Vishaan Chakrabarti on a Manhattan real estate market without private cars

[embedded content]

Vishaan Chakrabarti has a message for real estate developers: Think outside your own black car.

The founder of Practice for Architecture and Urbanism and the dean of the UC Berkeley College of Environmental Design joined TRD‘s Hiten Samtani to discuss his proposal for a Manhattan in which private cars would be banned. Instead, all the land devoted to the private car — four Central Parks worth, by his estimate — could be used for better mass transit, bicycle lanes and real estate development that caters to the needs of more New Yorkers.

“What I find in the New York development community — not everyone, but too many people — are just too focused in their own reality, as opposed to the fact that real estate in New York, as an industry, is serving a city of 8.6 million people,” Chakrabarti said. He said city, state and federal governments would have to seriously step up to help counter the “world of hurt’ that New York is going to experience from the pandemic.

To read an extended version of this conversation, subscribers can click here

For more of The REInterview, a series of in-depth conversations with real estate leaders and newsmakers hosted by Hiten Samtani, click here

How the Miami HEAT is Supporting Black Lives Matter

How the Miami HEAT is Supporting Black Lives Matter

As the vice president of creative and digital marketing for the Miami HEAT, Jennifer Alvarez oversees all areas of marketing that fans interact with daily, including the wildly successful Cour…

¡Atención! DeSantis decretó estado de emergencia en los condados de la costa este de Florida

¡Atención! DeSantis decretó estado de emergencia en los condados de la costa este de Florida

 El gobernador Ron DeSantis ha declarado un estado de emergencia en los condados de la costa este de Florida antes del huracán Isaias. Por redacción MiamiDiario DeSantis anunció la declaración el viernes por la mañana. “Para asegurar que el estado esté completamente preparado para el impacto, acabo de firmar una orden ejecutiva para declarar un […]

La entrada ¡Atención! DeSantis decretó estado de emergencia en los condados de la costa este de Florida se publicó primero en Miami Diario.

Calamity and Kabbage: Accountants riff on PPP madness

Calamity and Kabbage: Accountants riff on PPP madness

Wrapping their arms around the Paycheck Protection Program has been a mind-boggling experience for Mark Bosswick and Elliot Levine, two veterans of New York City’s accounting industry.

With hundreds of billions of dollars up for grabs from Congress, rapid-fire rule changes from Washington and bewildering responses from the banking system, the accountants and their colleagues have been trying to make sense of it all for clients.

Appearing Wednesday on The Real Deal’s webinar series TRD Talks Live, the number crunchers from Berdon LLP and Levine & Seltzer zeroed in on some key facts:

  • It’s not too late to get a forgivable PPP loan for businesses yet to receive one. The deadline to apply has been extended to Aug. 8.
  • Skip the big banks. Small, even obscure lenders are often nimbler. Ever heard of Kabbage.com? Neither had Levine — until it scored money for one of his clients in mere days.
  • Businesses that could not reopen before exhausting their PPP are SOL. For folks who have been living under a rock (quite a few of us, actually), that stands for Shit Outta Luck.
  • Gaming of the program looks inevitable, a fact Bosswick and Levine attributed to Congress’ failure to consult accountants when designing it.

Accountants tend to be exacting people, which may be why Bosswick and Levine — a managing partner and managing member at their respective firms — were flabbergasted at how the federal program was slapped together. Officials just seemed to make it up as they went along.

But one thing became clear to them: The program was not intended as a stimulus or economic development.

“Ultimately, PPP was a form of unemployment compensation that put the burden on the employer,” said Bosswick.

“It was a way to keep unemployment numbers low,” Levine added. “It didn’t help businesses.”

Rule changes flummoxed business owners, who were first asked to spend 10 weeks of payroll in eight weeks, then later given 24 weeks, the accountants said. Different rules were applied to applications filed on different dates. The initial money came from banks, but many only helped customers who had borrowed from them before.

That’s how Levine ended up at Kabbage.com, which he said had been “phenomenal” for his clients, unlike giant institutions such as Bank of America and JPMorgan Chase. Terms that make PPP loans friendly to businesses — notably an interest rate of 1 percent, payable over several years — make them less attractive to giant lenders. Many don’t want such piddling accounts lingering on their books. But other banks are drawn to the fee Congress provided.

