With property tax deadlines quickly approaching — or having already passed — many state and local governments are in a bind.
Taxes from real estate bring in huge chunks of revenue to cover essential services for municipalities, which are at a high need during the pandemic. And without that money, some cities may have to float bonds or file for bankruptcy. A small share of the property taxes are designated to state services, which poses an additional problem at the state level.
At the same time, many residents are still cooped up at home, and commercial real estate owners are now grappling with red ink, as stores, restaurants, gyms and other retailers increasingly fail to pay rent. For multifamily landlords, unemployed tenants present a similar problem. And for some hotels and tourism companies, the situation’s even worse.
Counties around the U.S. have proposed a variety of different solutions — from delaying tax payments to completely reassessing property values — but the money will have to come from somewhere to continue funding essential services.
And while many have compared the coronavirus to Sept. 11, 2001, and the 2008 financial crisis, a growing number of experts believe the impacts on real estate could be far worse. Some say the hardest hit companies may not survive, especially those without corporate backing.
“Do they ever come back, or is this the end of that era?” said Julio Gonzalez, founder and CEO of tax engineering firm Engineered Tax Services. “The whole landscape is changing.”
Weighing the Big Apple
There’s no doubt New York City has been hit the hardest by Covid-19.
To help homeowners, the city is offering some payment plans and deferral programs for property taxes. But the first half of property tax payments are still due on July 1.
For the 2019 tax cycle, New York City billed $30 billion in property taxes, according to tax experts in the area.
Under current tax laws, all payments must be made on time, and those who miss the deadline are charged 18 percent interest compounded daily. Hotels, theaters and shopping centers — which have been especially hard hit — are still expected to pay on time despite having no active income for the last several months.
“Not only are my clients crying out for cancellation or postponement, they need an announcement now so that they can use these anticipated tax funds to pay for salaries, maintenance and operations,” said Joel Marcus, a partner at the NewYork-based real estate tax and litigation law firm Marcus & Pollack.
Surveying the Sunshine State
Florida is not going to see the real effects of the coronavirus until the next tax cycle due to the “lien date.” This is a date set by the state to assess property values. Next year’s lien date is Jan. 1, 2021. In addition, many Florida property owners already paid this year’s taxes because the state gives taxpayers a 4 percent discount if they pay in November when the bills arrive.
But Logan Gans, a partner at the law firm Shutts & Bowen in Miami, said that he anticipates the next tax cycle to be much more difficult — especially for the decimated tourism industry.
Florida property tax rates are based on two components: the property value set on Jan. 1, 2020, and the millage rate, which is the amount a property owner has to pay in taxes for every $1,000 of their property’s assessed value.
Miami proper billed about $2 billion in property tax revenue in 2019, and of that amount, $445 million is put toward city services, according to tax experts in the area.
Not only were properties valued before the coronavirus hit, but many counties are overstressed with the pandemic and need more money to pay for essential services, which will affect the millage rate, according to Gans.
“If the federal government isn’t going to help the state and local governments out, then the counties are going to have to raise revenues themselves or else go into bankruptcy,” he said.
The City of Deferred Dreams
In Los Angeles County, annual property tax bills are paid in two installments — the first was due in December and the second was due this April. Both deadlines had a 10 percent interest rate attached to delinquent payments.
Gov. Gavin Newsom announced an executive order to waive late payment penalties on property taxes if the taxpayer can prove a correlation between coronavirus and ability to pay. But it appears this relief is not available to taxpayers who were in default on certain property taxes prior to March 2020, said Kevin Moore, of the local law firm Kevin J. Moore & Associates.
For the 2019 tax cycle, Los Angeles County billed about $2 billion in property taxes, according to tax experts in the area.
Moore said that multifamily properties have been hit the hardest. “Banks are not lending or refinancing on these types of property for fear that tenants will not be paying rent and the owner cannot evict,” he noted.
Michael Lebeau, an attorney at Bewley Lassleben & Miller, said the state’s tax codes include a provision that could potentially provide property tax relief for regions that have experienced a natural disaster. But California courts have held that it only applies if the governor declares a disaster and there is physical damage as well as restricted access to property.
In the era of coronavirus, it’s unclear whether this disaster relief will apply to the current circumstances.
Windy City Headwinds
Chicago is taking a different approach in trying to remedy the issue of property taxes during the pandemic. On April 3, Cook County Assessor Fritz Kaegi said he would reassess the entire county from top to bottom. That’s roughly 1.8 million parcels of land.
“How he’s going to do that is a mystery to all of us,” said George Relias, founder of Chicago-based law firm Relias Law Group. “The speculation is that he’s going to have to use some kind of mass appraisal methodology, like a percentage across the board to reduce assessments.”
Relias said if this is the approach Kaegi takes to reduce property values, it will not end up saving taxpayers money. He said the tax rate will increase to compensate for the reduced values.
About $6.7 billion in taxes were billed for the 2018 cycle, of which about $1.5 billion goes to city services, according to local tax experts.
Meanwhile, some retail landlords are offering relief to tenants by extending their leases to allow time for the tenant to pay back what is owed.
Along with retail, Relias said office space is “going to be crushed” in the long run, which may result in adaptive reuses of buildings
A Wilshire Boulevard office tower could plunge into receivership as lenders accuse owner Said Hakim of siphoning money to personally benefit himself and his family.
Wilmington Trust, the trustee of a securitized mortgage issued by UBS Real Estate Securities, filed a lawsuit against Onyx Tower, a limited liability company founded by Hakim and managed by sons and daughters Sam, Michael, Tanya, and Julia Hakim that own the 130,000-square-feet property at 6100 Wilshire Boulevard.
The plaintiffs want a Los Angeles County Superior Court judge to place the building into receivership.
Commercial landlords across the U.S. are on the default precipice as tenants don’t pay rent amid the coronavirus pandemic. But problems at the Wilshire property predate the economic crisis, and allegedly involve mismanagement and fraud.
Questions for Hakim were routed to Brian Weinhart, a lawyer at Hill, Farrell, and Burill who called the allegations “highly defamatory.”
“The borrower’s mortgage payments are and at all times since the origination of the subject loan, have been paid,” Weinhart stated. “Mr. Hakim unequivocally denies any misappropriation of rent payments whatsoever. The building has always been, and will continue to be, managed in a stellar manner and maintained in class A condition.”
According to the complaint, UBS provided Hakim a $65 million mortgage loan in 2014, enabling him to purchase the property from Kennedy Wilson for $76 million.
