Month: August 2019


NYC developer raises $50M, will hunt…

Written by Limelight

Silverback Development’s Josh Schuster (Credit: iStock) Josh Schuster’s Silverback Development has snagged a $50 million capital investment to seed a new Opportunity Zone Fund and expand to additional markets. The three-year-old firm wrapped up a second funding round from Silverpeak, the investment firm co-founded by former Lehman Brothers execs, which has backed Schuster since 2016. The developer said the new tranche will accelerate its expansion to markets including Louisiana and North Carolina, and will also be invested in local projects through a $200 million opportunity zone fund. “We’re deploying that capital now,” Schuster said. The developer said Silverback has four OZ sites — a project at 38-11 41st Street in Astoria; a commercial office building at an undisclosed site in Long Island City; a multifamily project in the South Bronx; and a 372-unit, ground-up rental in Stamford, Connecticut. To date, Silverback has financed and developed more than 1 million square feet of real estate in New York and Florida. Schuster, who left DHA Capital three years ago to the firm, said it currently has $2 billion in the pipeline representing 1,000 residential units and 500,000 square feet of commercial states in Florida, Connecticut and Washington, D.C. Silverback’s current projects in New York include a 13-story condo at 359 Second Avenue that will have between 53 and 55 units and a total sellout of $150 million. In June, Silverback landed a construction loan for the project from Och-Ziff Capital Management Group and Michael Dell’s MSD Partners. This year, Silverback and AEW Capital Management paid $40 million for an under-construction multifamily project at 16 Queens Plaza South in Long Island City. With additional funding from Silverpeak, Schuster said he’s hunting for opportunities in Louisiana and North Carolina. In the former, there’s still demand for jobs and housing in the wake of Hurricane Katrina. In the latter, Schuster said he’s encouraged by strong employment growth and the relatively low cost of living, which has attracted millennial buyers and renters. Schuster said he’s still bullish on New York, even though developers like Steve Witkoff, Michael Stern and Gary Barnett said recently in the wake of the new rent law and increased transfer taxes. “Part of our investment philosophy has been somewhat contrarian with the rest of the market,” Schuster said. “Folks are fearful and capital is sitting on the sidelines. We think the time to build is now,” he added. Projects built now will hit the market when there’s a dearth of inventory and that will lead to quick absorption, he said. “As long as you’re building the right product for the right end-user, then the product will rent or sell.”


Introducing ThorLogis, Thor Equities’ ambitious plan…

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Thor Equities CEO Joe Sitt (Credit: iStock) The e-commerce has arrived for Thor Equities. After spending years as a champion of brick-and-mortar stores, the firm is launching a new business called ThorLogis that plans to spend $900 million on purchasing and developing logistics properties, according to the Wall Street Journal. It is already at work on two sites in Red Hook, Brooklyn and the Netherlands. Thor bought the site in Red Hook for $40 million in 2005, and originally intended an 800,000-square-foot office complex at the site. As The Real Deal first reported, those plans were killed . Thor now plans to break ground early next year on a warehouse spanning 700,000 square feet that should open sometime in 2021. The Dutch flower company Bakker, meanwhile, will occupy its 430,000-square-foot facility in Amsterdam. Thor’s traditional retail sector has been lately, and CEO Joe Sitt told the Journal that the firm “basically shut down” buying retail properties in the United States seven years ago. It has now sold off most of its retail properties in the United States and in Europe. Sitt said he is still meeting with several of the same executives in retail, “except now I’m serving their needs for a logistics space instead of serving their needs for a [store] space.” [] – Eddie Small


