Kian Investment LLC is the latest player in the Koreatown development boom.

The entity, registered under Benhoor Elyashar and possibly associated with U.S. Auto Parts co-founder Sol Khazani, filed Monday plans for a five-story, 32-unit apartment complex at 708 and 712 South Gramercy Drive, according to city documents. 

The project calls for 3,760 square feet of open space as well as a roof deck. Two of the 32 units will be reserved for very low-income households.

The 0.3-acre site of the development comprises two residential zoned lots that contain single-family homes. Kian acquired the parcels for a total of $2 million between June and November 2014. Earlier this summer, the developer filed plans for a six-story, 69-unit apartment complex also in the neighborhood at 926 South Kingsley Drive.

London skyline

From the New York website: U.K. private real estate funds that halted trading after Britain’s June vote to leave the European Union are returning to the market.

Columbia Threadneedle Investments, an asset manager, said Monday that its British real estate fund would allow investors to invest and withdraw money again this month. Two other asset managers, Canada Life and Aberdeen Asset Management, had lifted their own withdrawal restrictions on their U.K. real estate funds earlier this month.

Several open-ended real estate funds that hold U.K. properties either blocked withdrawals or made them costly by raising fees in the wake of the June 23 Brexit referendum. The vote sent shivers through the real estate market and caused an asset run on property funds. Unlike closed-end funds, open-ended funds allow investors to withdraw money on short notice. But because they own real estate and that tends a while to sell, a wave of withdrawals can quickly threaten a fund’s stability.

“Any effects of the Brexit vote on the overall U.K. economy, negative or otherwise, will take many months if not years to transpire, and sometime after that for the property market,” Don Jordison, managing director of property at Columbia Threadneedle Investments, said in a statement, the Wall Street Journal reported.

According to the Journal, the market has fared better than expected in the wake of the Brexit, with discounts on sales not as steep as in previous cycles.

Several major U.K. real estate funds, including Standard Life Investments, Aviva Investors and M&G Investments, still remain closed to withdrawals. Aviva said it wouldn’t reopen its real estate fund for six months.

By weakening the U.K’s real estate market, the Brexit vote could push NYC ahead of London on luxury residential properties. The NYC investment sales market is also expected to receive a hearty boost, according to some market observers.  [WSJ] — Konrad Putzier

A rendering commissioned by the “No to HH” campaign of the 26-story tower proposed by developer Beny Alagem in Measure HH

It’s not everyday that a developer commissions a rendering of a competitor’s project. But that’s exactly what happened in the latest round of a development battle riling the quiet, tree-lined streets of Beverly Hills.

The tension between Chinese billionaire Wang Jianlin and millionaire Beny Alagem’s development interests, reported by TRD in our print issue, heated up this week. 

The “No on HH” campaign — funded by the Beverly Hills subsidiary of Jianlin’s Wanda Group and its development partner, Athens Group — amped up its efforts to sway voters against approving Alagem’s ballot initiative, now known as Measure HH. If approved, the measure would allow Alagem’s Oasis West Realty to merge two previously-approved condo towers on the site of his Beverly Hilton hotel into one 26-story tower, replacing the other one with a garden.

First, the No on HH campaign issued its own rendering of the Robert A.M. Stern-designed skyscraper, based on the specifications laid out in the initiative text. The Hilton initiative’s campaign has used mostly renderings of the garden, and has not ever shown an image that shows the building at full scale with the surrounding area.

Then, it sent out brochures en masse, titled “The Truth about Measure HH in its Own Words: An Annotated Guide.” The mailers, in an eight-page magazine-style format, clinically break down certain sections of the text of the initiative document, which amends the previous approvals for the two condo towers.

The brochure cover

Critics of Alagem’s measure, dubbed the Beverly Hills Garden and Open Space Initiative but known locally as the “Hilton initiative,” have said the campaign’s focus on the garden, rather than the condo tower, could be construed as deceptive. Beverly Hills Mayor John Mirisch called it a “skyscraper initiative masquerading as an open-space initiative” in an interview with TRD. The No on HH brochures, accordingly, highlight the building’s height — and feature a sketch of the building that was part of the initiative document but hasn’t been used in any of the Hilton initiative’s promotional materials.

The annotations to the initiative text stress that the height of the building would be 375 feet. “If built, it will be the tallest building in Beverly Hills by more than double the next highest building,” the pamphlet reads.

“We have a policy not to talk about tactics or strategies,” said Adam Englander, a consultant to No on HH, when asked about the brochures.

Fact sheet issued by the Beverly Hills Garden & Open Space Initiative

Marie Garvey, a spokesperson for the Hilton initiative, said the brochures contained misinformation on items in the initiative related to greywater use and the housing quarters for staff, which do not add additional square footage to the project. In response to a fact sheet on the “No for HH” website, the Hilton initiative sent out its own fact sheet in an email blast.

“This is a matter that should be left for the voters to decide and not a developer that is brand new to this community and out only for personal and economic gain,” Garvey said in an emailed statement. “We have faith that Beverly Hills residents will see through the developer Wanda’s lies and deceptions just as a California Judge did when she threw out a frivolous lawsuit funded by Wanda that attempted to block Measure HH’s ability to educate residents about the benefits of our proposal.”

The lawsuit in question was a writ of mandate filed by Beverly Hills resident Alma Ordaz and funded by Wanda and Athens. It called for the authors of the ballot to remove allegedly false and misleading language in favor of the initiative prior to the printing of the ballot pamphlet. The petition was denied by Judge Strobel on September 8.

