WeWork warns it might go out of business

SAN FRANCISCO, United States - Embattled office-sharing firm WeWork on Tuesday warned US regulators that it is worried about its survival.

Citing financial losses, cash needs, and a drop in memberships, WeWork said in a filing with the Securities and Exchange Commission (SEC) that "substantial doubt exists about the company's ability to continue as a going concern."

The fate of the New York-based company depends on the "successful execution of management's plan to improve the company's liquidity and profitability," it said in the filing.

WeWork's plan for the year ahead includes restructuring, negotiating more favorable terms on leases, beefing up membership and possibly even issuing debt or selling off assets, the SEC filing said.

WeWork has lost billions of dollars during the first six months of this year, with macroeconomic conditions weakening demand for its shared office spaces, the company told regulators.

WeWork's share price has been below a dollar for months and fell to 16 cents in after-market trading on Tuesday.

WeWork has been trying to turn the page on Adam Neumann, its co-founder and former leader whose antics tired investors.

The company has been in trouble since Neumann's forced departure in late 2019 following WeWork's failed IPO, in which the company's valuation fell from $47 billion to less than $10 billion.

WeWork had been a celebrated star in the sharing economy that put a mammoth footprint in the commercial real estate of major cities around the globe.

Its collapse led to Neumann's departure and cost the main shareholder, Japanese billionaire Masayoshi Son, billions of dollars.

Agence France-Presse

Existing home sales surge as interest rates point higher

Sales of previously occupied U.S. homes bounced back in September to their strongest pace since January as mortgage rates tick higher, motivating buyers to get off the sidelines.

The National Association of Realtors said Thursday that existing homes sales rose 7% compared with August to a seasonally-adjusted annual rate of 6.29 million units. That was stronger than the 6.11 million units that economists had been expecting, according to FactSet.

Sales were down 2.3% compared with September last year, a time when home purchases surged as buyers who had held off during the early months of the pandemic returned in force.

“The increase in sales in the latest month I would attribute to mortgage rates,” said Lawrence Yun, the NAR’s chief economist. “This autumn season looks to be one of the best autumn home sales seasons in 15 years.”

Yun noted that a dip in mortgage rates in August gave buyers urgency to close deals on homes, which translated into the sharp September increase in completed transactions.

While the average rate for a 30-year mortgage remains near historic lows, it has been inching higher since August, when the weekly rate averaged 2.77%, according to mortgage buyer Freddie Mac.

This week, the average rate rose to 3.09%, the highest level since April, when it peaked at 3.18%. A year ago, the rate averaged 2.8%. When mortgage rates rise, it gives would-be homeowners less buying power.

Economists expect mortgage rates to rise up to 4% next year as the Federal Reserve takes action to control rising inflation. The central bank is widely expected to announce a timetable for reducing its monthly bond purchases at its policy meeting next month. Those bond purchases have helped keep mortgage rates at ultralow levels for much of the last 18 months.

The median home price jumped to $352,800 last month, a 13.3% increase from September last year. The rise in prices continued to weigh on first-time buyers, who accounted for 28% of all sales last month. That’s the lowest level since July 2015, the NAR said.

Homes purchased in cash rose 23% in September from the previous month. Individual investors, who account for many cash sales, accounted for 13% of all home sales last month.

Despite the sharp increase in sales last month, there are signs the housing market frenzy that drove 20% to 25% annual increases in the median home price is easing. Properties on the market are receiving fewer multiple offers and buyers increasingly are refusing to waive their right to a home inspection or appraisal, Yun said.

Still, the inventory of homes on the market remains tight in much of the country, which continues to support higher prices.

At the end of September, the inventory of unsold homes stood at just 1.27 million homes for sale, down 0.8% the previous month and down 13% from a year ago. At the current sales pace, that amounts to a 2.4 months’ supply, down from 2.7 months a year ago, the NAR said.

Homes continue to sell within days of being put up for sale. Homes typically remained on the market 17 days before getting snapped up last month. That’s held steady the past six months. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. All told, 86% of homes sold last month were on the market for less than 30 days.

The inventory of homes for sale should begin to improve next year, as builders continue to ramp up construction and the end of mortgage forbearance programs force homeowners in financial straits to put their home up for sale, Yun said.

“The days of inventory being down 20% or 25%, those days are over,” Yun said. “The decline is lessening and soon in 2022 we’ll begin to see inventories are higher year-over-year.”

-Associated Press

July sales of new homes surge 13.9%, far more than thought

SILVER SPRING, Md. (AP) — Sales of new homes jumped again in July, rising 13.9% as the housing market continues to gain traction following a spring downturn caused by pandemic-related lockdowns.

The Commerce Department reported Tuesday that July’s gain propelled sales of new homes to a seasonally-adjusted annual rate of 901,000, the most since 2006. That’s a far bigger number than analysts had expected and follows big increases in May and June. The government report has a high margin of error, so the July figures could be revised in the coming months.

The recent sales gains followed a steep dropoff in March and April as much of the country stayed home due to government restrictions intended to slow the spread of coronavirus.

In a report last week, the National Association of Realtors reported that sales of existing homes rose by a record 24.7% in July, thanks to historically low interest rates. It was the second big spike in as many months and has helped stabilize the housing market in an otherwise uncertain economic time.

Low inventory of existing homes is pushing buyers into the new homes market, but inventory there is also shrinking. What was a 6-month supply of new homes a year ago is now down to a 4-month supply, thanks to a red-hot market.

The Commerce Department reported last week that construction of new U.S. homes surged 22.6% in July as homebuilders bounced back from a lull induced by the coronavirus pandemic. New homes were started an annual pace of nearly 1.5 million in July, the highest since February. They’ve now risen three consecutive months after plunging in the spring. Last month’s pace of construction was 23.4% above that of July last year.

Sales are being fueled by ultra-low mortgage rates, which earlier this month dropped below 3% for a 30-year-fixed rate mortgage for the first time in nearly 50 years. The average rate on a 30-year fixed rate mortgage is now 2.99%, the mortgage buyer Freddie Mac said Thursday. A year ago, it was 3.55%.

Economists believe low rates and changes in home preferences brought on by the pandemic will continue to support sales, though perhaps not at recent levels.