SoFla real estate deals on hold:…

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Miami skyline (Credit: iStock) Hurricane Dorian is putting real estate deals in a holding pattern as it approaches South Florida. Insurance companies hold the key to any real estate closing that involves a mortgage, so it’s no surprise that a major storm would throw a wrench in a buyer’s plans to close on a property. In recent years, insurers have moved away from using the box method – which meant that if a storm fell within a certain geographic box, insurance companies would not bind new policies for properties in that area until after the storm passed and properties were re-inspected. Now, insurers generally rely on the National Weather Service’s watches and warnings, according to South Florida real estate attorneys and title brokers. Marcie Gregorio of Brickell-based Worldwide Title tells her clients to have their insurance agents bind their policies by the date of the closing, prior to the NWS issuing a warning or watch. “As long as they do it and bind it by that effective date, [the insurance company] will honor that,” she said. Gregorio has some clients who had their closings delayed due to , which is expected to make landfall in Florida as a Category 4 storm early next week. Others got their insurance binders before the storm became a threat. “I always recommend a local insurance agent. They know exactly what happens, especially in your neighborhood,” she added. Nancy Klock Corey, regional vice president of Coldwell Banker, said the brokerage has post-storm documents available to its agents that can be added to contracts if closings are delayed. A hurricane can also impact refinances, said Gary Singer of the Fort Lauderdale-based Law Firm of Gary M. Singer. With home purchases, it’s important to make sure that buyers have their policies bound in time. “People get a quote and don’t bind it in time,” he said. Lenders require , but if it’s an all-cash deal the closing could still occur. “If it’s a cash deal, there’s really nothing stopping you,” Singer said. Most contracts include a force majeure clause, which would give the buyer or seller the ability to delay the closing within a certain period of time after the storm passes. After 30 days, either party could cancel. “You want to get the house re-inspected” following a storm, Singer said. “Everything depends on the contract. Typically the seller is responsible to turn the property over in the condition it was in the beginning. … If that becomes too expensive, they may be released.” Fred E. Karlinsky, co-chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group, said that if a property is damaged, that could impact whether it can be insured. Karlinsky represents a wide range of commercial and residential insurers in Florida and across the U.S. “Whenever you’re in a state like Florida, you always have these issues and you need to be cognizant of them when you’re dealing with real estate closings,” he said.


Nothing is “off the table” in…

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Mayor Lori Lightfoot and Cook County Assessor Fritz Kaegi (Credit: Getty Images,, iStock) For commercial and residential property owners in Chicago, reality has hit hard. Additional property tax hikes could be on the horizon if structural changes are not made to the city’s pension system. That was the word from Mayor in her State of the City address on Thursday. The city is facing an $838 million budget shortfall next year, and more than $500 million in pension costs alone over the next three years, she said. “I want to avoid that measure as much as possible, but if we don’t get the structural changes that our pensions need…we will be presented with very hard and limited options,” the mayor said, according to a transcript of the speech she delivered. “As your mayor, I cannot in good faith promise you that I will take any option off the table to tackle this crisis, whether it’s through budget reductions or by raising revenue,” she said. The real estate industry is already grappling with higher property taxes as a result of new Cook County assessor Fritz Kaegi, who reassessed the city’s north suburban properties at . In her speech, Lightfoot called for solidarity — and budget relief — from the state and proposed a number of alternative taxes, including funneling revenue from new into pension funds, though she acknowledged a recent study that showed in the plan. In July, the mayor said Chicago’s first casino could still get built Downtown, though the city is also looking at five potential sites on the . During Thursday’s speech, Lightfoot also said she already avoided a “historically large property tax increase.” The mayor ran on a platform favoring a graduated real estate . Last month, Lightfoot said she would consider raising property transfer taxes on homes .


