The coworking company recently took part in a $4.6 million venture round for the commercial real estate startup company Jones, Jones announced on Thursday. Hertz Ventures led the round, and other firms that took part included JLL Spark, MetaProp Ventures, GroundUp Ventures and 500 Startups.
Jones focuses on developing software to help commercial real estate companies handle and simplify the insurance compliance process. It has raised a total of $8 million so far.
“We believe the on-demand economy is coming to commercial real estate, and that means the insurance workflows need to be rebuilt for simplicity,” Jones CEO and co-founder Omri Stern said in a statement. “Real estate managers, tenants and vendors deserve an effortless and transparent experience when completing the insurance approval process.”
WeWork did not respond to a request for comment about its investment.
The company is investing following a disastrous and ultimately unsuccessful effort at an IPO that led to the departure of co-founder and CEO Adam Neumann. WeWork’s new co-CEOs Artie Minson and Sebastian Gunningham said in late September that WeWork would postpone its IPO to focus on its core business.
WeWork had planned to raise at least $9 billion in its IPO, and without a cash infusion, the company could run out of money by next spring. Recent reports have suggested that WeWork is talking with multiple private investors in an attempt to raise more capital, but details about those discussions remain scarce.
Strong leasing activity in the Westside kept the overall Los Angeles office market steady in the third quarter.
The vacancy rate in the Westside reached its lowest point since the end of 2016, according to a CBRE market report cited in the L.A. Times. It was the 10th straight quarter that office landlords in the Westside leased more space than hit the market, according to the report. Average asking rents on the Westside clocked in at $5.14 a foot per month, well over the county average of about $3.71 a foot.
WeWork and biopharmaceutical company Kite Pharma inked two of the biggest leases in the submarket in the third quarter. The troubled co-working company leased 67,000 square feet in West L.A. and Kite Pharma took 87,000 square feet in Santa Monica.
Both county-wide average rent and county-wide 14.3 percent vacancy was unchanged from a year ago. The third quarter passed without a massive lease signing, but tech and co-working tenants continued to gobble up mid-sized leases, according to CBRE.
The Tri-Cities market — Burbank, Pasadena, and Glendale — had a particularly good quarter, scooping up entertainment industry firms priced out of Hollywood.
Netflix remained the dominant leasing player in Hollywood, where nearly 80 percent of space being built is already leased. The company has leased or committed to taking 1.6 million square feet of office space in L.A., much of it in Hollywood.
Meanwhile, Downtown L.A. remained the weakest submarket with a vacancy rate near 19 percent. [LAT] — Dennis Lynch
Larry King and his soon-to-be ex-wife Shawn Southwick listed their longtime Beverly Hills Flats mansion, less than two months after filing for divorce.
The property is on the market for $17 million, a 44% jump from the $11.8 million the couple paid, according to TMZ.
King — whose “Larry King Live” talk show ran for 25 years — and Southwick bought the 10,800-square-foot home in 2007, a decade after marrying. Kurt Rappaport, CEO of Westside Estate Agency, has the listing.
The elaborate Tuscan-style home has imported Italian limestone and Venetian plaster walls throughout the interiors, as well as ornate mouldings and other design accents in keeping with its Italian-inspired design.
The home has seven bedrooms, nine bathrooms, and a guesthouse in the backyard. The lot totals about half an acre.
Properties in the Flats fetch hefty sums. Last year, Cleveland Cavaliers co-owner Gary Gilbert dropped $27 million on a 12,500-square-foot home in the Flats. Not long after that, Viagogo CEO Eric Baker paid $23.5 million for a 10,000-square-foot manse in the neighborhood.
King filed for divorce in August, citing irreconcilable differences. Southwick, his seventh wife, said she doesn’t plan to fight it because of her 85-year-old husband’s recent health issues. [TMZ] — Dennis Lynch
Blackstone’s Jonathan Gray (Credit: Getty Images and iStock)
After Blackstone dropped almost $19 billion on an industrial portfolio in June — the biggest portfolio deal ever — the private equity giant’s industrial activity hasn’t let up.
In the months following that deal with Singapore-based GLP, Blackstone’s industrial plays in the U.S. have ranged from one-off property acquisitions to a partial selloff of that newly-acquired portfolio.
In another show of its interest in the sector, Blackstone also launched its own logistics firm overseas.
The deals come at a time when industrial real estate remains a strong draw nationwide, particularly among institutional players. Investors and developers are turning to logistics centers and warehouses to get in on the e-commerce and storage boom and provide a hedge against an economic contraction. Markets like New York, Los Angeles and Chicago have seen a surge in industrial investment.
And Blackstone remains bullish.
“As retailers continue to shorten delivery times and expand their last-mile footprints, we believe warehouses in dense population centers will continue to experience outsized demand growth,” said Nadeem Meghji, head of real estate Americas in the firm’s Sept. 30 announcement of one such portfolio deal.
A couple of months after Blackstone announced its massive deal with GLP, the private equity player bought part of TA Realty’s industrial portfolio. Blackstone picked up 68 properties spread across 10 high-growth markets around the country, and AEW Capital Management, in a separate transaction, acquired 28 Texas-based holdings. Combined, the deals totaled $1 billion, though Blackstone has not provided additional details.
A few weeks later, Blackstone said it was buying Colony Capital’s 60 million-square-foot national warehouse portfolio. The price tag was $5.9 billion, and the properties are located in northern New Jersey, Atlanta and around California, among other places.
In New York, the increased appetite for industrial properties near major urban centers has led developers to construct multi-story warehouses. “The solution has been to go up, and it’s unprecedented,” said Marcus & Millichap commercial broker Jakub Nowak. Chicago and L.A. also rank among the top cities for industrial investment.
For its portfolio deal earlier this month, Blackstone sold off a chunk of its GLP mega-portfolio to Nuveen, the real estate investment arm of pension fund TIAA. The 100 properties are spread across 29 million square feet in major cities around the country, again in places like northern New Jersey and California. The transaction was valued at $3 billion.
Blackstone also has continued to pick off industrial buildings in smaller portfolios and other one-off deals. In August, the firm paid $56 million for a trio of warehouses near Miami International Airport. It also picked up another property in South Florida — a 9.2-acre site for $9.6 million.
Single-asset purchases of industrial buildings were up 6 percent year to date in August from the same period in 2018, though portfolio deals were down 2 percent, according to data from research firm Real Capital Analytics. But that figure did not include Blackstone’s GLP acquisition, which closed at the end of September and alone represents a usual quarter’s worth of activity, said Jim Costello, senior vice president at RCA.
“The deal activity is down in terms of what had closed…but the point was everybody knew something big was in the works and was coming soon,” he said.
Hunger for more
Demand has outpaced supply in the industrial sector for almost the past decade, said Marcus & Millichap commercial broker Jakub Nowak.
“It’s no surprise we’re seeing a lot of institutional capital keen on pursuing these types of deals,” he said.
