WeWork’s got a new bank and a new line of credit.

Goldman Sachs arranged a $1.75 billion line of credit for SoftBank Group with WeWork listed as a co-borrower, according to Bloomberg. The credit line is part of a larger bailout package SoftBank has committed to securing.

WeWork was listed as a co-borrower in a bid to attract other lenders willing to front lines of credit to the beleaguered co-working company, which is desperate for cash after its failed initial public offering, Bloomberg reported.

The new credit line replaces the company’s previous $1.1 billion facility and will reportedly free up additional cash previously being used as collateral. To complete SoftBank’s plan for $5 billion in debt financing for WeWork, a further $3.3 billion is needed. According to Bloomberg, Goldman is canvassing other banks in a bid to secure the rest of the plan by the end of the year.

Following WeWork’s botched IPO in September, co-founder Adam Neumann was ousted from his role as CEO and SoftBank assumed a controlling stake in the company.

To prevent the co-working firm’s bankruptcy, SoftBank ironed out a $9.5 billion rescue package with a $5 billion debt facility, a $1.5 billion commitment and a $3 billion stock tender offer.

SoftBank had delayed paying out the $3 billion offer, prompting WeWork’s junk bond price to sink and its risk premium to skyrocket.

Prior to Goldman Sachs leading its search for financing, WeWork largely relied on advice from JPMorgan Chase, which has had to defend its role in the failed IPO and the suspect corporate governance. JPMorgan’s CEO Jamie Dimon last month said he and the bank have “learned lessons” following the WeWork implosion. [Bloomberg] — Erin Hudson

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Jason Illoulian’s Faring has assembled more than 70,000 square feet of land for an upcoming project on the border of West Hollywood and Los Angeles.

In a series of deals totaling $29.6 million, the firm purchased 1000-1028 N. La Brea Avenue in WeHo, home to concrete manufacturing plant CEMEX and antique store Noble House Antiques, as well as 1011-1013 Sycamore Avenue and 7061 W. Romaine Street in L.A.

Faring did not comment on specific development plans for the assemblage, but said in a statement that it would become an “eastern gateway” to West Hollywood.

Illoulian, when reached for comment, did not identify the sellers, and declined to elaborate on the proposed eastern gateway concept. CEMEX, according to previous news clippings, looks to be the owner of 1000 N. La Brea. The property is located near the intersection of Santa Monica Boulevard and N. La Brea Avenue, where a new Metro subway station along the purple line’s Crenshaw/LAX light rail extension has been proposed.

The acquisitions, which were brokered by Avison Young, cap off a busy few months for Faring.

Just last week, West Hollywood’s planning commission gave final approval to the firm’s new three-story office complex that will incorporate the existing French Market building at 7985 Santa Monica Blvd., according to the developer. The roughly 70,000-square-foot complex will have office space while the front portion of the new building will have a restaurant and retail space.

In May, West Hollywood approved Faring’s Robertson Lane hotel and retail project. Demolition begins next month, Illoulian said. The project, built around the historic Factory building, will see a nine-story hotel with 241 rooms, a ground-floor retail and event space, and a restaurant built on a two-acre site around the Factory.

Faring also is planning a mixed-use complex across the street at 637-651 La Peer Dr.

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Buyers waiting on the sidelines, waiting for the market to turn in their favor. Sellers refusing to adjust their prices, in the hopes that conditions will swing their way: It’s the stuff brokers’ nightmares are made of.

Getting a better sense of which markets across the U.S. lean in favor of the buyer or seller might lead to more sensible pricing decisions and boost activity. And a new analysis aims to do just that.

According to the analysis, which was done by the Wall Street Journal and Realtor.com, California’s Contra Costa is the nation’s most extreme seller’s luxury market. Its absorption rate, defined as the number of monthly sales divided by number of listings, was a whopping 61.5 percent. (The analysis was done on a county level, with the rate taken as the average of the three ZIP codes with the highest rate in the county.) In some ZIP codes there, every home priced at $1 million and up goes into contract in just over a month.

Contra Costa is followed by Sacramento, California, where the absorption rate was 59.8 percent. Other top seller’s markets include Loudoun, Virginia, (53.1 percent) and Broward, Florida (9.2 percent).

According to the Journal, tips for buying in a seller’s market include pre-interviewing local contractors to quickly understand how much repairs will cost, waiving contingencies, and writing a seller a personal letter explaining why the house should be yours.

On the other side of the spectrum is the buyer’s market, where supply far outstrips demand and sales volume is relatively low. According to the analysis, the top buyer’s market in the U.S. is Suffolk County, New York, which has an absorption rate of just 1.1 percent. Suffolk County, which includes the wealthy real-estate playground of the Hamptons, has seen inventory rise 84.2 percent since the second quarter of 2018, according to a report from Douglas Elliman.

Suffolk County is followed by Monroe County, Florida, (2.2 percent) and Cook County, Illinois, which includes Chicago (2.4 percent).

The paper’s tips for navigating a buyer’s market include playing the waiting game until prices drop, but also making offers to get the conversation started with sellers. Talking to contractors can also help get a sense of how much it’ll cost to get a fixer-upper ready. [WSJ] — TRD Staff

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Lackluster home sales took a bite out of Toll Brothers’ 2019 profits, which dropped 20 percent to $590 million, the homebuilder reported Monday.

The Pennsylvania-based firm reported $7.08 billion in 2019 revenue from home sales, down 1 percent year over year. Net signed contract value dropped 12 percent to $6.71 billion.

But the company said buyer demand rose during the fourth quarter of the year — signaling improvement ahead. At the end of the quarter, the number of contracts was up 18 percent year over year.

During an earnings call Tuesday, CEO Doug Yearley said several markets — including California and New York City — “feel better” than they did a year ago.

“Southern California was pretty flat and it’s running at about the company average for sales,” he said. “New York is not back to where it was four to five years ago, but it’s better.”

Still, Toll’s stock dropped 3.27 percent to $40.04 per share on Tuesday afternoon, after the company said its gross margins would contract in 2020. The fourth-quarter order growth was “below our estimate and we believe investor expectations,” analyst Michal Rehaut of JPMorgan wrote in a research note.

During the call, Yearley reiterated the company’s strategic expansion into new geographic regions and lower price points to meet demand for so-called “affordable luxury” homes.
“We remain committed to our luxury niche,” Yearley said. Still, there are a “growing number of millennials who are older, more affluent and discerning when they buy their first home,” he said, comparing Toll’s affordable luxury homes to BMW’s 3 Series.

During the fourth quarter, Toll reported net income of $202.3 million, down from $311 million a year prior. Toll said home sale revenues dropped 7 percent to $2.29 billion.

Net contract value rose 12 percent to $1.68 billion, but the company’s backlog at the end of the quarter was $5.26 billion, down 5 percent year over year.
For the first quarter, Toll anticipates delivering 1,650 to 1,850 units, with an average price between $800,000 and $820,000 — down from $863,000 a year ago. The drop is “strategic” and reflects Toll’s new focus on affordable luxury, said CFO Marty Connor.

In New York City, Toll has avoided “super luxury,” Yearley said. “We’re focusing on $2,000 per square foot in Manhattan and $1,000 on the Jersey side,” said Yearley. “That is relatively affordable in the New York City market.”

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Former President Barack Obama and First Lady Michelle Obama recently closed on an $11.75 million, 6,900-square-foot estate in Martha’s Vineyard, making it the priciest post-presidential pad in history.

But the Obamas are only the latest former first couple to retire to comfy confines after moving out of 1600 Pennsylvania Avenue. In 2008, George W. and Laura Bush snapped up a Dallas property just after the Dow Jones tanked.