“For small banks, a 5 percent fee for making the loan plus 1 percent interest isn’t bad,” Levine said. “And maybe they’ll get a client out of it.”

They noted that the program was hastily created, and probably necessarily so. But the money would have been more useful for scaling up after a prolonged closure, rather than as a passthrough to idle employees of shuttered shops.

“If there’s another round of PPP, give more capital to businesses, and let them spend the money once business has returned,” said Levine.

“Employing people just to give them money doesn’t make sense for businesses,” Bosswick added.

Because the program made loan forgiveness conditional on spending no more than 25 percent of the funds on rent — an amount eventually increased to 40 percent — real estate owners saw little support despite losing substantial rental income, according to Bosswick.

For businesses that have taken loans unsure if they will be forgiven, Levine said it’s best to think of them “as 1 percent loans which you may have to pay a portion of back.”

“One thing not many people understand about PPP is that banks are lending their own money,” Levine said, noting that banks prefer the loans to be forgiven so they can book federally guaranteed revenue. For loans neither forgiven nor repaid, the federal government will make the lender whole.

Although banks must examine how businesses used loans before declaring them forgivable, questions about accountability naturally arise for such a novel and hasty solution.

“To me,” Levine said, “the government took away a moral compass” by announcing a 1 percent penalty for companies found to have broken rules.

“That’s a very weak penalty,” he said.

To stay on the fair side of regulators, Bosswick recommended putting PPP proceeds into a separate account and using it exclusively for payroll and rent.

For businesses that miss out on PPP, Levine noted that the government renewed its Main Street Lending Program, which he said could provide a loan of six times EBITDA at 3.7 percent interest payable over five years, and interest-only for the first two years.

“The whole thing is just a numbers game,” Levine said. “I wish they had gotten accountants involved in the PPP from the start.”

The post Calamity and Kabbage: Accountants riff on PPP madness appeared first on The Real Deal Miami.

Hudson Pacific is effusive about Blackstone deal, defensive about office space

Hudson Pacific Properties CEO Victor Coleman (Illustration of Victor Coleman by The Real Deal; iStock; Coleman via Hudson Pacific)

Hudson Pacific Properties CEO Victor Coleman (Illustration of Victor Coleman by The Real Deal; iStock; Coleman via Hudson Pacific)

Hudson Pacific Properties reported a dip in second quarter net income, attributing it to retail tenants that deferred their rent payments because of the coronavirus.

But taking into account the massive impact the pandemic has had on retail and office landlords, the real estate investment trust’s net income of $3.7 million and revenue of $199 million in Q2, was not a sharp fall off from the same period last year, when it reported $9.8 million in profits on $197 million in revenue.

The modest change in earnings belies a company going through a major transition. The Los Angeles-based office, retail and studio landlord is set to receive a major injection of capital from Blackstone Group, but it also faces questions about its office leases as Google and other tenants tell employees to work from home.

Blackstone is planning to buy a 49 percent stake in HPP’s Hollywood office and soundstage properties for film production, a portfolio valued at $1.65 billion and largely leased to Netflix. HPP owns three studio lots and 36 sound stages totaling 1.2 million square feet of space across 41 acres, as well as 900,000 square feet of adjoining office space.

HPP executives said during the earnings call Thursday that the Blackstone deal was “imminent” and that proceeds from the deal would more than double Hudson Pacific’s liquidity — from $1.1 billion to $2.4 billion.

Company CEO Victor Coleman said Blackstone’s blockbuster buy-in “provides validation to the stock market” for HPP’s decision to “assemble the largest collection of independent soundstages in the United States.”

The company now has “ample liquidity,” Coleman said, “to enhance business with Blackstone” and also entertain stock buybacks.

The company’s lease signings have fallen since the third quarter in 2019, when it inked 550,000 square feet of leases. The fourth quarter saw that number decline to 435,000 square feet, then nearly 235,000 square feet in Q1 2020 and just 110,000 square feet of lease in the most recent quarter, when office leasing nosedived in L.A.

