This week’s most eye-popping images included new images of Shenzhen Hazens Real Estate Group‘s $700 million proposed redevelopment of the Luxe Hotel at 1020 South Figueroa Street in Downtown Los Angeles, across from the Staples Center. In place of a smaller hotel and parking lot, the developer wants to build a 34-story, 300-key W Hotel tower; a 38-story, 360-unit residential tower; and a 32-story, 290-unit condo tower. The development, which would include 80,000 square feet of commercial space, is designed by Gensler.

The project would have four levels of parking below ground, a public plaza and a whopping 60,000-square-foot digital sign wrapped around the building. Construction is slated to begin in 2017, with completion of the first phase in 2020, and the second phase by 2023.

Images reveal the plans of an unknown developer, registered as Bay Capital Fund LLC, who swooped up a property adjacent to the Soho Warehouse site shortly after rumors began to circulate about the elite club’s Arts District outpost. Designed by Studio One Eleven, the 1.8-acre development at 2110 Bay Street will include three buildings in a campus with open spaces. One building would be a 110-unit live-work residential tower. Another would be a more than 100,000-square-foot office building with a rooftop restaurant. The third would be a “retail shed structure with a second level open-air retreat,” according to release from Studio One Eleven. Combined, they will contain more than 50,000 square feet of retail space. — Hannah Miet

1st Street in The Grove, an outdoor shopping mall owned by Caruso Affiliated.

When The Grove opened in 2002, it was a breath of fresh air for Southern California shoppers — literally. After years of grand openings for enclosed, suburban-style malls, here was an open-air shopping center reminiscent of a theme park, with trolley service, trendy restaurants and a movie theater.

Flash forward nearly 15 years, and a host of mall owners are scrambling to revitalize their L.A. properties by tearing off rooftops and adding attractions and amenities. They’re counting on entertainment and social experiences to draw in customers for high-end retailers and justify the soaring lease rates.

“The suburban-style mall had a great run, but people are just not shopping that way anymore,” said retail analyst Peter Lynch of Los Angeles-based A&G Realty Partners.

Lynch said that shopping malls are  becoming integrated with mixed-use complexes, and he expects that trend to continue over the next decade. “The most successful will be those that are extraordinarily sophisticated and ready to spend capital to build an omnichannel experience for the customer,” he said.

The Grove — with sales of $2,200 per square foot, making it the second-most-productive U.S. shopping center, according to Green Street Advisors — has played up the experiential theme. The mall offers hotel-style concierge services to guests, such as making arrangements for birthday parties, reserving tables at restaurants and securing private trolley rides.

“We’re constantly looking for ways to innovate and provide additional services and amenities for our guests,” said Jack Levy, the executive vice president of operations for the mall’s owner, Los Angeles-based Caruso Affiliated. “One of the ways we have adapted is by having pop-up shops at The Grove.”

The Grove has hosted pop-up shops by actress and organic-product maven Jessica Alba, who opened Honest Beauty, and actress and fashion designer Nicole Richie, who showcased her House of Harlow fashion line. The celebrity fashion designer Rachel Zoe’s first brick-and-mortar pop-up shop made its appearance here. The shopping center has also been home to first-to-market retail concepts, such as Elizabeth and James, which is Mary-Kate and Ashley Olsen’s first dedicated store for purchasing their fashion line.

Experts say that some of L.A.’s tired suburban malls are undergoing pricey makeovers to try to keep up with contemporary concepts like The Grove as well as with the nearby The Americana at Brand, a similar property that Caruso opened in 2008.

In fact, mall owners are opening their wallets for major building nationwide. The value of shopping-center construction, including work on new and existing structures, reached nearly $17.2 billion in 2015, according to the U.S. Census Bureau — the highest level since the end of the last economic cycle in 2008.

Occupancy rates have held steady at around 94 percent over the last two years. Net operating income increased 2.6 percent in the first half of 2016 compared with the same period a year earlier, while base rents rose 2.6 percent over the same time frame, according to the International Council of Shopping Centers.

Here’s a bird’s-eye view of sevveral high-end mall renovations that are either under construction or ready to break ground in L.A.

Promenade at Howard Hughes Center

The neighborhood has certainly changed since the 250,000-square-foot Promenade at Howard Hughes Center opened in 2000. At 6081 Center Drive, on land that was once owned by aviation and business mogul Howard Hughes, it sits at the periphery of Silicon Beach.

The mall owners say the burgeoning demand for office space in nearby Playa Vista — where Google and Yahoo have set up shop — makes this a promising time to redevelop the shopping center. “We’ll capture a good part of that momentum,” said Philip Cyburt, CEO of Laurus, the Los Angeles real estate investment firm behind the Promenade’s reinvention.

Laurus purchased the mall from Irvine-based Passco in June 2015 and plans to invest $30 million in the two-level, mixed-use center that has thus far “not been able to get any momentum through its life cycle,” Cyburt said.

The Bloc, a DTLA mall, before the roof as part of a $180 million redesign.

The design, by the L.A.-based Jerde Partnership, will include pedestrian-friendly access via a new crossing on Center Drive and an update to tired Art Deco retail façades, as well as a new courtyard with an outdoor movie-screening area and fire pit. Interior changes include reconstructed retail spaces that will sport smaller footprints and shorter bay depths. The result will be an increase in the number of leasable tenant spaces.

Construction is expected to begin in October, when the second floor of the southeast portion of the mall will be removed to create an open-air space with multiple entry points. The project is slated for completion in the second quarter of 2017.

Westfield Century City

Mall owner Westfield plans to keep its Westfield Century City, located at 10250 Santa Monica Boulevard, partially open during its $800 million redevelopment.

The vast undertaking, which is projected to get under way by the end of 2016, involves tearing down three-fourths of the mall. Redevelopment plans include a renovated 1.2-million-square-foot shopping center, eight acres of new outdoor public space, additional parking and 70 more shops.

Celebrity chef Mario Batali has taken a 50,000-square-foot space for his food-emporium concept Eataly, which has existing stores in New York and Chicago and expansion plans for Boston as well as Los Angeles and beyond.

At least one tenant wasn’t pleased about the addition of the New York-based Eataly. Gelson’s Markets, a Southern California grocery chain that has been a mall tenant since 1967, disputed the addition with Westfield, saying it violated the company’s lease agreement. A spokesperson for Gelson’s said on Aug. 31 that it had reached an agreement with Westfield. The mall owner declined to comment.

Despite the lawsuit, Lynch, the retail analyst, said the Batali venture is a good get for Westfield. “Eataly is a home run,” Lynch said. He also said that today’s shoppers want to have “restaurant and entertainment experiences that are unusual, and that includes all kinds of dining experiences.”