Bill and Hillary Clinton paid $1.7 million for a home in toney Chappaqua, N.Y., in 1999. That positioned Hillary Clinton for her successful Senate campaign. More real estate purchases were to come for the Clintons.

George H.W. Bush and Barbara Bush retired to their sprawling estate in Kennebunkport, Maine; while Ronald and Nancy Reagan moseyed on back to their “Ranch in the Sky” in California.

Jimmy and Rosalyn Carter returned to their longtime, modest ranch-style house in Georgia, after he lost his re-election bid in 1980.

And what is now the most expensive post-presidential property once belonged to one of the most infamous presidents. Richard and Pat Nixon retreated to their home in San Clemente, California, after he resigned amid what would have been certain impeachment in the House of Representatives and potential conviction in the Senate.

Barack and Michelle Obama

The former first couple’s 29-acre spread on the moneyed Massachusetts island was actually snagged at a 20 percent discount from its asking price. The listing had been slotted at $14.9 million. The Obamas actually rented the estate before deciding to buy.

Their new residence at 79 Turkeyland Cove Road has a pool and an outdoor stone fireplace surrounded by lush hydrangeas. The seven-bedroom home also has high-vaulted ceilings with exposed beams and a massive kitchen — as well as a private beach. In 2017, an Obama family spokesperson denied a rumor that the couple had been eyeing two much larger parcels on the island owned by Caroline Kennedy and her husband.

George W. and Laura Bush: Dallas

In 2008, just days after the Dow Jones fell 777 points, Laura and George W. Bush paid $3 million for an 8,501 square-foot pad in an upscale North Dallas neighborhood. The house is on a quiet cul-de-sac on a 1.13-acre lot, with an outside fireplace and a separate servant’s quarters.

The former first couple spend most of their days in the ultra-chic Preston Hollow neighborhood, near Dallas Mavericks owner Mark Cuban. He bought the Texas Rangers from Bush and other investors in 1988. Another neighbor was oil magnate and corporate raider T. Boone Pickens, who lived there until his death in September.

Separately, the Bushes owned a home in the Texas hill country near Crawford. It was 43’s favored retreat during his presidency. The couple rarely spends time there now, according to reports.

Bill and Hillary Clinton: Chappaqua, N.Y.

In 1999, the Clintons bought a 5,300-square-foot home at 15 Old House Lane, in Chappaqua, New York, for $1.7 million. The purchase was made as Bill Clinton was leaving the White House and Hillary Clinton was planning her Senate run.

In 2000, the Clintons bought another multimillion-dollar home, this one in the nation’s capital. The $2.85 million, 5,500-square-foot home on “Embassy Row” has seven bedrooms, a den, and a pool on grounds surrounded by trees.

But the couple apparently liked Chappaqua, an exclusive neighborhood near where New York Gov. Andrew Cuomo shared a home with now-ex and celebrity chef Sandra Lee. In 2016, the Clintons purchased a second house on Old House Lane in Chappaqua, for $1.16 million. The 3,631-square-foot home sits on 1.6 acres and boasts three bedrooms and four baths, with a chef’s kitchen and a fireplace in the family room.

George H. W. and Barbara Bush: Kennebunkport, Maine

When George H.W. and Barbara Bush left the White House in 1992, they returned to their home in Kennebunkport, Maine. The former president purchased the estate from his father in 1977.

The compound, called “Walker’s Point,” was built by his grandfather, David Davis Walker, in the 1870s. The New England-style house sits on nine acres and has nine bedrooms, a library, kitchen and dining room, numerous patios and decks, a private beach and a tennis court. The parcel was assessed at $13.1 million in 2018, according to Kennebunkport tax records.

Ronald and Nancy Reagan: Simi Valley, California

The couple purchased this massive, 688-acre estate in 1974 for $527,000. They swiftly named the retreat “Rancho del Cielo,” or “Ranch in the Sky.” The Simi Valley ranch overlooks the Santa Ynez Valley and boasts views of the Pacific Ocean. The 1,600-square-foot house has two bedrooms, a large living room and kitchen. But the real draw is the land — filled with hardwood trees and ponds where the couple would canoe.

It was also the place where the former president conducted official state affairs when away from the White House — and entertained heads of state and VIPs, including Queen Elizabeth II and Prince Philip, former Soviet leader Mikhail Gorbachev and former British Prime Minister Margaret Thatcher.

Jimmy and Rosalyn Carter: Plains, Georgia

The couple’s post presidential pad has also been their only home, for almost 60 years. The Carters have owned the 1961 Ranch-style house at 209 Woodland Drive since it was built. The modest, 4,000-square-foot abode has four bedrooms and 3 bathrooms, according to Zillow. The Zestimate for it was pegged at around $200,000.

Richard and Pat Nixon: San Clemente, California

Richard Nixon purchased his 9,000-square-foot home for $1.4 million in 1969. It sits on 5.45 acres.

Combined with the other buildings, the estate had a total living space of 15,000 square feet, including Nixon’s ocean-view office, a swimming pool, an illuminated tennis court and a greenhouse. Nixon called the expansive estate “La Casa Pacífica.”

The property has been listed for as much as $75 million — the asking price it reached in 2015 — and was discounted to $57.5 million earlier this year.

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R.W. Selby & Co. picked up a rare multifamily complex in Culver City in a $33 million off-market deal. The transaction was brokered by a Kennedy Wilson agent who is the son of the seller’s general partner, a fact he did not disclose when publicizing the deal.

The purchase, a 104-unit complex called Imperial Buckingham Apartments, is located at 6000-6024 and 6060 Buckingham Parkway in the burgeoning Culver City neighborhood. Brentwood-based R.W. Selby specializes in acquiring and managing Class A and B apartment complexes in Southern California and Nevada, targeting deals between $10 million and $300 million and often paying all-cash. Many of its holdings are in the student housing sector.

On Friday, a public relations professional reached out to The Real Deal with a pitch about how his client, Kennedy Wilson broker David Pressberg, used his insight on the market to overcome challenges — namely Culver City’s adoption of rent-control measures — to complete the sale. The deal closed on Nov. 7, and Pressberg brokered both sides.

The publicist did not initially disclose the buyer and seller. Eventually, he provided
the name of the buyer, but insisted he wouldn’t name the private seller, which TRD discovered through a search of tax and corporation records were two entities controlled by Pressberg’s family.

In an interview with TRD, David Pressberg said that his father, Ken Pressberg, was the general partner of the selling entity. Tax records show the entity was controlled by two shell companies tied to the Pressberg family’s investment firm, SPB Partners. David Pressberg said neither he nor his father owned a financial stake in Imperial Buckingham Apartments, which was developed by David’s grandfather Sidney in the 1960s.

The broker said he simply received an unsolicited offer from R.W. Selby, presented it to the sellers (several limited partners), and they accepted.

David Pressberg said R.W. Selby was aware of his relationship to the seller, and claimed that he only received a commission from R.W. Selby despite brokering both sides of the off-market deal. He said he didn’t disclose the seller or his relationship to it because his family business is “very private,” and said that while the relationship did help him win the listing, it was his contacts and savvy that enabled the deal to happen.

R.W. Selby declined to comment on the transaction or its relationship with the Pressbergs. The firm will likely need to deploy $10 million into the Buckingham Parkway property, which has never been renovated, according to David Pressberg’s representative.

TRD was unable to independently confirm whether or not Ken and David Pressberg had a financial stake in the property.

The post R.W. Selby buys $33M Culver City rental in deal brokered by seller’s kin appeared first on The Real Deal Los Angeles.

