The Real Deal New York

National Cheat Sheet: US home sales have weakest year since 2015, hedge fund honcho has country’s largest-ever home buy… & more

By Maya Rajamani | January 25, 2019 10:00AM

Clockwise from top left: Ken Griffin’s Manhattan penthouse purchase marks the most expensive home sale ever in the U.S., where a December plunge in home sales sparked fears of a continuing slowdown; Gymboree and Crazy 8 stores prepare to close after filing for bankruptcy; and Keller Williams hires Berkshire Hathaway’s No. 1 real estate agent.

Home sales plunge in December, sparking more slowdown fears
Existing home sales dropped 6.4 percent from this past November to December, officially making 2018 the weakest year for home sales since 2015, the Wall Street Journal reported, citing data from the National Association of Realtors. Price growth, meanwhile, was slower than it’s been in six years, and a number of homes took price cuts as a result. December’s slowdown has some concerned the sluggish market could persist into 2019. “We’re in a mental recession,” Freddie Mac’s chief economist Sam Khater told the newspaper. “It’s a constant stream of negative headlines for a couple of months… it wears on you.” Major global cities like Hong Kong, London and New York are also now grappling with a more tepid housing market, according to recent news reports. [TRD]

Gymboree and Crazy 8 stores to close after bankruptcy filing
For the second time in two years, Gymboree Group has filed for bankruptcy. The San Francisco-based children’s clothing retailer plans to shutter all of its Gymboree and Crazy 8 locations and sell off its Janie and Jack stores and other assets, according to the Wall Street Journal. The company filed for bankruptcy for the first time back in 2017, closing 375 stores and slashing $900 million in debt, but that wasn’t enough to stave off its most recent Chapter 11 filing in the retail dissolution-friendly jurisdiction of Richmond, Virginia. Gymboree currently has more than $200 million in debt. The company, which in bankruptcy filings disclosed it owes more than $2.6 million to Simon Property Group and $977,843 to Brookfield Property Partners, said it was hoping to launch going-out-of-business sales right away. [TRD]

WeWork, now the We Company, owns nearly 100 trademarks
Co-working giant the We Company, which earlier this month rebranded itself after SoftBank Group slashed its investment to $2 billion, owns at least 94 trademarks, according to an analysis by The Real Deal. The company, which also just launched its first no-membership service and signed four new leases in Manhattan, has sought to stake out WeEat, WeGrow, WeLive and many more. An examination of the so-called We Universe could provide a roadmap to the company’s future plans, which may reportedly include a future initial public offering. The We Company is also grappling with criticism of its CEO Adam Neumann, who has faced conflict of interest accusations due to his leasing of property he personally owns to the company itself. [TRD]

Startup that eschews brokers raises $45M ahead of expansion
REX, or Real Estate Exchange, has raised $45 million in its latest funding round — a figure that could unsettle some brokerages. The Los Angeles-based startup uses artificial intelligence and machine learning to sell homes instead of residential real estate brokers via its RexHomes platform, where customers can buy and sell property with a flat 2 percent brokerage fee, less than they generally pay on traditional multiple listing service platforms. REX listed $1 billion worth of properties last year and plans to use the funding to expand its platform to cities like Sacramento and Portland, Oregon. A number of private investors are backing the startup. [TRD]

Keller Williams hires Berkshire Hathaway’s #1 real estate agent
Berkshire Hathaway’s top real estate agent is heading to Keller Williams Philly, Inman first reported. Gary Keller, who returned to Keller Williams earlier this month as CEO, personally recruited Mike McCann and his 25-person team, the outlet reported. McCann, who was at Berkshire Hathaway for more than two decades, is known as “The Real Estate Man” in Pennsylvania, where he is the No. 1 agent, according to a Real Trends ranking. He and his team closed $361 million worth of transactions in 2017. Berkshire Hathaway’s Ivan Sher Group will likely move into the top spot that McCann and his team are vacating. [TRD]

