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Jean-Michel Basquiat’s “Untitled” (1982)

Consigned by Lise Spiegel Wilks, the daughter of Jerry Spiegel, a real estate developer of Kings Point, N.Y., and his wife Emily, who as collectors of works by emerging artists bought the work in 1984 for $19,000, Jean-Michel Basquiat’s “Untitled” (1982, acrylic, spray paint and oil stick on canvas) was offered at auction by Sotheby’s on May 18, 2017 with a guaranteed price of at least $60 million.

The painting was purchased for $110,487, 500 (hammer price with buyer’s premium) by Yusaku Maezawa.

Yusaku Maezawa, 41, is the founder of Contemporary Art Foundation and of of Japan’s large online fashion mall, Zozotown.

Passionate about the works of Jean-Michel Basquiat, Mr. Maezawa acquired “Untitled” for a museum that he is planning for his hometown of Chiba, Japan.

“But before then I wish to loan this piece — which has been unseen by the public for more than 30 years — to institutions and exhibitions around the world, I hope it brings as much joy to others as it does to me, and that this masterpiece by the 21-year-old Basquiat inspires our future generations.”

Yusaku Maezawa

See:

“Untitled” | Jean-Michel Basquiat, 1982, acrylic, spray paint and oil stick on canvas

“A Basquiat Sells for “Mind-Blowing” $110.5 Million at Auction” | Robin Pogrebin & Scott Reyburn, The New York Times, 18 May 2017

“How Basquiat Became the $60 Million Man” | Robin Pogrebin & Scott Reyburn, The New York Times, 17 May 2017

“Sibling Rivalry Erupts Into $160 Million Art Auction Showdown” | Katya Kazakina, Bloomberg, 10 May 2017

“Monumental Basquiat Leads Contemporary Art Evening Sale” | Sotheby’s, 18 April 2017

#JeanMichelBasquiat #Basquiet #artmarket #YusakuMaezawa #JerryandEmilySpiegel #LiseSpiegelWilks #Sotheby’s #GabrielaPalmieri #AlexRotter

 

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art storage & protection @ $1+ billion globally

The global art market generated sales of about $65 billion in 2016 according to the TEFAF Art Market Report 2017.

The growing, global network of facilities to store art now generates revenues of over $1 billion a year. Many of these spaces serve multiple objectives – including security, environmental protections, and trade: Sto

  • security
    • video surveillance
    • retinal scanning
  • space | collectors have too much to keep at home
  • protection
    • climate-controlled environments
    • fire-resistant walls
    • air-filtration
    • flood control
    • LEED and BREEAM building certifications
  • investment purchases
  • tax benefits
  • tax-suspended transport to and from galleries | as long as works of art return to storage no duty is payable, even if ownership of the art has changed
  • “1031 exchange” friendly
  • gallery inventory between shows and art fairs
  • storage of art taken by banks as collateral against loans
  • viewing rooms that can be rented on a more permanent basis | in-house, private sales and transfers of ownership
  • passport free access (freeports within airport perimeters)

Simon Hornby, the president of Crozier Fine Arts, estimates that 80% or even more of all the world’s art is in storage at any one time.

The art storage business has doubled in size in eight years and continues to grow.

“Until about ten years ago, Modern and contemporary art collectors were mainly made up of art enthusiasts and amateurs, they had a real passion, spending their money on what they liked; they collected in order to simply enjoy the work in their home environment. Today you have to work with an increasing number of art funds or speculators buying art for investment. Art buying has become accessible to a much larger audience than before and is considered an asset. The result of this is that more work sleeps in warehouses rather than hanging in collectors’ homes.”

Stephane Custot, Waddington Custot Gallery, London

“In the last year, I only physically saw one piece of art that I negotiated. Everything else was bought and sold via jpegs and remained in storage. It was all for investment.”

New York dealer and appraiser

In order to protect the assets, moreover, built environment investment is attempting to keep up with the evolution of demand, including security and environmental protections.