Institutional players were second to private buyers of industrial assets in August, according to RCA; the data does not include the Blackstone/GLP deal. But the amount that private players have shelled out for the properties dropped 7 percent year over year.
Meanwhile, institutional funds have seen their spending increase 28 percent, and their deals are, on average, valued at around $21.5 million each. The average size of a private investor’s deal was just $7.6 million.
The industrial demand has been driven largely by the growth in e-commerce spending, a trend experts don’t see abating any time soon.
Aside from buying and selling last-mile logistics centers, Blackstone also recently launched its own company focused on those properties. In September, the firm touted the start of Mileway, which owns and operates 1,000 last-mile logistics properties across Europe. Blackstone slowly acquired the buildings through real estate funds over several years.
Landlords across Los Angeles have sent out scores of eviction notices in recent weeks, trying to get ahead of the “just cause” provision of California’s new rent control bill, which kicks in Jan. 1.
“We’re dealing with dozens of buildings calling our hotline,” said Trinidad Ruiz, an organizer with the Los Angeles Tenant Union. And Katie McKeon, an attorney with the pro bono law firm Public Counsel, said it was “a massive uptick in no-fault evictions” over the past two weeks.
In response, two L.A. City Councilmembers on Friday introduced an emergency motion seeking a moratorium on evictions. The measure could also seek to invalidate the most recent notices that have already been sent. The full Council could vote on the measure next week.
The timing coincides with the sweeping rent reform measure Gov. Gavin Newsom signed into law on Tuesday, which imposes rent hike caps and stricter limits on evictions.
Last week, more than 40 tenants in one apartment building in Westlake at 143 South Burlington Avenue received eviction notices, according to Ruiz, stating they will have to be out before the end of the year.
Another building in Canoga Park, a 23-unit complex at 20954 Vanowen Street, also received a dozen eviction notices last week, according to a tenant who spoke on condition of anonymity for fear of retribution from the owner.
“We got the eviction notice when I was at work,” the tenant said on Friday. “My grandfather who has cancer was at home, relaxing. People are already moving out. It’s a mess. It’s an absolute mess.” A representative for building owner KLS Financial declined to make someone available for comment.
The evictions at 143 South Burlington are retaliatory, according to tenants and tenant advocates. The complex was among three in the Westlake neighborhood at the epicenter of a tenant demonstration last year.
Organized by Burlington Unidos and the Los Angeles Tenant Union, tenants in those buildings refused to pay rent after the landlord, FML Management, raised prices on every unit by $250 a month. The rent strike ended in November without an agreement, and the building was sold last week to Chicago-based 29th Street Capital. Now, tenants say, the new landlord is targeting just one building with eviction notices in an attempt to “divide and conquer.”
29th Street Capital did not return requests for comment.
An attorney who specializes in affordable housing and land use issues said investors who may be rushing to evict their tenants before the rent law deadline may be doing so for one reason.
“If you’re an investor, you want to have certainty,” said John Goetz, principal at the law firm of Meyers Nave. He added, “you could get certainty by doing [evictions and renovations] now before Jan. 1, or by doing a more substantial rehab where there’s less of a question of what side you’re on.”
Under existing law, landlords do not have to give a reason to evict a tenant, as long as 60 days notice is provided.
The new statewide rent control law is intended to address the growing housing affordability crisis and to protect tenants from evictions without “just cause.” Landlords have generally chosen to evict a tenant with an expiring lease in order to deregulate units subject to rent control and raise rents to market rate.
But landlords are now racing the clock, given the two-month advance notice requirement. That means landlords have until Nov. 2 to send those notices if they want to fast-track the deregulation of the units under existing law. That would also allow them to raise rents more than the maximum 5 percent a year plus consumer price index under the new law.
Starting in 2020, landlords will not be able to evict tenants except in certain cases unless the landlord or immediate family member will occupy the unit. In that case, the landlord will have to pay relocation costs for the tenant. Landlords still may evict a tenant for non-payment of rent, breach of lease or criminal or nuisance activity on the property.
Developer Pinyon Group’s 486-unit project would sit two blocks away from the Heritage Square Gold Line.
One of the biggest projects to take advantage of Los Angeles’ Transit Oriented Communities housing incentive program was unveiled Thursday.
The Pinyon Group, a downtown-based developer, submitted a request for approval with the L.A. Planning Commission to construct a 486-unit building above 16,000-square-feet of retail space.
The project, at 151 W. Avenue 34, is two blocks from the Heritage Square gold line stop, qualifying it for the city program that lifts density requirements for projects built within a half-mile of a transit stop. Since it was approved as part of a 2016 ballot measure, developers have filed for hundreds of TOC projects, totaling nearly 20,000 units, around 3,900 of them affordable.
The space is currently an industrial warehouse site, said Andrew Brady, the project’s representative and an attorney in DLA Piper’s downtown office.
The city had approved a 373 residential unit project for the site, Brady said, that included more retail and office space than the current proposal. But developers decided to revise the plan, the lawyer said, partly in order to qualify for the transit program. Under the new proposal, 66 units would be reserved for very low- income housing.
The proposal comes six months after two other transit program projects were proposed near the Heritage Square stop, a 55-unit project by Toronto-based developer Greg Sharp at 3547-3585 N. Figueroa St. and a 100-unit development by FDZ Partners at 3836 N. Figueroa St..
The Pinyon Group’s website bills the company as working on transit friendly and environmentally sustainable projects near the Los Angeles river. Its managing principals are Robert DeForest and Jay Stark.
Fireside chats — one-on-one discussions between industry players at conferences — are typically genial events.
But one such discussion held at a real estate conference in Munich this week was anything but friendly. At Real Expo 2019, New York-based tech investor and consultant Duke Long assailed Morten Lund, the co-founder and CEO of Danish vacation-rental startup Poshtel International.
“Anyone want to ask, other than ‘how fucking stoned are you right now,’” he said, when asking his audience for questions at the end of the 30-minute heated talk. During an almost five-minute long video of the exchange obtained by The Real Deal, Long can be seen saying the word “fuck” nine times.
Long is figure in commercial real estate technology circles, and serves as a consultant, blogger and investor. Among his roles, he is the entrepreneur-in-residence for REach, a subsidiary of the National Association of Realtors’ investment arm, Second Century Ventures.
Lund’s firm, which he co-founded alongside starchitect Bjarke Ingels in 2017, offers upscale pop-up vacation rentals made from shipping containers. In a promo video displayed at the conference, he featured a clip shot at Burning Man, the raucous Nevada festival that attracts thousands of people to the desert.
Long described how one of his friends attended Burning Man, ran around “half naked” and “tried to solve all the world’s problems.” He then accused Lund’s firm of underscoring the culture of Burning Man as a way to make profit.
“To me, this is the same kind of bullshit. We’re rich as fuck, we’re going to go out and talk about all this stuff, and make sure we’re making bank.”
At times, Long’s tirade bordered on incoherence. In one exchange, he skewered Lund for his firm’s messaging that aims to get its customers outside of urban areas.
