UK tax break expiration could hurt struggling retailers

UK tax break expiration could hurt struggling retailers

The tax break allows foreign visitors to reclaim a sales tax of 20 percent on items bought in the country for more than £30 (Getty; Unsplash)

The tax break allows foreign visitors to reclaim a sales tax of 20 percent on items bought in the country for more than £30 (Getty; Unsplash)

A popular tax break is expiring in the United Kingdom in January, threatening the country’s status as a shopping destination and potentially dealing another blow to struggling retailers.

The scheme allows foreign visitors to reclaim a sales tax of 20 percent on items bought in the country for more than £30, or roughly $40, according to the Wall Street Journal. That can add up, especially for foreign visitors dropping serious coin in pricey shops on London’s high streets — which are already seeing an exodus of retailers — and premier shopping districts.

The tax break expires after the U.K. formally withdraws from the European Union Customs Union and European Single Market on Dec. 31.

British business owners worry that shoppers will stop coming to the U.K. in favor of other European destinations, such as Paris or Milan, that have similar tax schemes. Visitors from outside the European Union can claim 20 percent of their spending in France and 22 percent in Italy.

A recent survey of tourists found that at least 70 percent of visitors from Asia and the Middle East, along with 70 percent of Americans, are less likely to visit the U.K. after the tax break expires.
The coronavirus pandemic is also putting pressure on British retailers. More than 7,800 retail stores closed in the first half of the year.

The owners of Heathrow Airport are leading a legal challenge against repealing the tax refund, claiming in the British High Court that the government failed to consult parties most affected by the change and for miscalculating the financial details of the repeal. [WSJ] — Dennis Lynch

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Pandemic takes drastic toll on dry cleaners

Pandemic takes drastic toll on dry cleaners

As workers trade in suits for sweatpants, 1 in 6 dry cleaners has closed or gone bankrupt (Getty)

As workers trade in suits for sweatpants, 1 in 6 dry cleaners has closed or gone bankrupt (Getty)

At J’s Cleaners, business had clawed up to 40 percent of pre-pandemic levels last month. But now, with Covid-19 soaring again, that number is expected to plummet.

“If this thing keeps dragging, many small businesses will close. Maybe I could be one of them,” owner Albert Lee, who plans to permanently shutter four of his 15 locations, told Bloomberg. He is losing $1,000 to $2,000 monthly per store.

As workers abandon suits for sweatpants, dry cleaners are having an existential crisis, the publication reported.

One in six dry cleaners has closed or gone bankrupt in the U.S. already, and many won’t survive without more federal stimulus, according to the National Cleaners Association. The industry’s revenue is half of the $7 billion it enjoyed pre-Covid.

“It’s an ugly, ugly time,” said Nora Nealis, executive director at the trade group, which has more than 2,000 members. “Most of them are holding on with their fingernails in hope of help.”

[Bloomberg] — Sasha Jones

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Real estate deals dominate Opportunity Zones. Is that bad?

Real estate deals dominate Opportunity Zones. Is that bad?

The Economic Innovation Group identified 145 real estate investments in Opportunity Zones (iStock)

The Economic Innovation Group identified 145 real estate investments in Opportunity Zones (iStock)

Investment in Opportunity Zones is growing at a rapid pace, and so is skepticism about the program — and whether its incentives for pouring cash into low-income communities amount to a tax dodge.

The Economic Innovation Group, a policy group that’s a proponent of the program, identified 186 real estate and business investments in Opportunity Zones in the United States. Of those, the majority — 145 — are in real estate, the New York Times reported.

Critics have said that operational projects would create more jobs for locals and that the program doesn’t meaningfully help residents of the “distressed” communities. But investors often need incentives, and proponents are pushing back.

“When we make investments, we look at impact. And in this case, we’re taking an old, 500,000-square-foot abandoned building, giving it a second life, and bringing people into the area,” Michael Tillman, chief executive of PTM Partners, whose firm is raising $250 million for its second Opportunity Zone fund, told the publication.

PTM, along with Douglas Development, developed a mixed-use complex with luxury apartments in an Opportunity Zone in Washington, D.C.

“We’re also bringing in a school that lost its lease elsewhere,” he added. “All of that has a positive impact on the community.”

While some states and cities are attempting to track investment in opportunity zones, there is no such data at the federal level. This summer, however, the White House estimated that $75 billion had flowed into Opportunity Zones because of tax incentives.

In Baltimore, for example, some 80 projects are in the works in 42 zones.

“We have enough examples at this point to show that Opportunity Zones are helping projects that either would not have happened or would have taken a very long time to move forward,” said Benjamin Seigel, the Opportunity Zone coordinator for Baltimore’s economic development agency. “We’ve also learned that we’re not going to achieve the outcomes we care about by doing nothing.”