As part of the agreement reached between Hakim and UBS along with loan servicer Wells Fargo, all monthly rent checks would go into a deposit toward Hakim’s mortgage payments, the lawsuit states.
Problems began with payments last year, per the lawsuit.
In July 2019, Wells Fargo dinged Hakim with a $14,000 late payment fee, and began investigating why just half of the expected $800,000 per month in rent payments were entering the mortgage deposits.
After not hearing back from Hakim about the discrepancy, Wells Fargo hired a forensic accountant.
What the accountant found, the complaint reads, is that just $3 million of Hakim’s $8.32 million cash receipts between May 2019 and March 2020 at the Wilshire property went to pay the property’s mortgage.
The other money went to “insiders and affiliates” including payments to the personal home mortgage of Said Hakim’s son, Sam Hakim, the suit alleges.
The legal action comes on the heels of a complaint filed last year against Hakim’s sons and daughters also regarding 6100 Wilshire Boulevard. In that lawsuit, property investor Brian Weiner accused the family of fraudulently misrepresenting his stake in the property.
Sam Hakim is also involved in another pending legal saga. He has filed a lawsuit against Agency co-founder Mauricio Umanksy and Umansky’s business partner, Mauricio Oberfeld.
In that dispute, Hakim claims he was willing to spend $41 million on a Malibu property formerly owned by the Vice President of the Republic of Equatorial Guinea, but Umansky sold the property to Oberfeld for $33 million and then allegedly profited off the resale. Umansky has denied any wrongdoing.
Convene’s top design executive is stepping down after more than 10 years with the firm, the company announced Thursday.
Joyce Bromberg, Convene’s chief design officer, is resigning, just as the flex-space company braces for a gradual reopening of its 30-plus locations.
The reason for her departure was not immediately clear, but according to a press release, she described her time at Convene as “the best part of my career and truly a privilege for me to help design great spaces, create strategies, and to allow work to be about love.”
According to Convene, Bromberg came out of retirement to join the firm in 2010, where she eventually led a team that designed Convene’s locations and created the company’s workplace strategy.
Convene, along with other flex-office companies, has grappled with a dramatic drop in business due to the coronavirus pandemic. In March, the firm laid off a fifth of its workforce, or about 150 employees.
Workplace design will likely play a large role in how businesses navigate a return to their offices. Earlier this month, the firm revealed plans to reduce office capacity by 50 percent and to reconfigure its spaces to allow workers to maintain social distancing.
Convene — backed by investors including RXR Realty, the Durst Organization and Brookfield Asset Management — has locations in New York, Los Angeles, Chicago, Boston, Philadelphia and Washington, D.C.
Bed Bath & Beyond is planning to reopen 600 U.S. stores as states begin to wind down shelter-in-place orders. (Getty)
Bed Bath & Beyond is planning to reopen 600 stores across the country, the latest chain retailer to unlock its doors as states wind down shelter-in-place orders.
The home-goods company estimates about half its stores will be open by June 13 — subject to local regulations — and it will roll out curbside delivery at an additional 600 stores. Curbside pickup will be available at 90 percent of its 1,500 stores across the U.S. and Canada, the company announced Friday. It estimates the measures will bring back 11,000 employees who are currently furloughed due to measures around the pandemic.
“Our financial flexibility allows us to take this patient, market-by-market approach, while we invest in rebuilding our business and introducing new services for our loyal customers,” Bed Bath & Beyond president and CEO Mark Tritton said in a statement.
Tritton joined the company in November after activist investors pushed out its top executives. In December, he restructured the leadership team, letting six executives go. And in January, Bed Bath & Beyond sold about half its real estate assets to private equity firm Oak Street Real Estate Capital and then leased back the space.
The reopening of hundreds of stores comes as the retail industry — already crippled under competition from ecommerce — faces increasing pressure on all sides, made worse by the coronavirus crisis. A number of big retail chains, including Neiman Marcus, J.C. Penney and J. Crew filed for bankruptcy in the last month.
With stores closed across the country, rent collections among 135 major chains plunged 58 percent in April. Mall giant Macerich reported that it collected only 26 percent of April rent payments across its 47 shopping centers. And now, some malls that have reopened are seeing only a fraction of normal foot traffic.
A photo illustration of Goldman Sachs CEO David Solomon (Getty; iStock)
Big money will be deployed into cash-deprived real estate funds that have been hit by the coronavirus pandemic.
Goldman Sachs announced it closed a $2.75 billion fund, known as Vintage Real Estate Partners II, vastly exceeding the investment firm’s $1.25 billion target. The fund will target the real estate secondaries market, such as limited partnerships and other real estate funds that need capital in order to stay afloat or make new deals.
The announcement comes at a time when many real estate owners have been impacted by the coronavirus and stay at home orders throughout the country. Retail and hotel property owners have been particularly hit hard by the pandemic and have left owners struggling to make debt payments.
Goldman Sachs managing directors Harold Hope and Sean Brenan said an area of focus is on real estate owners who need liquidity in order to weather the economic downturn.
“There are going to be some good properties that have some short-term struggles and they are going to need additional capital,” said Hope. “We partner with the owners of those properties… to allow them to get to the other side of COVID.”
The fund could also invest in real estate partnerships that are looking to buy new properties, but are struggling to get financing since banks and lenders hold off on making new loans due to uncertainty around pricing.
“Some of the deals that are really attractive have to happen really quickly, if you need to do it quickly you need a lot of capital,” said Hope.
As of March, the fund has already made five investments, but 90 percent of the fund’s money has not been invested, according to Brenan. Goldman Sachs declined to disclose their investments.
Vintage Real Estate Partners II has an investor base of institutions and high net worth individuals and is the second real estate secondaries fund raised by the group. The team’s first real estate secondaries fund, Vintage Real Estate Partners, closed on about $900 million in capital commitments in November 2016. The group has been investing in real estate secondary transactions since 2010.
By investing in real estate funds, Hope and Brenan can see how property owners are faring during the crisis. Hope said, however, while there has yet to be the level of distress as in past crises.
“We are seeing some investors that are pretty distressed, but if we compare it to previous crises it doesn’t seem to be as widespread,” said Hope.
3M CEO Mike Roman and Altaris Capital Partners Principal Garikai Nyaruwata
A spinoff of 3M, the company that makes N95 masks, has sold a Northridge manufacturing plant.
Altaris Capital Partners paid $35.7 million to acquire the 168,000-square-foot property from Kindeva Drug Delivery, property records show.
While 3M makes the N95 masks that healthcare professionals use to protect against the coronavirus, Kindeva develops and manufactures drugs and delivery systems. Its microneedle delivery system is being used to develop a Covid-19 vaccine as well as therapies for other illnesses like osteoporosis.