Nashville broker posts oral sex selfie…

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137 Saxon Mist Drive (Credit: Scoop Nashville and Benchmark) It happens all the time: a broker is showing a home to prospective buyers and almost has them ready to sign a contract, but they pull out at the last minute because they just can’t picture themselves having oral sex in the bedroom. People interested in the 2,900-square-foot four-bedroom home at 137 Saxon Mist Drive in Nashville would likely not have this problem, as Benchmark Realty’s Miguel Calvo uploaded a photo of himself receiving fellatio to the listing, according to Scoop Nashville. The home has a $399,000 asking price. Calvo confirmed to Scoop Nashville that he had uploaded the photo and that it was of himself, but he did not say whether he did it on purpose or by mistake. The posting included 31 photos of the home, but for some reason, the oral sex photo has attracted more attention than the kitchen, bathrooms and pool photos. This could be because it’s the only photo that is basically porn. The photo has since been taken down, but its legacy will endure forever. [] – Eddie Small


Not your mama’s staging job: inside…

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Design firm ASH NYC did the showcasing for 732 Hill Street in Southampton, which is listed with Corcoran’s Gary DePersia for $4.495 million. There’s staging and then there’s “showcasing.” Ignore the difference between the two at your peril, Hamptons brokers. Rather than staging — which East Hampton designer Greg McKenzie described as setting up a living room and bedroom to look like a hotel room — developers are hiring interior designers to do showcasing, in which they furnish homes down to the very last detail. When a home is showcased, buyers not only get to see it completely furnished, they can also purchase it move-in ready, without having to pack their own kitchen utensils, let alone decor or appliances, McKenzie said. For staging, on the other hand, furniture is rented for showings and moved out when a sale is secured. RELATED: —  —  — Another distinction between staging and showcasing? A designer hired to showcase a listing often works with an architect on the initial plans for a house, McKenzie said. The designer helps, for example, with making sure there’s wall space for a family-size sofa and selects custom tiles and flooring to keep spaces from looking generic. “A lot of times an architect is all about symmetry, and a designer walks in and is like, ‘OK, this is great, but where is the TV going to go?’” he said. “All of those things a designer helps with, which in a bad market makes it feel like a much more custom home.” Any little bit helps. Data shows that there’s (see our story on page 28). Douglas Elliman’s second-quarter report on the Hamptons (which does not include the North Fork) shows that the number of luxury listings — defined as the top 10 percent — on the market is nearly double compared to last year. “Furnished for a billionaire” With so many homes available, tricks like showcasing are essential, said Corcoran agent Gary DePersia. He represents several fully decked-out spec homes, including 732 Hill Street in Southampton, designed by ASH NYC and listed for $4.495 million. He’s also the listing agent on  490 Hedges Lane in Sagaponack, priced at $17.5 million. Interiors in the latter were done by James Michael Howard, who executes what DePersia called “mack daddy” showcasing, even having custom carpeting cut specifically to fit whatever shape of room an architect plans. “When he furnishes those houses, they look like they’ve been furnished for a billionaire,” DePersia said. “They don’t look staged.” Additionally, buyers often purchase at least some of furnishings along with a showcased property, he said. A $5 million home can cost about $250,000 to fill, “so whether you pay a designer to do it or buy the stuff that’s already there, what difference does it make?” And for those who close on a sale in the spring and summer, a pre-furnished home is ready to go for the season. Naturally, showcasing comes with a bigger bill than simple staging. Showcase fees can run from $25,000 to $1 million depending on the size and scale of a project, sources said. Having a good relationship with a designer, or installing fixtures and hardware from companies that want the visibility for their products, can help keep the costs down. “What I charge a builder is not necessarily what I would charge a client,” explained Elsa Soyars, a local designer who often works in the spec home market. “You have to give a break to those guys because builders are generally on a budget and they’re trying to sell a home.” Soyars said her consulting rates start at $275 per hour for builders, compared to $375 for residential clients. However, if developers ask Soyars to pull furnishings from her private cache, a rental fee is tacked on. But there are still some builders who try their luck in the market without any staging at all, McKenzie noted. “Some builders don’t want to spend the money, or they put the house on the market and see what happens first,” he said. For others, showcasing has become a no-brainer. One proponent is Paramount Custom Homes, the developer behind the Fields, which divides 35 acres of land in Southampton into 28 custom homes (see our story on page 28 for more on the project). “Seven years ago, we could throw anything out there,” and it would sell, often while still in the construction stage, principal Bill Locantro said. Today, not so much. Facing an oversupply of spec houses, his company has had to change its strategy and outfit the homes to the fullest. Taking note of the trend, the staging department of the New York City design mega-firm ASH NYC has been heading out to the Hamptons to showcase its work in addition to opening an office in Sag Harbor last summer. Along with DePersia’s Southampton listing, the company was hired by Shoshi Builders and MSB Development to do the interiors of 117 Montauk Highway in East Hampton at the suggestion of Compass, the listing brokerage. “The word ‘partnerships’ keep coming up,” said ASH NYC’s director of staging, Andrew Bowen. “People like to align their brand with another.” In this instance, ASH NYC gave the team behind 117 Montauk Highway a discount in exchange for some creative freedom, though the exact fee is confidential, Bowen said. However, “we couldn’t go too far in one stylistic direction or make it too conceptual because even though it might look amazing, at the end of the day we did it to help sell the property,” Bowen said. A buyer hasn’t been found yet. The house has been on the market for a year, and its price was recently cut to $2.995 million from $3.5 million. But the ASH NYC furnishings and the publicity surrounding the firm’s work are making a noticeable difference, listing agent Evan Kulman said. “The house wasn’t staged for nine months and ASH just staged it three months ago, and since then our traffic into the house has increased,” Kulman said. “If you look at the pictures [of 117 Montauk Highway], it looks like a very cool, sexy house, versus a vacant, empty house.”