Billionaire business mogul Patrick Soon-Shiong has expanded his El Segundo empire, purchasing a 33,000-square-foot office building in the neighborhood for $19 million.

A limited liability company that lists the address of Soon-Shiong’s umbrella corporation NantWorks and features the signature of his longtime associate Charles Kenworthy, bought the property at 2200 E. Grand Ave. from BLT Enterprises, a Santa Monica-based real estate investment company. The deal hit county records on Dec. 2.

BLT Enterprises bought the two-story office building, which has a bold, black inscription that reads on “Aerospace” on its front door, for $11.4 million in 2012, according to PropertyShark.

A message left with a Soon-Shiong spokesperson was not immediately returned.

The deal represents Soon-Shiong’s latest effort to refashion El Segundo from aerospace hub to site for the entrepreneur’s many biotechnology, media, and entertainment properties.

The neighborhood, which is adjacent to Los Angeles International Airport, is transitioning from the reduction in L.A. work available at military and aviation companies including Boeing, Raytheon, and formerly L.A. headquartered Northrop Grumman Corp.

The 2200 East Grand Avenue property sits one mile away from the Los Angeles Times headquarters, a publication Soon-Shiong acquired from Tribune Publishing Co. last year. Soon-Shiong moved the Times from its century-old headquarters in downtown L.A. to 2300 Imperial Highway, a 157,000-square-foot property Soon-Shiong bought in 2017 for $52 million.

Soon-Shiong subsequently bought a $50 million warehouse adjacent to the new Times’ headquarters, and he purchased other properties in El Segundo last year.

Each of the deals were registered under LLCs controlled by Kenworthy, an executive vice president for corporate strategy at NantWorks. Kenworthy followed Soon-Shiong from Abraxis, a bioscience company Soon-Shiong sold for $2.9 billion in 2010 one year before he started NantWorks.

Privately held NantWorks is headquartered in Culver City, but the company has expanded into El Segundo under the moniker of numerous subsidiaries including NantKwest, NantHealth, NantMobile, NantBio, NantCloud, NantOmics, NantCell, and NantStudio.

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Ben Carson’s office is what one might expect from a former neurosurgeon: clean, with few distractions, in a sterile, hospital-like setting. The Secretary of the U.S. Department of Housing and Urban Development has routinely characterized the agency’s 1960s-era concrete semi-circular structure — the Robert C. Weaver Federal Building — as the ugliest in Washington, D.C.

One of the few paintings in his office is of members of the president’s original cabinet, including Carson, crossing a swamp behind the White House in a boat. It is signed by Donald J. Trump, his political rival-turned-ally. Just four years ago, when they were both seeking the Republican nomination for president, Trump was bashing Carson, claiming the doctor had never created a job in his life. Now, Carson is one of Trump’s few remaining original cabinet members.

At HUD, Carson oversees a budget of $44 billion and a staff of more than 6,500 people. He’s tasked with running an agency that makes housing policies for more than 9 million low-income Americans through rental assistance. Under his tenure, HUD claims it has reduced regulatory barriers and Obama-era rules that discouraged investment in distressed areas.

But critics, including many Democrats and housing advocates, accuse Carson of repealing crucial protections for marginalized communities. Some have also dismissed him as woefully unqualified for the job since he had never worked in government and had no background in housing policy.

Carson, meanwhile, has faced his share of controversies. In 2017, HUD ordered a $31,000 dining set for his office, which Carson later canceled and was cleared of wrongdoing on.  And the Washington Post reported this September that Carson had made disparaging remarks about the transgender community, telling HUD staffers he was concerned about “big hairy men” staying at women’s homeless shelters. He later defended the remark, saying, “political correctness is going to destroy our nation.” He’s also had a fair share of gaffes, notably confusing the real estate term REO with the cookie Oreo.

But despite the criticism, Carson’s life trajectory has been indisputably impressive. Born into poverty, he won a scholarship to Yale University and then went to the University of Michigan Medical School before becoming one of the youngest chiefs of pediatric neurosurgery in the country at age 33. He was also the first neurosurgeon to successfully separate conjoined twins at the back of the head. Carson and his wife, Candy, have three grown children and a reported net worth of $20 million, according to Forbes. So why did he take the position at HUD? That’s something Carson seems to wonder himself.

Was there any part of your childhood growing up in a low-income neighborhood in Detroit that led you to [HUD]? Well you know, Detroit wasn’t that bad at the beginning. My parents lived in a little G.I. home — it was 700 square feet, but it was our 700 square feet. When my parents got divorced for a little while [when I was eight], we were homeless. My mother eventually moved in with some relatives in Baltimore in a very typical tenement there. There were rats and roaches and crime, and both of my older cousins were killed. It was that kind of place. I had the opportunity to see first-hand what it was like to live in those conditions, and the thinking of people who lived in those kinds of conditions. How they thought about life. Did they think about getting out of there?

What’s your view of Detroit today? Detroit has had many sputtering starts. People were going to do this, they were going to develop the harbor [terminal], but it never really took hold until recently. The mayor now, Mike Duggan, seems to have a much better grasp of how to get things done. He was a hospital administrator. He had to deal with business and he knows the value of people being able to see progress.

Your late mother was a big inspiration for you. Did she say anything that motivated you to take a role in federal government? She was constantly saying from the time I was a little kid, “Ben you are smart. You can do anything anyone else can do, but you can do it better.” That is always what she said. But she fully understood the need to take care of people. Even though we were poor ourselves, she was always trying to help other people.

I remember one time there was this homeless guy and he was so hungry and she said, “I am going to fill that guy up until he feels like he is going to burst.” And she did. That’s the kind of person she was, even though she had a very difficult life herself. She grew up in a huge family in rural Tennessee, got married when she was 13 and then found out her husband was a bigamist.

Was there any inspiration from faith or from the Bible that pushed you into this position? There is no question that I have a belief in the Bible. And the Bible talks a lot about our obligations to the poor. … It says in James 1:27 to visit the fatherless and their widows and to keep oneself unspotted from the world, which means you take care of the poor people, and you don’t act like the rest of the politicians.

What was it like going from running against Trump to working for him? During the campaign, [Trump] and I became friends, because philosophically, we are very much the same. Personality-wise, we are extremely different. He’s actually a lot of fun when he’s in a pleasant setting and not being attacked. He’s very good to work with because he trusts my judgement. Even if there are  disagreements, he says, “I know that you have thought this through, and I am sure you know what you are talking about.”

What was your impression when he first called you? Where were you and what did he say? Actually, I was in Trump Tower, and I was going to talk to him about some various issues — what kind of things we could do to get the country back on the right track. Vice President Pence was there, and [former] Chief of Staff Reince Priebus was there, and who is the guy who played such a big role in the beginning and then left?

Bannon. Steve Bannon. Yeah, and Steve Bannon. After they listened for a little while, they said, “You really should consider a cabinet position, you would be so good at this.” Somehow they managed to convince me even though I really didn’t want to come into government. You know, I had a very comfortable life. I was making a ton of money [from writing books and sitting on boards] and could do anything I wanted to do, so to give all that up, I said, “Oh boy, do I really want to do this?” My wife wasn’t too sure either, except when the grandchildren started coming over, she said, “absolutely we should do this because we’ve got to make sure they have the same opportunities.”

Did your wife talk you into this? Well, I was leaning toward it. But I wasn’t going to do it if she didn’t want it. I realized that it would have an impact on my kids, too. Not only will certain people go from loving you to hating you, but also because one of my sons [Ben Carson Jr.], in particular, is a very successful businessman and is involved in lots of ventures. And now everything he does is examined under a microscope. But you have to weigh that against what is going on in our country. A long time before we came along, there were people who made a lot of sacrifices to make sure that we had the freedom we have now.

