Waterford at Blue Lagoon will have outdoor yoga and food trucks

Mike Sales CEO of Nuveen Real Estate and Waterford at Blue Lagoon

Mike Sales CEO of Nuveen Real Estate and Waterford at Blue Lagoon

One of Miami’s most prominent corporate office complexes is rebranding with yoga sessions, food trucks and bike sharing to appeal to millennial workers.

Waterford at Blue Lagoon, home to the offices of Airbus, FedEx and Burger King, will be renamed the Waterford Business District after a $10 million capital improvement program. Nuveen Real Estate and Allianz Real Estate, which control over 1.8 million square feet or 60 percent of the office space within Waterford, are paying for the improvements, which will follow another $10 million spent in renovations last year, according to a spokesperson.

The Waterfront Business District, near Miami International Airport, houses more than 100 multinational corporations, according to a press release. Tenants of the Nuveen/Allianz portfolio of buildings will have access to conference facilities, bike and ride sharing programs, weekly outdoor yoga and boot camp sessions and two fitness centers. Tenants will also have access to pop-up food and beverage options, food trucks, business networking opportunities and professional development seminars.

Blanca Commercial Real Estate is handling leasing for the Waterford Business District, led by Juan Ruiz and Andres del Corral. Other services and amenities within the Waterford Business District include a daycare center and a post office.

The area will soon see an uptick in new residential units and hotel rooms. In December, Miami commissioners approved a crucial zoning change that allowed developers to build residential units in the office park. The change enabled the Weiss Group to develop six buildings in Blue Lagoon with a total of 888 residential units and 294 hotel rooms.

Dev Motwani nabs loan for Fort Lauderdale project

Dev Motwani, Johnny Allison, and 2401 West Broward Boulevard (Credit: Google Maps)

Dev Motwani, Johnny Allison, and 2401 West Broward Boulevard (Credit: Google Maps)

A company managed by Dev Motwani’s Merrimac Ventures and Hernandez Construction scored a $10.4 million loan for a self-storage and retail project in Fort Lauderdale.

Riverbend Storage Property LLC secured the loan from Centennial Bank for the four-story mixed-use self-storage facility at 2401 West Broward Boulevard. It will feature 110,698 square feet of leasable self-storage space and about 5,168 square feet of total retail on the ground floor.

Riverbend Storage Property LLC purchased the property in March 2019 for $2.5 million, records show. The building is planned to be completed at the end of 2020, according to a listing on LoopNet.

The project is across from a new Super Walmart, as well as Planet Fitness and Marshalls, and is just west of I-95.

Partners in Fort Lauderdale-based Merrimac Ventures are involved in over $3 billion of projects, including the Four Seasons Hotel and Private Residences Fort Lauderdale, The Gale Boutique Hotel and Residences, Paramount Fort Lauderdale Beach, Broadstone Oceanside in Pompano Beach and the Flagler Village Hotel, according to its website.

In April 2019, Motwani won city approval to build a 34-story, 246-unit apartment building in Fort Lauderdale that will target older tenants.

Centennial Bank is a regional bank based in Conway, Arkansas, that has become one of the more active construction lenders in South Florida. The bank is a lender to developer Moishe Mana, who is seeking to redevelop downtown Miami’s historic Flagler Street area.

Why all the kids suddenly want to become industrial brokers

It’s a good time to be an industrial broker. Just ask them. (Credit: iStock)

It’s a good time to be an industrial broker. Just ask them. (Credit: iStock)

Jeremy Liebler spent four years working in sales and marketing at Ford Motor Company before he made the switch to real estate. He could have looked for work as a junior staffer on a top-agent team, where someday he might appear on an episode of “Million Dollar Listing: New York.” Or he could have put in the grueling hours needed to one day broker a trophy office tower deal in Manhattan, a la Darcy Stacom or Doug Harmon. But he chose what has traditionally been a far-less glamorous option.

Jeremy Liebler of JLL

Jeremy Liebler of JLL

“It really seemed like industrial had the most runway and growth,” said the 29-year-old JLL broker, “so I thought that would be a good place to be for a few years – for at least the five-year plan.”

Liebler is among the growing contingent of brokers in the tri-state area who are eschewing the flashier, more traditional corners of brokerage that had long been the training grounds for thousands of ambitious agents. Instead, they’re touring warehouses in gritty corners of New York, New Jersey and Connecticut; frantically texting investors of all shapes and sizes; and closing deals in under a week.