The 8.6-acre property at 19951 Nordhoff Street is in an industrial area of northwest San Fernando Valley. The plant was built in 1975, according to Realtytrac.
The sale closed on May 5 and appears to be part of the larger spinoff. 3M is retaining a 17 percent stake in Kindeva, which was formerly called 3M Drug Delivery Systems.
Altaris paid $650 million for the company, according to a May 1 release on the deal. The New York-based firm invests in the healthcare sector and manages $4 billion in equity capital, according to its website.
The L.A. industrial market was one of the tightest in the country before the pandemic hit. Overall, the coronavirus has highlighted the need for distribution centers, as delivery orders for essentials have spiked.
Minnesota-based 3M is one of the largest conglomerates in the country. Its real estate footprint includes 80 manufacturing facilities in the U.S. and more than 100 outside the country.
A 1.4-acre plot of undeveloped land next to Griffith Park once set for development has been purchased in a crowdfunding campaign for preservation.
The organizers behind the campaign managed to raise half a million dollars in 21 days to buy the two parcels, according to the Los Angeles Times. The parcels will be integrated into Griffith Park.
The story began last year when the two parcels hit the market asking $850,000. A developer had a deal in place to buy it earlier this year, but the coronavirus pandemic derailed the purchase and it fell apart in escrow.
Then, local residents Jason Greenwald and Corey Nickerson joined up with the organization Friends of Griffith Park to work out a deal to buy it. They had a contract in hand in late April to buy it for $500,000, but had agreed to get that money together within 21 days.
More than 100 contributions came in and they were able to close it last week. At least two donors contributed six figures to the campaign, but there were donations as small as $2 as well. They raised more than $500,000 and the extra funds will go toward maintenance.
The group handed over the property to the state’s Mountain Recreation and Conservation Authority, which will ensure its preservation. The property sits south of Bronson Canyon. [LAT] — Dennis Lynch
An illustration of Vornado’s Steven Roth and Facebook’s Mark Zuckerberg
On Thursday, Mark Zuckerberg took direct aim at real estate’s holiest of holies: The L word.
“Over time, location will hopefully be less of a factor in how many people work,” he said in a note on Facebook, the $659 billion social media giant he built and leads. “And we’ll have the technology to feel truly present no matter where we are.”
Zuckerberg was announcing the beginning of Facebook’s permanent shift to a distributed workforce, a decision that could see up to half of the company’s 45,000 employees go remote in the next few years. It’s likely to set off a ripple effect among tech companies and rock office markets across the country.
Consider New York, where Facebook occupies more than 1 million square feet of office space at Vornado’s 770 Broadway and Orda Management Corp.’s 225 Park Avenue South. It has also signed for 1.5 million square feet at Related’s Hudson Yards campus, and is reportedly near the finish line for another 740,000 square feet at Vornado’s Farley Building redevelopment.
Last year was the third straight that tech leasing in Manhattan surpassed 3 million square feet, according to CBRE, and was the biggest year for tech leasing on record. In San Francisco and Seattle, tech firms accounted for half or more of new office leases signed in 2019, and about a fifth in New York and Los Angeles.
Now, leases are hard contracts — companies can’t just walk away from them, though many will try. What’s more likely to happen is that building owners will be forced to invest even more in health and safety facilities because tenants will demand that for their employees — and landlords have little leverage.
“Those rules where a landlord for the last 100 years would say, ‘You have a lease, and these are the terms of the lease, and you’re going to live by those terms,’ — those are out the window,” Cushman & Wakefield CEO Brett White said in a recent interview with Fifth Wall Ventures. “They are being forced to do things to support their tenants that they never envisioned, whether it’s rent reductions, rent abatements — landlords in this pandemic have learned very quickly that their existing tenant base is critically important.”
But even if these gleaming towers with their stripped-down aesthetics and open plans have a 10-year grace period thanks to current leases, what happens next? Owners have long counted on tech companies to spread like weeds — or memes — in their office buildings: Facebook started off with just 100,000 square feet at 770 Broadway in 2013, and has grown seven-fold since.
Landlords have also counted on a sort of virtuous cycle in tech leasing: Snag one big name and reap the rewards of the whole ecosystem moving to your ’hood. And that impact isn’t felt just on the office floors. A young, wealthy tech workforce with heaps of disposable income is a godsend for retail. Recall the pre-pandemic scenes at José Andrés wildly expensive Mercado Little Spain or Estiatorio Milos on a weekday afternoon.
“Any real estate decision is location-driven, but with tech tenants, what we’ve found is that that tends to be one of the primary drivers,” Colliers International’s Stephen Shapiro said in December. “In banking or in legal or accounting, you don’t necessarily get that same sense that all the talent wants to be in a two-block radius.”
But if one of the most well-capitalized, profitable companies on Earth doesn’t feel the need to make it to the office every day, how will other firms justify the costs?
The list of companies that have announced a permanent shift toward remote work is filled with heavyweights: Twitter, Shopify, Square. But that’s not the half of it. Consider firms such as Mastercard, Google and Zillow, which have announced that work-from-home is the reality for at least this year, and possibly beyond.
Whereas lost productivity was cited as one of the key reasons that remote work would never work, some tech leaders are now turning that rhetoric on its head. Zillow CEO Rich Barton tweeted that “my personal opinions about WFH have been turned upside down over the past 2 months.” MasterCard’s chief people officer, Chris Fraccaro, told Reuters that companies may find their offices at a third of capacity even once this pandemic is past. Joan Burke, chief people officer of DocuSign, went even further, telling the New York Times that “working from home is a great thing for the company and for the employees, who don’t want to get back in cars and commute for two hours. That’s lost productivity.”
The other upside of going remote for these tech firms could be financial: They paid top dollar for workers in New York and San Francisco because they believed that was necessary to land top talent. In the shift to a remote workforce, they will become more open to hiring anywhere, and anywhere that is not New York or San Francisco is cheaper. Zuckerberg told Bloomberg the company would “localize everybody’s comp on January 1,” which could mean tens of millions of dollars in savings.
Office landlords have bet the farm on tech companies, buying out lesser tenants and stockpiling space in the hopes of their expansion, designing buildings from scratch with them in mind, and offering generous concessions to name-brand firms. The great irony is that these are the companies that are finding it easiest to make the forced transition to remote work during the pandemic: Much of their core work is already distributed across engineering teams globally. The cloud is already part of their DNA.
