Off the grid: Developers eye “virtual power plants” for properties

Rendering of Sonnen's ecoLinx home battery (Sonnen)

Rendering of Sonnen’s ecoLinx home battery (Sonnen)

A growing number of developers in the U.S. are investing in integrated solar power and battery systems for their buildings.

Advances in energy storage technology and falling prices for batteries mean these “virtual power plants” are becoming viable for a variety of buildings and uses, according to the New York Times. The technology would also create more energy independence, coming at a time when severe weather — like last month’s deep freeze in Texas that cut power to millions — has wreaked havoc on residents.

Developer Wasatch Group installed storage batteries in each of its 600 units at the firm’s “net zero” Soleil Lofts project in Herriman, Utah. The systems store energy created by solar arrays on the property, making the complex one of the better examples of using integrated power.

Collectively they can provide 12.6 megawatt hours of backup power for the building, and currently offset the costs of powering common areas, according to the report. Wasatch also signed a deal with Rocky Mountain Power that allows the energy company to tap the batteries at Soleil Lofts for power. Residents save around 30 to 40 percent on their energy bills, the Times noted, citing Wasatch.

Other developers are also exploring storage systems. Meritage Homes has demonstration projects across the U.S. to explore green tech. Related Companies installed a 4.8-megawatt battery at the Gateway Center retail complex in Brooklyn that’s used by energy company Enel X.

In New York City over the last few years, there have been several thousand solar panel installations in Brooklyn alone.

Some governments have pushed for more energy storage projects. In 2019, New York State created up to $55 million in incentives for commercial and residential storage projects on Long Island.

[NYT] — Dennis Lynch

Phat flat: Hedge funder nears deal for $153M London penthouse

Suneil Setiya and the One Hyde Park complex (Photos via Wikipedia Commons/Rob Deutscher and Synergos)

Suneil Setiya and the One Hyde Park complex (Photos via Wikipedia Commons/Rob Deutscher and Synergos)

Hedge fund billionaire Suneil Setiya is said to be in talks to buy a massive London penthouse for around $153 million.

The 14,000-square-foot unit that the Quadrature Capital founder is eyeing is located in the luxury residential complex known as One Hyde Park, according to Bloomberg. The unit has no internal walls and is completely unfinished, making its price tag all the more jaw-dropping. The deal would be one of the priciest residential sales to close in the United Kingdom, and the fourth largest to close above 100 million pounds in the last year or so, according to the report.

Billionaire Cheung Chung Kiu spent 210 million pounds on a massive estate in Hyde Park early last year. And in November, an unknown buyer spent 147 million pounds  on three units at No. 1 Grosvenor Square, a former U.S. embassy in the city.

The would-be seller of the One Hyde Park property is Hasan Ismaik, former CEO of Dubai-based construction firm Arabtec Holdings. Arabtec went into liquidation last year.

One Hyde Park sits across from its eponymous park in Knightsbridge. It was developed by Christian Candy’s CPC Group and a company controlled by former Qatar Prime Minister Sheikh Hamad bin Jasim bin Jaber Al Thani and completed in 2009. There are 86 residential units and three retail stores.

Candy’s brother, Nick also owns a penthouse at the complex, which is valued at 160 million pounds.

Overall, London home prices keep ticking up. The average price of a home in the city rose nearly 10 percent between November 2019 and November 2020, to about 514,000 pounds, or just over $700,000. Demand has also been high during the pandemic for properties in suburban and rural areas that offer space and privacy.

[Bloomberg] — Dennis Lynch

Legal battle erupts over BH3’s public-private Delray Beach project inside Opportunity Zone

BH3 co-founders Daniel Lebensohn and Greg Freedman (BH3, iStock)

BH3 co-founders Daniel Lebensohn and Greg Freedman (BH3, iStock)

A public-private partnership between BH3 and the Delray Beach Community Redevelopment Agency to redevelop 6.17 acres of prime downtown land is collapsing over delays and changes to the developer’s original proposal.

