A Condo Kingpin’s Next Act and Proptech Falls off the Wall

Summary

Podcast Summary: The Promote Podcast

Episode: "A Condo Kingpin’s Next Act and Proptech Falls off the Wall"

Date: January 28, 2026
Host: Hiten Samtani (“Bard of CRE”)
Co-host: Will Krasne
Theme: Behind-the-scenes deep dive into the most dramatic developments and personalities shaping Commercial Real Estate (CRE) today.

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Episode Overview

This episode offers high-energy, insider commentary on three defining stories in commercial real estate: a major comeback by a notorious New York condo developer, a reality check for the so-called PropTech revolution, and bite-sized dispatches on new market turmoil. Hosts Hiten Samtani and Will Krasne combine irreverent banter with deep domain knowledge, bringing context and color to CRE headlines for industry insiders.

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Key Discussion Points and Insights

1. Quickfire CRE News Roundup (03:00–09:10)

• Scott Everett’s S2 REIT Scrambles for Capital

  • S2, known for creative deal structures, now must raise $70M in preferred equity at an eye-popping 18% return, under threat of fire-sale disposals.
    • "They basically need to raise about $70 million in pref. And they're promising 18% on that pref... if they didn't get this, they're going to have to sell stuff at a 5.5 cap, which wipes 60 to 75% of their equity." — Hiten (04:02)
  • LPs unsettled, with serious consequences for failure to recapitalize.

• Charles Cohen’s Legacy Properties in Crisis

  • Major Manhattan asset (750 Lex) turns over to US Bank for $1,000 — a public mark-down for a storied owner.
    • “He’s got $187 million in personal guarantees... Fortress is not having it. They’re basically saying you’re not fit to sell your own assets because you’re not getting the prices that you should be.” — Will (05:26)

• Blackstone’s Willis (Sears) Tower: An Office Wobble

  • Once-iconic asset now hamstrung by $1.3B in debt, with buyers scarce and cash flow bifurcated by tourist “skydeck” revenue vs. traditional NOI.
  • Institutional sellers like Blackstone try to distance themselves: “So everyone knows, office is 2% of Blackstone's portfolio.” — Will (07:28)

• A Rare $300/PSF Lease at San Francisco’s Transamerica Pyramid

  • Michael Shvo lands a headline-grabbing lease, but at only 4,000 square feet in a 1.6M sf tower, highlighting the market’s ongoing struggles.
    • “It is just tremendous that this is leading everything. When it’s 4,000 square feet in a 1.6 million square foot building.” — Will (08:40)
  • Hosts gently rib the tendency to “spin” minor good news in tough times.

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2. Zeil Feldman’s Wild Rise, Fall, and Reinvention (10:14–21:35)

• From Manhattan Alpha to Affordable Housing Silent Partner

  • Zeil Feldman, once king of New York’s luxury condo rush, endured a spectacular crash amid the 2020s downturn.
    • “Zeil was really one of those guys... the mid-2010s, when it was Asian capital flowing into New York like there was no tomorrow... he was really the guy who would pay insane prices.” — Will (11:01)
  • His ex-firm HFC crumbled in scandal:
    • Silver-tongued lieutenant Nir Meir’s crimes (fake wire codes, hiring actors to impersonate investors, investment-grade wine and gold bullion) led to fraud conviction and lurid headlines.
      • “People don’t fake wire transfer codes. They don’t hire people to, like, fake Korean accents.” — Will (14:03)
      • “He camps out in a $150,000 a month Miami beach rental. He’s going to ZZ’s club. He’s just living hard in Miami at this point.” — Will (15:27)
  • Notwithstanding the chaos, Zeil was never implicated; he reemerges, steering clear of limelight but strongly involved (through family and loyal ex-staff) with Good Homes, a nationwide affordable housing developer.

• Good Homes: A Contrarian Play

  • Target: Extended stays, distressed hotels, medical facilities; conversion to workforce housing (studios, one-beds targeting 60–120% AMI residents).
    • “Their buy box is essentially extended stays, distressed hotels and medical facilities... focused on converting those into multifamily which are targeted at folks making 60 to 120% of AMI.” — Will (17:14)
  • Exploits tax-exempt bonds and public-private structures, echoing prior Texas deal playbooks.
  • Notable: Feldman keeps his own name off the public docs, but daughter Leila and son Adam serve as front-facing principals.