President-elect Joe Biden has suggested reforms to the program, including incentivizing developers to partner with community organizations, and a more robust system for reporting on the impacts of developers’ investments.

[NYT] — Sasha Jones

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Michael Stern pays $24M for future site of 62-story Brickell tower

Michael Stern pays $24M for future site of 62-story Brickell tower

Michael Stern and a rendering of the project (Getty, JDS Development/SHoP Archictects)

Michael Stern and a rendering of the project (Getty, JDS Development/SHoP Archictects)

UPDATED, Nov. 25, 9:45 p.m.: Developer Michael Stern closed on an assemblage of properties in Miami’s Brickell neighborhood where he plans to build a 62-story tower, The Real Deal has learned. 

Stern, who leads New York-based JDS Development Group, paid $9 million for property at 191 Southwest 12th Street. The seller is a company tied to John Polit. Stern also bought adjacent land from Choice Hotels for $14.5 million. 

Stern will demolish the existing building on the property and build a new fire station, plus a 1,400-unit mixed-use project that will encompass 1,000 rental apartments, 200 micro-units, a 200-key hotel, 250,000 square feet of office space and a new $8 million fire station. 

Adrian Sanchez, of Waterfront Investment Real Estate, represented both the seller and the buyer in the $9 million deal. The property last sold for $4.2 million in 2014. Records show that a four-story, 12-unit multifamily building built in 1971 is currently on the property. 

Earlier this year, a company tied to Alain Lantigua sued Stern, alleging he reneged on a $10 million assignment fee for legwork to obtain the zoning approvals for the development. Lantigua’s plan originally was to buy 191 Southwest 12th Street in order to flip the land to Stern for the fee. Lantigua is principal of Crystal Clear Holdings and Harlequin Property Management, according to his LinkedIn. The lawsuit is still open, according to court records.

The lawsuit identifies the property seller as a company tied to Polit, son of former Ecuadorian official Carlos Polit, who was given a six-year prison sentence in 2018 for allegedly collecting a $10.1 million bribe from a Brazilian construction firm. John Polit was given three years for being an accomplice. Earlier this year, the U.S. Securities and Exchange Commission opened an investigation into Polit, a former Merrill Lynch employee, related to activities in Ecuador.

In July, Stern filed court documents denying the lawsuit’s accusations, alleging that no such contract was formed between the two parties, and that Lantigua failed to close on adjoining property and “to perform under the Public Benefit Agreement.”

“In truth, Plaintiff conferred no benefit and was unable to bring the project to fruition by its own power and now seeks to profit off these failures by suing those that could bring the project to completion,” according to the documents.

In late February, the Miami City Commission approved a public benefits agreement with an affiliate of Stern’s JDS Development Group that allows Stern to build the $500 million tower on the fire station site and an adjoining property that he purchased last year.

As part of the deal, the city will get roughly $2.2 million in cash for fire station equipment, about $5.4 million in public benefits and $200,000 in streetscape improvements, and will pay for the renovations to the park and the transfer of development density rights, according to the public benefits agreement.

[contact-form-7]

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Mattos family pays $20M for Waterway Shoppes of Weston

Mattos family pays $20M for Waterway Shoppes of Weston

Carlos Mattos and Dylan Fonseca with the Waterway Shoppes of Weston at 2210-2282 Weston Rd (Linkedin, Marcus & Millichap)

Carlos Mattos and Dylan Fonseca with the Waterway Shoppes of Weston at 2210-2282 Weston Rd (Linkedin, Marcus & Millichap)

The Mattos family expanded its South Florida holdings by buying a shopping center in Weston for $20.45 million.

A company managed by Nicolas and Isabella Mattos — the children of Carlos Mattos, founder of car importer Hyundai Colombia Automotriz — bought the Waterway Shoppes of Weston at 2210-2282 Weston Road, according to records. The buying entity is also managed by attorney Richard G. Toledo.

The sale of the 36,000-square-foot shopping center equates to $569 per square foot.

Built in 1999 on 5 acres, the shopping center listed for $20.65 million, according to an online listing. Tenants include AT&T, Baires Grill and Pearl Vision Center. Spaces range from 980 square feet to 6,000 square feet.

The seller is a company tied to Fondo Atlas, a Miami-based owner and operator of real estate in Florida and South America. Fondo Atlas is led by Dylan Fonseca and Jose Torbay. The firm bought the shopping center for $15.3 million in May 2015, records show.

Kirk Olson and Drew Kristol of Marcus & Millichap represented the seller in the latest deal, according to a press release. Gordon Messinger of Cushman & Wakefield brought the buyer.

