Category Archives: Real Estate

Crown Castle CFO changes his mind and will stay

Dan Schlanger, CFO of Crown Castle, has changed his mind and will now stay with the company. Back in October, he announced he would be leaving the company at the end of March.

But that was before CEO Jay Brown resigned in December, 10 days after activist investor, Elliott Management, called for changes at the company. Tony Melone, a Board member, replaced Mr. Brown, as interim CEO. Subsequently, the company announced a strategic review of its underperforming fiber business.

To help persuade Mr. Schlanger to stay at the company, the Board has granted him 21,085 restricted stock units that will vest in two tranches by the end of this year. At today’s stock price, those units are worth almost $2.3 million. Presumably by the end of 2024, there will be a new CEO in place and there will be actions taken for the Fiber business.

The company also announced that Chris Levendos will revert back to being the COO of the Fiber business. In addition, Mike Kavanagh, the Chief Commercial Officer, was promoted to be COO for Towers.

The day before Elliott took its stake, Mr. Levendos was promoted from being the COO of Fiber to being the COO of the overall company.

Laura Nickel, Executive VP of Business Support, also appears to be out at the company, although this was not mentioned in the press release. She is no longer listed as part of the Executive Management team that Crown Castle included as part of its earnings release.

SEC filing – 8-K – Crown Castle CFO to stay



Six Houston-area residents charged with mortgage fraud

Six Houston-area residents have been charged in a multi-layered fraud scheme involving mortgage fraud and identity theft.

The US Attorney’s Office in the Southern District of Texas issued a press release, outlining some of the details. However, the original indictment filed last month remains sealed. Therefore, at this time, I don’t know how the scheme started and how long it continued.

The scheme involves

  • Elvina Buckley, a Woodlands realtor
  • Heather Ann Campos, a mortgage broker, based in Spring
  • Melinda Munoz, a notary, based in Spring
  • Leslie Edrington and her daughter, ShyAnne, also based in Spring
  • David Lewis Best Jr, a financial services executive

Ms. Campos and Mr. Best are considered fugitives and warrants remain outstanding for their arrest.

The indictment alleges that the six recruited clients for credit repair and “cleaned” their clients’ credit histories by filing false identify theft reports with the Federal Trade Commission.

After falsely inflating client credit worthiness, the six would fraudulently obtain credit cards, disaster loans and mortgages for themselves and their clients. They maintained control of the properties purchased in their clients’ names for the purpose of, allegedly, building a real estate portfolio worth millions of dollars and enriching themselves with rental income.

If convicted, all face up to 30 years in federal prison and a possible $1 million maximum fine.

Long-serving Houston REIT CEO fired for cause

[UPDATE 02-28-22 The day before the original posting James Mastandrea filed for divorce from his wife, Christine. On Feb 9, Ms. Mastandrea was appointed COO. On Feb 23, Mr. Mastandrea filed a lawsuit in Harris County for wrongful termination, He is suing his wife, and the new CEO, amongst others].

Whitestone REIT has terminated, with cause, James Mastandrea from his position as Chairman and CEO of the company. David Holeman, the current CFO is appointed CEO. In turn, Scott Hogan, currently Vice President, Controller, becomes the CFO.

Whitestone has its head office in the Westchase area and is a shopping center REIT (real estate investment trust), with properties primarily in Houston and Phoenix. It has a market capitalization of $508 million.

The company said that an independent internal investigation found that Mr. Mastandrea’s conduct to be in violation of his employment agreement and inconsistent with Company standards and responsibilities of the CEO. They also stated that his termination is not related to Whitestone’s operating performance, financial condition or financial reporting.

Mr. Mastandrea, 77, has been the CEO since 2006 and has a base salary of $600,000. Because he was fired for cause, he will only receive accrued and unpaid base compensation.

Christine Mastandrea

Interestingly, the press release and SEC filing makes no mention of his wife, Christine, who is also an Executive Officer of the company. Presumably, she is still employed in her role as Executive VP of Corporate Strategy (base salary $300,000).

