Paydirt: RIP Xceligent, Xinyuan’s shrinkage and other industry news you need to know this week
Exit through the gift shop: “At this point all employees should pack up their personal belongings and exit the building within the next thirty minutes.”
With that, one of the fiercest wars in the real estate information space came to a quick and brutal end. Xceligent, which sought to challenge CoStar as commercial property data’s alpha dog, was put down by its owner, Daily Mail and General Trust. DMGT, citing Xceligent’s lukewarm debut in New York and disappointing renewal rates, had written the value of the firm down to zero last month, and I’m guessing they no longer wanted to hemorrhage money on Xceligent’s lengthy and expensive legal battle with CoStar, which alleged that its rival was engaging in “industrial scale theft.”
CoStar couldn’t resist a bit of grave-dancing. In a statement after the shutdown, it said Xceligent “failed as a result of business missteps over two decades,” adding that it stood by “ready to help Xceligent’s former customers.” And in ominous news for DMGT, it appears that CoStar will battle on: The company has indicated in court filings that its lawyers will now turn their attention to DMGT and its umbrella companies.
“While the bankruptcy has stayed the case against Xceligent, CoStar will continue legal efforts to hold accountable those involved in the theft of its intellectual property,” a CoStar spokesperson said Friday. On Sunday, CoStar founder and CEO Andy Florance even gave a victory-lap interview to Bisnow, in which he touted the firm’s legal wins, provided some homespun wisdom about business ethics (“You learn at school that you don’t just take someone else’s paper and write your name on it and submit it as your work”), but declined repeatedly to comment on CoStar’s infamous mailing campaign.
Manhattan condo report card: The new development sector carried Manhattan’s luxury residential condo market to record highs for the past three years. But 2017 has been a comedown of sorts: Sales volume in the sector will fall 13 percent year-over-year to $8.1 billion, according to new year-end projections from CityRealty, largely due to fewer closings in ultra-luxury projects (2016’s numbers, for example, were bolstered by all the closings at 432 Park) Still, the overall residential market performed just about as well as last year, with CityRealty projecting a total sales volume of $25.9 billion (compared to $25.8 billion in 2016). As always, closings are more a sign of how the market was than how it is, so always keep an eye out for in-contract activity.
Xinyuan slashes XIN: Xinyuan is one of the more closely-watched Chinese companies in the New York real estate market, because it did a lot more than just write checks. It aimed to be the first true Chinese condo developer in the city, making a mark with innovative projects such as the Oosten in Williamsburg and what was a particularly fascinating acquisition of the RKO Keith’s Theater site in Flushing. But since October, we’ve been hearing that the New York team was effectively frozen – it stopped contending for deals, and word on the street was the publicly traded giant was rethinking its approach here. Now, as TRD first reported last week, Xinyuan has slashed its local development team and brought in Kuafu Properties to help get its projects over the line. Xinyuan will continue to own the assets, but choosing to team up with Kuafu perplexed some industry observers – the firm, led by Shang Dai, is yet to complete a major ground-up project.
Chaser: Been to a Knicks or Rangers game recently and noticed a dearth of fat cats in the VIP suites? Thanks to TRD’s E.B. Solomont, we now know why: Title insurance firms, big patrons of those amenities, are laying low, spooked by new regulations aimed at cracking down on inducements and excessive marketing. The rules kick in today, and if they deliver on what they promise, would transform what doing business in title means.
“I mean,” bemoaned one executive, “there are virtually no entertainment expenses of any sort that are allowed.” The horror!
(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.)