Targeting Russian-Owned Luxury Property May Be More Effective In Theory
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Targeting Russian-Owned Luxury Property May Be More Effective In Theory

“Freezing assets is one thing, actually seizing and auctioning off a property is another.”

By Virginia K. Smith
Tue, Mar 15, 2022 11:35amGrey Clock 5 min

Russia has faced widespread global censure since its invasion of Ukraine, but as the U.S. and NATO continue to resist active involvement in the form of a no-fly zone, conflict is instead being waged via economic sanctions that have thus far devastated the value of the ruble as well as Russian stocks. On Friday, U.S. President Biden announced a ban on Russian imports including diamonds, vodka, and seafood.

These sanctions have extended to some individual Russians, as well, including the high-profile seizure of yachts belonging to Russian oligarchs, and new legislation in the U.K. that will force offshore entities that own properties in Britain to identify themselves. Stateside, the Biden administration has announced sanctions on a short list of Russian elites described as “Putin’s cronies and family members,” a process that involves freezing their assets in the U.S., including property, meaning they are unable to sell it.

“The U.S. luxury real estate market has typically attracted investments from high-net-worth individuals worldwide,” said Mickey Alam Khan, New York-based president of Luxury Portfolio International. “New York and Miami [are] where Russian oligarchs have parked their capital, especially in condos and new developments through their LLCs.”

In New York specifically, local politicians are exploring further legislation to put pressure on the assets of Russian oligarchs, and New York City Mayor Eric Adams has vowed to assist the Biden administration with any planned crackdowns on Russian-owned luxury properties.

High-profile Russians with strong ties to President Vladimir Putin own a handful of marquee, well-publicized properties in New York City, including three Upper East Side properties worth a combined total of more than $91 million formerly owned by Roman Abramovich, who transferred ownership to his ex-wife Dasha Zhukova in 2017 in advance of a new round of sanctions, the New York Post reports.

Seizing property from Russian oligarchs may appeal to foreign policy hawks and local housing advocates alike, but the reality of the process is far from simple.

“Initially, the [U.S.] government can only freeze the asset,” said Michael Romer, co-founder and managing partner of New York-based law firm Romer Debbas LLP. When the government freezes an asset, “It’s sort of on hold, it’s in limbo,” Mr. Romer said. “[The owner] really can’t use it, can’t enjoy it, can’t sell it, can’t lease it, can’t mortgage it. It’s in this state of limbo where it will make it really uncomfortable for the owner.”

In order to actually seize a property (as opposed to simply freezing it), Mr. Romer said, “The government would have to establish that the property or funds used to purchase the property were associated with a criminal act. What the end result of this would likely be if real estate is frozen in the U.S. is that it would end up in litigation for years.”

“Freezing the assets is one thing, actually seizing them and potentially auctioning off a property down the road, that’s another,” Mr. Romer continued. Among the numerous complications that could arise from potential freezing or seizure of U.S. properties from Russian owners, Mr. Romer said, is the question of who is responsible for paying common charges when a condo asset is frozen; whether the government will target properties owned by relatives or children of certain individuals; and how broadly the government can or should target individuals based on nationality without running afoul of fair housing laws.

Similar complications are likely to arise in the U.K. market, as well.

“A lot of these properties are [owned by] a web of companies or offshore vehicles,” said Mark Pollack, co-founding director at London-based luxury real estate agency Aston Chase. “I suppose they can be unraveled, but it will inevitably take time. And when you’re talking about £40 million [US$52.2 million] or £50 million properties, [those owners] are going to have the best legal representation, they’re not going to go without a fight.”

In the short term, Mr. Pollack’s firm has had “a couple transactions which have been paused or aborted as a result of the sanctions.” While the buyers in question were not on any watch lists, “I think anyone with a Russian nationality at the moment is very concerned that any sanctions could be far reaching and not necessarily exclusively affecting the people they’re intended to affect. The tendency is to try to stay on the side of liquidity.”

In New York, some Russian luxury property owners are quietly considering selling their properties, also in the interest of liquidity.