Fashion is another key element of the planned renovation, with the center adding retailers like Nordstrom, which plans to move from Westside Pavilion.

“Westfield Century City will elevate fashion retail to a new level of excellence, combining the most sought-after brands and exceptional customer amenities,” Peter Lowy, co-CEO of Westfield, which also operates the Westfield World Trade Center in New York, told The Real Deal through a spokesperson.

Westside Pavilion

Speculation is rife about how Macerich, a Santa Monica-based real estate investment trust, may redevelop the Westside Pavilion, which is on the verge of losing its anchor tenant. The 755,000-square-foot mall, located at 10800 West Pico Boulevard, dates to 1985. In recent years, the mall’s owners have discussed some ideas with local community groups but haven’t announced definite redevelopment plans.

The Bloc, a DTLA mall, after. Inset below: developer Wayne Ratkovich

Bob Aptaker, vice president for development at Macerich, met with a homeowners’ association near the mall in late 2015 to discuss some possibilities, such as replacing at least part of the mall’s fortress-like walls to allow in more natural light, as well as opening up more easy pedestrian access from Pico Boulevard. Other potential plans included expanding an existing parking structure and converting part of the mall into creative office space.

In early 2017, the Westside Pavilion’s flagship store, Nordstrom, will decamp for new digs at Westfield Century City. Whole Foods is rumored to be interested in taking this space.

A representative for Macerich declined to comment for this article.

Beverly Center

In Beverly Grove, near Beverly Hills and West Hollywood, the 886,000-square-foot Beverly Center, located at 8500 Beverly Boulevard, is in the midst of a $500 million makeover.

Mall owner Taubman Centers, the Bloomfield Hills, Michigan-based global retail real estate company, has hired architecture firm Studio Fuksas of Rome, Italy.  Studio Fuksas has designed a number of high-profile international projects, including Shenzhen Bao’an International Airport in Guangdong, China, and the new National Archives of France in Pierrefitte-sur-Seine.

The renovation is slated for completion in 2018. Plans include a series of interior skylights, a perforated steel façade and an updated streetscape with drought-resistant greenery. Inside, a center courtyard with a 20-by-35-foot LED screen will serve as an informal gathering place as well as an event and exhibition space.

Anchor tenants Bloomingdale’s and Macy’s are expected to remain, with the new tenants including Apple, Burberry, Jimmy Choo, Prada, Salvatore Ferragamo, Tiffany & Co., Traffic, Uniqlo and Versace.

“Brands are rediscovering that they can only connect emotionally with customers in a brick-and-mortar environment. In our case, the environment needs to evolve into a retail, dining and gathering space that reflects the lifestyles, personality and interests of the Los Angeles community,” William Taubman, the chief operating officer of Taubman Centers, said in an interview with TRD.

The Beverly Center plans include a series of street-level restaurants that open to pedestrian traffic off of West 3rd Street, and a gourmet food hall, called The Street, on the eighth-floor terrace. Operated by James Beard Award-winning Chef Michael Mina, the food-court concept will include cuisine from around the world sold in an outdoor bazaar-style setting.  

The Bloc

The Bloc, the only one of these redevelopment projects located in DTLA, is a 1.1-million-square-foot, $180 million redevelopment project built by Los Angeles developer Ratkovich in partnership with National Real Estate Advisors and Blue Vista Capital. 

The developer bought the former Macy’s Plaza — a retail, office and hotel complex — in June 2013 for $241 million. In early 2014, the company removed the mall’s roof for an open-air food court and 150,000 square feet of retail space. In April, Ratkovich obtained a $225 million loan to refinance The Bloc. The development opened to the public at 700 South Flower Street in June with the unveiling of The Square, a plaza-level public space.

Ratkovich executives say that retailers are in the process of building out individual storefronts; however, the retail portion of this project has been delayed, and some market pros suspect that not all of the retailers who have been announced will move in.

3761 South Hill Street

Calling all Angeleno artists — this could be your shot at cheap studio living.

Plans were filed Friday for 33 live/work studio units in South Central L.A., according to city planning documents. The project calls for the conversion of two industrial office buildings at 3761 South Hill Street, just east of the 110 Freeway.

The zoning change request was filed by Hamid Razipour under the entity Hard Property, LLC. It calls for “joint living and work quarters for artists and artisans.”

Razipour, according to his LinkedIn profile, is the president of car stereo store SOS Electronics on South Central Avenue.

The industrial structures total 32,450 square feet on a 1.5-acre lot. Hard Property acquired the buildings for $9.2 million in 2015, property records show. David Gadoshian, a CPA listed on public records as an agent of Hard Property, declined to comment on the new plans.

The advent of artists in this historically working-class neighborhood is perhaps the perfect testimonial to its gentrification. Gallery 38, for instance, opened just last year on West Adams Boulevard.

Some longtime residents are apprehensive about the community’s growing home prices and changing demographics. Up the road on Broadway the $1 billion project the Reef only recently cleared the planning commission after protests from members of the community, who argued the 1.7-million-square-foot development would catalyze unwanted gentrification.

“The people that have lived here the longest can’t afford to live here,” Sandra Pruitt, who represents Jefferson Park on the neighborhood council, told the L.A. Times last week. “It’s interesting, once the color of the people changes, [the developers] want to start investing.”

Still, rents are low — at least for now. Last year, the average monthly rent for a one-bedroom apartment in South Central L.A. rang in at $930, compared to $2,380 in DTLA, according to an April report from renting site, Zumper.

Donald Trump (Illustration by Lexi Pilgrim for The Real Deal)

From the New York website: As a real estate developer, Republican presidential nominee Donald Trump has received at least $885 million in tax breaks and other subsidies for his New York buildings.

An investigation by the New York Times shows that Trump has taken in millions in tax breaks, grants and other subsidies — in part — through political maneuvering and lawsuits. For his Trump Tower and Trump Palace projects he took in 421a tax benefits worth $20.8 million. After the Sept. 11 terrorist attacks, Trump received $150,000 in grants made available to small businesses in the area, even though he said his building at 40 Wall Street near the World Trade Center wasn’t damaged.

Partially through his father’s political connections to Mayor Abraham Beame and Gov. Hugh Carey, Trump secured a 40-year tax abatement for the Grand Hyatt Hotel on 42nd Street, which has allowed him to forego $359.3 million in taxes. He sued the city in 1981 after Mayor Ed Koch’s administration denied 421a benefits for Trump Tower. After a ruling in his favor by the New York State Court of Appeals, Trump received $22.5 million worth of tax breaks on the building.

According to the New York Times, the city missed out on $332 million in taxes from Trump Place on Riverside Drive. It also lost out on $8 million from Trump Palace; $13 million from Trump Plaza; $120 million from Trump World Tower; and $16 million from One Central Park West.