“It’s easier to say I’m anti-as-shit, I can say whatever the fuck I want. I can talk about erections all day and it’s cute, right?” he said. “But its not competing against everyone who’s fucking really good at it.”
Lund, who spent much of the chat with his arms crossed and uncomfortably shifting in his chair, tried to defend himself. He said he’s not against traditional vacation real estate offerings.
“I just think it’s boring,” he said.
After Long accused Lund further about his firm’s high-minded messaging, Lund said his firm would not enter the American market while Donald Trump is president, and then added “everything from America is stupid.”
In an email, Long said he stood by his comments. He said that he was not there as a representative of the NAR, but for the organizers of the event.
Silvia Hendricks, a spokesperson for the event, said that there were several hundred panels during the show featuring close to 500 speakers, who, she said, represent themselves.
“Usually everybody acts in a constructive way,” she said via email. “We as organizer prefer clearly constructive discussions.”
Quintin Simmons, a spokesperson for the NAR, said Long “does not represent NAR in any official capacity and he represents himself.”
Lund, who was on the receiving end of Long’s tirade, dismissed the comments and signalled that his Danish roots would prepare him for another spar with Long.
“It’s what the organiser paid for,” Lund wrote in an email. “Vikings takes no prisoners when assaulted enough.”
Eric Wu said Opendoor is only partly replacing real estate agents
“I guess it’s good to be hated.”
That was Opendoor CEO Eric Wu’s riposte to a question from Recode’s Kara Swisher about what real estate agents think of him.
Opendoor is perhaps the startup most synonymous with iBuying, a practice that allows sellers to rapidly unload their homes online to companies that hope to make a profit off of reselling those homes. It’s a business that requires heaps of capital and has thin margins, but it’s one that has galvanized a whole army of firms including Zillow, Realogy and Redfin.
Wu’s firm, which he started six years ago in San Francisco, now owns over $1 billion in real estate across 20 different markets. It has raised $1.3 billion in equity from investors including SoftBank, and another $3.5 billion in debt financing.
The company was valued at $3.8 billion after a funding round in March, and Wu told Recode that he has discussed the possibility of going public with his board. (Another SoftBank-backed real estate darling, WeWork, withdrew a planned IPO last month after coming under severe criticism for its business model and financial health.)
The rise of OpenDoor has raised the ire of the traditional real estate industry, with agents fearing being made redundant – something that Swisher pressed Wu on.
He responded by saying that he doesn’t think Opendoor is “replacing realtors.”
Some agents, he said, can provide value and “help you through a process that is confusing and causing you stress.” Others, however, are a mere, “friend of a friend or a brother-in-law” that the seller feels obligated to bring in.
Opendoor’s strategy to (at least partly) replace agents, Wu said, is an app that enables contractors to open up homes for sale, which lets buyers “get a personal open house without a realtor.”
The iBuying space is expanding not just through startups like Wu’s, but also through established players like Realogy, eXp Realty, Redfin, and Zillow, which is making a long-term bet on the practice despite how capital-intensive and risky it is.
Not going big on iBuying, Zillow CEO Rich Barton recently told The Information, would be “an existential threat, because if it works and we don’t do it, we get displaced as the marketplace, theoretically.”
From left: Gavin Newsom and David Chiu (Credit: Getty Images and iStock)
Ben Lamson, the founder of Bluestar Properties, has been a real estate investor, owner and manager in the Inland Empire for three decades. But California’s march toward a landmark rent-control law served as his eviction notice.
Lamson sold his $15 million portfolio of apartment buildings in a swath of Southern California that extends from Victorville and Lake Elsinore to Long Beach and Torrance. He’s packing up and moving to Nevada, making property investments in what he described as a “friendlier state.”
“They are all sold and gone,” said Lamson of his California portfolio. “You can raise rents but money goes out the other side. The straw that broke the camel’s back was the rent control legislation.”
On Oct. 8, Gov. Gavin Newsom signed into law Assembly Bill 1482, which sets rent caps and implements “just cause” eviction rules, making California the third state in the nation to pass such legislation. Lamson believes the law may lead to “a flattening of property valuations – if not retrenching.” Investors across the country are sounding similar alarms in the wake of major rent reform across the U.S.
But the author of AB 1482 thinks it strikes a balance between renter and real estate industry interests.
“There is a lot of headroom to earn a fair rate of return on their investments,” Assemblyman David Chiu (D-San Francisco), said in an interview with The Real Deal.
“The builders didn’t want the legislation to disincentivize new construction, or impede new construction,” Chiu added.
Neil Axler, a valuations expert at B. Riley Financial subsidiary Great American Group, already sees downward pressure beginning to build on values.
“At the end of the day it may be harder to [borrow] money,” he said.
Axler began evaluating an undisclosed parcel for a client in Los Angeles last week, exploring various redevelopment opportunities such as retail, hotel and multifamily.
“It’s the first property we looked at since the law was signed,” he said. “If we did the valuation today, I’d assume that we’d take into account the Jan. 1 effective date. Once we see how it shakes out, we may see values go down.”
The law will cap annual rental increases for multifamily properties to 5 percent plus the consumer price index (estimated at up to 3.5 percent). It’s aimed at halting rent gouging by landlords who were raising rent prices to an average of $2,320 per month amid growing demand, according to a Marcus & Millichap report over the summer. Another key provision in the law is 15-year exemptions for annual rental increases for new multifamily buildings.
“My gut tells me it’s not going to be positive,” Axler said. “I’d say landlords aren’t going to be happy with this.”
Robert Noble, chief lending officer of Irvine-based First Foundation Bank, which has nearly half of its $4.5 billion lending portfolio tied up in multifamily loans, said the law could lead to changes in underwriting.
“You always have to take into account rent-control guidelines,” said Noble, whose bank’s average multifamily loan is roughly $2.8 million and has an average yield of 4.2 percent.
So far, California’s rent-control law hasn’t pummeled bank stocks, unlike what happened in New York when Dime Community Bank, New York Community Bank and Signature Bank lost a combined $2.5 billion in market capitalization leading up to the passage in June of that state’s rent laws.
The New York reforms placed significant limits on annual rent increases landlords could push through – roughly 2 percent — versus the 5 percent plus CPI amount permitted in California.
Jim Markel, regional manager at Marcus & Millichap in Los Angeles, said he doesn’t see the law as a “death blow.”
“Builders still are very bullish on building in California,” he said.
Brandon Smith, a debt broker at CBRE’s L.A. office, said he’d expect hiccups only in very few situations.
“I’d say 95 percent of the deals shouldn’t be affected by this,” he said, adding that he could foresee problems for properties in “severe disrepair” with slim profit margins. “These sorts of deals may not make sense any more.”
Steve Moss, an analyst with B. Riley who follows several multifamily lenders, warns that the jury is still out on the direction of property valuations in California. That’s in contrast to “New York’s punitive” law, Moss said, which disincentivizes investments in property and is “draconian.”
“I don’t get that same sense at this time in California,” he said. Mortgage brokers already forecasting declines here “probably should sharpen their pencils and get a better idea of what is going on,” he said.
