Aaron Hancock, Raintree Partners’ managing director and The Summit at La Crescenta apartment complex
Raintree Partners has acquired a 92-unit apartment complex in the wealthy enclave of La Crescenta-Montrose, as it continues to expand its multifamily portfolio in the Glendale submarket.
The Orange County-based developer paid $34.5 million for the 55-year-old Summit at La Crescenta, at 3250 Fairesta St., the firm announced.
The purchase is Raintree’s eighth in the Glendale and La Crescenta submarket, totaling 323 units and $114 million. Raintree managing director Aaron Hancock said the firm intends to keep buying in that area.
The seller was a joint venture between Stockbridge Capital and NNC Apartment Ventures.
Brokers Kevin Green, Joe Grabiec and Greg Harris with Institutional Property Advisors — a division of Marcus & Millichap — represented the buyer and seller.
The deal penciled out to $375,272 per unit. Spread across 3.75 acres, the property is in the tony community is bordered by Glendale, La Cañada Flintridge and Angeles National Forest.
The rental market vacancy rate in the unincorporated community of La Crescenta-Montrose is just 1 percent, according to Green, of Institutional Property Advisors. There are only five buildings with more than 50 units each, he said.
In June, Raintree paid $79 million for a seven-property, 231-unit multifamily portfolio in the Glendale submarket. The Dana Point-based firm, led by CEO Jeffrey Allen, is also working on two ground-up multifamily developments in Long Beach. Just a few blocks from each other, the projects would include 407 apartments and 17,300 square feet of retail space total.
Mohamed Hadid and the mansion (Credit: Getty Images, iStock, and Mega via TMZ)
Mohamed Hadid’s sprawling Bel Air spec mansion is on the verge of being demolished after a federal judge issued a fiery ruling Tuesday against the developer.
Federal bankruptcy judge Sheri Bluebond dismissed a bankruptcy filing by 901 Strada LLC, the limited liability company that Hadid created to operate the 901 Strada Vecchia Rd. property.
Bluebond repeatedly blasted Hadid’s LLC as filing for bankruptcy in order to avoid state court judge Craig Karlan’s ruling to tear down the saucer-shaped, 30,000-square-foot mansion on a hill.
“This is an attempt to use me to undo what the state court has done,” Bluebond said. “I don’t think that’s appropriate.
“The judge is concerned about this thing coming down the hill and killing somebody. I’m not going to second guess that,” Bluebond added.
In effect, Bluebond’s order kicks a lengthy dispute back to state court, which has repeatedly ruled against Hadid. The nine-year saga has spanned an FBI investigation into bribes of city inspectors, and Hadid’s no contest plea in 2017 to misdemeanor charges of building without a permit.
Hadid’s neighbors John Bedrosian and Joe Horacek filed a civil lawsuit against the developer last year demanding a judge order the mansion demolished and appoint a receiver to wrest the property from Hadid.
Karlan sided with Bedrosian and Horacek in a Nov. 20 ruling, finding the mansion foundation wobbly enough that it could tumble down the steep hill it was built on.
“I don’t even see this as a close call, ladies and gentlemen,” Karlan said, according to the court transcript. “This seems to be a clear-cut case where the property has to be torn down.”
A week after Karlan’s order, Hadid filed for Chapter 11 bankruptcy, stating he owed creditors about $28 million, including $17 million to Hollywood-based lender First Credit Bank, which specializes in short-term, high-interest real estate bridge loans. He said he didn’t have enough money to demolish the structure.
Bluebond went beyond just temporarily blocking a bankruptcy filing; her ruling prevents 901 Strada LLC from re-filing for bankruptcy for at least six months.
After the hearing, Hadid’s attorney Bruce Rudman said that his client might appeal Karlan’s demolition order, but said he is still considering next steps in preserving the mansion.
Karlan has scheduled a hearing Friday on the case, in which he may formally appoint Douglas Wilson of San Diego-based Douglas Wilson Companies as property receiver.
The tale of the mansion – dubbed “Starship Enterprise” by critics – still has many unanswered questions, including who would pay for demolition, and the status of a federal probe into the Department of Buildings.
A declaration in the civil case by former mansion project manager Russell Linch claims that several members of the Los Angeles Department of Buildings accepted bribes from Hadid, or frequently dined and socialized with the high-profile developer, whose daughters Gigi and Bela are celebrity fashion models.
Hadid – who did not appear in court on Tuesday – has adamantly denied being involved in any bribery, and has said that Linch is disgruntled. He said in an interview last month the FBI has not questioned him in the matter.
Donors favor Democrats over Trump (Credit: Getty Images, iStock)
As a Republican, an incumbent and a former developer, President Donald Trump should have no trouble harnessing donations from the real estate industry.
But new data from the Center for Responsive Politics show that the president is lagging behind Democratic rivals Joe Biden and Pete Buttigieg this year when it comes to donations from individual real estate donors.
Trump has raised just $902,723 from them compared to Biden’s $1.04 million and Buttigieg’s $964,912, the center found.
Sean Burton, a Los Angeles-based executive at real estate investment firm Cityview who supports Biden, told Bloomberg that policy changes under Trump — notably tariffs on China and a cap on state and local tax deductions — had caused frustration in the industry.
“People in California were very upset about SALT,” he said. “And there’s been a significant pullback of Chinese capital in real estate over the last few years.”
The real estate industry has traditionally donated more money to Republican candidates than Democratic ones, and Trump received $5 million from the real estate industry in the last general election.
But the industry has taken a major hit this year with a sharp decline in Chinese investment, which has contributed to a slump in luxury sales in New York.
“You know, as a group — as a group, you’re a tremendously big business and a very powerful business, politically, because you have numbers. Numbers is power.”