MAJOR MARKET HIGHLIGHTS

NYC penthouse purchase marks most expensive home sale in US
Hedge fund billionaire Ken Griffin shelled out $238 million for a Manhattan penthouse at Vornado Realty Trust’s 220 Central Park South, making the home the most expensive one ever sold in the U.S., the Wall Street Journal reported. News of the purchase sent shock waves through the nation’s luxury residential real estate market and came less than a week after Griffin, founder and CEO of Chicago-based Citadel, snapped up a mansion in London for $122 million — the most expensive home sale in that city since 2011. Griffin’s new home in New York isn’t the priciest home ever sold. That title goes to a home in Hong Kong that sold for $361 million in 2017. [TRD]

Trump friend’s Florida home hit with foreclosure suit
Morgan Stanley has slapped Aras Agalarov, a billionaire friend of President Donald Trump, with a $2.8 million foreclosure action tied to a Florida condo. The Azerbaijani-Russian oligarch was paying his mortgage on the Fisher Island property via an automatic transfer from one of his bank accounts, said his lawyer Scott Balber, managing partner of the New York office at Herbert Smith Freehills. Balber said the account was frozen last year amid concerns about millions of dollars transferred into it from Russia. Morgan Stanley claims Agalarov hasn’t made any payments since he defaulted on the terms of the mortgage this past summer, but Balber maintains that his client is current on his payments. Earlier this week Agalarov’s son, Russian pop star Emin Agalarov, canceled a proposed North American tour. [TRD]

Windy City 9th on list of top cities for global CRE investment
Chicago made its way onto a list of the top 10 cities for global commercial real estate investment in 2018. The Windy City ranked 15th on the list in 2017, but moved into ninth place in 2018, according to a new JLL report. London took the top spot, followed by New York. Los Angeles, meanwhile, dropped to sixth place. The top 30 cities saw a total of around $730 billion worth of investment, but that figure could fall “as investors look to hold their real estate exposure and become more selective in the search for assets with strong income growth,” the JLL report said. [TRD]

LA official resigns amid FBI probe of City Hall, developers
One of the five commissioners on the Los Angeles Board of Public Works has stepped down after showing up on an FBI search warrant tied to an investigation into Los Angeles’ City Hall and real estate developers, the Los Feliz Ledger reported. Joel Jacinto didn’t say why he was resigning, but the warrant — which named both Jacinto and his wife — was made public a little over a week ago. Jacinto, a city resident since 1989, was appointed to the board by Mayor Eric Garcetti in 2015. [TRD]

Tenant confesses to shooting Utah real estate agent to death
A week after a South Florida real estate broker was killed by her son-in-law, a tenant in Salt Lake City shot and killed a real estate agent who tried to evict him and another tenant from an apartment, the Salt Lake Tribune reported. Ranlife Real Estate broker David Stokoe’s body was found in a crawl space, and tenant and convicted felon Manuel Velasquez was arrested after reportedly confessing to the shooting not long thereafter. Velasquez claimed he shot Stokoe, 40, after the broker kicked down his front door and put him in a choke hold, but Stokoe’s family disputes that account and claims the broker was set up. Velasquez has been jailed on numerous charges, including murder and obstruction of justice. Two women have also been arrested in the killing of Stokoe, a father of four, according to news reports. [TRD]

New Orleans homeowners sue Brad Pitt over post-Katrina homes
More than 100 homeowners have sued Brad Pitt, claiming the homes his nonprofit foundation built in New Orleans after Hurricane Katrina hit in 2005 are poorly constructed, the New York Post reported. The homeowners claim the New Orleans-based Make It Right Foundation built homes that ended up having myriad problems, from incorrectly installed gas lines to rotting porches. Pitt has asked to be removed from the litigation, noting that he hasn’t been on the foundation’s board “for years” and is suing Make It Right’s executive architect. The homeowners’ attorney, Ron Austin, told the Post that the actor is “trying to cut and run.” The most recent federal tax filing for Make It Right from 2015 states that the nonprofit paid $952,369 to Method Homes in Seattle; $476,173 to CRM Builders in Metairie, Louisiana; and $108,625 to Caledonia Construction in New Orleans for construction that year. Make It Right also paid $179,950 to Bennett Truck Transport in McDonough, Georgia, for shipping construction materials and $100,550 to the Endeavor Law Firm in Washington, D.C., for legal services. [TRD]