Aventura-based BH3, led by principals Dan Lebensohn and Greg Freedman, sued the CRA on Friday for breach of contract, after the agency’s board began the process to scuttle the deal in late January.

“To our surprise, what was supposed to be a procedural vote to grant variances and an amendment for more time to have everything approved, the CRA board reversed course for some reason unknown to us,” Freedman told The Real Deal. “We have been asking for more time since March because of Covid. We have tried to acquiesce and work with them. When they reversed course on us, they left us no choice but to really go on offense.”

Kim Phan, the CRA’s legal advisor, said the agency declined comment, citing the pending lawsuit.

Adam Frankel, a Delray commissioner who serves as CRA vice-chairman, disputed Freedman’s characterizations. “From my perspective, BH3 promised a project that would be a true destination on West Atlantic Avenue,” Frankel said. “They sought to change that original project in a vast and material way. The fact is that BH3 has done minimal to no work in starting construction of this project, which has been a very large disappointment to all of us here in the city of Delray Beach.”

The site is within an Opportunity Zone on the 600 to 800 block of West Atlantic Avenue, where BH3 had proposed AltaWest. It would have entailed 43,000 square feet of ground-floor retail, 21,600 square feet of professional office space, a 33,000-square-foot grocery store, 165 residential units totaling 272,242 square feet, 744 parking spaces, about 45,000 square feet of public space called “Frog Alley” and up to 30 workforce housing units, the latter of which included 18 affordable housing units recently completed on an adjacent site.

Since the CRA approved a sale and purchase agreement with BH3 in April 2019, the project has changed substantially.

It is now called Fabrick, and the number of residential units were reduced to 65 apartments and four townhouses, all of which would be workforce and affordable housing, according to Freedman and documents submitted to the CRA. In addition, BH3 wants to reduce the square footage of the retail and green space, as well as build a surface parking lot instead of placing a parking structure on top of the grocery store.

According to the complaint, BH3 spent more than a year searching and holding discussions with potential grocery tenants, and signed a “non-binding, but heavily negotiated” letter of intent on Oct. 12 with a national chain. Freedman said the company is Publix.

BH3 claims that the pandemic prolonged the negotiations and responses to design and tenant requirements, because Publix was dealing with issues pertaining to its supply chain, logistics, employee health and other related factors, and the ongoing, general state of emergency.

The project’s design was revised to further reduce density and intensity after BH3 conducted outreach efforts with Delray Beach residents, who were “clearly not desirous of BH3 or any
developer gentrifying the neighborhood with a monstrous project that had market rate housing,” according to the lawsuit. Publix also required that BH3 build a surface parking lot instead of a garage.

Amid all this, BH3 faced a Jan. 18 deadline to have its site plan approved or be considered in default. So the developer sought approval to negotiate an extension and for the design changes, which the CRA board initially accepted at its Dec. 17 meeting in a 5-2 vote, the lawsuit states.

But at its Jan. 26 meeting, the CRA rejected project variances and the extension, despite BH3 offering to compensate the city by increasing its $250,000 deposit to $1 million and to pay $200,000 to the city’s parking trust fund, according to the complaint.

The lawsuit and Freedman contend the CRA should have granted the extension due to delays caused by Covid-19 and not the developer. “At the end of the day we wish we weren’t here,” Freedman said. “We think they have erred in their judgment. We look forward to that being corrected. We want to charge forward with this project.”

Frankel said the CRA went above and beyond in trying to work with BH3 to start construction. “The fact is that BH3 is trying to use Covid as an excuse, and I find that to have little to no merit,” Frankel said. “BH3 has done nothing to try and salvage this as of this time.”

Opendoor revenue plunged 45% in 2020

Opendoor CEO Eric Wu (Opendoor, iStock/Illustration by Alexis Manrodt for The Real Deal)

Opendoor CEO Eric Wu (Opendoor, iStock/Illustration by Alexis Manrodt for The Real Deal)

In its first earnings as a public company, Opendoor reported a 45 percent drop in revenue attributed to its pause in home-buying in the early months of the pandemic.