A state-of-the-art storage facility with “foreign trade zone” (FTZ) status (a freeport), ARCIS Fine Art & Collection Care, is under construction on Manhattan’s West 146th Street. Developed by Cayre Equities, the project has taken two years and over $40 million. Executive Director Tom Sapienza and Tom Lay, both formerly with Crozier Fine Arts, were recruited by art collector, real estate developer, and Crozier founder Ken Cayre to manage the project.

The five-story, 110,000 square foot is scheduled to open next month (July 2017).  ARCIS is Latin for “fortress”. The facility is designed and engineered to provide and enhance both environmental and security protections.

With the objective of constructing a museum-quality, sustainable, state-of-the-art secure building, Sapienza and Lay took crash courses in thermal dynamics and consulted with the professional services branch of the Van Gogh Museum in Amsterdam. Works of art will be scanned as they move through the building. State-of-the-art air filters are installed; air will change three to six times an hour.  LEED and BREEAM certifications are to be achieved for the building.

See:

“TEFAF’s 2017 Art Market Report” | Marion Maneker, Art Market Monitor, 6 March 2017

“TEFAF Art Market Report 2017” | Prof. Dr. Rachel A.J. Pownall, TEFAF Chair in Art Markets, The European Fine Art Foundation, March 2017

“Where does all the art go after a fair?” | Georgina Adam, The Art Newspaper, 16 June 2017

“Picasso Finds Possible Digs in Harlem $2.5 Billion Art Port” | Katya Kazakina, Bloomberg, 2 March 2017

“Will New York Get Its Own Freeport for Art? ARCIS Plans a Tax Haven in Harlem” | Eileen Kinsella, Artnet, 2 March 2017

“One of the World’s Greatest Art Collections Hides Behind This Fence” | Graham Bowley & Doreen Carvajal, The New York Times, 28 May 2016

“About Foreign-Trade Zones and Contact Info” | U.S. Customs and Border Protection, U.S. Department of Homeland Security

#realestate #resilience #smartluxury #art #LEED #BREEAM #finance #investments #artcollections #artmarket #VanGoghMuseum #museums

 

 

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climate risk, credit, bonds, & real estate: AAA is AAA? … or, move to high ground

For more than a century, rating companies have published information helping investors gauge the likelihood that companies and governments will be able to pay back the money they borrow. Investors use those ratings to decide which bonds to buy and gauge the risk of their portfolio. For most of that time, the determinants of creditworthiness were fairly constant, including revenue, debt levels and financial management. And municipal defaults are rare: Moody’s reports fewer than 100 defaults by municipal borrowers it rated between 1970 and 2014.

Climate change introduces a new risk, especially for coastal cities, as storms and floods increase in frequency and intensity, threatening to destroy property and push out residents. That, in turn, can reduce economic activity and tax revenue. Rising seas exacerbate those threats and pose new ones, as expensive property along the water becomes more costly to protect — and, in some cases, may get swallowed up by the ocean and disappear from the property-tax rolls entirely.

When asked by Bloomberg, none of the big three bond raters could cite an example of climate risk affecting the rating of a city’s bonds.

This is climate risk: risk to fundamental variables such as economic activity, property values, and tax bases caused by natural factors (such as storms and floods)  that may be exacerbated by our changing climate.

Climate risk has yet to be fully and sytematically incorporated into investigations into municipal creditworthiness.

Will your municipality will be be able to make timely and full payments on its then current debt load after a storm or flood, or repeated storms or floods, negatively influences economic activity?

What happens when the storms or floods are so severe that they “wipe out the taxation ability? I think this is a real risk” observes Bob Buhr, a former vice president at Moody’s who recently retired as a director at Societe Generale SA.

Predictions are imperfect, especially about the future; no one, no algorithm, no model can perfectly predict the future. The pace of climate change remains uncertain. What climate change, and concomitant effects on communities, community tax revenues, and the likelihood of any community being able to pay back bonds “is not a simple calculation.”

To date, the major ratings agencies are not asking questions about the expected effect of climate change on the economic activity and future tax revenues of US municipalities that look to “cheap money” (municipal bonds) to finance government.