“Sales may struggle to maintain their July pace going forward,” said Nancy Vanden Houten of Oxford Economics. ”While strong demand and lower mortgage rates are supportive of further growth in sales, the slow recovery and weak labor market pose downside risks.”

Regionally, construction of new homes fell only in the Northeast, which saw a 23.1% decline. The Midwest saw a whopping 58.8% increase, followed by the South’s 13% jump and an increase of 7.8% in the West.

The median price of a new home sold in July increased to $330,600, up 7.2% from one year ago.

Associated Press

More Americans signed contracts to buy homes in June

SILVER SPRING, Md. (AP) — The number of Americans signing contracts to buy homes rose for the second straight month after a devastating spring freeze brought on by the coronavirus outbreak.

The National Association of Realtors said Wednesday that its index of pending sales rose 16.6%, to 116.1 in June. That’s up from a reading of 99.6 in May.

Contract signings are now 6.3% ahead of where they were last year after being significantly behind last year’s pace due to the pandemic. An index of 100 represents the level of contract activity in 2001.

All four regions saw more contract signings for the second straight month. The Northeast led the way with a 54.4% increase. Sales in the Midwest, South and West all jumped around 12%.

“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”

Freddie Mac reported last week that average interest rates on a 30-year fixed rate mortgage rose to 3.01%. The average had been 2.98% the previous week, the first time in 50 years that it slipped below 3%. The Federal Reserve wraps up a two day meeting Wednesday and is not expected to change its main borrowing rate.

In May, the number of Americans signing contracts to buy homes rebounded a record 44.3% after plunging during the usually busy spring season as buyers and sellers were sidelined by coronavirus-related closures and regulations.

May’s recovery was the highest month-over-month gain in the index since since its inception in January 2001.

Last week, the government reported that sales of new homes jumped 13.8% in June, the second straight increase after two months when sales plunged as the country went into lockdown because of the coronavirus. June’s increase followed a 19.4% jump in May, further evidence the housing market has turned around.

Associated Press

Robinsons Land offers virtual catalog for home buyers

MANILA - Robinsons Land Corp said Friday it developed an online facility to help home buyers inquire about and purchase property remotely during the coronavirus lockdown.

Digital catalogs and virtual tours are used to "showcase" high-rise residential developments, the Gokongwei group's property arm said in a statement. [CATALOGS www.robinsonsproperties.com]

Unit reservations can be done from home by sending scanned copies of required documents, government IDs and proof of online payments, it said.

"Through this online facility, RLC aims to make home buying possible and convenient for property seekers, especially now that we are on enhanced community quarantine nationwide," RLC said in a statement.

Other inquiries should be submitted to its email address and other official platforms. 

source: news.abs-cbn.com

Billionaire Bezos buys estate for $165 million: report

SAN FRANCISCO -- Billionaire Amazon chief Jeff Bezos has purchased a Los Angeles-area estate for $165 million, setting a new record for the region, The Wall Street Journal reported on Wednesday.

Bezos bought the Warner Estate from media mogul David Geffen, according to the Journal.

It said the deal topped a Los Angeles-area home price record set last year when Lachlan Murdoch paid around $150 million for a Bel-Air estate seen in "The Beverly Hillbillies," a 1960s television show.

The Warner Estate spans nine acres (3.6 hectares) in Beverly Hills. It is a Georgian-style compound with a floor once owned by Napoleon, guest houses, a tennis court, and a nine-hole golf course.

It was originally built in the 1930s by the late Jack Warner, former president of Warner Brothers, the Journal reported.

Bezos, whose worth has been estimated at more than $110 billion, started internet colossus Amazon and is considered the richest person in the world.

Amazon has expanded from its original mission as an online retailer and now is a major force in cloud computing. Its digital assistant Alexa has been incorporated into thousands of consumer products, and the firm operates one of the largest streaming video services.

Bezos also owns The Washington Post newspaper.

Agence France-Presse

WeWork hit with big loss despite revenue jump: reports

SAN FRANCISCO, United States - WeWork posted third-quarter losses of $1.25 billion despite the beleaguered office space start-up nearly doubling its revenue, US media reports said Wednesday.

The firm has suffered a dramatic reversal in fortunes since its $47 billion valuation at the start of the year.

In the last two months WeWork canceled its IPO and pushed out co-founder Adam Neumann, albeit with a reported severance package of more than $1.5 billion.

The record-high loss was more than double the red ink logged over the same period a year earlier while revenue soared to $934 million, according to the Wall Street Journal, which cited a report to debt holders by parent company We Co.

Japanese conglomerate SoftBank Group will pump a total of $9.5 billion into WeWork and increase its stake in the firm from 29 percent to around 80 percent in an agreement announced last month.

SoftBank Group last week announced an operating loss of $6.4 billion for the third quarter, the worst in its history, as it took a hit from investments in start-ups including WeWork and Uber.

WeWork offers flexible and shared workspace arrangements, with operations in 111 cities across 29 countries.

To cut costs, the firm stopped construction of new buildings and is selling off some business units, according to SoftBank chief executive Masayoshi Son.

source: news.abs-cbn.com

Hong Kong businessman pays almost $1 million for parking space

Hong Kong might be heading for recession after months of violent protests but that hasn't stopped one businessman from forking out almost $1 million for a parking spot.

The mind-boggling sum paid by Johnny Cheung Shun-yee highlights the gaping inequality that has helped fuel nearly 5 months of demonstrations in the financial hub, where one in five people live below the poverty line.

The HK$7.6 million ($970,000) price tag is more than 30 times the average annual wage in Hong Kong and about the same as a one-bed apartment in London's plush Chelsea area.

It is situated in The Center, the city's fifth-highest skyscraper, which hit the headlines in October 2017 when it became the world's most expensive office building after Hong Kong's richest man sold it for more than $5 billion.

The purchase comes even though there are growing concerns about the impact of the pro-democracy demonstrations on the city's real estate market with property firms' share prices plunging in recent months, as they are forced to offer discounts on new projects and cut office rents.

The economy has been tipped to grow just 0-1.0 percent this year, the worst rate since 2009 during the global financial crisis.

"A lot of those owners in The Center are in finance or in other high-growth businesses," Stanley Poon, a managing director at Centaline Commercial, said. "To these tycoons, it’s not a significant purchase if you compare it to the value of the office floors they own."

