Retail bankruptcies on pace to rival 2010: report

Retail bankruptcies on pace to rival 2010: report

Retail bankruptcies are on pace to surpass those filed in 2010, while store closings have already passed those from 2019, according to a report (Getty)

Retail bankruptcies are on pace to surpass those filed in 2010, while store closings have already passed those from 2019, according to a report (Getty)

It’s been a difficult year for retailers, and things may get worse before they get better: The number of bankruptcy filings by retailers this year could outpace those filed in the wake of the Great Recession.

As of Sept. 29, nearly 30 retailers filed for bankruptcy, leading to almost 6,000 store closures, according to a biannual bankruptcy report from BDO International, a financial services firm. That’s on pace to beat 2010, when 48 retailers filed for bankruptcy.

But this year has already seen one unfortunate record broken: Approximately 10,226 store closures were announced from January to mid-August, surpassing the record 9,500 stores that closed throughout 2019, according to BDO’s report.

This year is also unusual because many of those store closures are unrelated to bankruptcies: More than 15 retailers that have not filed for bankruptcy — including Macy’s, Bed Bath & Beyond and Gap — decided to shed at least 50 stores each, totalling more than 4,200 store closings.

In the pandemic-driven recession, apparel and footwear retailers have been among the hardest hit, with 10 bankruptcy filings accompanied by 2,368 store closings.

One notable example was Brooks Brothers, which filed for bankruptcy in July and is likely to be acquired by Authentic Brands Group and SPARC Group, according to media reports. Others include Neiman Marcus, which emerged from bankruptcy earlier this month, and J.C. Penney, which has been acquired by Simon Property Group and Brookfield Property Partners.

Home furnishing retailers came in as the second-most affected, with five retailers filing for bankruptcy and 1,433 store closings.

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Movers & Shakers: Interior designer joins Douglas Elliman team & more

Sofia Joelsson and Lee Ann Edwards

Sofia Joelsson and Lee Ann Edwards

Interior designer Sofia Joelsson joined Douglas Elliman.

Joelsson joined Elliman’s Carmenate/Duchon team, based out of South Beach. Joelsson has worked with developers who include David Martin of Terra, Marcelo Kingston of Multiplan Real Estate Asset Management and One Thousand Museum co-developer Louis Birdman.

Jonathan Eismann, a longtime broker with Lombardi Properties, joined Gridline Properties as a senior associate.

The Altman Companies hired Lee Ann Edwards as president of Altman Management Company, where she will lead business development and strategy. She previously worked at Riverstone Residential, Greystar and RE Carroll Management.

Elandis, a real estate ownership and property management subsidiary of the Libra Group, announced the launch of a joint venture with international asset manager M&G Investments. The joint venture will focus on acquiring and repositioning workforce multifamily communities across the Sunbelt region, particularly in states that include Florida, North Carolina, South Carolina, Georgia, Texas and Nevada.

RKW Residential hired Carlos Vilchez as its new chief operating officer. Prior to joining RKW, Vilchez owned a consulting practice. He was also previously an auditor at the accounting firm PwC before serving as chief financial officer of several companies.

RE/MAX Presidential announced it’s opening a new office at 19790 West Dixie Highway in Aventura. The space is expected to open Thursday, and is across the street from Aventura Mall.

Brigada de Asalto 2506 le brinda su respaldo a María Elvira Salazar

Brigada de Asalto 2506 le brinda su respaldo a María Elvira Salazar

Está por iniciar la rueda de prensa donde la Brigada de Asalto 2506 le brindará su apoyo a la candidata republicana María Elvira Salazar, para el Congreso de los Estados Unidos por el distrito 27 de la Florida. Por redacción MiamiDiario El evento será un pequeño acto en la sede del Museo de la Brigada […]

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Orion Real Estate founder buys waterfront Miami Beach home

Orion Real Estate founder buys waterfront Miami Beach home

Joseph A. Sanz & 190 S Hibiscus Drive, Miami Beach (Credit: Google Maps)

Joseph A. Sanz & 190 S Hibiscus Drive, Miami Beach (Credit: Google Maps)

The head of Orion Real Estate Group paid $6.3 million for a waterfront Hibiscus Island home in Miami Beach.