“So far, there are two active listings that came on [in recent weeks], one $50 million apartment and one $41 million apartment,” Victoria Shtainer, a Ukrainian-born Compass agent in New York City, said last week. “With the ruble being worth less than a cent, this is an asset they have that they feel they could unload and send that money to Switzerland. For any asset right now in New York, now is a good time to sell, and [property] is like one of their diamonds that is easy to liquidate.”

Though there have been a few recent inquiries from luxury buyers hoping to scoop up New York City properties that Russian owners might be rushing onto the market, Ms. Shtainer said, the broader effect of sanctions on the property market may be smaller than on the handful of ultra-high-end trophy homes owned by oligarchs.

According to data compiled by the National Association of Realtors last week, Russian buyers accounted for less than 1% of all foreign buyers of U.S. residential property between April 2015 and March 2021, and the median purchase price among Russian buyers was $325,000. However, the average purchase price for Russian buyers was $652,915, compared to $480,695 for all foreign buyers, indicating a higher percentage of high-end deals done by Russian purchasers.

Previous sanctions enacted during the Obama administration—most notably in 2014 following Russia’s invasion of Crimea, a Ukrainian territory—had long since slowed the influx of Russian buyers into the New York market, Ms. Shtainer said. “They’re a very small proportion of [the city’s international] buyers.”

According to a recent report from Aston Chase, North West London has become a hot spot for Russian buyers, who collectively own £8 billion worth of real estate assets, businesses and other investments in the U.K.

“The real likelihood is that even if they want to transact, they probably won’t be able to for some time until this has all unravelled and legal ramifications are properly resolved and sanctions are lifted or more specifically targeted to individuals,” Mr. Pollack said. “I don’t think there’s going to be a huge impact on our market because in that space [for properties between £5 million and £15 million], there are a lot of buyers.”

New York City is a similarly frothy environment for luxury listings and is on pace to outperform white-hot 2021, according to recent market reports.

Beyond individual properties, broader economic sanctions may already be removing some would-be Russian buyers from the U.S. market.

“People who are living here but still have businesses in Russia have put deposits on new developments in New York and Florida that will be closing in the fall,” Ms. Shtainer said. “If their income stream has stopped and the ruble is down, how can they close? That’s something we should be watching.”

And as for the ultra-wealthy buyers, “Russian oligarchs will now continue looking to buy into friendly regions,” Mr. Khan said. “That means Dubai in the U.A.E. will benefit as Russians move their money across friendlier markets.”

Since Russia’s invasion of Ukraine began in late February, 2.8 million refugees have fled Ukraine and Reuters estimates that total casualties in the conflict have reached 15,000, including heavy losses of Ukrainian civilians. On Monday, Russia and Ukraine met for a new round of talks that have been put on a “technical pause” until Tuesday.


Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication:  March 14, 2022.


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They Were About to Move In When the Ocean Almost Washed Away Their New Home

Gail and Ron Fink’s property in Jupiter Inlet Colony sustained major damage during an unusually windy day. ‘The whole backyard is shot. All the landscaping is gone.’

Fri, Feb 23, 2024 8 min

Gail and Ron Fink weren’t home the day the ocean swallowed their backyard.

The Florida couple, who are in their 70s, were a few miles away on Feb. 6—an unusually blustery day in the Sunshine State—as waves pounded their beachfront property in Jupiter Inlet Colony, sweeping sand, dirt and trees out to sea. When it was all over, the Finks’ newly-built, roughly 10,000-square-foot home was intact; so too was their free-form swimming pool, improbably balanced on exposed concrete-and-steel pilings.

“That’s what saved the whole thing,” said Ron, founder of an air- and-water purification company. “The pilings are holding up the house and pool.”

Gail and Ron Fink recently finished building a roughly 10,000-square-foot home. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Drone footage and pictures from local photographers and the Finks’ builder show the severity of the destruction, which left their pool suspended in the air, with pipes protruding from the earth. Town officials said erosion claimed 7 to 10 feet of sand and created steep drop-offs in front of about half-dozen homes, including one belonging to Kid Rock , the rapper-turned-country rocker, who paid $3.2 million for the property in 2012. Conair heiress Babe Rizzuto also sustained damage to her property down the street, which she bought for $6.3 million in 2015 and currently has listed for $22.5 million, according to Zillow.  Neither responded to requests for comment.

But the Finks house, located just past the end of a granite revetment wall—a kind of sea wall—bore the brunt of the heavy wind and waves.


