The Daily Dirt: Stellar’s role in NYC’s Opportunity Zones

Census tract 135 and Stellar Management’s Larry Gluck (Credit: Getty Images and Stellar Management)
Census tract 135 and Stellar Management’s Larry Gluck (Credit: Getty Images and Stellar Management)

This area of Hell’s Kitchen was one of many locations that Stellar Management lobbied to become an Opportunity Zone last year. It also sticks out.   

Census tract 135, which runs from West 50th Street to West 58th Street and from 10th Avenue to the Hudson River, doesn’t scream low-income and undercapitalized. The area’s mean household income was nearly $112,000 as of 2017, according to Census Bureau data. The neighborhood is also home to several luxury developments. 

Yet, the U.S. Treasury Department identified the area as low-income, and the New York City Regional Economic Development Council recommended it for the Opportunity Zone program. Other areas in the city tapped for the federal tax program include the South Bronx, Jamaica and Brownsville. 

In a somewhat unusual move, Stellar Management stepped in to advocate for a few different census tracts once the OZ selection process began in February 2018, Eddie Small reports. In addition to the area on the Far West Side, Stellar suggested tracts in Bedford-Stuyvesant, Bushwick, Washington Heights, the Lower East Side and the area surrounding Penn Station.

“Should the census tracts from our concentrated list be nominated as Opportunity Zones, Stellar Management stands ready and willing to swiftly deploy at least $100 million of equity capital into those underserved communities,” Stellar’s chief investment officer, Matthew Lembo, said in an email to Empire State Development. 

In addition to Hell’s Kitchen, the state ultimately recommended two other tracts in the East Village that Stellar recommended. 

A representative for ESD said the state worked within federal guidelines and that selection of OZs was the result of a “data rich, regionally focused process, and all nominated tracts were subject to federal approval.”

Still, the selection of Hell’s Kitchen — a neighborhood that, on its face, doesn’t seem to fit the OZ distressed neighborhood criteria — after a prominent landlord, who has repeatedly been accused of illegally deregulating apartments, lobbied on its behalf, raises even more questions about the process. Not to mention the fact that the $100 million Stellar offered to deploy has yet to materialize. 

The powers that We — that is, SoftBank — wants the We Company to hold off on its initial public offering. 

The Japanese conglomerate is trying to raise $108 billion for a second Vision Fund, and its ability to do so could be jeopardized by a poor performing investment in WeWork, David Jeans reports.  

The conglomerate is WeWork’s largest investor and has a 29 percent stake in the company. If that isn’t sway enough, WeWork is also still waiting on the $1.5 billion SoftBank pledged to release in April 2020 (which is also contingent on WeWork not defaulting). The company also plays a huge role in WeWork’s business in Asia. In fact, WeWork can’t issue dividends in Japan or the Pacific region without SoftBank’s consent. 

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Still, CEO Adam Neumann maintains the majority vote, and according to CNBC, WeWork still plans to kick off its IPO show as soon as next week. ¯_(ツ)_/¯

What we’re thinking about next:
What’s going on over in Tel Aviv? Who will be the next NYC-based developer to plan a new bond issuance on the Tel Aviv Stock Exchange? Send a note and 250 million shekels

Residential: The priciest residential closing recorded on Friday was for a condo unit at 21 East 12th Street in Greenwich Village, at $8.3 million.
Commercial: The most expensive commercial closing of the day was for a retail building at 254 West 23rd Street in Chelsea, at $19.3 million.

The largest new building filing of the day was for 4,484-square-foot residential building at 36-20 190th Street in Murray Hill. Kwan Kong filed the permit application. 

The priciest residential listing to hit the market was for a condo unit (owned by Bette Midler!) at 1125 Fifth Avenue on the Upper East Side, at $50 million. Brown Harris Stevens’ John Burger has the listing.  — Research by Mary Diduch

A thing we’ve learned…
Before they were opponents in court, Compass’ Robert Reffkin and Realogy’s Ryan Schneider were… co-workers? The feuding companies’ CEOs apparently overlapped at management consulting giant McKinsey & Company in the late ’90s / early 2000s. Thank you to E.B. Solomont for providing this tidbit.

Top stories from our other markets:

Jeff Bezos, not surprisingly, is among the 100 largest owners of private property nationwide, according to data compiled by the Land Report and reporting by Bloomberg. The list also includes Ted Turner and Stan Kroenke, who owns the NFL’s Los Angeles Rams among other teams. Together the 100-member group owns roughly 40 million acres, or about 2 percent of the country’s total land.

The state’s attorney will review Todd Ricketts’ property tax missteps, which saved him some $10 million over the course of a decade. This comes after the Cook County Board of Review failed to prove that the Republican National Committee finance chair and Chicago Cubs co-owner intended to deceive officials. The panel noted it cannot compel Ricketts to testify, but the state’s attorney can.

As state legislators near a deal on expanding rent regulations, Los Angeles County is poised to develop a permanent rent control ordinance. The county’s proposed measure would cap rent increases and implement just-cause eviction regulations for tens of thousands of units in unincorporated L.A. County.

Hurricane Dorian didn’t make landfall in South Florida, but it heightened concerns for real estate buyers and brokers, who saw the catastrophic damage that it caused in the northern Bahamas. Local brokers say the once-Category 5 hurricane won’t have a lasting impact on buyers and sellers’ minds, but has already given some buyers and sellers pause. — Compiled by Alexi Friedman