National Cheat Sheet: The Oracle of Omaha gambles on retail, Chinese investment in US industrial sector rises by 540%… & more

From left, Aaron Grad, CEO LG Fairmont, Warren Buffett. (credits: LG Fairmont, Huffington Post)

From TRD New York: Warren Buffett invests in retail’s future

This week, Store Capital Corp. revealed that Warren Buffett’s Berkshire Hathaway bought a 9.8 percent stake in the investment trust, which largely specializes in single-tenant retail properties, like chain restaurants, veterinary offices and fitness centers. Buffett paid $377 million for his company’s stake, the Wall Street Journal reported. Store Capital is in 48 states with 1,750 locations and is valued at $5.5 billion. [TRD]

Study says Chinese investors increased spending on U.S. industrial real estate by 540 percent

In the wake of the e-commerce boom, Chinese investors are taking notice of the noise currently surrounding industrial real estate, according to a new report by on industrial capital markets by Avison Young. A massive $284.9M investment in industrial real estate was attributed to Chinese buyers in in Q1 2017, up from $5.2M for the same period the previous year. It’s a jump of 540 percent over a 12 month period. [Bisnow]

As interest rates rise and refinancings drop, lenders lower FICO score requirements

The FICO credit score required by lenders from borrowers to originate mortgage loans declined in April according to Urban Institute’s latest report. It stated that the increase in interest rates and the drop in refinance applications has caused lenders to soften their credit requirements. Since the housing crisis, the median FICO score has increased by 23 points and now stands at around 645, compared to the low 600s a decade ago. [HousingWire.com]

Worker shortage forces contractors to turn down work amid construction boom

With construction spending rising by 5.8 percent, or $359.5 billion, nationwide in early 2017, compared to the same time last year, construction companies are struggling to find enough workers to keep up with demand. In fact, according to the Wall Street Journal, one-third of contractors surveyed said that they have had to turn down work due to worker shortages. [TRD]

Housing prices continue to soar

Housing prices continued their unassailable ascent into the stratosphere in April, increasing by 5.5 percent nationally according to S&P Dow Jones and CoreLogic’s latest report. Seattle registered the biggest gain, 12.9 percent, followed by Portland and Dallas. [HousingWire.com]

Real estate data companies Costar and Xceligent trade insults and accusations in antitrust suit

Citing “an obvious abuse of power,” real estate data company Xceligent filed an antitrust lawsuit against competitor Costar. Xceligent claimed that Costar was stopping its users from sharing their data and is seeking monetary damages. In a statement about the countersuit, Costar, which filed a copyright infringement suit against Xceligent in December, accused the company of “industry scale theft.” [TRD]

E-commerce industrial sector generates $150M fund for Robinson Weeks

Robinson Weeks Partners has raised $150 million for a fund intended to target industrial real estate investment opportunities.“We see this e-commerce effect is really driving demand this development cycle,” president David Welch said. The Atlanta firm is led by industrial real estate vets Forrest Robinson and David Welch with long term build-to-suit developer Ray Weeks remaining as chairman. [Bisnow]

Major Market Highlights

Santa Monica votes to force full disclosure of hotel ownership

Fueled by Chinese insurance giant Anbang’s sizable strides in the American hospitality business, the Santa Monica City Council is taking measures to discourage further foreign investment in the sector. A vote to disclose hotel ownership followed complaints after Anbang spent $6.5 billion to purchase Blackstone’s Strategic Hotels and Resorts Inc., which included the Loews Santa Monica Beach Hotel. Anbang is currently converting New York’s Waldorf Astoria, which it purchased for $2 billion in 2014, into condos and local community groups fear a similar conversion of the Loews. [TRD]

Conjecture swirls on the effect lead generation could have on rockstar brokers

When a rookie agent landed the sale of a $17 million penthouse in Soho, New York City’s high-powered brokers started buzzing. Why? The lucky agent’s startup brokerage, LG Fairmont, had purchased their leads. The success of StreetEasy’s Premier Agent and Broker platforms is leading to intense debate regarding the possible effect this new style of marketing may have on the city’s established broker power houses. [TRD]

And now, StreetEasy takes aim at the NYC rental market

Following the victory with the Premier Agent and Premier Broker programs, StreetEasy has the rental market in its cross hairs. The site, which is owned by Zillow, has announced plans to charge agents $3 per day for each listing advertised. [TRD]