NBC exec David Doebler sells Trump…

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David Doebler and Trump Tower in River North NBC-5 executive David Doebler and his wife, Susan, have sold their 77th floor Trump Tower condo for $2.925 million after receiving an unsolicited offer to buy the three-bedroom unit. The couple already owns another place in the Trump Tower and will relocate there, according to the Chicago Tribune. The anonymous buyer plans to combine their unit with a neighboring unit, listing agent Chezi Rafaeli, of Coldwell Banker, told . The Doeblers bought the 3,100-square-foot River North condo in May 2014 for $2.8 million. The unit has four baths, double walk in closets, a den, a stone bathroom, and luxury appliances, the Tribune . As luxury buyers swap and expand Trump Tower living spaces, the location has been unable to lease its . Condo sales in the building have by two-thirds since 2015 before President Trump began running for president. One condo on the 53rd floor relisted today for $1.89 million after four discounts, according to a . — Sarah Paynter 


NBC-5 Exec has a backup Trump…

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Each day, The Real Deal rounds up Chicago’s biggest real estate news. We update this page in real time, starting at 10 a.m. Please send any tips or deals to .   It was an offer for his Trump Tower condo he couldn’t refuse. NBC-5 exec David Doebler sold his condo unit when an unsolicited buyer offered $3 million. The buyer plans to expand a neighboring unit. Doebler owns another condo in the building and will relocate to his second Trump Tower home.   Hines finished construction on the 698-unit Wolf Point East apartment building in the Near North Side. The tower is the second residential building on the property and will be joined by a Salesforce office building in 2023.   The developers of One Winnetka condo homes have called it quits. SB One Winnetka and Stonestreet Partners never secured financing on their planned $98 million project, and have given up after six years of lawsuits and redesigns.   Mayor Lori Lightfoot In her first State of the City speech, Mayor Lori Lightfoot cautioned about a potential property tax hike. That would be one of the ways to help close a looming city budget shortfall of $838 million in the 2020 budget. It would be the largest in Chicago’s recent history, she said. []   Angelo Gordon-owned River North residential complex gets a facelift. The 400-unit building, called River North Park, received a $15 million upgrade. Renovations on the 24-story building, which was built in 1986, included a new rooftop deck, 24-hour fitness center and upgraded resident lounge. []   Two of Lakeshore East’s new residential towers have broken ground. Co-developers Lendlease and Magellan are building the Cirrus and Cascade, with a combined 866 units. Construction is expected to be completed by 2021. []   A Ravenswood Manor bungalow hits the market. The three-bedroom home on Sunnyside Avenue is listed for $1.25 million. It’s next to the Chicago River but also near a CTA station. Matthew Shrake of Coldwell Banker has the listing. []   Thor Equities CEO Joe Sitt (Credit: iStock) Thor Equities, one of the most prominent retail landlords, is launching a new e-commerce business, and plans to spend $900 million on logistics space. Thor appears to be joining many companies in a move away from brick and mortar to online shopping by developing warehouse facilities. ThorLogis already has two developments in the works — one in Red Hook, Brooklyn and one in the Netherlands. []   With a cooling trade war, stocks perform well, including real estate. (Credit: iStock) The S&P 500 is up two percent this week and 19 of the 29 stocks that The Real Deal follows have risen, signaling somewhat diminished fears of a trade war with China. The winners this week were commercial brokerages Marcus & Millichap, which rose 4.12 percent, and Newmark Knight Frank, which rose 4.11 percent. Realogy, on the other hand, was