You are one of the few original Trump cabinet members that are still here. Why do you think that is? It’s not that [people] didn’t try to get rid of me. If you remember with furniture-gate they tried to get me to resign. A couple of months ago, they said, “Carson should resign because Carson thinks women’s shelters are for women.” That’s crazy stuff. I don’t listen to that mess. Some of the cabinet members have had to leave simply because they couldn’t withstand the financial burden. Because when you are accused of something, you have to hire these $900 per hour lawyers.

But then why are you still here? I can afford $900 [per hour] lawyers. And I don’t listen to the garbage. My mission here is to change this agency from a place that just sort of puts people in shelters and puts them in different programs to a place that gets people out of poverty.

Do you ever miss neurosurgery? It was very nice. There was no question. You go into the operating room and you are in the sanctuary. You don’t have to worry about anything except that patient, and sometimes you are in there for many, many hours. But you are only affecting one life at a time. In this job, you are affecting hundreds of thousands of people.

In a previous interview, you said running HUD was more intricate and complicated than brain surgery. What did you mean? In the sense that there are more things here that don’t make sense.

What doesn’t make sense? For instance, if you are getting housing assistance and you earn more money, you have to report that, so your rent goes up. That doesn’t make any sense. Because why would anyone be trying to improve themselves if they can’t get ahead.

What is the most challenging part of the job? The most challenging part in government is dealing with bureaucracy. Because bureaucrats are people who care more about dealing with the rules than they do about the goals. If you know anything about surgeons, they are just the opposite. They say: What is it that we are trying to do? Let’s fix everything else and make sure we can get to that.

One recent report said the 100-plus Opportunity Zones funds that sought to raise $22.7 billion have only raised about $3 billion so far. Do you still believe OZs are a $100 billion investment opportunity? I think there are somewhere between $49 billion and $60 billion right now. Will it get to $100 billion? Yeah, I think that it will go far beyond that. The American business community is very entrepreneurial and innovative. As they become more familiar with something and figure out how they can use it to their advantage, they will as long as you don’t overregulate it.

Where are you getting those [$49 billion to $60 billion] estimates from? This is what I have been told from various sources.

Critics say that under your leadership HUD has rolled back fair housing protections, including repealing an Obama-era rule around disparate impact. Critics say it will lead to more discrimination by developers and lenders on marginalized communities. What do you say to that? I expect criticisms. People are creatures of habit. They don’t like change. What are we trying to accomplish with Affirmatively Furthering Fair Housing? [Critics] are trying to stop segregation and in order to do so, create these massive surveys. They come up with all kinds of statistics but nothing changes. We are saying, why is there segregation? People can’t afford to live anywhere except in certain areas. There is no way for them to get into affordable housing. Why don’t we use AFFH to encourage local jurisdictions to remove those barriers to fair housing so that people do have the ability to move to areas that have opportunity?

Do you believe that discrimination is widespread in housing? I don’t know if I would say it is widespread. Does it exist? Of course, and that is the reason the Office of Fair Housing and Equal Opportunity is so active and has cleared out a backlog of cases. You never hear that from the people who say we are backing off.

HUD reached an agreement earlier this year with the New York City Housing Authority to oversee the agency. Who is to blame for the problems at NYCHA, and what have you done to curtail fraud and abuse in the program? The problems at NYCHA have been chronic. They have been neglected. I am sure you know the story about the cases of lead testing. We were able to negotiate with [Mayor Bill] de Blasio. I said: “Forget about politics, let’s talk about the people.” Let’s have everything we do be aimed at them. Knowing [the people at NYCHA] have traditionally neglected their duties, we couldn’t just take their word that they were going to change. That’s why we put in a federal monitor there.

Are there any parts of your time as a neurosurgeon that have helped you navigate bureaucracy? Well, just learning to take an overall type view as opposed to a very specific. It goes back to the beginning: What is the goal here as opposed to what are the rules here?

What’s next for Ben Carson, neurosurgeon, presidential candidate and HUD Secretary? I hope to retire at some point. I failed at that the first time. But I will probably never fully retire because I will still be doing a lot of public speaking and writing books and doing board work.

I’ve read that you’re a vegetarian. I am not a strict vegetarian, but I prefer a vegetarian diet.

Any reason for that? Yeah, because my wife is a vegetarian and I don’t like to cook.

How do you want to be remembered? I get the legacy question all the time and I answer it the same way. It’s really not about me. It’s about the people … we have a large segment of people in the country who are not realizing the American Dream and we need to find a way to change that.

Do you have any plans to get into real estate? I don’t think I will be getting into real estate, but who knows?

— Edited and condensed for clarity.

Correction: The Real Deal’s November cover noted that Carson is getting ready to step down, but while the HUD Secretary says he hopes to retire at some point, he did not specify when.

The post Ben Carson vs. the critics appeared first on The Real Deal Los Angeles.

In fragmentation, there is real estate opportunity. And that makes healthcare one of the most interesting spaces for private equity real estate investors, generating billions of dollars in trades over the past year, according to top players and advisers in the space.

“As we are reaching the end of the cycle, people are seeing healthcare as a safe place to invest capital and find enhanced yield in healthcare as compared to other asset classes,” Ben Ochs, CEO of Anchor Health Properties, said at a recent event organized by GlobeSt. But, he warned, “you have to understand the true demand for a facility and the location. In terms of real estate investors, if we are going to develop or contemplate purchasing one, you really need to peel back the layers and make sure it works.”

JLL’s Chris Wadley, who moderated the discussion, noted that construction costs will rise 10 percent over the next decade, making it imperative you choose what to build carefully.

Jon Foulger, who heads acquisitions at Med Properties, said on the panel that high-net-worth investors are showing a greater appetite for risk, while institutional investors continue to put a premium on consistency. He said he believes that while some other real estate asset classes are showing signs of unrealistic pricing, “there is still some level of sanity in underwriting healthcare real estate.”

The space has certainly been abuzz with activity. In September, Healthcare Trust of America paid $85 million for a Westlake medical office building in Los Angeles. The seller was Stockdale Capital Partners, which is looking to build a $250 million medical office tower in nearby Beverly Grove. And in October, a company tied to Meridian Senior Living paid $60.9 million for a community near Boca Raton, Florida.

Matt Bear, founder of investment-sales brokerage Bear Real Estate Advisors, said that his clients won’t buy buildings if they have a pitched roof.

“Functional obsolescence is real,” Bear said. [GlobeSt] — TRD Staff

The post What you need to know about investing in healthcare real estate appeared first on The Real Deal Los Angeles.

Chinese developer City Century has finally closed on a sought-after development site in downtown to build a $1 billion housing and retail complex adjacent to the L.A. Live entertainment venue.

The project, called the Olympia, is to be built on a site that the developer has now closed on for $121 million. The site is located on Olympic Boulevard along the 110 Freeway, according to the Los Angeles Times.

City Century announced three years ago that it wanted to build three high-rise residential towers sandwiched between L.A. Live and the Metropolis residential and hotel complex. The project could include over 1,300 residential units as well as shops and restaurants.

The City Century acquisition comes at a time when other Chinese investors have pulled back in the United States. Government policies put in place in 2016 have restricted the flow of money out of the country, and the U.S.-China trade war has also dampened investment.

The Times noted that direct investment by Chinese companies in the U.S. has dropped from a six-month average of more than $20 billion in 2016 and the first half of 2017 to less than $5 billion on average in the last two years, according to data from Rhodium Group.