However, Englander said it was dismissed because of changes the Hilton initiative rushed to make after the writ was filed — seeking a covenant to keep the garden open to the public and a full vote from the homeowner’s association that endorsed the initiative on the ballot.

“While we are disappointed that the court has allowed proponents of Measure HH to hide their false and misleading statements by attempting to fix them after the fact, we are pleased that this action forced the proponents of Measure HH to finally file their promised, but flawed, covenant now, rather than after the election, so the community understands their real intent, such as no free parking after 6:00 p.m.,” Englander said in an emailed statement. “We are also happy that our suit forced the Beverly Hills North Homeowners Association to comply with state law and finally become a legal organization again.”

Current reader favorites:

1. Netting the highest-flying agents

2. A look at LA County’s 10 most distressed properties

3. If passed as is, EB-5 bill could see RE deals crumble

4. Q&A with architect Christopher Martin

5. Jamison finds its way home

Behzad Souferian and the building at 1800 North Highland Avenue in Hollywood

L.A.-based Souferian Group, helmed by Behzad Souferian, no longer kneads your business.  

The landlord just closed a full-floor lease deal with Soothe, an app-based on-demand massage company, bringing occupancy at its 1800 North Highland Avenue office property to 100 percent. The tech company’s expanded operations will occupy the entire sixth floor, or roughly 12,800 square feet, of the seven-story, 88,000-square-foot Class A office building in Hollywood’s entertainment district.

The company’s five-year lease is valued at roughly $3.6 million, based on asking rent data from CoStar Group. Michael Arnold of Newmark Grubb Knight Frank represented the Souferian Group in the transaction. Soothe was represented by Scott Steuber and Jeff Vertun of Avison Young.

The lease-up comes almost exactly one year after Souferian bought the building, then 86 percent leased, from CIM for $45 million, or $511 a square foot. The Souferian Group is planning to introduce a hospitality-meets-office brand concept at the property, which is also home to music giant Live Nation and Sean Combs’ music cable network Revolt TV, later this year.

“Creative office spaces are now the norm and yesterday’s promise,” Souferian said in a statement. “We are cultivating the next chapter of office environments with unprecedented offerings that translate into value.”

Before founding his namesake firm, Souferian was vice president of real estate for Sam Nazarian’s SBE Entertainment Group. He has since partnered with the nightlife giant on several projects, the Camden apartments in Hollywood, co-developed with Camden Property Trust.

“In Hollywood, we’re noticing more than a demographic shift in the types of tenants that are moving in,” he said in an email to  TRD. “Rather, we’re seeing a change in mindset of those who are drawn to unique product offerings. Soothe was drawn to 1800 N. Highland because the tech company recognizes the synergy and cutting edge vision we have for this office environment.”
Launched in 2013, Soothe is a Los Angeles-based on-demand massage service that delivers massages to customers’ homes, hotels and offices — most likely including the one where it just inked a lease.

Jason Lev’s home at 9621 Arby Drive

Jason Lev, the owner of the famed Silver Lake cocktail bar Tenants of the Trees, may soon be toasting a big profit on the sale of his home.

Lev is selling his contemporary-style Beverly Crest home for $7 million, the L.A. Times reported.

Dubbed the Phineas Residence, the freshly built single-story abode is perched on a half-acre hillside. It has five bedrooms, 4.5 bathrooms, an open living and dining area, a chef’s kitchen and a media room. John Aaroe Group’s Brian Courville and J.B. Fung are the listing agents.

The residence, designed by SPACE International, also features custom Machiche wood panels and floor-to-ceiling glass windows.

Lev, who is also a developer, acquired the home for $1.8 million four years ago. [LAT] — Cathaleen Chen

(Credit: Terner Center/Jed Kolko)

Sunny days are ahead for middle-class American households.

Fewer renters and homeowners were cost-burdened in 2015 than in previous years, according to an analysis of American Community Survey data cited by the Wall Street Journal. 

About half of all American renters spent more than 30 percent of their income — the threshold for what’s considered a “burden” — on rent in 2014, according to the analysis’ author Jed Kolko, a senior fellow at UC Berkeley’s Terner Center for Housing Innovation. In 2015, however, that rate dropped to just over 49 percent, the lowest it has been since 2008.

Accounting for both renters and homeowners, the overall percent of cost-burdened households fell from 34.6 percent in 2014 to 33.6 percent in 2015, thanks in part to growing incomes and low interest rates. The number of cost-burdened households have been declining for five consecutive years since its peak of 38.1 percent in 2010.

“The big jump in income between 2014 and 2015 helped owners and renters,” Kolko told The Real Deal. “And homeowners with mortgages got an additional boost from declining mortgage rates.”

Overall homeownership has been declining, however, the data shows. Only 949,000 new households created in 2015 — that’s down from the 1.2 million in 2014, though sales have been consistently rising in pace.

But single-family ownership posted an exceptional increase — the biggest year-to-year jump since 2007. In 2015, there were 65.7 million owner-occupied single-family homes, compared to the 65.2 million the previous year.

