Banks should be on alert for Russian oligarchs attempting to circumvent U.S. sanctions by investing in commercial real estate, a U.S. Treasury Department watchdog said.
Wealthy Russians with ties to the Kremlin are likely attempting to evade the economic sanctions placed on them in the U.S. by moving money into the commercial-real-estate sector, where complex financing methods and opaque ownership structures can help bad actors hide funds, the Treasury’s Financial Crimes Enforcement Network, better known as FinCEN, said Wednesday.
FinCEN, which serves dual roles as the U.S.’s financial intelligence unit and anti-money-laundering regulator, is the recipient of the suspicious activity reports that financial institutions are required to file if they suspect a transaction may be illicit in nature. Law-enforcement officials can consult the reports when conducting investigations into financial crimes.
The Biden administration has targeted wealthy Russians as part of its response to President
invasion of Ukraine last year, placing those with close ties to the Russian government on blacklists that are intended to prevent them from accessing the U.S. financial system.
The alert issued by FinCEN on Wednesday is the Treasury’s latest effort to prevent sanctioned Russians from finding ways to evade such financial restrictions. In an 11-page report, FinCEN listed a number of potential red flags and typologies it said banks should be on the lookout for.
“Thanks to international pressure and the economic restrictions that more than 30 countries have imposed on Russia for its brutal war against Ukraine, sanctioned Russian elites are increasingly left with fewer options for moving and hiding their ill-gotten wealth,” FinCEN Acting Director
Himamauli Das
said.
Sanctioned individuals may try to use pooled investment vehicles or offshore funds to avoid due-diligence processes, FinCEN said in its alert. Banks aren’t typically required to verify the identities of individuals who own less than 25% of a fund. Sanctioned individuals could keep lowering their stakes to avoid detection, while still maintaining control of the fund, FinCEN said.
Oligarchs also may use shell companies and multiple layers of legal entities or trusts, or transfer their assets to a family member or business associate to conceal their ownership, the Treasury bureau added.
Sanctioned individuals aren’t just investing in high-end or luxury properties, according to the alert. In some cases, they may seek out more inconspicuous investments that provide stable returns without drawing unwanted attention. Such sanction evasion strategies are just as likely to occur in small to midsize U.S. cities as they are in the largest metropolitan areas, FinCEN said.
FinCEN’s latest alert builds on a similar warning issued last year, in which the watchdog advised banks to pay close attention to transactions involving high-value assets such as artwork, luxury yachts and jewelry.
Federal prosecutors have warned that lawyers, consultants and other service providers who work for sanctioned individuals could run afoul of the law.
An indictment unsealed earlier this week charged a former high-level FBI agent and a former Russian diplomat with sanctions violations in connection with work they did for
Oleg Deripaska,
a raw-materials magnate who was placed on a sanctions blacklist in 2018.
Write to Dylan Tokar at dylan.tokar@wsj.com
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Straws, bottles and packaging made with captured greenhouse-gas are starting to reach commercial scale, offering a way for businesses making and using everyday products to reduce emissions contributing to global warming.
Locking up greenhouse gas in ingredients that go into products can be costly compared with petroleum-based options and presents hurdles to building out enough infrastructure to capture emissions. Even so, big companies are increasingly willing to pay a so-called green premium for products that help reduce their carbon footprints by seeking alternatives to plastic and other materials made with petroleum.
Origin Materials Inc.
and Newlight Technologies Inc. are trying to meet that demand by bringing factories online that use captured emissions to manufacture materials used to make products including clothes, tires and plastic bottles. The two companies have signed deals with Target Inc.,
Ford Motor Co.
and other companies hoping to reduce emissions in supply chains and from the use of their goods.
“If we could use carbon emissions as a resource to create useful products, then potentially we could create a consumer-driven pathway to reducing carbon in the air,” said Newlight Chief Executive
Mark Herrema.
Sourcing and transporting raw inputs and captured CO2 are crucial to a product’s so-called carbon-negative credentials, meaning more CO2 is stored than created.
