Clockwise from top left: Warren Buffett’s HomeServices named largest resi brokerage in the U.S., New-home groundbreakings hit an 8-month low in February, report says, BlackRock snaps up real estate analytics firm eFront for $1.3B, and private real estate funds struggling to invest record amounts of cash.
Warren Buffett’s HomeServices named top US resi brokerage
Berkshire Hathaway’s HomeServices of America is now the largest residential brokerage in the country, according to a new ranking from Real Trends. It’s the first time the Minneapolis-based, Warren Buffett-owned firm has outranked Realogy’s NRT. HomeServices closed 346,629 transactions in 2018, while NRT closed 337,235, according to Real Trends. Despite being ousted from the top spot, NRT still had a higher dollar volume than HomeServices, with the two firms reporting $176.4 billion and $135.9 billion in sales, respectively, in 2018. In a statement, HomeServices CEO Gino Blefari attributed the firm’s ascent to “years of hard work.” [TRD]
Report finds new-home groundbreakings at 8-month low in February
Groundbreakings on new homes fell by 8.7 percent last month — marking an eight-month low, according to a new report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The dip “[suggests] buyers and builders remain wary despite higher wages and a drop in mortgage rates,” Bloomberg reported. Single-family home construction took the hardest hit, declining “the most in four years while permits were unchanged,” according to the outlet, which noted that the data “have a wide margin of error.” [TRD]
Trump administration seeks to end Fannie, Freddie conservatorships
More than a decade after the financial crisis, the federal conservatorships of Fannie Mae and Freddie Mac could be about to end as the Trump administration moves forward with plans to unwind the mortgage guarantors, Housing Wire reported. The White House has previously hinted that it’s in favor of moving the two government-sponsored enterprises out from under federal control, and Freddie Mac named a new CEO earlier this month amid ongoing privatization talks. [TRD]
Private real estate funds struggle to invest record amounts of cash
Private real estate fund managers now have a record $333 billion, according to financial research firm Preqin, but they don’t know what to do with it, the Wall Street Journal reported. Managers have found it increasingly difficult to find investments they feel are worth shelling out for, and some have had to alter their strategies as a result, according to the outlet. “A lot of firms have been sitting on their hands and not putting money to work, and that’s dangerous,” Christian Dalzell, managing partner at Westport, Connecticut-based Dalzell Capital Partners, told the outlet. But the problem has reportedly been less of an issue for larger real estate firms that have enough money to acquire entire companies and portfolios. [TRD]
BlackRock buys real estate analytics firm eFront for $1.3B
New York-based investment giant BlackRock has agreed to acquire French real estate analytics firm eFront in a $1.3 billion deal, Bloomberg reported. The move is part of the asset manager’s broader effort to diversify its products. “Technology and illiquid alternatives are two pillars of BlackRock’s growth, and this transaction provides a unique opportunity to accelerate our positioning in both,” said a statement from BlackRock chairman Laurence Fink, noting that BlackRock was “particularly excited about eFront’s global footprint.” IHS Markit was also reportedly in the market to buy eFront from Bridgepoint Advisers, but BlackRock won out. [TRD]
MAJOR MARKET HIGHLIGHTS
Chicago’s Trump Tower is a black hole for retail
President Donald Trump’s development efforts in Chicago have a long history. The Real Deal chronicled this week the more than decade-long retail disaster that has befallen the city’s Trump International Hotel & Tower. About a year before the project’s 2005 groundbreaking, Trump Organization executive Charles Reiss met with late Windy City retail broker Bruce Kaplan and his colleague, Leslie Karr. The Trump family, Reiss said, wanted advice on how to market the retail space that would face the river at the tower’s base. Today, a decade after its opening, the building has just one small retail tenant. [TRD]
Kansas homeowner association dispute racks up record legal bill
