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The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains, Reuters reported. The long-awaited rule is expected to require that real estate professionals such as title insurers report the identities of the beneficial owners of companies buying real estate in cash to the Treasury's Financial Crimes Enforcement Network (FinCEN). FinCEN is slated to propose the rule sometime this month, according to its regulatory agenda, though the timeline could slip, said two people briefed on the developments. Anti-corruption advocates and lawmakers have been pushing for the rule, which will replace the current patchwork reporting system. Criminals have for decades anonymously hidden ill-gotten gains in real estate, Treasury Secretary Janet Yellen said in March, adding that as much as $2.3 billion was laundered through U.S. real estate between 2015 and 2020.

WeWork has brought in a slate of new board members experienced in restructuring troubled companies through bankruptcy to succeed three directors who resigned because of disagreements about the company’s governance and strategy, WSJ Pro Bankruptcy reported. The flexible workspace provider, once valued at $47 billion but with a market capitalization today of less than $300 million, said in a securities filing Tuesday that due to business setbacks including weaker-than-expected demand and higher member churn, it has substantial doubt about its ability to continue as a going concern. WeWork also said that board members Daniel Hurwitz, Vivek Ranadivé and Véronique Laury resigned last week due to “a material disagreement regarding board governance and the company’s strategic and tactical direction.” To replace them, WeWork appointed four new independent directors, all of whom have experience steering complex corporate defaults and bankruptcies.

Apartment buildings, long considered a real-estate haven, are emerging as the next major trouble spot in the beleaguered commercial-property world, the Wall Street Journal reported. Investors bid up the prices of multifamily buildings for years, attracted by steadily rising rents and the prospect of outsize returns. Many took on too much debt, expecting they could raise rents fast enough to pay it down. Unlike office buildings and malls, which have been hit hard by remote work and e-commerce, rental apartments have low vacancy rates. The apartment sector’s main problem isn’t a lack of demand — rents have soared since 2020 — it is interest rates. The sudden surge in debt costs last year now threatens to wipe out many multifamily owners across the country. Apartment-building values fell 14% for the year ended in June after rising 25% the previous year, according to data company CoStar. That drop is roughly the same as the fall in office values.

Some of the biggest names in commercial real-estate lending have all but turned off the spigot, the Wall Street Journal reported. Blackstone Mortgage Trust and KKR Real Estate Finance Trust, two of the biggest mortgage real-estate investment trusts, have halted loans to any new borrowers. While these firms continued to provide financing related to existing loans, they didn’t originate any new loans during the first half of this year, according to the companies. Starwood Property Trust, another lender in the sector, has greatly decreased its appetite for new lending in recent quarters, securities filings show. Mortgage REITs, which lend to property owners instead of buying and developing real estate like equity-oriented REITs, typically originate an average of about $10 billion in loans a quarter, according to Jade Rahmani, an analyst at Keefe, Bruyette & Woods. But lately “hardly anyone has made new loans,” he said. Mortgage REITs are pulling back to protect their balance sheets during one of the most troubled commercial real-estate markets in decades. Default rates are rising for all lenders because higher interest rates are making it tougher for many borrowers to refinance and many properties, especially office buildings, are suffering higher vacancy rates. Their shutdown is a clear sign of how much lenders are tightening credit. Total commercial and multifamily mortgage lending is expected to fall to $504 billion this year, a 38% decline from 2022, according to the Mortgage Bankers Association.

A 10-bedroom home in the Southampton, N.Y., compound associated with Canadian art magazine publisher Louise Blouin was placed under chapter 11 bankruptcy protection this week ahead of a scheduled foreclosure auction, WSJ Pro Bankruptcy reported. The mansion is part of the two-home oceanfront compound on Gin Lane known as La Dune. The other home in the complex has already been under chapter 11 since April 2022, according to court documents filed with the U.S. Bankruptcy Court in Central Islip on Long Island, N.Y. Both are owned by entities led by Blouin, according to court papers. The two-home compound on a 4-acre lot has been on and off the market since 2016. The most recent listing price was $150 million, according to the listing website. While the two homes are located in the same complex, they can be sold separately, according to Geoff Gifkins of Nest Seekers International, which is marketing the property. Gifkins said on Friday that while he wasn’t privy to the details of the recent bankruptcy filing, he knew that the property owners have spent a “considerable amount of money over the last year restoring the properties.”