2016 Transaction

Back in 2016, Whitestone sold 14 non-core properties for $84 million to Pillarstone Capital REIT, which is a private company that James Mastandrea set up for the transaction. Mr. Mastandrea is still the beneficial owner of 78% of this REIT. John Dee, the COO of Whitestone, is also a beneficial owner of Pillarstone and acts as the latter’s CFO. The transaction was approved by a special committee of independent trustees. Even so, in my opinion, it is not a good look for a public company. Pillarstone has since disposed of six of the properties.

New officers

Mr. Holeman joined the company as its CFO in 2006 and was previously the CFO of Gexa Energy. Mr. Hogan joined in 2008 having previously been the Controller at Gexa Energy.

New compensation arrangements for Mr. Holeman and Mr. Hogan have yet to be determined.

SEC filing – Whitestone CEO




Woodlands real estate CFO leaves after nine months

Correne Loeffler is out as the CFO of Howard Hughes Corporation after only nine months in the position. She is replaced by Carlos Olea, who is currently the Chief Accounting Officer.

Howard Hughes is based in The Woodlands and is primarily a developer of residential master planned communities, though it also develops commercial real estate. In late December, the Wall Street Journal reported that the company had agreed to sell a new 55-story office tower in Chicago for more than $1 billion. The company has a market capitalization of $5.5 billion.

Ms. Loeffler was appointed the CFO in April 2021. She replaced David O’Reilly, who was promoted to CEO in December 2020. Prior to that, she spent 13 months as CFO of Whiting Petroleum (where she was paid $3.4 million all-in), leaving in September 2020 after Whiting exited bankruptcy.  Before joining Whiting, she worked at Callon Petroleum and J.P. Morgan Securities.


The press release issued by the company stated that the employment of Ms. Loeffler was terminated but did not state what severance payments would be made. Presuming she was terminated without cause, Ms. Loeffler will be entitled to a lump sum payment of one year’s salary ($500,000), plus a pro-rated portion of the target annual bonus ($900,000). That’s a small number for 2022, but presumably she will also receive her share of the 2021 bonus.

[UPDATE 2-11-22 The company issued an updated 8-K. Ms. Loeffler will get paid through March 11, 2022. Her bonus for 2021 is $720,000. She will also get a pro-rated bonus for 2022 ($172,603) and a cash severance of $1.4 million (one times base salary plus target annual bonus) to be paid by March 2022.]

Ms. Loeffler did not receive any stock awards when she was hired. In the first quarter of 2022, she was scheduled to receive a performance-based grant that would have been worth approximately $1.2 million a year.

Olea compensation

Mr. Olea will receive a base salary of $500,000. He joined the company in 2017 and has been the Chief Accounting Officer since 2019. His target annual bonus is $750,000 and he will receive an annual long-term equity award worth up to $950,000.

SEC filing – Howard Hughes CFO replacement

Houston real estate company to be taken over in $5.9 billion transaction

Courtesy JLL

[UPDATE 08-04-21 – Acquisition is now complete and Weingarten’s shares have been delisted]

Weingarten Realty Investors, a Houston-based real estate investment trust (REIT) has agreed to be acquired by Kimco Realty Corporation, based in New York in a transaction valued at $5.9 billion.

KImco is the number two in shopping center REITs while Weingarten is number five. Weingarten primarily operates in Texas, Florida and California. It has 159 properties where it develops and leases space in centers anchored by tenants such as Kroger and TJ Maxx.

Weingarten history

Harris Weingarten, an immigrant from Poland, first came to America in the 1880s. He started a general store in the Richmond/Rosenberg area, southwest of Houston. To grow the business, he moved to Houston in 1895 and opened his first grocery store in 1901. His son founded the real estate company in 1948 to build supermarkets for his father’s business. The grocery business grew to 103 stores before being sold to Grand Union in 1980 while the real estate business went public in 1985. Harris’ grandson, Stanford Alexander, 92, is Chairman Emeritus while great-grandson, Andrew is the Chairman and CEO.

Severance and synergies

Kimco shareholders will own approximately 71% of the combined company. The company will keep the Kimco name and its headquarters in New York. The press release stated that the business would be run by Kimco senior management. It made no mention of the Weingarten executive team.