Joseph Sanz, founder and executive chairman of Miami-based Orion and Orion Investment and Management, closed on the 5,239-square-foot home at 190 South Hibiscus Drive via Lime Island 31, LLC. Jessica Molly Snyder sold the property.

Snyder and her then-husband Todd David Snyder bought the home in 2001 for $2.5 million, according to property records. The Snyder family sold an eight-bedroom, 12-bathroom estate in Miami Beach for $11.8 million last year.

The Hibiscus Island house was first listed in 2019 for $8 million and reduced to $7.3 million. It sold for about 21 percent off the original asking price.

Snyder was represented by Lourdes Alatriste with Engel & Völkers.

The seven-bedroom, seven-bathroom home, built in 1939, was renovated in 2016, according to the listing.

Miami Beach has seen its share of big sales in recent months. Over the past week, closings revealed a restaurateur sold a waterfront home for $8 million, former Ford Motor executive Jacques Nasser sold his Venetian Islands estate for $18 million and a luxury homebuilder bought a La Gorce Island home for $6.8 million.

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Biden vs. Trump: What’s at stake for real estate?

Joe Biden and Donald Trump

Biden’s $775B ‘caring economy’ plan would kill 1031 exchanges

Joe Biden went after one of the real estate industry’s favorite tax benefits last month.

The presumptive Democratic presidential nominee proposed his “caring economy” plan to  fund a child- and elderly-care spending platform, in part by closing a loophole used by many commercial property investors.

Biden proposed eliminating 1031 “like-kind” exchanges for investors with annual incomes greater than $400,000 as part of his plan to finance $775 billion in government spending over the next 10 years.

But real estate industry experts noted that efforts to eliminate 1031 exchanges have been made before. The reason the tax benefit still stands, they said, is because lawmakers recognize its positive impact on the economy.

“They’ve talked about getting rid of 1031s for years, so I’m not surprised it would be in the Biden plan,” said Stuart Saft, head of the real estate department at law firm Holland & Knight. “Whenever Congress looked at these things, it’s been preserved.”

Saft stressed that eliminating the exchange at a time when the real estate industry is reeling from the coronavirus would be a major blow to the struggling economy. “It would just pull the rug out from underneath a very huge part of the economy,” he said.

Biden said that his proposal, which would also limit investors’ ability to offset their income tax bills with real estate losses, would add millions of “shovel-ready” jobs to the economy — particularly for women and minorities.

“The way we pay for it is by rolling back unproductive tax cuts: some of the $2 trillion tax cut the president put through,” he said during a speech in Delaware in late July. “Closing loopholes. Unproductive tax cuts for high-income real estate investors while ensuring high-income earners pay their tax bills.”

Like-kind exchanges have been part of the Internal Revenue Code since 1921. They allow real estate investors to defer capital-gains taxes when they sell properties by directing the proceeds into new investments, usually within a few months after the sale. But more than just deferring taxes, investors continually roll the gains into new properties, often in perpetuity — effectively eliminating those tax liabilities.

“In real estate, unlike in stocks and securities where you pay tax on your trading gains, you can just keep rolling over, so people do this for decades and decades,” Stephen Land of law firm Duval & Stachenfeld told The Real Deal in 2016.

Time Equities CEO Francis Greenburger said 1031 exchanges are “critical to the economic function of the real estate markets” and argued that efforts to cut them come from a lack of understanding about their economic benefits.

“Somebody who’s talking about eliminating these doesn’t fully comprehend why this is a good thing,” he said. “They’re just looking at it superficially.” —Rich Bockmann

Sizing up Kamala Harris’s real estate record

Sen. Kamala Harris

While serving as California attorney general, Kamala Harris could have gone after Steve Mnuchin for alleged mortgage fraud at his company, OneWest, but didn’t.

OneWest foreclosed on more than 36,000 California homeowners in the years following the Great Recession. Harris’ office conducted a preliminary investigation, and deputy attorneys general recommended the state take action, but no charges were brought.

On other occasions, however, Harris, who was recently named by Democratic presidential nominee Joe Biden as his pick for vice president, has taken the battle to the industry.

