National Cheat Sheet: Sears avoids liquidation, warehouse vacancies hit 18-year low, Blackstone plans massive real estate fund … & more

TRD NATIONAL /
Jan.January 18, 2019 08:00 AM

Clockwise from top left: Sears avoids bankruptcy liquidation after its board accepted an auction bid from chairman Eddie Lampert, CBRE finds warehouse vacancy rates at their lowest levels since 2000, the Blackstone Group readies its largest-ever real estate private equity fund and leading homebuilder Hovnanian Enterprises is in danger of getting delisted from the New York Stock Exchange.

Sears dodges liquidation after board accepts chairman’s bid
All of the remaining assets of Sears Holdings Corporation have been acquired by chairman Edward Lampert for $5.2 billion, according to various news reports. The board of the bankrupt company accepted Lampert’s auction bid in lieu of competing proposals from liquidators, Bloomberg reported. The decision came after “two days of discussions… to determine whether Sears would be worth more dead or alive,” according to the outlet. The deal must still be approved by a U.S. bankruptcy judge. A hearing on the matter has been scheduled for Feb. 1. If it is approved, Lampert will have another opportunity to try to revive the ailing retail chain. He hopes to keep 425 stores open and save 45,000 jobs, a source told Bloomberg. [TRD]

CBRE finds warehouse vacancy rates at lowest level since 2000
A mere 7 percent of industrial space was vacant in the fourth quarter of 2018 — the lowest that vacancy rates have dipped since 2000, the Wall Street Journal reported, citing data from CBRE. The commercial real estate firm attributed the scarcity of available space in part to the growing e-commerce industry. Demand actually outpaced supply by around 6 million square feet during the fourth quarter last year. “In 2019, it will remain quite a competitive market for people to get hold of the logistics assets they need,” CBRE’s head of research for the Americas and global chief economist Richard Barkham told the newspaper. [TRD]

Blackstone’s $20B real estate fund set to be its largest yet
Buyout giant the Blackstone Group is gearing up to close a $20 billion real estate fund with around $60 billion in buying power, the Wall Street Journal reported. The fund, which will likely close in the first quarter of 2019, will be the private equity firm’s largest real estate fund to date. “They can buy private companies and they can buy [entire companies listed] on the New York Stock Exchange,” Evercore ISI analyst Steve Sakwa told the newspaper. The fund is something of an anomaly, as other real estate funds have struggled to raise money, according to the outlet. [TRD]

The Mooch parts ways with Opportunity Zone fund partner
Former White House communications director and Harvard Law School graduate Anthony Scaramucci’s SkyBridge Capital split this week with Emanuel “Manny” Friedman’s EJF Capital on a planned $3 billion fund to invest in Opportunity Zones. The venture, which was announced in November and poised to be structured as a real estate investment trust, fell apart as a result of EJF’s perceived lack of experience in managing real estate funds, according to The Real Deal‘s reporting. SkyBridge president Brett Messing told TRD that the separation with EJF was amicable. Both will now proceed with their own Opportunity Zone funds. Scaramucci, meanwhile, will soon appear as a contestant on “Celebrity Big Brother,” which premieres Jan. 21 on CBS. [TRD]

Leading national homebuilder in danger of getting stock delisted
One of the largest homebuilders in the country, Hovnanian Enterprises, could be delisted from the New York Stock Exchange as its debt piles up. The Matawan, New Jersey-based company, founded by chairman and president Ara Hovnanian, plans to carry out a reverse stock split to stay on the NYSE if it can get approval from shareholders at a meeting in March. On Thursday, Hovnanian’s stock price close at 66 cents, and the company will need its shares to trade above $1 if it hopes to stay listed. Hovnanian’s current financial woes can be traced back to the 1990s, when the company’s debt started to mount as it went into acquisition mode. [TRD]

MAJOR MARKET HIGHLIGHTS

Amazon eyes 10,000 square feet of space in Chrysler Building
The Chrysler Building is for sale, but Amazon is planning to ink a lease at the iconic office tower, the New York Post reported. The e-commerce and technology behemoth, which late last year announced plans for a second headquarters in nearby Long Island City, is expected to sign a lease for around 10,000 square feet of space in the building soon, though it’s not yet clear exactly when. News of Amazon’s likely tenancy came less than a week after news broke that Tishman Speyer and the Abu Dhabi government fund that own the Chrysler Building would be putting it up for sale after hiring CBRE to market the landmark skyscraper. [TRD]