Kolko projects that this reflects the fact that families who lose their homes during the foreclosure crisis and subsequently became renters in the following years have finally become eligible to buy again. — Cathaleen Chen

David Lichtenstein (Photo by Larry Ford)

From the New York September issue: David Lichtenstein is the CEO of the Lightstone Group, a Manhattan-based real estate firm with a $2 billion portfolio that includes 11,000 apartments and 3,200 hotel rooms nationwide. A Democratic donor and a self-made billionaire, Lichtenstein has had his share of ups and downs. In 2009, his Extended Stay hotel empire filed for bankruptcy and was ultimately overtaken by investors. But the firm — which Lichtenstein founded in 1988 — is currently developing Los Angeles’ biggest hotel that’s currently in the pipeline, the 1,000-unit Fig+Pico in DTLA, as well as several NYC hotels in partnership with Marriott International’s [TRDataCustom] Moxy Hotels, including a 300-key property in the East Village and a 16-story conversion near Times Square.

You’re one of seven kids. What was that like?

I had to talk loudly in the family to be heard. I grew up in Brooklyn, near Madison High, where both Chuck Schumer and Bernie Sanders went to school.

What did your parents do?

My father was a rabbi and an educator, which meant there was no real wealth at home.

What were you like as a kid?

I always had a lot of questions, and we didn’t have a TV. My father bought me a World Book Encyclopedia. By age 10, I had finished it — A all the way through Z.

What was your first job?

It was actually selling encyclopedias. I was 17 and I needed money to buy some nice suits and stuff. It was brutal. You had to memorize this whole spiel and … you got the door slammed on you time after time. It was a pretty good education in dealing with rejection.

Why did you get into real estate?

I got married young. I was supposed to be a rabbi. I still study the Talmud. But when I brought home my first check, my wife looked at it and said, “This is going to last to the seventh of the month.” I wanted to start my own business, and real estate is sort of like a brain-dead thing. You add up the rents, do the expenses. I thought I could figure it out.

What does success in real estate take, if not brains?

You have to be willing to take risk and to fail. You have to say, “I will fall and I will cry. I am human and humans fail.” If you’re willing to accept that, then you can succeed in real estate without a lot of brains.

What does your religion mean to you?

Was it Thomas Paine who said, “The World is my country, all mankind are my brethren, and to do good is my religion”?

What was it like to marry at 24, and how have you made it work?

One of the challenges people have today is too much choice. You go to a restaurant and the guy comes over and asks, “Do you want sparkling water or bottled water, tap water, Evian?” You get a headache. On some level, too much opportunity becomes like a deluge. I was 24, I didn’t know anything. Some people say you have to respect your spouse, but it’s about respecting the institution of marriage. It was the understanding beforehand that we were going to make this work that made it work.

What does your wife do?

She’s a successful NYU life and relationship coach.

You famously started by buying properties on your credit cards. Was that nerve-racking?

When you start with nothing, you have to live on your wits. The first thing I bought was a two-family house in Lakewood, New Jersey, where I was living at the time. I bought it for $92,000 in 1987, and I sold it for $650,000. I wish I had more deals like that. Until then, I had never so much as picked up a hammer. I learned to be a barber on my own head of hair.

Was the Extended Stay bankruptcy your lowest career moment?

There have been many hair-raising moments. … I have a whole book entitled “Stupid Stuff I Have Done.” It’s very thick.

Forbes pegs your net worth at $1.4 billion. How do you feel about money?

Money is an affirmation of hard work. But I know I’m not better than anyone else because I’ve made money.

What’s been your most extravagant purchase?

I grew up poor and my car is a Lexus from ’09 that I bought used. My only extravagance is that I buy art. I do have some Chagalls and things like that.

Tell me about your Times Square project.

It’s going to be a Millennial steroids experience. They’ll be drooling.

What’s your advice to someone 20 years younger?

Don’t become a square watermelon. Try to remember who you were when you were a child and your soul was given to you — before it was squashed by the haters and the cynics.

You donated $250,000 to Hillary Clinton’s presidential campaign. Do you know her personally?

I know her pretty well. She would have made a better president than Obama. Before fund-raisers, she memorizes everyone’s name and picture so she can say thank you. She’s not a fuzzy teddy-bear person, but the best CEO in real estate is not a fuzzy CEO.

Who’s that?

David Simon. He’s hard as nails. I’m one of his largest shareholders.

Is he more fuzzy in real life?

No. But it’s not about having a big smile. This is not a reality TV show.

I take it you’re not a fan of Trump …

It’s a sad day if he wins. His daughter said he’s a kind and compassionate person, but even a Tyrannosaurus Rex is nice to its kids.

Moby’s Little Pine, an organic vegan nonprofit restaurant.

From the L.A. print issue: Los Angeles is serving up a new role for celebrities and their quasi-celebrity counterparts: restaurateur.

Expanding on a trend sparked by the tremendous success over the years of the Hard Rock Cafe — which counts Tom Cruise and Steven Spielberg among its L.A. outpost investors — actors, producers and musicians are increasingly putting their dough into L.A. eateries. Now these A-listers are helping to drive demand for storefronts from Silver Lake to West Hollywood, real estate experts say.

Two trends are converging here. As the definition of fame becomes more flexible, thanks to self-promotional social media and reality television, there are simply more celebrities who feel they have the requisite notoriety to peddle. At the same time, Angelenos are taking themselves more seriously as foodies, suggesting that the audience for these undertakings might be fairly wide.

“Celebrities are gravitating to restaurants,” said Derrick Moore, a principal with the commercial brokerage Avison Young. “And as chefs become celebrities themselves, it’s become even easier to
attract capital.”

 

Yet famous backers alone can’t guarantee success, he said, even in Hollywood. “Proximity to the center of the movie industry doesn’t ensure any more success than anywhere else.”

The Real Deal has rounded up some of L.A.’s hottest new, and coming-soon, restaurant attractions that are run on star power.