Noticeably absent from the local headlines in the rent control debate this summer were trade groups representing mortgage brokers, bankers and builders, who didn’t take sides too strongly.
Tom Bannon of the California Apartment Association, the largest statewide landlord trade group in the country, conceded that the new law could have the unintended effect of slowing down new construction.
“I’ve not heard that there is an issue yet for lending on new projects,” said Bannon, who was a key lobbyist involved in the legislation. It does, however, add “another cloud in deciding whether to invest in multifamily housing in California.”
WeWork’s first investor, who pledged his stock in the company as collateral on loans, is being accused of short-changing his lenders.
Joel Schreiber, a landlord whose firm Waterbridge Capital owns a vast portfolio of buildings in New York, used his stake in WeWork and properties he owned to back loans totalling almost $3.3 million, which he later defaulted on, according to two lawsuits filed Thursday.
One plaintiff, Vikram Kuriyan, says that he provided Schreiber with five loans totalling $750,000 for real estate and business uses and is yet to receive payment for those loans. The complaint states that Kuriyan agreed to most of the loans with verbal “handshake” agreements, and continued to issue more loans to Schreiber even after he defaulted on earlier loans.
When Kuriyan made a fifth loan of $100,000 to Schreiber in 2016, Schreiber pledged to collateralize that loan and all the prior loans with Schreiber’s “unique” founding stock in WeWork, the complaint states. Schreiber has liquidated some of his WeWork stock, but never to repay his debt, according to the suit.
“Kuriyan considered Schreiber a friend,” the complaint states, “who he believed he could be trusted to honor his word and keep his promises.”
Neal Brickman, an attorney for Kuriyan, said that “it’s not disputed that we lent [Schreiber] this money, and that he promised to repay it.”
In the weeks preceding the lawsuit, Brickman said Schreiber had repaid $145,000 of $350,000 outstanding, but that his client was still seeking $5 million in damages — the amount that Schreiber initially pledged with his WeWork stock.
Brickman is representing another plaintiff in a separate lawsuit, Forefront Income Trust, which issued a $2.5 million loan in 2015 to Schreiber. The loan was backed by multiple properties owned by Schreiber. The complaint alleges that Schreiber has made only partial payments, remains in default and owes $1.4 million in penalties. The firm is seeking $3.1 million in damages.
The lawsuits, which were filed in New York Supreme Court, come as the value of Schreiber’s WeWork stocks has plummeted. The office-space company has undergone a massive correction in its valuation, which has nosedived from $47 billion to less than one-third of that. It faces the prospect of bankruptcy if it does not find more capital soon and is reeling from the tumultuous fallout of a failed push to go public, including the departure of the firm’s CEO Adam Neumann.
In 2010, Schreiber became WeWork’s first investor, when he gave the company $4 million, according to Kuriyan’s lawsuit. That stake was valued as much as $1 billion when WeWork was valued at $47 billion in January, the complaint said.
Schreiber did not respond to a request for comment.
Schreiber has been accused of cheating partners out of deals before. At least a dozen other lawsuits against him accuse him of money owed, with allegations of defaulted loans, unpaid commissions and missing partnership payouts.
Despite his legal troubles, he has continued to access financing. Last year, he and partners RedSky Capital and JZ Capital Partners refinanced their 85,000-square-foot Williamsburg commercial portfolio with a $104 million loan from JPMorgan.
In 2010, WeWork’s Miguel McKelvey and Adam Neumann were two unknown entrepreneurs scouting buildings for their first co-working space. They set their eyes on a Canal Street property, but when they contacted the landlord, he balked.
Instead, the building’s owner offered a meeting with an acquaintance who, he said, might be interested: Joel Schreiber, an obscure Hasidic real estate investor living in Brooklyn.
“This guy shows up in the meeting, sits down, doesn’t really speak to us, doesn’t shake hands,” McKelvey recalled during a June interview with the NPR podcast “How I Built This.” “These are like Orthodox Jewish guys, you know, wearing the black suit and stuff, so to me as an Oregonian, I don’t really know the world too well. But Adam felt really comfortable with it by then.”
Not long after the meeting was over, Schreiber called the WeWork co-founders. He didn’t have a suitable building, but he had another proposal: He wanted to invest in their company. Neumann and McKelvey hesitated. They already had some money from the recent sale of another co-working venture called Green Desk and wanted to do their own thing.
Joel Schreiber (Credit: Shir Stein)
But Schreiber persisted. “Whatever it takes, I want to be a partner with you,” he said, according to McKelvey. “And so we were like, why not? Let’s throw out a number, and we’ll make it outrageous,” he recalled. “There’s no chance he’ll say yes, but if he does, then hey, we’re fine.”
Neumann and McKelvey reportedly offered Schreiber a third of the company for $15 million, and he accepted. Though McKelvey did not name Schreiber in the podcast, a spokesperson for Schreiber’s firm, Waterbridge Capital, confirmed to The Real Deal that he was WeWork’s first investor, noting that he “provided seed capital to open the first few locations” during its startup phase.
In McKelvey’s telling, the deal was a pivotal moment for what would become the world’s most valuable co-working company. WeWork went on to raise another $6.1 billion over the next seven years and garnered a $20 billion valuation in July 2017. Representatives for the company declined to comment for this story.
Into the spotlight
Now, as WeWork prepares for a rumored blockbuster IPO, its secretive first investor is being thrust into the spotlight. The sudden attention is a big change for Schreiber, who has kept a very low profile within the tight-knit and media-shy community of Brooklyn’s Hasidic property moguls.
Despite his being a key player in several big New York real estate deals — including Williamsburg’s first Apple store and the $481 million trade of the Long Island City office tower One Court Square — finding a photo of Schreiber online is virtually impossible. Even partners who spent years working with him say they know little about the man.
“He likes to be very secretive,” said Ira Zlotowitz, president of the commercial mortgage brokerage Eastern Union Funding, who has helped negotiate debt deals on behalf of Waterbridge. “He’s very below the radar.”
Schreiber, who did not respond to several requests for an interview, would clearly like to keep it that way. One of his allies in the real estate business called TRD last month anonymously, asking what kind of offer it would take to kill this profile. We refused to engage.
But while he may be shy, Schreiber may just as well not want his dirty laundry aired. Court records show a dozen lawsuits against him — almost all of them over money owed. There are allegations of defaulted loans, unpaid commissions and missing partnership payouts.
And not every Joel Schreiber story is as uplifting as McKelvey’s.
“He ruined my life,” said Sally Shtrozberg, an Israeli entrepreneur who told TRD that she lent Schreiber about $5 million in 2008 for various real estate investments but only got a fraction back. Her story was corroborated by the claims in her lawsuit, before she settled.
In 2010, around the time he pledged $15 million to Neumann and McKelvey, Schreiber missed payments on the loan, according to court records.
Shtrozberg, the founder of BuildIn, an online real estate platform, repeatedly broke down in tears during a November phone interview, accusing Schreiber of cheating her. When she read that Schreiber invested $15 million in WeWork, Shtrozberg said, her first thought was: Who did he take the money from?