From left: Blackstone's Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

From left: Blackstone’s Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

Few things are more exciting in real estate than money, and for many brokers, industrial is where the money is.

Joshua Kleinberg of Cushman & Wakefield

Joshua Kleinberg of Cushman & Wakefield

“Who would have thought some young kids out of college would come in and say, ‘We’re going to be industrial brokers in the outer boroughs,’” said Joshua Kleinberg, an industrial broker at Cushman & Wakefield. “Five years ago, those guys were all wanting to be retail brokers. Before that, they were all wanting to be office brokers. The young guys coming out of college right now all want to be industrial brokers.”

Need for Speed

Thomas Donovan of B6 Real Estate Advisors

Thomas Donovan of B6 Real Estate Advisors

Thomas Donovan, an industrial broker at B6 Real Estate Advisors, was at a low-slung, 5,000-square-foot warehouse in Woodside, Queens in January 2018 when he got word from the client: name the seller’s asking price so the investors could close as soon as humanly possible.

“They waived all due diligence and just said, ‘I’ll close it next week as long as I know it’s mine,’” he said. “The 5- to 10,000-square-foot spaces for sale were that hard to come by.”

Moving that quickly is oftentimes the only way a company can ensure it gets the industrial property it really wants, brokers said.

Adam Citron, an industrial broker at JLL, said high demand has made it much more common for buyers to settle on their third or fourth choices for warehouses.

“It doesn’t always mean it’s the fourth best out of four choices,” he said. “It just means that new opportunities come along often, but they also are leased or sold just as often.”

This happened last year when a large New York City-based nonprofit hired JLL to find a suitable industrial space. While JLL was ultimately able to find something for the nonprofit, it took several failed efforts.

“There was likely a minimum of three other pursuits that had not gone the way that we wanted them to go, given market availability,” he said.

Pound the pavement, cash the check

High demand has changed the range of the client base and the pace of deals, but brokers still rely primarily on tried-and-true techniques – door knocks, phone canvassing and existing client referrals – to land assignments and win new business.

CenterPoint CEO Bob Chapman, 101-01 Avenue D (top) and 103-00 Foster Avenue (Credit: Google Maps)

CenterPoint CEO Bob Chapman, 101-01 Avenue D (top) and 103-00 Foster Avenue (Credit: Google Maps)

And the brokers make their money in fairly standard ways as well, earning fees and commissions that top out around 5 percent, but tick down on much larger deals.

Industrial developers rely on broker counterparts to not just know the market, but to understand supply chains and potential new uses of space.

“We’re getting more sophisticated tenants, and the leasing process has also gotten more complicated, so we’re busier,” said Kleinberg. “We’re dealing with more institutional ownership.”

The rise of the industrial broker coincides with the phenomenal growth of e-commerce and the need for “last-mile” warehouses on the edges of major urban centers.

In 2014, national sales volume for industrial assets was $50.4 billion, according to research by Newmark Knight Frank. In 2019, that number exploded to $112.1 billion. Locally, demand has also roughly doubled. In 2014, industrial volume in the New York metropolitan area was $4.6 billion, but it rose to $8.4 billion last year, according to Newmark.

New York City alone saw $1.7 billion worth of deals across 296 industrial properties last year at an average price of $393 per square foot, which all marked significant increases from 2018, according to Cushman & Wakefield. Vacancy rates for industrial properties in the outer boroughs were all low during the year’s fourth quarter, ranging from just 3.1 percent in Staten Island to 5.4 percent in the Bronx, the firm reported.

The vacancy rate in Long Island was similarly low in the fourth quarter at 4.8 percent, and it was even lower in New Jersey at 2.8 percent, according to Cushman. New Jersey’s Middlesex County saw the most leasing activity by a wide margin at about 13.3 million square feet.

The trend has extended far beyond the New York metro area. Availability rates for industrial space across the country was just 7.2 percent as of the fourth quarter of 2019, according to CBRE.

Brad Pope of JLL

Brad Pope of JLL

“Twenty-five years ago, it wasn’t a very sexy topic,” said Brad Pope, a JLL industrial broker based in Atlanta. “[But] there’s always demand where there’s money, so if there’s money to be made, people will show up.”

You can call it the Amazon effect. The online retail giant’s insatiable desire for warehouse space has helped transform a formerly niche market into one that young brokers cannot ignore, according to Pope.