I’ve been working on a fully distributed/remote basis since leaving a big company in ‘07. I’ve never actually met our back office/CFO equivalent, nor have I ever been in the same room as our corporate lawyers or investment bankers.
Venture capitalist Chris Sacca, an early investor in Facebook and Kickstarter
The lumbering giants of banking and law are having a harder time with remote work, and their employees and leaders are raring to go back to the office. But these industries are not signing large leases at nearly the rate that Big Tech is: According to CBRE, tech accounted for nearly one-third of the largest 100 leases in the U.S., compared to financial services and insurance at 13.5 percent, or legal, at about 2 percent.
Shortly after Facebook signed at Hudson Yards in November, Stephen Winter, who oversees leasing for Related at the megacomplex, said the deal meant the execution of their business plan was now “beyond perfect.”
“Because now,” Winter said, “it seems that every single major tech company wants to be in and around 34th Street.”
There’s a lot of dust yet to settle, and reports of the death of alpha office markets have always turned out to be greatly exaggerated, but it is worth pondering: If Big Tech can truly be everywhere, does it need to be anywhere in particular?
Stagnant water in office buildings may pose risk to returning workers (iStock; CDC)
Workers abandoned their office buildings in mid-March to heed stay-at-home orders. But their absence may allow for the accumulation of other health risks.
A new study, conducted by Purdue University researchers Dr. Caitlin Proctor and Dr. Andrew Whelton, argues that standing water — and bacteria — may proliferate in unused office buildings, the New York Times reported. That could open the door to other diseases, the biggest concern being an outbreak of Legionnaires’ disease, caused by the virus Legionella, which has a death rate of about one in 10, according to the Center for Disease Control.
“Not every building will have issues but based on what we know, enough of them probably will,” Dr. Proctor said.
Some areas of the country have been under shelter-in-place orders for two months, including New York, which shut down on March 22. Hotels, gyms and other commercial properties could be at risk as well.
The study assessed 21 different guidelines for office building managers to keep their buildings safe, developed during the coronavirus pandemic — not all of which are “created equal,” said Dr. Proctor. Typically, office building managers add small amounts of disinfectant to the water, but that can dissipate after even one weekend of stagnation, Whelton said.
Other steps building managers can take include flushing out old water to bring in a new supply, using a high dose of infectant or raising the temperature enough to kill bacteria.
Bill Rudin, CEO of Rudin Management, said that taking such safety steps are standard procedure in his company’s buildings.
“Our engineers go through the building testing systems all the time,” he said. “That’s standard procedure.”
In 2015, New York City suffered its worst outbreak of Legionnaires’ disease in its history. More than 120 people were infected and 12 died. The outbreak concluded when health officials identified the culprit: a contaminated cooling tower at the Opera House Hotel in the South Bronx. [NYT] — Georgia Kromrei
Eric Garcetti (Credit: Gregg DeGuire/Getty Images)
It’s not every day that constitutional rights and trash collection collide. But both are at the heart of a legal battle Los Angeles landlords and hotel owners are waging against the city.
The Apartment Association of Greater Los Angeles and the City of Los Angeles Hotel Association have filed a lawsuit in federal court saying the city’s trash and recycling pickup program — dubbed recycLA — violates their constitutional right of due process.
The waste collection program separates Los Angeles into 11 zones, with private companies paying the city for the right to collect trash and recycling in each of the areas, then passing on the costs to landlords and property owners.
The three-year-old program is a major break from past city policies that essentially let each owner choose their own trash collection service. A main reason the city implemented recycLA was to reduce vehicle emission and truck traffic.
But according to the lawsuit, the program has “led to systematic abuses by the city.” Those allegedly include “awarding franchise agreements to a small, limited amount of franchisees in private with staff members and city employees negotiating the agreements and not in open, public hearings.”
The result is that landlords “have seen their monthly trash hauling charges increase by approximately 200 percent to 400 percent” compared to what they paid before the ordinance, according to the suit. In one example, the landlord of a four-unit building saw his monthly trash collection fee go from $75 to $190.
Landlords also have allegedly lost their right to transact with the waste hauler of their choice, which the lawsuit says is a deprivation of their constitutional rights.
Messages left with the mayor’s office and office of the city attorney on Friday were not immediately returned.
Daniel Yukelson, executive director of the Apartment Association, acknowledges prior attempts to dump the program. But, he said, “Those were filed in state court and were going nowhere. We have engaged with attorneys with experience in federal law.”
Frank Weiser, a Koreatown-based attorney, represents the plaintiffs.
This suit is the just latest one that property owners have filed against the city since recycLA took effect. The City Council has also scrutinized the program after landlord complaints.
The lawsuit comes while landlords and city hall continue to battle over eviction and rent payment policies; the city imposed a moratorium on evictions for residential and commercial tenants affected by the coronavirus. Yukelson promises that a lawsuit on the eviction moratorium will be the group’s next legal action.
Mastercard CEO Ajaypal Singh with 150 Fifth Avenue and Facebook CEO Mark Zuckerberg with Moynihan Station in New York (Getty; Google Maps)
Facebook and Mastercard are the latest major employers to rethink their office needs as remote work grows in appeal.
Mark Zuckerberg informed Facebook’s 45,000 workers on Thursday that the tech giant would shift toward more working from home, the Wall Street Journal reported. Over the next decade, the Facebook chief expects that nearly half of the company’s employees will no longer be working in offices.
Mastercard, too, is reassessing its physical footprint and mulling a consolidation of its operations, according to Reuters. Once social distancing measures are relaxed, some companies may see office occupancy reach only 30 percent, Mastercard’s Chief People Officer Michael Fraccaro told the outlet.
Since the coronavirus pandemic forced businesses across the U.S. to shutter, both companies’ employees have been working from home. But as employers become accustomed to remote work — and realize the potential cost savings in shrinking their office holdings — more companies have decided to do so permanently.
This month, Twitter CEO Jack Dorsey said most of its employees could work from home once the spread of the pandemic subsides. Should that trend continue, office landlords in major U.S. cities would face a reckoning.
VIDEO: Office landlords: Don’t eat before watching this
Though Mastercard owns its headquarters in Westchester, New York, it has offices across the globe — including L&L Holding’s entire 200,000-square-foot, 11-story office building at 150 Fifth Avenue in the Flatiron District.
Facebook, meanwhile, leases millions of square feet of office space across the country. Though the tech company owns much of its sprawling campus in Menlo Park, it has recently gobbled up big spaces in newly built offices on Manhattan’s West Side. Last year, it signed a lease for 1.5 million square feet across three towers at Related Companies and Oxford Properties’ Hudson Yards. At 50 and 55 Hudson Yards, the company is paying a base rent of $130 and $116 per square foot, respectively.