Casco Development filed for bankruptcy on a $539 million luxury condo in Chelsea that never got off the ground, The Real Deal reported. The firm’s Noam Teltch signed the chapter 11 filing as the company looks to sell the debt-ridden, vacant development site at 540 West 21st Street in New York City. Secured and unsecured debt at the property totals $256.7 million, based on an analysis of the bankruptcy filing. Casco is controlled by a foreign real estate investor named Uri Chaitchik, Crain’s reported in 2014 when the firm bought the site from the Atlantic Foundation. The foundation’s John Johnson, an heir to the Johnson & Johnson fortune, reportedly offered to return $2 million to the developers if their project achieved LEED certification.

A bankrupt Holiday Inn in downtown Manhattan can’t use chapter 11 to maintain its low-rate mortgage without paying penalty interest linked to its default, a judge ruled in a setback for borrowers seeking to hold on to more affordable loans as interest rates rise, WSJ Pro Bankruptcy reported. Judge Philip Bentley of the U.S. Bankruptcy Court in Manhattan said in this week’s ruling that Golden Seahorse, owner of the 50-story hotel, should pay the default interest and fees charged by its lenders, totaling about $20 million, if it wants to keep its cheaper mortgage as it leaves chapter 11. The judge, however, said that Golden Seahorse can return to his court to argue that its defaults should be excused because under New York state law, the COVID-19 pandemic made it impossible to keep up with its payments. A lawyer for Golden Seahorse, Scott Markowitz, said the company would do so. Golden Seahorse arranged a 10-year, $137 million loan in 2018 and had been current until May 2020, when it failed to make a payment after the hotel closed because of the pandemic. Its lenders began charging default interest and Golden Seahorse filed for bankruptcy in November to avoid a seizure.

An entity that is controlled by Charif Souki and behind the ownership of Aspen Valley Ranch declared bankruptcy last week in its latest attempt to stop creditors from foreclosing on the 813-acre property with a gated community in Woody Creek, the Aspen Daily News reported. Bankruptcy also was declared by Strudel Holdings, a Souki entity that owns one-half of Ajax Holdings, in order to put off an auction by creditors to sell its assets, which include the Coldwell Banker Mason Morse real estate firm in Aspen. The filings came amid a dispute between Souki, who lives in Aspen and Houston, and the lenders, who say Souki has defaulted on $90 million in personal loans that have soared over $120 million with interest, according to court records. Souki pledged Aspen Valley Ranch and Ajax Holdings as collateral for the loans that he received last decade. The 25 million shares in the stock of Houston-based Tellurian, a liquified natural gas company Souki co-founded in 2016, also were put up as collateral, as was his luxury yacht. The creditors sold those shares earlier this year at below $2 per share, according to court filings. Allegations in the bankruptcy filings are similar to ones carried out by Souki in the Supreme Court of the State New York, which are that Souki’s debt should be wiped clean because his loans were overcollateralized and the lenders dumped the Tellurian shares at fire-sale prices rather than following a strategic timeline. Souki’s New York suit is now on hold with the bankruptcies on file.

Nearly $12 billion of loans in U.S. commercial mortgage-backed securities (CMBS) became newly delinquent, pushing the late payment rate up by 34 basis points from June to 3.93%, a report by credit rating agency KBRA said on Wednesday, Reuters reported. The rise in the rate reflects continued stress in the U.S. commercial real estate sector as a post-pandemic environment had more people working from home or shopping online. The total rate of delinquent loans or those that entered special servicing rose in July for the fourth straight month and now stands at 6.44%, the report said. Office loans made up roughly 35% of the newly special serviced and delinquent loans in July rated by KBRA at $898.4 million. Retail property loans came in second at 26.4%, or $683.4 million, the report said. Mixed-use properties used for both retail and office came in third at 23.7%, or $613.9 million.