Miami takes a tough stance against Airbnb

South Florida doesn’t play when it comes to protecting its hotel industry from online home sharing companies like Airbnb and Home Away. Last year, Miami Beach raked in almost $1.6 million in fines, which start at $20,000 and double and triple for further violations.  Short-term rentals are only permitted in certain areas of the city, but the Miami-Dade County Commission is considering extending the ban to other areas, despite the considerable protestations of Airbnb. [TRD]



Source: The Real Deal South Florida

Ecclestone Palm Beach spec home sells to philanthropist for $11.7M

304 Garden Road Inset: Suzanne Frisbie and Allison Wren

A Palm Beach home developed by luxury homebuilder E. Llwyd Ecclestone III just sold to philanthropist Julie Fisher Cummings for $11.75 million, property records show.

Fisher bought the 9,100-square-foot home at 304 Garden Road Property under a trust listed in her name. The sale breaks down to about $1,291 per square foot.

It was listed for $12.75 million two days ago on Zillow, meaning it sold for a 7.8 percent discount. Corcoran Group’s Suzanne Frisbie and Allison Wren were the listing agents.

Fisher comes from a long family line of philanthropy. Her parents ran the Max M. & Marjorie S. Fisher Foundation, named after them, where Julie now serves as its vice chairwoman. She is also the presidential appointee of the Corporation for National and Community Service, which is just one of the many charitable activities she helps run.

Ecclestone III, son of PGA National’s developer John Ecclestone, completed the house this year, according to online listings. Records show he bought the home under the Palm Beach-based entity PB Housing Investment LLC for $4.7 million in 2015.

The home sits on a half-acre lot and features a library, a formal dining room, a custom wine room, a three-car garage and an equipped kitchen with a butler’s pantry. Outside there are two Banyan trees, a loggia and a pool that stretches 60 feet lengthwise, according to the listing.

This is the second sale in less than two weeks for homes along Garden Road. Beer industry heir Peter Busch Orthwein bought a neighboring 5,500-square-foot home at 202 Garden Road for $5.7 million or $1,042 per square foot.

Earlier in the month a larger oceanfront house at 1565 North Ocean Way in Palm Beach was sold by billionaire George Lindemann and his wife Frayda for $25.2 million – 21 percent below the asking price. Records show, the Lindemanns bought the 3.4-acre property in 2008 for $23.5 million.

Palm Beach County saw an increase in residential sales volume last month, according to the Realtors Association of the Palm Beaches. Residential sales rose 5.8 percent to 3,188 from 3,012 the previous year.



Source: The Real Deal South Florida

A new Zillow Zestimate-style way to estimate home equity

Kenneth Harney

Do we really need another Zillow Zestimate-style online gizmo to tell us what a computer model says our homes are worth? Probably not. There already are scads of real estate and mortgage websites that offer some type of automated home valuation feature, such as Redfin, Realtor.com, Chase Mortgage, RE/MAX, Homes.com, Bank of America Mortgage and Coldwell Banker, to name just a handful.

You’ve likely visited one or more of them — and you know that virtually none comes up with the same value conclusions. In fact, too often they don’t come anywhere near what local realty agents and professional appraisers tell you is the current market range for your property.

So why would a well-known company venture out with a new version so late in the game? Lending Tree, the popular mortgage site, which debuted its own valuation model earlier this month, can tell you why: Because none of the other value estimators calculate your home equity or suggest how and when you might want to tap into it.

Is that important to you? Maybe, maybe not. Say you don’t pay much attention to what houses like yours are selling for lately so you’re not quite sure what your home is worth. You probably have a better sense of the balance on your mortgage since it’s typically included with your monthly loan statements. But without a good fix on the home value, you’re missing the essential ingredient.

Your equity at any moment is your home’s worth minus the debt against it. If you own a $400,000 house and you’ve got a $250,000 mortgage, you’ve got $150,000 in home equity, exclusive of transaction expenses if you sold the place.

But even with that knowledge, the question remains: What would it cost to turn some of that equity into spendable cash, whether for home improvements, kids’ college tuitions or some other worthy purpose?

This is where Lending Tree believes it has an edge: It’s got your mortgage balance information and can provide what it purports to be your home value estimate — together. Once you’ve indicated that you’d like to check rates and terms on home equity lines of credit (HELOCs) or home equity loans, you’ll get preliminary offers from “up to five” competing lenders from the company’s network of 40 banks active in those products, according to Charles Battle, Lending Tree’s director of product management.

