A New York landlord is learning the hard way that you shouldn’t mix business with pleasure after his former business partner and girlfriend filed a lawsuit against him seeking $500,000 for breaches of contract and restitution.
The suit, raised by Douglas Elliman agent Vesna Todorov out of Palm Beach, alleges that her ex-lover Michael Speiser kept her on the hook for years as he promised to leave his wife for her and used her to make real estate deals in South Florida.
Speiser and Todorov met in New York around May 2010, according to the suit, filed earlier this week in New York Supreme Court. The landlord and interior designer quickly hit it off and began dating, despite Spieser being married with children.
The two even began living together full-time in a Palm Beach apartment, while Speiser continually delayed his promises to divorce his wife. Todorov, who was not working at the time, became restless and wanted to start earning her own income, according to the suit.
Speiser proposed they begin investing in real estate together: Todorov would earn her Realtor’s license and identify properties for them to invest in, and Speiser would fund the transactions.
As part of the agreement, she was to get a commission from the purchase as well as a piece of whatever the property sold for when they flipped it, according to the suit, first reported by the New York Daily News.
With Tadorov as his broker, Speiser bought a $1.775 million unit at 350 South Ocean Boulevard in Palm Beach and a flashy $3.7 million unit at the Ritz-Carlton Residences in Miami.
The suit alleges that Speiser later pocketed part of Tadorov’s $37,800 commission for the Palm Beach unit and told her she wouldn’t get anything when the Ritz-Carlton unit was eventually sold.
On top of that, Speiser picked up a new broker girlfriend when Todorov left for a few weeks in 2014. He kicked her out of his properties and refused to return all of her belongings, the suit alleges.
Plans for the Sea Vault boat slip condo project along the Miami River have been revamped with more slips and living quarters for yacht owners and crew.
The Miami River Commission’s Urban Infill & Greenways Subcommittee will meet on May 19 to consider the new plans for the 9.4-acre site at 1583 N.W. 24th Ave. In March 2015, the MRC supported the developer’s plan for 14 large boat slips and 14 living quarters, but the new plan would have 45 boat slips – with the sizes reduced – and 45 separate living quarters.
The property is owned by Brisas Del Rio, headed by Miami Beach developer Homero Meruelo.
“With the 14 slips, the pricing and the number of vessels out there was difficult,” Meruelo said. “The market is much larger for smaller vessels than what we had planned. We were looking at 200-foot vessels. Now we are looking at 100-foot vessels.”
Meruelo said the current boat slips at the property would be redeveloped to accommodate boats from 50 to 100 feet. It would sell the boat slips with crew quarters buildings of 3,000 square feet each. These three-story buildings could be configured for a combination of living space, office space or warehousing, he said. They would have full kitchens and bathrooms.
Sea Vault would also have a clubhouse, lounge, pool and tennis courts. It would be surrounded by locked gates to make it a private yacht club, Meruelo said.
Brisas Del Rio acquired the property for $7.5 million in 2003. The developer previously sought approval for a high-rise condo there but a legal challenge resulted in the area being restricted to mostly marine industry uses.
Meruelo said he has yet to select an architect Sea Vault
After years of complaints about out-of-control noise, petty crime and sidewalks crowded with tables and oversized umbrellas, Miami Beach is taking steps to clean up Ocean Drive.
The city’s land use committee, made up of city commissioners, on Wednesday heard from members of the Ocean Drive Task Force, a group of business owners who approached the city about a year ago with complaints of deteriorating conditions on the iconic street.
The task force submitted about 30 recommendations, calling for upgrading lighting, increasing police presence, banning music from golf buggies and other vehicles and having restaurant and bar owners scale back the size of café umbrellas that many complain have created “a tunnel effect” along sidewalks in front of many businesses.
Commissioners approved sending the recommendations on to the full city commission but some expressed doubts about measures in the task force report to reduce vehicular noise, noting that police have had difficulty in the past enforcing noise control measures. While they said they supported efforts to reduce the “tunnel effect” created by large multi-colored umbrellas in front of restaurants and bars, commissioners said operators on the street should not be forced to use a uniform color for their umbrellas but have a selection of “pastel colors” from which to choose.
Commissioners also agreed to start a pilot program to move restaurant tables on sidewalks closer to businesses, even if that means some table space might be lost.
The steps follow a Miami Beach City Commission vote in May to ban alcohol sales on the street from 2 a.m. to 8 a.m.
Jonathan Plutzik, the owner of the hotel the Betsy South Beach on Ocean Drive and the chairman of the task force said he’s encouraged that commissioners seem ready to move quickly on the proposals. “Some items can be moved quickly and others will take some planning,” he said. “All of us agree that it’s tremendously important that we show progress this year on beginning to make Ocean Drive special again.”