The iBuyer generated $2.6 billion in revenue last year, compared to $4.7 billion in 2019. The company reported a net loss of $286.8 million, down from $339.2 million a year earlier.

Even as it sought to rebuild its inventory during the fourth quarter, it had few homes to sell and quarterly revenue was $248.9 million, down 80 percent from $1.3 billion in 2019. Opendoor’s net loss for the fourth quarter was $87.8 million compared to $91.7 million.

During its earnings call Thursday, CEO Eric Wu acknowledged the toll the pandemic took on its home-buying operation. Opendoor sold off an estimated $1 billion worth of inventory last year amid uncertainty in the market. It has since rebuilt its inventory to 1,827 homes valued at $466 million.

Notwithstanding the turbulence of 2020, Wu said Opendoor is poised to benefit from the U.S. housing boom and adoption of digital home-buying tools. “We’ve been building Opendoor behind the scenes for this moment,” he said. “The adoption of digital products is rising sharply; real estate is no exception.”

Founded in 2014, Opendoor is the leader in the nascent-but-growing iBuying sector. It makes cash offers for homes, providing sellers the speed and certainty of a transaction for a fee. Competitors in the space include Zillow, Offerpad and Redfin, among others.

Last spring, nearly all of the major iBuyers suspended home-buying, citing the difficulty in valuing homes during the early part of the pandemic. U.S. home sales have since rebounded, and 2020 home sales hit a 14-year high, according to the National Association of Realtors.

Opendoor went public in December after merging with a blank-check firm backed by investor Chamath Palihapitiya. The IPO valued Opendoor at $4.7 billion and generated net proceeds of $970 million. Opendoor later raised $860 million in follow-on equity.

The stock has bounced around over the past few months, however. Shares closed at $31.25 on Dec. 21, its first day of trading. The stock hit a high of $38.26 on Feb. 11. But the price closed at $24.39 per share on Thursday, down 15 percent from a day earlier.

During the earnings call, Opendoor said it plans to expand to 42 markets — twice what it has now — including six new markets during the first quarter of the year.

In addition to working with sellers, Opendoor recently launched a “cash offer” program that allows buyers to make cash offers backed by Opendoor. “We know the market is competitive,” Wu said. “This feature, and more to come, demonstrates our ability to innovate quickly based on what we’re seeing in the market.”

Asked during the call about Opendoor’s competition with Zillow, Wu replied that he’s focused on building a new sector.

States Title, now Doma, going public in $3B SPAC deal

States Title CEO Max Simkoff and investor Mark Ein. (Keystone Strategy, Getty)

States Title CEO Max Simkoff and investor Mark Ein. (Keystone Strategy, Getty)

Title insurance startup States Title is going public in a $3 billion deal with a blank-check firm, the latest sign of investor interest in companies that digitize the residential real estate industry.

The company — which has been renamed Doma — said Tuesday that it plans to merge with Capitol Investment Corp., a special purpose acquisitions company backed by investor Mark Ein. Since 2007, Ein has raised $1.5 billion through five SPACs.

The deal will generate $645 million, including a $300 million PIPE investment and $350 million from investors including BlackRock, Fidelity, the Gores Group, Hedosophia, SoftBank’s SB Management, Wells Capital and Zillow co-founder Spencer Rascoff. National homebuilding giant Lennar, already a big investor in States Title, is participating in the PIPE.

Doma will retain up to $510 million in cash proceeds, the companies said.

Founded in 2016, States Title took on the arcane world of title insurance by digitizing and streamlining the closing process. The company was last valued at $623 million after a $123 million funding round in May 2020 led by Greenspring Associates with participation from Foundation Capital and Fifth Wall Ventures.

Last month, States Title raised $150 million in debt financing from HSCM Bermuda.

The deal reflects both the liquidity available in the financial markets, which has resulted in the proliferation of real estate-focused SPACs, as well as the strength of the U.S. housing market, with January home sales up 23.7 percent year-over-year, according to the National Association of Realtors. With it, demand for digital tools to buy and sell homes has also surged.