“In many cases, they made the difference between building and not being able to build,” Trump told the Times. “I’ve gotten incentives in other parts of the world as well.” [NYT] — Kathryn Brenzel 

Rubix Hollywood

AIG Global Real Estate has sold the Rubix Hollywood, a three-building apartment complex comprising 218 rental units in prime Hollywood, for $109 million, or $500,000 per unit, according to Real Capital Analytics.

The buyer is New York Life Real Estate Investors on behalf of the Madison Core Property Fund.

The 247,587-square-foot complex, at 1714 N. McCadden Place, last traded for $41.5 million in 2007, record show.

Cushman & Wakefield brokered the deal. Neither the brokers nor a representatives for AIG was immediately available for comment.

A spokesperson for New York Life said the company will likely revamp the property to add value.

“Rubix represents an excellent opportunity to invest in a high quality asset in Hollywood’s thriving residential market,” said Chris Hunt, senior director at New York Life Real Estate Investors. “We will begin renovating units and the common areas over the coming months so we can be well positioned to take advantage of the strong tenant demand in this highly popular submarket.”

The property is less than a block from Hollywood Boulevard and tourist attractions such as Ripley’s! Believe it or Not.

Insurance giant AIG has been in the real estate business since 1987 and was one of of the world’s largest commercial real estate investors before the 2008 crash, with roughly $25 billion in assets. More recently, the company dismissed four senior members of its real estate business, including the division’s chief executive, as a cost-cutting measure, the Wall Street Journal reported.

The LNR Warner Center

An affiliate of real estate giant Hines is looking to sell a corporate office park in Woodland Hills’ Warner Center amid speculation of an impending loan default, sources told The Real Deal. 

Hines interests bought the property, known as LNR Warner Center, for $311 million in 2006 as part of its joint venture with Japan’s Sumitomo Life Realty. It wasn’t clear if the company has officially put the property on the market, or what price it is seeking.

“With respect to the marketing of Warner Center, our policy is not to comment on potential future transactions,” a spokesperson for Hines said in a statement emailed to TRD.

The 808,274 square-foot office park comprises four five-story office buildings, one three-story building and two parking structures. Tenants include Health Net of California, which occupies more than 40 percent of the complex, as well as UMG Recordings and Viking River Cruises.

Occupancy levels at the property recently rebounded to 93 percent, after slipping to 74 percent in 2014.

A $174 million CMBS loan attached to the property was recently transferred to special servicing due to the possibility of a default, according to CMBS data analytics firm Trepp. According to the spokesperson for Hines, the loan was transferred “for purposes of discussing a potential extension.”

In August, Hines made an attempt to extend the loan until April 2017 in order to give it time to sell the property, according to Trepp. But the loan is still currently slated to mature next month.

The loan was originated by Bank of America in 2006, records show.

A sale would just be the latest is a long line for Hines, which has been disposing of many of its L.A.-based assets in recent months.

A fund managed by the Houston-based company is also selling a 19-story office tower at 12100 Wilshire Boulevard to Santa Monica-based REIT Douglas Emmett Inc. for $225 million, or close to $650 per square foot, TRD previously reported. That price is exactly what Hines paid for it in 2007, when it purchased the property from RREEF Property Trust.

Tower at Sherman Oaks at 14724 Ventura Boulevard and Eri Kroh of Sandstone (Credit: Ungar Law, Sandstone)

Los Angeles-based Sandstone Properties just bought a Class A office building in Sherman Oaks for $56.7 million, or $338 per square foot, from Douglas Emmett.

At the time of the sale, the 14-story building at 14724 Ventura Boulevard, dubbed the Tower at Sherman Oaks, was 96 percent occupied, according to a release from Madison Partners. Its brokers Bob Safai, Matt Case and Brad Schlaak brokered the deal on behalf of both parties and arranged a $48.1 million Loancore Capital loan for Sandstone.

The 167,726-square-foot building was built in 1966 and most recently renovated in 1991.  Sandstone has definite plans to further improve the property, which will be a long-term hold, a source familiar with the transaction told The Real Deal. The buyer will court more creative-minded entertainment tenants as current leases expire, the source said. 

Sandstone owns a handful of commercial properties in Southern California, including the offices at at 11175 Santa Monica Boulevard.

“Sandstone will go into an extensive renovation and reposition [the building],” Safai told TRD. “It did the same for the Variety building in West L.A., completely changing the property — the glass and everything — and got it fully leased to 100 percent. I anticipate this will happen again.”

The office building had been under the Douglas Emmett umbrella since 1997, when Douglas Emmett & Co. bought it for $19.8 million, according to CoStar. Safai and Madison Partners’ Chris DuMont and Bob Pearson will be leasing the property going forward.

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Hotel Cecil and Ellen Parry

New York-based co-living company Ollie will soon open its first West Coast outpost at the site of the former Hotel Cecil in Downtown Los Angeles. Simon Baron Development is converting the property to 301 microunits  — which Ollie will then outfit with beds that turn into couches and amenities that include butler service.

The Skid Row-adjacent property at 640 South Main Street is known for a series of creepy events that took place there. In 2013, a young girl was found dead inside a rooftop water tank, and in the 1980s and 1990s, serial killers Richard Ramirez and Jack Unterweger were reported long-term guests.

But Ollie, as co-living operator, has lofty goals for the site and is unconcerned with its past, Ollie’s West Coast director Ellen Parry told The Real Deal. It wants to shatter cliches about co-living by appealing to a demographic beyond “Urban Outfitter’s vibe that only appeals to 23-year-olds,” she said.

“Millennialism is a lifestyle,” she said, adding that it will be on full display in the Hotel Cecil projects’ 30,000 square feet of communal space. “It’s the ethos of minimalism, the ethos of a curated lifestyle.”

Parry, who joined the company from multifamily developer Mack Urban, sat down with TRD to chat about Ollie’s future expansion, exactly how “millennialism” is a state of mind and why the company isn’t worried at all about Hotel Cecil being a haunted bus tour destination.

Who will be managing the day to day operations at Hotel Cecil?

Our first line of defense is our community manager. It’s going to be their full time job to put on community events and our first core concept is through food. Our amenities include food programming — cold cuts, having a barista, taco tuesday, wine wednesday, etc. This will be deployed in Hotel Cecil and at our seven projects across the country.

How does Ollie plan on mitigating Hotel Cecil’s reputation as a sinister spot, based on its history? 

It’s something that we’re not concerned with. We’re not worried about the reputation. Haunted history can totally play into branding and positioning, but in my role, I’m not really focused on the Hotel Cecil. I’m focused on bringing new business.

What about Cecil’s proximity to Skid Row?