If you’re not quite ready to move ahead but instead prefer to track your equity, credit and mortgage situation on a regular basis, you can sign up for a more comprehensive “My Lending Tree” service, for which there is no charge. It provides you monthly updates plus periodic “alerts” on your home equity movement. You get an alert when there’s “an actionable opportunity” for you to tap into your equity on favorable terms, based on “real-time market data,” changes in your credit files and equity levels, according to the website. There’s no requirement that you take any action. “You can ignore it,” says Battle, but it’s designed “to tell you when you can save money.”

Before checking out this new entrant into the home valuation arena, what do you need to know about Lending Tree and the accuracy of its estimates? Lending Tree describes itself as “the nation’s leading online loan marketplace” connecting “consumers with multiple lenders who compete for their business.” Visitors can get quotes from lenders on first mortgages, credit cards, student loans, personal loans, reverse mortgages and home equity products.

In the fine print on its website, though, the description is more legally precise. The company is “a marketing lead generator” and “a duly licensed mortgage broker.” Lenders pay Lending Tree for “leads” — that’s what you are when you indicate you’d like to receive offers. Be aware that before you can get any competing offers, you need to divulge some highly sensitive information about yourself — name, address, Social Security number, income, credit and the like — the same as you would for any other mortgage application. If you’re not willing to do so, you won’t be able to get offers.

How does Lending Tree’s valuation model stack up against well-established players such as Zillow and Redfin? That’s hard to know because unlike those two, Lending Tree does not divulge its model’s median error rate. The company does say that its accuracy is “regularly tested” and is “similar to other high quality [valuation models] on the market.” Hmmm.



Source: The Real Deal South Florida

Airbnb to launch listings website for mansions

An NYC mansion and Airbnb’s Joe Gebbia, Nathan Blecharczyk and Brian Chesky (Credit: Getty Images)

From The Real Deal New York: Airbnb is planning to launch a luxury rental website for mansions and penthouses.

The new service doesn’t have a name yet, but the company’s managers refer to it as “Airbnb Lux,” Bloomberg reported.

Earlier this year Airbnb bought the Canadian high-end rental site Luxury Retreats for a rumored $200 million. The site’s 4,000 listings have not yet been incorporated into Airbnb.

The San Francisco-based tech giant, which investors valued at $30 billion, is planning to break up its products into different price segments much like hotel companies do. It already operates Airbnb Select, which offers more standardized services than most common listings.

Four Seasons announced this month that it is launching an app to better appeal to millennials and compete with Airbnb in the market for young rich people.

Earlier this year, Onefinestay, a high-end London-based rival to Airbnb that offers hotel services to hosts and travelers, expanded into the Hamptons.  [Bloomberg]Konrad Putzier 



Source: The Real Deal South Florida

Drop in residential construction brings down spending in South Florida in May

Construction in Sunny Isles Beach

South Florida developers broke ground on fewer projects in May year-over-year and year-to-date, according to the latest Dodge Data & Analytics report.

Overall, spending was down 5 percent in May compared to the previous year, and on a cumulative basis construction contracts were down 10 percent. Both declines were due to a big drop in residential construction, the report shows.

In May of this year, residential construction starts totaled $372 million, down 24 percent from $487 million. Commercial fared much better, with $297 million in spending recorded in May up 35 percent from $220 million last year.

So far this year, construction spending is down 10 percent to nearly $4 billion from about $4.5 billion for the same period last year. Commercial increased by 26 percent to $1.9 billion from $1.5 billion; and residential declined by 29 percent to $2 billion from $2.9 billion during January to May of last year.

May’s overall drop in construction spending is a sharp decline from the previous month. Construction starts were up 80 percent in April compared to the year before.

The slowdown in condo development has siphoned some of the fuel that has propelled the construction business in Miami-Dade, Broward and Palm Beach counties, South Florida’s biggest general contractors told The Real Deal in its June issue.

And in the shadows of the gleaming new condo towers, construction contractors are moving on, building more airport concourses, schools, rental apartments, offices, bridges and more.



