5 Unique Spa Treatments on the Beach

5 Unique Spa Treatments on the Beach

Fall calls for rest and relaxation. And with these five new, state-of-the-art spa treatments, you can be assured that your journey to serenity will be nurturing and revitalizing. Between a sal…

EB-5 extended again — until after midterm elections

EB-5 extended again — until after midterm elections

(Illustration by Isabel Espanol)

The EB-5 program, which was set to expire at the end of this month, has been extended until the beginning of December.

The controversial visa program, which was due to reach the end of its six-month extension period on Sunday, Sept. 30,  has been reauthorized through Dec. 7.

President Trump signed the extension Friday at noon, as part of a spending package to avoid a federal government shutdown. The U.S. Immigration Fund, a regional center that has raised money for EB-5 projects, first announced news of the extension.

A favorite of New York developers as a means of raising cheap capital from overseas investors, the EB-5 program was salvaged in March when it was included in a federal omnibus bill. The program gives green cards to foreign investors in exchange for a $500,000 investment and has seen a series of short-term extensions.

“This time around, there are zero chances for a longer-term legislative solution,” said Daniel Lundy, an EB-5 lawyer at Klasko Immigration Law Partners. “Nobody’s working on it as far as we know. The stakeholders are still interested, but the usual suspects in Congress are not talking about it.”

The EB-5 program has also been controversial, with Sen. Chuck Grassley of Iowa one of the most outspoken critics. Developers and industry players have said the senator’s failed EB-5 Reform Act would have damaged the industry. It would have upped the minimum investment amount and set aside more than 1,000 visas for projects in rural areas.

“I suspect that sometime next year we might have regulations from USCIS that address the investment amounts, eligibility requirements,” Lundy said, “and some of the compliance and integrity measures that have been in previous drafts of the bill.”

Keith Larsen contributed to this report.

Caroline Vreeland on Music, Modeling, Miami & Honoring the Family Name

Caroline Vreeland on Music, Modeling, Miami & Honoring the Family Name

How Caroline Vreeland became the gutsiest scion of fashion royalty while honoring her lineage, cherishing her body and bringing an unapologetic sexiness to the 305.

When Caroline Vreeland (ne…

Next stop IPO? After $400M raise, Compass eyes hypergrowth

Next stop IPO? After $400M raise, Compass eyes hypergrowth

From left: Masayoshi Son and Robert Reffkin (Credit: Getty Images and iStock)

A war chest of $1.2 billion gets you one step closer to that opening bell.

Following the news of Compass’ $400 million funding round led by SoftBank and Qatar Investment Authority, sources close to the company said it is looking to go public within 24 months. Such a move would represent a payoff for investors who’ve bet $1.2 billion on the residential brokerage since it was founded six years ago. But to get that coveted stock ticker, experts said, Compass needs to see serious revenue growth, fast.

“On the one hand, traditionally this round would suggest an IPO is imminent,” said one investor active in the proptech space. “On the flip side, I don’t know what their revenues look like. If they’re not high enough, how could they justify it?”

“Their [investors] only exit option now is IPO or bust,” added Zach Aarons, co-founder of MetaProp, a real estate tech accelerator.

Over the last 12 months, Compass has raised nearly $900 million, from the likes of SoftBank and QIA, for a total of $1.2 billion. That’s the most venture capital any brokerage has ever raised — by a great distance — and values the firm at $4.4 billion, well more than the publicly traded Realogy ($2.5 billion), parent company to Coldwell Banker and the Corcoran Group.

On Thursday, Compass said the new round would accelerate its plan to reach a 20 percent market share in 20 U.S. cities by 2020. The firm also plans to open its first international office within the year.

In an interview with Techcrunch Thursday, Compass co-founder and chairman Ori Allon did not specify whether the firm was profitable.

“We are in a strong financial position and continue to heavily invest in growth,” he said.

If Compass does end up going public soon, it stands to benefit from a booming IPO market.

During the first half of the year, 120 U.S. companies raised $35.2 billion by going public, the highest level since 2004, according to Dealogic, a financial markets platform. And companies that went public this year are trading, on average, 22 percent higher than their IPO price.

But older real estate stocks — including Realogy, RE/MAX Holdings and even Redfin, which went public last year — have seen stock prices stutter since the beginning of the year. That’s bolstered critics of Compass, who for years have said its valuation is not in line with brokerage valuations (which are typically a multiple of EBIDTA).