Hong Kong's white-hot property market has become a political issue as costs continue to soar, forcing some small businesses to close owing to sky-high rents while many residents cannot afford to buy or lease decent homes.

Commercial and residential property prices have been fueled by an influx of money from wealthy mainland Chinese investors and developers.

While the long-running protests in the city are fired mostly by anger at a now-dead extradition bill and hatred towards the government and police, they are also fanned by anger at the huge disparity between rich and poor.

Bloomberg News contributed to this story

source: news.abs-cbn.com

SoftBank in talks to take control of WeWork

NEW YORK — Japan-based SoftBank is ready to buy a controlling stake in WeWork, providing the shared office space startup desperately needed funding at a slashed valuation, a source told AFP on Monday.

Softbank is ready to invest an additional $4 billion to $5 billion in WeWork, taking a majority stake in the New York company while valuing it at $8 billion overall, the source said, asking not to be identified.

WeWork -- which declined to comment on the issue -- had been valued at more than $47 billion earlier this year.

The SoftBank proposal includes offering to buy more than a billion dollars in shares of WeWork from existing investors and employees, among them co-founder Adam Neumann.

Investment bank JPMorgan Chase, which already has an interest in WeWork, was expected to have a debt financing plan for the startup board of directors to consider at a meeting on Tuesday, according to the source.

WeWork needs to raise at least $3 billion to cover its financing needs through the end of the year, according to sources.

If WeWork opts for the SoftBank offer, the Japanese conglomerate headed by billionaire Masayoshi Son will own more than 80 percent of the startup.

The deal would also limit the influence of former chief executive and co-founder Neumann.

Neumann stepped down as chief executive in September amid questions over perceived self-dealing between his personal assets and WeWork, and over unconventional personal conduct, including drug use.

The company also scotched a plan to go public for the foreseeable future, ending one key financing route.

Ratings agencies have downgraded WeWork's bonds to "junk" status due to a cash crunch. The company reported $1.9 billion in losses in 2018 as it expanded rapidly.

The startup, which launched in 2010, has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.

source: news.abs-cbn.com

Crowded Hong Kong goes underground to overcome land crunch

HONG KONG -- When authorities drew up a plan to make Hong Kong a hub for Asia's wine trade, they faced a big challenge: where to store the bottles in a city that was fast running out of space. So they went underground.

Officials presented World War Two-era bunkers as potential sites, and former diplomat Gregory De'eb and businessman Jim Thompson signed a lease on them, setting up Hong Kong's first commercial wine cellar 20 metres (66 ft) below ground in 2003.

Crown Wine Cellars can store more than 100,000 bottles, and also has a subterranean clubhouse.

"It is the underground aspect of the club that is its most attractive and popular feature," said De'eb. "Members even view the lack of mobile phone reception as overwhelmingly positive."

Hong Kong plans to move more facilities beneath the Earth's surface to free up space above, in one of the world's priciest real-estate markets.

With almost 70 percent of the global population expected to be living in urban areas by 2050, according to the United Nations, cities are coming under the spotlight as never before.

From Singapore to sub-Saharan Africa, they are fast running out of space to house their swelling populations.

Cities have long put metro rail networks, as well as utilities like sewage and water pipes underground, with several also moving commercial, retail and storage facilities down below to free up space or better handle extreme temperatures.

In Hong Kong, known for its towering skyscrapers and wooded hills, sky-high home prices have boosted the urgency of maximizing use of underground space.

The government has vowed to create more land for housing, including by building artificial islands.

It is also looking to use underground space for waste treatment, data centers, water reservoirs, power stations, crematoriums and sports facilities.

The city's rocky terrain lends itself to cavern development as a "cost-effective alternative" for long-term land supply that offers safety, environmental and security benefits, said Edward Lo, Hong Kong's chief town planner.

"Given the lack of land resources in Hong Kong, it has all along been our policy objective to develop underground space," he added.

'BAD' NEIGHBORS

From the catacombs of ancient Rome to step wells in medieval India and army bunkers, underground spaces have been used for a variety of reasons down the ages.

Helsinki and Montreal, which are blanketed in snow for several months of the year, are considered leaders in "underground urbanism", a movement focused on innovative ways to use underground space.

Besides mass transit, growing concerns around the environmental and health impacts of "bad neighbor" facilities such as refuse transfer and waste treatment plants have pushed cities to consider moving those below ground as well.

Underground space is ideal for a densely populated city like Hong Kong, which has more than 7 million people crammed into an area of about 1,100 square kilometers (425 square miles), with less than a quarter of that land available for development.

About a decade ago, authorities unveiled a policy aimed at studying the opportunities in underground space.

In a government-commissioned study, consultancy Arup identified 48 potential underground and hillside sites for new caverns, and some 400 state facilities that could be moved underground.

"The idea was to better integrate facilities, so people can easily move between them, and avoid the conflicts of traffic and weather disruptions above ground," said Mark Wallace, director of infrastructure at consultancy Arup.

"For the city, it results in more efficient use of space, reduces the impacts of urban sprawl, and helps preserve the natural environment," he told the Thomson Reuters Foundation.

While excavation and building underground are more expensive, there are savings on maintenance and land costs, he added.

And less energy is needed because of more stable temperatures underground, an important factor for cities looking to curb their carbon emissions.

Underground structures also perform better in earthquakes and need fewer repairs, while offering better protection from typhoons and thunderstorms, which are forecast to become more severe as global temperatures rise.

Cheaper, fast-digging technologies such as those used by billionaire entrepreneur Elon Musk to build a high-speed transport tunnel in Los Angeles, meanwhile, can cut construction time and minimize disruption above ground.

"As older urban areas in Hong Kong deteriorate and new infrastructure or redevelopment is needed, underground development is a way to build new facilities with minimum disruption to the surface and public," Wallace said.

ENVIRONMENTAL RISKS

Elsewhere in Asia, space constraints and security concerns prompted the development of underground space decades ago in Japan and South Korea.

More than 20 Chinese cities including Beijing, Shanghai and Shenzhen are now making plans for urban underground space, while Singapore unveiled an underground master-plan this year.