DTLA is experiencing a really robust live-work-play renaissance. There are all kinds of residential buildings all up and down Main Street and Broadway. Skid Row is certainly not getting in the way of residential projects in the Historic Core. I think [homelessness] is a separate issue. I would say that the Historic Core, where the Hotel Cecil is, is a vibrant residential community and that community is already well-aware of its circumstances and the people that live on Skid Row. There’s a lot of outreach to address the problems on Skid Row but it doesn’t detract from the Historic Core neighborhood.

How do you pick new locations?

We look for buildings clustered around employment centers. They must be transit-oriented in live-work-play [neighborhoods]. The other thing is size. We need 50,000 to 150,000 square feet in order to operate our platform, especially with our housekeeping and butler services.

Do you have plans of expansion in L.A.?

Yes. Within L.A., neighborhoods we’re interested in are the Arts District, Koreatown, Hollywood, Santa Monica and DTLA. We might open a second Downtown location beyond the Historic Core.

How are your projects financed?

We are an asset-light model. We partner with multifamily developers and take on two structures. The first is a master lease: We’d agree on what portion of the building we’re taking, so in a medium-sized building we might take the entire floor plate and we’d agree on the benchmark rent that they’d have earned at market rate. The second is third-party management, under which we provide technical design assistance, marketing and leasing, and other operational things. We layer alongside the developer in a revenue split of the upside. For Cecil, we are the operator.

How does your work with co-living compare to your previous job in multifamily development?

Ollie bridges the gap between traditional multifamily and hospitality. So [with Ollie], I get to bring in elements of hospitality service into the residential environment and also use programming to build community. In the traditional multifamily setting, tenants might not even know their next door neighbor, and you feel that amenities are too underused. People say in the lounges, for instance, there’s this sea of chairs that no one ever sits on. So, Ollie is focused on activating features like this.

How do L.A. and New York differ when it comes to co-living?

We always create unique local environments so we don’t have a set of design guidelines. Ollie in L.A. and Ollie in New York will look different but also have similarities. In terms of market differences, the value of roommates is a lot more appealing in L.A. than in New York, I think. West Coast culture is very much about what you do at home, whereas New York, people are always going out.

How do you put tenants together?

We use a software program called BedVetter, a roommate matching platform. When you sign up for Ollie, you log into this platform and answer a series of questions like what time you wake up or what kind of music you like. It’ll recommend matches and it’s entirely integrated into our leasing program. It’s just like online dating, but for roommates. And we say “member,” not tenant. I think there’s a really high prevalence of roommate groups now, especially in L.A. county, where over 40 percent of units have unrelated tenants.

How is Ollie dealing with L.A.’s regulations on micro-units?

Everything we do is code compliant, but the real pressure point in L.A. comes down to parking. So we provide parking per code, and all of our bedrooms are governed by ADA (Americans with Disabilities’ Act) compliance. As for density limits, we add bedrooms instead of units. If we have a 15-unit, one-bedroom floor plan, we’d keep it at 15 units but change it into two-bedrooms. We’re able to do this because we’re converting the living rooms into bedrooms and focus instead on community lounge areas.

So that means each bedroom is quite small. [Editor’s note: In New York, Ollie’s apartment sizes range from just 265 square feet to 360 square feet.] How do you furnish them?

We have a partnership with the Italian Resource Furniture company so we’re able to fit each unit with fold-out beds and expandable tables. We work with small space thought leaders like Jacqueline Schmidt, our director of design. She lives with her two sons in a 600-square-foot apartment in Brooklyn, and her whole vision is focused around minimalism and living a streamlined life.

A microunit in Ollie’s Carmel Place complex at 335 East 27th Street in New York City

How does Ollie differentiate itself from other co-living companies?

Ollie has focused very critically on branding a product that appeals to an all-inclusive group. We’re seeing Gen Y and Baby Boomers interested. In New York, one out of four of our inquiries is from someone over the age 40. We believe that Millennialism is a lifestyle, not just a general age group. People who like the idea of living in a smaller space can be any age. What we’re not doing is creating an Urban Outfitter’s vibe that only appeals to 23-year-olds. The ethos of minimalism, the ethos of a curated lifestyle…these can apply to anyone.

How does that differ from what your competition does?

Some of our competitors go for that bohemian co-op look. We’re positioning against that. We’re all about small space efficiency and we’ve made a clear intention to be gender neutral. They’ve done more demographic-specific branding and we go for a broader, wider-reaching approach. We also have a special butler service that’s included in the base rent. Once you pay your rent, your butler will make an appointment with you either weekly or monthly. They will pick up your drycleaning, stock your fridge, come in and tidy up. All that you pay for is the bill if the butler buys you LaCroix. We found that in New York, people who live in our buildings save three to four hours a week with this service.

How expensive will the microunits be?

We are able to provide housing at a significant discount thanks to Ollie’s density planning and programming. No comment on the Cecil unit price point as those are still under review, but all of our units are more affordable than market rate Class A studios. 

So, what exactly does your design and branding look like?

In terms of our style, we choose organic, fresh, Scandinavian, timeless, neutral and natural — everything from our amenities into our units. Nature is a huge inspiration for us. Things that can be identified as being ageless. We’re also really focused on being the name associated with “roommating.” We’re declaring a National Roommate Day. We have something called an Ollie box: It’s a roommate kit with products you can give your roommate.

Roommating?

Yeah, we’re trying to establish it. Merriam-Webster has “co-living” as a word so we think we can get there. Anyone from age 23 to 45 can have the desire of living with someone else. It’s all about having community when you’re not in a traditional family. It’s really important that our branding isn’t just focused on Millennials and emerging adults, it’s about finding that balance.

What are emerging adults?

Emerging adulthood is that phase between being college kids and having traditional families. Fifteen years ago, people might get married and having kids right after college but today, people delay household formation. So there’s this whole continuum of people between 23 and 34 who want community and a real seamless lifestyle. They don’t want to invest in a house.

Housing construction

From the South Florida website: U.S. home builder confidence was back in spades during September, close to levels previously seen in 2005 before the Great Recession.

According to the Wall Street Journal, a recently released housing market index from the National Association of Home Builders showed confidence jumped six points to 65 between August and September. Any rating over 50 means home builders see the market as healthy.

That rate matches the previous post-recession peak seen in October 2015, and is also the highest it’s been since the confidence survey read 68 points in October 2005.

“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” NAHB Chief Economist Robert Dietz said in a statement.

Though the index doesn’t strictly correlate to construction activity, the Journal reported, it could indicate a boost in construction starts during the fall, as builders are more willing to pick up projects when confidence is high.

An increase in housing production would inject supply into a tightening market, where sales of new single-family homes recently hit its highest level since October 2007. [Wall Street Journal] — Sean Stewart-Muniz

Work on DTLA’s Wilshire Grand

From the L.A. print issue: Developers plotting to build in the hot Los Angeles market are bracing for tighter lending conditions, even for projects backed by robust supply-demand fundamentals.