Don Hankey, chairman of Hankey Investment Company; and Cityview CEO Sean Burton, with a rendering of The Pearl on Wilshire (Credit: BuzzBuzzHome)
Multifamily developer and investor Cityview has recently been a seller.
The firm shed its majority stake in a 346-unit Koreatown apartment complex it had developed, and sold a 240-unit rental property it built in Costa Mesa.
The Culver City firm sold its 65 percent interest in Pearl on Wilshire, the Koreatown project at 687 S. Hobart Boulevard. The buyer was Mid-Wilshire-based Hankey Investment, which had been the original land owner. Hankey had held a 35 percent interest in the complex.
The 215,000-square-foot property features studio-, one- and two-bedroom units, and includes 8,300 square feet of retail space. Construction was completed in June 2018. Hankey — led by billionaire investor Don Hankey — has been an active player in the L.A. and Orange County markets. In February, the firm proposed a 490-unit apartment building in Koreatown.
For the Costa Mesa deal, Cityview sold the Baker Block apartments for $113.5 million. The complex, developed in 2016, is located at 125 E. Baker Street. Mobile home investor Michael Scott was the buyer, through the entity Baker Block Associates, records show.
Earlier this month, Cityview unloaded its under-construction multifamily development in Warner Center.
Paul Manafort and Manhattan District Attorney Cyrus Vance Jr. (Credit: Getty Images)
The Manhattan district attorney’s criminal case against former Trump campaign manager Paul Manafort has been dismissed by a New York judge.
Manafort’s lawyers argued that the charges in the state case, which include residential-mortgage fraud, conspiracy and falsifying business records, were based on the same misconduct for which their client was already serving a seven-year federal prison sentence.
Justice Maxwell Wiley took that view. “Given the rather unique set of facts pertaining to the defendant’s previous prosecution in federal court, and given New York’s law on this subject, defendant’s motion to dismiss the indictment as barred by state double jeopardy law must be granted,” he wrote.
The ailing, 70-year-old Manafort was unable to appear in court Wednesday, the Wall Street Journal reported.
The state indictment, which accused Manafort of submitting false documents while applying for more than $20 million in bank loans, was seen as a response to concerns that President Donald Trump would pardon his former campaign chairman. Trump has said that a pardon wasn’t “right now on my mind,” although he felt “very badly” for Manafort.
“This indictment should never have been brought, and today’s decision is a stark reminder that the law and justice should always prevail over politically motivated actions,” Manafort lawyer Todd Blanche said after the ruling.
Prosecutors argued that the state case is not barred by double jeopardy because the state and federal crimes had different legal requirements, while conceding that the underlying actions are the same.
A spokesperson for Manhattan District Attorney Cyrus Vance said the D.A. will appeal the decision.
Manafort is scheduled to be released from a low-security federal prison in Loretto, Pa., on Christmas Day in 2024. [WSJ] — Kevin Sun
The current site at 1400 North Vine and a rendering of the Netflix-anchored development at 1341 North Vine across the street. (Credit: Google Maps)
In the shadow of a $450 million office development anchored by Netflix, developer Patrick Tooley has unveiled plans for a 198-unit mixed-use project.
Tooley’s Hollywood development site, which is located on the east side of Vine Street between Leland Way and De Longpre Avenue, is currently home to a 6,000-square foot, single-story building leased to K&L Wine Merchants. The retail building, built in 1948, will be razed to make way for the new building.
Tooley, the managing director of Tooley Interests, was not immediately available to comment on the project.
But public records show that Tooley wants to build a 197,000-square-foot mixed-use building at 1400 N. Vine St., with 198 apartments above a 16,000-square-foot floor of retail space. Filings also show plans for 278 parking spots.
The Los Angeles Planning Commission would need to approve the project.
Tooley, through an LLC, picked up the property in July 2016 for $12.2 million.
The Tooley project is at the center of a development craze in Hollywood, and a few blocks south of the Hollywood Bowl and Cahuenga Boulevard.
Tooley’s proposed project is located across the street from ArcLight Cinemas along Sunset Boulevard, and a Netflix-anchored office and complex being built by Kilroy Realty. The streaming video company leased all 355,000 square feet in Kilroy Realty’s Academy on Vine project at 1341 N. Vine St., in Hollywood, where its long-term lease will start in phases in mid-2020, depending upon construction completion. Project costs have been estimated at $450 million.
The Canadian-based Omni Group is also planning a 21-story apartment tower at 1360 N. Vine St., located across the street from the proposed Tooley structure.
Heather Sinclair and Lisa Hatem are first hires for The Agency’s Aspen office.
The Agency is opening a two-person office in Aspen, Colorado, as the luxury residential brokerage looks to compete with national firms already established in the affluent ski resort town.
The move, announced Wednesday, is part of the Beverly Hills-based brokerage’s recent expansion effort. The Agency is now in 35 markets in the U.S., Canada, Mexico and the Caribbean, according to a company spokesperson.
For its Aspen location, The Agency hired Heather Sinclair and Lisa Hatem.
Sinclair spent the last two years at Timbers Resorts, a vacation home company. Before that, she was a broker in the Aspen offices of Sotheby’s International Realty and Coldwell Banker. Hatem spent six years working for Montage Residences Kapalua Bay in Hawaii, where she left as director of sales.
The Agency’s office is at 205 S. Mill Street, in Mill Street Plaza.
Though relatively small, the Aspen residential market is disproportionately full of luxury listings, and is not lacking for brokerages. Douglas Elliman entered the market in 2014 with the purchase of local boutique agency Joshua & Co.; and Compass arrived two years later, with the acquisition of Shane Aspen Real Estate.
Of the 611 residential properties listed for sale in the area, 118 properties were valued at $10 million or more, according to a report earlier this year in the Aspen Daily News.
Many see a housing bubble forming (Credit: iStock)
Negative interest rates and high rates of household debt in Europe may be leading to a housing bubble.
