TJAC Development sells mixed-use portfolio near Boca Raton for $155M

Stateland Brown owner-brokers Ayal Frist and Dan Statlander with one of the properties, City National Bank Plaza at 7000 West Palmetto Park (Google Maps)

Stateland Brown owner-brokers Ayal Frist and Dan Statlander with one of the properties, City National Bank Plaza at 7000 West Palmetto Park (Google Maps)

TJAC Development disposed of four mixed-use office and retail plazas west of Boca Raton for $155 million, marking one of the largest commercial sales in South Florida this year.

Weston-based Titan General Partners acquired the 515,000-square-foot portfolio by buying an interest in the four limited liability companies TJAC originated to own the properties, according to Boca Raton-based Stateland Brown co-owner Ayal Frist, who brokered the deal with brokerage co-owner Dan Statlander. No deeds were recorded.

The portfolio includes roughly 17 buildings interspersed along Powerline Road from Glades Road to Southwest 18th Street, Frist said.

Florida corporate records show Titan General, as well as Carlos Ulloa and Debra Corchia, who are affiliated with Titan, became managers of TJAC affiliates TJAC Boca Grove, TJAC Palmetto Park, Boca Wharfside and Boca Medical Plaza in late February.

Frist and Statlander said Bahamas-based investment manager Holdun also bought a stake in the properties. The brokers declined to say how Titan General and Holdun divided their interest in the properties.

TJAC, founded and led by the Schwarzman family and based in Boston, focuses on student housing and mixed-use retail properties, according to its website.

Frist and Statlander said they worked on behalf of TJAC to assemble the properties from 2012 to 2016. TJAC paid a total of $78 million.

The portfolio sale includes the seven-building Fountains Center, at 7000-7700 West Camino Real, which spans 15 acres. Built in 1978 and 1981, it includes a building with two banks and a medical office; two mid-rise office buildings; and four more buildings with a mix of office and retail. Property records show TJAC bought it for $16 million in 2012 from CB Camino Real.

The sale also includes the Grove Centre, at 21301 Powerline Road, which was built in 1983 on 3.5 acres. It has a one-story and a four-story office building. TJAC bought it for $11.5 million in 2016 from SF Partners, according to records.

Also, City National Bank Plaza, at 7000 West Palmetto Park, which includes a 132,598-square-foot, mid-rise office building with Starbucks and McDonald’s outparcels. The office building includes a City National Bank of Florida office, several medical offices and restaurant space. It was built in 1986 on 7.3 acres. TJAC bought it for $37.6 million in 2016 from 700 West Palmetto I, records show.

Lastly, the portfolio includes The Boardwalk at 18th Street, at 6853-6909 Southwest 18th Street, which spans 10 acres and overlooks a lake. It has several medical offices, as well as a Carrabba’s Italian Grill with lakefront dining. TJAC bought it for $13 million in 2013 when the plaza was called Wharfside Village Shopping Center.

TJAC renovated the properties over the years. Frist and Statlander leased vacant space on behalf of TJAC and increased occupancy by 60 percent, Statlander said. Rents are in the low $20s per square foot for offices and in the $30s per square foot for retail, he said.

The portfolio had a 92 percent occupancy when TJAC sold it, and maintained its occupancy throughout the pandemic, Frist added.

In January, the Related Companies closed on its $282 million purchase of the Phillips Point office towers in West Palm Beach, marking the largest office sale in South Florida in more than a year.

More recently, an office building in Boca Raton at 6700 Northwest Broken Sound Parkway sold for $6 million to an affiliate of private equity firm AE Industrial Partners LP.

Also, investor CA Ventures paid $80 million for an apartment complex at 135 Northwest 20th Street in Boca Raton.

U.S. mall values fall 60% after appraisals

Many of the lower-tier malls that will be sold will likely be redeveloped into something else. (Getty)

Many of the lower-tier malls that will be sold will likely be redeveloped into something else. (Getty)

The suburban mall that you frequented as a teenager could now be worth substantially less than the dirt underneath it.

U.S. mall values declined 60 percent due to appraisals in 2020, according to an analysis by Bloomberg News. Across 118 shopping centers with commercial mortgage-backed securities loans, about $4 billion was lost after reappraisals caused by delinquencies, defaults or foreclosures.

The data suggests a grim outlook for many malls across the country as some of the largest mall owners, including Brookfield Property Partners and Simon Property Group, are increasingly walking away from underperforming properties and handing them over to their lenders.