Last September, when Hilton Head Island in South Carolina issued bonds that mature over 20 years, Moody’s gave the debt a triple-A rating. In January 2016, all three major bond companies gave triple-A ratings to long-term bonds issued by the city of Virginia Beach, which the U.S. Navy has said faces severe threats from climate change.

Investors, including 117 investors with $19 trillion in assets, say it would be prudent to include “systematic and transparent consideration” of environmental and other factors in order to identify systemic ESG risks in debt capital markets.

In other words, bond buyers should be warned. If storms and floods decrease property values and tax revenues while increasing spending on mitigating infrastructure such as sea walls, storm drains and flood-resistant buildings, pay back to bond buyers may be impacted.

Property owners – both residential and commercial – might take note.

Should your municipality meet a storm or flood that significantly impacts economic activity and the ability to collect tax revenues, it might be stressed and its ability to make scheduled payments on its municipal debt obligations might be impacted.

This will influence the municipality’s credit. If the credit is downgraded, the municipality will have to pay greater interest on its debt. To pay higher interest, it will have to collect more tax revenues. That means greater economic activity and/or higher taxes.

And/or, the municipality might have to reduce services. Municipal services include physical infrastructure (such as roads, bridges, water) and civic benefits such as fire departments and schools.

If such services are reduced, how prepared are you in your private capacity to initiate efforts and implement necessary steps towards the robust resilience (basically the ability to bounce back after a shock  or multiple shocks to the system) and operability of your real estate holdings (residential, commercial, …)?

Do you have the means (financial, intellectual, technical, etc.) and the time to “do it yourself” (e.g., water, energy, transportation)? How do you use your real estate holdings? How long do you expect to own them? What are your expectations of resale value?

Moving to high ground might help manage the risk.

Food for thought.

See:

“Rising Seas May Wipe Out These Jersey Towns, But They’re Still Rated AAA” | Christopher Flavelle, Bloomberg, 25 May 2017

“Credit ratings agencies embrace more systemic consideration of ESG” | PRI, Principles for Responsible Investment, 26 May 2016

#climatechange #climaterisk #creditrisk #risk #finance #municipalfinance #bonds #credit #realestate #resilience #luxury #smartluxury #urbanluxury

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Amazon expanding into physical stores, agrees to acquire Whole Foods Market

Amazon announced today that it has agreed to purchase Whole Foods Market.

Amazon (NASDAQ:AMZN) and Whole Foods Market, Inc. (NASDAQ:WFM) today announced that they have entered into a definitive merger agreement under which Amazon will acquire Whole Foods Market for $42 per share in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market’s net debt.

Amazon to Acquire Whole Foods Market, BusinessWire, 16 June 2017

The New York Times reports that Amazon wishes to expand beyond online retail into physical stores.

The company is experimenting with physical stores. The Atlantic reports that “Amazon needs food and urban real estate.” The company has opened a small chain of book stores across the country. In Seattle, Amazon has opened two drive-through grocery pickup locations;  customers order their items online.

With Whole Foods, Amazon will acquire more than 460 stores in the United States, Canada and Britain.

“’The Whole Foods acquisition provides them more physical locations. They’re going to be within an hour or 30 minutes of as many people as possible.’”

Mikey Vu, partner (retail), Bain & Company

Whole Foods’ urban and suburban locations are extremely valuable for Amazon’s delivery business.

“’Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.’”

Dennis Berman, financial editor, the Wall Street Journal, via Twitter

Whole Foods, The Atlantic reports, “needs help.” While Whole Food Market sales were approximately $16 billion in the 2016 fiscal year and while the United States grocery industry produces approximately $700 to $800 billion in annual sales, the grocery business is low-margin. Whole Foods revenue growth has fallen every year since 2012. Whole Foods investors have been encouraging the company to sell itself to a larger grocer like Kroger.

Under the terms of the proposed deal, Amazon would pay $42 a share for Whole Foods, a 27 percent premium to Thursday’s closing price.

Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions. The parties expect to close the transaction during the second half of 2017.

Amazon to Acquire Whole Foods Market, BusinessWire, 16 June 2017

Whole Foods was founded in 1978 in Austin, Texas.