Key alliances
Schreiber was born into a Hasidic family in London in the 1970s or early 1980s, according to several people who have worked with him.
It wasn’t long before he set out on his own and moved to New York. In 2000, he began buying residential properties in Brooklyn, upstate New York and New Jersey with the help of his family’s money and a syndication of private investors. By 2004 Schreiber had sold those buildings and began focusing on more high-profile commercial properties in Manhattan. He then founded Waterbridge, a small real estate investment firm based in Midtown, in 2006.
Schreiber has been a key player in several big New York real estate deals, including Williamsburg’s first Apple store
A year later, he teamed up with a group of investors to buy a Soho office and retail building at 536 Broadway for $190 million, according to Richard Baxter, who brokered the deal. Baxter recalled him being a “very knowledgeable and savvy investor.”
But Schreiber’s big break as a New York real estate player came with a series of deals in 2012. That April, he partnered with Ben Bernstein and Ben Stokes’ RedSky Capital to buy an assemblage of properties on North 4th and North 3rd streets and Bedford Avenue for $66 million. The joint-venture partners later redeveloped the property and signed Apple to a 20,000-square-foot retail lease — a watershed moment in Williamsburg’s gentrification.
Then in July 2012, Schreiber and Brooklyn real estate investor David Werner bought One Court Square from SL Green and JPMorgan Asset Management. The following month, he partnered with WeWork’s Neumann and Alchemy Properties to buy the top floors of the Woolworth Building for $68 million with plans for a condo conversion. A seven-story penthouse at the tower hit the market for $110 million this September. Alchemy’s Ken Horn did not respond to inquiries about whether Schreiber is still a partner in the project.
Waterbridge is a small operation with fewer than 10 employees, and Schreiber usually leaves development work to the firms he partners with, sources said. What he does, and does well, is find deals and raise money.
People who have worked with Schreiber describe him as blunt, quick to the point and at times charming. “He’s a character, no doubt about it,” said Dagan Lacorte of the investment advisory firm L&L Partners Wealth Management. “He’s not afraid to ask for what he wants.”
RedSky’s Bernstein said one of Schreiber’s greatest strengths is the speed at which he goes after deals. There is “no rethinking, no additional noise,” he noted.
Still, not every deal has been wrinkle-free. Just short of three years ago, Schreiber went into contract on an assemblage of properties on North 3rd Street — near the Apple-leased property — that includes the popular Radegast Beer Hall. But he struggled to land bank financing at favorable terms, according to Lacorte, who brokered the deal. Instead, he cut a deal with the seller, the estate of Olga Sosa, in which Sosa became the de facto lender by allowing the buyer to postpone full payment.
One Court Square in Long Island City
Schreiber paid about 30 percent of the $92.3 million cost at the closing in April 2015 and paid the rest with interest by September 2016, Lacorte said. Waterbridge refinanced the property the following month with an $82 million loan from Deutsche Bank.
At one point Schreiber tried to flip the property to New York developer Chaim Miller, according to news reports, but the deal fell through.
“Along the way, I wasn’t sure he was going to close,” Lacorte said.
Legal troubles
It was Schreiber’s savvy as a dealmaker that convinced Shtrozberg to lend him the roughly $5 million back in 2008.
The Israeli native had recently moved to New York on a mission to invest her family’s savings in local real estate. A mutual acquaintance from her home country introduced her to Schreiber, who took her around town with his private chauffeur and showed her all the buildings he claimed to own.
Shtrozberg said she was impressed. “He speaks very fast to show that he’s a big guy,” she recalled. “It was all an act.”
When Shtrozberg requested a full reimbursement in early 2009, Schreiber didn’t pay, she told TRD. They agreed to an extension that February, but after the new promissory note came due one year later, Schreiber still owed her $3.8 million, according to her lawsuit. She then took him to court.
In the end, Shtrozberg said she recouped about $3 million. A few days after her on-the-record interview, she requested that her remarks not be printed. Her attorney, Saar Rosman of Lipa Meir & Co. in Israel, later sent TRD a demand letter regarding the matter.
“The said loan has been repaid in full and any controversies between my client and Mr. Schreiber, in connection with the foregoing, have been settled to the satisfaction of my client,” Rosman’s letter read.
Similar lawsuits from other parties followed Shtrozberg’s. Investors Oren Evenhar and Isaac Hershko filed a complaint against Schreiber in June 2014, accusing him of cheating them out of a 35 percent stake in 119 West 25th Street, which Waterbridge and its partners bought for $54.5 million in 2013. Court records indicate that the suit was later settled.
Then in August 2015, the commercial brokerage Eastern Consolidated sued Schreiber over a commission he allegedly failed to pay for the Radegast deal. That same year, investor Marco di Laurenti sued Schreiber for allegedly bilking him out of his share of profits from a $38 million sale of a Soho retail property at 154 Spring Street. The sides reached a settlement, but Schreiber never paid the agreed-upon sum, di Laurenti’s lawyer Stephen Meister said. Only after Meister filed a confession of judgment and froze his bank account did Schreiber finally pay.
And last year Schreiber and his partners filed for Chapter 11 bankruptcy on their mixed-use development at 182-186 Spring Street, where they owed lenders, including Acadia Realty Trust, $26 million. The real estate investment firm Opal Holdings bought the site out of bankruptcy for $31.6 million this June.
“Waterbridge was a preferred equity investor in the deal, and the bankruptcy filing facilitated the reorganization of the partnership,” the firm’s spokesperson noted. “All creditors were paid in full.”
WeWin?
Despite the lawsuits and financial troubles, Schreiber still has plenty of friends in the NYC real estate industry. “I only have good things to say about Joel,” noted Normandy Realty’s Gavin Evans, who partnered with Waterbridge on the purchase of 119 West 25th Street. RedSky’s Bernstein described Schreiber as loyal, honest and fair, while Zlotowitz of Eastern Union pointed out that several of the lawsuits against Schreiber and his firm were ultimately resolved.
“He has vision,” Lacorte said, pointing to Schreiber’s WeWork investment — as good as the investment looks in hindsight, giving two entrepreneurs with little track record a big chunk of money was incredibly risky.
But how much of the reported $15 million Schreiber paid and how much of WeWork he actually owns today remain unclear.
“He gave us some of the cash,” McKelvey said on the “How I Built This” podcast.“A little bit to start and a little bit more over time.”
A former business partner of Schreiber’s, speaking on condition of anonymity, said he finds it “extremely hard to believe” that he ever owned one-third of WeWork.
An investor in the co-working company, who also asked not to be named, said Schreiber owns 1 percent of WeWork at most, and that he could have held a much larger share if he followed through on his funding commitments.
But even if his stake is that small, he could still strike gold once the company goes public.
“If he owns 1 percent of the company, that’s still worth $200 million,” Schreiber’s former partner said, referring to WeWork’s $20 billion valuation. “That’s probably more money than he’s made in any other venture.”