Paseo de la Riviera in Coral Gables is moving forward, but with buildings at a much lower height than the developer initially wanted.
After a three-hour deliberation Friday morning, Coral Gables commissioners unanimously approved a site plan and zoning changes for the controversial $172 million hotel, residential and retail development that will replace a 155-room Holiday Inn on U.S. 1 across the street from the University of Miami campus.
“It comes down to height and how we can control it,” said Coral Gables Vice Mayor Frank Quesada. “It is essential we deliver on that.”
The city commission’s vote will allow developer Brent Reynolds to build a Mediterranean-style complex set around a public plaza with a hotel capped at 126 feet and an apartment building with a height of 112 feet.
Originally, Reynolds sought approval for two 140-foot towers. Over the last two months, during contentious city commission meetings, commissioners pushed the developer to reduce the height of the buildings to allay concerns by residents who live to the east of the proposed project.
The city commission’s vote caps a whirlwind week for Reynolds, who near the end of a marathon meeting on Tuesday had told elected officials he would abandon his plans if he had to go through further delays, as well as more height reductions.
A large number of Coral Gables residents also expressed their objections to the project, claiming it will create traffic gridlock and open the door to more high-density, high-rise developments in the city. A homeowners group, the Riviera Neighborhood Association, had submitted a petition with more than 1,000 signatures against Paseo.
While Paseo cleared its biggest hurdle, the project still will have to be reevaluated by the city’s Board of Architects since the design has changed, said Coral Gables Planning and Zoning Director Ramon Trias.
While Palm Beach’s biggest firms have significantly less agents than those in Miami-Dade and Broward counties, their hooks remain the same: competitive commission splits, technology and in-house tools and training.
The Real Deal ranked real estate firms in Palm Beach County by the number of actively licensed agents and spoke to executives about recruiting strategies, commissions and top sales for the year.
Here are the top five:
#1 Keyes Company | 526 agents
Keyes has 11 offices and four satellites in Palm Beach County, president Mike Pappas said. The family-owned and operated firm targets a mix of newly licensed and experienced agents. Keyes is on track to reach $4.3 billion in sales this year, and hires more than 1,100 agents a year statewide.
While most of its agents are in Miami-Dade and Broward counties, Keyes leads the ranking in Palm Beach. The brokerage also has an in-house corporate relocation program, based in West Palm Beach.
Keyes has recently refinished or relocated up to eight offices in Palm Beach County. “We think facilities still matter,” Pappas said.
Steve Reibel, vice president of recruiting, previously said that commission splits between the agent and company vary from 60 percent to nearly 90 percent, “pending the level of production.”
Pappas has said the firm is “very aggression on splits.”
#2 Coldwell Banker | 466 agents
Coldwell Banker has 10 offices in Palm Beach County, including Boca Raton, Delray Beach, Jupiter Beach, Wellington, Palm Beach Gardens, West Palm Beach and Boynton Beach.
Duff Rubin, regional senior vice president, would not disclose the company’s commission split policy but said, “We as a company try to be more of a value-proposition brokerage,” including Coldwell Banker’s tools, management and support. “Commission splits are typically based on production. You’re only as good as your production,” he said.
The top sale in Palm Beach County was a single-family home at 600 Northeast Fifith Avenue in Boca Raton. Jonathan Postma had the listing for the property, which sold for $8.3 million.
Rich Fleischer, regional vice president of Coldwell Banker east central region of Florida, said sales are split evenly between condos and single-family homes. “We do not focus solely on one type of property or one specific price point. Our overall goal is to ensure that the customer has the best real estate experience possible, regardless of property type,” Fleischer said.
The company hires about 225 agents, a mix of experienced and newly licensed, in the county on an annual basis.
#3 Illustrated Properties | 435 agents
Illustrated Properties has 23 offices in Florida. The firm offers online marketing tools, a lead generation program, training classes and mentoring programs, according to its website.
The company also provides in-house marketing.
Debbie Zuloaga, director of recruiting, could not be reached for comment.
#4 ERA Home Run Real Estate | 373 agents
Home Run Real Estate hires about 50 agents a year, owner Debbie Smith said. The company has three offices in Palm Beach, including Palm Beach Gardens, Royal Palm Beach and Lake Worth.
Smith said she doesn’t pay for recruiting, and that ERA’s technology brings the majority of her agents. Home Run offers services like a seller security program, a Palm Beach County auction department and a Zap platform for its agents. Smith also provides a real estate boot camp, which takes agents from contract to closing.