Hong Kong, like Singapore, has traditionally relied on reclaimed land, but that is seen as increasingly unsustainable because it fuels environmentally harmful processes like sand mining, said Mee Kam Ng, director of the urban studies program at The Chinese University of Hong Kong.

Digging out space underground can also have effects on groundwater and surface ecology, she said.

Instead, Hong Kong could free up nearly 4,000 hectares through better planning for its existing land resources such as the largely rural New Territories in the north, she said, citing research by the Citizens Task Force, a non-profit network.

Some residents are resistant to the idea of tearing up parks to create shopping malls underground.

An ongoing study of potential underground development in Tsim Sha Tsui has drawn criticism from planners and locals, who say any benefits will be outweighed by the damage to Kowloon Park, a green oasis in the congested city.

The plan proposes that underground spaces be built beneath about a quarter of the 13-hectare park for retail and community facilities, parking and pedestrian passages.

Areas of the park could be affected for up to seven years during construction, while parts of it will be surrendered for access points, opponents say.

Authorities say the development will improve pedestrian movement and reduce congestion, and that "old and valuable trees" will be preserved.

But Paul Zimmerman, chief executive of Designing Hong Kong, an urban think-tank, said the project would wreck the park, while failing to ease traffic significantly.

"Good use of underground space is definitely needed in Hong Kong, and it makes sense in some cases - like roads and sewage treatment, and wine cellars," he said.

"But it does not make sense in others, like building a multi-story complex under a park that will destroy the park's character and only creates more shops and parking."

source: news.abs-cbn.com

WeWork founder Neumann: an unconventional leader steps aside

NEW YORK - WeWork co-founder Adam Neumann, whose unconventional approach to business and governance pushed boundaries on Wall Street and Silicon Valley, stepped down as chief executive on Tuesday.

Under pressure from some board members, Neumann will exit the corner office as the company tries to reposition an initial public offering campaign that has sputtered over the last month.

Neumann, who will stay on as chairman, has also faced questions over his perceived self-dealing, as well as the ability of his fast-growing company to become profitable.

Neumann's setback marks a shift in fortune for a charismatic figure who has been embraced by investors even as he has employed unusual imagery to describe the business's meteoric growth since its founding in 2010. 

The company's IPO prospectus says "its mission is to elevate the world’s consciousness."

Neumann's audacious approach to business won support from key investors, including the Japanese group SoftBank.

But his loose approach to corporate governance and conflicts of interest garnered scrutiny, as did a Wall Street Journal expose detailing drug and alcohol use and Neumann's aspirations to become the world's first trillionaire.

Known for long hair and a wardrobe that favors T-shirts, Neumann, 40, is also known as a serial entrepreneur.

BIG AMBITIONS 

Born in Israel, he has described a difficult childhood that included the divorce of his parents and frequent moves.

After serving in the Israeli army for five years, he moved in 2001 to New York. He has lived in the city ever since and it is now WeWork's headquarters.

Neumann initially studied business at Baruch College in the City University of New York but abandoned formal studies to launch his first fledgling business, producing a woman's shoe with a collapsible heel.

A second venture marketed baby clothes with knee and elbow pads, but he told Baruch students at a 2017 graduation ceremony that the venture notched just $2 million in sales compared with $3 million in expenses.

During that period, Neumann also met the woman who became his wife, Rebekah, a cousin of actress Gwyneth Paltrow. The couple now have 5 children.

"The first moment I met my husband, even though he was broke.... I could see that together we were going to create something that was going to be large scale for the planet," Rebekah Neumann said in a November 2018 podcast.

"I just knew he was going to be the man that was hopefully going to help save the world."

Neumann, along with his friend Miguel McKelvey, moved into the shared-office business in 2008.

The company, called Green Desk, was based on "coworking," an old concept but one that was refreshed with new technologies as the financial crisis led to more freelancing and startup ventures, some involving people from finance who lost their jobs.

Neumann describes renters as "members" and built WeWork to be "a community that helped people live life with purpose," according to a blog post earlier this year.

The company today manages more than 500 sites in 30 countries and employs 12,500 people.

But WeWork has struggled with its bottom line, losing almost $2 billion in 2018.

On the jobs site Glassdoor, former WeWork employees praise Neumann's charisma and boundless energy, while others have criticized a cult-like atmosphere.

On Tuesday, Neumann said he was stepping down as CEO, declaring that he was "so proud" of the company's growth.

"While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction and I have decided that it is in the best interest of the company to step down as chief executive," he said.

source: news.abs-cbn.com

Dubai in push to rebalance bloated property market

The committee charged with rebalancing the industry will be headed by Sheikh Mohammed bin Rashid Al-Maktoum's son and deputy, Maktoum bin Mohammed, and include representatives of top property developers in Dubai.

"Today, we formed in Dubai a higher committee for real estate planning... with the aim to achieve a balance between supply and demand," Sheikh Mohammed, who is also prime minister of the United Arab Emirates, said on Twitter.

Dubai's property market has been in a downturn since mid-2014, with sale prices and rents shedding around a third of their value.

Economic outlooks indicate that the sector, which contributes some seven percent to Dubai's gross domestic product, will slump further due to the extent of oversupply and an economic slowdown caused by low oil prices.

In an emirate where glitzy apartments line the coastline,and gated communities stretch back into the desert, Sheikh Mohammed called on the committee to ensure that property projects add value to the economy and do not duplicate each other.

He also said the panel should guarantee that giant semi-state real estate companies do not compete with private sector developers, and to draw up a 10-year strategic plan for the sector.

Standard and Poor's ratings agency said earlier this year that property prices in Dubai, where full foreign ownership is allowed, have slumped to levels close to those seen in the 2009-2010 crash.

It said prices will continue to fall until they stabiliZe either next year or in 2021.

Property prices in Dubai plummeted in the aftermath of the 2008 global financial crisis which hit the emirate’s economy hard, triggering a 2.6 percent contraction the following year.

The main drive behind the current glut of new housing projects in the market is excitement over Dubai's hosting of the global trade fair Expo 2020, which experts project will generate some 300,000 new jobs and attract over 20 million visitors.

source: news.abs-cbn.com

Falwell steered Liberty University land deal benefiting his personal trainer

LYNCHBURG, Virginia - Evangelical leader and prominent Donald Trump backer Jerry Falwell Jr personally approved real estate transactions by his nonprofit Christian university that helped his personal fitness trainer obtain valuable university property, according to real estate records, internal university emails and interviews.