The European Central Bank five years ago slashed its benchmark interest rate to below zero in an effort to ramp up the continent’s stagnant economy. But the move kickstarted a surge in demand to buy housing, the New York Times reported.
“The dynamics have totally changed in a short period of time,” Matthias Holzhey, UBS’ head of Swiss real estate told the Times. And in some pockets of Europe in the low rates are forcing real estate valuations “into the bubble risk zone,” he added.
A UBS survey led by Holzhey found that Munich, Amsterdam and Paris are among the cities at risk of a bubble. And Germany’s central bank found recently that real estate in the country’s cities is overvalued by 15 to 30 percent, according to the Times.
In response, ECB’s European Systemic Risk Board is asking 11 countries to bring in prices and focus on housing affordability through regulations and tax policies, the Times reported. Those countries include Denmark, Sweden and Austria. In Spain, rents have been capped at the rate of inflation, while the mayor of Paris plans to enact rent controls and build subsidized housing.
After Europe’s economic recovery, job growth made it possible for more people to borrow credit and buy homes — and most aren’t flipping those properties as they were before the crisis, according to the Times. Housing prices are up 40 percent in metropolitan areas of Portugal, Luxembourg, Slovakia and Ireland over the last five years.
Much of the rise in housing costs can be directly attributed to foreign investors and institutional players — especially pension and insurance funds— pouring money into European real estate, chasing returns.
It’s easy with rates at zero percent. In August, Jyske Bank of Denmark began offering 10-year fixed-rate mortgages at negative 0.5 percent interest before fees, while Nordea Bank is offering 20-year loans at zero interest. Such policies are luring new customers, but economists argue there are too many of them. And those borrowers are often overextended.
In the Netherlands, the collective household mortgage debt as of March was $584 billion, nearly two-thirds of the Dutch economy. Its central bank recently warned that the housing market is the biggest “systemic risk” to the stability of the economy. If housing prices fall, banks and homeowners will quickly be under water and it will be a disaster, the bank said. [NYT] — Mary Diduch
Eastdil Secured Managing Director Jonathan Firestone (Credit: Eastdil)
One of Eastdil Secured’s top brokers in Los Angeles is moving to the East Coast, to boost the firm’s investment sales and debt placement teams in New York.
Jonathan Firestone, a managing director, has worked at Eastdil’s L.A. office for the past 18 years. He is a member of the management committee and expected to start in the Manhattan office in January, the company confirmed.
Firestone moved to Los Angeles in 2001 to join Secured Capital as an associate; Eastdil bought the company five years later. The move to New York will be something of a return for Firestone, who began his career there, in the real estate finance division of Credit Suisse.
In an interview Wednesday, Eastdil President D. Michael Van Konynenburg said, “we were looking at people to further drive the firm’s growth as part of our new structure. Jon started his career in New York, and raised his hand for the opportunity to move to New York to grow the firm’s business locally, nationally and globally.”
Van Konynenburg said Eastdil’s New York team has advised on over $10 billion of financing and sales of New York City assets this year.
Eastdil has been a leader in New York’s investment sales market, but has undergone dramatic change in the last six months.In June, Guggenheim Investments and Singapore sovereign-wealth fund Temasek Holdings agreed to a management-led buyout of Eastdil from Wells Fargo.
Eastdil ranked third in The Real Deal’s most recent ranking of top investment-sales firms in New York, brokering about $5.9 billion worth of deals. The firm had taken the top spot on the ranking seven years in a row from, 2010 to 2016.
He will work alongside managing directors Gary Phillips and Will Silverman. Silverman joined the company in June, and Phillips has been there a year.
Neumann’s partner on the projects, Urban Community, is reportedly in talks with Westbank Corporation, a real estate firm based in Vancouver. No deal has yet been reached.
Urban Community, headed by former eBay exec Gary Dillabough, has made an aggressive push to revitalize San Jose in recent years. The firm has spent hundreds of millions of dollars acquiring properties in the downtown area, aligning itself with WeWork and its co-founder.
Neumann stepped down from the co-working giant in September after a failed IPO attempt. Beyond buying several homes, he’s made other investments in real estate. But some worried WeWork’s investors, namely his ownership of buildings that were leased to the co-working company.
“Our vision from day one has been to help transform San Jose into one of the best urban environments in the country,” Urban Community said in a statement to Bloomberg. “San Jose’s potential has become apparent to some of the most thoughtful and accomplished developers in the world. We are fortunate to be talking with a number of them at this time to help us achieve our goal.” [Bloomberg] — Sylvia Varnham O’Regan
WeWork co-CEO Artie Minson and Managed by Q founder Dan Teran (Credit: Wikipedia, Getty Images)
WeWork is in talks to unload one of its business units at a major discount as the co-working company struggles to get back on track.
According to Bloomberg, talks are underway to sell Managed by Q, an office-management platform, for less than $55 million — only eight months after reportedly paying $220 million for the company.
The acquisition was led by former WeWork CEO Adam Neumann, who wanted to diversify his business. Neumann stepped down from his position in September.
At last week’s SALT conference in Abu Dhabi, Managed by Q’s founder Dan Teran addressed the negotiations directly. “I’m actively working to buy back my company,” he said. The Real Dealreported Dec. 11 that he was competing with another bidder, Eden.
WeWork has announced major structural changes in recent months, including the layoffs of thousands of staff — more than 900 in New York.
Fox Corp. chief executive Lachlan Murdoch capped off 2019 by reportedly buying the Chartwell mansion of former Univision chairman Jerrold Perenchio for $150 million, the biggest residential purchase ever in Los Angeles County.
The majority of the top residential sales in 2019 were in the platinum triangle, the leafy area comprised of Beverly Hills, Holmby Hills and Bel Air. Market observers say these homes are often distinctive architecturally – like a historic piece of art – and allow access to greater Los Angeles by being near Sunset Boulevard.