Mr. Herrema said he expects Newlight’s costs to fall as production scales up, adding the Huntington Beach, Calif.-based company’s foodware products are already priced competitively with other sustainable options. He said there are many sources for emissions, but more infrastructure to capture them is needed.
Newlight in 2020 opened its first commercial-scale factory in Huntington Beach. It manufactures foodware, such as cutlery, bowls and straws, for
Shake Shack Inc.,
Walt Disney Co.
and
Hyatt Hotels Corp.
among others. Newlight said the factory has produced more than 50 million foodware units.
The company took about a decade to develop a process using microbes that suck up methane or carbon dioxide to grow a biological material called polyhydroxybutyrate, which is used to make biodegradable resins that can replace plastic. The private company sources captured emissions from dairy farms, ethanol plants and landfills, and is expanding into coal mines and exploring direct-air capture.
“Nature’s favorite food source is greenhouse gas,” Mr. Herrema said. “Do what nature does, turn it into useful goods.”
The startups are taking aim at chemicals that are an essential part of many consumer goods. The sector is the third-largest industrial source of greenhouse gas emissions globally and is on pace to produce more unless new technologies go into widespread use, according to the International Energy Agency.
Making chemicals that capture emissions faces two barriers, according to chemical industry analysts: reducing costs sufficiently to compete with petroleum-based chemical manufacturing and sourcing enough captured emissions or raw materials.
“The market for captured-carbon-based fuels and products is still relatively limited due to technology and cost constraints,” said Mitch Toomey, vice president of sustainability and responsible care at the American Chemistry Council trade association.
Mr. Herrema said Newlight is also in talks with
Nike Inc.
and
Ltd. to use its materials in apparel and automotive machinery. Previously, Newlight had agreements with IKEA and Dell Technologies to provide packaging, but Mr. Herrema said his company decided over the past few years to focus on serving foodware, fashion and automotive companies until it grows.
Newlight’s next factory is slated to come online in 2025 in Ohio, which will tap methane from a coal mine through an agreement with
CNX Resources Corp.
The CNX deal will supply between 1 million to 36 million metric tons of carbon-dioxide equivalent, with the likely amount somewhere in the middle, said Ravi Srivastava, president of new technologies at CNX. He said the mine is one of only five with a capture system in place, among more than 2,000 coal mines across the U.S. The companies declined to share financial terms of the deal and what portion of the mine’s emissions it will cover.
Competitor Origin Materials has a different approach to acquiring captured emissions and plans for its first commercial-scale factory to come online next year.
The West Sacramento, Calif.-based company already has $9 billion in orders from companies including Primaloft to make bedding and apparel and Ford for automotive parts, and expects to be profitable by 2025 after its second commercial-scale plant opens.
Through a chemical process, Origin Materials converts organic materials, which lock up carbon dioxide from when they were growing, for use in polyethylene terephthalate, or PET, plastic commonly found in packaging and other synthetic products. The company’s offerings will be cost competitive with petroleum-derived versions because the ingredients it uses are abundant and cheap, co-CEO
John Bissell
said.
“There are a lot of these materials globally,” Mr. Bissell said. “If we’re at the point that we are using all of those things, we’ve won the game if we are starting to run out of feedstock.”
Write to Dieter Holger at dieter.holger@wsj.com
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Real-estate companies are facing soaring costs to protect their variable debt against jumps in interest rates, with prices on some contracts jumping at least 10-fold this month from a year earlier.
Banks and other lenders often require real-estate firms relying on floating rate debt to hedge their exposure with so-called interest-rate caps. The caps are derivatives contracts, sold by the lender, in which companies receive a payment when an interest-rate benchmark—for example, the Secured Overnight Financing Rate—exceeds a certain level. Companies have to buy these caps after they secure new debt and risk defaulting if they violate that covenant.
The caps, which are also used in other industries, shield companies from sharp increases in rate benchmarks like SOFR or the London interbank offered rate, which underpin trillions of dollars of financial contracts, including corporate loans, mortgages and interest-rate derivatives. They limit borrowers’ interest costs and assure lenders that a risk potentially affecting their clients’ ability to service their debt is mitigated.