See:

“Amazon to Buy Whole Foods in $13.4 Billion Deal” | Michael J. de la Merced & Nick Wingfield, The New York Times, 16 June 2017

“Amazon to Acquire Whole Foods Market” | BusinessWire, 16 June 2017

“Why Amazon Bought Whole Foods” | Derek Thompson, The Atlantic, 16 June 2017

#Amazon #WholeFoods #WholeFoodsMarket #organic #retail #groceries #grocery #food #smartluxury #urbanluxury #urbanliving #realestate #resilience

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climate change as opportunity・developing economic value through investments in resilience

From a Dutch mind-set, climate change is neither a hypothetical , nor a drag on the economy, nor an ideology. For the people of the Netherlands climate change is an opportunity – to let water in, where possible, to live with water rather than struggle to defeat it – with added economic value developed through investing in resilience.

People in the Netherlands believe that the places with the most people and the most to lose economically should get the most protection.

To the Dutch, what’s truly incomprehensible is New York after Hurricane Sandy, where too little has been done to prepare for the next disaster.

The idea that a global economic hub like Lower Manhattan flooded during Hurricane Sandy, costing the public billions of dollars, yet still has so few protections, dumbfounds climate experts in the Netherlands.

See:

“The Dutch Have Solutions to Rising Seas. The World is Watching” | Michael Kimmelman, The New York Times, 15 June 2017

#climatechange #realestate #resilience #Rotterdam #investments #economicvalue

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Apple issues second green bond, a $1 billion bond to finance renewable energy & closed-loop supply chain

Yesterday Apple issued its second “green bond”, a $1 billion bond dedicated to financing renewable energy, energy efficiency at Apple facilities and throughout its supply change, to close its supply chain loop, and procure safer materials for its products. 

The bond offering includes a specific focus on helping Apple meet a goal of

  • developing a closed-loop supply chain and
  • using only renewable resources or recycled material in the manufacture of its products.

The bond is to mature in 2027 and will yield 95 to 100 basis points more than Treasuries. Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co. arranged the sale.

Investors are seeking lower-carbon investments. Demand for green bonds is growing significantly.

According to the Climate Bonds Initiative, in 2016 $81 billion of green bonds were issued. This is double the number of green bonds that were issued in 2015.

See:

“Apple Issues a Second Green Bond to Finance Clean Energy” | Alex Webb, Bloomberg, 13 June 2017

“Apple issues $1 billion green bond after Trump’s Paris climate exit” | by Valerie Volcovici, Reuters, 13 June 2017

Climate Bonds Initiative | “Climate Bonds Initiative is an international, investor-focused not-for-profit. We’re the only organisation working solely on mobilising the $100 trillion bond market for climate change solutions.”

#Apple #finance #greenbond #GoldmanSachs #BankofAmerica #JPMorganChase #renewableenergy #cleanenergy #investments #bondmarket #climatechange #climatechangesolutions

 

 

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Lévy Gorvy’s Brett Gorvy speaks

Lévy Gorvy, the gallery

What we do see ourselves as is a boutique, a haute-couture gallery that ultimately adapts itself and takes advantage of market changes and opportunities but is very sustained and has growth over a longer period of time.

It’s incredibly important to Dominique and myself that we are an individual company. We’ve committed ourselves financially to this project with the understanding that we can work with any business partner where it will be mutually beneficial, with no conflict of interest.

It will also be about painting, because what we really responded to in Dan’s studio is that he’s returning to his roots in a way that’s very much to our own tastes, where it’s less about the conceptual pieces and more about just really beautiful painting.

The only way these kinds of shows can be feasible is if you have a financial commitment and also a focus, which is how this kind of gallery works. Here I mean less from a purely curatorial aspect, and more curatorial in that it’s highly focused on our client base from a business point of view, and on the art-collecting sphere we feel very close to.

Auction background

Working at an auction house is a phenomenal training, obviously—you have access to great art, you have access to an amazing group of collectors who become your friends, and you learn how to work as a team, which is incredibly important within this environment. But you also learn ultimately how to understand the valuation of works of art and price them.