In some cases, malls are being foreclosed on with almost no interest from outside investors. A recent foreclosure auction of a Simon mall outside of Atlanta yielded no bids despite a previous valuation of $322 million.

In Connecticut, a portion of a shopping center owned by Simon recently saw its value drop by 88 percent after an appraisal.

Many of the lower-tier malls that will be sold will likely be redeveloped into something else, according to industry experts.

“The orange tile and brown carpeting is just going to be torn down and plowed under and eventually trade at a price someone can build something else there,” Jim Costello of the research firm RCA told Bloomberg.

But it’s not just lower-tier malls that are in trouble: The valuation of Class-A malls fell by nearly half since 2016, according to a recent report by Green Street.

Mall traffic has dropped significantly across the U.S. because of Covid restrictions and consumer hesitation, which has accelerated the shift toward e-commerce that was already in place. Some retailers have also declared bankruptcy or stopped paying rent on their mall space, further squeezing operators.

[Bloomberg News] — Keith Larsen

Morgan Properties, Olayan America buy $1.75B multifamily portfolio

Mitchell Morgan and one of the properties (Morgan Properties)

Mitchell Morgan and one of the properties (Morgan Properties)

Morgan Properties and Olayan America have purchased a portfolio of 48 U.S. multifamily properties for $1.75 billion.

The seller was STAR Real Estate Ventures, a joint venture of El-Ad National Properties LLC and Yellowstone Portfolio Trust, according to a press release from Morgan and Olayan. It is Morgan’s largest acquisition since the Pennsylvania-based firm bought 95 multifamily properties for $1.9 billion two years ago.

The 48 properties have 14,414 units, including 2,566 outside Baltimore and 1,972 in the Tampa-St. Petersburg area.

The portfolio spans 11 states, including six where Morgan already owns multifamily properties: North Carolina, South Carolina, Illinois, Ohio and Maryland. The portfolio deal marks Morgan’s first acquisitions in Florida, Texas, Georgia, Louisiana and Michigan.

Morgan and Olayan plan to spend about $100 million on renovations and upgrades to the properties, the average age of which is 35 years.

Morgan Properties plans to open a regional office in Boca Raton, Florida, to help manage the portfolio. The acquisition also saw Morgan bring on 400 employees and create around 70 new corporate positions.

STAR Real Estate Ventures joins other multifamily landlords in offloading holdings recently. Radco has sold more than half of the 59 multifamily properties it has purchased over the last decade in order to build up some cash for what CEO Norman Radrow last fall called “a new and interesting cycle that will be coming next year.”

Miami-Dade resumes pre-pandemic evictions after unannounced February break

Miami-Dade Mayor Daniella Levine Cava (Getty, iStock)

Miami-Dade Mayor Daniella Levine Cava (Getty, iStock)

Miami-Dade County resumed executing writs of possessions for residential eviction cases filed before the pandemic, following an unannounced month-long break.

The police execute writs of possession, evicting residents or businesses from their properties. The move follows a final judgment in a court case.

Homeowners with federally backed mortgages are protected from eviction until at least March 31, per a federal moratorium from the U.S. Department of Housing and Urban Development.

On Nov. 13, former Miami-Dade Mayor Carlos Gimenez directed the police department to begin enforcing writs of possession for all cases filed on or before March 12, when the mayor declared a state of emergency. The policy continued under incumbent Mayor Daniella Levine Cava, who took office days after Gimenez’s order.

But by early February, Miami-Dade Police paused the service of writs of possession as the mayor’s office looked to clarify the policy, according to a spokesperson. That temporary change in policy was not announced in writing. The break ended on Thursday, the spokesperson confirmed.

In a court filing dated Feb. 2 for a foreclosure case dating back to 2015, the lender cited an “oral directive” from the mayor that led to the police refusing to execute a writ of possession. That residential borrower, who was foreclosed on, was evicted on Thursday, according to her attorney, David Winker.

In a memo issued on Thursday, the mayor re-stated her policy on evictions. Miami-Dade Police will also remove non-tenants who are identified as squatters.

Earlier this month, the Miami-Dade County Commission approved Levine Cava’s $60 million relief program for residential landlords with pending writs of possession for tenants facing eviction. The program offers landlords back rent of up to $3,000 per month. At that press conference, Michael Liu, Miami-Dade’s public housing director, said the courts had issued up to 1,700 writs of possession which would be prioritized.

According to Miami-Dade Police, the department executed two commercial and nine residential writs of possession on Thursday. From Nov. 12 until Thursday, 324 writs of possession have been executed.

