Monthly Archives: February 2018

Bill allowing state to oversee vacation rental regulations put on hold

(Credit: Wikimedia Commons)

Local regulations regarding short-term rentals are likely to stay in place, as this year’s Florida legislative session comes to an end next week.

New rules that would allow the state to take over vacation rental regulations and eliminate local government authority have stalled during the session, according to the Florida Times-Union.

Earlier in the month, a bill governing vacation rentals passed the state Senate Community Affairs Committee. Under the proposed bill, regulations on vacation rental properties would be uniform across Florida. Currently, many municipalities have their own sets of regulations, including Miami, Miami Beach and Surfside.

State Sen. Greg Steube, R-Sarasota, who sponsored the bill, told the Florida Times-Union that he does not see the legislation passing this year, meaning local regulations governing vacation rentals are likely to remain in place.

The latest bill was a merged version of Steube’s and state Sen. David Simmons, R-Altamonte Springs. It proposed that vacation rental properties would be regulated like hotels and motels, so owners who hold five or more properties would be obligated to semi-annual inspections by the state. The bill would also require hosts to provide the state with emergency phone numbers to be shared with local governments.

Vacation rental ordinances passed before June 1, 2011, would remain in place, according to a bill amendment. [Florida Times-Union] – Amanda Rabines

Source:: The Real Deal

Google has its goggles set on new apartments for employees

Googleplex in Mountain View, California and Katerra’s Michael Marks (Credit: Robbie Shade/Flickr, Katerra)

Google is preparing to build a village in its own backyard.

The tech giant is asking a handful of prefab housing startups for proposals to build 10,000 apartments for employees as part of its huge Mountain View Googleplex HQ, according to The Information.

The tech giant has solicited at least eight firms and has met with representatives from Katerra, a Menlo Park-based technology company that handles various aspects of the building process. In January, Katerra raised $865 million from Japan’s SoftBank, which it will use to add factories and fund research and development.

The Google project would be a huge injection of housing to the area, and is necessary if Google wants to expand operations there. Fewer than 5,000 units of housing were built in Santa Clara County between 2003 and 2014, according to The Information, but Google employs 20,000 people there, mostly at its 750,000-square-foot headquarters.

The proposal hints at opportunities beyond the huge Mountain View project. It notes that Google wanted to “form relationships with one or more companies and work collaboratively with these companies on future housing projects,” according to the report. Letters were also sent to Full Stack Modular, Plant Prefab and Factory OS, which is building 300 temporary apartments for Google, also in Mountain View.

Google’s parent company, Alphabet Inc., has a real estate portfolio worth an estimated $14.5 billion. Around About 30 percent of that is concentrated in New York City, where earlier this month The Real Deal reported Google was in contract to buy the Chelsea Market building for an estimated $2.4 billion. [The Information] — Dennis Lynch

Source:: The Real Deal

Miami-Dade is swimming in condos, with 4 years of luxury supply: report

Miami Beach skyline (Credit: Pixabay, Max Pixel)

Miami-Dade County has four years of luxury condo inventory – not including the glut of preconstruction condos being marketed for sale.

Nearly 2,800 units are on the market asking at least $1 million, according to a new report from Condo Vultures Realty. In 2017, 681 luxury units sold in the county, meaning an absorption rate of about 57 units a month.

Six months of supply generally makes for a balanced market. Anything over that suggests a buyer’s market, while years of excess supply suggest developers and sellers will be sitting on product for a long time.

That means that there are about three years of excess luxury condo inventory in Miami-Dade.

About 152 luxury condos are under contract for an average asking price of more than $3.3 million, or about 1,100 per square foot as of Tuesday. The average closing price in 2017 was less than $2.4 million, or about $910 per square foot, according to the report. That’s 28 percent lower than the current average asking price.

According to Condo Vultures, there are nearly 47,500 units in the development pipeline in South Florida since the new cycle began in 2011. That includes projects that have been proposed, planned, or are under construction or completed in Miami-Dade, Broward and Palm Beach counties east of I-95.

Developers, brokers and sellers in South Florida’s luxury condo sector have been forced to adjust their pricing, wait longer for units to sell and scour the globe for new buyers amid the luxury market slowdown. The condo market has slowed since the beginning of 2016, due in part to foreign economic and political turmoil and currency fluctuations.