Home Run, which was founded in 2003 and affiliated with ERA in July, does not charge its agents monthly fees. Smith would not disclose its commission split policy. It’s closed about $200 million in transactions this year, Smith said.
#5 United Realty Group | 356 agents
United Realty Group offers 100 percent commissions with a flat per-transaction fee. The firm has four branches in Palm Beach County, according to Melanie Brownell, director of recruitment. It hires on average 20 agents a month.
The majority of sales in the county come from single-family homes, she said.
United Realty, which is in the tri-county area and Orlando, doesn’t charge its agents desk or franchise fees or provide training. It offers a 100 percent commission with a $299 transaction fee.
Year-to-date, United Realty has $810.3 million in sales. The firm has 13 offices with two additional locations opening early next year. Top sales this year include a commercial sale in West Palm Beach in August for $4.8 million.
The newly announced merger agreement between Walgreens Boots Alliance Inc. and Rite Aid Corp. has the potential to be hugely disruptive to retail real estate across the country, according to industry experts analyzing early details of the proposed deal.
Walgreens and Rite Aid, the second and third-largest drug store chains respectively, reached a deal for Walgreens to acquire Rite Aid for a total enterprise value of $17.2 billion, including acquired net debt. Under the proposed merger, Rite Aid would become a wholly owned subsidiary of Walgreens Boots Alliance, and initially operate under its existing brand name.
The two drug store operators control roughly 200 million square feet of retail space and another 21 million of office and distribution space.
"Our complementary retail pharmacy footprints in the U.S. will create an even better network, with more health and wellness solutions available in stores and online," Walgreens Boots Alliance executive vice chairman and CEO Stefano Pessina said. "This combination will generate a stronger base for sustainable growth and investment into Rite Aid stores, while realizing synergies over time."
Pessina said they have already identified more than $1 billion in savings from potential synergies, although specific decisions regarding the integration of the two companies will be made jointly, Pessina said.
If the merger is approved, it would leave Walgreens and CVS as the two dominant drugstore chains in the country. Walgreens Boots Alliance has more than 13,100 stores in 11 countries, with more than 8,300 in the U.S. The company includes one of the largest global pharmaceutical wholesale and distribution networks with over 11 million square feet of distribution centers in the U.S. and 3 million square feet of office space.
Rite Aid has nearly 4,600 stores in 31 states and the District of Columbia. It owns or leases more than 7 million square feet of distribution space, not counting another 700,000 square feet of office and warehouse space near its corporate headquarters in Camp Hill, PA.
The retailer is currently building a 900,000-square-foot distribution center in Spartanburg, SC. Once operational, it had planned to consolidate its current distribution centers in Charlotte, NC, Tuscaloosa, AL, and Poca, WV.
"This will be a big one. Assuming they get approval from the FTC to merge, which I would assume they would get, this will mean a lot of real estate coming back to market," said Garrick Brown, vice president research, West Region for DTZ.
"I am guessing that they may have to divest some stores first (for Federal Trade Commission approval),” Brown said. “I wouldn't be surprised if they had to divest as many as 1,000 stores or more just to make the deal happen."
The likely closure of a large number of either Rite Aid or Walgreen's stores should the merger win approval could also have a ripple effect in retail centers in which other tenants in the center have co-tenancy clauses that allow them to opt out of their lease should the main drug store anchor in their center close.
"To make matters worse, owners whose shopping centers are collateral for loans run the risk of having their loans put into default or causing a 'trigger period' in the loan because of a major tenancy clause or by lowering debt service coverage ratios below the level the loan allows," said Jack Miller with Florida-based GFCIB and Advisors.
If they are allowed to merge, the stores most likely to be closed are those that either chronically underperform or ones that cannibalize sales from each other, said DTZ's Brown. Walgreens sales per square foot are typically higher that Rite Aid within the same markets, according to Brown and others.
And Rite Aid has a lot of older stores in larger formats that have fallen out of favor with the drugstore industry in general. As a result, there could be a movement to close old, larger Rite Aid stores as leases expire, Brown noted.
According to CoStar data, the two drugstore chains have more than one location in nearly 3,100 zip codes across the country. They operate more than four locations in 410 zip codes. And those counts don’t include overlap between neighboring zip codes.
For its part, Walgreens is already well versed in costs savings having implemented a chain-wide restructuring program. The company previously announced a $1.5 billion cost transformation program through the end of fiscal year 2017, with the cost reductions primarily targeting its Retail Pharmacy USA division.
