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— SoftBank Group will take control of WeWork after reaching a multibillion rescue deal with the struggling co-working company.
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— City Council Member Ritchie Torres is raking in cash from the real estate industry in the crowd race for an open South Bronx congressional seat.
— A Tuesday ruling from the state Court of Appeals will make it easier to bring class-action lawsuits on behalf of tenants, according to the watchdog group Housing Rights Initiative.
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WEWORK BAILOUT — “SoftBank Unveils $9.5 Billion WeWork Rescue, Gets 80% Stake,” by Bloomberg’s Pavel Alpeyev, Gillian Tan, Michelle Davis and Ellen Huet: “WeWork announced on Wednesday it has accepted a rescue package from SoftBank Group Corp., its largest investor, that will give the Japanese conglomerate an 80% stake in the company. The deal marks the end of an era for the troubled co-working giant, which raised money at a $47 billion valuation in January, pulled out of a botched initial public offering attempt last month and is now valued at less than $8 billion in the bailout. WeWork founder Adam Neumann will leave the company’s board as part of the package, to be replaced by SoftBank executive and newly appointed Executive Chairman Marcelo Claure. Neumann is set to walk away from the deal with as much as $1.2 billion in WeWork stock, a $500 million credit line from SoftBank and a roughly $185 million consulting fee, people familiar with the matter have said.”
NOT LETTING GO — “WeWork scrambles to hold on to Lord & Taylor building,” by Crain’s Daniel Geiger: “Fresh off a financial bailout, WeWork is scrambling to hold onto the $850 million Midtown building that formerly housed Lord & Taylor’s flagship department store. The company, which just secured a multi-billion-dollar lifeline from SoftBank, had widely been expected to cast the 660,000-square-foot property at 424 Fifth Ave. onto the market for sale to raise hundreds of millions of dollars of desperately needed cash to stave off collapse. Instead, the company just interviewed a major leasing broker, several sources said, to help it lease the property to major office tenants.”
MOUNTING COSTS — “WeWork Faces Rising Lease Costs After Failed IPO,” by Wall Street Journal’s Konrad Putzier: “WeWork, which has gone from hot startup to bailout candidate in a month, will face a tidal wave of rising real-estate costs that could top $10 billion in the next four years, a result of its growth-at-any-cost strategy. In its rush toward an initial public offering and its goal to dominate the shared-office-space market, WeWork parent We Co. signed leases that would nearly double the company’s size. Those leases and the costs of building out new offices are forcing WeWork to raise cash and cut costs after its IPO failed.”
FULL STEAM AHEAD — “Prolific hotel builder buys big Midtown development site,” by Crain’s Daniel Geiger: “As Mayor Bill de Blasio’s administration contemplates an unprecedented control on new hotel development in the city, a prolific hotel builder is racing to get another project out of the ground. Developer Sam Chang has locked up a major vacant Midtown development site at 150 W. 48th Street, where he will be able to raise a hotel tower that could total about 276,000 square feet. Chang, who has built dozens of hotels in the city over the last two decades, is buying the site for $140 million from Rockefeller Group, which owns the nearby blue-chip office towers, 1221 and 1271 Sixth Ave., and had spent years assembling the site on West 48th Street.”
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CAMPAIGN CASH — “Ritchie Torres reaps real estate cash in Bronx Congress run,” by THE CITY’s Ese Olumhense and Josefa Velasquez: “City Councilmember Ritchie Torres’ bid to represent the South Bronx in Congress is raking in real estate cash, campaign finance records show. Torres leads a crowded pack of Democrats seeking to replace retiring Rep. José Serrano, pulling in a top $878,000 since declaring his candidacy in July. At least $110,000 of that came from people with ties to the real estate industry, according to THE CITY’s analysis of the latest filings with the Federal Election Commission. The vast majority of donations to Torres’ campaign — 96.3% or about $845,000 — came from outside the 15th Congressional District, which is among the poorest in the nation.”
LANDLORD WATCH — Housing watchdog group planning 'crusade' against rent-regulation fraud, by POLITICO's Janaki Chadha: A court decision today making it easier to bring class-action lawsuits on behalf of tenants has inspired one housing watchdog group to launch a “crusade” against rent-stabilization fraud perpetrated by landlords. A state Court of Appeals ruled that a class-action suit filed against Harlem landlord Big City Realty can move forward, reversing a lower court decision to dismiss the case before it could move into discovery. The suit, filed by a group of nearly 30 tenants in 2016, accuses the firm of inflating the rents of rent-regulated apartments through tactics including misrepresenting individual apartment improvement costs and falsely reporting that apartments were rent-regulated through the J-51 tax abatement program.
TAX TALKS — “What’s wrong with J-51? Plenty, landlord reps say,” by The Real Deal’s Kathryn Brenzel: “Developers usually flock to tax breaks. But there’s one program in New York that’s seeing increasingly less interest from the real estate community. In the past 10 years applications for J-51 dropped 69 percent, according to data collected by the city’s Department of Housing Preservation and Development. Within the past five years, the volume declined 37 percent, and 23 percent between fiscal years 2017 and 2018. Back in 2004, the city received 1,405 applications — a peak level for the past two decades. In 2018, the agency received only 275 applications, and 373 so far in 2019.”
IN THE ZONE — “A Possible Rezoning Raises Questions About the Future of Soho,” by Commercial Observer’s Rebecca Baird-Remba: “Soho and Noho are, in many ways, frozen in time. Retailers change, but the beautiful, landmarked, cast-iron and brick buildings remain the same. However, as the city examines the neighborhood’s outdated zoning, it has opened up the possibility of legalizing residential and retail uses that have existed in the area for decades and paving the way for new development. It could radically alter Soho and Noho, which have some of the highest residential and retail rents in the city.”
NEW LOOK — “550 Madison Ave. will have 30-foot-tall window in new lobby,” by New York Post’s Steve Cuozzo: “The once-opaque facade of 550 Madison Ave. is finally letting in some light. A soaring, 30-foot-tall arched window in its new lobby will let sidewalk strollers see directly into a public garden behind it, Realty Check has learned. Olayan Group bought the recently landmarked former Sony headquarters for $1.4 billion in 2016. It’s spending $300 million more to make the vacant, 1984-vintage office property competitive in a Midtown market that includes spanking-new One Vanderbilt, Hudson Yards and Manhattan West, as well as top-tier older addresses such as 9 W. 57th St. and the former GM Building.”
BIG PLANS — “Fisher Bros. wants to bring a 240-unit mixed-use project to LIC,” by The Real Deal’s Eddie Small and Mary Diduch: “Fisher Brothers is joining the Long Island City gold rush with plans to bring a 240-unit mixed-use project to the booming neighborhood. The firm pre-filed plans with the Department of Buildings on Friday for a roughly 255,000-square-foot project at 42-50 24th Street in Queens. The project will be split between about 40,000 square feet of commercial space and 216,000 square feet of commercial space, and it will stand 35 stories and 447 feet tall.”
— “Potential Barneys Madison Avenue exit is worrying retail brokers,” by New York Post’s Steve Cuozzo
— “Union Square tech hub rebrands as Zero Irving, with new renderings,” by Curbed’s Valeria Ricciulli
— “Exclusive: Plans Revealed for Brooklyn Music School Expansion in Historic District,” by Spectrum News’ Jeanine Ramirez