As the Federal Reserve continues its campaign of interest rate increases, some companies are looking for alternatives to the caps, for example by taking out fixed-rate debt instead or hedging their variable debt. Real-estate companies are struggling with cost increases for labor and building materials as well as slowing demand.
Prices for caps have surged in recent months as the U.S. central bank raises rates, most recently to a range between 3% and 3.25% in September. For a 4%, three-year $100 million interest-rate cap tied to SOFR—a standard deal size in the real-estate sector—prices averaged $2.2 million in October, up from $200,000 a year earlier and $45,000 two years earlier, according to Riverside Risk Advisors LLC, a hedge advisory firm. For a similar cap that covers two years, prices averaged $1.5 million, up from $50,000 a year earlier and $14,000 two years earlier, Riverside Risk Advisors said.
“Cheap financing is no longer a market reality for companies,” said
Helen Kane,
director of risk and exposure management at software provider Hedge Trackers LLC.
Armada Hoffler Properties Inc.,
a Virginia Beach, Va.-based real-estate investment trust that invests in office, retail and multifamily properties, in July extended the maturity on caps on $285 million in debt by about a year to 2024, Chief Financial Officer
Matthew Barnes-Smith
said. The company purchased the cap at a 1% threshold rate, he said, which means that it would receive a payment if its benchmark rate moves above 1%. The transaction also includes an agreement for the company to sell a different cap with a 3% threshold, which effectively reduces the cost of the new cap by as much as a third, he said.
Companies tend to buy and sell caps in one transaction with the same bank to avoid credit exposure. Banks usually include the planned sale along with the purchase in one contract, allowing companies to pay one net price and less than they otherwise would have paid to buy the new cap.
The extension means its debt will be fully fixed or hedged through 2024, limiting any additional interest-rate costs until then. The company since March recorded a significant increase in derivatives costs, Mr. Barnes-Smith said, but declined to provide specifics.
“We believe that potentially with the Fed, they will eventually slow down the rate increases and the uncertainty in the market will come out, making those derivatives slightly more attainable when ours mature,” Mr. Barnes-Smith said. The company held about $643.8 million in variable rate debt as of June 30, or a little over half of its total debt, Mr. Barnes-Smith said. The company’s weighted average cost of debt, which includes the caps, was 3% as of June 30, up from 2.8% the previous quarter, he said.
Lenders require the caps as part of their underwriting for borrowers’ floating-rate financing, which involves calculations of coverage ratios, or measures of companies’ ability to meet financial obligations. In the real-estate industry, banks often add an interest-rate cap to the financing they give based on the expected cash flow from the property that is being financed, said
Amol Dhargalkar,
chairman and managing partner at Chatham Financial Corp., a financial-risk adviser. “We’ve certainly seen large cost increases for the average real-estate borrower—millions of dollars for the largest borrowers out there,” he said.
Commercial property owners usually prefer floating-rate debt because it costs less over time and can be paid back early without a penalty, giving them more flexibility to sell or refinance the buildings, Mr. Dhargalkar said. U.S. commercial-property sales totaled $496.8 billion this year through August, up from $408 billion during the prior-year period, according to MSCI Real Assets, an arm of investment research firm
MSCI Inc.
Real-estate developers are also seeking leniency from lenders by requesting higher threshold rates, such as 4% to 5% if their current threshold is 3%, which reduces the likelihood of tripping it, said
Joyce Frost,
a partner at Riverside Risk Advisors. Some are also asking lenders to move funds from rental income into a special reserve account that can only be used to pay interest on the loan if there is a cash shortfall or to purchase a future cap, Ms. Frost said.
Ready Capital Corp.
, a New York-based firm that buys and finances commercial property loans, is considering offering a short-term loan product at a fixed rate for companies that want to avoid the high costs associated with variable debt, CFO
Andrew Ahlborn
said. Such a loan would help companies avoid both the need for a cap and the uncertainty associated with floating-rate loans, he said.