“These higher priced estates tend to be large swaths of relatively flat land, closer to Sunset Boulevard, than up in the hills,” said Paul Habibi, a finance and real estate professor at UCLA.
Here were the top five residential sales of 2019, based on an analysis of public records, news clippings, and market reports.
875 Nimes Road | $150 million | Bel Air
Eight – yes, eight – agents are listed as behind the record Chartwell sale, with the buying agent not yet identified.
After Perenchio died in 2017, his estate put the 10-acre property on the market for $350 million, and then cut the price down to $195 million this June. The property includes a 25,000-square-foot main house with 11 bedrooms, 18 bathrooms, along with a 75-foot swimming pool, guest house, tennis court, and covered parking for 40 cars.
Murdoch is the son of Rupert Murdoch and is taking over leadership roles for his father at both Fox and News Corp., who he is co-chairman. Two years earlier, Lachlan Murdoch paid $29 million for an equestrian estate in Aspen.
The eight sales agents are Drew Fenton, Jeff Hyland and Gary Gold of Hilton & Hyland; Joyce Rey, Jade Mills and Alexandra Allen of Coldwell Banker; and Drew Gitlin and Susan Gitlin of Berkshire Hathaway HomeServices.
594 South Mapleton Drive | $119.8 million | Westwood
Formula one heiress Petra Ecclestone’s sale of a manor formerly owned by Aaron Spelling was at the time the biggest sale in Los Angeles County history. Ecclestone sold the home in July. The listing agents were Jade Mills of Coldwell Banker, Kurt Rappaport of Westside Estate Agency and David Parnes and James Harris of the Agency.
The unidentified buyer is registered with the state of California as 594 Mapleton LLC, with West Hollywood-based attorney Dennis Roach listed as the service agent. Hilton and Hyland’s Jeff Hyland represented the buyer.
Ecclestone, the daughter of billionaire Bernie Ecclestone, sold the manor after three years on the market and three price cuts, originally listing the estate for $200 million. She bought the property for $85 million in 2011 from Aaron Spelling’s wife Candy Spelling. The property includes 123 rooms – including 14 bedrooms – a tennis court, swimming pool, spa and koi ponds.
Pacific Coast Highway | $100 million | Malibu
Jan Koum, co-founder of the messaging service WhatsApp, purchased the 14,000 square foot beachfront property from NBC Universal executive Ron Meyer in August.
Meyer first shopped the property in the Paradise Cove section of Malibu for $125 million in July 2018, and then took the property to the Multiple Listings Service in January at the same price. Kurt Rappaport of Westside Estate Agency served as listing agent and also represented the buyer.
The property includes five bedrooms and six bathrooms, private beach access, pool, tennis courts, spa and two guest houses.
The abode, which Makowsky dubbed “Billionaire” is a playpen for the rich with helipad, bowling alley, massage studio, 130 pre-selected works of art, two wine cellars, an 85-foot swimming pool, and $30 million worth of exotic cars.
The husband-wife team of Branden and Rayni Williams of Hilton & Hyland plus Shawn Elliott of NestSeekers International represented Makowsky in the sale. Ben Bacal, who announced his new brokerage firm Revel Real Estate days before the deal went down, represented the buyer.
822 Sarbonne Road | $72 million | Bel Air
Speculative mansion builder Ardie Tavangarian sold his 25,000 square foot home to an anonymous China-based buyer registered as Sarbonne 6 LLC.
Tavangarian, founder of architecture and construction firm Arya Group, built a mansion that includes a movie theater, art studio, and car elevator. The home was first listed for $88 million in November 2018, with Jeff Hyland and Branden Williams serving as sales agents. Mauricio Umansky and Jon Grauman of The Agency represented the buyer.
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 aredisagreements, 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.
Zillow CEO Rich Barton (Credit: JD Lasica via Flickr, iStock)
From the people who brought you the smash hit, Kim et al V. Trulia, LLC, get ready for part two of the Premier Agent Class Action litigative universe!
A few weeks after Long Island attorney Spencer Sheehan filed a class action lawsuit blasting Trulia’s Premier Agent program as “unfair and deceptive,” the lawyer filed a new lawsuit against Trulia’s parent, Zillow Group, containing the same allegations and using the same metaphors.
The program is “the analog equivalent to buying a billboard to advertise another real estate broker’s listing but with the contact information of [Premier Agents],” the new suit states. That’s almost identical to the language in the prior suit that called the practice “equivalent of buying a billboard to advertise the listing of another real estate broker and including a picture of the property and telephone number for prospective buyers to call.”
Sheehan is joined by two other attorneys as joint filers on the most recent lawsuit, which was first reported by Inman. The new suit is more expansive in a number of other ways as well.
While the previous suit defined its class as “all real estate brokers in New York,” the new suit encompasses “all real estate brokers and real estate sales agents in New York, Pennsylvania and States where defendant conducts business.”
But like the prior suit, which featured Queens-based broker Andrew Kim as lead plaintiff, the lead plaintiff on the new suit is another Queens-focused real estate agent — Max Brizer of R New York.
“Plaintiff Brizer has been a listing agent for various properties on defendant’s website and lost money due to Premier Agents who paid defendant to be on his listings,” the lawsuit states.
According to the agent’s page on Zillow subsidiary Streeteasy, the bulk of Brizer’s past deals have involved properties in Astoria and Long Island City, including six for which he was the listing agent. Representatives for R New York did not respond to a request for comment.
Unlike the Trulia case, the new lawsuit also raises new concerns that “consumer confusion and frustration” caused by Premier Agent may also lead consumers to unknowingly enter dual agency transactions.
At the end of the day, however, the two suits share the same four primary allegations: violation of New York’s Consumer Protection from Deceptive Acts law, violation of the state’s Donnelly Act (an antitrust law), unfair competition and unjust enrichment.