Banks, the traditional source of construction financing, are in retreat due to a more conservative lending approach and new pressure from regulators. Developers who do secure bank loans have been required to put up more equity, accept higher borrowing rates and provide stronger guarantors, industry insiders tell The Real Deal. Builders have also found nonrecourse loans from banks to be elusive in this more cautious environment.

“Construction lending is much more difficult than it was last year,” said Chris Casey, an L.A.-based managing director in JLL’s real estate investment banking group.

“Banks are getting a lot more scrutiny from regulators about how they’re underwriting loans, and the risks they’re taking. When you have someone breathing down your neck, you want to be very cautious about your lending,” he said.

This has created an opening for new players such as debt funds, which have emerged as alternative sources of capital, as well as for foreign money that increasingly sees U.S. real estate as a safe haven amid global volatility.

“In the past 12 months, we’ve seen the proliferation of debt funds come into this space. They are serving a very critical role as a viable alternative,” said David Milestone, managing director at commercial brokerage Newmark Grubb Knight Frank.

However, banks continue to finance the bulk of the L.A. market’s frenzy of development. Construction is largely backstopped by big banks such as Wells Fargo, Bank of America, Deutsche Bank, Citigroup and Union Bank. Arkansas-based Bank of the Ozarks is also a major player, especially because it offers a nonrecourse construction loan program that doesn’t require a full repayment guarantee, according to real estate professionals.

However, while banks used to be comfortable providing leverage of up to 70 percent of the total cost of construction, current loans max out around 50 percent or 60 percent. Lenders are requiring more capital, partially because bankers are concerned about how much longer the real estate boom will last.

“The market has shifted to where lenders are trying to find reasons not to do deals. Before, there was a focus on the strengths. Now, weaknesses are focused on,” said Jake Roberts, senior vice president for capital markets in Marcus & Millichap Capital’s West L.A. office.

“Everyone is worried: Are we near the end of the run-up here?” Roberts said.

Tougher regulations

Beyond that more conservative approach to lending is the tougher regulatory environment banks are grappling with. Not only are real estate loans and single-asset exposures being more closely scrutinized, but looming new regulation rules are also forcing lenders to become more cautious.

Specifically, banks are trying to get ahead of new regulation concerning “high volatility commercial real estate,” known as HVCRE. These new rules, aimed at lessening the risk of the growing amount of construction loans on banks’ balance sheets, require lenders to set aside more capital and adhere to tighter underwriting standards for certain risky loans.

“Banks are really getting hit with regulations that impact the pricing and risk tolerance relative to construction loans,” said Val Achtemeier, vice president for debt and structured finance at CBRE Capital Markets in Los Angeles.

In practice, this means developers are having more difficulty securing financing from banks at the right price, under the right conditions. Real estate executives say bank loans now carry higher rates, require greater equity and more guarantors with higher net worth, as well as enhanced liquidity.

Banks have also sought to minimize their exposure to any one property by limiting loan sizes to around $30 million. That requires syndicating loans among several banks for larger deals, increasing the execution risk and complexity.

“In general, you’re seeing construction loans at the major banks being reserved for their best clients and for projects that have very strong supply-and-demand levels,” said Achtemeier. “Traditional banks are being more conservative in construction loans, even with top sponsorship.”

The ability to secure financing at favorable interest rates can often hinge on the property type. NGKF’s Milestone said apartments “get the most-favored-nation treatment” in the L.A. region because of strong demand. Office, industrial and retail developments are also looked upon favorably, especially if landlords have already lined up tenants. Experts say that pre-leasing can be a critical factor in obtaining financing for these projects.

Hotel development can be much more challenging to find financing for, Milestone said, because they are inherently riskier assets.

Residential condominiums are also seen as risky, especially those that require units to be sold at the top of the market. “Condos are on the no-go list for a lot of people. We saw what can happen to condos in the last go-around,” said Ron Bonneau, senior vice president in the L.A. office of debt fund PCCP.

Debt funds step in

Condo development is where debt funds are seeing a lot of opportunity. They have been able to capitalize on the bank retrenchment by providing loans to condo projects as well as other developments traditional lenders are now shying away from.

PCCP provided more than $70 million in financing to support the construction of 1050 South Grand, which will be one of Downtown L.A.’s first brand-new luxury residential properties in the past decade. Marketed as “TEN50” and developed by San Francisco-based Trumark Urban, the 25-story property is nearing completion and is currently selling luxury condos that start in the low $600,000 range.

Like other debt funds, PCCP doesn’t face the same regulatory constraints as banks. That allowed the firm to avoid syndicating the loan and cover nearly 70 percent of the cost of the development, a level of leverage that banks don’t typically underwrite these days. PCCP also provided a nonrecourse loan for TEN50.

(Click to enlarge)

Bonneau said those leverage levels and the nonrecourse structure are common for debt funds. “Most banks need recourse. But debt funds are more comfortable without recourse because they are getting compensated for the risk,” he said.

How much compensation? Bonneau said pricing varies, but generally condo project loans financed by debt funds carry floating rates that are priced around five percentage points above Libor (the benchmark interest rate for short-term loans many banks use), if not more. That’s great for yield-hungry debt funds that are struggling to hit their required returns in today’s world of extremely low interest rates.

Beyond PCCP, there are around 30 or 40 active debt funds, including ones operated by ACORE Capital, Starwood, Blackstone, Mesa West Capital and Cornerstone.

“That debt-funds base is definitely serving a very critical role as a viable alternative,” said JLL’s Casey.

Cornerstone was an early mover in the debt-fund space in L.A. The firm said its commercial mortgage group has financed more than $1 billion in core mortgages on non-transitional assets in the L.A. area since 2013. That includes a wide range of properties, spanning hotels, condos, office, retail, multifamily and even industrial.

“The addition and growing prevalence of debt-fund capital is more or less a reaction to a funding gap,” said John Gerber, vice president for alternative investments at Cornerstone.

Cornerstone helped bankroll the construction of the West Hollywood Edition, a new luxury hotel and condo development at Doheny Drive and Sunset Boulevard. More recently, Cornerstone provided acquisition and renovation financing for the Burbank Town Center, a 1.2 million-square-foot shopping mall in downtown Burbank.

“We expect the trend of debt-fund growth to continue for some time as new banking regulations continue to take hold,” said Gerber.

New developments don’t typically rely on the commercial mortgage-backed securities market, a type of financing more commonly used for refinancing and acquisitions of existing properties. The CMBS market, as it’s known to do, has experienced pockets of volatility over the past year, due to various economic and political shocks.