“There is nothing I’m aware of — at all — that justifies that [valuation],” said Steve Murray, founder of data and research firm Real Trends. “They’re saying Compass will one day become a giant in the business and produce substantial returns. As I sit here today, I question whether they can ever produce results that would justify a $4.4 billion market valuation.”

He pointed out that Realogy — which has a $2.5 billion market cap — sold 1.5 million homes in 2017 valued at $508 billion. That generated $6.1 billion in annual revenue, with a net income of $431 million. According to Compass, it is on track to generate $1 billion in revenue this year, on $35 billion in sales.

Compass has calculatedly avoided defining itself as a residential brokerage — though brokering real estate is still its main source of revenue — and says it is a technology company that’s building a brokerage platform and tools to improve a friction-filled business.

“The foundation of Compass today is technology and will only continue to be more so in the future,” Robert Reffkin, the company’s CEO, said Thursday on NBC’s Squawk Box.

Until now, Compass hasn’t been in a rush to go public. Wall Street can be far less forgiving than private investors, particularly on metrics such as profitability. And being public means you’re judged far more on real-time performance, not on projections, run rate and half a dozen other metrics that startups like to quote.

In a blog post earlier this year, Redfin CEO Glenn Kelman described a harrowing, two-week roadshow to drum up investor support last summer.

“The whole IPO process has historically been a coronation, but several recently turned into a beheading,” he wrote. “The world has begun to wonder if any Internet company can compete with Facebook, Google and Amazon, and if this new generation of companies can surpass the billion-dollar price-tags put on them in a private sale.”

For Compass, SoftBank’s initial investment in December 2017 set tough expectations for how quickly the firm could grow.

“They expect you to completely dominate the market,” Aarons said this summer of the Japanese investment firm. SoftBank, he added, stacks the deck in favor of its portfolio companies, but in return expects that they take the whole market.

Compass has been racing to do just that, gobbling up firms across the country, notably Pacific Union International, a $14 billion firm that is a big player in California. It’s planning to launch 13 tech tools this year, including a new customer relationship management system, and it has announced new forays into commercial brokerage, title and escrow, and tech licensing.

On Thursday, one brokerage chief anxiously predicted that the new funds would mean Compass will become even more of a recruiting force — it’s been able to hurt competitors by bringing over their top talent.

“This is going to be a killer for us,” the CEO said.

Although Compass as a whole isn’t yet profitable, sources said Redfin’s IPO proved that is not a prerequisite for going public. But showing enough growth is, and that’s where Compass’ 20:20:2020 plan comes in.

To get a sense of just how quickly it’s moving, consider this: The brokerage had 4,765 agents nationwide one month ago. Today, the number is 7,000.

Justin Wilson, the SoftBank executive who sits on Compass’ board has said previously that the Japanese conglomerate has patient capital — though it will ultimately seek a return.

“It’s not that we’re going to invest and hold forever,” he said. “But we are very aligned in our vision and mission to support entrepreneurs and [back] what they think the right outcome is for the business.”

That sentiment apparently drove the latest round, which was led by SoftBank and QIA, along with Wellington, IVP and Fidelity.

“Real estate is the largest asset class on the planet — and an enormous white space for investment opportunities,” said Jeffrey Berman of venture-capital firm Camber Creek. “I think this latest round reflects that perspective.”

Five Unique Spa Treatments on the Beaches

Five Unique Spa Treatments on the Beaches

Fall calls for rest and relaxation. And with these five new, state of the art spa treatments, you can be assured that your journey to serenity will be nurturing and revitalizing. Between a Sal…

Subscribers: Here’s the info for tomorrow’s call at 2 p.m.

Subscribers: Here’s the info for tomorrow’s call at 2 p.m.

Tomorrow at 2p.m. (EST)/11 a.m. (PST), subscribers will get an inside look at our fall issue’s blockbuster cover story, “See no evil: How a culture of secrecy boosts South Florida’s condo market.”

Call-in number: +1-510-338-9438
Access code: 629 304 407

TRD’s editor-at-large Hiten Samtani will talk to reporter Keith Larsen about how the story took shape, the reporting hurdles along the way and some of the details that did not make it into the final cut.