“I just fell into this business by accident,” he said. “Today, pretty much every business student in college is aware of Amazon’s supply chain. It just wasn’t the case 25 years ago.”

Kevin Dudley of CBRE

Kevin Dudley of CBRE

However, those trying to break into the industrial brokerage game might now find themselves caught in a catch-22, according to Kevin Dudley, an industrial broker at CBRE. They want to put together industrial deals because industrial properties are so popular, but because industrial properties are so popular, they will likely have a harder time finding vacant assets to sell.

“It’s a tough industry to break into right now because the vacancy rate in top markets like New Jersey is below 2 percent,” he said. “When I started, we were at like 9 percent in New Jersey. There was a lot of opportunity.”

And it isn’t just younger brokers who are paying more attention to the industrial market these days. Kleinberg said he now faces competition for properties from companies both large and small, which was not the case at the beginning of his career.

“When I started, the JLLs weren’t showing my properties,” he said. “Now, from the mom and pops to the multinational companies, everybody wants a piece. Everybody wants to get involved with industrial.”

No end in sight

Most industrial brokers did not solely attribute the popularity of warehouse properties to the e-commerce boom, noting that other factors ranging from a strong economy to a lax regulatory environment compared to other types of properties played a role as well.

But there was near universal agreement that it had given a massive boost to the industry. This is especially true given that online retailers generally need a very large amount of space compared to other types of clients, according to Pope.

Prologis CEO Hamid Moghadam and 18-51 Flushing Ave. (Credit: Google Maps, iStock)

Prologis CEO Hamid Moghadam and 18-51 Flushing Ave. (Credit: Google Maps, iStock)

“It takes two-and-a-half to three times the amount of warehouse space to support the same sales to consumers on the e-commerce model versus the brick and mortar model,” he said, “so as e-commerce takes a larger and larger share of retail sales overall, the demand for warehouse space increases exponentially.”

E-commerce has shifted the way companies view industrial properties as well, brokers said. They are no longer just looking for a property where they can store their goods but for a property that will serve as a key asset in their business model.

“People aren’t just looking for warehouses,” Dudley said. “They’re looking for things like network optimization and supply chain and how that fits into the whole piece.”

“If you can’t deliver your goods to anywhere in the world for a reasonable cost in a timely fashion,” he continued, “then it doesn’t matter how great of a product you have.”

Kyle Eaton, an industrial broker at Newmark, said he is “100 percent busier” today than he was even just a few years ago, and while e-commerce may not be the only reason for this, he expects the sector to stay busy for the foreseeable future.

“As long as people are shopping online and e-commerce stays healthy,” he said, “this is going to continue.”

Cannabis legalization drives demand for warehousing and retail: study

Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Real estate in states where cannabis use is legal is in high demand compared to states where use is illegal. (Credit: Pixabay)

Green makes green, apparently.

Investors can’t get enough warehouse, retail, and land in states that have legalized recreational cannabis use, according to a National Association of Realtors study first reported by Yahoo Finance. NAR surveyed 600 commercial brokers across the country last fall for the study.

Generally, the study found that demand was higher for those property types in states that legalized before 2016 than states that legalized after 2016 and demand was higher in both those categories than in states where cannabis use is illegal.

Investors have poured money into real estate in states with legal recreational use. Some investment firms are opening offices and making moves in states where legalization seems on the horizon.

Warehousing is especially hot. It’s used both for storage and growing cannabis. Compared to 2017, last year demand increased for warehouse space in 42 percent of markets where recreational cannabis has been legal for more than three years — Colorado, Oregon, Washington, and Alaska.

Demand increased 34 percent in states that legalized cannabis post-2016. Demand in states without recreational legalization increased by 18 percent. Disparities in demand for land and retail storefronts between those states was less dramatic.

Katie Barthmaier, CEO of cannabis-focused real estate investment trust Green Acreage, said that higher values correlate with higher barriers for entry.

“It is very important to understand the supply and demand, and the regulatory dynamic, in each state. Focusing on states with higher barriers to entry makes a license more valuable and makes that real estate more valuable,” she said. [Yahoo Finance] — Dennis Lynch

Forget the Forever 21 auction: Simon Property Group, Brookfield to buy retailer

Forever 21 cancels auction (Credit: Getty Images)

Forever 21 cancels auction (Credit: Getty Images)

In the end, Forever 21 had no choice.