down 26 percent this week, another terrible week for the resi brokerage conglomerate. []   A New Mexico Attorney General says that the state should take possession of Epstein’s ranch. Epstein apparently planned to inseminate hundreds of women at his ranch before his death at a New York City jail by suicide. The Attorney General said Epstein should never have been granted the leases in the first place and suggested turning the lands over to local farmers. []   Builders around the world are using novel construction methods to reduce emissions. Former Whitehouse adviser Steve Bannon suggested using “hempcrete” to build walls, while firm JustBio Fiber Solutions plans to fill orders to produce enough hemp bricks to build 2,000 homes. []   A Benchmark Realty real estate agent added a “sexy selfie” Tuesday to an otherwise unremarkable listing. The photo, which has since been removed, was attached to a listing for a four-bedroom home asking $399,000. The risque shot shows the agent engaging in a sex act with a lover faced away from the camera in a bedroom. []


Rep. Alexandria Ocasio-Cortez wants to put…

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Congresswoman Alexandria Ocasio-Cortez Holds Public Housing Town Hall In The Bronx (Credit: Getty Images) Congresswoman Alexandria Ocasio-Cortez plans to introduce several of the housing-policy ideas floating around New York state at the federal level, the lawmaker said during a town hall in the Bronx on Thursday. The progressive congresswoman touted her plan to introduce “Just Cause” and Access to Counsel at a federal level. Those policies would mirror New York State Senator Julia Salazar’s failed “Good Cause” and the Right to Counsel rule already in place in many zip codes in New York City. The lawmaker also said she plans to introduce laws that would place restrictions on rent increases larger than three percent and prosecute mortgage fraud. “We are asking the nation’s largest landlords to provide data,” Ocasio-Cortez said. “If you act like a slumlord you should not be able to get money to do it again and again.” Likening it to a “set of dominoes,” Ocasio-Cortez said housing policy is difficult to legislate because of the complex interplay between city, state and federal policy. Ocasio-Cortez organized the meeting to discuss the city’s beleaguered public housing agency. At least $32 billion is needed to repair NYCHA developments in New York City. Last November, the de Blasio administration said that his administration would 62,000 units to the Section 8 federal housing subsidy program. A separate proposal would allow NYCHA to sell air rights for mixed-use to subsidize public units. And although the freshman lawmaker spoke extensively about the history of NYCHA, the funding problems and lack of transparency that have led to its current crisis, none of the policies she outlined were specifically related to NYCHA. Calling a lack of funding “federal sabotage,” Ocasio-Cortez said that Republican control of Congress has been responsible for budget shortfalls at the housing authority — $2.7 billion each year — and that she plans to work to increase funding through appropriations and a redistributive taxing model. During her presentation, Ocasio-Cortez said the United States should look to other models of public housing— Denmark, for example. The ebullient progressive lawmaker later took questions from the community, responding to concerns over broken elevators and reports of discrimination against “mixed-status” NYCHA residents. A earlier this year found that elevator mechanics are given little training and NYCHA elevators have outages five times more than non-NYCHA buildings. Following multiple questions about problems with NYCHA elevators, the congresswoman said her staff is looking into opening a congressional inquiry based on violations of the American Disabilities Act. “It’s an enormous problem. I think that if elevators are broken for an extended time, it’s an ADA violation,” the congresswoman said.