A report from August found that the Bal Harbour, Surfside and Bay Harbor Islands market was facing two years of excess luxury condo inventory.

Source:: The Real Deal

Angelo, Gordon & Co. and partner plan self-storage facility in Homestead

Rendering of self-storage facility (Credit: Andover Properties)

A joint venture between the New York-based investment manager Angelo, Gordon & Co. and Andover Properties is planning to develop a 110,000-square-foot self-storage facility in Homestead, and is expecting to score nearly $6 million in construction financing, The Real Deal has learned.

Brian Cohen, president of Andover, which does business as Storage King USA, said the partners expect to close on the construction financing within the next couple of months. Records show the joint venture purchased the 3-acre property at 1235 Northeast 12th Avenue in October for $1.2 million, under the entity AGAP Homestead LLC.

The developers want to build a multi-level climate controlled facility, as well as several smaller, single-story buildings that will house some drive-up storage units. The storage facility is scheduled to be completed by the end of the year, according to a press release.

Andover owns and operates 28 self-storage facilities throughout the United States.

Development of self-storage facilities has increased nationwide. The annual rate of new self-storage construction was $4.6 billion last year, on a seasonally adjusted basis, or double that of the previous year, according to Census Bureau figures.

Self-storage real estate in South Florida has also recently garnered the attention of some prominent storage operators and investors. In November, Prudential paid $18.5 million for a new 101,000-square-foot self storage building in Little Havana.

CubeSmart, a Pennsylvania-based self-storage real estate investment trust, also recently bought properties in Delray Beach and Oakland Park and will manage a facility under construction near Coral Gables.

Haru Coryne contributed reporting.

Source:: The Real Deal

HUD spends $31K in taxpayer money on dining room furniture for Ben Carson

The HUD Headquarters at the Robert C. Weaver Federal Building in Washington, D.C. and Ben Carson

Ben Carson, self-proclaimed cost cutter at the helm of the Department of Housing and Urban Development, spent $31,000 in taxpayer money on a new dining room set for his office. And he doesn’t plan to return it.

The department did not ask for approval from Congressional appropriations committee, which is required for any office redecoration costing more than $5,000. The justification, according to a HUD spokesperson: the table, which sits inside Carson’s office, serves a “building-wide need.” The table was bought from a company in Carson’s hometown, Baltimore, the New York Times reported.

An agency spokesperson said Carson wasn’t aware of the purchase but does not plan to return it, according to the Times.

Last year HUD official Helen Foster filed a complaint alleging she was demoted after she resisted Carson’s wife Candy Carson’s requests to sidestep the $5,000 law. According to Foster, HUD interim Craig Clemmensen asked her on Candy’s behalf to “find money” to pay for the decoration in January 2017. Foster refused, and was later demoted from chief administrative officer to a new role overseeing the agency’s Freedom of Information Act requests, she said.

The HUD spokesperson claimed Foster was reassigned as part of a routine reorganization of the agency. “Secretary Carson, to the best of our knowledge, is the only secretary to go to the subbasement at his agency to select the furniture for his office,” the spokesperson said.

Meanwhile Carson is also under pressure for bringing his son, whose company does business with the federal government, along on an official tour of Baltimore year. The agency’s inspector general is looking into the trip, and whether it created conflicts of interest.

Earlier this month the White House proposed slashing HUD’s budget by $8.8 billion, or 18 percent. Carson, a retired neurosurgeon, has warned against making publuc housing “too comfortable” for residents. [NYT] — Konrad Putzier

Source:: The Real Deal

Trump Organization settles lawsuit over Jupiter golf club dispute

Trump National Golf Club Jupiter and Donald Trump (Credit: Nicklaus, Wikipedia)

The Trump Organization has agreed to settle a lawsuit brought by at least 65 former members of Trump National Golf Club Jupiter, ending a dispute that began in 2013.

Trump agreed to pay the former members $5.45 million, or 94 percent, of the judgment ordered by a federal judge last year, an attorney for the plaintiffs told the Sun Sentinel.