Plus, it’s still nearing a deal to sign a lease for 700,000 square feet at Vornado Realty Trust’s redevelopment of the Farley Post Office.
Manhattan Borough President Gale Brewer said on a recent TRD Talks Live web discussion that anxiety was growing among the city’s commercial real estate community.
“People have not only learned to work at home and enjoyed it, but guess what,” she said, “it’s going to save money for the company that is renting at a vast cost per square foot.” [WSJ, Reuters] — Danielle Balbi
Anbang’s Andrew Miller, Mirae’s Peter Lee and (from left) JW Marriott Essex House, the Westin St. Francis in San Francisco and the Four Seasons in Jackson Hole (Credit: Marriott, Westin, Four Seasons)
The saga of Anbang Insurance Group’s sale of its $5.8 billion U.S. hotel portfolio has yet another wrinkle.
The would-be buyer, South Korea’s Mirae Asset Global Investments, is now countersuing the entity in control of the Chinese insurer’s assets for the return of its $582 million deposit, accusing it of breach of contract and committing fraud.
It comes after Anbang slapped Mirae with a suit last month intended to get the court to enforce the purchase contract. Anbang claimed Mirae’s termination of the deal was “a classic case of buyer’s remorse” in the face of a global pandemic that frustrated its efforts to secure debt financing.
In a court hearing earlier in May, an attorney representing the insurer’s interest said that Mirae “bet that they could get better terms if they waited and waited and negotiated and negotiated. And, lo and behold, they bet big and they lost big.”
Mirae’s attorneys hit back with a complaint on May 20, accusing Anbang of deliberately concealing further ownership claims of the 15 hotels — problems stemming from a bizarre case of deed fraud that came to light in September.
The Korean investment firm claims in February it was ready to pay a $50 million non-refundable fee to lock in acquisition financing from a consortium led by Goldman Sachs, when the lender’s attorneys uncovered a series of trademark disputes between Anbang and several of the same parties named in the deed fraud case. The parties used alleged arbitration awards from these trademark cases to claim ownership of Anbang’s hotels.
Anbang claims it only learned of these actions in December, and by mid-January it obtained a default judgment that prevented any of the parties from making further ownership claims to any properties noted in the fraudulent filings.
But Mirae’s lengthy countersuit questions the authenticity of the ownership claims. It also put forward a theory connecting the entities claiming ownership of the hotels to former Anbang chairman Wu Xiaohui, who was jailed in 2018. Mirae’s claim that a “Chinese power play” could be behind the disputed deeds is based on an agreement that bears Wu’s signature. (Anbang’s attorneys had blamed the deed fraud scheme on an Uber driver in San Francisco, according to Mirae’s complaint.)
Anbang’s suit called the document in question a “fabrication” and, in court, its attorneys accused Mirae of “jumping into bed with a bunch of fraudsters” by suggesting its legitimacy.
Regardless of the validity of the scheme, Mirae claims that because it wasn’t informed of full scope of the disputed ownership issues the asset manager suffered “shock (and embarrassment)” and its lenders and title insurance companies “immediately pulled their commitment letter and demanded a full explanation.”
“[Mirae] had no indication that the issues plaguing [Anbang]’s ability to convey ownership of the properties ran much deeper than a lone Uber driver,” the complaint states. “[Anbang] gambled that it could conceal the [litigation] targeting the properties from the [Mirae], and force a quick closing on the transaction before [the litigation] would come to light and before the coronavirus pandemic decimated the hotel industry for years.”
There is also a significant part of Mirae’s claims of breach of contract that takes issue with recent management of the properties by Dajia Insurance Group, the company formed to manage Anbang’s assets after Chinese regulators took control of the insurer in 2018.
Mirae claims that Dajia’s halting operations at the15 hotels due to coronavirus constitutes a violation of the sales contract’s requirement for the properties.
Forced closures due to the virus have shuttered hotels across the country, and as a result occupancy has fallen off a cliff, while billions in loans have been sent to special servicing. Earlier this month, the $800 million sale of one of South Florida’s largest hotels was called off.
On May 8, Vice Chancellor J. Travis Laster granted Anbang’s motion to expedite the case, setting a trial date for later August.
Laster, who was also the judicial officer who issued the January default judgement against the entities claiming ownership of Anbang’s hotels, expressed skepticism during a hearing that Mirae could prove its allegations about the ownership claims.
“Those folks have vanished into the ether,” he said of Anbang.
“It may be because they never existed in the first place. It may be because they are fraudsters. It may be because they are somewhere in China. I don’t know. But it doesn’t seem to me that that’s going to be a wide-ranging source of discovery,” he said, noting that the case will likely rest on Mirae’s allegations of business interruption related to Covid-19.
It makes the disputed sale of Anbang’s hotels one of the most high profile court cases where the effect of the pandemic is a central issue. The three-day trial will start on Aug. 24.
As lockdowns lift and the work-from-home debate ranges on,office landlords are eager to get back to leasing and building out their spaces.
“We have various construction projects we want to get back to,” said Grant Greenspan, senior vice president of leasing at the Kaufman Organization.
In New York, all nonessential construction work and in-person real estate showings are on hold until Gov. Andrew Cuomo gives the green light for those activities to resume. When they do, Greenspan acknowledged there will be challenges with showing commercial spaces.
“Obviously, it’s a little more tricky if the tenant is occupying the space,” he said. “We’re going to have to be more cognizant of their concerns.”
In the meantime, office leasing brokers have been doing their best to adapt to virtual showings. Stephen Schlegel, market director for the tri-state region at JLL, said the lockdown has pressed brokers to try new technologies quicker than they would have otherwise.
“We can’t imagine a set of circumstances that would have pressed us to develop those technologies the way we are now,” he said.
One of the big questions around virtual showings is how willing tenants are to lease spaces of significant size without ever physically visiting them.
Ryan Simonetti, CEO of the flexible-workspace and conference-space company Convene, said his company has long offered visual tours of its spaces. In the past several weeks, the number of deals done virtually has become much larger, as members seeking the flexibility of short-term commitments sign up.
Simonetti said members are more likely to close an all-virtual deal up to a certain point: usually for about 10 or 20 people, maximum. After that, he said, it becomes a harder proposition. “We are seeing people’s appetite to consume space digitally growing,” he said. “But it’s a different story for bigger requirements.”
JLL’s Schlegel said it will be some time before brokers return to the old ways of doing business.
“Given the restrictions on going to buildings, the notion that you’re going to take tenants to six buildings a day is just not realistic,” Schlegel said.