Earlier this year, the Mattos family bought an assemblage in Hialeah for $8 million.

Carlos Mattos is also partnering with Swire on a 100,000-square-foot-plus expansion at Brickell City Centre, which would include a 54-story, 588-unit residential tower, another 62-story, 384-unit residential tower, commercial space and parking.

In 2017, Fondo Atlas dropped $25 million for a shopping center in Palm Beach Gardens.

Other recent sales in Weston include industrial properties that were part of Blackstone’s $93.5 million portfolio purchase from Elion Partners.

[contact-form-7]

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Charles Cohen’s Carefree Theater redevelopment advances

Charles Cohen’s Carefree Theater redevelopment advances

Charles Cohen and 2000 S Dixie Hwy, West Palm Beach (Getty, Google Maps)

Charles Cohen and 2000 S Dixie Hwy, West Palm Beach (Getty, Google Maps)

West Palm Beach officials recommended a zoning change that would allow a mixed-use development at the former site of the Carefree Theater, owned by developer Charles Cohen.

A three-hour hearing of the West Palm Beach Planning Board resulted in a recommended approval of the rezoning with minor changes last week, according to The Palm Beach Post.

The proposal is for 58 housing units, 6,900 square feet of restaurant space, 9,000 square feet of retail space, a six-screen and a 600-seat movie theater, the Palm Beach Post reported

The proposal is a scaled down version of what Cohen originally intended.

Cohen, a New York developer and a part-time resident of Palm Beach, bought the property at 2000 and 2100 South Dixie Highway four years ago for $3 million.

His Cohen Brothers Realty Corp. also owns the Design Center of the Americas in Dania Beach and opened the Le Meridien Dania Beach hotel earlier this year.

Cohen is also a film producer.

[Palm Beach Post] — Wade Tyler Millward

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Black homeowners twice as likely to lose homes and return to renting: Report

Black homeowners twice as likely to lose homes and return to renting: Report

A recent study that found 1 in 10 Black homeowners returned to renting between 1984 and 2017 (iStock)

A recent study that found 1 in 10 Black homeowners returned to renting between 1984 and 2017 (iStock)

Over the last three decades, Black homeowners were twice as likely as white homeowners to lose their properties and return to renting.

That’s according to a recent study that found 1 in 10 Black homeowners returned to renting between 1984 and 2017, compared to 1 in 20 white homeowners, the USA Today reported.

Dartmouth College researcher Gregory Sharp, who co-authored the report, said the difference could come down to the availability of extended-family wealth in helping pay a mortgage.

“They might not have access to wealth in the family,” Sharp said. “So, therefore, because African American homeowners are already at a more vulnerable state on average, it stands to reason that they’re worse affected by these types of disasters like Covid.”

The report found that the average net worth of a Black homeowner’s extended family was around $133,000. For a white homeowner’s extended family, it was about $400,000.

The report could provide more insight when it comes to the nearly 3 million American homeowners who had mortgages in forbearance as of late October. That number has been dropping recently, but there are concerns that a wave of foreclosures could come once those assistance programs expire.

Owning property itself is a huge part of building family wealth and is part of the reason why white families had a median net worth of $171,000 in 2016, about 10 times more than Black families had, according to the Brookings Institution.

Racist policies adopted generations ago, like redlining, still impact Black homeowners today. Since 1980, homeowners in redlined neighborhoods https://therealdeal.com/2020/06/12/homeowners-gained-far-less-equity-in-formerly-redlined-areas-study/ — areas with mostly Black residents where lenders refused to provide mortgages — have built just half the equity of homeowners outside those areas where loans were made available. [USA Today] — Dennis Lynch

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For some employees, WFH now includes a view of the Mediterranean

For some employees, WFH now includes a view of the Mediterranean

Palermo, Italy (iStock)

Palermo, Italy (iStock)

As winter nears and coronavirus infections spike in the U.S. and parts of Europe, some workers are heading for warmer, more remote climes.

Those fortunate Europeans and Americans — but not ultra wealthy — are leaving cities like Paris, London and New York for locales around the Mediterranean, according to the Wall Street Journal.

Besides the weather, some destinations have the added benefit of a lower cost of living. Jennifer Babin, whose employer is based in Paris, is working in Sicily. She pays about $710 per month for a two-bedroom apartment in downtown Palermo, a third of the rent she paid in Paris.

Manchester, England, native Duncan Wallis also moved to Sicily, and said he sees “no good reason to leave,” given that restrictions in Italy will be similar to those in his home country.

“I wanted to go to a place where I could get a bit of sunshine, spend more time outside, and where rents would be a little cheaper,” he told the Journal. “It’s working pretty well.”