The company’s clients—including some businesses in the commercial real-estate industry—haven’t sought to avoid interest-rate caps, nor would Ready Capital allow them to do so, Mr. Ahlborn said. “Borrowers are aware of the need for the interest rate cap, but remain sensitive to the rising cost of those caps,” he said. At the same time, borrowers are pursuing fewer transactions than last year due to market volatility, higher borrowing costs and the uncertain economic outlook. “The entire industry is adapting to the new rate environment, all the way from purchase price to how deals are structured,” Mr. Ahlborn said.
Interest-rate cap prices are expected to continue climbing as Fed rate increases persist. “These hedging cost issues make something that’s already expensive even more expensive for companies,” Mr. Dhargalkar said. “With every rate increase, there’s more [caps] that are getting triggered.”
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Billionaire real-estate investor Jeff Greene is asking $49.9 million for two adjacent homes in Manalapan, Fla., a town roughly 10 miles from Palm Beach.
Totaling more than 3 acres, Mr. Greene’s properties comprise two contiguous parcels of land that both run from the Intracoastal Waterway to the Atlantic Ocean.
While both parcels include small beach cottages, Mr. Greene said the true value of the property is in the land and that most buyers would raze the cottages to make way for a more modern estate.
Jeff Greene in 2019.
Photo:
Greg Lovett/The Palm Beach Post/ZUMA PRESS
Mr. Greene made his fortune betting against risky mortgages in 2006, a strategy he learned from hedge-fund executive
John Paulson.
He purchased the first of the Manalapan properties in 2015 through a bankruptcy auction for $6.5 million, records show. He bought the second for $4.1 million in 2018 after a neighbor died, he said. He has rented one of the homes out for $25,000 a month, he said.
The site faces the Boynton Inlet, an artificial cut through a barrier beach connecting the ocean and the Intracoastal. “It’s right next to the inlet,” he said. “Some people might not love that idea, but I like that you can be out in the ocean in minutes if you just want to go fishing or for a quick Jet Ski in the ocean. I also like to be able to see all the excitement of boats coming and going all the time.”
Mr. Greene said he and his wife, Mei Sze Greene, who have a home in Palm Beach, considered building on the property but found they don’t have the time. Much of their energy is going into building a new mansion at their estate in North Haven on New York’s Long Island. They also still own Palazzo di Amore, a 25-acre compound in Beverly Hills, which once asked $195 million. Mr. Greene said he’s since taken that property off the market.
Both properties have frontage on the Intracoastal Waterway and the Atlantic Ocean.
Photo:
Danny Petroni
Mr. Greene said he has been quietly shopping the Manalapan properties for a while, but is now finally hiring a broker to market them. The listing comes as the Manalapan market is hitting record highs. In June,
billionaire
Larry Ellison
purchased a $173 million home in Manalapan, setting an area record.
In the past, Manalapan properties tended to be cheaper than those in Palm Beach, but that is changing, according to listing agent Christian J. Angle. “Now the secret is out,” he said.
Mr. Greene said he doesn’t expect the Palm Beach-area market to dip significantly, despite economic headwinds.
“There are so few great homes and most people there never sell,” he said. “Once they get their house, they are there for the rest of their lives. It’s the last stop. They’re not going to pick up and move to Jacksonville.”
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LYNWOOD, Calif.—The air conditioning in the food hall is broken. The parking lot is cracked. And for more than a year, the Plaza Mexico shopping center operated under bankruptcy-court protection.
But on a recent Sunday, families flocked to the 400,000-square-foot shopping center about 15 miles south of downtown Los Angeles. Children rode the outdoor carousel and shoppers rested in the shade on benches near the center’s “kiosco,” a gazebo-like structure commonly found in Mexican plazas.
Retired machine operator Gerardo Vicente Badillo, who moved to the U.S. from the Mexican city Torreón 40 years ago, visits almost daily to buy inexpensive fruit and eat authentic Mexican cuisine. A fan of Los Angeles’s sports teams, he said he’s particularly proud of the Dodgers and Lakers jackets that he bought on layaway at the shopping center.
“Plaza Mexico is a little piece of Mexico here in Los Angeles,” said Mr. Badillo, 64 years old. “A little piece of heart.”
A fruit vendor inside the ‘Mercado’ at Plaza Mexico. The carousel is a big attraction.