The retailer agreed to an offer of $81 million from a group of buyers including Simon Property nGroup and Brookfield Property Partners, the Wall Street Journal reported Monday. It scrapped an auction after receiving no other qualified bids.

A judge will consider approval of the sale in a Delaware court Tuesday. Forever 21 filed for bankruptcy in September. Last week, a court filing indicated that the retailer had struck a stalking-horse purchase agreement with Simon, Brookfield and brand licensing firm Authentic Brands Group.

The chain, which was controlled by its founders, had expanded its footprint to 800 stores in recent years, even as other retailers were cutting back.

Forever 21’s assets include its ecommerce platforms and brands such as beauty store Riley Rose. Other landlords among its creditors include Vornado Realty Trust, Macerich and Unibail-Rodamco-Westfield.

Earlier Monday, Simon announced it was buying an 80 percent stake in Taubman Centers, the $2 billion mall company run by the Taubman family, which held off Simon’s hostile takeover bid with Westfield in 2003. [WSJ] — Erin Hudson

Warren Buffett’s grandson and the art of Opportunity Zone social impact investing

Howard W. Buffett (Credit: Getty Images)

Howard W. Buffett created a software tool to measure an Opportunity Zone’s social and environmental impact. (Credit: Getty Images)

The grandson of legendary investor and billionaire Warren Buffett is getting into Opportunity Zones, but in an unusual way.

Howard W. Buffett is rolling out a software tool that measures an Opportunity Zone investment’s potential social, environmental and economic impact. Through his advisory firm, Global Impact, Buffett developed the software, “Impact Rate of Return,” with financial technology company NES Financial.

The project comes at a time when the federal Opportunity Zone program is under investigation by the Treasury Department into allegations it has provided a windfall for wealthy developers looking to build luxury real estate projects. The program’s intent was to spur development in thousands of distressed areas across the country.

So far, the Opportunity Zone legislation does not have a standard to judge whether a project in a designated zone is actually creating jobs or investment in the community, which has been a center point of the criticism. In his State of the Union address on Tuesday, President Trump sidestepped the investigation, and hailed the program as an unqualified success.

Buffett’s reporting tool, according to the firm, tracks an Opportunity Zone project’s location, development type, census tract and investment size, then tabulates the data into one number.

Buffett is rolling out the software across 67 Opportunity Zone investment funds.

Buffett, 36 and an associate professor of international and public affairs at Columbia University, said in a statement that he hopes the software “will ensure that funds achieve their impact objectives in communities where they’re needed most.”

Reid Thomas at NES Financial, said “investors increasingly care about the impacts that their investments make.”

Once a niche submarket, social impact investing or “do-good” investing has taken off in recent years. Goldman Sachs is pledging $750 billion over 10 years to invest in sustainable finance, which includes clean energy and access to health care. Some of the same investors, like Goldman, are also investing heavily in Opportunity Zones or setting up funds north of $500 million.

The Opportunity Zones program allows investors or real estate developers the ability to defer or forgo paying capital gains taxes by investing in one of the 8,700 designated Opportunity Zones. The biggest tax break comes to investors who hold their investment in the Opportunity Zone for at least 10 years.

Over the past year, the program has also been mired in controversy after reports showed how wealthy developers lobbied for certain U.S. census tracts to be included as Opportunity Zones. In one example, a 700-acre industrial development in Nevada — part-owned by billionaire financier Michael Milken — became eligible for a tax break after the Treasury Department overrode its own rules to designate the area as an Opportunity Zone.

The scrutiny, however, is not scaring off investor interest. Opportunity Zones investment has surged in recent months thanks in part to the government’s release of its final set of regulations meant to provide investors and developers with more clarity. Close to $2.3 billion was put into Opportunity Zone funds between early December and early January, according to a survey from accounting firm Novogradac, a 51 percent increase over the prior month.

Where to next? Inside Eastdil Secured’s global expansion

Roy March

UPDATED February 3, 2:48 p.m.  Over Kobe steaks at the Michelin-starred Beefbar in Hong Kong, Roy March and Goodwin Gaw were chatting in hushed tones. They traded notes on their Ferraris and detailed their recent travels, but as the meal drew to a close, the longtime friends, March the chief executive of Eastdil Secured and Gaw the managing principal of Gaw Capital Partners, got around to one of the key reasons for their dinner: Eastdil’s expansion plans in Asia. For one, which local brokers should the firm poach from rivals?