Shtrozberg has her own hopes for WeWork’s anticipated IPO, which she speculates would raise the level of scrutiny on Schreiber.
“Now it’s [soon to be] a public issue,” she said. “If you have a shareholder in a company who is [questionable], the market can respond to that.”
LA’s Airbnb ordinance complicates future for hosts (Credit: iStock)
Home-sharing hosts in Los Angeles are organizing to secure a last-minute carveout before the city’s ordinance regulating the industry kicks in.
The ordinance, set to take effect Nov. 1, allows Angelenos to rent out only their primary residences. They’ll also have to register their units with the city and obtain permission to rent units for more than 120 days a year.
Homeshare Alliance Los Angeles now wants the city to allow some homeowners to rent out those secondary homes on websites like Airbnb, HomeAway and VRBO, according to the L.A. Times.
The rule is meant to stop investors from turning multifamily buildings into de facto hotels in an already housing-strapped city. But those who oppose the rule say it could harm people who rely on rental income from a secondary property. Homeshare Alliance wants the city to create a path toward legalizing those rentals.
“We support getting rid of commercial operators,” alliance leader Chani Krich told the Times. But added, “thousands of mom-and-pops need to be protected.”
Supporters of the ban say that renting out secondary units takes housing off the market, units that could be rented by long-term residents.
City officials have previously brushed off requests from short-term rental platforms to postpone the ordinance altogether.
Councilmember Mike Bonin, who represents neighborhoods popular with tourists, including Venice, called a carveout for vacation rentals “nothing short of a full-frontal assault” on the ordinance. He said it would be “great if those units were being rented by people who live permanently in Los Angeles,” according to the Times.
L.A. is one of the top destinations in the country for Airbnb users. Hosts took in $613 million last year. The ordinance is expected to significantly reduce that figure. [LAT] — Dennis Lynch
Four of the top residential listings in LA this week
The five priciest homes to hit the market in Los Angeles County included a Beverly Hills Flats mansion from Larry King and his soon-to-be ex-wife, a spec home and a massive listing in Bel Air.
The total added up to $147.7 million, roughly $15 million more than the prior week.
The data and information was from the Multiple Listings Service and Redfin from Oct. 8-14.
10410 Bellagio Road | Bel Air | $75M The Bellagio Estate is one of the biggest and oldest designed by pioneering architect Paul Williams to hit the market recently. The 17,700-square-foot Spanish-style mansion was built in 1931 on 1.7 acres. It has sold five times since 2005, most recently in 2015 for $38 million. The owner gave the seven-bedroom, nine-bathroom property a complete overhaul, directed by Don Ziebel of Oz Architects. The home has a large interior courtyard, two pools and spas, a tennis court, and an outdoor cabana area. Jeff Hyland and Linda May of Hilton & Hyland have the listing.
926 N. Beverly Drive | Beverly Hills | $20M
This 12,000-square-foot mansion packs quite a bit into its less than 17,000-square-foot lot, including a 10-car garage, screening room, gym, library, staff quarters, and a panic room. The backyard has a swimming pool and a barbecue area. The home was built in 2012 and last sold in 2015 for $13.6 million. Christopher Choo with Coldwell Banker has the listing.
1307 Sierra Alta Way | Hollywood Hills West | $18.5M
This 13,800-square-foot modern home has five bedrooms and 10-bathrooms. It’s also just two houses down from the former home of late musician Prince. The interiors have high ceilings and moveable glass walls that open to a landscaped backyard with a large swimming pool. Other luxe features include the screening room and a motorized wine rack that delivers bottles directly to the master suite. Qiang Zhang and Lidan Dong of Harvest Realty Development have the listing.
2710 Bowmont Drive | Beverly Hills Post Office | $17.3M
The only new spec home to make the top five this week is this hillside home off Mulholland Drive. It’s replete with the usual spec amenities, including movable walls, a wine room, top-grade appliances, and a game room. The home’s position in the Santa Monica mountains also give it views of both the San Fernando Valley and the city. Joyce Rey and Stephen Apelian of Coldwell Banker have the listing.
707 N. Hillcrest Road | Beverly Hills Flats | $17M
The home once shared by Larry King and his estranged wife Shawn Southwick hit the market as part of the couple’s divorce. The Tuscan-style home spans 10,800 square feet and features imported Italian limestone and ornate interiors keeping with its Italian-inspired design. The backyard has a pool and a guest house to add to the seven bedrooms and nine bathrooms in the main house.
The Real Deal senior reporter E.B. Solomont has won a Front Page Award from the Newswomen’s Club of New York.
The organization, founded in 1937, recognizes the best journalism by women working in print, wire, broadcast and online media. Solomont won for her breaking-news story “Dottie Herman sells stake in Douglas Elliman for $40M.”
Although Herman had already stepped back from the day-to-day operations at residential brokerage Douglas Elliman, the sale marked the end of an era for the residential brokerage industry. Herman partnered with Howard Lorber to buy New York City’s largest residential brokerage more than 15 years ago.
In an interview, Herman told Solomont that selling her share was the “hardest decision” she’s ever made.
TRD senior reporter Kathryn Brenzel also nabbed a Front Page Award with former editor Elizabeth Kim for their January 2017 cover story “Real estate’s diversity problem.”
Other recipients of this year’s Front Page Awards include the New York Times’ Nikole Hannah-Jones, the Daily Beast’s Emily Shugerman and Vice’s Isobel Yeung.
Solomont joined The Real Deal in 2014 after stints with the St. Louis Business Journal, Jerusalem Post and New York Sun. A Boston native, she graduated from Tufts University and earned a master’s degree from the Columbia University Graduate School of Journalism.
Marcelo Claure and Softbank CEO Masayoshi Son (left) (Credit: Linkedin, iStock, Pixabay)
In late September, SoftBank Group’s Marcelo Claure took to Twitter to share his goals for the upcoming month. He wanted to beat his best running time, try a dish he had never had before, watch more soccer games, and figure out his daughter’s Halloween costume.
A Twitter follower responded: Fix WeWork.
Setting my goals for the month. What else should I add to my list for #October? Beat my best running time Try a dish I’ve never had before Watch more soccer games Figure out Mia’s #Halloween costume #MondayMotivation#OneGreatThingADay
With a track record of creating billion-dollar companies from scratch and also turning around sinking ships, the 48-year-old billionaire Bolivian native is now tasked with his biggest challenge yet: restoring order and a path to profitability to the office startup that his boss Masayoshi Son staked his reputation on, a firm that many believe is the poster child for all that’s wrong with venture-capital-fueled startups.
Claure, handpicked by Son, is taking on WeWork at a crucial time. It has a new executive team with little real estate experience, $45 billion in U.S. debt obligations, and only enough cash on-hand to fund operations for a few months. Because of the failed IPO and cash-crunch, thousands of layoffs are expected.
Claure declined to comment.