High foot traffic at shopping centers like Plaza Mexico has been a pleasant surprise in the retail world as the U.S. has emerged from the pandemic. People who previously relied on online shopping are returning to bricks-and-mortar locations, especially those that offer experiences not found on the Internet.
Investors are noticing. More than 900 shopping centers sold nationwide in the second quarter of this year for a total $16.6 billion, about double the volume of the same period last year, according to data firm MSCI. The increase was particularly noteworthy because overall commercial-property-sales growth slowed in the quarter due to higher interest rates and recession concerns
“A lot of [spending] is happening at the store again,” said Jim Costello, chief economist for MSCI’s real-assets team.
Plaza Mexico’s parking lot was crowded on a recent day despite the retail center’s dowdy appearance.
One of the largest U.S. retail deals last quarter was the purchase of Plaza Mexico by private-equity firm Sterling Organization for nearly $165 million in a bankruptcy auction. Analysts say the price of $407 a square foot was a healthy one given the property’s troubled past and lease expirations next year of three of its largest tenants, a Food 4 Less grocery store,
Aid pharmacy and the children’s party spot Chuck E. Cheese.
“This asset very much speaks to the demographics in the local community,” said Brandon Svec, national director of U.S. retail analytics for data firm
CoStar Group Inc.
“But from a pure deal structure, I think that the buyers are going to need to frankly justify the pricing.”
Florida-based Sterling believes Plaza Mexico is well worth the purchase price and the millions it plans to spend on improvements, according to
Brian Kosoy,
chief executive. The real estate focused company estimates nearly 400,000 people live within 3 miles of the shopping center, most of them Hispanic.
“If you look at what the income could and should grow to in five to seven years, I think we bought it very favorably,” Mr. Kosoy said.
The shopping center is 13% vacant, but Mr. Kosoy said this and the expiring leases are advantages because many tenants are paying below-market rents. Sterling plans to boost revenue by raising well-performing tenants’ rent to market rate and by attracting national retailers.
“There’s a ton of meat on the bone, from our perspective, and a ton of value that will be added,” Mr. Kosoy said.
Plaza Mexico shoppers can buy arts, crafts and traditional jewerly.
Plaza Mexico was built as a traditional shopping center in the 1970s and then redeveloped in the early 2000s by California-based M&D Properties to appeal to the area’s Hispanic population. Its architecture was inspired by Mexican cities like Guadalajara, Mexico City and Oaxaca, according to its website.
Plaza Mexico entered bankruptcy last year after its then-owner, Plamex Investment, LLC, defaulted on $106 million in senior loans and $14 million in mezzanine loans and the mezzanine lender moved to foreclose. The previous owner said in court filings that it had been unable to make its debt payments because business disruptions caused by the pandemic left many tenants unable to pay rent.
One of Plaza Mexico’s most popular attractions is its “Mercado,” a large hall modeled after a traditional Mexican marketplace where nearly 200 vendors sell food and other items like piñatas, clothing and sports equipment. Floor fans keep the air circulating, but produce-stand owner Jose Gutierrez was still wiping sweat from his forehead as he stood behind the counter recently. The fruit and vegetables would stay fresh longer if the air conditioning worked, he said.
Before the pandemic, Plaza Mexico’s previous owner organized events like World Cup viewings and appearances by famous Mexican boxers. In 2016, then-Democratic presidential candidate
Hillary Clinton
held a campaign rally at Plaza Mexico.
Shop keepers, many of whom said they knew and liked the previous owners, said they hoped the new management revives these types of events. While Plaza Mexico’s public gathering spots and food vendors are busy, several owners of apparel and other retail shops said sales haven’t recovered from the pandemic.
Community advocates said they hoped higher rents don’t force out local small businesses. The Mercado’s vendors could be particularly vulnerable to displacement, said Prince Osemwengie, policy associate for the community development financial institution and nonprofit Inclusive Action for the City, based in Los Angeles.
Mr. Kosoy said there are no current plans for changes to the Mercado, but added, “the first thing that we’re doing is wrapping our arms around the operations in order to vet the opportunities for improvement.”
