The Real Deal New York

National Cheat Sheet: Apollo plans $1B real estate fund, Amazon’s HQ2 selection spurs spurned cities to react … & more

By Maya Rajamani | November 23, 2018 09:00AM

Clockwise from top left: Apollo plans to raise at least $1 billion in its third U.S. real estate fund, ‘Unlikely’ secondary markets are drawing money from foreign investors, Compass hires a new CFO to oversee ‘hypergrowth’ amid nationwide expansion, and cities that weren’t chosen for Amazon’s HQ2 experience a range of emotions.

Apollo plans to raise at least $1B in its third U.S. real estate fund
Buyout giant Apollo Global Management hopes to raise at least $1 billion for a new real estate investment fund that will focus on retail and industrial properties, senior housing, and hotels, Bloomberg reported. This would be the firm’s third real estate fund in the U.S., sources told the outlet, and fundraising would launch at the beginning of next year. Apollo recently bought the Holiday Inn San Francisco near Fisherman’s Wharf from RLJ Lodging Trust, and the publicly traded alternative asset manager is looking to unload a portfolio of single-family rental homes, according to Bloomberg. The outlet noted that the Apollo unit containing its real estate arm “had $15.4 billion under management as of Sept. 30.” [TRD]

‘Unlikely’ secondary markets are drawing money from foreign investors
Foreign investors are turning to “unlikely” markets to avoid increasingly high prices in major cities like Los Angeles, Miami, and New York City, according to Bloomberg. Investors from Canada, China, and Germany have in the past year set their sights on cities such as Denver, Philadelphia, Phoenix and the Atlanta suburbs. “Yield is king and yield is now being found in less-usual suspects,” Spencer Levy, Americas head of research at CBRE, told the outlet. Levy added that “[s]ome of the usual suspect central business district markets are later in the cycle.” Nevertheless, New York and Los Angeles still saw billions of dollars in foreign investment within the last year. [TRD]

Cities snubbed for Amazon’s HQ2 experiencing a range of emotions
When Amazon earlier this month made Long Island City and Crystal City its official choices for a halved second headquarters, the decision meant cities like Austin, Chicago, Dallas, Miami, and Newark that had been seen as top contenders for HQ2 were officially out of the running. TRD checked in with officials and developers in those cities, and their reactions to the news ran the gamut from disappointment to acceptance and relief. Chicago Mayor Rahm Emanuel, for one, said he felt that the Windy City “has won more than it has lost.” In Newark, meanwhile, one residential developer said he felt the company had “made a mistake.” [TRD]

Compass hires new CFO to oversee ‘hypergrowth’ amid nationwide expansion
Compass has hired Carlyle Group executive Kristen Ankerbrandt as its new chief financial officer, eight months after its former CFO left the firm — a move Compass maintained was “mutually decided.” Ankerbrandt, who led technology investments for Carlyle’s $18.5 billion fund, is going to oversee the “next stage of hypergrowth” at Compass, CEO Robert Reffkin said in a statement. Before her time at Carlyle, Ankerbrandt worked at Goldman Sachs. Compass has been rapidly expanding, having acquired independent Washington, D.C.-based brokerage Wydler Brothers Real Estate in November, a move that came a little less than a year after it secured a $450 million investment from Japan’s SoftBank. In September, SoftBank’s Vision Fund led a $400 million fundraising round by Compass. [TRD]

MAJOR MARKET HIGHLIGHTS

Kushner Companies buys Manhattan hotel known for noise complaints
Former Wall Street lawyer Paul Stallings has sold the Hotel on Rivington, an establishment on Manhattan’s Lower East Side that’s garnered myriad noise complaints, to Kushner Companies, the New York Post first reported. The 20-story hotel, which opened in 2004, has reportedly received more noise complaints than any other hotel in its precinct area, but its new owner was interested in the property anyway. “This was Joshua [Kushner’s] call,” a source told the Post, noting that his brother Jared is “busy in Washington.” Kushner Companies, which has found itself in the spotlight thanks to its ties to the White House, plans to renovate the hotel to bring it up to the standard of its competitors. [TRD]

Developer selling Miami Beach condo he bought on a whim for $15.3M
A real estate developer is selling his Miami Beach condo after admitting that buying it was an “impulse buy.” Edward Minskoff bought the Faena House residence for $15.3 million in 2015 and is now seeking $16.5 million for the condo. He told Mansion Global he regrets purchasing it because he doesn’t stay in Miami often, instead mostly dividing his time between Malibu and New York City. Minskoff is one of several investors who’ve parted ways with their Faena House properties amid a soft condo market in the Miami area. [TRD]

Chicago’s housing market saw its best month in 12 years in October
October was the best month Chicago’s housing market has experienced since before the recession, according to a new report from Re/Max Northern Illinois. The median home sale price in the metro area increased 3 percent year-over-year, to $230,850, with 8,896 homes sold. Those numbers compare to October 2006, when 9,044 homes were sold with a median price of $244,900. Last month’s average market time for homes sold was 72 days, a figure that stood at 94 days in October 2006. “Overall, it’s fair to say that this October is better than any we’ve seen since 2006,” Re/Max Northern Illinois Region vice president Jeff LaGrange said. [TRD]

Attorney for Stormy Daniels is reportedly evicted from his office building
Michael Avenatti’s law firm has been evicted from its Newport Beach office building, according to the Los Angeles Times. Avenatti’s firm reportedly owed $213,254 in rent payments, and a judge ordered the firm to vacate. Avenatti, however, claimed the firm that was handed the vacate order, Eagan Avenatti, is actually owned by a new owner. Avenatti, who once owned the Tully’s Coffee chain, told the newspaper that he is only affiliated with his current firm, Avenatti & Associates. “Eagan Avenatti, my former firm, was already in the process of moving. A non-event,” he told the outlet. [TRD]

Sin City realtors association reverses course to end listing syndication backlash
Earlier this month, the board of directors for the Greater Las Vegas Association of Realtors said it would no longer automatically send its members’ listings to Zillow, ListHub and other portals. But within a week, the trade group backtracked after the move elicited “concerns this month from many of its members,” Inman first reported. “We believed this was the right decision, but we have since heard from some of our members who expressed concern that this change could have created a hardship for them and may have the potential to detract from the way they currently do business,” GLVAR president Chris Bishop said in a statement. [TRD]

Startup company building giant co-living project in San Jose
A San Francisco-based startup called Starcity plans to launch what it claims is the largest co-living project of its type in San Jose, Business Insider reported. The project, which is slated to open in 2021, would have 800 bedroom-only units, in addition to communal kitchens, living rooms, and bathrooms. Rents will likely range from $800 to $2,500 per unit, and amenities will include utilities, home cleaning, and a laundry service. Starcity recently launched a co-living project in Los Angeles in partnership with Worthe Real Estate Group. [TRD]