“He leverages partnerships across the world,” Gaw said of March in a recent telephone interview. Gaw is a trusted confidante of March and has involved Eastdil in “30 to 40 transactions” over the years, including his company’s $325 million purchase of the sprawling Hollywood & Highland Center entertainment complex last summer.

“The topic of conversation is the industry and what part of the world to expand,” Gaw said. “We talk shop, his hiking expeditions and climbing.”

Led by the swashbuckling March, Eastdil Secured has been at the top of the commercial real estate heap for a decade-plus now. Whether he’s pressing the flesh at Davos, talking with government leaders in Riyadh, Saudi Arabia, or introducing former U.S. President George W. Bush at an invitation-only real estate conference in Park City, Utah, the floppy-haired 63-year-old puts himself where the power brokers are.

By extension, his firm’s list of deals reads like a timeline of the market itself: Eastdil brokered Blackstone Group’s $39 billion deal for the Equity Office portfolio in 2007, Anbang Insurance Group’s $2 billion deal for New York’s Waldorf Astoria in 2015 and a good chunk of trophy office trades in New York City and Los Angeles over the past decade. 

And after pulling off a management-led buyout of Eastdil from majority owner Wells Fargo, March and firm president Michael Van Konynenburg are in the midst of expanding the firm’s reach on a global scale.

With the turmoil in the Middle East, Brexit, Hong Kong and tit-for-tat saber-rattling with Iran, Eastdil is stepping forward to help major investors find new areas of investment in commercial real estate through newly opened offices in Germany, France, Japan, Singapore and elsewhere.

The executives want Eastdil to become “the firm of choice” for global wealth funds looking to diversify into real estate. For instance, Saudi Arabia is going from an oil-based economy to a more diverse one. After Eastdil’s management-led buyout last fall, March attended “Davos in the Desert” in Riyadh to meet with government and business leaders to network.

Formally known as the Future Investment Initiative, the annual forum is seen as a window into the Public Investment Fund of Saudi Arabia, one of the world’s largest sovereign wealth funds, which is seeking to develop sectors like health care, infrastructure and tourism. The Eastdil team has attended the event for the last three years — Van Konynenburg participated in 2017 and March in 2019.

Qatar also is of interest for Eastdil as it has become one of New York City’s biggest commercial real estate investors in recent years.

Essentially, Eastdil wants to play dealmaker as global turmoil creates new opportunities for investments in commercial real estate, which is seen as a source of stable income.

“We are spending a lot of time with these major investors as we assist them in identifying places to place that capital in a very low-yielding world,” Van Konynenberg said.

The management-led buyout of the majority of Wells Fargo’s stake in Eastdil was a victory for March, who has worked for the firm for more than 40 years. Wells Fargo bought Eastdil in 1999, and March became CEO in 2006 when Eastdil merged with Secured Capital. Since October, Wells Fargo has cut its stake in Eastdil to less than 10 percent.

The company is now free from the regulatory constraints of being owned by Wells Fargo. By bringing in investment from Guggenheim Investments and Singapore investment company Temasek Holdings, Eastdil is positioning itself to compete with its much larger rivals, the “big three” – L.A.-based CBRE, Chicago-based Cushman & Wakefield and Chicago-based JLL.

Eastdil has already dominated larger commercial real estate markets in New York City and other major cities for years. It was the No. 1 ranked broker for U.S. deals over $100 million from 2015 to 2018, according to data supplied by Real Capital Analytics.

In 2019, Eastdil completed more than $253 billion in global capital market transactions, which included both debt and equity placements, according to figures provided by the company.

One of the biggest players in the market has a long-standing relationship with the firm. Colony Capital, a $49 billion dollar real estate investment firm headquartered downtown, is lead by Tom Barrack, a close personal friend of President Trump with strong ties to the Middle East — Qatar in particular. The firm has had “a very long-standing relationship with Eastdil,” according to Colony President Darren Tangen. He pointed to Eastdil’s recent advisory involvement in the $5.7 billion sale of 60 million square feet of last-mile industrial assets to Blackstone as evidence of the firm’s heft in the field.

“I’ve been here for 18 years, and they’ve been involved in every single year in some deal,” Tangen said, noting the efficiency and speed by which Eastdil conducted a three-month-long auction to sell the industrial assets to Blackstone.