With WeWork, Claure is expected to cut costs and boost revenue — much as he did at Sprint Corp. In 2014, when he stepped in as CEO of the telecommunications company, it was losing nearly 8,000 customers a day. Three years later, it was adding nearly 14,000 customers a day.
Claure went to “dramatic extremes to improve Sprint’s network and gain customers,” said Mike Dano, who covered the wireless industry as a reporter and editor. That included offering steep promotions and discounts in an effort to bring in more customers.
While the company’s financials improved under Claure’s watch, the perception of its core product — cell phone reception— did not, he said.
“It might be better than before but it’s certainly not great,” said Dano, editorial director of Light Reading’s 5G & Mobile Strategies. “He slowed the bleeding but he did not reverse the [damage].”
“You don’t have to do what people tell you”
Claure’s rise to the top is the stuff of lore. A serial entrepreneur as a child who was a mediocre student at American international schools, Claure completed his degree in economics and finance at Bentley College in 1993. He got his big break when he sat next to the newly-appointed Bolivian Football Federation president on a flight. By the time he landed in Quito, he had a job as general manager. After a World Cup tournament in 1994, he struck out on his own and moved back to Boston. Needing cash, he sold his frequent-flyer miles for $2,000. But when he needed to fly back to Bolivia a week later, he was told the same miles were worth $8,000 — a 400 percent markup. It’s how he got into the shady business of selling frequent flyer miles, and made an enemy of the airlines.
“They told us it was illegal, but we found a way to do it legally,” he told Inc. Magazine in 2004. “It taught me that you don’t have to do what people tell you, no matter how powerful they are. A lot of times, we live by the limits that are given to us, and it stunts our potential.”
Because his customers tended to impulse-call, Claure made certain his staff was available 24-7, which required lots of cell phones. He famously walked into a retail store to purchase a cell phone, and wound up buying the retail business instead. Before long, Claure was the biggest cell phone distributor in New England. In 1997, he set his sights on the international market and founded Brightstar, a Latin American cell phone distributor based in Miami.
At the time, Latin America was in chaos — uprisings, drug wars, kidnappings, economic crashes were common — and the telecoms were retreating. Despite the risk and tight margins, Claure smelled opportunity. It was a hugely underserved market. Brightstar would do all the dirty work carriers didn’t want to do — Claure figured out all the logistics of operating with different currencies, government regulations, tariffs across South America. He built warehouses and operations teams to tackle problems as they emerged in real-time.
Claure, known as a hands-on operator who takes risks, soon dominated the South American market and expanded globally. By 2014, Brightstar was pulling in $10.5 billion a year in revenue, pitting carriers against one another and branching into new business lines. It caught the attention of Silicon Valley’s biggest whale — Masayoshi Son.
“King of the world”
Claure, who cuts an imposing figure at 6 foot 6 inches and lives in a bayfront mansion in Miami Beach, was introduced to Son in Tokyo in 2012. The meeting was supposed to be quick, but Son convinced Claure to delay his return flight, and the two businessmen worked out a deal to launch a used phone buyback program in Japan, according to Forbes. The following year, when Claure was planning to sell a portion or all of his company Brightstar, Son said he would buy it. Claure was handpicked by Son to run Sprint, the nation’s third-largest carrier, in 2014, and to shepherd a controversial merger with T-Mobile, the fourth-biggest carrier.
It’s not yet clear how much time Claure will be able to dedicate to WeWork. In addition to his role as COO of SoftBank Group, Claure leads its international operations and remains executive chairman of Sprint. Claure is also part owner and chairman of Inter Miami CF, the Major League Soccer team that is expected to start playing in March, as well as the chairman of Club Bolivar, Bolivia’s top soccer team. He also oversees the Miami-based SoftBank Innovation Fund, which plans to invest $5 billion in tech startups in Latin America.
“Marcelo wants to be king of the world,” Clay Parker, a lawyer who has represented Brightstar and Claure, told the Miami Herald in 2018. “I think Marcelo views that everything is a stepping stone to somewhere else, [and his] view [is] if he works hard, he can accomplish it.”
On Sunday, the Wall Street Journal reported that SoftBank, which owns one-third of WeWork, is aiming to invest several billion dollars in new equity and debt into the office startup, which would give it full control of the company. If SoftBank is successful, it would further reduce former CEO Adam Neumann’s voting power and give more operational control to Claure.
Claure has a vested interest in turning around the company. He controls 1.025 million shares of SoftBank as of March 31, according to his SoftBank bio. The shares are currently valued at about $19.9 million, based on a per-share price of $19.49 on Friday afternoon. That value has fallen from an all-time peak of $27.93 per share in early May, partly because of WeWork’s meltdown. That’s a 30 percent drop — or $8.7 million decline — in six months.
Having already invested $10 billion into WeWork, SoftBank needs stem the bleeding, or its stock will fall further and its Son’s upcoming Vision Fund II could suffer.
“The results still have a long way to go,” Son said of WeWork in an interview with Nikkei Business. “And that makes me embarrassed and impatient.”
Meridian Vice President of Acquisitions R.J. Sommerdyke, Healthcare Realty President & CEO Todd Meredith and Cotton Medical Center
A unit of Marcus & Millichap that focuses on developing and investing in medical offices has sold the Cotton Medical Center in Pasadena, nabbing a tidy profit nearly four years after buying it.
San Ramon-based Meridian offloaded the 115,000-square foot complex near Huntington Memorial Hospital, it said Monday. Cotton Medical Center is located at 50 Bellefontaine Street and 50 Alessandro Place.
The buyer was Healthcare Realty Trust, a Tennessee-based real estate investment trust. Terms were not disclosed but an industry pro estimated the purchase price at above $60 million. The buyer and seller were self-represented in the off-market purchase.
That deal would be a significant increase from the $37.5 million that Meridian acquired the complex for in January 2016. At the time, it marked the firm’s biggest transaction.
Meridian did plow over $10 million into renovations, and brought occupancy up to 86%, from 71%. Healthcare Partners and Quest Diagnostics are among the largest tenants.
The 2.8-acre office complex consists of a four-story, 52,000-square-foot building; plus a five-story, 62,750-square-foot building and an adjacent, underground garage.
This is only the second time in 43 years that the medical complex has traded hands in a city that is seeing a steady flow of office and residential development, and leasing deals.
Crowdfunding was once touted as the next big thing — a way for average investors to get into the lucrative world of real estate and a way for platforms to tap a new spigot of funding.
That one small change — which was tucked into the 2012 federal JOBS Act — instantly increased awareness around crowdfunding and spawned a host of platforms. That was even as many (including Prodigy Network, the platform launched by Rodrigo Niño) targeted accredited investors.
In 2014, Scott Whaley, president of the National Real Estate Investors Association in Cincinnati, told the Wall Street Journal that there was “massive demand, both from entrepreneurs who want to get access to capital, and from people who want to invest capital.”
But the field has thinned since those early days, and venture capital money has retreated from the space. Globally, venture capital for crowdfunding peaked in 2015 at about $76.4 million and plummeted to $25.7 million in 2017, according to real estate tech research firm CREtech. This year, it’s bounced back to $72.2 million year-to-date.