“CMBS is still soft,” said Roberts. “You’re a little nervous going into any CMBS deal,
because between when you sign up and when you close, the market can shift and your terms can change a lot. Before, they were the go-to. Now they have their place.”

Foreign investors fill the gap

In part due to global volatility, premier American real estate markets such as L.A. have enjoyed an influx of foreign capital, especially for larger development deals.

Downtown L.A.’s biggest project under construction is Metropolis, which is being developed by China’s Greenland USA. The 2-million-square-foot development will include a hotel and condos. The second-largest project is the soon-to-open Wilshire Grand. The 1.7-million-square-foot mixed-use building is being developed by Korean Air.

Another of DTLA’s largest projects is being developed by China’s Oceanwide Real Estate Group, and is being paid for with mostly or all cash. Known as Oceanwide Plaza, the $1 billion mixed-use development, which is set for completion in late 2018, will feature condos and hotel rooms spanning a 49-story tower and two 40-story buildings.

Expect the foreign capital influx in L.A. to continue, especially in the wake of the Brexit referendum in the U.K., a shock that has already disrupted the previously hot London real estate market.

“None of us like to see global volatility — and it does impact our stock and debt markets — but our core U.S. real estate investments are viewed as a safe haven with some yield,” said CBRE’s Achtemeier. That’s one of the reasons she and others are optimistic about the prospects of the L.A. real estate market, despite concerns about how much longer the expansion will last.

Milestone pointed to a range of positive drivers, including low interest rates, low inflation, limited pockets of oversupply and leasing velocity.

“I’m fairly bullish about where we’re headed over the next 12 to 24 months,” he said.

Izek Shomof and 211 West Alpine Street

Developer Izek Shomof, one of the godfathers of DTLA’s renaissance, is planning a new multifamily project in Chinatown.

Shomof’s Pacific Investment Group filed plans Monday for a 122-unit, seven-story mixed use complex at the corner of Alpine and Spring Streets.

The project would also include 4,200 square feet of ground floor commercial space, as well as three levels of parking and storage for 124 bicycles. As part of its density bonus request, six of the units would be reserved for very low-income households, according to the plans, which were filed by Pacific using the corporate entity Grand Pacific 7-28 LLC.

Pacific acquired the half-acre lot at 211 West Alpine Street for $4.25 million in February, according to CoStar. It’s 85 percent occupied by several tenants, including a beauty salon and Thai restaurant.

Known for his historic residential conversions, Shomof’s latest major undertaking is the redevelopment of the site of the Boyle Heights Sears building at 2650 East Olympic Boulevard. Once complete, the project is slated to feature a 10-story, 1.8-million-square-foot complex with 99,000 square feet of retail space in addition to the 250,000-square-foot Sears storefront.

Shomof, a native of Israel, was among the first investors to take interest in revitalizing DTLA. Since the 1990s, he has restored multiple structures in Historic Core, including the Premiere Towers at 621 South Spring Street.

Shomof and Pacific Investment did not immediately respond to requests for comment.

From the New York website: Speaking in the first person is taboo at Robert A.M. Stern Architects. When discussing the design process, architects at the firm will constantly use the refrain: “So, that’s very important to us.” It’s an element of the hive mind philosophy that leaps out when touring the firm’s New York workshop.

After a stint under Richard Meier,  Robert A.M. Stern founded his own firm in 1969 with a partner, John Hagmann. In 1977, he struck out on his own to start RAMSA, now a 325-person shop with projects such as the “Limestone Jesus” at 15 Central Park West, Superior Ink and Philadelphia’s Comcast Center. The firm’s current projects in New York include 70 Vestry Street for the Related Companies, and 30 Park Place for Silverstein Properties.

The Real Deal visited on a typical, noisy weekday: The space was littered with sketches, models, renderings and images used for research and various tools of design. Dividers separated the open space into individual meeting rooms for various groups (the firm can be working on more than 100 projects simultaneously). Scattered around were photographs of arches, rough ink sketches of facades, lumps of clay and cans of diet coke (the fuel of choice for the entire company, according to Whalen). Amid the chaos, employees don jackets and ties.

“There’s sort of two sides to how an architect’s mind works,” said Paul Whalen, a partner who’s been at the firm since 1981. “One side is having a good eye and the other side is being able to be analytical. Some people aren’t necessarily brilliant designers, but they’re brilliant problem-solvers. And they can be a really important part of the process in a big firm like this.”

Partners at RAMSA say they look at their projects as a bridge between the past and the present day. This idea applies to both the elements of a building and its relationship to its surroundings. Their central goal is one of assimilation, of acknowledging and building upon traditions and styles, whilst simultaneously embracing new technique and tastes. Grandeur is embraced, but it’s couched in the quiet humility of homogeneity.

RAMSA has always attracted criticism for what some see as a lofty dedication to classical architecture. In an era where the term “starchitect” is attached only to the iconoclast, Stern buildings can even seem drab. At RAMSA, however, conformity is in fact the point.

The firm’s design philosophy was explained in detail by three of the firm’s partners: Paul Whalen, Daniel Lobitz and Michael Jones. Using sketches, renderings and models from all the different stages of research, study and design, the trio described how three current projects came to fruition. In designing a building or a master plan, every aspect is initially subject to rigorous research, from the shape and size of the building to the design of the window frames. Inspiration can come from anywhere, including specific urban planners, theater sets, or even Fred Astaire and Ginger Rogers movies. The relationship of differing scales is examined from every angle, and the intricacies of crafting a top or placing set-backs are studied scrupulously.

“We like to feel that we’ve been able to create a building that feels timeless, that feels like it fits in, but makes its own statement,” said Dan Lobitz, who joined the firm in 1986. “So it’s a building of today, but growing out of the ideas of the place and the past.”

For an in-depth look into the working process of Robert A.M. Stern Architects, watch the above video.

(Video produced by Alistair Gardiner. Reporting by E.B. Solomont. Editing by Hiten Samtani and Kerry Barger)

A house in Mar Vista (credit: kenihandevelopment.com)

Homes are selling like hot cakes in SoCal, with sale volume reaching a ten-year high in August, according to a recent CoreLogic report.

Despite sky-high price tags, the number of sales climbed 5.4 percent since last year in Los Angeles County, with 7,725 new and existing homes sold in August. All the while, median prices rose 6 percent to $530,000.

The boost in August sales can be attributed to low mortgage rates, job growth and high rates of household formation, CoreLogic analyst Andrew LePage said in the report.

In the greater Southern California region, which encompasses Orange, Riverside, San Bernardino, San Diego and Ventura counties as well, the number of home sales grew by nearly 10 percent with 23,278 houses and condos sold in August.

SoCal’s median sales price, though unchanged since July, increased 6.2 percent since last year. [CoreLogic] — Cathaleen Chen

Leo DiCaprio and his home at 21844 Pacific Coast Highway (Credit: Getty, Berkshire Hathaway)

It turns out Jack will let go — for a steep profit.