“That’s one of Eastdil’s strong suits, their ability to put together a transaction of this size,” Tangen said. “There are very few others who have the track record, percentage of market share and breadth of relationships to do these large transactions this quickly.”

Growing global reach

Eastdil has always been an anomaly, seeing itself not as a brokerage but as a real estate investment bank. With about 350 brokers, analysts and executive managers in 16 locations, the firm is dwarfed in head count by players like the publicly traded big three. Unlike those firms, Eastdil can’t rely on leasing arms to win new work. Expansion is key.

In recent months, the big three have been buoyed by record stock trading highs and strong earnings as observers are seeing these industry consolidators as posing a competitive threat to Eastdil. This growing industry power concentrated in the hands of few was viewed as yet another catalyst for Eastdil to break free from Wells Fargo’s regulatory grip and look to grow outside of the U.S.

But Eastdil stands out from the pack in some respects. A selling point, from its own perspective, has been its compensation structure, which resembles more of what a Wall Street investment firm offers.

Its brokers take home a salary and bonuses, not commission, and they rarely leave the company. Managers act more like advisers in high-end deals, working closely with financing specialists who can tap into global resources.

“A traditional commission system incentivizes people to only focus on the specific team working with a client, limiting the willingness to use the full resources of a the platform,” Van Konynenburg said. “Furthermore, the recapitalization has benefitted our recruitment pipeline, as it allows us to offer a larger platform with greater geographic presence to generate more revenue and, consequently, greater compensation opportunity than a commission-based shop.”    

The company took its first step outside of the United States in London in the early 2000s and has since added Hong Kong, Tokyo and Dubai. Since the management-led buyout was completed this fall, Eastdil has opened an office in Frankfurt, Germany.

The firm is also turning eastward.

“We will grow our presence in Asia,” he said. “Especially given that Temasek is a shareholder and gives us a significant growth opportunity.”

He said other moves to open offices in the region include Seoul, South Korea, and Singapore, where Temasek is headquartered. It also has two  offices in Beijing and one each in Shanghai, Mumbai, India, Hanoi, Vietnam, and elsewhere.

The pace of expansion is speeding up, according to Van Konynenburg. He projected that over the next two to three years, the professional head count will hit 400 employees with another 125 administrative and operations employees, giving the firm a total workforce of 525. He doesn’t anticipate opening more offices in the U.S., where they currently have 10 locations.

Other real estate investment players are taking notice of Eastdil’s posturing outside of the U.S.

Paul Twardowski, who oversees the West Coast for real estate investment firm Hines, said his own Houston-based company is undergoing some restructuring within its ranks to reflect expansion in Asian and adjacent markets, including Australia.

“To some degree, with their new funding and their historically deep relations with investors across the world, Eastdil’s plans are in parallel with our own expansion in Asia,” Twardowski said. “I’d expect to overlap with them frequently in the future.”

Contrition for attrition?

As Eastdil moves forward, it is still recovering from setbacks of the recent past. The firm had ruled the New York investment sales market for three consecutive years until 2016 when top-producing New York brokers Doug Harmon and Adam Spies decamped for Cushman & Wakefield.

The impact is evident: The brokerage ranked third in The Real Deal’s most recent ranking of top investment-sales firms in New York, brokering about $5.9 billion worth of deals. But the firm had taken the top spot on the ranking seven years in a row from 2010 to 2016. And while Eastdil more than doubled its dollar volume from 2017 to 2018, the 2018 earnings are still a fraction of the $22.7 billion it closed in 2015.

March and Van Konynenburg bristle over any talk of the two brokers creating any lasting battle scars to the company after they left.

As of mid-December, Eastdil’s New York team had advised on over $10 billion of financing and sales of New York City assets and another $8 billion-plus in out-of-market transactions in 2019, Van Konynenburg said.

Over in L.A. County, the company reports that financings and sales were $14 billion in 2019. In all of Southern California, Eastdil saw a total of $18 billion in deals in 2019.

The company is currently strengthening its bench in New York — perhaps at the expense of L.A.

Van Konynenburg confirmed that one of Eastdil’s top brokers in Los Angeles is moving to the East Coast to boost the firm’s investment sales and debt placement teams in New York.

Jonathan Firestone, a managing director, has worked at Eastdil’s L.A. office for the past 18 years. The 43-year-old is a member of the management committee and started in the Manhattan office in January.