Around 2011, Falwell, president of Liberty University in Virginia, and his wife, Rebecca, began personal fitness training sessions with Benjamin Crosswhite, then a 23-year-old recent Liberty graduate. Now, after a series of university real estate transactions signed by Falwell, Crosswhite owns a sprawling 18-acre racquet sports and fitness facility on former Liberty property. Last year, a local bank approved a line of credit allowing Crosswhite's business to borrow as much as $2 million against the property.

Falwell, one of the most influential right-wing Christian leaders in the United States, has been buffeted by disclosures about his private dealings over the last year and a half.

A Florida lawsuit brought public scrutiny to a relationship between the Falwells and Giancarlo Granda, a young man they befriended while he was working as a pool attendant at a luxury Miami Beach hotel and later backed in a business venture involving a youth hostel. Falwell filed an affidavit in 2018 saying he used his own wealth to lend $1.8 million to the $4.65 million project with Granda.

And U.S. President Trump’s now-jailed fixer, Michael Cohen, has said he helped the Falwells suppress racy personal photos, as Reuters reported this May, in the months before Cohen persuaded Falwell to endorse Trump’s 2016 White House bid. There is no evidence that Cohen’s efforts to suppress the photos were a quid pro quo for Falwell’s vital political backing.

The support Falwell provided to the two young men, Granda and Crosswhite, has some parallels. Both were aided in business ventures and both have flown on the nonprofit university’s corporate jet.

One difference: When Falwell helped Crosswhite, he used the assets of Liberty, the tax-exempt university he has led since 2008. Among the largest Christian universities in the world, Liberty depends on hundreds of millions of dollars its students receive in federally backed student loans and Pell grants.

In 2016, Falwell signed a real estate deal transferring the sports facility, complete with tennis courts and a fitness center owned by Liberty, to Crosswhite. Under the terms, Crosswhite wasn’t required to put any of his own money down toward the purchase price, a confidential sales contract obtained by Reuters shows.

Liberty committed nearly $650,000 up front to lease back tennis courts from Crosswhite at the site for nine years. The school also offered Crosswhite financing, at a low 3% interest rate, to cover the rest of the $1.2 million transaction, the contract shows.

Crosswhite declined to answer questions about the deal. "All I will say is that my wife and I consult each other before every major business deal and we bought the complex from Liberty together," he said in an email. "My wife and I both work around the clock to make our business succeed."

Falwell referred Reuters to the university for comment. Liberty issued a statement describing the transaction as both proper and beneficial for the school.

Liberty had received the athletic center as a gift in 2011 from a trustee who has since died, but it quickly became a “drain on university resources,” the statement said. Crosswhite had been leasing gym space at the property since 2013, and was thus “the most viable purchaser.” Liberty said it adjusted the price and financed Crosswhite’s purchase because its tennis team would continue to use the courts.

Falwell has “tried to be a business mentor” to Crosswhite, the university statement said, but that effort did not “cause him to abandon his fiduciary duties” to Liberty.

As Liberty’s leader, Falwell draws an annual salary of nearly $1 million, and is obligated to put the university’s financial interests before his own personal interests when conducting Liberty business.

“The concern is whether the university’s president wanted to do his personal trainer a favor and used Liberty assets to do it,” said Douglas Anderson, a governance specialist and former internal audit chief at Dow Chemical Co, who reviewed both the transaction and Liberty's explanation of it at Reuters’ request. That would be bad governance, he said. “At a minimum, the terms suggest the buyer got a great deal and Liberty got very little.”

The Crosswhite Athletic Club is set off a quiet residential lane about seven miles from Liberty’s campus. Its large windowless buildings house indoor tennis and racquetball courts, a gym and pavilion.

During a visit by a reporter in August, Crosswhite, a muscular 31-year-old with short blond hair, was training a client in the well-equipped facility, running him through kettlebell swings and dumbbell presses. On a wall: A sign for “Crosswhite Fitness,” with a cross where the T should be, and a citation to a verse from the New Testament’s Second Epistle to the Corinthians.

Falwell has publicly credited Crosswhite with helping him lose 75 pounds. “That’s the kind of guy he is,” Crosswhite told Reuters. He asked Reuters to submit written questions about his dealings with Liberty and Falwell, but did not respond to them.

PITCHING A ‘SWEET DEAL’

The story of the business relationship between Crosswhite, Liberty and Falwell appears to begin in 2011.

That year, Falwell urged other Liberty personnel in an email to cut Crosswhite a “sweet deal” allowing him to offer private gym training at the Lynchburg fitness facility, then known as the Sports Racket, which Liberty had recently acquired through the trustee’s donation.

“Becki and I wouldn’t mind working out over there with Ben as a trainer because it is more private,” he wrote in the email, which was reviewed by Reuters. Falwell and his wife, who goes by Becki, each work out with Crosswhite twice a week, the university said. Falwell has become a vocal advocate of the trainer’s skills, as have other university executives and clients who work with Crosswhite.

The Falwells brought the trainer along on Liberty’s private jet during a 2012 trip to Miami. Later, Falwell sent an email directing Liberty to lease its gym space to Crosswhite’s fitness business, which began a five year lease in 2013. The cost, according to a lease document: $2,300 per month.

Liberty said Falwell uses the university-chartered jet to fly every year to his annual physical in Miami. Crosswhite joined him in 2012 “to explain to the doctors Mr. Falwell’s diet and exercise program and help document the results,” the university said. Because Liberty’s board requires an annual physical for Falwell, the president doesn’t have to reimburse the university for the corporate jet travel to Miami, the statement said.

It was in Miami in 2012, as well, that Falwell met Granda, the pool attendant he would later finance in business. The financial ties between Falwell and Granda have been detailed by BuzzFeed and others.

In 2016, Falwell signed the deal transferring the facility to Crosswhite. The contract says the price is $1.2 million, but notes that the “Net Purchase Price” is $580,000, because Liberty “agrees to credit” Crosswhite with rental payments for seasonal use of the site’s tennis courts through 2025. The courts are used by Liberty’s tennis team for practices and tournaments.