Source: The Real Deal South Florida

Miami real estate agent sues Airbnb over “fraudulent” rental

521 Northeast 68th Street

In a twist on an alleged Airbnb scam, a real estate agent is accusing the online short-term rental listings company of allowing an unauthorized individual to rent out a client’s Miami property without her knowledge.

Realtor Yarden Bayles is suing Airbnb in Miami-Dade Circuit Court to recoup $29,500 in rental fees she paid the property owner out of her own pocket and for an undetermined amount of damages.

In recent years, the Federal Trade Commission has received dozens of complaints from Airbnb users who rented homes from alleged hosts who would request payments be made via wire transfer instead of the company’s online platform. The guests would subsequently learn the properties were not available and that they had been scammed.

In Bayles’ case, an individual named Mihael Yordanov allegedly fraudulently listed a duplex at 521 Northeast 68th Street in Miami’s Morningside neighborhood on an Airbnb account with his information, asserting himself as the property’s owner, the recently filed lawsuit states.

Bayles, who has her own Airbnb account that she uses to list numerous properties, including the duplex, said in the suit that a woman booked the home via Yordanov’s account for four weeks between March 12 to April 6. The renter paid him $29,500 via Airbnb, the lawsuit alleges.

However, when the guest arrived on March 12, Bayles turned her away because she had no knowledge of the “fraudulent reservation” and she hadn’t received any payment, the lawsuit states.

Airbnb spokesman Ben Breit declined to comment on the specific allegations, other than saying, “We are reviewing the matter and are working to address Mrs. Bayles’s concerns.”

Bayles’ lawyer Krysten Pogue declined comment.

According to the lawsuit, Bayles and the property’s real owner spoke to an Airbnb representative only identified as “Joseph” and provided proof that Yordanov had no right to list or rent the duplex. Joseph allegedly told Bayles that Airbnb would pay the proper rental amount for use of the duplex if she allowed the guest to stay for the agreed upon rental term.

However, Airbnb never made the payment, despite numerous attempts by Bayles and her attorney, according to the suit. Bayles wants Airbnb to reimburse her the money that she was forced to pay the owner from her own funds, as well as pay her for the loss of goodwill from her clients, additional cleaning and servicing fee and emotional distress.



Source: The Real Deal South Florida

First Real Madrid Café in US to open at Met Square in downtown Miami

Rendering of Met Square and Cristiano Ronaldo

The first Real Madrid Café in the United States will open at Met Square in downtown Miami, the Spanish soccer brand announced on Thursday.

The 12,000-square-foot, two-story facility at 340 Southeast Third Street will feature a restaurant, bar, Real Madrid-themed merchandise store and a VIP Lounge. It is expected to open in early 2018.

The space will include 4,000 square feet on the ground level and 8,000 square feet on the second level on the southeast corner of Met Square overlooking the historic Indian Circle, Lyle Stern, president of the Koniver Stern Group, told The Real Deal.

Stern brokered the lease on behalf of MDM Group, the developer of Met Square.

“Heres a global brand, the most important soccer franchise out there, and they look around North America to launch this new restaurant concept, and they examined so many markets and they chose Miami….” Stern said. “For Miami, Real Madrid is a great statement, and for downtown Miami and Brickell and Met Miami in particular, it’s fantastic.”

Kevin Lurie, principal of Creative Realty Group, LLC, represented Real Madrid Café in the deal.

Real Madrid is one of the world’s most valuable soccer clubs, worth $3.58 billion, according to Forbes. It is also among the highest revenue-generating teams, bringing in $688 million in the 2016-2017 season.

American Franchise Group, which has a partnership agreement with Real Madrid throughout the Americas, plans to bring the Real Madrid Café brand to other cities during the next five years, and is in the process of identifying locations, according to a release.

Met Square is expected to be delivered this fall, Stern said. It is the final phase of Metropolitan Miami, which includes Met 1, a 447-unit, 40-story luxury residential tower that will feature Novikov Bar & Grill; Met 2, which is the Wells Fargo Center, a 47-story, 752,000-square-foot Class ‘A’ office tower and adjoined 41-story JW Marriott Marquis Miami and Hotel Beaux Arts Miami; Met 3, the Whole Foods, parking garage and luxury residential tower by Zom, as well as the under-development Met Square. 

In addition to the Real Madrid Café, Met Square will feature a Silverspot Cinema, additional restaurants, retail outlets and residences.