On the call, Coleman discussed possible acquisitions, including buying out Macerich’s 25 percent share of One Westside Pavilion, the $475 million office project pre-leased to Google, a move also floated in an October earnings call.

“The intent is eventually to hold 100 percent of the asset,” Coleman said, adding that given Macerich’s “capital needs” — the Santa Monica-based retail REIT has been hammered by a drop in rent payments — HPP “will make this transaction.”

So far, HPP has maintained its rent collection rate. The REIT reported that it had collected 97.3 percent of rent payments during the second quarter, only slightly down from previous quarters.

But HPP faces its own vulnerabilities, including studio production sidelined amid the pandemic, which has led to uncertainty about soundstage leases.

HPP president Mark Lammas characterized the lack of content production as a dispute between producers and actor-and-writer unions over coronavirus testing.

Despite a rising number of Covid-19 cases in L.A. County, Lammas said he anticipated production would begin as soon as next month, and would ramp up in the fourth quarter.

“Content producers are under significant pressure” to provide streaming subscribers new material, Lammas said.

And as with many office landlords, HPP faces an existential question about demand.

Coleman said that despite Google’s policy that its employees can work remotely until at least July 2021, the tech giant has not wavered in its agreement to lease roughly 300,000 square feet of office space at One Westside Pavilion.

“Our construction continues unabated,” Coleman said about the redevelopment project.

He seized on a Wall Street Journal article from last week, whose headline said that companies were beginning to question benefits of working from home.

He said it highlights a “lack of mentorship” and “impaired efficiency” that accompanies a remote work environment.

Experience The Spa Again Sans Touch at The Carillon Miami Wellness Resort

Experience The Spa Again Sans Touch at The Carillon Miami Wellness Resort

The Carillon Miami Wellness Resort Brings a New Perspective to The Spa Experience.
Dining spot looking out over The Carillon Miami’s wonderful oceanfront view.
Relaxing and unwinding can…

¡Tercer día consecutivo! Nuevo récord de 253 muertes en un día por coronavirus en Florida

¡Tercer día consecutivo! Nuevo récord de 253 muertes en un día por coronavirus en Florida

¡Nuevo récord! Se reportó este jueves 253 muertes las últimas 24 horas en Florida por COVID-19. Es fundamental que los residentes usen mascarillas y practiquen el distanciamiento social para evitar que la pandemia siga extendiéndose en todo el estado. Redacción MiamiDiario Este jueves los casos de coronavirus en Florida llegaron a 461,379 casos totales después de […]

La entrada ¡Tercer día consecutivo! Nuevo récord de 253 muertes en un día por coronavirus en Florida se publicó primero en Miami Diario.

South Florida by the numbers: From the Big Apple to the Magic City

South Florida by the numbers: From the Big Apple to the Magic City

(iStock)

(iStock)

“South Florida by the numbers” is a web feature that catalogs the most notable, quirky and surprising real estate statistics.

Attribute it to Covid-19, taxes, costs of living, weather, the rise of remote working, or some combination of the above factors — whatever the cause, New Yorkers are relocating to Miami at eye-popping levels. While this trend has been building in recent years, the past few months have seen a spiked flow of Gothamites trading stilettos for sandals, and in most cases, cramped apartments for roomy single-family homes. Is this a real exodus with “legs,” or a momentary craze that will settle down once things return to normal? We explore it in this edition of “South Florida by the numbers.”

40 percent: Decline in New York City office values predicted by Barry Sternlicht, Starwood Capital’s CEO, who moved his company from Greenwich, Connecticut to Miami Beach in 2018 due to a more favorable tax climate. Sternlicht anticipates that a loss of populace and capital would increase New York City expenses accordingly, driving office rents down by 25 percent. [TheRealDeal]

10,346: Square footage of a $22 million Gables Estates mansion recently purchased by Lee Scott Millstein, a private equity investor and Sylvie Millstein, a fashion designer, who are relocating from New York with this purchase. The nine-bedroom home features 255 feet of water frontage with a 160-foot dock, a master suite that overlooks the water, a home theater, game room with a wet bar and wine cellar, pool, rooftop deck and outdoor entertainment area. [TheRealDeal]