In 2012, she negotiated the second-largest civil settlement in U.S. history, for predatory practices that contributed to the foreclosure crisis. It secured $25 billion for homeowners from the country’s biggest lenders, including Bank of America, Wells Fargo, JPMorgan Chase and Citigroup. Even though the banks had agreed upon a far lower amount with the Obama administration and other states, Harris walked away from the table until they agreed to pay billions of dollars more.

Harris is the first African-American female vice presidential candidate — in a year when longstanding racial tensions have roiled communities. The police killing of George Floyd unleashed a public outcry and nationwide protests against police brutality. The haphazard federal response to the Covid-19 crisis has also given more force to criticism of President Donald Trump, whose Wall Street donors have mostly abandoned him in favor of Biden.

James Whelan, president of the Real Estate Board of New York, called Harris’ nomination an “exciting moment” that will impact generations to come. “In a country as diverse as ours, we must continue to make strides like these to include a broader spectrum of voices in every industry and every institution, including the highest office in the land,” he said in a statement.

A lot has happened since Harris threw her hat in the ring for the Democratic presidential nomination. She officially withdrew her candidacy on Dec. 3, 2019, and endorsed Biden three months later.

Her presidential platform, however, included points that may not sit well with real estate interests, including her position that “housing is a human right.” In November 2019, she and Rep. Maxine Waters introduced a bill that would invest more than $100 billion in affordable housing, including $10 billion to ease or eliminate zoning requirements.

Harris said she would pass legislation to provide a tax credit for renters spending over 30 percent of their income on rent and utilities, the level at which tenants are considered to be rent-burdened. She also supported a federal minimum wage of $15, which developers have said would drive up their construction costs.

Last year, she also teamed up with Rep. Alexandria Ocasio-Cortez — the subject of intense criticism from many in the real estate community — to eliminate the “one-strike rule” in public housing, a Clinton-era policy allowing residents to be evicted for violent or drug-related crimes. The legislation aimed to prohibit public housing authorities from denying people housing if they had a criminal record.

Harris has challenged Trump’s tax cuts, calling them a “trillion-dollar tax scam,” and said that she would reverse his 2017 corporate tax cut. And she joined 41 of her Democratic colleagues last year to argue against a capital gains tax cut, calling it an “illegal action that would defy longstanding Justice Department policy.”

She has proposed additional taxes on the financial sector, calling for a new tax on banks with more than $50 billion in assets. Many of New York’s largest construction lenders would fall into that category.

But while she may take largely populist political stances, Harris’ personal taste, at least as real estate goes, runs more to the posh. She owns a 3,500-square-foot pad in the upscale Brentwood neighborhood of Los Angeles, a property that Zillow estimates is worth $4.8 million. —Georgia Kromrei

Trump repeals HUD rule in bid to win over the ’burbs

In an apparent bid to gain votes in suburban areas, President Donald Trump announced in late July that the White House repealed an Obama-era fair housing rule.

In a press release announcing the measure, the Trump administration wrote that the new rule “eliminates the excessive burden put on local communities and gets rid of the top-down approach that dictated zoning for communities.”

The decision, which was preceded by a partial rollback, dismantled what remained of an Obama-era rule requiring localities to proactively assess segregation in housing. Among the requirements, localities had to answer a checklist of nearly 100 questions. Critics of the Housing and Urban Development rule called it onerous, while proponents of the previous measure said it was already too lax.

“The Trump administration had already taken steps to suspend the rule,” said Moses Gates, the Regional Plan Association’s vice president for housing and neighborhood planning. “But this definitely halts any kind of progress that was being made.”

Under the new rule, which the Trump administration called “saving our suburbs,” localities can certify they are in compliance with fair housing law without having to provide evidence or study the effect of zoning decisions on segregation.

“It’s just instituting what is already a de facto policy,” said Gates. “[Trump] is doing it because he’s getting politically desperate and is going back to the well of what he thinks works — being more and more explicitly racist.”

The ruling is of particular importance in wealthy enclaves in places like Long Island, suburban New Jersey and Westchester, which are often resistant to large-scale affordable housing that would allow more people of color to live in largely white communities.

Craig Gurian, executive director of the Anti-Discrimination Center, which brought a 2006 lawsuit to challenge restrictive zoning in Westchester County, said Trump’s change means “the national scourge of residential segregation will continue unabated.”