What are your burning questions about dirty money in real estate? Email us your thoughts at subscribercalls@therealdeal.com or tweet at us.

Mystery PAC shakes up convention center hotel campaign with ads warning ‘mega-traffic’

Third Horizon Film Festival 2018 focuses on documentaries from our Caribbean neighbors

DJ Khaled buying Miami Beach home for $26 million

The new Miami Beach home of DJ Khaled includes a private dock on Indian Creek.

Khaled is a prolific music producer and recording artist who has worked with practically every big name in the hip-hop and R&B fields, including Jay-Z, Beyoncé, Nicki Minaj, Drake, Pitbull, Lil Wayne and Mary J. Blige.. He has released 10 albums, with his 11th scheduled to drop sometime in October.

Khaled is also a formidable social media presence, with more than four million Twitter followers, and known for having livestreamed the birth of his son Asahd on Snapchat in October 2016.

DJ Khaled unveiled a new line of home furnishings branded “We Are the Best Home” at El Dorado Furniture in August.

In August, Khaled launched a new line of home furnishings, called “We the Best Home,” with El Dorado Furniture. The name was spun off Khaled’s production/management company We the Best Music, which he launched in 2006.

Rene Rodriguez: 305-376-3611@ReneMiamiHerald
The view from the patio of DJ Khaled’s new Miami Beach home. The superstar recording artist is paying a reporter $25.9 million for the mansion.

Show me the money: Canadian, European investors increase stakes in South Florida RE

South Florida real estate has long been a haven for foreign investment, but for years, that meant South American money more than anything else.

Today, the region’s reputation as a mature real estate market is growing larger on the global stage, experts say, and South Florida is becoming more of an attractive destination for large institutional foreign investors from around the world. European and Canadian investors now account for a much bigger share of foreign investment in the residential and commercial markets in the tri-county region, according to a report by the National Association of Realtors (NAR) and data provided by Real Capital Analytics (RCA). And Asian countries remain engaged in the area. Singapore has been among the top five investors three times in the past three and a half years, and China accounted for the second largest source of foreign investment in 2016.

“There is capital that is coming out of markets like the Middle East, like Europe, increasingly they are viewing South Florida as a place to invest comparable to L.A. and New York, but with somewhat better pricing power,” said Ken Krasnow, Colliers’ executive managing director for the South Florida region.

Canada goes commercial

The largest foreign investor in the commercial space over the past two years has been Canada, which invested $389.3 million this year as of August 2018 and $775.6 million in 2017, according to the data.

Long attracted to South Florida residential properties in order to escape the dreary winters of the north, Canadians are showing interest once again in expanding into local commercial real estate.

“The residential and commercial investments are complementary, and you gravitate toward what you know,” said Jaime Sturgis, the CEO and founder of Native Realty Co., which specializes in leasing and investment sales in emerging markets throughout the tri-county area.

Glenn Cooper, president of the Florida-Canada Chamber of Commerce, added that Canadian investors are looking for bargains. “They are looking at buying a large number of units … they might even send a Canadian real estate fund down here to do rentals,” Cooper said.

Cooper said part of this growth could also be due to the emergence of Canadian banks in South Florida, including Natbank and Desjardins Bank, which now has four branches in South Florida. Having their local banks here has made Canadians more comfortable with investing in real estate in the area, Cooper said.

Another factor in recent developments in the Canadian- South Florida real estate equation could be the emergence of new Canadian companies in the area. Bombardier opened a Learjet facility at the Fort Lauderdale-Hollywood Airport, and Canadian pharmaceutical giant Apotex is planning to move its U.S. headquarters to Miramar next year. As more Canadian companies expand in the region, some hope that the increased exposure to South Florida will increase their real estate investment in the area.

However, the uncertainty surrounding the North American Free Trade Agreement could cause some Canadians to hit the brakes. President Trump has warned that Canada will be left out of any new free trade agreement if a “fair deal” with the United States is not reached. This could have huge ramifications for Canadian companies that do business in the U.S. since it would mean they would have to pay more in taxes to transport goods across the border.

For now, though, the region is enjoying the uptick in Canadian and European investment, which is set against a backdrop of a broader increase in institutional investment everywhere.