So far this year in the U.S., four firms — Groundfloor, RealtyMogul, Vairt and Wealth Migrate — cumulatively attracted a paltry $9.8 million.
Zach Aarons, co-founder and partner of MetaProp, a venture capital proptech firm, said many of the crowdfunding platforms that emerged in the early days were overcapitalized and going after the same users.
“That does not sustain itself forever,” Aarons said. “When the venture capital money runs out, the music stops.”
Ben Miller, CEO and co-founder of Fundrise, said the firm shifted into raising capital for funds with lower fees in order to “mitigate risk for investors.” By switching its business model, Fundrise, like other fund managers, can raise capital before deploying it into deals and maintain control over its investments, Miller said.
Some crowdfunding companies pool money from investors for deals that they sponsor but don’t execute. Prodigy co-develops all of its properties. And unlike many of its rivals, it has never raised venture money, though it did just recently sell stakes in its company to investors.
Despite some high-profile issues, several sources said they are confident in the sector and that investor demand for crowdfunding is strong.
Many of those who’ve invested through crowdfunding portals, including via Prodigy, have, in fact, made money. One investor told TRD he invested in Prodigy’s AKA Wall Street early and exited a year or two later, with no issue.
Darren Powderly, an executive at CrowdStreet — which recently topped $800 million in equity raised — said “the interest level is exploding.”
“The growth is just tremendous, and that is because both sides of the marketplace are hitting this network effect,” Powderly said.
Adam Kaufman, co-founder of the Manhattan-based crowdfunding platform ArborCrowd, said the space is bifurcated and that many of the remaining players are thriving.
“We’re starting to see some companies … experience difficulties. But at the same time, we see a lot of companies in the space who are really flourishing,” he said. “What it comes down to at the end of the day are the fundamentals.”
James Wan and the building at 600 North Sepulveda Boulevard (Credit: Getty Images and Google Maps)
A film and television production company has acquired a distinctive clock tower office building in Bel Air, a modest deal that still represents the highest price-per-square-foot paid for a commercial property in the residential enclave.
Atomic Monster Productions paid $5.4 million for the nearly 6,000-square-foot building at 600 N. Sepulveda Boulevard.
Atomic Monster, founded by James Wan in 2014, produces horror and science fiction films, including “The Conjuring 2.”
The 58-year-old complex, which had been vacant, sold for slightly under its $5.6 million asking, and was acquired as an investment, according to a company spokesperson. Jason Froelich of Douglas Elliman represented the buyer.
The seller, Evolve Commercial I LLC — an arm of Evolve Treatment Centers — bought the property in late 2014 for $3.45 million.
At $917 per square foot, the most recent sale was the highest per square foot deal in the Bel Air commercial market, eclipsing the $757 a foot sale that went to 662 N. Sepulveda a decade ago, according to Trevor Nelson of Newmontis Real Estate Investment Management. Nelson and Katherine Weaver of Pegasus Investments marketed the building, and announced the sale.
Better known for its massive mansions, Bel Air is within the larger Westside office market, which remained steady in the third quarter, thanks to strong leasing activity, particularly from Netflix, according to a recent CBRE report.
From left: 60 Sloane Avenue, Domenico Giani, former head of security of The Vatican, and Vatican City (Credit: Wikipedia and iStock)
A new scandal is sweeping through the Vatican and, despite scant details, the center of the storm appears to be one of the Holy See’s property investments in London.
An internal probe that’s led to at least five Vatican staffers’ suspension is focused on a Chelsea building that the Holy See bought Italian financier Raffaele Mincione, according to the Wall Street Journal. The Vatican bought out Mincione last year and the financier claims the building is now worth more than $490 million.
After the identities of the staff who were suspended in the investigation were leaked to the press, the Vatican’s head of security, Domenico Giani, resigned. Giani claims he’s not responsible for the leak and is stepping down “out of love for the church and faithfulness” to the pope.
The suspended staffers include a top official at the Vatican’s financial watchdog, Tommaso Di Ruzza, and Monsignor Mauro Carlino, who was one of the highest officials at the Secretariat of State until Pope Francis made him a cardinal last year. It is still unclear what led to their suspensions and what, if any, wrongdoing is at issue. [WSJ] — Erin Hudson
Robert Shapiro, along with two of Woodbridge Group’s former luxury properties, and at right, a federal prison. (Credit: iStock)
UPDATED, Oct. 15, 11:04 a.m.: When developer Robert Shapiro pleaded guilty in August to leading a $1.3 billion real estate Ponzi scheme, he faced up to 25 years in prison.
On Tuesday, a federal court judge sentenced Shapiro to that maximum, closing the criminal chapter on what has been a two-year-long saga surrounding the massive fraud perpetrated by Shapiro’s now-defunct Sherman Oaks-based investment firm, Woodbridge Group of Companies.
In all, more than 7,000 property investors were defrauded over five years until Woodbridge went under in late 2017 amid a wide-reaching federal investigation into the scheme, the government said in a release announcing the sentencing.
The majority of the prison sentence — 20 years — is for defrauding those investors, and for committing wire and mail fraud. The 61-year-old was sentenced to an additional five years for failing to pay $6 million in taxes owed between 2000 and 2005.
To raise money for the fraud, Woodbridge Group promised investors — many of them elderly — that the cash would go toward building and buying luxury properties that would yield high returns. Instead, Shapiro and the company bought those properties themselves through a web of legal entities to obscure ownership.
Woodbridge bought hundreds of millions of dollars worth of properties and development sites in Los Angeles and across the country. It paid out investors using cash from new investors in a classic Ponzi scheme arrangement. Shapiro himself siphoned off between $25 million and $95 million to fuel his glitzy lifestyle, prosecutors said. The case against him took place in Miami, as did the sentencing.
Lavish lifestyle At least 2,600 Woodbridge investors put their retirement savings into the firm, totaling $400 million, according prosecutors. Shapiro personally spent at least $3.1 million of that money on travel and charter planes, $6.7 million on a home and another $2.6 million on renovations, $1.8 million paying off personal income taxes, and $672,000 on vehicles., the government said.
Shapiro and his wife agreed to forfeit a massive trove of luxury items they purchased with misappropriated funds, including artworks by Picasso and other artists, a 603-bottle wine collection, and several pieces of diamond jewelry.
While the criminal case against Shapiro is over, independent managers are in charge of selling off the rest of Woodbridge’s assets to recoup money for defrauded investors.
Shapiro is also on the hook to pay the Security and Exchange Commission $120 million as part of a civil settlement with the agency.
Federal law enforcement continues to pursue claims against other Woodbridge executives. Investors have sued for compensation from at least one bank, Comerica Bank, that held Woodbridge accounts.
Despite his being a key player in several big New York real estate deals — including Williamsburg’s first Apple store and the $481 million trade of the Long Island City office tower One Court Square — finding a photo of Schreiber online is virtually impossible. Even partners who spent years working with him say they know little about the man.
Beat my best running time