Cushman reports 10% drop in revenue in 2020

Cushman & Wakefield CEO Brett White

Cushman & Wakefield CEO Brett White

The fourth quarter of 2020 was another tough one for Cushman & Wakefield, putting an end to a tough year for the commercial real estate giant.

Cushman reported a net loss of $27.3 million in the fourth quarter, its third consecutive quarterly loss in 2020. Quarterly revenue was $2.3 billion, a decrease of 13 percent over the same time the previous year. The pandemic was once again the culprit, as leasing activity remains lower than it was in 2019.

The firm recorded $388.7 million in revenue from leasing, down by 36 percent from the same time last year. Revenue from investment sales activities was $319.3 million, down 12 percent from a year ago.

But there was some good news: Fourth quarter leasing revenue was up 21 percent over the previous quarter, and investment sales revenue more than doubled, showing some signs of recovery.

“Our fourth quarter result is the balance of encouraging signals on business activity, especially in brokerage, and validation of our commitment to operational excellence,” said CEO Brett White during a Thursday earnings call. “We have executed very well in a very fluid and uncertain environment.”

For all of 2020, the company recorded a net loss of $220.5 million, and revenue of $7.8 billion — a 10 percent dip from 2019’s number.

Still, the loss was partially offset by the stable income from the company’s property and facility management sector.

The firm’s cost saving efforts of about $300 million in 2020 also contributed to mitigate the loss, said CFO Duncan Palmer, who will be stepping down from the position on Feb. 28. Neil Johnson has been appointed as a new CFO.

Though the pandemic-driven downturn continues, executives expressed some optimism about the future during the call.

“As we look ahead, most economists are cautiously optimistic that the worst of the pandemic impact on the economy is largely behind us,” said Kevin Thorpe, the company’s chief economist. “By extension, the worst of the impact on the property market is also largely behind us.”

Manhattan job losses in Q3 worst of any large county in the US

(iStock/Illustration by Alexis Manrodt for The Real Deal)

(iStock/Illustration by Alexis Manrodt for The Real Deal)

The average wage that workers earned in the third quarter of 2020 rose 7.4 percent from the previous year — a troubling sign for low-wage earners, and the job market as a whole.

According to the latest report from the Bureau of Labor Statistics, the number of people employed dipped by nearly 7 percent year-over-year, hitting 138.5 million at the end of the third quarter. Employment decreased in 355 of the 357 counties the report tracks, and wages rose in 350 of those counties — an indication of “substantial employment loss among lower-paid industries,” according to the Bureau.

Workers in leisure and hospitality have been the hardest hit by the Covid-19 virus, especially in tourist-dependent regions such as Maui County, Hawaii, where a staggering 67 percent of those employed in the industry — or almost 17,000 people — lost jobs. Overall employment there fell by more than a third year-over-year, according to the report.

Of the 10 largest counties tracked, New York suffered the largest employment loss over the year that ended in September, with a nearly 16 percent decrease in employment. Once again, leisure and hospitality took a huge hit, with over 182,000 of those workers losing their jobs.

The city also lost two-thirds of jobs in entertainment, recreation and the arts, erasing a decade of economic gains in an industry which drew millions to the city each year, Bloomberg reported.

CoStar revenue soars 19% after year of acquisitions

CoStar Group Andrew C. Florance. (Getty)

CoStar Group Andrew C. Florance. (Getty)

CoStar Group’s revenue soared to $1.66 billion in 2020, as the pandemic pushed more people to shop for real estate online, the company reported Tuesday.

While earnings rose 19 percent, the real estate data giant’s profits sunk thanks to the coronavirus closures in the spring. Net income plunged nearly 28 percent to $227 million for the full year. CoStar reported net income of $314.9 million in 2019.

Still, CoStar turned in a strong second half of the year as the real estate market rebounded. It notched $100 million in sales bookings during the latter part of 2020, including $49 million in net new sales during the fourth quarter.

Last year, CoStar acquired Ten-X, Emporis and Homesnap, although its deal to buy RentPath fell through after the Federal Trade Commission objected.

With $2.7 billion in debt and equity on its books, CoStar said it would double down on acquisitions in the coming year, particularly in the residential space.

Earlier this month, CoStar submitted a bid to buy CoreLogic for $6.9 billion, or 20 percent higher than CoreLogic’s previously-accepted offer from Stone Point Capital and Insight Partners. “This combination would triple CoStar Group’s total addressable market,” CEO Andy Florance wrote in a letter to CoreLogic’s board.