According to the research firm Preqin, as of August 2018, the number of global institutional investors who put more than $1 billion into commercial real estate was up 13 percent from the same period in 2017. “The bigger trend is that pure institutional capital … is really the driving force on the commercial space,” Krasnow said.

Last year, the German investment fund Bayerische Versorgungskammer (BVK) paid $283 million for 1111 Lincoln Roadand an adjacent property in South Beach, marking one of the biggest deals in Lincoln Road’s history. In total, Germans invested $317.3 million in commercial real estate in South Florida in 2017, according to the data.

Meanwhile, just five years ago, the second and third largest investors in South Florida commercial real estate were Argentina, at $120.3 million, and Brazil, at $39.1 million, according to data from RCA.

But in recent years, South American countries have dropped completely out of the top five when it comes to foreign commercial investment in South Florida, according to RCA data on commercial transactions of $2.5 million or more as of August 2018.

“Unless the money is already out of the country, [South American investors] are dealing with a dollar that is more expensive,” said Alan Lips, an attorney at the Miami-based law firm Gerson Preston.

Residential market

The same broader trends affecting foreign commercial real estate investment in South Florida are impacting the residential market. Currency devaluations have weakened the buying power for South American countries, brokers say, while there is more interest from Europe.

Although data from NAR shows that 46 percent of foreign residential investment in South Florida in 2017 still came from Latin America and the Caribbean, Canadian buyers made up 19 percent of non-U.S. buyers in South Florida’s residential market.

(Click to enlarge)

There’s more parity between the Canadian and U.S. dollar, which is appealing to Canadians; they may also be attracted to the local prices, which are looking better than those back home. U.S. home prices rose by 4 percent in the second quarter of 2017, according to NAR, while prices in Canada’s residential market rose by 11 percent over the same period.

Toronto, in particular, has some of the fastest rising real estate prices in the world. There, housing prices have risen 60 percent in the past five years, according to the Toronto Real Estate Board as reported by the Financial Post.

Real estate prices have skyrocketed in Canada’s biggest city in part because of an increase in Chinese investment there, which has helped to increase the average condo price to $972 per square foot in the downtown area, according to the Globe and Mail. Comparatively, luxury condos in downtown Miami have an asking price of $848 per square foot, according to Miami real estate consultancy Condo Vultures.

“Real estate is taking off in Toronto,” said the Florida-Canada Chamber of Commerce’s Cooper. “We are seeing a lot of Canadian hotel owners, investors and groups coming down here.”

Shahab Karmely, owner and CEO of KAR Properties, said that about 30 percent of the inquiries at his planned 2000 Ocean Condominium in Hallandale Beach have come from Canadian buyers. Many are very price sensitive, which is what draws them specifically to Broward County, he said.

Simon Mass, CEO of the Toronto-based brokerage the Condo Store, said that Karmely’s project has many features that are attractive to Canadian buyers, including the fact that the units will be fully finished.

“Canadians don’t want decorator-ready … they want to move in hassle-free and that’s going to be key for them to buy at preconstruction or under-construction sites,” Mass said.

Mass added that in the past six months, his firm has been approached by half a dozen South Florida developers “seeking to have their product marketed through our Toronto offices.”

Europeans have also taken a greater interest in South Florida’s residential real estate. European buyers made up 18 percent of all foreign residential real estate investment in the area last year, according to RCA.

Alicia Cervera Lamadrid, managing partner of Cervera Real Estate, said that about half of her foreign clients at Aston Martin Residences come from Europe. “For the first time, we are seeing an equal interest between South Americans and Europeans,” she added.

The French could also see an investment opportunity in South Florida housing prices, as those in Paris have soared in the past few years. In France’s capital city, housing prices have increased to more than 9,000 euros per square meter — which converts to about $900 per square foot — one of the highest rates ever in France’s history.

Henry Torres, founder of the Astor Companies, said that over the past year, he has seen an increase in French buyers at his planned 10-story Merrick Manor project in Coral Gables. “One of the things they like about Coral Gables is we have schools here that cater to the French,” Torres said, adding that the climate helps, too.

Ultimately, those watching the real estate market in South Florida say that the makeup of the foreign investors may shift, but the demand from elsewhere around the world will grow.

“People love to put money in America, and they want to put it in premier cities,” said Ed Easton, chairman of the Easton Group. “I do believe there is still a lot of money that would like to be here.”