Source: The Real Deal South Florida

Can Thor Equities survive a retail apocalypse?

(Illustration by Kagan McLeod)

From TRD New York: It took Joe Sitt [TRDataCustom] less than 30 minutes to agree to pay Aby Rosen $132 million for a trio of buildings at 516-520 Fifth Avenue in 2011. It was a rapid-fire deal even for the Thor Equities CEO — who one friend described as New York real estate’s version of the Tasmanian Devil.

“He’s really fast, and I love fast people who can be decisive in the moment,” Rosen, co-founder of RFR Holding, told The Real Deal. “He called me up, and I gave him the price. He said, ‘I’ll call you back in 20 minutes.’ That same day, we signed the contract.”

Rosen described Sitt as one of the gutsiest players in the business: Someone who knows what he wants and who goes after it relentlessly.

“What motivates him? He wants to make money, and he wants to be famous for making money. I like that,” Rosen quipped.

The property was among more than 20 retail-driven assets that Sitt’s firm, Thor Equities, scooped up on Fifth Avenue and in Soho over the past six years — several at record-breaking prices. The spree led some in the industry to say that Sitt was overpaying to secure deals and setting a new benchmark for the market, thereby forcing himself and his competitors to lock in unprecedented rents to make transactions pencil out. While he wasn’t the only one paying such hefty amounts for luxury mixed-use buildings in prime Manhattan neighborhoods, Sitt has become the de facto poster boy of the retail bubble.

In the case of 516-520 Fifth, however, his bullishness paid off. Even though Sitt scrapped plans to redevelop the site into a residential and retail tower, he demolished the three adjacent buildings and resold the dirt for a whopping $275 million at the top of the market in 2015. That sale netted him and his investors — who had bought into the property through a private fund raised by Thor — a hefty profit.

But fast-forward to 2017, and with retail rents taking a very public nosedive, industry insiders wonder whether Sitt indeed took a larger bite out of retail than he could chew. Some also question whether he’s been ensnared by the inflated values he worked so hard to push up. Meanwhile, his firm has been hampered by a number of senior-level departures in recent months.

“Joe had a theory for a while,” said one major retail investor, who spoke on the condition of anonymity. “He said, ‘I’ll buy something, keep it vacant and sell the dream to a new buyer.’ When the market’s going up, that works great. But people are not buying into the dream anymore.”

Thor has seen the number of high-profile vacancies on its books steadily grow since Manhattan’s luxury retail market started to take a turn last year. Among those vacancies are retail spaces at 530 Fifth and 680 Madison Avenue — in the city’s priciest submarket. The firm also has a handful of empty storefronts elsewhere in Manhattan, including 11 Greene Street in Soho and 212 Fifth in NoMad.

Thor recently inked a one year lease with Lululemon Athletica
at 597 Fifth Avenue for an undisclosed price.

Moves by Sitt over the past two years to try to sell some of those properties in favor of moving into new markets have led to speculation that Thor is under pressure to lease the spaces or find some other way to liquidate its investments. Plans to pivot into the high-end rental market also appear to have floundered after two key residential executives left the firm to go it alone.

“There was a real frothy investment strategy from a lot of companies buying retail real estate, and that turned into overpaying,” said seasoned retail broker Robert Futterman, chairman and CEO of RKF. “Now an adjustment is happening, and the rents they needed to accomplish their goals have changed.”

What will that mean for Sitt?

“If he doesn’t produce, people should be a little more forgiving because he made money for them in the past,” Rosen said. “You can be the greatest operator, but if the timing isn’t there, the timing isn’t there. You may need time to fix things.”

Though Sitt declined to talk on the record for this story, Melissa Gliatta, Thor’s chief operating officer, told TRD that the vacancy narrative was slightly overstated.

“We’ve had a lot of success on Fifth Avenue, but certainly we still have some spaces we’re leasing,” she said. “But it’s become a story that’s bigger than it’s necessarily worthy of. Sometimes to get a space leased, you have to give up the rents a little. It’s a little disappointing when that happens.”

The debt game

In a bid to relieve some of the pressure, Thor recently inked a one-year lease with Lululemon Athletica at 597 Fifth for an undisclosed price. That deal would buy Sitt some time to find a longer-term solution, without putting a $105 million commercial mortgage-backed securities loan attached to the property in jeopardy.