“It is well to remember that the social engineering involved here was the deliberate, decades-long policy of excluding African Americans from suburban neighborhoods,” said Gurian. “Remedying that wrong is what basic justice requires.”

A multi-year investigation conducted by Newsday found that real estate agents on Long Island routinely steered Black homebuyers away from white neighborhoods.

Multiple high-level affordable housing developers declined to comment for this story.

Racial bias and a preference for single-family homes, rather than multifamily apartments, often pits communities against affordable real estate developers, who must battle exclusionary zoning laws to complete their projects.

But New York Rep. Alexandria Ocasio-Cortez is seeking to block the Trump administration’s efforts. She recently proposed a pair of amendments to an appropriations bill that would prohibit federal funds from being used in accordance with any rules proposed under Housing Secretary Ben Carson.

“We must hinder President Trump’s efforts to segregate communities and to discriminate against Black and brown homeowners and renters,” Ocasio-Cortez said in a statement. “We cannot return to the days of redlining and white flight.” —Georgia Kromrei

President’s pledge to stop evictions offers no aid to renters

President Donald Trump touted in early August that he was “going to stop” evictions by issuing a moratorium as negotiations in Congress stalled a larger federal coronavirus relief plan.

“A lot of people are going to be evicted. But I’m going to stop it, because I’ll do it myself if I have to,” Trump told reporters. “I have a lot of powers with respect to executive orders, and we’re looking at that very seriously right now.”

He repeated that promise a few days later at another White House press conference.

But the president’s executive order only directs federal agencies to “consider” an eviction ban. The order provides no additional funding to renters, and does not change the fact that rent is due and many cannot pay.

“It’s toothless, at best,” Peggy Bailey, vice president of housing policy at the Center on Budget and Policy Priorities, told CNBC.

The White House is also reportedly looking into whether Trump can unilaterally extend the enhanced unemployment benefits that were part of the federal government’s pandemic relief legislation passed in March.

Democratic and Republican leaders are currently at an impasse over a relief package. The matter of evictions and the  $600-a-week unemployment benefits are major points of disagreement. Both measures have now expired.

Trump, referring to the impasse, told reporters that Democrats are “not interested in unemployment [and] evictions.”

The Democratic-controlled House of Representatives passed a $3.5 trillion aid package in May, while the Republican-controlled Senate introduced a $1 trillion package in late July.

The House’s stimulus plan would extend the enhanced unemployment benefits created in March, allowing unemployed workers to claim an extra $600 weekly. Republican leaders have argued for a reduced supplement as low as $200 per week, claiming the extra benefits discourage workers from returning to their jobs.

On Aug. 3, Trump’s Treasury secretary, Steven Mnuchin, and Chief of Staff Mark Meadows met with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer for negotiations over the relief package. —Dennis Lynch

Come Home to Italian Luxury at Mr. C Residences in Coconut Grove

Come Home to Italian Luxury at Mr. C Residences in Coconut Grove

Contemporary European elegance finds a home in Coconut Grove at the new Mr. C Residences.
Mr. C Residences’ Arquitectonica-designed tower faces the waters of Biscayne Bay surrounded by a…

Policía de Florida disuelve grandes fiestas universitarias

Policía de Florida disuelve grandes fiestas universitarias

La Policía de Tallahassee informó el domingo que disolvieron una fiesta en un complejo de apartamentos para estudiantes fuera del campus, en momentos en los cuales el contagio de COVID-19 aumenta en el campus. Por Redacción MiamiDiario De acuerdo al reporte de las autoridades policiales la fiesta involucró a unos 700 vehículos y más de […]

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Amazon grows HQ2 site near DC with hotel buy

Amazon grows HQ2 site near DC with hotel buy

Blackstone's Frank Cohen and Amazon CEO Jeff Bezos with the HQ2 site (Getty; Blackstone; Google Maps)

Blackstone’s Frank Cohen and Amazon CEO Jeff Bezos with the HQ2 site (Getty; Blackstone; Google Maps)

Amazon’s massive HQ2 development outside Washington D.C. may be expanding.

The e-commerce leviathan bought a Residence Inn by Marriott near the Arlington, Virginia site that’s earmarked for its second North American headquarters, the Washington Business Journal reported. Amazon plans to demolish the hotel.