Leonardo Dicaprio is selling his 1,765-square-foot beachfront cottage in for a sliver under $11 million, or a titanic $6,200 a square foot, Variety reported. He’s asking for almost seven times what he paid for the property, when he acquired it in 1998 for $1.6 million. 

Located on the prestigious Carbon Beach, the cottage has three bedrooms and two bathrooms. It features an open-plan living area with fireplace, sliding glass doors with the deck, a galley kitchen and access to the second-floor balcony from both bedrooms.

The Oscar-winning actor, environmentalist and philanderer of supermodels has leased the property several times. The most recent asking rent, as of last spring, was a cool $50,000 a month.

DiCaprio has sold two other Malibu homes in the past 10 years, including one for $7.4 million in 2009 and another for $17.35 million in 2013. He currently owns homes in the Bird Streets neighborhood as well as Silver Lake, and at least three apartments in Lower Manhattan.

Last year, he announced plans of opening an eco resort on his private 104-acre island in Belize. [Variety] — Cathaleen Chen

From Left: 311 West 39th Street, 372 Canal Street and 8 Stone Street (inset from top: Lexington Realty Advisors’ T. Wilson Eglin and BH Properties’ Steve Gozini)

From the New York website: BH Properties, a Los Angeles-based commercial real estate investment firm, is breaking into New York City in a big way. The company is finalizing a $300 million-plus deal to acquire the land beneath three hotels from Lexington Realty Trust, The Real Deal has learned.

The company is in contract to buy the fee interest for a portfolio of hotels, sources said, including the 39-story, 411-key Element New York Times Square West at 311 West 39th Street; the 21-story, 369-key Sheraton Tribeca New York Hotel at 372 Canal Street; and the 40-story, 399-key DoubleTree Financial District at 8 Stone Street.

Together, the hotels, which opened in 2010, hold 1,179 rooms and span more than 480,000 square feet.

The properties are net-leased to tenants under 99-year ground leases, which are set to expire in 2112.

Just three years ago, Lexington, a Midtown-based real estate investment trust, bought the three parcels from Magna Hospitality Group for $302 million. At the time, initial annual rents under the leases totaled about $14.9 million, according to a Lexington earnings call.

Fast-forward to February 2016: On an earnings call, Lexington CEO T. Wilson Eglin said the REIT plans to sell as many as 30 properties this year in an effort to generate up to $700 million in proceeds. In May, the REIT sold the land under the Holiday Inn Express at 15 West 45th Street in Midtown for $37.5 million.

The land beneath the three hotels are encumbered by $213 million in debt provided by Cantor Commercial Real Estate Lending, Commercial Real Estate Direct reported. That debt matures in 2027.

In the past year, Singapore-based Ascott Residence Trust has acquired the leasehold interest from Magna for two of the hotels: $163.5 million for the Element hotel and $158 million for the Sheridan.

Eastdil Secured, which was marketing the fee interest, declined to comment, as did the buyer and seller.

BH Properties, founded in 1994 and led by Steve Gozini and Ronald Platisha, has offices in Los Angeles, Dallas and Salt Lake City. It has known interests in 71 assets with an estimated value of $695 million, according to Real Capital Analytics.

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Los Angeles Mayor Eric Garcetti at the construction site of the Wilshire Grand, DTLA’s tallest tower in development, which is slated to open in 2017.

From the L.A. print issue: Los Angeles Mayor Eric Garcetti has appeared with Jay Z to promote an open-air music festival, lit the façade of City Hall in purple to mark the death of Prince, and recorded an R&B video — the “101 Slow Jam” — to publicize the temporary closure of an overpass.

Yet the so-called “hipster mayor” has also made a name for himself as a budget cutter, a technocrat in the mold of former New York City Mayor Michael Bloomberg and a booster for new development.

Real estate professionals confirm that the development process has been more efficient under the mayor’s leadership. Among the key changes industry insiders point to is the parallel design permitting process, implemented just a few months after he took office in 2013. This  policy allows developers to design projects and consult with the Building Department simultaneously. Christopher Martin, the architect behind the Wilshire Grand tower, told TRD that this single change had streamlined the planning process and “put it into a form that’s user-friendly and attractive to investors.”

But the mayor doesn’t intend to stop there. He wants to rip up the city’s zoning rulebook — the beating heart that sustains urban development — in order to facilitate more housing construction. He has called L.A.’s 35 community plans and the general plan outdated (no argument from developers, there) and created a program to overhaul them in the next decade.

Garcetti, a fourth-generation Angeleno, grew up in the inner circles of local Democratic Party operatives — his father, Gil Garcetti, is a former district attorney. He rose to power early. Fresh from Columbia University and a Rhodes scholarship from Oxford, he joined the City Council at 30. He was elected mayor at 42, one of the youngest mayors ever to lead the nation’s second-largest city.

As he was climbing the government ladder, he took on the issue of neighborhood beautification. As a City Council member representing L.A.’s District 13, he created UNTAG (Uniting Neighborhoods to Abolish Graffiti), a program that is credited with dramatically reducing graffiti in his district.

He burnished his credentials as an environmentally aware politician by appearing as a proponent of the electric car in the star-studded 2006 documentary “Who Killed the Electric Car?” Closer to home, he authored Proposition O, a 2004 stormwater initiative to fund projects that prevent the pollution of regional waterways.

As a stalwart pragmatist, Garcetti now says that moving the city forward isn’t about environmental policy or economic policy, but about cooperation. Yet some critics argue that he’s bending too far in the direction of high-density development — although he’s widely viewed as a liberal Democrat — and some progressives are pushing back through the ballot box.

Two initiatives that could potentially shake up the development process by putting new restrictions on large-scale projects are heading to voters. The Build Better L.A. initiative would require more affordable housing in large multi-family projects, while the Neighborhood Integrity Initiative would mandate a two-year pause on projects requiring zoning amendments.

TRD asked the mayor what he thought about these initiatives, as well as a slew of other questions — some of which he answered, some of which he did not. 

Following are the emailed responses TRD received from the mayor’s office at the end of August.

During your tenure, many of L.A.’s biggest commercial development projects ever have broken ground. What is your goal?

I’ve laid out an ambitious goal of building 100,000 new housing units by 2021 and doubling the production of affordable housing for low-income Angelenos.

Building enough housing to meet our needs is key to helping us address this crisis, as we protect the unique character of our neighborhoods. One way we do this is by concentrating development where it makes the most sense. That’s why I’m committed to creating more housing around our transit hubs. In 2015, 67 percent of new housing units permitted in the City were within 1,500 feet of high quality transit stops. Our Metro rail system is in the midst of an historic expansion, and we should be leveraging that growth to ensure we are bringing housing to key corridors.