Edward Dittmer, a senior vice president at ratings agency Morningstar, said his firm recently flagged the loan, issued by UBS, after cosmetics giant Sephora decided not to renew its lease for the 12,000 square feet of retail space — making the building a potential credit risk. While Sephora was paying a relatively low $613 per square foot, its lease accounted for a significant chunk of the 80,000-square-foot building’s rent, he said.

“Because that was such a large percentage of rent, they’ve been put in a position where the cash flow will not cover the debt service,” Dittmer noted.

That situation could repeat itself across Thor’s portfolio.

A mezzanine loan held by real estate investment trust SL Green Realty on 590 Fifth is also said to be under scrutiny, since Thor has been unable to find a tenant that could take the whole retail component as a flagship since it purchased the building in 2007. Representatives for SL Green declined to comment.

And at 680 Madison, the occupancy rate for the retail space as of December was 53 percent, including a recent 15-year lease signed with Tom Ford for 12,300 square feet. Sources said Thor has been trying to refinance a $185 million loan on the property originated by Morgan Stanley. That loan is also on Morningstar’s watch list.

The ratings agency has broader concerns about leasing prospects on Fifth Avenue, since asking rents appear to be so significantly out of sync with what tenants are willing to pay, Dittmer explained.

At the same time, the gap between face rents and net effective rents — which factor in the total amount of concessions — is widening. While a recent report by the Real Estate Board of New York showed that Fifth Avenue rents were down by just 2 percent to an average of $3,324 a square foot over the past year, sources told TRD that the real reduction is much more pronounced.

“The face rent hasn’t come down by a drastic percentage, but landlords’ contribution to construction is much greater,” Futterman said.

Susan Kurland, co-head of Savills Studley’s global retail services group, echoed that point. “In order for landlords to keep their lenders happy, many will be giving additional free rent,” she said. “The landlords need to get a certain [amount from tenants] because they’re financed at a certain rate and still need to have those numbers in the lease. They’ll be offering packages with additional free rents and money toward construction.”

In some cases, insiders say, Thor and its contemporaries were instrumental in pushing up rents on the thoroughfare — and thereby the value of their properties — by making side deals to fund construction for tenants or inking deals with retailers that they actually have ownership stakes in.

Sitt, for instance, is said to own a stake in Brioni, a high-end fashion house that inked a deal at his retail condominium at 680 Madison in 2015 — setting a near-record rent of $3,000 a foot. A spokesperson for Thor declined to comment on the Brioni lease deal or any potential investment in the  Italian menswear designer.

And when Sitt secured Valentino as the anchor tenant at 693 Fifth for an all-time high $3,000 a foot for the area, skeptics argued that the rent price was offset by the fact that he had subsidized the fashion label’s buildout. Sources close to Thor refuted that.

Some believe Sitt is reluctant to blink and sign leases below the advertised rent for fear of resetting the market at too low a price. According to several people familiar with the company’s strategy, the Thor CEO is also wary of falling short of the numbers he projected to investors.

Still, Futterman said he doesn’t expect many lenders to try to move in and foreclose on properties. “Lenders don’t really want the keys back, but I do see owners looking to shed or refinance some properties [early],” he noted.

Others said that Thor’s investors will stay patient for the time being, since Fifth Avenue will remain a trophy retail strip even if there’s a dip in rents.

“He has good fundamentals in his favor,” said Faith Hope Consolo, who heads Douglas Elliman’s retail division. “The number may not be where they were when he bought, but nothing retains value long-term like Fifth or Madison or Soho.”

Many of the industry players interviewed for this story argued that Sitt would not be defeated even in the worst of circumstances. The Brooklyn-born entrepreneur started Thor in his New York University dorm room in 1986 and grew it into an $18 billion company. He later launched Ashley Stewart — a plus-size women’s clothing company — in 1991, and the company went on to open more than 380 stores across the country. Sitt reportedly came up with the idea after having trouble bringing retailers to inner cities.

“He resents failure,” said Sitt’s friend Morris Moinian of Fortuna Realty Group.

Cashing out

While industry observers continue to debate the state of the city’s retail market and whether the bubble has burst or is still collecting hot air, Sitt appears to be slipping through the back door. Over the past 18 months, he has quietly made it known that he’s willing to sell many of his company’s prized retail assets, as well as a slew of residential properties.