“The whole backyard is shot. All the landscaping is gone,” said Ron. Also gone are fully matured Palm trees and an ipe-wood deck. “It’s out floating in the ocean someplace.” Ron is self-insured and the repair work will be quite expensive. undefined

A New Jersey native, Ron is an engineer by training who worked at nuclear-testing sites in California and Nevada before moving to Florida in the 1980s. He is the founder of RGF Environmental Group, which makes air- water-and food-purification systems.

For almost 40 years, the Finks—who have three adult children and eight grandchildren—have lived in Admirals Cove, a gated community in Jupiter about 5 miles from their new house. They paid $180,000 for the Admirals Cove lot in 1987 and built a roughly 6,000-square-foot house, Ron said. The Finks also own homes in the Cayman Islands and Bahamas.

Until now, the Finks have lived in Admirals Cove, about 5 miles from their new house. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Ron said they began looking for property in Jupiter Inlet Cove years ago. “It’s a neat place, just a closed little colony right on the ocean, low key and quiet,” he said.

About 20 miles north of Palm Beach, Jupiter Inlet Colony is at the southern tip of Jupiter Island. The town, founded around 1959, has approximately 240 homes and is surrounded on three sides by water—the Atlantic Ocean, Jupiter Inlet and the Intracoastal Waterway. Long a destination for wealthy homeowners, homes in Jupiter Inlet Colony tend to trade for between $2 million and $5 million, although one sold for $18.6 million in January, according to real-estate brokerage Redfin. Last year, a home on the Intracoastal sold for $21.4 million, a record for the town.

In 2020, the Finks paid $4.9 million for a vacant beachfront lot and subsequently built a coastal-style house with a copper-and shake-style roof, covered loggia, pool and outdoor fire pit. “You know, it’s kind of a dream home,” Ron said. “We have built quite a few homes, but this is the end of the line for us, hopefully the last one.”

He said the property originally belonged to the singer Perry Como, one of the town’s first residents. A prior owner demolished Como’s house, and when the Finks bought it, there were concrete-and-steel pilings sticking out of the ground.

Ron Fink said he never removed about 60 pilings, he simply added roughly 30 more. “Now I’m glad I did,” he said. (Pilings are based on the design of a house, so Ron retained some pilings that he didn’t necessarily need.)

John Melhorn of design-build firm Thomas Melhorn, which built the house, said the Finks were a final review away from obtaining a certificate of occupancy when the backyard was destroyed. “They were right there at the goal line,” he said.

The Finks’ house and pool are standing on about 90 concrete-and-steel pilings. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Melhorn said the erosion began in late October amid unusually high winds and ocean swell. During the first week of February, sand beneath a row of sea grapes that stabilized the dunes between the house and ocean began to wash away. By the evening of Feb. 6, the plantings disappeared. The yard was gone by the next morning.

Melhorn said a pre-existing, low wall between the ocean and house—described as a cinder-block retaining wall on land surveys—also washed away, as did a walkway and steps to the beach. But he said the 2-foot-high wall was less of a retaining wall and more like a curb between the street and sidewalk. In this case, a prior owner used it to hold sea grapes back from encroaching on the property. The Finks replaced the wall with decorative stone, now lost to the ocean. An outdoor fire pit is still there, cantilevered over the ocean. “We tried to pull as many things out as we saw the erosion coming, but we lost a lot,” Melhorn said.

In Florida, erosion is increasing because of more frequent, more severe storms and sea-level rise, said Cheryl Hapke, a research professor at the University of South Florida and the chair of the Florida Coastal Mapping Program. But she said it isn’t just hurricane-level storms that cause major damage. “One thing I have found about barrier islands [like Jupiter Inlet Colony] is that sometimes a series of smaller events can have as big an impact as a major hurricane,” she said. “But people get caught off guard. It’s something they don’t think of.”

In Jupiter Inlet Colony, longtime residents said this month’s erosion is the worst the area has seen in years, possibly ever.

Mayor Ed Hocevar, who has lived there for 17 years, said it has been a particularly cool and challenging winter with an abnormal number of Nor’easters. On Feb. 6, local news channels warned of high winds, with gusts between 40 and 50 miles an hour. (There were also reports of an earthquake off the coast that week, causing high waves.)