According to the recently-filed proxy, Andrew Alexander will get approx $17 million (including vested equity) if he leaves as a result of a change in control. COO Johnny Hendrix will get about $8 million, CFO Stephen Richter over $9 million. The two Alexanders still own 6% of the equity. That means the stake is worth about $200 million.

Kimco expects to make annual savings of $35-$38 million from the combination, which it  expects to close in the second half of 2021.

SEC filing – Weingarten takeover


Woodlands real estate company appoints new CFO

The Howard Hughes Corporation has appointed Correne Loeffler as its new CFO. She replaces David O’Reilly, who was promoted to CEO in December 2020. Ms. Loeffler was previously the CFO at Whiting Petroleum, based in Denver.

Howard Hughes is now based in The Woodlands, following its move from Dallas late last year. It is primarily a developer of residential master planned communities and has market capitalization of $5.4 billion.

Ms. Loeffler will receive a base salary of $500,000 and be eligible for annual cash bonuses of $900,000 and annual long-term equity awards worth up to $1.2 million, 50% of which will vest based on performance.

Ms. Loeffler was CFO at Whiting from August 2019 to September 2020. She left as Whiting exited from bankruptcy. In Chapter 11, the bondholders exchanged $3 billion of debt for 97% of the equity in the newly-reorganized company.

Ms. Loeffler was paid handsomely for her 13 months at the company

  • Base salary of $440,000
  • Signing bonus of $190,000 in 2019
  • Cash bonus of $2.2 million paid the day before Whiting filed for bankruptcy.
  • Severance payment of $880,000
  • Transition consulting services of $68,250

Whiting also paid $158,000 in relocation costs to relocate Ms. Loeffler from Houston to Denver.

Ms. Loeffler was VP, Finance and Treasurer at Houston-based Callon Petroleum from April 2017 to July 2019. Prior to that, she spent 11 years at J.P. Morgan Securities.

Howard Hughes Corp – CFO appointment

Houston luxury realtor files for bankruptcy protection

John Daugherty Realtors has filed for bankruptcy protection. This follows a dispute with its landlord over the rent for its corporate offices at 520 Post Oak Boulevard.

Historically the company has handled many of the priciest single-family home sales in Houston. However it suffered a blow in early December when two of its top agents, Laura Sweeney and Lisa Kornhauser, left for Compass, a rival real estate brokerage. Sweeney was ranked number 1 on the Houston Business Journal’s 2019 list of Top Residential Real Estate Agents by Sales volume. Kornhauser was ranked number 4. The pair generated almost 20% of the sales volume at John Daugherty Realtors.

A week after their departure, the company announced it would be acquired by New York firm, Douglas Elliman, which has its Houston offices on Kirby Drive in the River Oaks area. The potential merger appears to have triggered the dispute.

The landlord at 520 Post Oak Boulevard, Griffin Partners, alleges that John Daugherty Realtors has breached its contract as it wants to get out of its lease (which runs to 2027) so that it can move into the offices on Kirby Drive.

The deal for Douglas Elliman to acquire John Daugherty Realtors has now collapsed. However Mr Daugherty himself and the remaining team are still expected to join the New York firm.

John Daugherty Realtors has denied the allegations made by Griffin Partners.

The company filed for Chapter 11 bankruptcy on February 27. Since then it has filed motions to pay its real estate agents outstanding commissions and to terminate its leases at both Post Oak Boulevard and its office in The Woodlands.

Griffin – Complaint v Daugherty

Chapter 11 filing

Lake Jackson attorney sentenced in $5m mortgage fraud scheme

Kirk Brannan, a 65-year-old resident of Lake Jackson, was sent to prison for defrauding Wells Fargo and other lenders in a $5 million mortgage fraud scheme.

Brannan is an attorney and real estate broker. His late father was the first Mayor of Surfside, a coastal village to the south of Lake Jackson. Brannan was an Alderman on Surfside council in the 1980’s

Brannan created false HUD-1 settlement forms (standard form in the US that lists fees and charges to the borrower in the purchase of real estate) and title documents that purported to show the sale of three of his properties to his children at grossly inflated prices. He then used these forms as comparable sales that appraisers relied upon in over-valuing the rest of Brannan’s beach home properties. He sold these properties at inflated prices.