Jessica Biel’s Au Fudge

Many VIPs tend to play it safe by choosing well-tested markets for their untested culinary ideas.

Jessica Biel, for instance, went with an established retail stretch of Melrose Avenue in West Hollywood for her Au Fudge, an organic restaurant that opened in March 2016, which takes its family-friendliness seriously.

Inside the airy, blond-wood-lined eatery, a staircase twists up to a pillow-strewn nook where a unicorn head is mounted like taxidermy over a door, and a small shop sells candy necklaces.

The location, a white-painted, low-slung structure with skinny columns across its front at 9010 Melrose, near North Doheny Drive, has seen a revolving door of restaurants in recent years, including Café Figaro, which served as a location in the movie “Jerry Maguire.”

Despite the long list of short-lived restaurants, No. 9010 is located in a coveted area, brokers say, near the popular Verve Coffee Roasters, at 8925 Melrose, and Craig’s, at 8826 Melrose. Rents there can average more than $12.50 a square foot, according to Rachel Rosenberg, an executive vice president with Robert K. Futterman and Associates. Those are steep for WeHo, although, by comparison, Rodeo Drive in Beverly Hills can fetch $67 a foot.

 

Biel, who is married to Justin Timberlake and perhaps best known for the 1990s television drama “7th Heaven,” may have deep enough pockets to survive the difficult startup period for any eatery. Au Fudge backers include Monica Saunders-Weinberg, Joint Deputy Chairman of the Terrace Tower Group, an Australia-based real estate firm with West Coast commercial holdings. The company’s founder, John Saunders, also founded Westfield, the mall developer that controls the new shopping center below New York’s One World Trade Center. Jillian Eldredge, a spokeswoman for the restaurant, did not respond to requests for comment.

Moby’s Little Pine

Many star-owned restaurants reflect the tastes and personalities of their backers, even if the celebrities are silent partners who don’t take an active role in setting the menus.

Take, for example, the electronica musician Moby, who opened Little Pine — an organic, vegan, nonprofit restaurant — in the fall of 2015. It’s located at 2870 Rowena Avenue, in the Silver Lake neighborhood.

The 1,500-square-foot Art Deco-style restaurant, which is near West Silver Lake Drive, seats 50. The modestly priced but eclectic menu includes a vegetable ravioli entrée with pesto, spring vegetables and bread crumbs for $14. All the profits go to animal charities such as the Humane Society.

RKF’s Rosenberg said retail rents in Silver Lake can typically top $5 a square foot. At the high end, he said, La Colombe — a Philadelphia-based coffee chain — paid $8 a foot for a space at Sunset Boulevard and Hyperion Avenue.

Little Pine is not the first vegetable-themed undertaking for Moby. He backed another such restaurant in New York, while he was living in Manhattan, which shuttered in 2015, after 13 years. In Los Angeles, Moby, who was born Richard Melville Hall, was previously a backer of Crossroads Kitchen, a Mediterranean-style veggie spot at 8284 Melrose, whose other sponsors are reportedly Steve Bing, the film producer, and Travis Barker, the drummer for Blink-182.

 

For his part, Moby, in an email said, “I picked Silver Lake because it’s a mile from my house and that’s where the building was,” adding that he had “absolutely no plans for any more restaurants.”

Mark Wahlberg’s Wahlburgers

Most actors who own eateries are hoping that fans will become customers, even if their on-screen roles have nothing to do with cuisine. But Mark Wahlberg — the former rapper and model turned actor — is blending art and life by going into business with his brothers Donnie and Paul.

In 2011, the trio launched Wahlburgers, a burger chain. “Wahlburgers” is also the name of the six-season reality show the family has on A&E chronicling the launch of the chain and plans for a national expansion. The enterprise, which gets its recipes from Paul, a trained chef, may benefit from the extra limelight. It’s competing in the tough burgers-and-fries segment of the casual dining space, with the likes of Five Guys and Shake Shack.

The company is scouting for the chain’s first location in L.A., sniffing around a high-profile corner of Sunset Boulevard at the Sunset Plaza outdoor mall, an upscale shopping enclave, according to brokers familiar with the search. The corner could command $10 a square foot, said Will Knox, the broker/owner of the Knox Company, a restaurant-focused commercial brokerage that is not involved with the project. But that strikes Knox as steep. “How many burgers would you have to sell?” he said. “Bodies would need to be coming in and out all day.”

Lori Moretti, a company spokeswoman, said it was premature to comment on an L.A. location before any lease was signed.

Based in Hingham, Massachusetts, the chain currently has seven locations. The family intends to open 30 new franchises nationwide, according to plans announced this spring.

Louis Tikaram, the executive chef of E.P. & L.P., at left, with sous chef Richard Gregory.

Axwell’s E.P. & L.P.

In Los Angeles, celebrities don’t need to have had long careers before hanging up a shingle. Take Axwell, a member of Swedish House Mafia, a popular electronic trio that broke up in 2013, after a five-year run. He’s now an investor in a restaurant, E.P. & L.P., with partners Grant Smillie, an Australian DJ, and restaurateur David Combes.

Named for the two common types of vinyl records, the restaurant is located at 603 North La Cienega at Melrose, a two-story, 9,120-square-foot contemporary space in L.A.

It offers a Southeast Asian-fusion-themed restaurant on one level (E.P.) and a wood-lined 5,000-square-foot roof bar (L.P.) with views of the Hollywood Hills. Included on that roof is a VIP lounge, dubbed Frankie’s Private Bar in honor of the late Frankie Knuckles, a DJ who popularized house music in Chicago in the 1980s.