Americans are restricted in their travel, but can get to some European countries if they are seeking residency. Jincey Lumpkin and her wife flew to Portugal from New York in September. They went house hunting with plans to stay permanently when their residency visa is approved.

Lumpkin works in the beauty industry as a writer and is still working on an East Coast schedule, which she says works with her night-owl schedule. She called it a “blessing in disguise” when she was laid off from an advertising firm this summer.
Some hotels are also offering long-stay packages catered specifically to people working abroad. [WSJ] — Dennis Lynch 

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Vornado halts sale of office towers co-owned with Trump

Vornado halts sale of office towers co-owned with Trump

From left: 555 California Street in San Francisco, Vornado CEO Steven Roth and 1290 Sixth Avenue in Manhattan (Photos via Wikipedia Commons; Getty; Trump Org)

From left: 555 California Street in San Francisco, Vornado CEO Steven Roth and 1290 Sixth Avenue in Manhattan (Photos via Wikipedia Commons; Getty; Trump Org)

Vornado Realty Trust has suspended its efforts to sell two trophy office towers that it co-owns with the Trump Organization.

The real estate investment trust has been looking for a buyer for its 70 percent stake in the buildings, located at 1290 Sixth Avenue in Manhattan and 555 California Street in San Francisco’s Financial District. Vornado was hoping to sell the properties for around $5 billion, the Wall Street Journal reported.

If the buildings had gone for that price, the Trump family’s 30 percent stake in the partnership would have been valued at around $1.5 billion.

But sources said Vornado could not attract buyers at that price, leading the firm to stop the sale. Potential conflicts of interest involved in making a deal with the sitting U.S. president might have given foreign buyers — who often snap up high-priced trophy properties — a second thought as well.

Vornado is now shifting its strategy for the properties.

“We are now focusing more on refinancing both assets,” said Doug Harmon, an investment advisor at Cushman & Wakefield, which was leading the sales effort for the Manhattan building. Eastdil Secured LLC was working on the San Francisco tower.

The Trump Organization is reportedly a passive owner and has no control over making sales decisions on the two buildings. In recent weeks, the company has halted its own sale of the Trump International Hotel in Washington, D.C., and while potentially letting go of its Seven Springs estate in Westchester County, New York.

“The Trump Organization is an incredible company with tremendous cash flow. We have never been stronger,” the company told the Journal.

[WSJ] — Akiko Matsuda

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San Diego REIT to pour $1.7B into life-sciences real estate

San Diego REIT to pour $1.7B into life-sciences real estate

IQHQ Stephen Rosetta and the San Diego Research and Development District (IQHQ)

IQHQ Stephen Rosetta and the San Diego Research and Development District (IQHQ)

The life sciences sector has officially become the in-thing for real estate investors.

Highlighting this interest, real estate investment trust IQHQ has raised $1.7 billion, which it plans to use for an existing development pipeline of 4.4 million square feet of life science projects in Boston, San Francisco and San Diego.

The $1.7 billion raise comes just nine months after the Solana Beach, California-based company completed its initial capital raise of $770 million.

IQHQ, formerly known as Creative Science Properties, recently purchased the 26.5-acre Alewife Park in Cambridge, Massachusetts, which has office and research space. It also broke ground on the Research and Development District, a 1.6 million-square-foot campus in San Diego that will have labs, offices and retail.

While the pandemic has pummeled other commercial sectors, demand for laboratory and research space is flourishing — and office landlords are hoping that the sector will fill the gap left by other tenants.

In New York, more than $1 billion of venture capital funding poured into life sciences last year https://therealdeal.com/2020/07/14/life-sciences-sector-proves-safe-haven-for-landlords/, up from $990 million in 2018 and $366 million in 2017, according to JLL.

In Long Island City, Alexandria Real Estate recently announced plans to turn a building once used for bookbinding into more than 175,000 square feet of laboratory and office space. And at 125 West End Avenue on the Upper West Side, Taconic Partners and Nuveen Real Estate are converting a former Disney-owned ABC campus into a 400,000-square-foot research center.

IQHQ CEO Stephen Rosetta said his company focuses on buying and developing new facilities, rather than converting other spaces for use by life sciences companies.

“The demand is for the new facilities,” said Rosetta, who adds that these companies typically want purpose-built spaces rather than conversions.

Rosetta said that IQHQ investors are largely institutional, sovereign wealth funds and large family offices. CenterSquare Investment Management, for example, invested $158 million in its most recent capital raise, according to a release.

IQHQ is led by Rosetta, who opened Cushman & Wakefield’s San Diego County office and held the position of vice chair. IQHQ executive chair Alan Gold was previously the CEO of BioMed Realty Trust, which sold to Blackstone in 2016 in a deal worth about $8 billion

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