Barry Sternlicht, who has amassed an estimated net worth of $3 billion over the years, is co-founder, chairman and CEO of Starwood Capital Group. The investment firm manages more than $60 billion in assets, and Sternlicht is launching a public company focused on special acquisitions that will hold a $600 million IPO in May. Sternlicht is now on the hunt for discounted properties, including distressed hotels. The Brown University and Harvard Business School graduate got his start in real estate investment at JMB Realty. Sternlicht was laid off from the company in 1990, following the market’s collapse, and went on to launch Starwood the next year with his partner at the time, Robert Faith. In one of their first deals, they bought apartments from the Resolution Trust Corporation — which the federal government formed to hold and liquidate properties owned by failed savings and loans in the wake of the S&L crisis. Starwood, which is building its new headquarters in Miami Beach, now employs more than 4,000 people across 16 offices on three continents. Over the past three decades, the company has acquired and developed more than 150 million square feet of office, retail and industrial space, 300,000 hotel rooms and 180,000 multifamily units. Starwood has also invested about $7 billion in energy infrastructure and $230 million in oil and gas. While the company has largely withstood the pandemic so far, Starwood has had to furlough some of its hotel workers. Sternlicht told The Real Deal he’s optimistic the hospitality industry will rebound from the pandemic, but said he’s more skeptical about the future of retail and voiced his many frustrations with Amazon. In a wide-ranging Zoom interview from his home in South Florida, the billionaire CEO also talked about everything from his stance on restarting the economy and his relationship with Donald Trump to his father’s harrowing experience during World War II.
DOB: November 27, 1960 Lives in: Miami Beach Hometown: Stamford, Connecticut Family: Divorced with three children
I always start with the hardest question: What is your full name? Barry Stuart Sternlicht.
Where were you born? Long Island. Stamford, Connecticut, is really where I grew up. I moved there at like 4 or 5 years old.
What were you like as a kid?Happy and a frustrated jock. I was pretty good at most sports but not great at anything. I actually taught tennis to earn a living during my summers before college.
Were you a good student? Yeah, I was a pretty good student. I always leaned toward the humanities. My major at Brown was called Law and Society. I used to call it Lost in Society because it was a major that combined economics, political science, history and philosophy.
Your father was a Holocaust survivor. Did he ever discuss that with you? Yes, but not until I was 38. I took him back to Poland. I think that was when he first told me that he killed someone during the war. He was not in a camp. He was lucky to survive in the mountains, and he was liberated by the Russians.
How do you think that experience shaped his worldview and how he raised you? I think he had a hard time trusting people. He always felt a little bit like an outsider, even though he married a gal from Brooklyn. He obviously taught me to be tough. My worst day was probably better than his best day during that eight- or nine-year period. He was angry, though — he really had a lot of anger against the Poles for their behavior during the war.
How did you get started in real estate investment? I really didn’t start in real estate until after business school. I had an offer from Goldman Sachs, which I didn’t take, and I went to JMB Realty instead. I always walked a little less conventional route, and that was the less conventional route.
Let’s fast-forward to the present, with Covid-19 continuing to wreak havoc on the world. What’s your next big move as an investor? I don’t know. Well, I’m not going to tell you. Too many of my competitors are going to hear about this. I think a crisis is a terrible thing to waste. I was exceptionally bullish on CNBC on March 13 and said we’d have a very quick recovery.
Are you referring to your comment about the pandemic being World War III for 90 days? Yup. I got that right. But with the fallout from Covid in the real estate markets, it will take time to figure out which tenants survive and which tenants don’t. The equity markets reprice overnight, and the real estate markets don’t.
You’ve said Starwood will look to be opportunistic during the pandemic. Does that mean you’ll look to buy properties at discounted prices?We will. We’ve probably laid out half a billion dollars in the last 45 days, but we haven’t bought any individual assets yet, although we have been actively acquiring public equities and CMBS securities. When it looks like the world is totally ending, that’s the hardest time to actually push the button and buy something.
Are there certain types of assets that you’ve got your eye on?We have a pretty deep background in hotels, and I’m willing to buy cheap real estate in the hotel space because I believe in the asset class. I think I know what we can do with them. Our thinking is: “Okay, where will we be in 24 months? Let’s not worry about the slope of the recovery right now.”
What’s your outlook on distress bets these days? We love distress markets from a buyer’s standpoint. I like markets like this where you have to hustle. Hopefully, we’re big enough now to help people survive, too. They can come to us, and we can give them capital.
Barry Sternlicht in the Zoom interview with The Real Deal’s Eddie Small
How do you feel about restarting the economy? Do you think it’s time to start lifting some of the social distancing restrictions? Yes. We have to reopen the economy, and we have to do it soon. People who are at risk should stay home, but the vast majority of people are probably not at risk. We have to open with protocols, and we have to watch the results really carefully, but that can be zip code by zip code. The medical experts, they’re the same people who told us that 2.5 million people would die. They’ve since revised their forecasts.
Have you had to lay off any workers or cut salaries?Not at the parent company or the asset manager. At our most impacted assets like hotels, we had no choice.
If you had to boil it down to one point, what is your biggest concern about the pandemic in the long run? I’ll give you two. One is treating money as if it’s free and doesn’t matter. I do think we should spend trillions of dollars. I just think we should be super careful about how we spend it.
What’s the second one? I worry about fear-mongering. I heard a mayor say the other day that she’d keep her city closed until a vaccine was found. That may not be until next year — the country would be in a depression. You cannot keep [more than] 30 million people on unemployment. The whole financial system will collapse. We can keep our hotels closed for a few months. We can’t keep our hotels closed for a year and a half.
What has been the pandemic’s biggest impact on Starwood so far?I suppose hotels, but I think it’s just temporary there. We have some retail outfits, but they’re not really significant investments. For retail, this was a dagger to the chest.
Do you see a way forward for retail after all this?Walmart’s big enough to survive. Target and Costco seem to be doing fine. But I don’t want to walk down Main Street in Greenwich and see a Costco. I’m not interested in seeing an Amazon outlet. I like the mom-and-pop stores. I have to say, I’m not a fan of Amazon. They’re demolishing the Main Streets of America, and they could behave a lot more benevolently to communities.
Are there any Starwood assets that you think are well-positioned to hold up during the pandemic?We have apartments, and so far they’ve held up really well. We have 98 percent of the rent, so I’m pretty happy about that. Our best-performing asset, the one I’m happiest about, is a company we call InTown Suites. It’s classified as a hotel, but it’s a low-end extended stay, so people use it as an alternative to housing. We have 196 properties, 24,000 keys, and we’re 80 percent occupied.