Brannan sold 10 homes in the Freeport/Surfside area to straw buyers at two to three times the real appraised values. Other co-conspirators (to whom Brannan paid $2.4 million) recruited straw buyers who created loan applications with with fake information.  As a result, Wells Fargo and others were induced to lend the inflated amounts. All the straw buyers defaulted on the mortgages and all 10 properties ended up in foreclosure.

The scheme ran from 2005 to 2009. The lenders lost $5.3 million in the scheme. Brannan was ordered to pay this amount in restitution.

Brannan pleaded guilty in 2018. He was sentenced to 36 months. Two other co-conspirators have also been sentenced for similar terms. A third will be sentenced later this month.

Houston added 93,000 jobs in the past year

The Federal Reserve Bank of Dallas published its monthly economic outlook for Houston. Highlights were;

  • Houston employment grew 3.8% over the three months ending in August. Biggest gains were in Construction (13,600 jobs) and education and health services (5,600). Last month’s figure was 2.7%.
  • Year-over-year job growth increased to 3.1% in August (93,000). Last month the figure was 2.7%.
  • Houston unemployment rate dropped to 4.2% in August. The Texas and US unemployment rates were both 3.9%.
  • The outstanding value of loans at banks headquartered in Houston grew at 11.6% from the 2nd quarter of 2017 to the 2nd quarter of 2018. This is slightly lower than the 1st quarter figure of 13.6% but well ahead of the US lending growth of 4.3%.

The Feds conclude that the overall outlook remains positive. Houston’s economy continues to grow at a healthy pace despite signs of a slowdown in its core energy-related sectors.

Separately, JLL reported that the total office vacancy rate for Houston declined for the first time since Q4 2014. The vacancy rate dropped from 24.5% in Q2 to 24.2% in Q3, primarily due to new leasing activity in west Houston.

Houston retailer may file for bankruptcy

Source: Social Woodlands

Houston-based Mattress Firm may file for bankruptcy, according to this article in Reuters.

The company is seeking to get out of costly store leases and shut some of its 3,200 locations that are losing money. The company is working with AlixPartners, a restructuring firm.

Mattress Firm was publicly-traded until it was acquired by Steinhoff, a South African company for $3.8 billion in 2016. Back in December, the shares of the parent company plunged 80% as it disclosed accounting irregularities in its European operations.

According to the unaudited half-year results through March 2018 that were filed at the end of June,  the parent company wrote off nearly $13 billion in shareholders’ equity and admitted that €3 billion of cash reported the previous year either didn’t exist or shouldn’t have been consolidated.

Although Mattress Firm wasn’t part of this accounting shenanigans, the inflated purchase price that Steinhoff paid for the business added to the pressures. The same half-yearly results paint a grim picture for Mattress Firm. For the 6 months ended March 2018, the revenues of Mattress Firm were €1.26 billion (approx $1.5 billion), down 17% on the corresponding period. The EBITDA loss increased from €33 million to €94 million in the period to March 2018.

In early 2017 Mattress Firm had a spectacular and litigious fall out with Tempur Sealy, a supplier of many of the products in the stores, that clearly impacted revenues. This caused a €1.5 billion write-off of goodwill in 2017, one year after acquisition. Surprisingly, Steinhoff still carries €1 billion of goodwill on its books for Mattress Firm, despite the EBITDA losses.

Mattress Firm CEO  Ken Murphy, appointed in March 2016, stepped down in January, to be replaced by Steve Stagner, who was CEO between 2010 and 2016.

In November 2017 Mattress Firm sued two former real estate employees and a former broker with Colliers International claiming they defrauded the company of tens of millions of dollars by signing store leases at above-market prices. The defendants were responsible for the leases for about 1,500 of the new stores. The defendants have counter-sued, claiming Mr Stagner and Mr Murphy knew about the above-market rate deals.

Just before Mr Murphy resigned, in a bizarre move, he denied conspiracy theory allegations that surfaced on Reddit that Mattress Firm was a giant money laundering scheme! More revealing is this article that appeared in the lifestyle section of the Houston Chronicle in September 2016.

The aching loneliness of the Houston mattress salesman – Houston Chronicle

My December blog entry on the Steinhoff accounting irregularities