Despite the slight differences between the two class action suits, Zillow appears to consider them one and the same. “The claims made in this suit are a replica of the meritless claims made a few weeks ago by the same lawyers, who use the same baseless and unsupported attacks against us,” Zillow spokesperson Viet Shelton told Inman.
“If a consumer wants to do more research, we provide them with the necessary information for this to happen, whether it be to work with the seller’s agent or contact a buyer’s agent on their own,” a prior Zillow statement said.
Premier Agent has long been a cash cow for Zillow, and a source of bitter controversy in the real estate industry. In a letter to state regulators this week, the Real Estate Board of New York argued that Premier Agent “falls woefully short” of a proposed rule banning the practice of steering consumers to agents who advertise on its site. [Inman] — Kevin Sun
An L.A. landlord and developer who owns a dilapidated 16-unit apartment building in the Pico Union neighborhood just west of Downtown L.A. wants to replace it with a six-story, 87-unit apartment complex. Then he wants to cash out.
But Rafi Shaoulian – who captured headlines in 2015 when he and his brother sold a development site near the Staples Center to a Chinese developer for $26 million – has seen the property fall out of escrow three times because lenders balk at the building’s “historical significance” in Pico Union.
That has made it difficult to sell the property, said Shaoulian, who claims to be unaware of any specific historical significance to the building, which was constructed in 1938.
Shaoulian, in an interview, conceded that he must fork out substantial legal fees to get the site developed – and sold. This week, he applied for a permit to begin the arduous task of getting entitlements and begin a tough historic district project review process.
“I need to hire someone to talk to the city to convince the city that this is not really a historical building,” he said.
“My dream is to develop this property for my family’s benefit,” said Shaolian, who bought the property back in July 2013 for $1.1 million. He transferred the site’s ownership to his LLCs, Westmoreland Manor LLC and Westmoreland Residences LLC.
Shaoulian said he was hoping to sell the property for health reasons.
The developer and investor said that he has retained Santa Monica architect Babak Bardi Chaharmahali to come up with drawings for the proposed project, which he estimates could cost $20 million or more to develop.
Shaoulian says he owns a tiny portfolio of office and residential structures, mostly in the Downtown area, including some in Little Tokyo, others on streets that crisscross near the Staples Center. He claims that his most valuable asset is located at 120 E. 8th St., at the intersection of 8th and South Los Angeles Streets — just a few blocks east of the Staples Center.
“I want to clean up my portfolio for my family,” he said of his motivation to develop the Pico Union apartment.
The Pico Union site, which is located at 1116 S. Westmoreland Ave., is eligible for density bonuses and other incentives as part of the city’s Transit Oriented Communities program, which provides incentives that encourage market-rate developers to include affordable units in projects located near transit hubs.
The program aims to streamline the development process and incentivize affordable housing development by implementing a section of Measure JJJ, which was passed by L.A. voters in Nov. 2016.
Despite being hyped the Next Big Thing in real estate, investor interest in Opportunity Zones hasn’t materialized as fund managers, developers and government officials had hoped.
But on Thursday, the IRS and Treasury released the final set of regulations for the federal program, providing investors and developers more certainty over the rules and regulations that govern how real estate money can be deployed into the 8,700 areas across the country. At minimum, the real estate world can no longer blame government inaction as the reason for not investing in the program.
The new regulations “provide more flexibility for when [funds] have to deploy capital, more flexibility for how much those funds have to invest in assets, and they provide more flexibility for how governments can use leases in order to put public assets to better use,” said Glickman.
The federal Opportunity Zone program gives developers and investors the ability to defer or potentially forgo paying capital gains taxes if they invest in a designated Opportunity Zone. The first regulations were released in October 2018 and the second set of rules was released in April. Investors and developers have to deploy capital by the end of the year to claim the biggest tax benefit.
The Opportunity Zone program was the most talked about play in real estate last year, but expectations and hype has cooled down due to some of the challenges of finding attractive properties to develop in the designated zones.
Many funds have had trouble raising capital. Of a sampling of 103 Opportunity Zone Funds that sought to raise $22.7 billion so far they raised only $3 billion, according to a recent report by accounting firm Novogradac & Co.
Then there’s Anthony Scaramucci’s SkyBridge Capital, which first sought to raise $3 billion, but is now seeking just $300 million.
More favorable rules for real estate investors
The new rule changes should help alleviate the uncertainty that caused big investment funds to back away from the program.
One benefit is that the new rules allow investors, developers and fund managers more time to complete an Opportunity Zone project, according to Glickman. Under the initial proposed regulations, an Opportunity Zone project had to be completed in 31 months from when the money was first invested in a project. The new rules give a developer 62 months to complete an Opportunity Zone project. This is crucial for real estate developers, since permitting and entitlements can be complicated and projects can take years before getting off the ground.
Another benefit under the new rules is for developers building on Brownfield sites and vacant lots in Opportunity Zones. Under the regulations, developers can more easily qualify for the tax benefits if they build on these properties.
If a developer is building in a Brownfield site in an Opportunity Zone, the project will count as an “original use” property as opposed to a property that needs to be substantially improved. This means that a developer only needs to build on the site in order to qualify for the tax benefits rather than doubling the value of the property.
The regulations were released a time when the program has come under increased scrutiny and criticism as a tax break for the rich.
News outlets have documented how developers have lobbied governments to include their projects as Opportunity Zones such as in West Palm Beach, Baltimore and Chicago.
Some Democrats are asking for more tracking and data collection on where the money is going and the economic impact that the program is generating. This was something not addressed in the final regulations.