Liberty “agrees to finance the purchase” at a 3% interest rate, the contract says. To help Crosswhite in the transaction, Liberty was lending Falwell’s fitness trainer more than half a million dollars to buy its property. The university would receive no cash up front from the sale, the contract shows.

Transactions on such favorable terms could raise concerns over stewardship of corporate assets, and potentially insufficient scrutiny by the board, said Anderson, the independent governance specialist.

In 2017, after Liberty had sold the facility to Crosswhite, some university representatives voiced concern about whether the indoor tennis courts and roof over them were receiving needed maintenance, as the sales contract required, internal emails show. Falwell wasn’t included in the email chain.

Liberty’s general counsel, David Corry, responded that the school should remind Crosswhite of his maintenance obligations, according to the email exchange, which was reviewed by Reuters. But Corry, referring to Liberty University by its initials, added a note of caution: “Ben Crosswhite enjoys a close working relationship with several LU administrators, including the President.” Anyone communicating with Crosswhite should do so “with knowledge ahead of time that it may be second guessed,” Corry wrote.

Asked about Corry's warning, Liberty said he was raising the possibility that Crosswhite might complain to any one of "several people" at Liberty if he felt he was being treated "harshly" over the maintenance obligations. Therefore, Liberty said, the university needed to "have an approach that was not only legally sound, but cordial, professional and above reproach."

In 2017, Liberty provided Crosswhite with another $75,000 line of credit to conduct maintenance and repairs, the university said in its statement.

In an email sent earlier this month, Corry, citing a Reuters reporter’s “persistent” attempts to reach former board members and the Falwells, reminded the former trustees they had signed confidentiality agreements. He told them they were required “forever” to keep secret what they knew about the university.

Crosswhite’s acquisition of the sports facility appears to continue benefiting him. Last year, according to a Lynchburg Circuit Court filing, the trainer's business obtained a $2.05 million credit line from a local bank against its interest in the facility. Liberty said the credit line amount was linked to the property’s future value after Crosswhite builds a swimming pool there.

On April 23, 2018, the day after the $2.05 million bank financing, Liberty University filed paperwork saying the $576,000 note Crosswhite owed for the property had been paid in full.

source: news.abs-cbn.com

Hong Kong protests fuel buyer interest in Australia, New Zealand luxury homes

SYDNEY - Hong Kong buying enquiries for expensive Australian and New Zealand homes have ramped up due to anti-government protests in the Chinese-ruled city, according to property agents and real estate data, as wealthy investors look for a safe haven.

Jamie Mi, partner at Melbourne-based Kay & Burton, said the real estate agency was receiving about one-third more enquiries from Hong Kong buyers than usual, with most buyers targeting high-end properties priced above A$5 million ($3.4 million).

She said the protests in Hong Kong had "accelerated the motivation" in the past month for wealthy buyers to look for residential properties to move their money into.

The protests, triggered earlier this year by a proposed extradition bill that would allow individuals to be sent to mainland China to face trial in courts controlled by the Communist Party, have become more violent in recent weeks.

Police for the first time used a water cannon to combat protests on Sunday, while some protesters threw petrol bombs at police.

Juwai.com, China's largest international property website, recorded a 50 percent increase in Hong Kong enquiries for Australian properties in the past quarter.

"In the current environment, Australia appears as a safe harbor — both comfortably close and far from home," Juwai.com executive chairman Georg Chmiel said in a statement to Reuters.

Buying real estate in Australia and New Zealand does not grant Hong Kong investors residency.

Several real estate agents said the buying enquiries are likely coming from wealthy foreigners who are already allowed to reside in Australia or New Zealand and who are possibly planning an exit strategy from Hong Kong.

Australia is seeing an increase in interest in its millionaires-only visa program from wealthy Hong Kong residents who are eyeing a safety net amid political turmoil in the Chinese-ruled territory.

Under the program, people can obtain a provisional visa if they invest at least A$5 million ($3.4 million) into complying investments in Australia.

New Zealand has similar investor visas that require a minimum NZ$3 million ($1.9 million) spend.

Another factor behind the spike in buying enquiries in Australia and New Zealand is the economic impact the protests are having on the Asian financial hub, which is now facing its first recession in a decade.

James Chan, from Bayleys Real Estate in New Zealand, said enquiries had been ticking up ever since the protests intensified. "They are starting to think about how to protect their money - they need to look for a safe haven," he said.

Official figures suggest the overall level of foreign home buying in New Zealand is relatively low - about 3 percent of property transfers nationwide - however the data does not capture property bought through trusts.

Australia's property sector has long been a favored destination for foreign buyers, especially Chinese, although demand has been tempered in recent years by rising state taxes on foreign purchases.

Australia and New Zealand have also introduced tighter regulations on foreign purchases of established homes in recent years, pushing Chinese investors towards new apartments.

Government data on foreign property investment for 2018-19 has not yet been published. The year before, Chinese investors were by far the single biggest group of foreign buyers of Australian real estate, accounting for A$12.7 billion ($8.6 billion) in purchases. Hong Kong investors spent A$2.8 billion ($1.9 billion) that year. ($1 = 1.4806 Australian dollars) ($1 = 1.5620 New Zealand dollars)

source: news.abs-cbn.com

How much to fight a Manhattan photobomber? Try $11 million

NEW YORK — In New York City’s forest of tall buildings, having a view is an inestimable commodity, to be treasured and, when necessary, fought over.

There have been pitched battles over Brooklyn Bridge vistas blocked by waterside apartments, and the shadows cast by billionaires’ apartment towers over Central Park.

But when the residents of a 12-story loft building in Chelsea learned that a proposed tower next door threatened to darken most of their windows and block their Empire State Building views, they tried a less confrontational approach.

They banded together to make the developer an unusual offer: $11 million not to build.

The gambit captured the kind of wealth that now courses through New York City, where residents of a former warehouse building — with full-floor apartments that stretch 5,600 square feet, twice the size of an average new American home — were willing to pay a hefty price just to protect a view.

The owners used a typical developer strategy and turned it on its head: They bought the developer’s air rights — normally used to allow for taller buildings than allowed — at the neighboring property.