“In 2020, adoption and usage of our core product exceeded our expectations,” founder and CEO Max Simkoff said in a statement.

To date, Doma has facilitated 800,000 closings for lenders including Chase, Homepoint, PennyMac and Sierra Pacific Mortgage.

After the Series C last year, Simkoff summed up his experience with the title insurance industry thus: “First they ignore you, then they laugh at you, then they fight you.”

“I’ve been told often that I speak ignorantly in this industry,” he said in a conversation with The Real Deal at the time. “Then it turns out the ignorant things I’m saying end up becoming more efficient ways of doing things.”

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.

Discount brokerages launch fresh attacks on size of residential fees

American broker fees are among the highest in the world. (Getty)

American broker fees are among the highest in the world. (Getty)

The age-old question of what justifies broker fees often comes up as people embark on buying or selling their homes — and discount brokerages are egging on the conversation.

American home sellers and buyers pay among the highest fees to agents, the New York Times reported. In the U.S., the standard fee is 6 percent, with 3 percent going to the seller’s and buyer’s agents, respectively. Compare that to Asia or Europe, where standard broker fees are as low as 1 or 2 percent.

There have been a string of lawsuits over the past two years accusing the residential real estate industry of conspiring to keep broker fees high and violating U.S. antitrust laws in the process. The instigators range from private citizens to the U.S. Justice Department, with some industry members trying to offer discount models to consumers.

As the pandemic has pushed even more of the buying and selling process online, discount brokerages with models based on online listings and transactions are keeping the subject top of mind.

Last week, Redfin announced it would publish agent commissions on thousands of public listings. It’s a move that’s in line with the spirit of the Department of Justice’s settlement agreement with the National Association of Realtors for the industry to make agent commissions more transparent to consumers and fix the industry’s misleading, incorrect advertising.

Weeks earlier, an Oregon brokerage, REX Real Estate, filed a state lawsuit challenging the state’s policy of banning brokerages and agents from refunding commissions to buyers. The brokerage is exploring filing similar suits in Louisiana, Missouri and Tennessee.

The firm says the logic behind the suit is based on the view that homebuyers are doing an increasing amount of the work to find a home without an agent’s help.

“You’re starting to see a kind of drum beat,” Mike Toth, REX’s general counsel, told the Times. “Buyers are doing so much of the work themselves. So why are commissions so high?”

The continued suits and positioning of firms like Redfin and REX indicate that pressure on the industry to reduce fees and increase industry competition is not going anywhere.

[NYT] — Erin Hudson

Wealthy buyers scoop up real estate on warm-weather islands

Cold weather and lockdowns are inspiring people to more to warmer climates. (Getty)

Cold weather and lockdowns are inspiring people to more to warmer climates. (Getty)

As the cold weather set in and lockdowns continued in many U.S. cities, the market heated up for properties on remote islands in warmer climates.

Activity is expected to increase as travel bans are lifted — and some buyers are even willing to buy sight unseen to beat the competition, according to Mansion Global.

Some island nations are taking advantage of the uptick in demand. The Saint Kitts and Nevis government will give citizenship to buyers who pay more than $400,000 for a home in the two-island nation, offering easier access to Europe.

Bermuda is also offering a one-year residential certificate to people living in the country and working in another. Barbados and the Cayman Islands have similar programs.

“We’ve seen an uptick in purchases since the pandemic, from people looking for an escape from big cities,” said Neal Sroka, a high-end real estate consultant. “They do buy without visiting, provided they know the product, so it’s much easier to sell on a branded hotel basis rather than individual homes.”

Hotel-branded condo projects are gaining popularity stateside as well. The recognizable branding gives some buyers confidence. Four Seasons entered the market in 2019 and has completed a handful of properties around the country.

The phenomenon isn’t new: The flight of wealthy urbanites from cities last year amid the pandemic fueled activity in remote island destinations and rural communities alike.