How long do you think it will take for the hospitality industry to recover from this? It’s going to vary [depending on] the kind of asset you have and your location. I expect high-end resorts to do okay. The large fly-to markets and the large convention businesses will come back last. That’s Vegas and New Orleans and Chicago’s convention center base.
Do you see demand for office space going down after this, especially with so many people now working from home?The faster you reopen the economy, the faster people get back to their old habits. We might have less demand for space if companies are nervous about the economy and don’t need to expand, but they’re probably going to offset that by social distancing themselves a little bit. I think we’re down to like 220 square feet per employee, but they’ll go back to the 250 or 300 square feet you had 10 or 15 years ago. You’ll inch your way back that way.
You said before the pandemic that a bubble in tech stocks could impact office leasing by some of those companies. Does the same theory apply now? As long as those tech companies are growing, there’s going to be demand for office space, regardless of what’s going on. The government is busy trying to get money to the unemployed, as it should be, rather than breaking apart Google or Amazon. I do not know how it can get much better for those companies.
Are you bullish on any particular company stocks these days? I might have been one of the more vocally bullish people on the equity markets. But I did not expect the market to be down 10 percent from where it was pre-Covid.
You had been warning of a recession well before the pandemic. Are we in it now?Yeah. I thought that the country would slow its investment cycle this year. I didn’t realize you’d have Covid to deal with. There are two things I worry about coming out of this. One is our relationship with China. The outcome of that relationship is critical not only for U.S. economic growth but for the world. The second thing is the political climate. We’re going to have an election. It isn’t going to be kumbaya, I love you, you love me. This is going to be ugly.
Do you consider yourself a Republican, or are you more flexible ideologically? What are you, crazy? I’m an independent. I’m socially liberal and fiscally conservative. I think capitalism is the best form of government, but I think it needs to be regulated.
How would you rate the Donald Trump presidency so far?There’s one positive thing I’d say about the Trump presidency: If you’re a businessman, you’re no longer demonized. What I objected to under the Obama administration was the thought that we were morally corrupt for succeeding. I do think there are certain things that the federal government can uniquely do, like defense spending, and there are national priorities, like energy. We still don’t have an energy strategy.
What about a national pandemic strategy? Well, we had one [for an influenza pandemic] under Bush, and it was abandoned and dropped, so I guess we need one now.
When did you first meet Trump?I’ve known him for decades. He came to the opening of the first W Hotel on Lexington Avenue in 1998, so I probably met him around 20 years ago.
Do you consider him a friend? I consider him a friend, but I don’t talk to him as president. I haven’t been involved in the administration. I’m pro-choice, and the environment is another very important issue to me. It’s complicated.
What is the biggest mistake you’ve made in your career?Randsworth, that’s easy [JMB acquired the London property owner for $425 million in 1989, and by 1992, Citicorp forced it into bankruptcy, according to Forbes]. It really wasn’t my mistake, but I got blamed for it.
More recently, we bought some retail assets. I probably didn’t have the right management team for them, and I didn’t realize how quickly the retail space as we knew it would be reorganized and dismantled.
What do you like to do to unwind?I golf. My tennis career is still around. I work out and bike, and I travel and drink wine.
You have two sons and a daughter. Do you get to see and talk to them on a regular basis? I see them all. My daughter’s an hour away right now. I am divorced, though. I was married for 25 and a half years.
Are you still in touch with your ex-wife? All the time.
Are you dating anyone these days?I’m going to pass on that question.
Where do you live? I live in Florida, in South Beach.
Do you have any other homes? Yes. I have a home in New York City and on Nantucket.
Are you abiding by the stay-at-home rules in Florida? Well, I’m working from the house, but I’ll drive this weekend to play golf in a neighboring county. So it’s stay-ish at home for me.
What are you most looking forward to doing once the pandemic ends and social distancing restrictions ease up?Traveling. Going to Europe for the summer. I’m also excited to get back to the office. I’m not one of those people who’s in love with working from home. I like having people around me.
This interview has been edited and condensed for clarity.
Softbank’s Marcelo Claure, Masayoshi Son and Rajeev Misra (Getty; iStock)
As SoftBank reports a loss of nearly $18 billion — the largest in its history — and prepares to sell off $42 billion in assets, a long-simmery internal feud is complicating matters further.
The tensions arose in 2018 between Marcelo Claure, now SoftBank’s Chief Operating Officer, and the chief of Softbank’s Vision Fund, Rajeev Misra, when Claure was under consideration for the fund’s board and investment committee, Bloomberg reported. In doing due diligence for the position, Misra’s reportedly team hired a Swiss firm to do a background check on Claure, which focused on his potential ties to money laundering and drug cartels in Bolivia. The investigation cleared Claure’s name, and found he didn’t have any illicit ties or criminal history — except for a bar fight in the 1990s — but the focus of the investigation angered Claure and heightened tensions at the firm.
A Vision Fund spokesman told Bloomberg that one of the fund’s limited partners, not Misra, requested the background check and Misra wasn’t involved in determining its focus.
Bloomberg’s reporting follows a February report by the Wall Street Journal that alleged that Misra orchestrated a campaign of sabotage against two other rivals at SoftBank, Nikesh Arora and Alok Sama. Misra allegedly leaked negative information about them and arranged an unsuccessful “honey trap” attempt against Arora in Tokyo. Misra has denied the allegations.
In addition to the cloak-and-dagger scandals, because the Vision Fund’s structure was not intended to withstand such volatility in the markets, some are questioning Misra’s leadership of the $100 billion technology fund. About $40 billion of the fund is in the form of preferred shares which pay out 7 percent to investors each year. Misra has defended his strategy for the Vision Fund, telling CNBC in March that the portfolio would recover within 18 to 24 months. (A spokesperson for SoftBank denied to Bloomberg that Misra made such statements.)
“Misra and Masa go back a long way, but gratitude should only last so long,” Justin Tang told Bloomberg, head of Asian research at United First Partners in Singapore. “If Misra is not the problem, he’s at least a big part of it.” [Bloomberg] — Georgia Kromrei
Natural gas mogul Charif Souki has put his sprawling Colorado ranch on the market for $220 million.
Souki spent the last seven years building out the 813-acre property into what he called a “mini country club” for his family, replete with tons of amenities and recreational toys, according to the Wall Street Journal. If sold at his asking price, it would be among the most expensive residential sales ever recorded in the U.S.