As Hurricane Dorian barrels toward South…

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The Miami skyline and a satellite image of Hurricane Dorian (Credit: Getty Images, iStock) Across South Florida, developers and builders are securing tower cranes to blow with the wind like a weather vane, putting away debris that could become projectiles and emptying out dumpsters of loose materials as Hurricane Dorian barrels toward Florida’s coastline, projected to become a powerful Category 4 storm. As of Friday afternoon, the hurricane was a Category 3 storm with maximum sustained winds of 115 miles per hour, approaching the Bahamas. South Florida could begin to feel the effects of tropical storm winds on Sunday or Monday, with landfall currently expected between Palm Beach and Martin counties early Tuesday. At Estates at in Sunny Isles Beach, workers started on Wednesday removing trash, tying down loose materials, and removing wind screens from the top of the building, said developer Jules Trump. The site’s tower cranes will be secured so that they can blow freely in the wind. And before the storm approaches, anything electrical will be disconnected in case of water intrusion. Computers will be covered and placed on the floor. “We are taking all precautions,” Trump said. Nearby, Developer Gil Dezer said the Residences by Armani/Casa construction site in Sunny Isles Beach is already “all buttoned up and sealed up” now that the interiors are being built out. For Hurricane Irma, Dezer in his Porsche Design Tower in Sunny Isles Beach. He said the offer is now on the table for Brett David, owner of Prestige Imports, who stored a handful of high-end cars, including a $5 million Ferrari and a $15 million Pagani Zonda during Hurricane Irma. In Boca Raton, , the developer of Via Mizner, a 2-million-square-foot mixed-use project, has had teams securing equipment since Wednesday, removing loose debris and banding all material, according to a spokesperson. Columns and shear wall forms were also poured with concrete to secure them for the storm. Workers also have been checking the fence lines and screens, relocating all gas and oil products to a safe area, and have cancelled any new deliveries to the site. Sedimentation tanks are being filled with water to add weight for protection against high winds. And in advance of the storm, engineers are also removing awnings and signs and filling up life safety generators. “Our project managers are meeting with their onsite teams and subcontractors after every advisory to further evaluate and prepare,” the spokesperson said in a statement. Moss Construction, which has 45 projects within the storm’s forecast cone, follows a specific storm protocol, with preparations lasting all week, said Scott Gerrard, vice president of safety, health & environment, in a statement. The sites stopped delivery of materials on Wednesday, and Thursday started securing the sites, making sure construction materials are stored properly, debris is removed and/or secured and ensuring IT equipment and heavy machinery is protected, the spokesperson said. “This year we will be using 16 licensed drone operators to conduct fly-overs of all of our sites to check that storm preparations are on schedule,” he said in a statement. Similarly, at South Florida projects, workers have been disassembling and securing scaffolding, removing wind screens from fences, and bundling up roof tiles and zip-tying them on the roof, according to a spokesperson. Peter Dyga, CEO of Associated Builders and Contractors Florida East Coast Chapter, said most plans are put in place 72 hours out from the hurricane’s approach, so preparations are already underway. “The biggest problem is loose items that can be projectiles,” Dyga said. Securing tower cranes is, of course, also vital. Co-President Inigo Ardid said in a statement that its AC Hotel by Marriott site in Fort Lauderdale Beach stopped the use of its tower crane at noon on Wednesday to ensure it was secured by the end of that day. Any materials on the above-ground floors were also brought down to the first level for safety. “We will continue procedures to secure the project,” he said, “and are monitoring the hurricane’s path to determine when site work can resume.”