saying on CNBC that: “Look, we’re likely going to have an IPO. But we’re fortunate, given our capital base, that we have flexibility in timing.”

Compass’ primary backer is Japanese conglomerate SoftBank, which is also the main backer of WeWork, the shared-office space giant that is facing criticism from investors over its business practices and erratic behavior of its CEO, Adam Neumann. On Tuesday, WeWork announced that Neumann would step down.