It’s located near a venerable actor’s eatery, Nobu, at 903 North La Cienega, whose owners include Robert De Niro, considered by some to be the godfather of celebrity restaurant investing. This Nobu, as well as another in Malibu, are regularly packed.

In the E.P. & L.P. deal, which closed in 2015, the tenants signed a 10-year lease. Brokers say rents in the neighborhood can average just under $7 a square foot.

“We thought this was a pretty good precinct,” Combes said, noting the nearby restaurants and proximity to areas such as Beverly Hills. “The restaurant is performing incredibly well.”

Carmel Partners CEO Ron Zeff and a rendering of the project at 3321 South La Cienega Boulevard

It’s been a long time coming.

Multi-family developer Carmel Partners doled out almost $111 million for the Southwest Los Angeles site of its megaproject adjacent to the La Cienega/Jefferson Expo Line station, which was already approved by the city, The Real Deal has learned. The acquisition closed more than a year after Carmel submitted the city planning documents for the development, which will include South L.A.’s first high-rise. 

The San Francisco-based firm acquired the 11-acre site from radio broadcaster Cumulus Media, according to the deed document from CoStar.

Prudent developers will often initiate the planning and entitlement process for a piece of property before they close the sale of it, according to someone close to but uninvolved in the deal.  

Carmel paid roughly in line with per-square-foot averages for land in the Central L.A. industrial submarket, where the project sits according to CoStar. But the gargantuan size of the parcel makes it remarkable in the submarket. Occupied by the KLOS and KABC radio stations, a 60,000-square-foot single-story industrial structure also sits on the lot.

Carmel made waves last year when it proposed the 1,218-unit, multi-structural Cumulus Transit Oriented Project, one of the biggest in the L.A. pipeline. Its tallest building would be a 30-story, 300-foot residential tower. The apartments would include 609 one-bedrooms, 487 two-bedrooms and 122 three-bedrooms. Office space, general retail and a 50,000-square-foot grocery store would complete the rest of the campus’ 300,000 square feet.

Not everyone was happy when the city approved the project. Opponents said the tower would be too tall and the development too dense for the area. Some cited concerns over gentrification. In a lawsuit filed in June, the Crenshaw Subway Coalition and Friends of the Neighborhood Integrity Initiative alleged that city officials violated state and local laws by approving it. The City Council amended zoning and height restrictions to permit the high-rise.

In May, Carmel proposed a 600-unit condo development for a two-acre site in the Arts District, The Real Deal reported. And for the residents of the first phase of Carmel’s Eighth & Grand apartments, rent is free for the first five weeks and parking for 12 months.

Neither Carmel nor Cumulus could be reached for comment.

Apartments currently at 1237 South Holt Avenue

A 14-unit apartment complex in West Los Angeles may soon give way to 34 condos.

Private property owner Davoud Kobaei has filed a vesting tentative tract map request for 1237 South Holt Avenue, in the Pico neighborhood near Koreatown, according to city documents.

Kobaei, who goes by David, runs a New York- and L.A.-based leather supplier called United Leather. He told The Real Deal that he has a 50 percent stake in the property.

The developer and his partners purchased the 0.3-acre property for $3.1 million in 2006, according to CoStar.

Just two blocks away, Calabasas-based investment firm Amoroso Companies filed plans last week to build a seven-story apartment complex with 90 units on La Cienega Boulevard, TRD previously reported.

Current reader favorites:

1. LA’s $340M futuristic new courthouse awaits judges

2. Wanda Group creates rendering of competitor’s project

3. A look at LA County’s 10 most distressed properties

4. DTLA’s Arts District: An all-inclusive guide

5. Q&A with architect Christopher Martin

The Owlwood estate (via Douglas Elliman), Bob Shapiro (via BusinessWire), Sonny and Cher (via Getty Images)

The second priciest residential sale of the year just closed in Holmby Hills — and the property is almost as famous, though far less infamous — than the Playboy Mansion.

Sturmer Pippin Investments, an LLC headed by Bob Shapiro, the CEO of Woodbridge Group of Companies, purchased the the former home of Sonny and Cher, in an off-market transaction for $90 million.

Ann Dashiell of Douglas Elliman’s Beverly Hills office was listing agent for property, known as the Owlwood Estate. Adam Rosenfeld, founding principal of Mercer Vine, represented the buyer.

Hef’s manse, which sold for $100 million, was the only sale in Los Angeles this year with a steeper pricetag. While the Playboy palace came complete with furnishings — and Hugh Hefner, until he dies, as a deal stipulation — Owlwood, a 12,200-square-foot property at 141 South Carolwood Drive, was delivered empty.

“What was built originally is really intact, the original architecture is there and it is pristine inside,” said Stephen Kotler, chief revenue officer of Douglas Elliman, who is overseeing its L.A. expansion. “With the Playboy [Mansion], there have been a lot of changes to the house and it was used as an entertaining facility. But [Owlwood] retained its grandeur.”

Elliman got the listing in May 2015, after it had passed through the hands of two other agencies, Kotler said. It sold well below Elliman’s off-market listing price of $150 million.  

“There was strong interest from multiple parties, so the market for this [kind of luxury product] hasn’t slowed as much as people think but it has adjusted from last year and this closing price is a value,” Kotler said.