Oceanside Plaza, another major Chinese development downtown, has stalled since January. The condominium, hotel and retail project, valued at more than $1 billion, was being built by Oceanwide Holdings, a publicly traded international conglomerate.

Greenland USA, a subsidiary of major Chinese developer Greenland Group, is wrapping up the $1.3 billion Metropolis, a 3.3-million-square-foot development three blocks south of the Staples Center that has reshaped the DTLA skyline.  [LAT] — Pat Maio

The post Chinese developer City Century closes on land for $1B DTLA megaproject appeared first on The Real Deal Los Angeles.

“They paved paradise to put up a parking lot,” Joni Mitchell famously sang. However, in hot real estate markets, we’re well past that.

Developers, desperate for prime land upon which to build, are increasingly eyeing parking lots, and that has caused trading activity of such assets to soar. In 2016, for example, there were over 200 sales of parking lots, according to CoStar Group data cited by the New York Times. That’s more than double the annual volume seen in 2006 through 2014, according to CoStar data cited by the publication.

“From a landowner’s standpoint, values have increased tremendously over the last several years, and it’s a great time to capitalize on that,” James Letchinger, whose firm JDL Development is building a pair of skyscrapers on a Chicago lot it purchased for $110 million for a Chicago lot in 2017, told the Times. “The reason they’re valuable is because many are sandwiched in the middle of really strong locations.”

Although parking lots remain lucrative businesses, there are factors that may make them less so in coming years. According to research firm IBISWorld, these include ridesharing, a surge in public transport usage and an uptick in bicycling.

And the lure of big money from developers may be too strong. Between 2003 and 2014, about 34 percent of the land classified as parking in Manhattan below 59th Street was redeveloped for other uses, according to an analysis of city data by The Real Deal. At the end of 2014, Ziel Feldman’s HFZ Capital Group paid a staggering $870 million, or about $1,100 per buildable square foot, for a 36,000-square-foot development site straddling the High Line that was once a parking lot. (HFZ’s condo project on the property, the XI, is now in the news for its role in an alleged bribery scandal involving the mob.)

Besides their prime locations, the biggest draw for developers is that parking lots, unlike existing structures, are flat, empty space.

“You don’t have to worry about demolishing something and, say, you find asbestos and all of a sudden you’ve got to encapsulate and do all sorts of crazy stuff,” said CBRE’s Bill Shanahan.

In Los Angeles, Ivy Station, a 500,000-square-foot project by Lowe Enterprises and Aecom Capital, is rising on a former parking lot next to a light-rail stop. It will include 200 apartments and 240,000 square feet of office space anchored by HBO, as TRD reported.

“You are starting with a clean slate,” Lowe’s Tom Wulf told the Times. “You have the opportunity to build out, you create the context yourself.” [NYT] — TRD Staff 

The post They paved paradise to sell a parking lot appeared first on The Real Deal Los Angeles.

In an uncertain U.S. economy, real estate investment trusts have had a standout year. Overall, the sector has notched better than 25 percent total returns year-to-date, among its best performances of the decade.

Those strong 2019 results came as the Federal Reserve slashed interest rates three times this year, U.S. gross domestic product grew at a slow but even pace and there remained lingering concerns about the global economy, said Haendel St. Juste, a REIT analyst at Mizuho Securities USA.

Instead of hampering growth, that uncertainty provided the ideal environment for REITs, which have also benefited from continued strong industrial and manufactured housing markets nationwide.

“It’s a low-risk, low growth, but steady-Eddie type of sector,” St. Juste said.

If the SNL U.S. REIT Equity Index stays around the same point through the end of December — with total returns of 27.4 percent — that would make 2019 the third-best performing year this decade, according to data from S&P Global Market Intelligence as of Dec. 6. The top years of the decade for REITs were 2009 and 2010, which tied with 28.9 percent returns.

But there are pockets of problems amid the strong topline figure reported as of Dec. 6, in the SNL U.S. REIT Equity index. Some REIT subsectors aren’t faring as well, namely retail, to no one’s surprise. Going into 2020, that has created an environment of the haves and have nots, analysts and experts said.

“We would characterize this as a market where a rising tide has not lifted all boats by any means,” said Richard Hill, a managing director at Morgan Stanley, who heads its U.S. REIT equity and commercial real estate debt research.

So far REITs are neck-and-neck with the S&P, with the REIT index trailing the broader market by less than a percentage point. That’s a reversal from earlier in the year, when REITs outperformed the S&P.

The shift was likely more so because the S&P has caught up to REITs, Hill said. And some good news — an improved outlook on the U.S. trade tussle with China — led many investors back to cyclical stocks over defensive ones, like REITs, he added.

“I do think investors are a little bit conflictive of where the market is going,” Hill said.

The third quarter also saw some stocks underperform, giving back much of the returns gained over the year, said James Shanahan, a senior analyst with Edward Jones.

“With valuations stretched the way they were and results coming in below analysts’ expectations, it was enough to send some of these REITs’ stocks down 5 percent, which is a pretty significant move for a REIT following an earnings announcement,” he said.

Shanahan pointed to medical office and senior housing REIT Ventas. The firm reported net income of almost $85 million in the third quarter, down from $210 million the prior quarter. It attributed the decline in part on a struggling senior housing portfolio. So far in 2019, its one-year returns are down almost 8 percent, according to S&P. “[Ventas] gave back a lot of the return they had been able to deliver year to date,” Shanahan said.

Haves and have-nots

Though the headline returns figure paints a rosy picture for REITs, there is a sizable gulf between the best- and worst-performing subsectors.

The top-performing sector year-to-date is manufactured housing, raking in 54.5 percent one-year gains, according to S&P. Following close behind was industrials, at 52.3 percent.

Manufactured housing is generally considered a safe sector to invest in, one that sees investor capital pouring in when there are concerns about the economy and fewer compelling investment opportunities, St. Juste said.

A top performer in the space this year is Sun Communities, which is seeing 59 percent returns year-to-date. The Michigan-based REIT has 389 manufactured housing and recreational vehicle communities around the U.S. and Canada.

Private equity firms have poured funds into mobile homes in recent years. For instance, Brookfield Asset Management owns some 130 mobile-home communities. That makes the Canadian-based asset manager one of the largest manufacturing housing investors in the country.

Industrial giants go toe-to-toe

As for industrials, it’s been a favored property group for years — including 2019 — in part a product of the continued growth of e-commerce, and the need for last-mile warehouses and data storage centers. That shows little signs of abating, even if industrial stocks look expensive, analysts and experts said.

San Francisco-based logistics giant Prologis has tallied year-to-date returns of almost 59 percent, according to S&P. This year, it’s gone toe-to-toe with Blackstone to gobble up massive industrial portfolios. In October, it acquired rival Liberty Property Trust in a $13 billion deal.

Meanwhile, Blackstone made its own massive logistics play when it dropped $19 billion on an industrial portfolio from Singapore-based GLP.

Not surprisingly, malls have performed the worst this year amid retail’s continued struggles. Malls marked 9.4 percent losses year to date, the only sector with negative returns in 2019, according to S&P.

But investors are increasingly distinguishing between different retail subsectors. Store closures and retail bankruptcies — like those of Forever 21 and Payless — have pummeled mall REITs.

Even the top name mall REITs are feeling the pain.

Simon Property Group, which operates 233 malls and outlets globally, is posting return losses of 7.2 percent since the start of the year. Macerich, another class-A mall owner that has been working to redevelop its portfolio, is seeing losses of nearly 31.5 percent over the same period.

