The Real Deal New York

National Cheat Sheet: Amazon makes HQ2 split official, SoftBank invests $3B in WeWork… & more

By Maya Rajamani | November 16, 2018 08:00AM

Clockwise from top left: Amazon announces plans to divide its HQ2 between Long Island City and Crystal City, WeWork secures a $3B investment from SoftBank, Berkshire Hathaway HomeServices plans to open up new offices abroad, and the MTA will shell out $35M for Grand Central Terminal.

Amazon announces plans to split its HQ2 between Long Island City and Crystal City
After months of speculation and unconfirmed reports, Amazon finally made its long-awaited HQ2 announcement Tuesday. The Seattle-based company said that it would divide its second headquarters between Crystal City in Virginia and Long Island City in New York. The e-commerce behemoth also plans to open a “regional hub” in Nashville for its retail operations division’s tech and management functions. New York State has said it plans to dole out $1.7 billion in tax credits and grants to Amazon for choosing Long Island City, while Virginia has promised to provide the company $574 million in incentives and rebrand Crystal City as “National Landing.” [TRD]

WeWork secures $3B investment from SoftBank, reaching $45B valuation
SoftBank is investing $3 billion in WeWork, giving the rapidly expanding co-working giant a valuation of $45 billion, according to various news reports. The investment will land WeWork in second place on the list of the country’s most valuable startups, surpassed only by Uber and one place ahead of Airbnb. The infusion won’t be SoftBank’s first investment in WeWork. The Japanese conglomerate’s Saudi Arabia-backed Vision Fund invested $4.4 billion in the startup last year and another $1 billion in August through a convertible note. WeWork reported a revenue of $1.2 billion in the first three quarters of 2018, and the investment comes as the company continues to grow. [TRD]

Berkshire Hathaway HomeServices to open up new offices abroad
Warren Buffett’s Berkshire Hathaway HomeServices (BHHS) has global aspirations. The residential brokerage plans to expand to Dubai, Milan, and Vienna, and will partner with Kay & Co. to open up to 10 new offices within the next decade, according to Bloomberg. The company is also eyeing Hong Kong, Madrid, Mexico City, Paris, and Tokyo as it looks to expand. “We’ve got a number of markets already teed up,” Gino Blefari, CEO of HSF Affiliates, which oversees BHHS, told the outlet. “Eventually we’ll be in all the major metropolitan markets.” BHHS, the second-largest real estate brokerage in the country, recently expanded in Boston and last year bought Westchester County-based brokerage Houlihan Lawrence and the Long & Foster Cos. [TRD]

$1B public offering will allow Boston Properties to invest in more green projects
Boston Properties hopes to raise $1 billion in a public offering and put the expected $988.1 million in proceeds toward green projects across the country. The company already owns and manages 20 million square feet of LEED Gold and LEED Platinum-certified projects, including the Salesforce Tower in San Francisco, which it co-owns with Hines. Boston Properties has pledged to cut its greenhouse gas emissions and its water and energy use by 2025. If the public offering is a success, the company will also repay debt and invest in a short-term securities purchase. The public offering is expected to close at the end of the month. [TRD]

MAJOR MARKET HIGHLIGHTS

The MTA will pay $35M for Grand Central Terminal instead of continuing to lease
New York’s Metropolitan Transportation Authority has been leasing Grand Central Terminal, but now it plans to buy it. The MTA said this week that it would purchase the famous transit hub, along with the Hudson Line from Grand Central to Poughkeepsie and the Harlem Line to Dover Plains, for $35 million. MTA Chief Development Officer Janno Lieber said in a statement that it was cheaper for the MTA to buy the terminal than to continue renting it until 2274, when its lease is up, given current interest rates. “Financially, it makes sense; operationally it makes sense,” MTA board member Carl Weisbrod told the Wall Street Journal. [TRD]

Real estate firm fires agent who mocked Andrew Gillum supporters
A South Florida company axed one of its real estate agents after a video showed her mocking supporters of gubernatorial candidate Andrew Gillum, the Daily Business Review reported. Gillum, a Democrat, conceded to former Rep. Ron DeSantis on election night, but withdrew his concession amid a recount. Over the weekend, United Realty Group agent Liliana Albarino-Olinick took part in various chants, saying that Gillum’s supporters only wanted him to be mayor “because is black” and calling them “racists,” according to the outlet. Olinick later apologized, saying the incident wasn’t indicative of “the person that I am.” [TRD]

Morningstar founder Joe Mansueto drops more than $100M on Chicago building
Morningstar founder and billionaire Joe Mansueto has paid more than $100 million for the iconic Belden-Stratford apartments in Chicago. PGIM is selling the Beaux Arts building to Mansueto, who recently purchased the Wrigley Building for around $255 million. Belden-Stratford houses 297 units and is on the National Register of Historic Places. Mansueto, who is now the executive chairman of Morningstar, has an estimated net worth of $3.6 billion. Earlier this year, he bought a 49 percent stake in the Chicago Fire, a Major League Soccer franchise. As for Belden-Stratford, it is nearly fully occupied. [TRD]

Netflix leasing more Hollywood office space as it continues to invest in programming
Netflix is leasing 355,000 square feet of office space in Hollywood. The streaming giant’s lease at Kilroy Realty’s Academy on Vine project, which is still under construction, will start in 2020. Last month, the company announced that it would lease the 13-story Epic office development that’s under construction on Sunset Boulevard, in addition to extending its leases at the Icon building and the Cue building on the Sunset Bronson Studios lot. Netflix’s real estate expansion mirrors its investments in its programming. A Goldman Sachs projection indicated that the company would spend around $13 billion on content this year. [TRD]

Compass buys DC-based brokerage for an undisclosed sum
SoftBank-backed Compass has snapped up Washington D.C.-based Wydler Brothers Real Estate as it continues to expand across the country, Inman reported. The deal means that Compass, which broke into the D.C. market approximately four years ago, will now have more than 500 agents in the area, according to the outlet. Earlier this year, Compass bought West Coast brokerage Pacific Union International Realty and San Francisco-based Paragon. BHHS PenFed Realty, Century 21 New Millennium, and Keller Williams Capital Properties are among Compass’ primary D.C. competitors. Compass currently has more than 7,000 agents across the country. [TRD]

Hawaii has most expensive single-family home sale ever on Kauai
A waterfront estate on Kauai has sold for $46.1 million in the most expensive single-family home sale Hawaii has ever seen, the Wall Street Journal reported. A trust created by William Strong, the former head of Morgan Stanley’s Asia Pacific operations, and his wife listed the property for $70 million in May 2017, so the home known as Hale ‘Ae Kai did take a price chop. The 15-acre estate has six bedrooms, exterior decks, pools and media and exercise rooms, as well as a farm where coconut trees, exotic palms and other plants grow. Before this, the highest single-family home sale in Hawaii was a Maui home that sold for $41.8 million in 2015. [TRD]