Souki has built seven homes on Aspen Valley Ranch totaling 34,000 square feet and 31 bedrooms. There’s a central clubhouse with a dining room that can accommodate 14 people and a commercial kitchen.
He converted a barn into a game house complete with arcade games, air hockey, foosball, and storage for ATVs, snowmobiles and dirt bikes.
Souki said the property is large enough that he’s hardly noticed the friends that have been sheltering in place on the property since the coronavirus pandemic hit.
“We’re confined in paradise,” he said.
As with many large properties, the ranch has high maintenance costs. It requires a staff of 25 and maintenance is tracked digitally.
Souki bought the property for $27 million from a bank that foreclosed on it when the previous owner declared bankruptcy. He said he always planned to sell it once he completed renovation and additions.
Souki, who was born in Egypt and raised in Lebanon, moved to the U.S. in the 1970s. He founded Cheniere Energy out of Houston and his company developed the first terminals to liquefy natural gas and export it from the U.S., according to the Journal. [WSJ] — Dennis Lynch
A Maryland home formerly owned by Mike Tyson and ex-wife Monica Turner is on the market for $8.5M. The home overlooks the Congressional Country Club, which has hosted U.S. Open golf tournaments. (Getty; Google)
A Maryland home once owned by boxing great Mike Tyson is on the market for $8.5 million.
Tyson and his former wife, Dr. Monica Turner, bought the home in the mid-1990s and lived there for several years before divorcing in 2003 — the same year Tyson filed for bankruptcy. Turner kept the home, which is about 30 minutes outside Washington, D.C., according to the Wall Street Journal.
Turner has expanded the main house over the years and it now spans 19,000 square feet. It includes a gym, pool, sports court, media room and piano room. A massive closet in the spacious master bedroom suite features a dry cleaner–style conveyor belt for clothes.
Turner, a pediatrician who had a son and daughter with the former heavyweight champion, also added an adjacent lot to the property. The grounds overlook the Congressional Country Club. Turner said she’s selling the home because her youngest child has graduated from college and the house is too big for her.
Around the time the two divorced, Tyson — who had burned through his more than $300 million in career prize money — sold an even larger Connecticut estate to rapper 50 Cent for $4.1 million. The rapper sold the property last year for $2.9 million after it had spent more than a decade on the market. [WSJ]
Bars, restaurants and live entertainment venues around the world are now weighing their reopening options. Some owners say they can’t cover the cost of operating at reduced capacity. (Getty)
As the U.S. and countries across the globe begin easing some restrictions on nonessential businesses, bars, restaurants and live entertainment venues face tough decisions.
Some are planning to open at whatever capacity local authorities will allow, while others are on the fence about opening up at all because of the financial constraints, according to the Wall Street Journal.
Business owners say they need to run at higher capacities than social-distancing guidelines allow to cover the costs of operating. Bars typically need more customers in the door than restaurants because their patrons usually spend less than patrons who come in for meals, according to the Journal.
Michael Grieve, who manages the Sub Club in Glasgow, Scotland, said he doesn’t plan to open until social distancing guidelines are dropped completely. He said the 410-person capacity club is about “a shared emotional, and at its best euphoric, experience” that can’t be achieved with social distancing in place.
He said he needs over 90 percent capacity to turn a profit. Others say they just want to open and in the short-term, will accept whatever business comes their way. Weeks of closures have meant many businesses are on the brink of failure.
At The Brass Tap craft beer bar in Austin, Texas, general manager Lewis Smith said: “The place will look empty but it doesn’t matter to us so long as it can get started back up.”
Restaurants could fare better. Many jurisdictions are allowing eateries to have higher capacities than bars, as long as tables are spread out at an appropriate distance and they meet other operating guidelines. [WSJ] — Dennis Lynch
Cadillac Fairview CEO John Sullivan and the RCB Centre in Toronto (Google)
One of Canada’s biggest office landlords has dished on the precautions it’s taking as it prepares for a “measured” return of workers to its buildings.
Cadillac Fairview Corp Ltd. owns and manages 80 properties in the country and is the landlord for some of Canada’s biggest banks. Canadian bankers can expect a much different environment when they go back to their offices, according to Bloomberg.
For one, the firm is working with tenants to schedule staggered start and end times to avoid crowding in lobbies and other common areas. Employees will have to wear face masks in elevators and will be “strongly encouraged” to do so in common areas.
Elevators will be limited to four people at a time and riders will find antimicrobial films over the elevator buttons. Cadillac Fairview is also looking to utilize a smartphone app so that people can schedule elevator rides, hopefully avoiding crowding.
Every major office landlord and office tenant has had to draw up strategies for returning workers. Approaches differ. Many companies have remodeled their spaces, spreading out desks and creating clearly defines avenues for foot traffic. Staggered work schedules are also popular.
Cushman & Wakefield’s Netherlands branch put together a social-distancing safe office concept a month ago. [Bloomberg] — Dennis Lynch
Sir Frederick Barclay and the Ritz London (Photo by Kirsty O’Connor/PA Images via Getty Images, Ritz London)
A high-stakes drama worthy of a soap opera — complete with hidden cameras and big inheritances — is playing out with the Ritz Hotel in London as a backdrop.
Twin billionaires Frederick and David Barclay bought the five-star hotel in 1995 for 75 million pounds. Now, the aging brothers and their respective children are feuding over the sale of the property.
In the saga’s latest update, Frederick this week released hidden camera video footage allegedly showing his nephew Alistair planting a listening device in a room where Frederick and his daughter met to discuss the Ritz sale, according to Bloomberg.
Frederick’s attorney, Hefin Rees, has alleged in court that Alistair and his two brothers are trying to freeze out his daughter, Amanda, from the sale. They sued in January, around the same time Alistair allegedly planted the bug.
The listening device reportedly captured 94 hours of audio over several months, allowing Frederick’s three nephews to anticipate “every move in advance [and] plan their business strategy around that.”
Frederick and Amanda have said they received a 1.3 billion pound offer for the hotel from Saudi Arabia-based Sidra Capital. David’s sons say that isn’t true and claim that their relatives’ talks about “sensitive commercial matters” with outside parties have “the potential to be disruptive and damaging to the family’s business interests.” [Bloomberg] — Dennis Lynch
With property tax deadlines quickly approaching — or having already passed — many state and local governments are in a bind.
Surveying the Sunshine State 
The City of Deferred Dreams
Chicago is taking a different approach in trying to remedy the issue of property taxes during the pandemic. On April 3, Cook County Assessor Fritz Kaegi said he would reassess the entire county from top to bottom. That’s roughly 1.8 million parcels of land. 
As lockdowns lift and the 