Several buyers said they have received for-sale notices on more than 10 Thor properties, including its global headquarters at 25 West 39th Street and several buildings the firm co-owns with General Growth Properties.

Sitt has already disposed of a handful of his firm’s assets —some at a great premium.

When he sold 693 Fifth for $525 million last year to French billionaire Marc Ladreit de Lacharrière, the price was nearly four times what Thor paid to buy the 20-story building from the Japanese department store Takashimaya in 2010. And his firm got $38.5 million for a retail condo at 38 Greene Street, more than double what it paid in July 2014.

Thor’s spokesperson said the profits from those sales were invested in assets in emerging markets in the Midwest and on the West Coast, including several in Chicago’s Fulton Market and in tech-driven assets in San Francisco. Gliatta attributed some of the sales push to Thor’s fund-based model — in which the John D. and Catherine T. MacArthur Foundation, the University of Notre Dame and the University of Michigan, among other institutions, invest for set periods. Much like a private equity firm, Thor is contractually obligated to sell the assets purchased with fund dollars, including 520 and 693 Fifth, when the fund’s term ends.

Joe Sitt has dealt with a number of senior level departures in recent months.

On Thor’s private deals, investors have included White House chief economic adviser and former Goldman Sachs President Gary Cohn and Etienne Paris of Innovo Property Group. Sitt regularly entertains his financial backers and other partners in his sleek penthouse office on West 39th Street, where he shows them his tequila collection, according to several people with intimate knowledge of the matter. The office is decorated in thick patterned rugs and spotted with art books, horse saddles and press clippings.

“It comes off like an old-money, old-guard institution,” one source said on the condition of anonymity.

Nonetheless, some of Sitt’s attempts to sell assets have fallen short.

Thor reportedly came close to selling a mixed-use building at 875 Washington Street to San Francisco-based investment firm Shorenstein Properties this year, but the deal fell through. The firm is now in contract to sell its stake in the building to its partner, ASB Real Estate Investments’ Allegiance Real Estate Fund, TRD reported in late May.

And the New York real estate development arm of the Turkish jewelry company Gulaylar Group sued to get out of buying 685 Fifth for $150 million, claiming that Thor’s partner GGP had promised to finance the deal but hadn’t delivered.

Sitt recently hinted that his selling spree may be slowing.

“We, for the last few years, have probably been net short on New York City,” he said during a television interview on Bloomberg News in March. “But now we’re probably reversing back, as there’s a little more value in the market.”

Gliatta said Thor is likely to focus more on emerging New York retail markets in the near future. “When some of the pricier areas get very pricey and we’re a value-add player, we might step out of those markets and into Brooklyn and Long Island City, where we can execute on the value-add strategy,” she said.

The company has also been aggressively moving into foreign markets and has acquired assets in London, Paris and Madrid. Meanwhile, Thor is trying to raise between $350 million and $400 million from retirement funds and international investors to plow into retail centers and mixed-use projects in Mexico.

Resi dreams deferred

For the past year and a half, it seemed that Sitt and his associates were moving deeper into the residential sector, but industry observers say that push has lost steam in recent months.

Those rumblings began when Sitt sold his stake in Town Residential to the Manhattan brokerage’s founder and CEO, Andrew Heiberger, in July 2016.

Then just last month, the investment firm GreenOak Real Estate bought Thor out of its interest in three Upper West Side multifamily properties — at 120 and 125 Riverside Drive and 150 West 82nd Street — in a deal valuing the buildings at a combined $190 million. Thor paid $80 million for its stake in the properties in 2014.

Similarly, the firm exited a deal for a 280,000-square-foot Bronx rental building at 975 Walton Avenue after entering contract in September to buy it from Brooklyn investor Benzion Kohn for $42.5 million. Sources at Thor said the change of heart had to do with the condition of the building rather than the company’s overall strategy.

However, both purchases were led by Thor’s former top residential executives Alan Klein and Jonathan Fishman, who left the company this year to launch Weaver Street Partners, a multifamily investment firm backed by Silverpeak Real Estate Partners.

They’re not the only ones to have departed Thor in 2017. Bert Dweck — who led business development at Thor Retail Advisors and partnered on several Thor investments— recently left for Premier Equities, a company headed by Sitt’s occasional business partner Yaron Jacobi, though he remains as an investor in some of Thor’s deals. Meanwhile, retail leasing specialist Michael Worthman, whose name was famously plastered all over vacant storefronts, jumped to Vornado Realty Trust this spring.