Mohamed Hadid is facing a judge’s order to tear down his Bel Air mansion, something that hasn’t happened to an LA homeowner in 35 years. (Credit: Getty Images, iStock)
In 1978, Mohammed al-Fassi — an in-law of Saudi Arabia royalty — and wife, Dena, bought a 38-room Beverly Hills mansion and promptly made their presence known. Neighbors complained about the couple’s all-night parties on the corner of Sunset Boulevard and North Alpine Drive, about the home’s “rotting lime” new coat of paint, the extensive renovations and nude statues on the front yard they deemed obscene.
By 1985, the city had had enough. Following a fire that damaged the estate, the local City Council voted to demolish the 68-year-old mansion. By then, the couple had enough, too; they decided to sell the property and host a wild demolition party.
Government-ordered demolitions of multimillion-dollar homes are exceedingly rare in Los Angeles, where city officials, longtime brokers, industry experts and architectural historians interviewed said they could not name another case like it…until now.
Today, another very rich homeowner and developer, Mohamed Hadid, is fighting a judge’s demolition order over his half-built Bel Air mansion, which neighbors deem a hazard and an eyesore. The case is similar in that, like al-Fassi and his Beverly Hills neighbors, Hadid is also doing battle with the local Bel Air community.
Similar confrontations have popped up elsewhere.
In March, a judge in Grasse, France, ordered developer Patrick Diter to tear down his chateau, which cost roughly $64 million to build. Like Hadid, Diter was accused of building without a permit.
In New York, developer Harry Macklowe admitted last month that he didn’t obtain a permit when he destroyed wetlands in order to build his East Hampton mansion. That case is ongoing.
And in San Francisco, the planning commission last year ordered a homeowner to rebuild the two-story house he had demolished, after purchasing it for $1.7 million. The city determined that the man, Ross Johnston, tore down an architecturally significant home, designed by celebrated modernist architect Richard Neutra.
Local governments, including civil court judges, have “broad injunctive relief powers” to order buildings demolished — or rebuilt — said Scott Gizer, a real estate attorney at L.A.-based Early Sullivan Wright Gizer & McRae.
A possible problem with orders to demolish large homes is not whether it’s enforceable, but who can pay to tear it down, he said. Gizer worked on a case involving the dismantling of the Harmon Hotel in Las Vegas. All parties agreed that the steel structure was not properly built, but a lengthy court battle followed over who would pay to take it apart. It took seven years before the partially-built tower was finally dismantled, in 2015.
Footing the demolition bill is also an issue for Hadid. The developer claims that the limited liability company behind his Bel Air mansion does not have the $500,000 needed to put the property into receivership, much less the estimated $5 million it would cost to demolish. The judge’s ruling does not specify who will pay for the work.
From left: Compass’ Robert Reffkin, Adam Neumann, Softbank’s Masayoshi Son, Knotel’s Amol Sarva and Knock’s Sean Black (Credit: Getty Images, iStock, Wikipedia)
If 2018 was the year of big money for real estate tech startups, 2019 was a reckoning.
After the world’s largest office space company, WeWork, saw its $47 billion valuation plunge by more than 80 percent, investors began second-guessing the eye-popping valuations being assigned to startups.
“WeWork has gone through a massive correction because the public markets didn’t believe in how it was valued,” Travis Putnam, a managing partner of venture capital firm Navitas Capital, told The Real Deal in October.
Putnam’s comments proved to be prescient for other startups as well, including residential brokerage Compass and construction firm Katerra.
Behind many of the funding rounds that have propped up these companies was SoftBank, the Japanese technology giant that oversees a $100 billion venture capital fund, the world’s largest.
In our ranking of 2019’s largest funding rounds for U.S. real estate tech startups, compiled by Pitchbook, SoftBank figured in four of the top 10 funding rounds. Those four alone totaled more than $12 billion, out of $16.8 billion.
The rise of iBuying is also in full swing, and investors are taking notice. OpenDoor, a San Francisco-based startup launched in 2014, almost doubled its valuation this year to $3.8 billion. Rival firm Knock also scored a huge funding round that brought its total amount raised north of $600 million. Both firms are reshaping how homes are sold, with some studies pointing to higher costs for sellers.
1. WeWork, $6.5 billion / 2. WeWork, $5 billion
Despite everything that happened to WeWork this year — an abandoned IPO, the ouster of its CEO and thousands of announced layoffs — the office space company still secured the largest funding round for the third straight year.
Speculation about the company’s troubles began to mount in January, around the time it was courting SoftBank for a $16 billion funding round, which would have been the largest ever. Instead SoftBank put in $2 billion — still the largest funding round of 2019.
The funding round valued WeWork at $47 billion and cleared the way for the company to build a path to the public markets. But as investors became jittery amid concerns over corporate practices and governance, the company was forced to shelve plans for an initial public offering. In the ensuing months, CEO Adam Neumann was forced out of the company by SoftBank. The firm’s valuation plummeted to $8 billion and SoftBank was forced to issue a roughly $9 billion financing package.
Landlords who have filled their buildings with WeWork now face the possibility of having to find new tenants in the event WeWork withdraws from some locations.
3. Knock, $400 million (tied)
The iBuying craze, which allow buyers to purchase homes instantly online without ever visiting the property, is set to reshape homeselling in 2020. New York-based Knock is ensuring that it’s well-capitalized for the trend.
The firm, which launched in 2015, is pitting itself against other established players in the iBuying space, including OpenDoor.
Its latest funding round, in January, was a vote of confidence from some prominent investors including RRE Ventures, Foundry Group, Corazon Capital and FJ Labs.
It was the size of the funding round, however, that raised eyebrows: After raising $32 million in 2017, the firm’s follow-up round this year totaled $400 million.
3. Knotel, $400 million (tied)
Some investors who didn’t sign on to WeWork saw a counterweight in Knotel, another flexible office-space firm.
Since launching in 2016, the New York-based firm has opened more than 200 locations in four countries.
