Clockwise from top left: Real estate developers among 50 charged in college admissions fraud scheme, HUD will give preference to affordable housing in Opportunity Zones, Ben Carson says, New York congresswoman presents bill that would expose LLCs’ beneficial owners, and CoStar Group sues two NY firms claiming copyright infringement.
Real estate developers among 50 charged in college admissions fraud scheme
Fifty people have been charged in a college admissions fraud scheme that allegedly involved parents handing out bribes to secure acceptance letters for their children, including three real estate developers and investors. Miami developer Robert Zangrillo and Los Angeles developers Bruce Isackson of WP Investments and Robert Flaxman of Crown Realty were among the 50 individuals ultimately charged in the scandal. William E. McGlashan Jr., a partner at private equity firm TPG, has also been charged. The scandal marks the Justice department’s largest-ever college admissions investigation. [TRD]
HUD wants to boost affordable housing in Opportunity Zones
Developers and investors looking to take advantage of the federal Opportunity Zone program may want to consider building affordable housing. In an interview with The Real Deal, Housing and Urban Development Secretary Ben Carson said preference for certain grants will be given to proposed affordable developments, though he noted the agency can’t require developers to build affordable housing. Carson also said he would consider staying with HUD for a second four-year term. “My preference would be to go back to the private sector, that would be my preference now,” he said. “But there are some very important things that need to be done.” [TRD]
New York Rep. presents bill that would expose LLCs’ true owners
New York Congresswoman Carolyn Maloney has reintroduced a bill that would force anonymous LLCs to disclose their beneficial owners to the Financial Crimes Enforcement Network, which would in turn disclose the info to law enforcement and financial institutions. The bill, known as the Corporate Transparency Act of 2019, aims to solve a “very simple” problem, Maloney said. “Criminals and terrorists have always used anonymous shell companies to finance their operations, because they never have to disclose who actually owns these shell companies,” she said, adding that law enforcement investigations often “hit a dead end at an anonymous shell company.” [TRD]
CoStar Group sues two NY firms claiming copyright infringement
CoStar Group has hit two different firms with copyright infringement lawsuits. The suit filed against New York-based Baron Realty Group claims the firm didn’t pay to use its service, “stole tens of millions of data points” and subsequently compiled its own database for employees. Another suit filed against New York-based Realty Insight claims that firm did buy CoStar subscriptions, but “secretly” resold them to other commercial real estate firms. CoStar said it hopes the lawsuits “send the message to would-be thieves that [it] will pursue legal action.” The firms didn’t immediately respond to requests for comment. [TRD]
MAJOR MARKET HIGHLIGHTS
The Chrysler Building’s new owner is considering a hotel conversion
Aby Rosen’s RFR Holding and Austrian real estate firm Signa Holding GmbH may have big plans for their latest purchase. In an email, Rosen told Bloomberg he would consider a hotel conversion for the Chrysler Building, which he and his partner are buying from Tishman Speyer and an Abu Dhabi government fund for $151 million. Newmark Knight Frank’s Lawrence Wolf noted that a conversion of the 1930 Art Deco building could be difficult for the new owners. “It’s a magnificent building… but changing use is not without issues,” he told the outlet. [TRD]
Chicago City Council approves $6B riverfront development plan
Sterling Bay’s $6 billion plan for a development along the North Branch of the Chicago River has secured the Chicago City Council’s approval. The council approved the developer’s plan to build 14.5 million square feet of office, retail and residential space on the Lincoln Yards site along the river by a vote of 33-15, following months of debate. While one Alderman had hoped to delay approval, describing the project in its current iteration as “the rich getting richer,” another Alderman said the Windy City needs the project to compete with cities like New York. Sterling Bay still needs the council to approve a new $1.3 billion tax increment financing district. [TRD]
Miami WeWork building to sell in cryptocurrency auction
The owners of a Miami office building that’s currently leased to WeWork are expected to sell it for $65.5 million as part of a cryptocurrency real estate auction, marking largest such deal of its kind. Turnbridge Equities founder and managing principal Andrew Joblon and his partners plan to sell the 93,000-square-foot building to New York-based financial and advisory services firm Inveniam Capital Partners, which reportedly made a deposit on the building using Bitcoin back in January. WeWork still has 12 years on its lease at the building. [TRD]
Co-living company plans $100M expansion in LA amid “huge demand”
Los Angeles will be getting seven new co-living buildings over the next few years. Co-living company Common is teaming up with Proper Development on a $100 million project that will include 600 beds, the Los Angeles Times reported. Common’s existing co-living buildings in Echo Park and Hollywood offer housekeeping services and fully-furnished units. Rents are around $1,550 per person at the Hollywood location, and competition for the spaces is fierce: Common founder Brad Hargreaves told the outlet the company got 9,000 applications for the 24 units, and noted that he’s seen “huge demand in Los Angeles.” [TRD]
West Coast housing prices drop after years of “out of reach” prices
Home prices on the West Coast are falling thanks to an increase in inventory, spelling good news for prospective homebuyers, according to Bloomberg. The shift comes after years marked by “out of reach” price tags and heated competition between buyers. In places like Seattle, San Francisco and Denver, “bidding wars are vanishing, time-on-market is climbing and prices are flattening, or even falling,” according to the outlet. “This is what it looks like when the pendulum starts to go the other way,” Trulia housing economist Felipe Chacon told the outlet. [TRD]
Austin-based developer to construct 3-D printed affordable housing
An Austin-based developer is planning to use a 3-D printer to construct affordable homes. Construction-tech startup Icon is selling the printer, known as the Vulcan II, to Cielo Property Group, which plans to start using it this year, according to the Wall Street Journal. The 3,800-pound printer will be able to create a 2,000-square-foot family home within several days by pumping out concrete. Perfecting the technology hasn’t been setback-free, Icon CEO Jason Ballard noted. “We exploded so many pumps,” he said. “I’m talking about liquid concrete on every surface and every human in the room.” [TRD]