Real estate drama isn’t exclusive to CRE

Multifamily, retail, construction and development all had their moments this week

Real Estate Week in Review for August 19, 2023
CA Ventures' Tom Scott, Unibail-Rodamco-Westfield's Jean-Marie Tritant, Berkshire Hathaway's Warren Buffett, AECOM Tishman’s Jay Badame (AECOM Tishman, LinkedIn, Getty, CA Ventures)

While office market woes have dominated conversations this year, this week exposed there has been no shortage of drama in other real estate sectors, as well. 

In Chicago, multifamily giant CA Ventures, which claims to have assets valued at $15 billion worldwide, faces an eviction from its headquarters and a United Center luxury box, a series of lawsuits filed in the last two months show.

A River North office venture of Jaime “Jay” Javors is pursuing an eviction against CA Ventures from its 74,000-square-foot space at 448 North LaSalle Street, according to a lawsuit filed last month in Cook County court. Javors, the owner of the 12-story, 172,000-square-foot building, claims that CA Ventures owes more than $334,000 in unpaid rent, according to a July letter from the landlord included as an exhibit in the suit.

In New York, AECOM Tishman’s Jay Badame abruptly left the construction giant after a terse announcement from the company.

Badame’s departure followed an announcement in May that he was being replaced as the company’s president of construction management, in which he oversaw 3,000 employees across the U.S. At the time, the firm said he would serve as an executive adviser to the new president, Bob Hart.

It was a curious departure, as Badame has headed the Tishman and Hunt construction brands at AECOM and City & State just named him one of the top 100 most powerful construction leaders in the city, which earned him a congratulatory tweet from his company.  

On the home building side, Warren Buffett’s Berkshire Hathaway disclosed $814 million in investments across three home builders this week — D.R. Horton, Lennar and NVR —  the Financial Times reported. The move from the world’s most famous investor reflects how builders are capitalizing on this moment of limited supply, even as higher mortgage rates have cast a chill on home sales.

Meanwhile, Unibail-Rodamco-Westfield is close to a deal to refinance a $925 million loan on its Westfield Century City mall in Los Angeles.

Morgan Stanley will fund the two-year, floating-rate loan, which will be pooled into a commercial mortgage-backed securities offering, according to a release from Fitch Ratings, a KBRA report and data from Trepp. The deal is expected to close Aug. 29. 

In South Florida, Brian Tuttle has gone from being a “land flipper” to a developer, because it’s a safer bet. 

His 800-apartment Royal Palm Beach project marks 64-year-old Tuttle’s switch from the high-risk, high-reward land business –– which has left him with a checkered financial record, going from an eight-figure net worth to filing for bankruptcy –– and into income-generating real estate. 

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TRD caught up with Tuttle and his late-career switch.

On the residential side, in Dallas, it was revealed that in 2021, Douglas Elliman brokerage’s Texas leader Jacob Sudhoff allegedly factored a Sikh real estate agent’s religion, race or physical appearance, as well as those of a white agent who is a former Dallas Cowboys cheerleader, into its sale strategy when the two agents were paired together in a deal. 

The Sikh man, Andy Anand, wore a turban and there was concern he wouldn’t be able to get a deal in tony Highland Park. So he was paired up with the former cheerleader as a front woman.

Experts are unclear as to where the situation falls on the inappropriate-to-illegal spectrum. Part of the issue is that many details are unknown, as the anecdote was just a single paragraph of a much longer feature story in Texas Monthly about a legendary real estate agent.

Compass reached its goal of being cash flow positive by the end of the second quarter, but not necessarily in a straightforward way.  

The company last week reported that it brought in $51 million more than it spent in the second quarter.

But Compass’ liabilities for commissions payables jumped by $40 million last quarter, which it booked as positive cash flow on its statement. That’s allowed because it represents cash the company has on hand should it need it — but it’s money the company ultimately owes to its agents. 

And while there were plenty of non-office stories, office was still a hot topic.

Indeed, SL Green took over Ben Ashkenazy’s interest at 625 Madison Avenue last week — closing a chapter on a years-long dispute over the property.

The Marc Holliday-led company and its group of lending partners acquired the stake at a UCC auction earlier this morning, according to auctioneer Matthew Mannion of Mannion Auctions. The lenders, who held a $195 million mezzanine loan that Ashkenazy used to finance the property, moved to foreclose in June.

The big question is what will become of the 17-story office building.