Owlwood has nine bedrooms, a dozen bathrooms and a sprawling living room with a marble fireplace and solid oak paneling. Outside, there is a swimming pool,  a sunken tennis court, manned guardhouses and two separate guesthouses.The main house, built in 1936, was designed in the Italian Renaissance style by architect Robert D. Farquhar. At the time of its completion, it was deemed the largest private residence in Los Angeles and has since incorporated two additional, adjacent lots, creating a sprawling 10-acre estate.

Over the last 80 years, the property has had a lengthy list of influential owners, including Sonny and Cher, Tony Curtis, Superior Oil Founder William Keck, 20th Century Fox co-founder Joseph Schenck and Hotel Bel-Air founder Joseph Drown.

“The Owlwood Estate has been the unchallenged symbol of uber-luxury since being built during the Great Depression, and we will keep it that way for another 80 years,” the buyer, Shapiro, said. “We fully intend to honor this property’s legendary past by ensuring it remains the absolute definition of luxury living for wealthy buyers from around the world.”

Woodbridge’s Luxury Homes division, which modernizes and resells estates with care towards their histories, will oversee future plans for the estate, according to a release. All parties declined to comment on Woodbridge’s plans for Owlwood, saying they have not been finalized.

Councilmember Jose Huizar and parking lot 2 for El Pueblo de Los Ángeles park (Credit: ParkMe)

One of L.A.’s historic monuments may be getting a more modern neighbor.

DTLA Council member Jose Huizar is urging the city to seek development options for a parking lot next to the El Pueblo de Los Ángeles historic monument, citing a desire to continue Downtown’s recent revitalization, according to Urbanize.

The parking lot is located the southwest corner of Main Street and Cesar Chavez Avenue. Huizar’s proposal emphasized that any development must still contain the same number of parking spaces.

“The historic park brings Mexican, Italian, and Chinese culture to 2 million visitors a year,” he wrote in a motion put before the city. “As the city continues to support the infill and reimagining of downtown property, this parking lot should be considered as a potential site for development.”

Nearby, Trammell Crow Company’s 355-unit mixed-use development is well on its way to completion after breaking ground in July. [Urbanize] — Cathaleen Chen

Charles Park’s Beverly Hills custom home

A Beverly Hills custom home designed by fashion mogul Charles Park has been listed for $43.9 million.

Park, whose fashion labels include Pure Sugar, Sugarlips, Cream & Sugar and Jonesy, developed and designed the property in partnership with Samuel and Paul Oh of LA-based the Parks & Associates LLC. Aaron Kirman of John Aaroe Group and Drew Fenton of Hilton & Hyland share the exclusive listing.

“This is a family home, not just a party house,” Park said in a statement. “My goal wasn’t to impress a buyer walking through for an hour. Each decision was made to delight the buyer who will live in this house for a lifetime.”

The spec home’s interior

Records show a trust linked to Park bought the site, at 1231 Lago Vista Drive, for just $4.2 million in 2013, so the asking price likely represents a tidy profit.

The seven-bedroom, 11-bathroom home features a six-foot Mooi chandelier, two sets of floating staircases, a 600-bottle floating wine cellar, a home theater and an original Andy Warhol piece situated to greet visitors at the entrance. Park said that over $1 million had been spent on the furnishings.

Approximately $400,000 was spent just on lights imported from Belgium, which are “fully dimmable for endless ambience effects.”

Jaime Lee and the parking garage at 633 South Western Avenue

Jamison’s multi-family development binge shows no signs of stopping.

The Koreatown landlord has filed plans for a 132-unit mixed-use development on the block bound by 6th Street, Manhattan Place, Western Avenue and Wilshire Boulevard, The Real Deal has learned.

The project, just the latest in a long line of ongoing developments by Jamison, calls for a five-story residential apartment building to be constructed over an existing four-level garage. The resulting nine-story structure, which would be adjacent to Metro’s Wilshire/Western Station, would also include 900 square feet of retail space.

The lot totals about 33,000 square feet, according to property records. It wasn’t clear what Jamison paid for it. 

Last week, prolific Jamison filed plans for two 23-story apartment buildings on Wilshire Boulevard that would contain 760 units and 6,359 square feet of commercial space. The company is also planning a 160-unit complex on a nearby site at 700 South Manhattan Place.

In addition to honing in on multifamily developments after decades as primarily a commercial landlord, Jamison has also begun creative office conversions on three of its properties, TRD previously reported, including the California Market Center in DTLA.

From left: Barry Sternlicht and a WeWork space

From the New York website: Barry Sternlicht doesn’t understand why people invest in WeWork at its current, $16 billion valuation. “Why would you go to to WeWorks (sic) at 300 times EBITDA.  If you got shares that are at zero value, like realty cash and incredible compensation,” he said Tuesday, according to a transcript. “When these things go down they do not go from 16 to 14, they go from 16 to 2. There is no elevator down, you hit the floor.”

WeWork [TRDataCustom], the New York-based co-working company, reached a $16 billion valuation with its latest funding round in March and has raised around $1.4 billion from investors to date. Real estate bigwigs Mort Zuckerman and Bill Rudin are among the firm’s backers. But although the company is profitable, it is making less money than initially hoped.

According to leaked documents, the company in April lowered its 2016 profit projection to $14 million from $65 million, and its revenue projection by 14 percent to $532 million from $620 million.

The documents intensified the debate over WeWork’s valuation, and Sternlicht, who heads fund manager Starwood Capital, appears to be firmly on the side of the skeptics.