A group of ex-Trump National Golf Club members filed a class action suit in 2013, about a year after President Trump bought the then-Ritz-Carlton Golf Club & Spa for $5 million. The property, off of Donald Ross Road at 115 Eagle Tree Terrace, had been losing as much as $4.1 million per year. And the sale came with the understanding that Trump was assuming liability for $41 million in refundable deposits that former members were waiting to receive.

Resigned members, who were previously allowed to use club facilities while waiting for their deposits, were barred from entrance. At the time, Trump wrote in a letter, “As the owner of the club, I do not want them to utilize the club nor do I want their dues. In other words…if you choose to remain on the resignation list, you’re out.”

The refundable memberships ranged from $35,000 to $210,000.

In August, the Trump Organization appealed the federal ruling, arguing that U.S. District Judge Kenneth Marra incorrectly ordered the company to repay members for improperly keeping their deposits. The settlement is still pending final approval. [Sun Sentinel] – Amanda Rabines

Source:: The Real Deal

Toll Brothers’ City Living posts big contract growth in Q1. But wait ’til you see how California did

Doug Yearley, New York City and Los Angeles

Toll Brothers got off to a solid start in fiscal year 2018, with net income, revenues and contract value all up significantly year-over-year in the first quarter, company executives said Tuesday in an earnings call.

Net income rose to $132.1 million in the first quarter of fiscal year 2018 from $70.4 million in the first quarter of fiscal year 2017, while revenue rose 28 percent to $1.18 billion, and net value of contracts went up 36 percent to $1.69 billion, according to the company. Revenue was still not as high as it had been during the fourth quarter, when it reached $2.03 billion. Net income was lower as well, as it had reached $191.9 million during the fourth quarter.

The luxury homebuilder’s City Living division, which focuses primarily on the New York City metro area, saw a fair share of the first quarter growth, as the value of contracts in its projects fully owned by Toll Brothers went up by 25 percent year-over-year, according to CEO Doug Yearley. The value of City Living contracts in Toll Brothers’ joint venture projects rose as well.

In all, Toll Brothers’ City Living division inked 47 contracts valued at $61.8 million in the first quarter of FY 2018, compared to 22 contracts signed in the first quarter of 2017, with a value of $49.3 million. The average contract price in the first quarter of this year was $1.31 million, down from $2.24 million a year prior, a sign that Toll Brothers is backing away from the ultra-luxury segment as expected.

Still, the uptick in the New York City metro area paled in comparison to California, which saw a 93 percent growth in the value of contracts signed. Toll Brothers in the first quarter of this year signed 388 deals worth $646 million in the California, up from the 226 deals valued at $335 million a year prior.

The value of contracts in the western region overall rose 36 percent in the first quarter of 2018. Growth in the southern and northern regions of the country was at 17 and 15 percent, respectively.

The company saw an annualized pace of 24 sales per community, which was higher than the 19 sales per community from the first quarter of fiscal year 2017. However, Yearley acknowledged that this was still lower than the company was accustomed to seeing.

“We have yet to reach historical norms of annualized sales paces in the high 20s,” he said.

Throughout fiscal year 2018, the company expects to deliver between 7,800 and 8,600 housing units priced at an average of $820,000 to $860,000, and it will focus more on millennial housing moving forward as the older members of that generation start buying homes.

Toll Brothers recently raised $400 million through a public offering. In November, the company landed a $144 million loan from UnionBank for its condominium project at 91 Leonard Street and received $73 million from Shanghai Municipal Investment for a majority stake in its condo project at 351-355 Broadway.

Source:: The Real Deal

The new CEO of Realogy is not impressed with the competition

Realogy CEO Ryan Schneider (Credit: Jhila Farzaneh for The Real Deal)

Realogy is no longer playing defense.

A year after the company vowed to turn itself into a “recruiting machine” to beat back well-capitalized competitors, CEO Ryan Schneider said he’s not impressed by rivals who are spending heavily to match Realogy’s heft and reach.

“Companies are spending millions of dollars trying to replicate Realogy’s scale, only to achieve a fraction of our market share,” he said during an earnings call Tuesday, the first since he assumed the CEO role in January.

For the full year, Realogy reported revenue of $6.1 billion, up 5 percent year over year. Net income clocked in at $431 million, up 102 percent compared to 2016’s $213 million. That was largely due to President Trump’s tax plan, which reduced the company’s effective tax rate to 29 percent from 41 percent.