Microsoft to contribute $500M to affordable housing in Seattle
One of the world’s largest companies has a plan to tackle a dearth of affordable housing in the Puget Sound region. Microsoft announced this week that it was ready to spend $500 million to fix a problem that it partly had a hand in creating in one of the nation’s priciest housing markets, according to the New York Times. The Redmond, Washington-based company has pledged to fund projects in Seattle and surrounding areas that provide more housing options for low-income and middle-class workers, as well as address homelessness. [TRD]

PG&E going bankrupt as CEO steps down amid wildfire fallout
The California utility giant accused of starting the deadly Camp Fire in California this past fall plans to file for bankruptcy, Bloomberg reported. Geisha Williams, CEO of the San Francisco-based Pacific Gas & Electric Company, has also stepped down with general counsel John Simon stepping into the company’s top leadership role until it finds a permanent replacement. A number of California residents have hit PG&E with lawsuits claiming that the company’s equipment sparked the November fire that left 86 people dead and destroyed 21,000 homes in Northern California. State Attorney General Xavier Becerra is investigating those allegations. PG&E could be facing up to $30 billion in wildfire-related liabilities. [TRD]

Top NYC developer looks outside for new leader
Sush Torgalkar, a former COO of Westbrook Partners, has been named the new CEO of Extell Development Company, one of the largest commercial real estate developers in Manhattan. Extell founder Gary Barnett will continue to serve as chairman of the firm, but he did not provide a reason for recruiting Torgalkar to run the business. Torgalkar, 42, grew up in Cleveland as the son of Indian immigrants. He is known for his access to institutional investors and ability to navigate tricky deals, something in which Extell is well-versed. A recent analysis by The Real Deal found that Extell has more than 1,500 units in its New York pipeline. [TRD]

South Florida mansion owned by IHOP founder’s son hits market
The son of one of IHOP’s founders has put the South Florida mansion that he and his wife own on the market. Nathan and Jacqueline Finkel are seeking $7.25 million for their 21,656-square-foot home in a suburb of Fort Lauderdale. Abe Finkel, Nathan’s father, was one of the founders of IHOP, the pancake house restaurant chain that briefly flirted last year with a name change to IHOB as part of a burger promotion. The nine-bedroom, 11-bathroom home in the town of Southwest Ranches has a bowling alley, a theater room, a bar room, a library and quarters for maids and nannies. The property comes with a tennis court, gazebo and swimming pool. Mark Kaminsky and Kevin O’steen of the Kaminsky/Reyes Team at Coldwell Banker have the listing. [TRD]

Amid national expansion, Compass heads to Mile-High City
Despite already having offices in Aspen and Telluride, Compass is embarking on a further Colorado expansion with planned outposts in Denver and Boulder. The SoftBank Group-backed residential brokerage said it will open flagship offices in the two cities within the next few months. “Colorado is consistently named one of the fastest growing states in the country, netting more than 70,000 new residents per year over the past 5 years,” chief growth officer Rob Lehman said in a statement, noting that there’s “an enormous opportunity to elevate the real estate experience for agents across the state.” Compass has been rapidly expanding, opening offices across the country. [TRD]

R. Kelly evicted from Chicago warehouse he used as studio, residence
A judge signed an order evicting the R. Kelly from an industrial building in Chicago, the Chicago Sun-Times reported. The singer owed nearly $80,000 in back rent for the warehouse, which he used as both a recording studio and a residence. City attorneys claim the dual use violates zoning code and had been trying to gain access to the building, according to the outlet. R. Kelly has long been accused of abusing women and young girls, but a recently-aired Lifetime series, “Surviving R. Kelly,” has raised a new set of abuse allegations against the entertainer, all of which he has denied. [TRD]

Nonprofit shells out $2.5M for Muhammad Ali’s Michigan estate
An 81-acre estate in southwest Michigan that Muhammad Ali bought in the 1970s has a new owner, the Chicago Tribune reported. A Turkish nonprofit called the Turken Foundation, which is based in New York, bought the property from Lonnie Ali, the boxing legend’s widow, for $2.5 million, according to the outlet. Lonnie Ali initially listed the estate for $2.895 million, although the precise figure was $2,895,037, a tribute to her late husband’s 37 career knockouts. Ali, who died in 2016, purchased the property when he was living 90 miles away in Chicago’s Kenwood neighborhood. He continued to stay there even after Ali moved to Los Angeles and Arizona. One of the buildings on the estate has a boxing ring, the newspaper reported. [TRD]


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