But Simon is doing relatively well in a challenging retail environment, Shanahan said. Like other operators, Simon has been working to repurpose its properties, and recently invested $280 million in online discount retailer Rue Gilt Group to expand their purchasing platforms.

Looking toward 2020, analysts are keeping an eye on trade and how it will affect investment. And with steady — if slow — GDP growth, “the U.S. REITs are in a favorable place,” St. Juste said.

The post Here’s why “Steady-Eddie” REITs are having a standout 2019 appeared first on The Real Deal Los Angeles.

For developer Billy Ruvelson of Icon Company, Los Angeles City Council’s incoming president Nury Martinez is a welcome presence.

Martinez was a strong supporter of Icon at Panorama, the firm’s residential and retail redevelopment project planned in a blighted area of Panorama City. Martinez stood by the Beverly Hills-based developer after the local carpenters and laborers unions sued to stop development of the 623-unit complex at the former Montgomery Ward shopping center.

“We’ve worked with Councilmember Martinez in a very productive and positive manner,” Ruvelson said.

The Council last week elected Martinez to succeed Herb Wesson, whose complicated record on development saw him generally favor market-rate projects but also championing an affordable housing plan that seeks citywide guarantees for all new projects. Martinez was Wesson’s choice to follow him.

Martinez, who has represented the San Fernando Valley for six years as council member, will be L.A.’s first Latina council president. In the powerful post, she sets the legislative agenda — along with Mayor Eric Garcetti — and will control which bills make it to the Council floor.

“She has been in the Council’s background, so I was very surprised when she was made Council president,” said Casey Maddren, executive director of United Neighborhoods for Los Angeles, an affordable housing advocacy group.

Martinez has pushed for the creation of environmentally-friendly jobs through a local “Green New Deal,” and advocated for raising the minimum wage. She has spoken out less on housing and development issues, although the council member has backed development projects in long overlooked parts of her district.

Now, she will lead the Council as it increasingly focuses upon perhaps the city’s most urgent problem, a lack of affordable housing. Martinez also takes the helm — officially Jan. 14 — after the Council voted to ban development companies and their executives from contributing to city officials’ election campaigns. That Dec. 4 vote made L.A. the first city in the nation to take such a step, though good government groups criticized it for not banning indirect campaign contributions.

Through a spokesperson, Martinez declined to answer specific questions about her record and position on housing and development issues and developer influence in city elections.Martinez’s office said in an emailed statement that she would “be releasing her agenda/plan once her term” as Council president begins. That plan will include “a number of issues, including homelessness and affordable housing.”

Pushing for development

Developers, local business associations, and affordable housing advocates interviewed all agree that at least when it came to her district, Martinez saw big development projects as a means to revive working-class communities including Panorama City, Sun Valley, and Arleta.

“She has been pro-development,” said Stuart Waldman, president of the Valley Industry and Commerce Association, a group that advocates for San Fernando Valley businesses and local development.

Waldman contrasts Martinez to Councilman David Ryu, who presides over a more affluent neighboring district, and who was instrumental in pushing for the developer donation ban.

“Her district isn’t a district filled with NIMBYs,” Waldman said, referring to those who oppose larger developments. “I think if David Ryu tried to enact the same policies in his district, the constituents would be up in arms.”

Added Maddren, “It’s been a real struggle to lure both businesses and residential developers to places like Panorama City.”

Deep in the Valley

Martinez has spent almost her entire life in working class areas of the San Fernando Valley. Born in the U.S. to Mexican immigrants, she attended public schools in Pacoima before graduating from California State University-Northridge.

Martinez served on the San Fernando City Council for six years, and spent four years on the L.A. Board of Education before winning a special election to the L.A. Council in 2013.

The Council Member perhaps lacks a signature bill — housing and development or otherwise — but she recently co-authored a measure barring no-fault evictions prior to the state rent control law going into effect in January.

Martinez has shown a willingness to shepherd market-rate apartment developments in her district through the Council.

Despite union objections, she maintained support for Icon’s Panorama project, which passed the Council unanimously in August 2018.

Going against organized labor can be a tough choice for a Democratic politician in L.A., Waldman said. “But the Council member enjoyed broad local support for the project,” because it targeted “one of many buildings in her district to fall into disrepair.”

Martinez also helped downtown developer Izek Shomof with his plan to create a residential and mall complex out of the 13-story Panorama Towers, which has sat vacant since the 1994 Northridge earthquake, but is now listing apartments for lease.

And she shuttled through tearing down hotels that Waldman claimed were a site of drug dealings and prostitution. IMT Residential razed the Voyager Motor Inn at 6500 Sepulveda Boulevard, replacing it with a 160-unit apartment complex where construction is expected to be completed early next year.

“I think that she wants to change the face of the district,” Waldman said. “If you drive down Van Nuys Boulevard, there are bars on windows, and pawn shops and bail bondsmen. She wants to build more housing and complete new projects.”

Succeeding Wesson

Martinez became a councilwoman a year after Wesson took the reins as Council president. Wesson had replaced Garcetti, who stepped down as leader in January 2012 after winning the mayoral race.

Martinez supported Wesson’s policies, but so did everyone else on a unified City Council in which 99 percent of votes are unanimous. In a motion to nominate Martinez, Wesson focused on his own legislative record. He said of Martinez, “I have no doubt that the good governance that has helped to make Los Angeles the greatest city in the world will carry on under our next president.”

Maddren and others interviewed posit Wesson may have nominated Martinez president to shore up support among Latino voters during his run for a County Board of Supervisor post. Multiple messages left with Wesson’s office were not returned.

Wesson’s track record on development was complicated to the end. In October, a Los Angeles Times investigation revealed that Wesson helped steer Michael Hakim’s Rosewood Corp.’s high-rise apartment project through the planning commission at the same time the company was providing rent breaks for his son on a different property.

Meanwhile, Wesson last month opposed a 577-unit market-rate project by Arman and Mark Gabay’s Charles Co. because it didn’t have any affordable units. The city subsequently killed the project.

That came at the same time as a sweeping plan Wesson has proposed that would require all multifamily construction in the city to have an affordable component.

Previously, Wesson had aligned himself with Councilman Jose Huizar, who led the powerful pro-development Planning Land Use and Management Committee. But Wesson stripped Huizar of his post last year, days after an FBI raid of his home and office. Huizar is under investigation for possible bribery, extortion, money laundering and conspiracy in a case that involves Downtown development projects.

Amid that probe, the Council passed its ordinance last week, which does not take effect until 2022, and does not limit indirect campaign contributions from developers to political committees.

Despite the recent ordinance, Maddren criticized Wesson for being too close to developers. He said the councilman was “basically shutting L.A. communities out of development issues.”

But James Elmendorf, policy director at Los Angeles Alliance for a New Economy — a group that often works with council members on drafting economic and housing legislation — praised Wesson for what he called innovative work on policies that include “leading on the development of temporary housing shelters.” Elmendorf, who is an affordable housing advocate, was hopeful Martinez would continue on that path. Martinez, who has been a guest at one of LAANE’s gala dinners, is a “dynamic leader,” Elmendorf said, but one who has “big shoes to fill.”

The post Next LA Council president has backed big development in her district appeared first on The Real Deal Los Angeles.

A development team has a $2.5 billion plan to lure millennials — and some Gen Xers — out of amenity-filled apartments and into thousands of new houses across the country.

Miami-based Partners Global City Development and Brazil-based Leste investment management firm want to construct 10,000 new houses and townhomes in the build-to-rent space, The Real Deal has learned.

The plan is on an aggressive timeline, with the venture aiming to build the houses in 30 communities over the next five to seven years.