At the time of its funding round in August, the firm proclaimed that it had reached unicorn status — achieving a valuation over $1 billion. It raised $400 million in its Series C round, which included investments from Wafra Inc., a subsidiary of Kuwait’s government pension fund, and GIC, Singapore’s sovereign wealth fund.
As the firm has grown, CEO and co-founder Amol Sarva has been an outspoken critic of WeWork. But as WeWork’s troubles unfolded toward the end of the year, news reports surfaced that Knotel itself was dealing with high vacancies in its locations.
5. Compass, $370 million
Compass, a brokerage that says it uses tech to streamline the process of selling residential real estate, has also grown at a rapid clip. Over the summer, the New York-based firm secured a $370 million funding round that included cash infusions from SoftBank, Canada Pension Plan Investment Board and the Qatar Investment Authority. The round bumped the firm’s valuation above $6.4 billion.
However, because another company in SoftBank’s portfolio — WeWork — had fallen hard, Compass later faced tough questions about its own business model. Observers pointed to parallels between the two companies, including high executive turnover, doubts about the significance of its technology and breakneck growth.
In an interview with TRD in October, CEO Robert Reffkin dismissed these links, saying, “There’s nothing about what’s happening at WeWork that changes what’s happening at Compass.”
6. Opendoor, $300 million
The second iBuying startup in this year’s rankings, Opendoor, has a longer track record in the sector than competitor Knock.
After raising $300 million in March, Opendoor was valued at $3.8 billion. Its backers included prominent names: SoftBank, Fifth Wall Ventures, GV and Khosla Ventures. In total, the firm has raised $1.5 billion.
The San Francisco-based startup, which is led by CEO Eric Wu, buys homes from owners looking to sell quickly, collects a fee, and then resells them. However, some studies on the iBuying sector found that firms including Opendoor reported thin profit margins on properties it acquired and unloaded.
Wu told TechCrunch that more than 800,000 people toured Opendoor homes in 2018.
7. Sonder, $225 million
It’s been quite a year for hospitality startups. In the shadow of Airbnb, Sonder has sought to carve out its own market for refurbished rentals and amenities in apartment buildings.
Led by CEO Francis Davidson, the San Francisco-based firm has raised a total $360 million and manages more than 8,500 units across hundreds of buildings.
But unlike Airbnb, Sonder relies on an asset-heavy model that has drawn comparisons to WeWork, which also leases space, outfits it and then rents it to end users.
However, any concerns have been outweighed by a strong roster of investors, including Fidelity Investments, Spark Capital and Greenoaks Capital Partners.
While iBuying has attracted investors, so too have other business models that seek to reshape home-selling. EasyKnock, a New York-based firm that launched in 2016, buys homes and then leases them back to the sellers.
Investors issued a full-throated vote of confidence in plunking down $215 million for the firm’s series A funding round (typical series A rounds are less than $10 million). The round included investments from Blumberg Capital, Kairos Society, FJ Labs, 500 Startups and others. However, just $12.5 million of the funding was equity.
The company, which is led by CEO Jarred Kessler, says it operates in 25 states.
9. Lyric Hospitality, $160 million
Lyric is yet another Airbnb rival drawing significant interest from investors — only this time, Airbnb was among those involved in a large funding round this year.
San Francisco-based Lyric primarily functions as a premium hotel operator that offers rentals to professionals.
Its product is attractive to Airbnb, which is aiming to expand Lyric’s operations in New York, where talks have been held with RXR Realty about opening apartment-style units in commercial buildings.
RXR also was involved in the series B funding round alongside Tishman Speyer and previous investors Fifth Wall Ventures and Barry Sternlicht.
Since launching in 2014, the hospitality startup is now in more than a dozen markets. It provides studios and one- and two-bedroom units, with rates that start at $200 a night.
One of the major issues for homebuyers is access to capital. Better.com says it halves the time it takes to get a loan approved.
The startup, also known as Better Mortgage, provides an online service to homebuyers that streamlines the mortgage process by eliminating commissions, fees and in-store appointments with lenders.
The series C funding round, which totaled $160 million, valued the company at more than $600 million. The round, announced in August, was well-subscribed, with more than a dozen investors including Goldman Sachs, Kleiner Perks and Fission Ventures.
The firm has now raised $254 million and is touting breakneck growth: In the second quarter alone, Better.com said, it issued more than a $1 billion worth of loans — besting its combined total for 2016 and 2017. It predicts that by the end of 2019 it will have processed $4 billion in loans to more than 20,000 customers.
The largest retail investment sale in Los Angeles this year is also something of a fixer-upper.
Gaw Capital USA and DJM Partners shelled out $325 million for the 450,000-square-foot Hollywood & Highland Center in August. It was by far the highest-priced retail sale in L.A. County’s top five in 2019.
The deal for the Hollywood retail complex was touted as the biggest single-asset transaction to close outside of Manhattan in three years. The buyers said they would renovate the property.
Two other deals that made this year’s list involved smaller shopping centers, with Blackstone Group’s retail arm, ShopCore Properties, the buyer on one of them.
Those shopping center deals — along with another that made the list, involving a large Whole Foods-leased property — may be a sign of the times. In 2018, prime retail storefronts dominated L.A. County’s top retail sales list. That’s when Louis Vuitton Moet Hennessy acquired a pair of prime Rodeo Drive properties in Beverly Hills for a combined $355 million.
Hollywood & Highland Center, Hollywood — Gaw Capital USA, DJM Partners | $325M In August, the U.S arm of China-based Gaw Capital Partners and DJM Partners picked up this sprawling retail and entertainment complex at 6801 Hollywood Blvd. from CIM Group and Abu Dhabi Investment Authority.