The mall sells items like piñatas and food specialties that are typical of Mexico and Central America.
Write to Kate King at Kate.King@wsj.com
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The longtime Palm Beach home of the late conservative commentator Rush Limbaugh is being quietly shopped for sale with an asking price of $150 million to $175 million, according to people familiar with the offering.
The roughly 2.7-acre waterfront property, located on Palm Beach’s tony North Ocean Boulevard, includes multiple structures, including a large main house built in West Indies style, according to public records and people familiar with the property. The property has roughly 250 feet of ocean frontage and direct access to the beach, records show.
Rush Limbaugh and Kathryn Adams Limbaugh in 2020.
Photo:
Patrick Semansky/Associated Press
Mr. Limbaugh, a talk-radio icon and a ring-wing media stalwart, died last year at age 70. Records show the property is owned by a trust tied to his widow, Kathryn Adams Limbaugh. Ms. Limbaugh didn’t respond to requests for comment.
Mr. Limbaugh purchased the property for $3.9 million in 1998 through a limited liability company, records show.
The main house spans roughly 24,000 square feet, according to the 2010 book “An Army of One” by Zev Chafets.
“Largely decorated by Limbaugh himself, it reflects the things and places he has seen and admired,” Mr. Chafets wrote. The house had a vast salon meant to suggest Versailles, he wrote, and a massive chandelier in the dining room was a replica of the one in New York’s Plaza Hotel. The main guest suite was modeled after the Presidential Suite of the Hotel George V in Paris, while the library was a scaled-down version of the library at the Biltmore Estate in North Carolina, with wood-paneled walls and cherubs dancing on the ceiling, the book said. It wasn’t clear if the property has been updated since the book was published.
An aerial view of the compound.
Photo:
EagleView
While the main house is in good condition, real-estate agents said it might be considered a teardown since today’s buyers prefer more contemporary architectural styles.
If it sells for $150 million or more, the property will be among the most expensive ever sold in Palm Beach, where the luxury real-estate market posted record levels of activity during the pandemic.
Last month,
billionaire Larry Ellison purchased a $173 million home in nearby Manalapan, Fla., setting a record for the area, according to property records and a person familiar with the deal.
Write to Katherine Clarke at Katherine.Clarke@wsj.com and E.B. Solomont at eb.solomont@wsj.com
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Rising interest rates could pinch freight carriers and put industrial real-estate transactions on pause, executives say, but tighter policy might help if it succeeds in slowing the inflation that is driving up the cost of projects.
“If there’s any one sector that really needs inflation to get under better control, it is the industrial sector,” said
Kevin Thorpe,
chief economist at real-estate services firm
The Federal Reserve on Wednesday announced it would raise interest rates by 0.75 percentage point and Fed Chairman
Jerome Powell
said the central bank could follow the largest interest rate increase since 1994 with more rapid hikes this year.
Daniel Son,
head of global banking at U.S. Bank, oversees its supply-chain finance business. He said the rising financing costs will also raise inventory carrying costs, adding to stresses in supply chains—if companies carry less inventory to tamp down costs.
“When interest rates go up, then there’s a correlation that inventories actually go down” when companies can’t pass along those higher costs to their customers, he said.
Inventory costs were already elevated as retailers and manufacturers sought to bring in goods to refill depleted stocks as supply-chain logjams tied up orders on the water and at congested ports. The Logistics Managers’ Index, a monthly survey of supply-chain managers, showed inventory costs about 33% higher in May than they were in the same month in 2020.
The higher rates will also raise borrowing costs for logistics operators and carriers and could lead some industrial real-estate investors to put off decisions on new construction, executives said.
The increased cost of money could have a big impact on lightly-capitalized trucking companies that operate on thin margins, said
Jeff Carlson,
vice president of global sales and marketing at freight-payment company
“You could actually end up with a reduction on available trucks down the road if you start to lose a lot of carriers,” Mr. Carlson said.
The tighter money policy comes as freight carriers are already wrestling with higher fuel prices, adding costs that smaller operators have trouble passing along to customers.
Gregg Healy,
executive vice president and head of the industrial services group in North America at real-estate service provider
PLC, said higher financing costs could also cool investor interest in what recently has been a red-hot market for industrial real estate.