But the loft owners have no intention of using those air rights to build; their full intent is to prevent the neighboring developer from building anything taller than the three- and four-story buildings that had been on the site, at Seventh Avenue and West 17th Street.

“Sometimes people have bought a dinky little asset next door,” said Jordan Barowitz, vice president of public affairs at the Durst Organization, a real estate firm. “But I’ve never heard of that much cash being spent for an intangible, for a view.”

The deal, which took place in 2016, has not been previously reported, and some of those involved were reluctant to discuss it.

“It was expensive,” said John R. Muse, 68, a Texas investor and absentee owner whose grown children live in the building, on West 17th Street. “I wouldn’t say prohibitively. But expensive.”

Not everyone paid the same amount, with lower-floor owners paying less and, on the lowest floors, nothing. Muse admitted, with some embarrassment, that he could not recall exactly how much he had paid — perhaps around $1 million for his unit’s share.

A review of records over the past 5 years by The New York Times turned up an instance of a similar deal between a condominium and an adjacent property owner. That one involved neighbors of the Zen Studies Society on East 67th Street.

In that case, residents of the neighboring 6-story apartment building paid $3.25 million to purchase the air rights from the Zen center, ensuring their windows would not be blocked in the future. They worried about future development on the site of the religious institution, which was facing legal trouble.

“It’s typically done by developers,” said one resident of the Upper East Side building, Ryan Freedman, who works in real estate. “This was the opposite of that.”

The L-shaped loft building in Chelsea, a few blocks from the West Village and Google’s New York headquarters, has been home to artists and celebrities drawn to its tall ceilings and sprawling space.

Meryl Streep’s husband, sculptor Don Gummer, once lived in the building, a former warehouse known as the Chelsea Prairie, as did actor Harrison Ford, who owned the penthouse until 2012, when he sold it for roughly $15 million. One unit recently sold for $9.75 million.

“At the price point, it just happened you had some valuable apartments and it was worth a fair amount of money to them,” said Jonathan L. Mechanic, chairman of the real estate at the law firm of Fried, Frank, Harris, Shriver & Jacobson, who was not involved in the deal. “If you had $500,000 apartments, it would be much harder to get to $10 million.”

The idea for the deal materialized almost immediately after the developer, Gary Barnett of Extell Development, made clear his intention to erect a 145-foot condominium at Seventh Avenue and 17th Street, replacing a set of short buildings.

“He contacted the building management and said, ‘I’m putting a big building there,’ ” recalled Thomas Levine, 73, a painter who lived on the eighth floor for two decades and sold his apartment last month.

The proposed new building would have been roughly as tall as the L-shaped loft building — and positioned directly to its inside.

The residents moved quickly: Within about a week, a small group sat down with Barnett to offer to buy the air rights. He initially wanted far more than $11 million. Over several meetings, they haggled in Barnett’s offices. He never came to see the views.

Barnett recalled telling the residents that he would be willing to make a deal if they were willing to pay the right price. They were.

“It’s not common,” Barnett said. “Most of the time, they sue you and try and stop you somehow. These people stepped up to the plate and paid market value for the building rights.”

The deal took a few months to work out, but ended with a meeting in the sixth-floor unit to vote on the proposal. All agreed to go forward, even if, for some residents, it was a stretch.

“There were pros and cons about it,” Levine said. “But everybody realized that it was something we had to do. We wanted the light, we wanted the views, we wanted the value.”

Levine said he did not have enough available cash for the transaction, but that a neighbor was able to loan him the money.

“I think it was the most financial pressure on me,” Levine said, standing in the mostly empty corner living space where his studio had been. “But it would have been a disaster. It would have been a lot of dark.”

Now, instead of new condominiums, a short glassy commercial building is nearing completion at the corner, and nothing taller can ever replace it.

Unless, that is, someone some day shows up with an offer too good to turn down.


2019 New York Times News Service

source: news.abs-cbn.com

In inland Chinese province, property bubble haunts dreams of prosperity

ZHENGZHOU, China - Song Jingyi, a paralegal from a family of modest means in the central Chinese region of Henan, had long dreamed of buying a home of her own in Zhengzhou, the sprawling provincial capital of 10 million where she attended college.

But high prices, and hefty downpayment requirements, meant that dream stayed tantalizingly out of reach.

Zhengzhou's property market exploded in 2016, spurred on by Chinese government efforts to boost home ownership and consumer spending in interior provinces like Henan.

While the resulting price surges were a new source of wealth for many in the city, they also excluded people like Song, who is 25 and has plans to marry her long-term boyfriend.

Last November, however, Song was presented with a tempting opportunity: a deal offered by a Chinese developer to circumvent the usual 30% downpayment on an apartment by borrowing the up-front payment itself.

The offer was a risky one for a developer - and a warning sign that the market in Zhengzhou was hitting a wall, caught up in China's slowest economic expansion in nearly three decades.

After two years of breakneck growth, property markets in provincial cities like Zhengzhou finally reached a turning point in late 2018. That has presented a policy challenge for the Chinese government, which has been attempting to spread wealth beyond the country's rich coastal regions to the interior.

It also illustrates how policymakers have struggled to grapple with a property market, the world's largest, that is crucial for growth yet prone to bubbles springing up in unlikely places - including the cities of Henan province.

Despite the warning signs, Song saw the mortgage offer as a golden opportunity to finally get into the Zhengzhou market.

She paid one-third of the usual down payment as deposit on a two-bedroom flat on Zhengzhou's outskirts, where seemingly endless rows of blocks have proliferated in recent years.

However, Song soon noticed that prices were dropping at some developments - including one where a friend had bought a home.

She had longed for a taste of the middle class lifestyle her friends were flaunting with their apartments packed with consumer goods. But she also didn't want to buy into a bubble that looked set to pop.

She decided to pull out, ultimately filing a lawsuit to get her deposit back.

"I felt that everyone around me had a house and I felt so much pressure from my peers," Song said. "In many ways, that was an illusion of false prosperity."

BACKWATER NO LONGER

Long a quiet provincial capital, Zhengzhou has thrived in recent years thanks to its position as a transport and logistics hub. Taiwan's Foxconn operates a factory in the city employing 230,000 people making Apple iPhones for the world.

And, for two years, the property market boomed.