Speaking at the Delivering Alpha conference in New York, Sternlicht also said he would short Elon Musk’s electric car company Tesla and threw shade on Silicon Valley’s investment culture. “We want to know how does the company eventually make money and where’s the business model and that is still something you don’t talk about in Silicon Valley that much,” he said. “Pinterest $12 billion, I use it but I don’t pay anyone anything for it so it seems like a lot of money for a bulletin board, but that was the market cap of Starwood Hotels when we owned $1.6 billion we made $1.6 billion and we were told buy no market cap that year so it was like ‘wow, that’s a lot of…believing.” [CNBC] — Konrad Putzier

A rendering of the lobby of the Waldorf Astoria being built in Beverly Hills.

From the Los Angeles print issue: The Los Angeles hotel market isn’t huge by comparison with that of New York or Chicago, but developers appear to be intent on rectifying that. With nearly 100 hotels planned, many of them for the city’s central business district, some market watchers are starting to talk about oversupply.

Yet the hotel companies themselves clearly remain bullish on L.A.’s prospects, particularly in the downtown area. Some 5,468 keys out of a total of 11,120 in the pipeline for Los Angeles County are planned for DTLA, according to an analysis by The Real Deal in late August 2016 that included proposed projects as well as hotels that were under construction.

“There are a lot of hotels in different states of development right now,” said Arash Azarbarzin, president of the SBE Hotel Group, a Los Angeles-based hospitality company. “If all of them get built, there would be saturation for a period of time. But what I’ve learned in the hospitality industry is that as more hotels come into the market, so do more companies.”

Demand is robust, in large part due to strong job growth and new companies moving to L.A. Occupancy is expected to remain steady at around 80.5 percent — that’s more than 10 percent higher than the long-run average of 68.9 percent. By the end of the year, L.A. could see a 7.8 percent increase in revenue per available room, or RevPAR, compared with a national growth rate of 4.2 percent, according to a June market forecast by CBRE.

To be sure, the huge number of hotel rooms in the pipeline has started to make some lenders cautious. Real estate experts say that developers are having to reach more to finance all kinds of L.A. projects, not least among them new hotels. Industry insiders tell TRD that banks are requiring developers in L.A. to put up more equity, accept higher borrowing rates and provide stronger guarantors in order to secure construction loans.

“I would say the biggest hurdles right now are going to be organizing your capital, financing your construction,” said Cara Leonard, who works in the hotel investment banking platform of Savills Studley, a London-based real estate services firm, as a senior managing director in the L.A. office. “A lot of lenders are taking a step back and saying, ‘We don’t want to be overexposed.’ ”

Yet developers are sticking with the sunny market forecast.

“I think it’s the healthiest gateway market for hospitality in the U.S. today,” said Steve Witkoff, a New York City real estate investor who broke ground on his first L.A. project in early 2016.

Here’s an overview of some of L.A.’s largest hotel projects in the works in prime areas.

DTLA

New York developer Lightstone Group is behind L.A.’s largest proposed hotel development, Fig+Pico, at the corner of Figueroa Street and Pico Boulevard. Lightstone first submitted project plans for an 1,100-room hotel complex in early 2016, with a proposed completion date in 2020.

The 880,000-square-foot complex would include towers ranging from 22- to 40-stories tall, and would be designed by Gensler, a global architecture firm based in San Francisco. The complex would include 20,000 square feet of retail and a 3,850-square-foot “sky lobby.”

Planning for this project has been a challenge, said Lightstone President Mitchell Hochberg. “In New York, for instance, it’s easy to get comps and occupancy rates,” he said. “But in Downtown L.A., there aren’t that many hotels to begin with, so the ability to interpolate isn’t great, and you need to connect a lot more dots, which is riskier because you’re making assumptions.”

Left: Arash Azarbarzin, SBE Hotel Group; center: Mitchell Hochberg, Lightstone; right: Steve Witkoff.

Korean Air’s 73-story Wilshire Grand, which is scheduled for completion in early 2017, is also slated to put more hotel rooms on the DTLA market. The skyscraper, designed by L.A. architect Christopher Martin, will become the tallest structure west of the Mississippi and will include a 900-key hotel to be operated by the InterContinental Hotel Group.

Another major InterContinental-operated hotel project is also in the works, this one under the umbrella of Chinese developer Greenland USA. The $1 billion Metropolis complex is slated to include Hotel Indigo, a boutique hotel with 18 stories and 350 rooms.

Not all DTLA hotel projects have gone smoothly. Related Companies’ proposal to build a Frank Gehry-designed hotel across from the Walt Disney Concert Hall has encountered some rough conditions.

First proposed in 2004, the two-tower hotel planned for Grand Avenue was sidelined by the last recession. After another five years of delays, and a breakup with former investment partner SBE Entertainment, Related was still short of funds to complete the project.

However, the developer’s luck changed in June 2016, when the Los Angeles City Council unanimously backed a proposal for a $198.5 million financial aid package, exempting Related from nearly half of the $400 million in taxes the firm would otherwise have owed over the next 25 years.

Critics are skeptical that hotel developers need such generous tax breaks, which cut into the general fund designated for such purposes as fighting fires or paving streets. A spokesperson for Related declined to comment on the financial aid package approved by the City Council.

West Hollywood and Beverly Hills

With a current inventory of more than 12,500 rooms, the Hollywood and Beverly Hills area has 816 hotel rooms under construction and another 1,331 more in the planning stages, according to CBRE.

Developer Beny Alagem is building the first Waldorf Astoria on the West Coast — a 170-key, 12-story, $200 million project designed by Gensler — on land surrounding his Beverly Hills Hilton. The hotel is 70 percent complete, with a scheduled opening in 2017.