… because of our strong auction background, we have very close ties with now all three auction houses. That gives us an understanding of how markets work and how values work, because we can dissect the results of the auctions at all three houses and know exactly what happened.

Art fairs

If you look at how an art fair can ultimately change, communication will be a large part of it. … So now they’re going to have to get to the fair in the first half hour, because that’s when these things happen. … The key is to get someone as committed as they would be to an auction picture, to the point where the only thing they need to do is see it physically, which is obviously a crucial part.

Asia

I’ve done a lot of work in Asia over the years, and we want to continue our position there. We believe very firmly in the strength of the market there, not just in China but all over Asia, and, having worked there, you know all of the nuances, and who are the people to deal with.

So, from our point of view, Hong Kong is where we’ll have the best access to the top collectors who we can ultimately develop. One of the most exciting aspects about Asia is that the learning curve of Asian collectors is phenomenal. I’ve never come across that speed of understanding markets and artists and desiring to learn more and read more.

And in Hong Kong too—we really need an office in Hong Kong in order to function, because a lot of clients want to have a base outside of mainland China, either because they want to have their assets outside of the mainland or because they prefer that way of buying. It’s like with a lot of West Coast collectors in America—they prefer to come to New York to buy, even if it’s from a dealer who has a gallery out on the West Coast. People buy more when they’re traveling.

See:

“Former Christie’s Rainmaker Brett Gorvy on How He’s Creating a New Power Center in the Gallery World” | Andrew Goldstein, Artnet, 12 June 2017

#art #artmarket #LévyGorvy #DominiqueLévy #BrettGorvy #collectors #collections #Asia #HongKong #Christie’s #Sotheby’s

 

 

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Downtown San Diego | early morning vistas

Early morning vistas.

San Diego is, indeed, beautiful and has what is widely acknowledged as one of the best, if not the best, micro-climate in the United States. Very Mediterranean.

Why “tech”, that I appear to mention so often and that is taking root in the downtown San Diego economic eco-system?

“Tech,” in my mind, is no more than information gathering, processing, analyzing, reporting, and using, with certain questions asked (by people), the questions usually having to do with certain industries (art, finance, transport, design, building and construction, chemistry, physics, aerospace engineering, entertainment, etc.).

Sort of like groups of individual Marines gathering, processing and using information, on steroids.

Why pay attention to tech in downtown San Diego? Some of these companies have just appeared downtown, willy nilly, not according to the city plan. People in the tech industry generally speaking make more money than those working in the hospitality industry (housekeeping, serving tables, etc.). It is money generated here rather than earned elsewhere and brought here by visitors, tourists, and buyers of second or third homes.

 

#SanDiego #downtownSanDiego #realestate #resilience #art #tech #technology #finance #urbanliving #urbanluxury

 

 

 

 

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a ‘mainstream’ approach to ESG | finding the “metrics that matter”

Goldman Sachs highlights “the metrics that matter, a ‘mainstream’ approach to ESG.”

Seeking to identify companies with long-term growth potential, Derek Bingham of Goldman Sachs Research’s GS SUSTAIN team and his colleagues study which sustainability measures most closely align with returns over time.

Investors can improve their risk analysis and returns, he says, by identifying sustainability metrics that offer hard data (e.g., resource efficiency for a metals company, employee turnover for an investment bank) that correlate with a company’s long-term stock performance.

There is an opportunity for portfolio managers to identify which ESG metrics matter most and invest accordingly.

Bingham recommends a “holistic view” and discourages the “silo” effect.

Listen to the Goldman Sachs podcast Episode 63: The Metrics that Matter – A ‘Mainstream’ Approach to ESG”

#GoldmanSachs #ESG #riskanalysis #investmentreturns #resilience #data #metrics #finance #longtermgrowth

“Episode 63: The Metrics that Matter – A ‘Mainstream’ Approach to ESG” | Derek Bingham, GS SUSTAIN, Goldman Sachs Research, & Jake Siewert, Global Head of Corporate Communications, Podcast: ‘Exchanges at Goldman Sachs,’ recorded 2 May 2017