Those communities will be under the Cassa Life brand, and will be geared toward renters between 25 and 44. Many of them are currently living in high-rise buildings in their cities’ downtowns, paying high rents for small spaces, said Brian Pearl, principal of Global City Development.

The target resident wants to move away from micro and co-living product, and is not looking to buy a home, either because they prefer renting or they’re priced out of the homebuying market.

At Cassa Life communities, residents would be paying the same or less in rent for double the space. “As people get married or get pets, have children … there’s a lot of life events where people need more space,” Pearl said. “The problem with urban living today is a lot of units are getting smaller and smaller.”

The venture has made its first two land buys, shelling out $15.2 million for 300 acres in Raleigh and Durham, North Carolina, where it’s planning to build more than 700 units, and has started acquiring land in Nashville, Tennessee, for a project with about 200 units. Pearl said the partnership bought a smaller property in the Nashville area for $2 million, and is still assembling land for that community. Construction on the Raleigh/Durham project will begin next year.

In Florida, the group is negotiating deals for land in Tampa and Orlando, and looking at properties in western Palm Beach County.

Building communities

Unlike one-off homes that investors rent out or large, sprawling portfolios owned by single-family rental giants like Blackstone, Cassa Life will build and manage entire communities from scratch.

Global City is managing the venture, and Leste is providing the capital. Leste, led by founder and CEO Emmanuel Hermann, has an office in Miami. The two firms have worked together in the past, Pearl said.

They are planning to expand to gateway markets in the Southeast, Texas and in Washington, D.C. Cassa Life is being led by Adam Adler, who previously worked for Terra. Pearl said the build-to-rent initiative is in response to how much land prices have increased.

He said the concept would not be feasible in markets like New York, San Francisco and Miami where land just outside of the urban core is either not available or too expensive.

“We’re trying to keep rents relevant for people making between $75,000 to $150,000 a year. The only way to really do that is to find markets where you can find the land,” Pearl added.

The communities will range from 200 to 500 townhouses and homes, with units ranging from 1,200 square feet to 2,000 square feet. The homes will have 10-foot ceilings, kitchen islands, and stainless steel appliances, for example. There will also be pools and fitness centers.

And of course, amenities will be a big focus. Younger people have become used to perks like speedy WiFi, so much so that Pearl said he’s looking to purchase land with fiber-optic cable.

“Speed of WiFi is becoming a key amenity because everybody is just streaming all the time. You just have to think about the future. It’s just going to get more and more intense,” Pearl said.

The post The $2.5B plan to lure millennials into new houses appeared first on The Real Deal Los Angeles.

A massive Bel Air mansion that belonged to the late media mogul Jerry Perenchio is being sold for $150 million, setting a new record for Los Angeles County.

The Chartwell estate is being purchased by an unidentified buyer, according to the Wall Street Journal, which first reported the deal.

The home was by far the largest property in the extensive portfolio owned by the Perenchio estate. The billionaire was a former chairman and chief executive for Univision. He died in 2017.

The 10-acre estate, which has a 25,000-square-foot main home, hit the market for $350 million as a pocket listing two years ago. In June, that was slashed to $195 million. The mansion has 11 bedrooms, 18 bathrooms, along with a 75-foot swimming pool, guest house, covered parking for 40 cars and a tennis court on the meticulously landscaped grounds.

The sale surpasses the previous record, set in July, when Formula One heiress Petra Ecclestone sold the Spelling Manor for about $120 million. That massive home had originally been listed for $200 million. The buyer was also unnamed.

No less than eight agents are listed as representing the Perenchio estate in the sale: Drew Fenton, Jeff Hyland and Gary Gold of Hilton & Hyland; Joyce Rey, Jade Mills and Alexandra Allen of Coldwell Banker Global Luxury; and Drew Gitlin and Susan Gitlin of Berkshire Hathaway Home Services. [WSJ] — Matthew Blake

The post Bel Air megamansion sells for $150M, setting LA record appeared first on The Real Deal Los Angeles.

The Luzzatto Company is building a creative office hub in West Adams, after assembling half-a-dozen properties totaling at least 140,000 square feet.

Asher Luzzatto, president of the Fairfax-based development firm, said the company had acquired five properties and was in escrow for a sixth, all near Exposition and Crenshaw boulevards a couple of blocks from each other. The properties are in various stages of development.

This week, the company said it had lined up a $30 million refinancing package for Exposition 2, a 56,000-square-foot conversion project at 3339 West Exposition Place. JLL arranged the 10-year, fixed-rate loan. Luzzatto Company purchased the building in 2018 for $17.25 million, and undertook the renovation earlier this year. It is fully leased to GOAT, an online sneaker marketplace.

Over the summer, the firm acquired 3101 Exposition Boulevard, which salad chain Sweetgreen will use for its new headquarters. Luzzatto Company paid $15 million for the 50,000-square-foot property, a former dairy building that is being redeveloped.

The remaining properties in the West Adams portfolio are: 3644 11th St., a 9,000-square-foot industrial space space; 3629 10th St., a 12,000-square-foot space; and 3645 10th St., an existing 22,000-square-foot creative office campus.

Asher Luzzatto declined to identify the sixth property, which is in escrow, but said he expects to close on it in early 2020.

The post Luzzatto Co. assembling creative office hub in West Adams appeared first on The Real Deal Los Angeles.

WeWork is in talks to the sell the biggest acquisition it made in its free-spending days.

The co-working company is in discussions to sell the workplace management company Managed by Q to a group including one of the company’s co-founders, Bloomberg reported. It’s one of three companies WeWork put on the chopping block as it looks to cut costs.

Co-founder and former chairman Dan Teran is working with a group of investors and executives to buy the company just about eight months after WeWork acquired it.

The deal could free up cash for WeWork as it tries to focus on the core of its business. To stave off a bankruptcy, WeWork’s biggest investor SoftBank recently provided a $9.5 billion rescue package. This week, Goldman Sachs arranged a $1.75 billion line of credit to WeWork and SoftBank.

During a panel in Abu Dhabi on Wednesday, Teran said he is “actively working to buy back my company.”

Managed by Q was valued at $249 million in January following a new funding round, according to a report citing PitchBook data. It wasn’t clear how much the company is being valued at now in the negotiations between WeWork and Teran. [Bloomberg] – Rich Bockmann

The post WeWork in talks to sell off Managed by Q to free up some cash appeared first on The Real Deal Los Angeles.

Andrew McDonald is prepared for a West Coast scrap.

The president of Cushman & Wakefield’s western region plans to continue an aggressive push into new markets in 2020, which will pit his brokers up and down the coast against entrenched powers CBRE and JLL.

For McDonald, who joined Cushman Realty Corp. in 2001 to work with John C. Cushman III, high-growth markets such as L.A. and Texas are key targets for his stable of multifamily, investment sales, debt and leasing brokers. He’s also overseeing the firm’s operations and strategy in Colorado, Arizona, Washington, Oregon, Nevada, Utah and Mexico.

In an interview with The Real Deal, McDonald talked about his team’s performance in 2019, the most promising markets on the West Coast, the potential of downtown L.A.’s office market, brokerage competition and more.

The following has been edited for length and clarity.

Has Cushman’s approach changed since it went public last year? How are you dealing with competition?

If we go back to 2014-2015, I don’t think anyone would necessarily say that we were a global competitor to JLL or CBRE. I think that we competed, but we weren’t probably on equal footing. I think you fast-forward to today, nearly five years later, and that has changed dramatically. We are now the third largest real estate services firm globally, and that simply was not the case pre-merger.