The skyline is packed with soaring office towers in a newly constructed business district. Flashy malls selling luxury goods jostle for space in the crowded city centre. And freshly minted residential blocks stretch far into the suburbs.

Zhengzhou's property market took off when the Chinese government eased borrowing and credit restrictions in 2015 and 2016, setting off a nationwide home-buying frenzy.

Attracted by cheaper prices in interior provinces like Henan, buyers from across the country piled into Zhengzhou, many paying in full, in cash, to secure flats that often sold out within minutes.

In September 2016, at a new Evergrande apartment complex, a couple in their 40s told Reuters, wiping away tears of disappointment, that they drove from a nearby city only to be told that everything had been sold.

And prices kept soaring.

In the upscale Beilonghu district, overlooking an artificial lake on Zhengzhou's northern fringe, rows of opulent villas decorated with the sweeping roofs of traditional imperial residences went for tens of millions of yuan, rivalling prices in Sydney on a per square foot basis.

But in September last year, the Zhengzhou property market deteriorated rapidly, according to sales agents. Unsold property inventory in Zhengzhou rose 26.5% last year, compared to a 26.9% decline in 2016 at the peak of the boom.

Nationally, property sales by floor area grew 1.3% in 2018 from a year earlier, down from an increase of 7.7% a year earlier. In Henan, the growth slowdown was more dramatic: down to 5.1% last year, from 17.8% in 2017. Henan's real estate investment fell for the first time in 2018.

While the slowing Chinese economy is a key factor in the slump, it is also the result of government efforts to curb rampant property speculation and clean up a chaotic and risky financial system - even as it tried to spur spending and home ownership in places like Henan.

China's housing ministry did not respond to a request for comment.

RIPPLE EFFECTS

The effects of the slowdown in Zhengzhou have been felt by people like Zhang Chenxuan, who has run an interior design business in the city for seven years. Since last year, his income has shrunk by 20-30% as orders from new home buyers fell, he said.

"Clients nowadays only want something practical and simple that saves money instead of going for the luxurious," Zhang said as he fitted out a client's new apartment with contemporary furniture and grey ceramic tiles.

"Eighty percent of my customers now complain that they are very poor, that they don't have the money for proper furnishings," he said.

Zhengzhou's government has eased some purchase restrictions and scrapped price caps for new developments to encourage developers to release inventory, local agents said. But so far, those measures, and similar ones in other cities, have done little to revive the market.

The property slowdown has also been deeply felt in Xuchang, a city of about 4 million people south of Zhengzhou that is the world's wig-making capital.

Like Zhengzhou, the city had been the scene of frantic property development and buying in recent years. To lure builders and buyers, the local government moved wig-making businesses to the city's fringes, spent tens of billions of yuan demolishing shantytown homes, and built a series of lakes and parks, including a gigantic "Central Park" modeled on the one in Manhattan.

Those efforts attracted developers like Evergrande and Country Garden, who built vast complexes overlooking the park.

But the frenzy faded. Property consultancy Tonglitongcheng said in February that the city's housing stock had grown at such "a horrifying rate" that unsold inventory - totalling 9.7 million square metres by its estimates - would take about 55 months to clear.

Xu Boyun, 27, said his family, which owns three properties in Xuchang, was passing on buying a unit in another new development, despite the 20% discount offered to staff at the state-owned company where his parents work.

"It was a really good price but the market has cooled significantly and I've advised them there is not much room for another price spike," he said.

In some developments, prices have been slashed, infuriating those who bought in at higher prices.

In November, angry home owners stormed a Yango Group sales office after the company cut prices by 15% in one development, smashing scale models of the project, sales agents told Reuters.

While Yango hasn't cut prices further, it is now branding its apartments as "cost effective", and touting the market slump as a "rare opportunity" to buy.

It's unclear whether that will be enough to attract buyers to developments in provincial cities like Xuchang.

For Song, the paralegal, safer bets closer to cities like Beijing are a more attractive option for now.

In March, she said her boyfriend made a downpayment - a complete one - on a flat in Zhangjiakou, a ski resort near Beijing that will host some events for the 2022 Winter Olympic Games.

Speculators were eyeing the town, she said, but prices were still just a sixth of the average in Beijing.

"Even if prices fall, how much lower do you think they can go?"

source: news.abs-cbn.com

New York Grand Hyatt, Trump's first big project, faces demolition

NEW YORK - A New York developer and a partner plan to demolish the Grand Hyatt New York, the hotel that launched U.S. President Donald Trump's real estate career in Manhattan decades ago, the two companies said on Thursday.

Developer TF Cornerstone and MSD Partners, which manages the assets of Dell Technologies founder Michael Dell and his family, said they would develop 2 million square feet (186,000 square metres) of office and retail space and a new luxury Grand Hyatt Hotel.

The redevelopment would be in collaboration with an affiliate of Hyatt Hotels Corp, TF Cornerstone and MSD Partners said in a statement.

The Grand Hyatt is immediately east of the Grand Central train station on 42nd Street and was the former Commodore Hotel, a derelict stone building built in 1919 that Trump gutted and re-skinned with a glass facade after its purchase in 1978.

The hotel was Trump's first success in Manhattan after he started in real estate with his father, a wealthy developer in the New York City borough of Queens where the president grew up. Entering Manhattan established Trump's name as a businessman and made him a source of tabloid fascination.

The new development would provide new subway entrances and enhanced connectivity to the subway system underneath Grand Central, and a significant increase in tax revenue, according to the statement.

The project marks a further step in the revitalization of east Midtown where a 1,401-foot (427-m) skyscraper, One Vanderbilt, is rising next to Grand Central on its west side, and JPMorgan Chase & Co plans to build a new headquarters nearby on Park Avenue.

State and city approval is required and construction financing must be arranged, the statement said.

The project may deter potential tenants from relocating to Hudson Yards, a district rising on Manhattan's West Side where a number of marquee companies have decided to relocate.

"This will be a draw for new office tenants and potentially lure tenants away that would have otherwise considered Hudson Yards," said Myers Mermel, chief executive and co-founder of TenantWise, a real estate research and advisory firm.

"It will re-establish Midtown East as the pre-eminent office district," he said.

source: news.abs-cbn.com