Mr. Healy, who is based in Southern California, said he is not seeing warehouses change hands in some parts of the region even as overall distribution space remains tight.
“There’s a pause because you have investment groups which are looking at their own debt stack, and they’re saying, ‘OK, what are opportunities for reward here? What’s the risk that might be out there as well going forward?’” Mr. Healy said.
The rate hike will also affect calculations on real-estate projects, said
Ken Simonson,
chief economist at the Associated General Contractors of America, a trade group representing builders. Higher borrowing costs mean some projects such as warehouses will “no longer pencil out,” Mr. Simonson said. Financing costs “along with rapidly rising construction materials and labor costs will outrun the potential rental income,” he added.
But the fallout on infrastructure projects such as highway construction will be generally minor, he said, since much of their financial backing comes from state and federal funding.
“Many types of construction are relatively insensitive to this increase: infrastructure and long-lived manufacturing and power projects, for instance,” Mr. Simonson said.
Write to Liz Young at liz.young@wsj.com
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Billionaire internet entrepreneur Jim Clark is selling an oceanfront estate near Palm Beach, Fla., for around $175 million, he said.
The deal is expected to set a record for Florida, which has yet to see a home sell for more than $130 million, according to real-estate appraisal firm Miller Samuel.
The off-market deal is expected to close this week, said Mr. Clark, who bought the estate and a nearby vacant island for just over $94 million in March 2021, records show. He declined to identify the buyer.
The roughly 16-acre property is located on a barrier island in Manalapan.
Photo:
Eagleview
The roughly 16-acre property is located on a barrier island in Manalapan, just south of Palm Beach. It was previously owned by the Ziff publishing family.
Mr. Clark said he and his wife, Kristy, bought the property as a “spur of the moment purchase” when they thought they were going to live in Florida most of the time. They fell in love with the aesthetics of the home and features such as a botanical garden, he said. But as the year went on, they decided to stay in New York—they have homes in Bedford and Manhattan—and enroll their two young daughters in school there, he said. Mr. Clark also sensed headwinds in the world economy and thought it made sense to sell, he said.
“In the end, we sort of thought, ‘How much will we come down here?’” he recalled. “I knew there was someone who wanted it and I beat them to it, so I thought, ‘Let’s see if they want it again.’” He said
Lawrence Moens
of Lawrence A. Moens Associates brokered the deal.
Mr. Clark said he updated some mechanical systems, but made no major changes to the estate. “Look, it’s a phenomenal piece of property,” he said. “You can’t find anything like that in Florida.”
Jim Clark in 2017.
Photo:
Sean Zanni/Patrick McMullan Agency/Getty Images
The property spans the width of the barrier island, with about 1,200 feet of ocean frontage and around 1,300 feet on the Intracoastal Waterway. The compound has several structures, including a roughly 62,200-square-foot, main residence clad in coral stone. It also has a seven-bedroom guesthouse, two cottages on the beach and a manager’s house. The structures are connected via tunnels that run underneath a road that bisects the property. The estate also has a pool, a dock, a sports complex and a three-hole golf course.
Mr. Clark co-founded Netscape and several other startups, most recently the digital security company Beyond Identity. He has bought and sold several other luxury homes in Florida, and said he tends to over-invest in his homes. “I’ve never made money on real estate until now,” he said.
So far, Palm Beach seems largely immune to a recent slowdown in luxury sales. Earlier this month, an oceanfront mansion in Palm Beach closed for around $85.9 million, less than a year after selling for $64 million, records show. In May, the number of contracts signed on single-family Palm Beach homes priced above $10 million more than doubled compared with May 2021, according to Miller Samuel.
Write to E.B. Solomont at eb.solomont@wsj.com
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That’s a wrap. Director James Burrows, a co-creator of the TV show “Cheers,” is putting his Los Angeles estate on the market for $38 million.
The roughly 4.3-acre property is located in a Bel-Air gated community, according to listing agents Linda May and Guy Levy of Hilton & Hyland. Mr. Burrows and his wife, Debbie Burrows, purchased the property for about $11.94 million in 2004, records show.