I think that the reality of this is that the industry will continue to consolidate. I think vendor consolidation is something that we’ll see going forward for the foreseeable future. I think that more and more companies are looking for a single provider that could solve for any and all of their needs, in any locations around the globe. And so the competition is always going to be fierce, clearly, but we really like where we’ve been competitively. Those are very good companies, JLL and CBRE, and I would imagine they think of us in the same way.

Last year, Cushman’s western operations had about 500 million square feet under management, with an estimated 2,400 transactions valued at $22 billion. By contrast, transaction value for 2017 was $8 billion. What are you seeing as 2019 comes to a close?

Well, I don’t have the actual figures on transactions or on the total volume, but that’s because we don’t have that until probably the end of the year. What I can tell you is that 2018 was our best year ever at the company, and 2019 is going to be better in Los Angeles, so we continue to grow. We’ll see where we end up by the end of the year, but we’re seeing extremely strong growth both in revenue and profitability.

I would tell you that it is a fair comment and statement to make that financially, 2019 is substantially stronger than 2018’s results, we believe. That’s three straight years of very strong growth across all of our disciplines. That’s in leasing and in capital markets, that’s in our asset services business, and that’s in our project development services or project management businesses. Those are four of our biggest businesses we have in Los Angeles.

What do you see as the biggest trends in the L.A. commercial real estate market right now?

We’re so fortunate to have a disparate economy, right? When you have that you have many, many different trends going on at the same time. Very luckily, I think, at this point in time some of those industries have collided, most notably the industrial e-commerce rebuild, in addition to entertainment content and technology.

We see an incredibly strong industrial market going into 2020. On the warehousing side of that, I think you’ll see a strong trend for supply chains to creep closer and closer to the consumer doorsteps. I think those fulfillment centers, those distribution channels, are literally only going to get closer and closer to the neighborhoods.

I do think that for scale, that downtown Los Angeles will be the location of choice over the next few years for large employers.

Why is that?

It’s very hard for large employment growth to continue in many parts of Los Angeles. That’s not necessarily a traffic issue, that’s more simply a scale issue. The large employers that we’ve seen taking down large blocks of space on the Westside have fewer and fewer choices, and I think that the transportation, the mobility issue, and the availability to grow in and around the core of Los Angeles will only be more appealing.

I think mobility, personal mobility, really kind of has a major influence in that. I think that everything from e-scooters to rental car sharing, bike sharing and ride sharing, all has an immense influence on I think where employers are located.

At Mateo was an example of where we were the leasing agent for both retail and office on a spec development, and were able to negotiate a very large lease with Spotify. At the time, that was a near record-setting lease in its overall valuation, and I think it was very helpful to plant a flag and provide an argument that the Arts District was something that had been vetted by large employers.

Overall, how do you view the L.A. economy right now?

I think we’re the beneficiary of an incredible economy in greater Los Angeles, and I would really include that just to be Southern California.

The economy just continues to expand. We’ve been the beneficiary of incredible job growth for years, outpacing the nation in many of those years.

Los Angeles gets a lot of hype as being the entertainment capital of the world, which it is. But what many people don’t realize is it’s the logistics capital of the world. Of course, we have two of the largest seaports in America, and the absolute explosive growth of e-commerce and the port volumes we think will only continue to fuel demand for industrial and last-mile warehousing.

How many people are working at your L.A. operation?

We have just around 600 people in all, across six offices in the Greater Los Angeles area. In Downtown L.A., we have just about 200. There’s probably only one place where we would consider opening another office right now under the right conditions, and that would be somewhere in the San Fernando Valley.

How are you prioritizing expansion in the west?

We will continue to look at Texas and Southern California to deploy probably a disproportionate amount of our capital on growth, and that’s for a couple of reasons. One is that we are following demographic changes in those two parts of the world – Texas has explosive job growth, Southern California the same. But we also view where we are in both of those markets … we believe that we have an exponential ability to grow. I would say in Austin, Houston and Dallas that we have room to grow across almost all of our service lines. In Southern California we do as well, but mostly on the occupier side, the multi-family side.

Can you talk about your priorities for 2020?

If you’re asking specific business priorities, we have a real strategy around data and analytics that is an incredibly important priority for us as a firm. That is something that we spend an incredible amount of time right now working with a couple of different folks, both internally and externally, on better understanding all the data that we have. Where it’s all warehoused, how it can come together to service our clients.

Another is with regards to how we recruit and train our next generation of folks, and I’ll be specific to brokers. What we’ve done it’s a kind of a 180 on how we engage that young talent today. The historical model was, come in for no salary, kind of starve for a couple of years, and see if you can make it, right? And that did nothing. That doesn’t help the talent that will help the clients. And so what we have done is we’ve put together a very comprehensive program, which trains people, on salary, for a year before they move into any one of our disciplines, but especially into brokerage. And so they get an education with us too, the entire suite of services of our business before they are, in essence, a fee-earning professional.

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Atlas Capital Group has purchased the Los Angeles Times’ printing plant in Downtown for $240 million.

The building contains about 660,000 square feet of manufacturing and distribution space, along with about 15 acres of open space mainly used for loading trucks and parking.

The seller was a partnership led by Harridge Development Group, according to the Times. The entire site spans 26 acres on Olympic Boulevard alongside the Santa Monica freeway, and Harridge purchased the plant three years ago for $120 million, and property values in the neighborhood have increased since then.

Atlas and its partners are developing the Row DTLA just a few blocks away, turning 2 million square feet of warehouse space into a complex of stores, restaurants and offices. The company also just went into contract in Manhattan to buy an 80,000-square-foot commercial building at 110 Leroy Street for $79.5 million earlier.

The Times built its printing plant in the late 1980s and became a tenant in the property after its former owner Tribune Co. filed for Chapter 11 bankruptcy. Its lease expires in 2023. Atlas’ plans for the printing plant are unclear, but several options have been floated in recent years, including a basketball arena, a residential development and creative office space, according to the Times.

Harridge is the developer behind the Crossroads of the World megaproject, a $1 billion project in Hollywood that is expected to feature 950 apartments and condos, a hotel, and 190,000 square feet of commercial space. [LA Times] — Eddie Small

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Eight months after selling his office-services firm to WeWork for $220 million, Dan Teran is raising money to buy Managed by Q back at a fraction of the price. But another interested bidder is threatening his successful takeover.

Eden, a San Francisco-based startup and one of Managed by Q’s biggest competitors, has bid on the sale of the company, people familiar with the matter told The Real Deal. According to those involved, Teran and Eden both put in bids to WeWork two months ago, but talks have stagnated since then.

Teran declined to comment, as did representatives for Eden and WeWork.

Teran founded Managed by Q in 2012, and eventually attracted funding from Google Ventures, RRE Ventures and Kapor Capital before it was acquired by WeWork in April. The firm employs over 100 people, and counts Casper and Staples among its clients.

WeWork put the firm on the chopping block after the office space giant announced it would offload a suite of ancillary businesses to cut costs. That announcement followed a failed bid to go public, and an exodus of staff from the company, as its valuation plummeted 80 percent to $8 billion.

Before WeWork, Managed by Q had competed for business with Eden since the latter launched five years ago, and sources say the rivalry is a bitter one. Both firms provide services to tenants that allow them to manage a range of office services including cleaning, maintenance and IT support.

During a panel at the SALT Conference in Abu Dhabi on Wednesday, Teran said he is raising money to regain control of his company.

“I’m actively working to buy back my company,” he said, according to Bloomberg.

For Eden, acquiring Managed by Q would expand its business significantly. The firm has raised $40 million, including a $25 million raise last month, which was led by Reshape Ventures. It says it services clients including VTS and Convene.

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