The Real Deal New York

National Cheat Sheet: LaSalle calls off the deal with Blackstone … & more

By Maya Rajamani | September 06, 2018 01:31PM

Clockwise from top left: Zaha Hadid’s South Beach condo sells for $5.75M, Blackstone to get $112M breakup fee as LaSalle opts for Pebblebrook’s bid, Manhattan apartment owned by German ‘punk princess’ fetches $5.2M, and Trump thinking ‘very strongly’ about tax break linking capital gains to inflation.

Blackstone to get $112M breakup fee as LaSalle opts for Pebblebrook’s bid
Pebblebrook, on behalf of LaSalle Hotel Properties, will likely be handing $112 million over to the Blackstone Group after LaSalle rejected Blackstone’s $4.8 billion dollar bid to acquire the firm. LaSalle Hotel Properties on Wednesday officially announced it would be choosing Pebblebrook’s offer. LaSalle is required to pay the breakup fee for choosing not to go with Blackstone after all, but Pebblebrook previously said it would cover the costs. LaSalle’s decision appears to be bringing a months-long battle between Blackstone and Pebblebrook to a close, but there is still a possibility Blackstone could increase its offer in an attempt to win LaSalle back. [TRD]

Trump considering a tax break that would be a boon for real estate
President Donald Trump is “thinking… very strongly” about implementing a tax change that would adjust capital gains to inflation, Bloomberg reported. If a change of the sort went into effect, investors could change the original purchase price of stocks or real estate they were selling for inflation — a move that would cut their tax bills. It would also benefit the top .1 percent of taxpayers more than it would benefit lower-tier taxpayers, in addition to costing more than $102 billion over the next ten years, according to the Penn Wharton Budget Model. Trump may be thinking about going around Congress to carry out the change, as his Treasury Secretary Steven Mnuchin was trying to figure out how to do just that in July. “There are a lot of people that love it and some people that don’t,” Trump said of the possible change. [TRD]

Moody’s to acquire Reis and its property database in deal valued at $278M
Financial services company Moody’s will swallow up Reis in a deal valued at $278 million, Globe Street reported. Moody’s plans to incorporate the commercial real estate data company’s archive of properties into its analytics offerings, according to the outlet. Moody’s and Reis are just two of many real estate companies that have decided to combine over the past year or so — setting a record for mergers & acquisitions activity. The merger will go into effect in the fourth quarter, the outlet reported. [TRD]

Stores like Target and Walmart are adapting to keep their brick-and-mortar outposts afloat
Retail closings still number in the thousands so far this year, but stores like Target and Walmart are finding ways to adapt, the New York Times reported. Target, for one, lets customers pre-order items and pick them up curbside, while Walmart has “personal shoppers” that put orders together. Nordstrom customers, meanwhile, can return items by dropping them into a box. “The retailers that get it recognize that Amazon has forever changed consumer behavior,” said Barbara Kahn, marketing professor and former director of the retailing center at the Wharton School. Last year, 5,700 stores had shuttered by this point in the year, but this year, that number has decreased to 4,480, the outlet reported. [TRD]

Equity Residential gets new CEO, CFO as current CEO plans retirement
Chicago-based Equity Residential is seeing a change in its leadership. CEO and president David Neithercut, who led the real estate investment trust since 2006, plans to step down at the end of 2018. CFO and executive vice president Mark Parrell is stepping into Neithercut’s roles, and senior vice president and treasurer Robert Garechana is the new CFO and executive vice president. Equity Residential’s founder and chairman Sam Zell said Parrell and Garechana’s promotions “are a direct result of the priority placed by our board on succession planning and are the most recent examples of a very successful and rigorous process that has served the company and its shareholders well.” Neithercut will still be on the firm’s board after he retires on Dec. 31. [TRD]

MAJOR MARKET HIGHLIGHTS

Zaha Hadid’s South Beach condo sells for $5.75M after taking several price chops
A South Beach condo owned by late architect Zaha Hadid is off the market. ATI systems chairman Ray Bassiouni shelled out $5.75 million for the three-bedroom, four-bathroom condo at the W South Beach, where he already owns two units, according to the Wall Street Journal. The condo took several price chops after hitting the market with a $10 million price tag in May 2016. Just six months after it listed, its price was reduced to $6.5 million. Hadid combined three units in the building to form the condo. It still went for more than the $4.17 million in total Hadid spent on the three units. Hadid lived in the building while she was designing One Thousand Museum. [TRD]

LA couple hits Malibu developer with suit claiming it hid $22M spec home’s defects
A spec home in the Pacific Palisades that a Los Angeles couple bought for $22 million last year has serious defects that the developer was supposed to fix, a new lawsuit charges. Matthew and Kathy Barrett’s suit claims the house has a total of 143 defects — all of which developer Jaman Properties and its contractors promised they would fix. The suit also claims the developer hid the defects before the couple actually closed on the home, and that the couple wouldn’t have bought the home if they’d known about them in advance. Greenberg Glusker’s Dennis Ellman, who is representing Jaman, maintained the lawsuit was “completely without merit.” The home sits on a property once owned by Ronald and Nancy Reagan. [TRD]

Facebook’s Bay Area expansion continues with Menlo Park office opening
Facebook has its sights set on expanding in the Bay Area. Last week, the company opened a new 525,000-square-foot office in Menlo Park, according to Bloomberg. It’s also planning to lease over 1 million square feet of space in San Francisco as well as plotting an expansion in Sunnyvale and in the East Bay area, and its plans don’t stop there, according to the outlet. Katerina Cheok, a market analyst at CoStar Group Inc., told Bloomberg the company “[doesn’t] do small, apparently” adding that it’s “either giving employees a ton of personal space, or… looking for future hires.” Menlo Park residents may not be pleased by Facebook’s continued expansions, however. Long-time locals say that the company is “ruining the community” by driving up rents. [TRD]

Residents fear the BeltLine — Atlanta’s High Line — will spur gentrification
Critics of New York City’s High Line have claimed it’s contributed to gentrification on Manhattan’s West Side by driving up the area’s desirability and pricing out longtime residents and businesses. Now, Atlanta’s version of the High Line, a 22-mile trail known as the BeltLine, is stirring up similar concerns about gentrification. The first stretch of the BeltLine, which follows former rail corridors, has been open for six years, a second stretch opened last year, and the city is now working on the next stretch. Detractors say the plan for the BeltLine hasn’t involved enough of a focus on affordable housing and some residents say the trail has changed their neighborhoods for the worst, according to the Wall Street Journal. Atlanta’s mayor herself acknowledged the completion of the newest stretch would affect property values. “I told them, ‘If you live on the Westside of Atlanta, do not sell your property right now,’’ she said during a recent interview. [TRD]