Since the 1980s, Jupiter Inlet Colony has had a granite rock revetment wall that extends from the northern end of the community past 11 oceanfront homes. “But we’ve got 28 homes along the beachfront, so it isn’t complete,” Hocevar said. “Where the wall ended is where the significant damage occurred.” Hocevar said he doesn’t know why the wall wasn’t completed, although local lore is that homeowners building the wall ran out of money.

Last week, the town hired a local mining company to bring in 7,000 tons of sand to replace what washed away. Hocevar said it would cost about $500,000, which will come out of the town’s reserve fund. Long term, he said, extending the revetment wall isn’t a strong possibility.

Hapke, the coastal geology expert, said that in recent decades, sea walls and hardened structures have fallen out of favor as scientists discovered they are detrimental to the environment around them. “Storm water wants to flow, so it will redirect water to the area without a sea wall,” she said, adding that the most ideal long-term solution is to move homes away from the coastline.


Hocevar, 67, who has been mayor of Jupiter Inlet Colony for about a month, said the town is working closely with the Department of Environmental Protection on its response. He said the DEP’s recommendation, should erosion like this occur again, is to bring in more sand. Hocevar emphasised that the community is rallying together. “Think about it as a fortress and your wall has been breached,” he said. “You want to protect your neighbourhood and that’s what we’re trying to do here.”

Holly Meyer Lucas of Compass, who represented the seller when the Finks purchased their property, said Jupiter Inlet Colony is a “special little enclave” where sales exploded during Covid. “Listings sell after a day or sell off-market,” she said.

Lucas said the consensus among local real-estate agents is that property values will hold, despite the erosion. “I think this is a really rare, weird, fluky event,” she said. “I’ve sold everywhere up and down the coast and I’ve never heard of anything like this.”

The couple were close to getting their certificate of occupancy for the newly-built home. PHOTO: JAMES JACKMAN FOR THE WALL STREET JOURNAL

Babe Rizzuto, whose house is two doors down from the Finks, listed her house for $24.5 million in December 2023 and cut the price to $22.5 million on Feb. 6, according to Zillow.

“She’s going to continue to sell,” said Milla Russo of Illustrated Properties, who is marketing the property with her husband, Andrew Russo. “Even though the timing isn’t great, it is what it is.”

Russo said there has been erosion in the past, and during hurricanes residents of Jupiter Inlet Colony are the first in the area to evacuate. But in general, people are not preoccupied with the weather. “Maybe because we live here, when the hurricanes come, we all have hurricane parties. We go to people’s homes and we barbecue and grill. Of course we’re careful and we lock up and all that, but weather is weather,” she said. “We’ve never been terribly scared.”

(The Russos were also involved in selling the Fink property. However, in 2020 the closing agent on the deal, Florida-based Eavenson, Fraser & Lunsford, PLLC, sued Milla Russo and Illustrated Properties as part of a commission dispute. The seller, Michael Cantor’s Range Road Developers, was named as a defendant and cross-plaintiff in the suit, in which a judge ruled in favor of Eavenson, court records show. Milla Russo declined to comment on the suit. Eavenson declined to comment beyond the judge’s findings and Cantor did not respond to requests for comment.)

Ron was also matter-of-fact about the state of beachfront living. Bring a life jacket, he jokingly told a photographer who inquired last week about taking his picture.

However, the Finks are facing weeks of costly repairs. Although the town is bringing in sand to replace the decimated beachfront, the couple is self-insured and will be on the hook for the cost of rebuilding. Several major home insurers have pulled out of Florida, and Ron said insurance on the house would have cost $100,000 a year. Now, he estimated they could face about $1 million worth of repair work. “We gotta eat it,” he said.

The couple, who was supposed to move into the house this month, has put those plans on hold—for now. An engineer recently inspected the property and deemed the house safe, Ron said. “We’re doing wallpaper today,” he said. “We can put it back together again.” The patio and pool area, meanwhile, are roped off while the area underneath is backfilled with sand.

Ron said being near the ocean makes it worthwhile. “I just love the ocean, we both do. It’s important to us,” he said. “It isn’t easy to look at, but I’ve been through a lot worse.”


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