During an earnings call, Florance said there is “vast potential” to integrate commercial and real estate data tools.

CoStar said Apartments.com notched record results last year, with revenue of nearly $600 million, up 22 percent year-over-year. “We believe that our increased investment in marketing for Apartments.com in 2020 was a key driver in our performance and produced outstanding results,” Florance said in a statement. Apartments.com notched 170 million virtual tours in 2020, twice as many as 2019.

LoopNet also had a strong year with 20 percent year-over-year revenue growth.

CoStar projected revenue this year between $1.925 billion and $1.945 billion. It projected EBITDA between $640 million to $650 million.

Activist investors urge Kohl’s to cut real estate, inventory

Kohl's investors have a list of changes they want implemented. (Getty)

Kohl’s investors have a list of changes they want implemented. (Getty)

A group of activist investors have something to say about Kohl’s.

Macellum Advisors GP, Ancora Holdings, Legion Partners Asset Management and 4010 Capital are attempting to control the company’s board and influence its trajectory, according to the Wall Street Journal.

Together, the group owns a 9.5 percent stake in Kohl’s. Earlier this year it nominated nine people to the retailer’s 12-person board.

Now, the investors are calling on Kohl’s to hire directors with retail experience. They also advise Kohl’s to consider a sale-leaseback of more than $7 billion of its real estate and to reduce inventory while improving offerings and discounts.

Kohl’s responded that it is already pursuing some of the proposed initiatives. Among them, the company has added six new independent directors since 2016. It has rejected some of the other proposed changes.

Kohl’s has been in discussions with the activist investors since early December.

Although Kohl’s have been hurt by the pandemic, its wounds pre-date it, as is the case for other department stores. On the plus side, its locations are not located in malls, which have seen foot traffic fall in recent years and especially during Covid.

[WSJ] — Sasha Jones

Seeing green: Land rush is on in latest states to legalize cannabis

(iStock)

(iStock)

In November, voters in Arizona, New Jersey, Montana and South Dakota approved recreational cannabis use in their states.

Those votes have opened the door for the sort of land rushes seen in other states that have legalized marijuana, with cannabis companies searching for retail and commercial space, according to the Wall Street Journal.

It can be tough for pot purveyors seeking space to operate: Their choices are often limited by strict regulations on cannabis sales and cultivation, and landlords may hesitate to work with them because marijuana remains illegal at the federal level.

For those companies, that means paying a premium to rent or buy. Anthony Coniglio’s company NewLake Capital Partners Inc. owns 19 properties in eight states leased to cannabis businesses.

“It’s like holding the winning lottery ticket,” Coniglio said, regarding landlords who are willing to rent to those tenants.

Massachusetts-based Curaleaf Holdings, which operates retail stores in 23 states, currently sells medical marijuana in New Jersey, which recently legalized cannabis but has not yet finalized a framework for distribution. The company bought its second dispensary in the state last year and reportedly paid about twice as much as the property would cost for other uses.

“People know they can charge cannabis an absurd amount,” said Patrik Jonsson, Curaleaf’s regional president for the northeast. “It’s the new norm.” [WSJ] — Dennis Lynch

US warehouse boom attracts foreign investors

(iStock/Illustration by Kevin Rebong for The Real Deal)

(iStock/Illustration by Kevin Rebong for The Real Deal)

It’s not just massive firms like Blackstone Group and Prologis that are throwing billions of dollars at warehouses — foreign investors are also pouring money into the booming industrial sector.

Investment firms from France, Germany and South Korea are among those that have recently inked big deals for industrial properties, according to the Wall Street Journal. That comes even as overall foreign investment into U.S. real estate has plummeted due to the pandemic. Real Capital Analytics pegged that total as down by 31 percent in 2020.

But warehouses — which have been booming thanks to the surging e-commerce — are a bright spot, according to the publication. Allianz Real Estate, a German firm, partnered with Crow Holdings to buy a 49 percent stake in a logistics portfolio. AXA Investment Managers, based in France, paid $857 million for a nearly 8 million-square-foot logistics portfolio in December. And the National Pension Service of Korea partnered with Stockbridge Capital on a $2 billion warehouse deal.

Warehouses that are leased to major companies like Amazon — which planned to increase its industrial square footage by 50 percent in 2020 — are seen as especially attractive, the publication reported.

The warehouses are “effectively a corporate bond given by one of the largest companies in the world,” according to Matthew Alshouse, a partner at law firm DLA Piper. [WSJ] — Amy Plitt