A bathroom with a fireplace in the primary suite.
Jim Bartsch
There are six bedrooms in the main residence, plus a separate guesthouse.
Jim Bartsch
The main house is around 12,600 square feet.
Jim Bartsch
The kitchen of the main house.
Jim Bartsch
The two-story entry foyer has limestone floors and a stacked staircase.
Jim Bartsch
Built around 1990, the house is set back from the road, with a roughly ¼-mile private driveway and motor court. The estate also contains a separate guesthouse, pool and tennis court.
Mr. Levy said the couple took the roughly 12,600-square-foot home “down to the studs” after purchasing it nearly two decades ago. Working with architect Oscar Shamamian of Ferguson & Shamamian Architects, they essentially rebuilt the property. Michael Smith, who worked on the Obama White House, designed the interiors, which include a two-story foyer with limestone floors and a wine cellar that holds about 3,000 bottles. There are six bedrooms in the main house, including staff quarters. The primary suite has a wood-burning fireplace, a wraparound terrace, two bathrooms—one with a fireplace—and two closets, each with its own balcony.
James Burrows at his Bel-Air home.
Photo:
Ryan Lowry for WSJ. Magazine
Mr. Levy said the property sits on top of a ridge line with city, ocean and canyon views. The pool area has a pavilion with a fireplace and built-in bar and grill.
The couple has decided to sell so that they can travel more, Mr. Levy said. They own two homes in Wellington, Fla., which they purchased for $2.52 million in 2015 and $999,000 in 2018, according to public records. Last year they paid $15 million for a mansion in Laguna Beach, Calif., and they also bought a home in La Quinta, Calif., for $3.25 million in 2020.
In addition to “Cheers,” Mr. Burrows directed sitcoms such as “Friends,” “Will & Grace” and “Frasier.” He has won multiple Emmy Awards and recently published a memoir, “Directed by James Burrows,” chronicling his career in TV.
Write to E.B. Solomont at eb.solomont@wsj.com
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An oceanfront Santa Monica, Calif., home with two hot tubs is quietly asking $25 million, according to the owner, Australian entrepreneur and designer Kirk Lazarus.
Mr. Lazarus said he bought the property for $3.95 million in 2010 and spent about four years remodeling it. He moved into the house in 2015.
The owner, Kirk Lazarus, spent about four years remodeling the beach house.
Molori Design
Reclaimed-wood floors throughout the house come from Europe.
Molori Design
The kitchen.
Molori Design
A terrace off one of the bedrooms overlooks the ocean.
Molori Design
Amenities include a home theater.
Molori Design
The home has a hot tub on a top-floor balcony off one of the bedrooms. There is another hot tub adjacent to the swimming pool, he said. Other amenities include a room for Pilates and yoga, a massage room, a home theater, a gym and a spa with a steam room. Reclaimed-wood floors throughout the house come from Europe, he said, and a powder room is lined with Tiger’s Eye stone. In addition to the pool, the roughly 0.1-acre grounds contain an outdoor kitchen and a tropical garden with fruit trees. A gate provides access to the beach, where Mr. Lazarus has a volleyball net.
The house is being sold fully furnished, according to Mr. Lazarus. He hasn’t yet officially listed the house for sale, he said, because he is in no rush to sell. He is putting it on the rental market asking $85,000 a month, however, with Veronica Klein of Compass and Joyce Rey of Coldwell Banker Global Luxury. Mr. Lazarus said he plans to list the home for sale with Ms. Klein and Ms. Rey later this year. Real-estate agent Marc Cowan is helping to market the property.
The oceanfront house is one of several Mr. Lazarus said he has bought and remodeled along Palisades Beach Road. He is selling it because he is about to complete a remodel of the home next door and plans to live there.
Mr. Lazarus, who previously worked for the trading and mining company Glencore, now runs the interior-design and development company Molori.
In April, the median listing price in Santa Monica was $1.7 million, up 2.8% compared with the same time last year, according to data from Realtor.com.
Write to Libertina Brandt at Libertina.Brandt@wsj.com
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