During its most recent quarter, Walgreens closed 75 stores in the quarter bringing the total closures for the year to 84.
As for Rite Aid, it has been seeking a growth strategy. In an investor presentation this month, Rite Aid said it saw significant store relocations as a possible opportunity to develop new stores in underpenetrated markets and contiguous markets that have positive demographics.
Going forward, investors who like to purchase triple net leased properties could see a potential upside.
"Assuming Walgreens credit stood behind the Rite Aid leases going forward, this event would be a major positive for all Rite Aid owners as their store values would move substantially higher and now trade at Walgreens cap rates,” said Randy Blankstein, president of The Boulder Group in Chicago.
"Depending on the terms of the merger, this deal would make all of the top drug store companies investment grade, and thus would make the whole sector more desirable and likely cause transaction volume to increase as a result."
Currently, CVS and Walgreens have credit ratings of BBB, while Rite Aid is rated B, according to Blankstein.
Cap rates for single tenant CVS, Rite Aid and Walgreens properties hit historic lows in the net lease drug store sector in the third quarter of 2015. But with lower credit ratings, Rite Aid cap rates are the highest of the three with a median asking cap rate for a 20-year lease term at 6.15% compared to a 5% for CVS or Walgreens.
“As Rite Aid’s financial strength improves, investors have gained interest in the extra yield associated with Rite Aid properties. The additional yield can be attributed to Rite Aid not being an investment grade rated company similar to Walgreens or CVS,” Blankstein said.
North Palm Beach-based Bankrate Inc. has agreed to pay $15 million to settle accounting fraud charges, the Securities and Exchange Commission announced Tuesday.
Bankrate agreed to pay the multimillion-dollar penalty without admitting to or denying the SEC’s findings.
"Bankrate...today announced a final settlement with the Securities and Exchange Commission that concludes the company’s part in its investigation related to its historical financial reporting for the quarter ended June 30, 2012," the company said in a statement. "The accounting entries encompassed by this settlement were addressed as part of the restatement that Bankrate previously disclosed in its FORM 10-K filed on June 18, 2015."
The financial news company (NYSE: RATE) was investigated by the SEC and U.S. Department of Justice for earnings reports issued in 2011, 2012 and 2013. The SEC alleges that Bankrate’s Q2 earnings were knowingly overstated.
Three former Bankrate executives were also charged in the case: then-CFO Edward DiMaria, then-director of accounting Matthew Gamsey, and then-vice president of finance Hyunjin Lerner. The SEC alleges that the three took part in a scheme to fabricate revenues and avoid booking expenses to meet analyst estimates, resulting in an overstated Q2 2012 net income and inflated stock prices.
DiMaria allegedly decided to arbitrarily increase Bankrate’s revenue to meet certain key metrics, according to the SEC order. Bankrate’s Insurance and Credit Cards division were then improperly instructed to add additional revenues to the books of $300,000 and $500,000, respectively, without any support, according to the order.
When the company’s outside auditor asked for an explanation of the Insurance department’s revenue, “Lerner sent a misleading, generic explanation…an explanation that was reviewed and approved by DiMaria and Gamsey,” the order states.
Accountants from the Credit Cards department only recorded $176,000 of the additional $500,000 in revenue as directed by DiMaria, which infuriated the then-CFO, according to the order. DiMaria insisted that an approximate difference be recorded as revenue of Bankrate’s mortgage business, Bankrate Core.
In addition, DiMaria directed a Bankrate Core accountant to reduce the accrual for certain expenses by $400,000, and Bankrate did not book approximately $99,000 in accounting expenses in Q2, according to the order.
After a three-hour deliberation Friday morning,Coral Gables commissioners unanimously approved a site plan and zoning changes for the controversial $172 million hotel, residential and retail development that will replace a 155-room Holiday Inn on U.S. 1 across the street from the University of Miami campus.
Keyes has 11 offices and four satellites in Palm Beach County, president Mike Pappas said.The family-owned and operated firm targets a mix of newly licensed and experienced agents. Keyes is on track to reach $4.3 billion in sales this year, and hires more than 1,100 agents a year statewide.
Rich Fleischer, regional vice president of Coldwell Banker east central region of Florida, said sales are split evenly between condos and single-family homes. “We do not focus solely on one type of property or one specific price point. Our overall goal is to ensure that the customer has the best real estate experience possible, regardless of property type,”Fleischer said.
Smith said she doesn’t pay for recruiting, and that ERA’s technology brings the majority of her agents. Home Run offers services like a seller security program, a Palm Beach County auction department and a Zap platform for its agents.Smith also provides a real estate boot camp, which takes agents from contract to closing.