Schneider spoke freely about the “intensely competitive” landscape in residential brokerage.

The company — which claims 15.9 percent market share nationwide — sold 1.5 million properties in 2017. Those deals had an aggregate value of $508 billion, up 7 percent from 2016. Its NRT division — which includes the Corcoran Group and Sotheby’s International Realty — saw transactions rise 3 percent and prices rise 5 percent.

Since assuming the chief executive role, Schneider has moved quickly to restructure the industry stalwart. He told investors on Tuesday that the company would “move faster” than it once did to improve business. In addition to a C-suite shakeup, he’s restructured operations to realize an extra $50 million in annualized savings, he said. Going forward, Realogy will move away from mergers and acquisitions in order to focus on organic growth.

Unlike his predecessor Richard Smith— who ramped up commissions to recruit and retain agents — Schneider said Realogy would take a more “moderate” approach to offering lucrative commission splits. Analysts had expressed concern that the higher commissions were eating into Realogy’s profits.

Schneider said Realogy — which already spends $200 million a year on technology — is committed to producing new tools for agents.

“I am encouraged by how little transaction disruptors have gotten by attacking the average broker commission rate over the years,” he said. “I am surprised by how much competitors are spending — both overall and in individual offers to agents — to capture a pretty small share of the market.”

Source:: The Real Deal

Private investor picks up Hialeah apartment building for $10M

6680 West 2nd Court (Credit: Google)

Private investor and property owner John Sismanoglou is busy yet again scooping up multifamily complexes in Miami-Dade County.

Property records show Amelia Towers Residences LLC, led by Sismanoglou, paid $10 million for a 67-unit apartment complex at 6680 West Second Court in Hialeah. The private investor owns a number of properties throughout Miami-Dade and New York City.

The four-story rental building totals 85,000 square feet – meaning the trade breaks down to about $118 per square foot, or roughly $150,000 per unit.

The seller, Amelia Towers LLC, is led by Jorge Ariel Lopez, who paid $3.95 million for the property in 2012, records show. It was built on a 1.3-acre lot in 1972.

Just this month, a nearby 90-unit apartment complex built the same year traded hands for $13.5 million.

In 2016 a company managed by Sismanoglou paid $36.2 million for a 347-unit multifamily and condo community in Miami Gardens. The trade was later embroiled in a lawsuit in which La Rosa Realty and realtor associate Nabeel Abunassar sued Sismanoglou for allegedly not paying a 4 percent commission on the property.

In 2015 a company mangaed by Sismanoglou and Anthony Roussos paid $17.5 million for a low-rise apartment complex just south of Miami International Airport.

Source:: The Real Deal

Bloomberg, Turner Construction offices raided as officials investigate $100M fraud

730 Lexington Avenue (credit: American Wood Installers)

State officials raided the offices of Bloomberg L.P. and Turner Construction as part of a larger investigation into a suspected $100 million worth of construction fraud.

Bloomberg may have overpaid Turner $1 million for interior work at Bloomberg’s office, including its headquarters at 731 Lexington, the New York Times reported. Investigators believe subcontractors, including Queens-based Jonathan Metal & Glass, paid rogue Turner and Bloomberg executives to secure work at the financial news and information company’s offices. The Turner and Bloomberg executives, in return, inflated the cost of the contracts.

No arrests have yet been made, but Bloomberg’s global head of construction, Anthony Guzzone, and another executive have been fired. Guzzone denies any wrongdoing. Industry executives told the Times that the raids are part of a larger investigation into other contractors and victims involving up to $100 million in fraud.

Last year, another subcontractor Nastasi & Associates filed a lawsuit against Bloomberg, alleging that the company engaged in a similar scheme with New Jersey-based electrical subcontractor, Litespeed Electric. Nastasi claimed Litespeed embezzled more than $100 million from Bloomberg. Investigators raided Litespeed’s offices.

“Years ago, New York’s construction industry was plagued by the mob,” Rod Leith, a longtime investigator and a former assistant inspector general at the School Construction Authority, told the Times. “Today, a handful of private contractors have made it a way of business to cheat, bribe and corrupt a whole sector known as the interiors industry.”[NYT] — Kathryn Brenzel

Source:: The Real Deal