The seller is an affiliate of Blackstone Group, which let the property go for $148.5 million. Blackstone purchased the hotel for $99.1 million last July, eight months after Amazon chose the area for its second headquarters.

The property is part of an 11.6-acre development known as PenPlace, which will be part of the second phase of HQ2 development. The rest of the site is still owned by JBG Smith Properties, though Amazon plans to acquire it once development plans are approved. Amazon has yet to submit plans for the PenPlace section of HQ2.

A company spokesperson said the development could have worked with the hotel there, but removing it would allow the company to build a “more robust” and “cohesive urban plan” with improved pedestrian circulation and more open space, according to WBJ.
Construction on the first phase of HQ2, on a site known as Metropolitan Park, is already underway. Amazon’s presence in the D.C. area has also boosted prices and activity in the local housing market. [Washington Business Journal] — Dennis Lynch

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Citing Covid-19 shutdown, Williams Sonoma and Pottery Barn want out of Lincoln Road

September 28th, 8:45am September 25th, 11:54pm

Gregory Prosser

Commercial Real Estate

The Lincoln at 1691 Michigan Avenue

As retailers struggle amid the pandemic, Williams Sonoma and Pottery Barn are taking a new tack, attempting to terminate their lease by alleging a government “taking.”

Claiming government shutdowns and restrictions are hampering their connected stores off Lincoln Road in Miami Beach, they are suing their landlord to break the lease agreement that amounts to nearly $800,000 per year, according to a recently filed lawsuit.

Williams Sonoma, which also owns Pottery Barn, sued New York-based Clarion Partners affiliate CLPF – Lincoln this month in Miami-Dade Circuit Court. The home furnishings company wants to break a lease agreement for 43,000 square feet of ground-floor retail space of an office building with a garage at 1691 Michigan Avenue, known as The Lincoln.

A Clarion Partners spokesperson declined comment. A Williams Sonoma spokesperson and the local attorney representing the company did not respond to requests for comment.

Clarion’s affiliate paid $109.25 million in cash for the ground lease of The Lincoln in 2016, records show. The six-story building was completed in 2003 and is connected to a 709-space parking garage.

According to the complaint, Williams Sonoma notified Clarion’s affiliate on June 11 that it was terminating the lease under a clause that the agreement is voidable in the event of government actions that impair the stores’ business operations, also known as a “taking.”

Williams Sonoma claims the forced closures of non-essential businesses during the initial months of the pandemic, and then precautionary measures enacted after the shutdowns were lifted have created a significant impact on retail sales.

Williams Sonoma has been unable to operate its stores at The Lincoln in a manner consistent with the material purpose of its lease, the lawsuit states. “The market for in-person retail sales in Miami Beach has not recovered to the pre-pandemic levels upon which the lease was based and is unlikely to do so,” the complaint claims. “The described effects of COVID-19 have utterly and irreversibly frustrated the purpose of the parties’ lease agreement.”

On June 17, the Clarion affiliate rejected Williams Sonoma’s intention to exercise the “taking” clause, the lawsuit alleges. Meanwhile, the home furnishings retailer states it has not missed any rent payments since March when the shutdowns began.

Williams Sonoma signed the lease in 2015 and agreed to pay a monthly rate of $64,446 based upon “Lincoln Road’s status as a premier shopping destination with heavy pedestrian traffic. Lincoln Road is walking distance,” the lawsuit states. “The number of visitors and the unparalleled popularity of the area.. were the dispositive factors in plaintiff’s decision to agree to pay nearly $780,000 annually in rents.”

Lincoln Road’s commercial real estate has taken a big hit during the pandemic. Embattled co-working space firm WeWork moved out of its 40,000-square-foot Lincoln Road location in August just as its landlord sued the company for nearly $20 million in unpaid rent. Independent bookstore Books & Books permanently shuttered its 950 Lincoln Road space after being there more than 30 years. And Miami Beach real estate investor Sam Herzberg filed eviction lawsuits against Diesel USA and Perry Ellis’ Original Penguin.

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Re-Introducing Milagro Select: Brand New Bottle, Same Exceptional Tequila

Re-Introducing Milagro Select: Brand New Bottle, Same Exceptional Tequila

Milagro Select stands by the philosophy that quality is the result of less, not more. That’s why they source only the highest-quality mature agave plants and finest American and French…