A dispute between an Olathe, Kansas, resident and his homeowner association has racked up a combined $1 million in legal fees, making it the most expensive dispute of the sort in the country, the Wall Street Journal reported. The resident, Jim Hildenbrand, moved into the Avignon Villa Homes, a community for older adults near Kansas City, in 2012. The local HOA soon took issue with the placement of his satellite dish and a decorative wall, according to the outlet. The disputed has escalated since then, with Hildenbrand having reportedly been cited for everything from putting a St. Francis statue in one of his flower beds to “a dead cat [found] in a window well,” the latter of which he “suspects was planted by a neighborhood enemy,” the outlet reported. [TRD]
Texas county is No. 1 in new Opportunity Zones ranking
Investors hoping to cash in on the federal government’s Opportunity Zones program may want to set their sights on Travis County, Texas, according to a new report by Yardi Systems’ Commercial Cafe. The county placed first on Commercial Cafe’s ranking of the top 306 Opportunity Zones. Sacramento, California, and Washington D.C., placed second and third, respectively. The rankings were based on factors such as employment, population growth and poverty rates in each county. Opportunity Zones are meant to encourage developers to invest in low-income, underdeveloped areas, but the Commercial Cafe ranking highlights concerns that some critics have raised about their efficacy. [TRD]
Authorities move to seize condos tied to Florida spa prostitution probe
More than 25 men — including New England Patriots owner Robert Kraft and former Citigroup president and COO John Havens — have been charged with soliciting prostitution at a day spa in Jupiter, Florida, and authorities have since moved to seize condos owned by individuals with ties to the probe. Law enforcement officials earlier this month filed a joint forfeiture action to seize a condo in Jupiter that is partially owned by Orchids of Asia Day Spa owner Hua Zhang, according to the Palm Beach Post. (Zhang watched the Patriots win this year’s Super Bowl at President Donald Trump’s country club in nearby West Palm Beach.) They’ve also seized condos in Hobe Sound and Winter Garden owned by one of the spa’s managers, the outlet reported. [TRD]
South Florida real estate firm enters SoCal with $86M deal
Coral Gables, Florida-based developer Driftwood Acquisitions and Development made a bold entry in Southern California’s real estate market this week with its $85.7 million acquisition of a Marriott hotel in San Diego. Driftwood, which paid just under $243,000 per key for the 353-room Marriott Mission Valley, plans to develop another 150-key hotel on the same 7.4-acre property at 8757 Rio San Diego Drive. Built in 1988, the Marriott Mission Valley has more than 37,000 square feet of space for events, meetings, a business center and other amenities. The hotel’s common areas were renovated in 2017. [TRD]
Brooklyn tenants oppose landlord’s plan to use facial recognition scanners
A landlord plans to start using facial recognition scanners to grant entry at a rent-regulated apartment complex in Brooklyn — but tenants have filed an objection, saying they don’t want to be tracked, Gothamist reported. The coalition representing tenants at Nelson Management Group’s Atlantic Plaza Towers in Brownsville raised concerns that government agencies such as the NYPD or ICE could end up gaining access to data collected by the scanners. In a statement, however, Nelson Management’s founder and president Robert Nelson called the technology “the most innovative and effective solution for protecting the safety and security of residents in our properties,” adding that that was his firm’s “sole motivation for pursuing these upgrades.” [TRD]
Former Los Angeles-based JLL broker sues company over ‘corrupt culture’
A broker who once worked in JLL’s Los Angeles office until December has hit the Chicago-based real estate services firm with a lawsuit claiming her former supervisor asked her to commit securities fraud and put her in a situation where she was sexually harassed by two clients. Amanda Ly’s suit claims her supervisor asked her to illegally solicit investments for a client-run fund and lie about the investments the fund had already received. In her civil complaint, filed in Los Angeles County Superior Court, Ly also claims that a JLL higher-up and an official in JLL’s human resources department ignored Ly when she voiced her concerns. The lawsuit alleges that JLL “perpetrated a corrupt culture that valued profits over basic decency and that was hostile, offensive, and belittling.” JLL agreed to acquire Dallas-based brokerage HFF last week in a $2 billion deal. [TRD]