A rival 900,000-square-foot, mixed-use project called One Beverly Hills — with a 134-key boutique hotel, and 193 luxury condominium apartments — is planned next door on Wilshire Boulevard. Chinese billionaire Wang Jianlin’s Wanda Group is behind this proposed $1.2 billion project, which has not yet broken ground.

In WeHo, Witkoff is making his first foray into the L.A. market with the 190-room Edition hotel. For this project, he has partnered with Vector Group CEO Howard Lorber, hotelier Ian Schrager and Marriott.

Savills Studley’s Leonard said the L.A. market still has capacity to absorb new supply. “The economy in California has seen a major turnaround with the tech and movie industry,” she said. “That’s given us an advantage in the hotel market.”

600 Wilshire Boulevard and Zooey Deschanel

HelloGiggles, the media brainchild of America’s favorite Manic Pixie Dream Girl Zooey Deschanel, signed a seven-year lease for half the penthouse floor of a DTLA office building, The Real Deal has learned.

The lifestyle website, co-founded by Deschanel in 2011, was acquired by Time Inc. last year for a reported $30 million. Its new office space spans 9,000 square feet on the 17th floor of the Class A complex at 600 Wilshire Boulevard, which the Vancouver-based Onni Group bought for $78 million in 2014.

The lease is valued at $2.6 million based on the asking rate of the floor, according to CoStar.

HelloGiggles looked at other properties in DTLA, including the Arts District, but ultimately decided on 600 Wilshire because it’s already familiar with the area, Cresa’s Marc Bretter told TRD.

Bretter represented HelloGiggles in the deal, and DTLA broker Andrew Tashjian, who recently joined Cushman & Wakefield, represented Onni.

HelloGiggles will leave the smaller space it is currently occupying, a 5,000-square-foot office in the building next door, 626 Wilshire Boulevard. The company, run by a team of 29 as of late last year, will probably double by 2018, co-founder Sophia Rossi told Creative Cultivate in 2015.

It’s slated to move into the new office as soon as Onni’s renovations wrap up early next year.

The website joins co-working firm Industrious and Evite as the latest tenant in 300,000-square-foot complex. So far, it’s about 90 percent leased, according to CoStar. Industrious signed in April a 10-year lease, valued at $8 million, for 18,853 square feet of space on the fifth floor, TRD previously reported.

From the New York website: Common’s acquisition last week of the room-listing site Skylight wasn’t exactly marquee news. Common, which runs three co-living buildings and has raised $23.3 million in venture funding, is a small company by any standard, and Skylight is even smaller. But the deal could be the precursor of something bigger that observers have been predicting for a while: a consolidation wave in the real estate tech industry.

“Look at the M&A space in general – I mean it’s exploding right now,” said Zach Aarons, co-founder of real estate tech accelerator Metaprop. “You’re reaching the tail end of a bull market and that’s what typically happens at the tail end of a bull market. That just trickles down to startups.”

This week alone, pharmaceutical company Bayer reached a deal to buy Monsanto for $57 billion and food giant Unilever entered talks to buy retailer Honest Cos. for somewhere near $1 billion. Fueling the merger wave since at least 2015 are cheap debt and big cash reserves. To a lesser extent, the same forces apply to real estate tech startups.

Moreover, observers have long argued that there are simply too many real estate tech startups (often performing similar functions) and too few customers. Venture investors have got more cautious about betting on new entrants: the second quarter of 2016 saw the fewest real estate tech venture capital deals in four years, according to data from research firm Pitchbook. Without a continuing influx of cash, startups struggling to make bank will have to merge or fold sooner or later.

So far, few have done so, but the past weeks have shown tentative signs that could change. “It is happening in this industry,” said Ajay Yadav, founder of New York-based roommate-search app Roomi.

This week Roomi announced the acquisition of Room.me, another roommate-search app. Yadav declined to comment on the terms of the deal, but it’s safe to assume Roomi didn’t pay a lot of money (it has announced just $6 million in venture funding to-date). According to Yadav, Room.me’s founders were looking to move on from their startup and wanted to get something for their software and customer base rather than just fold it.

For Roomi, the main appeal of the acquisition was scale: it is expanding into California, where Room.me happens to have a user bare that could be migrated over to Roomi. Pop-up store online marketplace Storefront may have had a similar thought in mind when it acquired its European rival Oui Open in a deal announced last week. For Common, part of the appeal of acquiring Skylight lay in technology and data. According to a statement, Common wants to use the search site to “understand the demand for shared housing from a larger pool of prospective residents.”

“Real estate tech startups can no longer be siloed platforms,” said Ash Zandieh, CEO of commercial property information app Falkon and founder of RE: Tech. Those who want to compete need to offer a broad range of services, and acquiring other companies can help achieve that. In May, right after raising a $55 million Series C round, VTS CEO Nick Romito told The Real Deal that the cloud-based leasing and portfolio management startup would look to gobble up competitors.

“There’s consolidation to be had,” Romito said at the time. “Whether it’s via acquisition or acqui-hire, they [our investors] want to help us.”

According to Aarons, real estate tech entrepreneurs aren’t just increasingly talking about mergers and acquisitions, but also about integrating separate companies’ products in an attempt to get some of the benefits of mergers without having to actually merge. For example, crowdsourced leasing comps provider CompStak recently reached deals with VTS and Hightower to include its comps in their products.

Acquiring other startups can be difficult, Aarons said. “You don’t really have real valuations and you have a lot of common equity that may or not be worth money,” he said. “You have small boards and big egos.”