What is your position on the Build Better L.A. initiative and the Neighborhood Integrity Initiative? The backers of the latter said they’d halt their campaign if you were to ban private meetings between real estate developers and officials.

I have heard their concerns. My office is addressing most of what is being raised, already leading one of the City’s most ambitious efforts to reform the development process in L.A.

Almost six months ago, the City announced an aggressive schedule to update our community plans, as well as the general plan. I have also pushed new efforts to make our environmental review process more transparent. We will continue to work on reform, and accelerate wherever possible.

Tell us why you’ve called for updating L.A.’s community plans by 2026 to revise the allowable size and density of development projects.

Our community plans should reflect the aspirations and unique character of Los Angeles’ vibrant and diverse neighborhoods. Today, many of them are out of date, and we don’t have an effective system for determining what each neighborhood’s planning vision should be. That is why I’ve funded a comprehensive update of our 35 community plans, and our general plan. And to be clear, this is not a one-time effort — it will be a permanent program to ensure that these plans stay updated over time.

The City of Los Angeles paid tribute to Prince by lighting up City Hall in purple on the night of his passing.

Tell us more about what the city is doing to build affordable housing, including on city-owned land.

We are making strong progress, but the job is far from finished. We have to continue to think creatively, and use every available tool to ease the pressure on our housing market.  For instance, new revenue sources — such as the general obligation bond set for the November ballot and the Mayor’s proposed affordable housing linkage fee — will help the City bring even more affordable housing to Angelenos who are struggling to keep up with their rents and mortgages. And we must continue working to protect renters in existing housing.

Since July 1, 2013, our Housing and Community Investment Department has addressed more than 19,000 tenant complaints and 10,000 illegal eviction cases, bringing more than $23.2 million in relocation assistance to almost 2,000 families. And this summer, I launched a new campaign called Home for Renters to spread awareness to tenants across our city about their rights under the City’s Rent Stabilization Ordinance.

There is a tremendous amount of commercial construction in DTLA, in terms of office, residential and hotels. Is it in danger of being overbuilt?

I don’t think so. Downtown Los Angeles should be a global center for tourism, commerce and economic activity. It should also be a central hub for public transportation and mobility. That’s why I’m so excited when I look across our skyline and see clusters of cranes building some of the most breathtaking skyscrapers the world has ever seen.

The kind of development we’re seeing Downtown also meets the needs of this particular neighborhood. It’s what this community needs to attract and serve both its residents and visitors. And the best part is, this is only the beginning.

In the coming years, we’re going to build more hotels, and more offices, so that we can keep welcoming residents, workers and businesses into the heart of our world-class city.

What impact do you think that foreign investors are having on development? Do you want to draw in more foreign real estate investment?

We want to encourage more investment in Los Angeles, period. Right now we’re seeing a huge amount of investment from overseas, especially Downtown. And we’re moving aggressively to help move these transformative projects along by giving the best service that our City can offer. Our Department of Building and Safety has started using a parallel design permitting process to help get shovels into the ground more quickly and efficiently.

Metropolis developer Greenland, for instance, was able to submit initial plans for review and approval while the design process was still underway. This expedited process allowed them to break ground just three months after they came to the City with conceptual plans for their project. And now, that project is just months away from completion.

But local investors are also taking advantage of these efficiencies we have created. Our economic development has to be about attracting all forms of investment to our City — because this means more jobs for our City.

As a Council  member, you were widely viewed as an environmentalist. Now that you’re the mayor, how do you see the challenges of balancing environmental goals with growth?

When my Sustainable City pLAn was launched in April 2015, it represented the first comprehensive road map uniting our entire city government around a far-reaching vision to build a sustainable future for Los Angeles. Achieving sustainability is not just about environmental policy or economic policy. It’s about every facet of our city working together.

These questions and answers have been edited and condensed for space. 

Angelina Jolie, Brad Pitt and their French chateau

Hollywood’s golden couple may have called it quits, but the material remnants of Brad Pitt and Angelina Jolie’s 12-year union span three continents, 13,000 acres and at least $70 million.

In L.A. alone, Brad Pitt and Angelina Jolie own five adjacent properties in Los Feliz, totaling just under two acres, Variety reported. Pitt purchased the first three in the 1990s, paying a combined $2.55 million. But, since they coupled up, two more properties have been added to Brangelina’s portfolio, which now totals more than $4.9 million and at least four houses.

In 2000, Pitt also bought an 11.5-acre oceanfront property for an undisclosed amount just outside of Santa Barbara.

But the couple’s biggest and most lavish digs are located in the south of France. Their 1,200-acre Chateau Miraval in the village of Correns is a village in its own right, with multiple structures including a 35-room main house, several cottages, a Romanesque chapel and a recording studio, Variety said. They acquired this sprawling estate for $60 million in 2012 from American businessman turned wine producer Tom Bove.

In New Orleans, the couple owns a 1930s-built masonry residence in the French Quarter, which Pitt and Jolie bought for 3.5 million in 2006. It was for sale for a hot second in 2015, first listed at $6.5 million and eventually dropping to $5.65 million, before being taken off the market altogether.

Jolie, who initiated the couple’s divorce this week citing irreconcilable differences, has also owned a 1,232-square-foot apartment on Manhattan’s Upper West Side since 1997, Variety reported. The Oscar-winning actress also owns a spread in Cambodia, including a 100-acre property in Cambodia’s Battambang Province and another 12,000 acres that she developed into a wildlife preserve. [Variety] — Cathaleen Chen

Blackstone’s Jonathan Gray and LBA Logistics Center at 8311 Central Avenue in
Newark, California

From the New York website: Betting on the continued strength of e-commerce, the Blackstone Group agreed to pay $1.5 billion for a logistic center portfolio, the bulk of which are located on the West Coast. 

The properties total 12 million square feet. California-based investment firm Irvine Realty is the seller.

Investors have doubled down on logistic centers in recent years amid the rise of e-commerce, which needs these centers to store goods and bring them to consumers.

“Distribution used to be just another part of the supply chain,” said Charles Sullivan, president of U.S. operations for logistic-center owner Global Logistic Properties, told the Journal. “Now logistics has moved up in its importance in corporate strategy.”

Logistic-centered real estate investment trusts saw their average returns grow 4.8 percent over the past year – the third-highest growth rate among all REIT categories, according to Green Street Advisors.

The deal marks Blackstone’s first big bet on the sector since it sold IndCor Properties for $8.1 billion last year. The fund manager also owns 150 million square feet of logistics properties in Europe.

The deal carries risk. Analysts told the Journal that a wave of new supply could push down logistic centers’ returns, while e-commerce remains largely unprofitable. [WSJ] — Konrad Putzier