And Michael Schurer, Thor’s longtime chief financial officer, resigned from his post this year to work primarily on investments in Mexico under the umbrella of Thor Urbana Capital. He was replaced by Fess Wofse, who previously served as CFO for Apollo Global Real Estate.

Several sources told TRD that the exodus had set off alarm bells in the New York real estate market that all was not well at Thor. But Gliatta downplayed the defections.

“A couple of people leave and you’d think it was Armageddon or something, which is absolutely not the case,” she said. “We’re a growing business.”

And not everyone in the industry thinks Sitt is down for the count.

“We’re not taking up a collection for Joe,” Consolo quipped about the recent challenges the Thor chief has faced. “He always has something up his sleeve.”

(To view commercial sales transactions from Thor Equities, click here)



Source: The Real Deal South Florida

Keurig Green Mountain billionaire sells Palm Beach mansion for $13M

11 Via Vizcaya and Bob Stiller

Coffee magnate Bob Stiller sold his Palm Beach mansion for nearly $13 million, property records show.

Stiller, founder of Keurig Green Mountain, sold the 9,435-square-foot, four-bedroom home at 11 Via Vizcaya to a trust managed by Andrew W. Regan, a New York-based real estate attorney.

The property was developed in 2009 and includes a pool, a boat dock and frontage on the Intracoastal. It also has hard wood and marble floors, a guest apartment and a three-car garage. It’s unclear if a Keurig machine was included in the deal.

The two-story mansion was listed with Palm Beach broker Lawrence Moens of Lawrence A. Moens Associates. for $15.85 million, which means it sold for an 18 percent discount, according to Moens’ website. The deal breaks down to about $1,374 per square foot.

Moens could not immediately be reached for comment.

Stiller paid nearly $10 million for the property in 2011, records show. Forbes ranked the coffee tycoon a billionaire in 2015. The self-made businessman got his start selling cigarette rolling paper in the early 1970s, then used his profits to buy a coffee store that eventually became a manufacturer, Green Mountain, and later invested in what became Keurig, according to Forbes.

His attorney, Stephen P. Magowan, signed the deed transfer of ownership on behalf of The P.C. Grace FL Revocable Trust. In May, an entity managed by Magowan sold a waterfront lot up the road at 235 Via Vizcaya for $5 million.

The Palm Beach Daily News first reported the sale.



Source: The Real Deal South Florida

CoStar rival files antitrust suit to end alleged “decades-long monopoly”

CoStar’s Andrew Florance and Xceligent’s Doug Curry

From The Real Deal New York: Real estate data company Xceligent filed an antitrust lawsuit against CoStar, alleging that the $9 billion behemoth is precluding its users from sharing their own data and stifling competition.

“We gladly take up this fight and we will not rest until the industry has clear safeguards against an obvious abuse of power by CoStar,” Xceligent’s CEO Doug Curry said in a statement. The company seeks monetary damages and is “asking the federal government to bring an end to CoStar’s decades-long monopoly in the CRE information industry.”

In a statement, CoStar said Xceligent’s “efforts to make this about broker provided content and broker websites is contradicted by the facts. This is about industrial scale theft orchestrated by Xceligent in the U.S. and abroad.”

Xceligent, which is owned by an affiliate of the Daily Mail Group, filed its complaint as a countersuit to CoStar’s December copyright infringement lawsuit, which is still ongoing. In that suit, CoStar alleged that Xceligent employees deliberately stole images and data from CoStar’s database, which Xceligent denies.

In its countersuit, Xceligent claims that CoStar is blocking its users from sharing their own data with CoStar in violation of a 2012 Federal Trade Commission ruling. Xceligent also claims that it “has committed over $150 million to expand its market presence to compete with CoStar, but that CoStar’s anticompetitive and exclusionary conduct has slowed Xceligent’s growth.”

The Missouri-based company is working at expanding into CoStar’s biggest market: New York City. In May, it reached a deal to integrate its platform with CompStak, a leasing comp database.

CoStar’s competitors have long accused the Washington, D.C.-based company, which has a market cap of $8.6 billion, of using lawsuits to bully them. The firm has filed copyright infringement lawsuits against crowdsourced property database RealMassive and against CompStak users in the past.



Source: The Real Deal South Florida