Van Konynenburg said that Eastdil tapped Firestone, who began his career in New York, “to further drive the firm’s growth as part of our new structure.”

The fallout from expansion

Some analysts say the move to go private by Eastdil may lead to a shakeup among its leadership and prominent departures to competitors.

“Going forward, you’ll definitely see some management changes and layoffs,” said Yousef Hafuda, an industry analyst with Morningstar. “We’ve not seen evidence of that yet.

“The push is for all players to be present in all geographies as much as possible,” he said of the big three. “I’d expect Eastdil to do the same, shifting to different geographies and different business lines.”

Van Konynenburg for one plans to stick to his knitting. He is betting it can prosper as an independent boutique operation even as its competitors are growing bigger and going public.

Meanwhile, he plans to focus on growing its technology and use capital to expand in the Sun Belt, Germany, France and Asia. “I do not see anything on the horizon for a material acquisition,” he said. 

Correction: A previous version of this story inaccurately stated Jonathan Firestone’s age.

Miami commission closer to issuing $85M in bonds for affordable housing

Joe Carollo (Credit: Getty Images)

Joe Carollo (Credit: Getty Images)

The Miami City Commission unanimously accepted the data of an affordable housing master plan created by Florida International University, during a special meeting on Friday.
However, city commissioners want to analyze the report’s suggestions on how to leverage $85 million in bond money for affordable housing to up to $6 billion, in order to build 32,000 affordable units over the next 10 years.

A couple of commissioners also balked at the idea of handing over $85 million to a “Miami Affordable Housing Finance Corp.” board, appointed by commissioners, as the report suggests.

Kevin Greiner, a fellow at FIU’s Jorge M. Perez Metropolitan Center that created the affordable housing report, said the finance corporation was actually suggested by city staff to make the process more efficient. “The issue going forward is one of scale, we need to ramp it up,” he told the commission.

Manolo Reyes and Kevin Greiner

Commissioner Manolo Reyes wanted to make sure that the city at least approves the data of the report that spells out the dire need that Miami has, as well as the fact that the median income within the city of Miami is significantly lower than that of the county. Reyes has been frustrated that Housing and Urban Development guidelines currently use Miami-Dade County’s area median income of $54,900. The city of Miami’s area median income was $33,999, and, as the report stated, the median income for renters citywide is $28,650.

The report, which cost the city $110,000, also points out that 57 percent of Miami households pay more than 30 percent of their incomes on housing, and that 1,286 affordable housing units are lost each year due to inflating land costs.

Accepting the report’s findings is critical for the issuance of $85 million in bond money, said Miami City Attorney Victoria Mendez.

At first, commissioner Joe Carollo advised against accepting the plan, even if it means delaying the bond money. He said he was suspicious that some of the data wasn’t accurate, and feared that the city of Miami will be hit with an adverse ruling from the Securities and Exchange Commission again. “The city has already had two major strikes,” Carollo said. “We get a third strike and it’s game over. Three strikes and you’re out.”

Carollo was suspicious because the median household income for renters for District 1, District 3 and District 5 were exactly the same: $22,760. The report also stated that District 3 and District 5 each had 20,854 units that were more than 50 years of age.

Edward “Ned” Murray, associate director of the Metropolitan Center, assured the commission that the data was taken directly from block by block data provided by the 2013-2017 census. Carollo relented after his colleagues agreed that the Metropolitan Center must turn over its raw data.

Carollo also questioned the report’s claims that it can leverage $4 to $6 billion with private loans, philanthropic donations, grants, and fees. He pointed out that the report claimed that $200 to $800 million could be raised by charging investors who leave their condos or homes empty most of the year an “empty unit fee.” Such a practice has been declared illegal in Florida, Carollo said.

Nevertheless, charging linkage fees to developers for the purpose of creating an affordable housing fund is legal in Florida, Greiner said. Through that method, between $200 and $800 million could be raised.

Finally, Carollo lamented that only a few paragraphs were devoted to creating homeownership housing in Miami. Carollo has proposed obtaining $250 million in loans and grants for such a project, which will be analyzed by city staff and an independent board of builders.

Reyes said he wants all the ideas to be analyzed by builders and financiers to see how feasible the recommendations truly are.

Dozens of affordable housing advocates, and developers, lined up to encourage the passage of the report. At the same time, developers pointed out that regulations that current zoning regulations make it impossible for smaller developers to build affordable housing on smaller lots. Complicating things further are long permitting times at the city, as well high fees for connecting sewer lines.

