National Cheat Sheet: Amazon’s Whole Foods plans store expansion, Sears fights for survival, US firms see Israeli bond troubles … & more

TRD NATIONAL /
Jan.January 04, 2019 08:30 AM

Clockwise from top left: Sears chairman Eddie Lampert plans to make $1.8B offer to save the retail giant if a $4.4B bid fails, Amazon eyes states like Idaho and Utah as it looks to open new Whole Foods stores, Texas-based tiny home builder raises $48M in initial public offering, and a Chinese retreat from U.S. and European markets is expected to hurt prices in 2019.

Amazon looks West to open new Whole Foods stores
Amazon plans to open a spate of new Whole Foods stores across the country, the Wall Street Journal reported. The e-commerce giant is looking at suburban areas for its new stores and has been scouting sites in Idaho, Utah and Wyoming, the outlet reported. There are currently around 475 Whole Foods stores in the U.S., with future locations slated for other areas like West Los Angeles. Amazon, which acquired the grocery chain in 2017, could end up using some of the extra space at its new Whole Foods sites for its delivery and online order pickup services. The openings would come as Amazon continues to build up its real estate empire. [TRD]

Sears chairman makes dueling bids for bankrupt company
A week after Sears chairman Eddie Lampert’s hedge fund, ESL Investment, made a $4.4 billion bid to buy around 425 Sears stores, the Wall Street Journal reported that ESL has also offered to shell out $1.8 billion for the retail chain’s real estate and a number of other assets if its other offer is not successful. Two liquidation firms, however, are also bidding to liquidate Sears and sell off the company’s assets. Sears and its board members have until Friday to decide whether ESL is a “qualified bidder” that can take part in a bankruptcy auction scheduled for Jan. 14, according to the outlet. Sears, which is trying to avoid liquidation, said in late December that it would close 80 more stores. [TRD]

Texas-based tiny home builder raises $48M in initial public offering
A developer that focuses on building tiny homes has raised $48 million in an initial public offering — selling 4 million shares at $12 apiece, according to Inman. Bedford, Texas-based Legacy Housing Corporation builds homes ranging in size from 390 square feet to around 2,600 square feet. The company’s IPO on the Nasdaq stock exchange comes amid predictions that tiny homes are about to soar in popularity. Legacy “is known for commercially viable tiny homes, but also provides an array of similar housing options, such as ‘single wides’ and ‘double wides,’” the outlet reported. [TRD]

American real estate firms hit Israeli bond market turbulence
Real estate firms that flocked to Israel in recent years in search of cheap debt are now coping with the aftermath of a series of declines, defaults and other troubling disclosures that have cut into the price of bonds issued by U.S. companies, including Starwood Capital Group. TRD reported in late December that bonds issued by Delshah Capital, Extell Development and GFI Real Estate Limited were trading a 20 percent above yields, while Barry Sternlicht’s Starwood West and Yoel Goldman’s All Year Management were selling for less than 60 cents on the dollar. While some bonds have recovered, there is a growing sense of concern. “It’s definitely a crisis,” Ayalim Mutual Funds CEO Kobi Segev told TRD. “Israelis now understand that the risks are higher than they anticipated.” [TRD]

Chinese retreat from US and European markets expected to hurt 2019 prices
In the third quarter of 2018, Chinese conglomerates shed more than $1 billion worth of commercial real estate in the U.S., while buying only $231 million in this country, the Wall Street Journal reported. The cool down also occurred in Europe, where Chinese investors unloaded $233.3 million in commercial real estate, including hotels and office buildings. The withdrawals, which come amid the Chinese government’s restrictions on foreign investments, are expected to have a negative effect on real estate prices this year. “You’re probably going to see some cracks,” Cedrik Lachance, director of REIT research at Green Street Advisors, told the outlet. [TRD]

MAJOR MARKET HIGHLIGHTS

After CEO sheds stake for $40M, how much is Douglas Elliman worth?
Douglas Elliman CEO Dottie Herman is letting go of her stake in the brokerage, which has taken a hit in recent months due a slowdown in the national housing market. Herman, who bought the firm 15 years ago with its current chairman Howard Lorber, will get a total of $40 million for her stake from Elliman’s parent company Vector Group. If that sum is a fair price, back-of-the-envelope math puts Elliman’s valuation at $136 million, a figure that Lorber disputed in an interview with TRD. “I’m not going to get into formulas,” he said. “But she was the seller, I was the buyer. As a buyer, you always want an aggressive price. She didn’t have to sell.” As for Herman, she told TRD that the decision to sell her stake in a place she loves was the “hardest” of her life. “It was just time to get some of my money out,” she said. “Now I can just have a little more security.” [TRD]

National Association of Realtors plans to renovate part of Chicago headquarters
The lower level of the National Association of Realtors’ headquarters in Chicago is getting an upgrade. NAR, which in November secured a permit for a $45 million expansion of its building at 430 North Michigan Avenue, plans to renovate its existing fitness and office space, city records show. The nonprofit trade association already said it planned to construct two stories on top of the building’s existing 12 stories and install new elevators and a new lobby. Annual dues for NAR went up by 25 percent last spring, from $120 to $150. Its building is across the street from the Tribune Tower, which is also undergoing redevelopment. [TRD]

Facebook moving into more office space in Los Angeles
Facebook has signed a lease for 260,000 square feet of office space at a Tishman Speyer-owned Brickyard office campus in the Playa Vista neighborhood on Los Angeles’ westside, the Commercial Observer reported. The social media giant, which already has 50,000 square feet of space at the Brickyard, will move into its new space within the next few months, according to the outlet. Facebook’s neighbors at the Brickyard include Loyola Marymount University’s School of Film and Television. Playa Vista itself is also home to tech companies like Google’s YouTube and Verizon’s Yahoo. [TRD]

Brookfield shells out $218M for South Florida’s largest hotel sale last year
A golf course in Palm Beach Gardens has been acquired by Brookfield Asset Management. Affiliates of Walton Street Capital sold the PGA National Resort & Spa to a unit of the global asset manager for nearly $218 million — the largest South Florida hotel sale in 2018. Toronto-based Brookfield used a loan from the Royal Bank of Canada to finance its purchase of the resort, which hosts the Honda Classic Golf Tournament. News of the deal first emerged late last year. The resort has 339 hotel rooms, five 18-hole golf courses, 42,000 square feet of meeting space and a 40,000-square-foot spa. [TRD]

Private equity firm moved to evict hundreds of Memphis-area tenants in 2018
A property management company owned by buyout giant Cerberus Capital Management tried to evict more than 400 tenants in the Memphis area last year — a 50 percent increase from 2017, the Washington Post reported. FirstKey Homes, a portfolio company of New York-based Cerberus, is the largest single-family home owner in the city, according to the newspaper. FirstKey was also hit with nearly 200 property code violations between Jan. 1 and Oct. 31 of 2018 — more than any other landlord in most parts of Memphis, the WaPo reported. Robert Knecht, director of public works in Memphis, claims that FirstKey is “just [there] to lease their properties without consequence.” [TRD]

WeWork expands its Virginia presence with 83,000-square-foot lease
Co-working giant WeWork has secured an 83,000-square-foot lease at a tower in Rosslyn, North Virginia, Washington’s Top News reported. The SoftBank Group-backed behemoth already has offices elsewhere in Washington, D.C., and Northern Virginia, including Tysons Corner and Arlington’s Crystal City — where Amazon is setting up one of its new headquarters. The lease includes four floors at developer JBG Smith’s CEB Tower. [TRD]


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