[Mansion Global] — Dennis Lynch 

South Florida resi volume tops $44B in 2020, buoyed by luxury sales

(iStock)

(iStock)

South Florida’s residential sales dollar volume rose in all three counties in 2020, reaching $44.1 billion, according to the Miami Association of Realtors.

Luxury sales led the market, rising in Miami-Dade, Broward and Palm Beach counties. While the overall number of residential sales decreased minimally in Miami-Dade and Broward, they increased in Palm Beach County, according to Multiple Listing Service data compiled by the association.

Prices also continued to rise across South Florida.

Miami-Dade

A total of 26,345 residential sales closed in 2020, down nearly 4 percent from 2019. The decrease is likely due to slow months early on in the pandemic. Of the total, single-family sales totaled 13,250 last year, a 0.5 percent decrease compared to 2019. Condo sales totaled 13,095, a 7.2 percent decline from the previous year.

Luxury sales, defined as $1 million and up, jumped 41 percent year over year to 1,447, which accounts for the surge in sales volume.

Single-family home sales volume rose 26 percent to $9.2 billion, and condo dollar volume increased 1.7 percent to $5.7 billion.

The median price of single-family homes was $402,000, up 10 percent. For condos, the median price rose 7.8 percent to $264,000.

Broward

Residential sales in Broward totaled 31,476 in 2020, a 3.5 percent decline compared to 2019.

Single-family home sales represented 16,035 of the total, a 0.4 percent year-over-year increase. Condo sales totaled 15,441, a 7.1 percent decline.

Luxury single-family home sales surged, up 43.4 percent to 1,068 closings in 2020.

Single-family sales dollar volume grew 15.6 percent to $8.5 billion, and condo dollar volume increased 3.6 percent to $3.8 billion.

The median sale price for single-family homes was $400,000, up nearly 10 percent. For condos, it was $189,000, a 10.5 percent annual increase.

Palm Beach

Residential sales rose in Palm Beach County, up 2.3 percent to 31,521. Single-family home sales totaled 18,174, a 4.3 percent year-over-year increase. Condo sales dipped to 13,347, a 0.4 percent decline.

The $1 million-and-up luxury market saw 1,922 sales, up nearly 50 percent compared to 2019.

Closed dollar volume totaled $12.4 billion for single-family homes and $4.5 billion for condo sales, up 31.4 percent and 8.5 percent, respectively.

The median price of single-family homes was $389,500, up 9.7 percent. The median condo price reached $205,000, an increase of 12.6 percent.

Corcoran launches first international franchise in British Virgin Islands

David V. Johnson and Corcoran CEO Pamela Liebman. (Liebman ph: Marc Scrivo, Oil Nut Bay)

David V. Johnson and Corcoran CEO Pamela Liebman. (Liebman ph: Marc Scrivo, Oil Nut Bay)

The Corcoran Group is going international with its first franchise outside the United States.

The New York City firm will expand into the British Virgin Islands later this month, after inking a franchise deal with Oil Nut Bay Properties Ltd., which will be known as Corcoran BVI, it said Thursday.

David V. Johnson, a developer of luxury homes, will run the 30-agent affiliate. In 2016, Johnson’s company, Victor International, developed a resort in Oil Nut Bay, on the island of Virgin Gorda. The property has 88 luxury homes “built in harmony with nature,” according to a promotional video.

In a statement, Corcoran CEO Pam Liebman said the British Virgin Islands are among the most beautiful in the world, offering a “true oasis” as a second-home market.

A subsidiary of Realogy, the Corcoran Group has been franchising in luxury and second-home markets.

Its first affiliate, Corcoran Global Living, launched early last year in San Francisco and Lake Tahoe. It now has 42 offices and nearly 1,500 agents and claims gross annual sales of $6.1 billion.
In November, Corcoran Global Living absorbed Los Angeles-based PLG Estates, which described its approach to real estate as “punk rock.”

Corcoran has also started franchises in Miami, Chicago and Hawaii, where it struck a deal with a 250-agent firm, Elite Pacific Properties, that was renamed Corcoran Pacific Properties.