“Your permitting process is probably the most unfriendly process that there is,” said Albert Milo, senior vice president of Related Urban Development, the affordable housing division for the Related Group. “It is difficult for us larger builders. It is almost impossible for smaller builders. It’s impossible for them to wait because they’re trying to invest their money.”

Harvey Hernandez fights back against Airbnb

Harvey Hernandez (Credit: Airbnb and iStock)

Harvey Hernandez (Credit: Airbnb and iStock)

Harvey Hernandez’s development group is striking back against Airbnb after the short-term rental company alleged he committed fraud and siphoned money out of an apartment-sharing concept.

NGD Homesharing, led by Miami developer Hernandez, alleges in a countersuit filed Friday in Miami-Dade Circuit Court that Airbnb was actually the one operating in bad faith and caused delays and setbacks in opening its projects by going “radio silent” in communication.

“This is a classic case of a big corporate player attempting to misuse its size and strong-armed legal tactics to improperly usurp an innovative business,” Michael G. Austin of McDermott Will & Emery, LLP, who is representing NGD, said in a statement.

The lawsuit alleges that Airbnb is attempting to misappropriate NGD’s confidential business information, trade secrets and proprietary business methods for the benefit of Airbnb.

The suit stems from a partnership between Hernadez’s development group and Airbnb to offer Airbnb-branded apartments. Airbnb claims it invested $11 million in the initiative.

But the local developer and the home-sharing giant are now locked in a heated legal battle.

Last week, Airbnb filed suit against NGD Homesharing in Northern California, claiming Newgard was supposed to open at least seven of projects in 2019, including one in Kissimmee, Florida. But Newgard failed to open a single project in 2019, according to the suit.

Furthermore, Airbnb alleges that Hernandez siphoned off $1 million of Airbnb’s investment into another one of his condo projects, Natiivo in Miami.

Airbnb alleges Hernandez and his company tried to disguise the investment as a loan by producing fraudulent and backdated documentation that showed Hernandez as the signatory on behalf of both borrower and lender.

Hernandez’s development group’s most recent lawsuit disputes that the loan was illegal. As the sole manager of NGD, Hernandez was allowed to make the $1 million loan without Airbnb’s consent or authorization under a previous agreement, Austin said in a statement.

Airbnb did not immediately return a request for comment.

In its suit, Airbnb demands the return of its $11 million investment and wants out of its contract.

It is not the first time Hernandez has faced major legal issues with his real estate developments.

In 2016, Hernandez’s development company was sued over a failed robotic car garage he installed at the luxury condo tower Brickell House in Miami. In September, a Miami-Dade County judge awarded the Brickell House condo association $40.6 million from the development group after the technology malfunctioned and left residents without a working garage.

Why institutional investors are now in love with Nordic real estate

Stockholm, Sweden (Credit: iStock)

Stockholm, Sweden (Credit: iStock)

Institutional capital is piling into Nordic real estate as investors hunt for returns.

The $49 billion or so invested in real estate last year in the north European region — Sweden, Norway, Denmark, and Finland — was the most ever recorded and appetites appear to be just as strong this year, according to Bloomberg.

Linus Ericsson, CEO of Jones Lang LaSalle’s Swedish outfit said that demand is coming from deep-pocketed investors like pension funds. His firm hired three new senior advisors in the region this month.

“They have massive amounts of money, and the bigger the better,” he said.

Foreign investors were involved in a third of transactions by value last year and this year some of the world’s biggest investors are planning to expand their operations in the region, even as some worry that Europe’s real estate market could be approaching a bubble.

New York-based Neuberger Berman is opening an outpost in the region, along with Goldman Sachs and a Luxembourg-based entity backed by the Qatari royal family.

So-called hybrid bonds — designed either to convert to equity or absorb losses — are growing in popularity with real estate firms in the region looking to raise money, largely because they’re cheaper than equity.

In 2018, only one real estate company offered a hybrid bond of benchmark size, but last year three did. In total, Nordic real estate companies issued $1.5 billion in hybrid debt last year.

The influx of capital has caught the eye of domestic regulators in Sweden and Denmark, where interest rates have been below zero. The former’s Financial Supervisory Authority told banks to build capital against potential losses and Denmark’s regulatory body wants to ensure lenders don’t get lax with credit standards. [Bloomberg] — Dennis Lynch