25 percent: Increase in out-of-towners looking to rent in Miami in 2020 compared to last year, according to Master Broker Christopher Zoller. “They are showing up in droves…fleeing high density, high-rise locations. They are learning to work from home or they can work from common spaces,” Zoller said. [MiamiHerald]

12: Number of months the general partner of a New York-based venture capital firm has agreed to lease a Miami Beach home, which is typical of other entrepreneurs who are taking “a taste” of South Florida before deciding whether or not to stay permanently. These investors are seeking more space, a lower cost of living, and warmer weather for their families during this time, but are not ready to completely divest themselves from New York for the long term. [SFBJ]

270: Estimated number of people leaving the New York metro area each day, with most of them choosing Florida. And it’s not just the wealthy residents fleeing increased taxes. Lower to middle class income earners are also leaving New York, and the costly Northeast in general. [Forbes]

This column is produced by the Master Brokers Forum, a network of South Florida’s elite real estate professionals where membership is by invitation only and based on outstanding production, as well as ethical and professional behavior.

The post South Florida by the numbers: From the Big Apple to the Magic City appeared first on The Real Deal Miami.

Blackstone eyes new 1M sf NYC headquarters

Blackstone's Jonathan Gray and a rendering of 350 Park (Vornado, Blackstone)

Blackstone’s Jonathan Gray and a rendering of 350 Park (Blackstone, Vornado)

The Blackstone Group is mulling options for a new headquarters in New York City as large as 1 million square feet, sources told The Real Deal. The investment giant’s current leases in the Plaza District expire in several years.

Blackstone, headed by CEO Stephen Schwarzman and president Jon Gray, has asked a handful landlords to submit proposals for a new headquarters in Midtown and the Far West Side.

Among the sites under consideration is a supertall office tower on Park Avenue proposed by Vornado Realty Trust and Rudin Management. The two have floated the idea of developing properties they separately own into a 1,450-foot-tall, 1.68 million-square-foot tower at 350 Park Avenue.

The project is particularly attractive to Blackstone, sources said, because the site sits catty-corner to the firm’s current headquarters at Rudin Management’s 345 Park Avenue. Between that location and another office at Boston Properties’ 601 Lexington Avenue, Blackstone occupies about 800,000 square feet on leases that expire in 2027.

Blackstone is looking at options to combine its offices and expand its footprint. The search is in its very early stages, and sources familiar with the process said Blackstone could also choose to renew and grow at 345 Park Avenue if space becomes available.

A spokesperson for Blackstone declined to comment.

Other sites under consideration include three developments in the Hudson Yards area: Tishman Speyer’s Spiral at 66 Hudson Boulevard, Related Companies’ 50 Hudson Yards and 3 Hudson Boulevard, which is being co-developed by Boston Properties and the Moinian Group.

On its second-quarter earnings call Wednesday, Boston Properties said it had recently made a pitch to a large tenant.

“Earlier this month we made a proposal and did a virtual presentation to a million-square-foot user with a mid-2020s delivery timeframe for 3 Hudson Boulevard,” said company president Doug Linde, without naming the tenant.

The REIT executive noted that most tenants are holding off from making moves on office space unless a lease expiring in the near future forces their hand, though he said there are a few exceptions.

“Some long-range planning activities continue despite the current economic and health uncertainties.”

Blackstone’s interest in a new Manhattan headquarters could be considered a vote of confidence for the city’s office market, which is suffering through an identity crisis as the shift to work-from-home during the coronavirus pandemic has many wondering if companies will abandon the central business district.

Gray earlier this month said people will eventually return to their office buildings, but “there will be less density, there will certainly be a lot less new construction.”

Contact Rich Bockmann at [email protected] or 908-415-5229

6 Movies For Your Summer Watch List

6 Movies For Your Summer Watch List

We tapped the Cinema Society’s founders for their top picks releasing this summer.

Andrew Saffir and Daniel Benedict
Settle in. It’s movie night. We caught up with Andrew Saff…