The 462,000-square-foot mall and entertainment venue spans five stories, and includes Dave & Busters, Sephora and Johnny Rockets, among others. The sale price was pegged at $703 per square foot. CIM owned the development for 15 years. Abu Dhabi, the sovereign wealth fund known as ADIA, invested $142 million when CIM Group recapitalized Hollywood & Highland in June 2013.
Gaw Capital and DJM described the recent sale as the largest single-asset retail transaction to take place outside of Manhattan in the past three years. Eastdil Secured brokered the deal.
The new owners plan on renovating the 7.6-acre property over the next two years.
Whole Foods, Pasadena — Kutzer Co. | $105M
South Pasadena-based Kutzer picked up this 80,000-square-foot Whole Foods-leased retail property and two acres of neighboring real estate in the off-market deal.
The transaction — pegged at $1,368 per square foot — was part of a 1031 exchange for the seller, which property records identify as Beverly Hills-based Marc Ittah Trust.
In all, the five-parcel assemblage is about three acres. Whole Foods has occupied the space since 2007, and it stands as the largest Whole Foods on the West Coast. Commercial Asset Group represented Kutzer in the deal, while the seller’s representative was not listed.
Three auto dealership properties, West Covina — Ayman Sarriedine | $61M
Ayman Sarriedine acquired the properties in February from Roger Penske Jr., the former president of auto dealership organization Penske Automotive Group. Sarriedine controls a Mercedes-Benz dealership in Escondido.
Combined, the three properties totaled 254,500 square feet.
Two of the properties — Mercedes-Benz of West Covina and Audi of West Covina — are located at 2010 E. Garvey Ave. and 2016 E. Garvey Ave., respectively. They sold for a combined $48.7 million. Penske owned them since 1997 when he purchased each site for $3 million.
The third dealership, Toyota of West Covina, is on more than 84,000 square feet at 1800 E. Garvey Ave., and sold for $12.5 million.
Penske is the son of auto racing billionaire Roger Penske. His brother, Jay Penske, is chief executive of the eponymous media company that publishes Rolling Stone, Deadline and Variety.
Towne Center East, Signal Hill — ShopCore Properties | $61M
This Blackstone Group affiliate acquired the Home Depot-anchored Towne Center East shopping center in September. The sale worked out to $374 a square foot.
The seller was Phoenix-based BIG Shopping Centers USA Inc.
Towne Center East, located at 2450 E. Willow St., spans 163,000 square feet of rentable space. It is anchored by a 103,000-square-foot Home Depot and a 26,500-square-foot PetSmart store. A Wells Fargo bank branch and a UPS Store also are tenants.
Chicago-based ShopCore owns more than 50 retail properties and over 20 million square feet of space nationwide. They majority of its properties are retail centers. In July, the firm announced a partnership with Industrious to develop a co-working office at ShopCore’s One Colorado property in downtown Pasadena.
Coastal Market Plaza, Manhattan Beach — DSB Properties | $52M
This 35,000-square foot property sold at $1,643 per square foot in January. The shopping center is located at 601 and 707 N. Sepulveda Blvd. The anchor tenant is a newly-opened, 27,000-square-foot Gelson’s market.
The buyer, David Blatt, owns roughly a dozen shopping centers from San Diego to Ventura. He operates the retail centers through his property arm, DSB Properties.
The seller was Paragon Commercial Group.
Coastal Market Plaza consists of two structures. In addition to the Gelson’s, there is a separate 7,000-square-foot building that First Republic Bank leases.
Rep. Alexandria Ocasio-Cortez and Governor Andrew Cuomo (Credit: Getty Images)
House Democrats on Thursday passed a bill that would ease the state and local tax deduction cap that shook the residential real estate market in New York and other high-tax states.
But the “Restoring Tax Fairness for States and Localities Act” has little chance of getting anywhere in the Republican-controlled Senate. The measure would increase the SALT cap to $20,000 from $10,000 for a joint return filed in 2019, and eliminate the cap for 2020 and 2021.
The bill was approved by a narrow margin of 218 votes to 206. Rep. Alexandria Ocasio-Cortez was among the few Democrats to vote against it.
The Bronx and Queens congresswoman has previously stated that SALT deductions disproportionately benefit the wealthy, including those who offset property taxes, according to the New York Daily News. The deduction was curtailed by the tax reform passed two years ago by congressional Republicans and signed by President Donald Trump.
But the bill passed Thursday by the House also calls for raising income taxes on the wealthy by raising the top marginal income-tax rate back to 39.5 percent. It was lowered to 37 percent in the same December 2017 tax reform that virtually eliminated the SALT deduction. (The reform raised the standard deduction to $24,000 for a married couple, making it unlikely that itemizing deductions would be worthwhile.)
In 2018, concern about how the SALT deduction cap would affect residential property sales swept through the industry. However, the chilling effect on buyers appears to be thawing, according to a recent report in The Real Deal.
In a statement, New York Gov. Andrew Cuomo applauded Thursday’s vote, arguing that it was time to “stop this double taxation scheme once and for all.”
“New Yorkers are sick and tired of being used as ATMs, footing an additional $15 billion each year that will be redistributed to red states and big corporations,” he said.
But Bloomberg calculated that about three-quarters of taxpayers with state and local taxes exceeding $10,000 were not even eligible to deduct them under the old law because these households were being hit by the alternative minimum tax instead. The federal tax reform mostly affected the top 1 percent of earners, who in New York account for 56 percent of state tax revenue, according to the Cuomo administration.
Rep. Peter King and Rep. Tom Suozzi (Credit: Getty Images)
The bill was carried by Republican Rep. Peter King and Democratic Rep. Tom Suozzi, both of Long Island.
Jan Koum, co-founder of the messaging service WhatsApp, purchased the 
An unidentified buyer registered as WinterSun Properties LLC purchased a mansion built by handbag mogul Bruce Makowsky in October – 
Speculative mansion builder Ardie Tavangarian 
