The Real Deal New York

National Cheat Sheet: Online marketplace Ten-X sells for $1B, hotel occupancy up in Q2, drastic drop in Chinese investment expected soon … & more

By Grace Guarnieri | August 04, 2017 05:30PM

Clockwise from the top left: Chinese investment in U.S. to decline, Google’s Silicon Valley offices, online real estate seller Ten-X.

Auction giant Ten-X will be sold to private equity firm for more than $1B

Ten-X, which brokers residential and commercials sales on its online marketplace, has been purchased by Thomas H. Lee Partners for more than $1 billion. The website, formerly known as Auction.com, characterizes the transaction as a “major recapitalization,” with current senior management and investors retaining small stakes in the company after the sale. The platform has handled 300,000 property sales, worth a total of $50 billion, since it was founded in 2007, the Orange County Business Journal reported. [TRD]

Good news for hotels: strong demand and occupancy rates reported in Q2 

Compared to the second quarter of last year, national hotel occupancy was up 0.5 to 69.5 percent, according to a second quarter report by STR, which tracks supply and demand data for the hospitality industry. RevPAR (revenue per available room) growth jumped significantly in the Orlando and Seattle markets, with respective growths of 13.5% to $98.21 and 9.6% to $137.72 in the second quarter of 2017 as compared with the second quarter of 2016. [Bisnow]

Chinese investment in the US expected to decline sharply this year, Morgan Stanley report warns 

The report projected that Chinese real estate investment could fall as much as 84 percent in 2017, with a subsequent 18 percent dip in 2018. While this will impact markets across the country, it’s particularly troubling news for Manhattan, where about 30 percent of all 2017 real estate transactions have involved a Chinese investor, Bloomberg reported. Morgan Stanley’s analysis blamed the potential nosedive on a Chinese government crackdown on capital outflows. [TRD]

Redfin CEO says the platform’s major competitors are traditional brokerages

Redfin went public in July, but CEO Glenn Kelman has said that Redfin doesn’t consider fellow online listings portal Zillow as a rival. Rather, Kelman sees his main competitors as traditional brokerages. “It’s Century 21, it’s RE/MAX, it’s Keller Williams, it’s these established brokerages that have been around for a long time,” Kelman first told Bloomberg. Redfin closed its first day on Wall Street at $21.70 per share, a 45 percent rise from its initial price. By comparison, Zillow shares were trading at $46 earlier this week. Meanwhile, Century 21 and Corcoran Group parent company Realogy threw down a blistering dis, with CEO Richard Smith describing Redfin as “small startup” in a second quarter earnings call this week. [TRD]

Grocery stores are susceptible to a wave of closures: study

With the amount of grocery retail space at an all-time high, the sector may soon see a wave of store closures, the Wall Street Journal reported. In the U.S. the amount of commercial space devoted to food hit a new record last year, at 4.15 square feet per person, CoStar data showed. National grocery store chains Kroger and Walmart are both planning to open fewer stores this year than they had in 2016. And competition from online grocery vendors and changing consumer behaviors are also thought to put pressure on the sector, experts said. [TRD]

Freddie Mac’s Q2 net income dips to $1.7 billion

Freddie Mac reported a net income of $1.7 billion in the second quarter of 2017, a decline from the $2.2 billion it raked in during the first quarter of the year. The government-owned corporation cited a reduction in market-related gains as the reason for decline, but reported that markets remained steady in Q2. Freddie Mac also announced this week that it would cease purchasing low down payment loans that include lender contributions to the down payment. The revised policy requires borrowers to produce three percent of the home value for the down payment. [Housingwire]

Major Market Highlights

Douglas Elliman grows West Coast presence with acquisition of Teles Properties

This week, Douglas Elliman announced the acquisition Beverly Hills’ Teles Properties. The deal, which is expected to close in the upcoming weeks, boosts Douglas Elliman’s West Coast presence with the addition of 500 agents and 20 office locations. Stephen Kotler will become the CEO for Elliman’s western region. In a second quarter earnings call this week, Elliman chairman Howard Lorber said “we have the cash for it,” though he would not disclose the amount of the sale. [TRD]

New York apartment vacancy rates are expected to soar in 2018

With a surge in new construction in New York City, vacancies are expected to rise from the current rate of 3.8 percent to exceed 11 percent by the end of 2018. Online real estate firm Ten-X predicts that the explosion of vacancy rates could potentially drive down rent prices, which are currently too damn high. [TRD]

New York hotel industry releases ad, suggests Airbnb increases chance of terror threats

A dramatic YouTube video released by the hotel lobby-backed Share Better campaign suggests that short-term rentals advertised by sites like Airbnb increase terror threats. The 30-second ad states that Airbnb will not release the addresses of 40,000 apartments available for short-term rent in New York (though the platform does release addresses in San Francisco, Chicago and New Orleans, the New York Daily News reported) and asks watchers to question who is staying in their buildings, providing a phone number to register complaints about Airbnb. The platform’s spokesperson called the ad as “an outrageous scare tactic by big hotels who themselves have a long history of lodging people who engage in acts of terror.” [TRD]

Google spent nearly $820 million on Silicon Valley properties

Google shelled out a reported $820 million on 52 Sunnyvale, California properties, the Silicon Valley Business Journal reported. The purchases were made in order to fill out Google’s campuses since the company’s main headquarters are located in Mountain View, which neighbors Sunnyvale. The tech giant was also given rights last month to negotiate in buying 16 parcels of land in San Jose, CNBC reported. [TRD]

Venezuelans are making Florida investments amid political unrest

In the thick of Venezuela’s political upset and recent election, many Venezuelans are making investments in the Florida real estate market, U.S. News and World Report found. Currently, 59,000 Venezuela-born residents account for 28 percent of Broward County’s population. In addition to buying homes, Venezuelans are also investing in small businesses, which helps them qualify for EB-5 visas. Foreign nationals qualify for EB-5 visas with $500,000 of investments in American businesses. [TRD]