• Memorable Metaphors:

  • “This is like when a heroin addict like finds religion and becomes a priest.” — Will (17:09)
  • “You’ve got to keep the flow of money going to create that illusion that everything is okay — as long as the money’s flowing all sins are forgiven in commercial real estate.” — Hiten (14:08)

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3. PropTech Hits the Fundraising Wall — Fifth Wall’s Reckoning (22:40–33:50)

• What is PropTech and Why the Cold Shower?
  • PropTech (property technology) sold to VCs as “the next big thing,” historically billing real estate as ripe for technical disruption.
    • “A lot of LPs have been asking... what is proptech?” — Will (22:40)
  • Fifth Wall, sector rainmaker with $3B AUM, halts fundraising of latest $500M vehicle amid underwhelming investment outcomes (notably, a string of high-profile SPACs collapsing post-IPO).
    • “They raised a ton of money over a bunch of funds and at one point had pretty serious mark to market. They were huge in the SPAC.” — Will (25:34)
    • “Doma, Hippo, Opendoor... they were down 85, 85, 90, 95%. Smart Rent was at risk of being delisted, but hemorrhaged money for investors.” — Hiten (31:06)
  • Analysis: Tech can be more hype than substance in property operations due to thin margins, low owner adoption, and limited “right tail” outcomes.
    • “Real estate’s a shitty business. It is super capital intensive. Margins are not great, really low return on equity. And so every dollar that you’re spending on Domo, whatever that is, or Hippo... you have to get significant dollars back. And in a lot of cases you don’t.” — Will (27:06)
    • “If you’re a landlord, all you care about is: will it either make you more money, or save you money?” — Hiten (28:24)
  • Fifth Wall’s future: Now in “workout” mode, not actively fundraising. Host speculation on whether they can preserve any investor capital and rebuild their reputation.
    • Memorable: “It’s really easy to be on LinkedIn... flying all over, posting about your wins... It is really hard to sit there and make no money and just work and stare at it for two years, three years, four years, five years... If you can do that... people remember that and you can build a firm.” — Will (33:37)

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Notable Quotes & Memorable Moments

• On Feldman’s Redemption Arc

  • “Whatever you do in life, you’ve got to attack it with full zeal. Even if you move from sexy condos to unsexy rundown hotels.” — Hiten (33:51)

• On CRE Survival

  • “This is not a great outcome, but you give him [Scott Everett] credit because he’s alive and that’s really hard. There’s a lot of people who aren’t.” — Will (04:29)

• On PropTech Realities

  • “The thing that’s gotten missed with PropTech is that real estate’s a shitty business… every dollar that you’re spending on Domo, or Hippo, or Smart locks, whatever… you have to get significant dollars back. And in a lot of cases you don’t like even think about something like Latch.” — Will (27:06)
  • Quoting Logan Roy: “There’s this fancy new business theory. It’s called: make more than you spend.” — Will (28:29)

• On Gimmicks in CRE Fraud

  • “You’ve got to keep the flow of money going to create that illusion that everything is okay, as long as the money’s flowing. All sins are forgiven in commercial real estate.” — Hiten (14:08)
  • “He [Nir Meir] camps out in a $150,000 a month Miami Beach rental... spending hundreds of thousands of dollars a month on wine, I believe. Sorry, it’s investment grade wine.” — Will (15:27, 15:45)

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Topic Timestamps

• 03:00 — S2 REIT capital crisis and creative structures
• 04:59 — Charles Cohen’s $187M personal guarantees and 750 Lex return
• 05:55 — Willis (Sears) Tower: Blackstone’s struggle
• 07:51 — Michael Shvo’s $300/sf lease in Transamerica Pyramid
• 10:14 — Zeil Feldman’s career: high-flying days, HFC crash, NIR Meir saga
• 14:08 — NIR Meir’s fraudulent tactics (fake wires, actors)
• 15:27 — Meir’s “YOLO” lifestyle post-collapse
• 17:14 — Feldman’s move to affordable housing (Good Homes)
• 18:46 — Details on workforce housing, public financing
• 19:55 — Family involvement and old HFC crew reunited
• 22:40 — PropTech primer and Fifth Wall’s halted fundraising
• 25:34 — Fifth Wall’s VC approach and failed outcomes
• 27:06 — The economics of proptech for landlords
• 31:06 — PropTech’s post-SPAC losses
• 33:37 — Character of sponsors during hard times

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Conclusion

This episode masterfully weaves together industry war stories, sharp analysis, and sarcastic banter, making it a must-listen for CRE insiders. The hosts shine a light on the reputational seesaw of legendary dealmakers, the myth-making of tech innovation in property, and the hard financial truths often glossed over by hype. Their frankness, humor, and deep connections deliver both entertainment and hard-won wisdom for listeners hungry to understand what’s really moving the market.

Transcript

[A]

Affordable housing is perhaps the biggest knife fight in cre unless your former partner did the following.

[B]

Faked wire transfer codes, hired people to fake Korean accents, Hosted private omakase dinners at his or not his Hampton's mansion and you know what? I bet he used a lot of soy sauce which just ruins the art.

[A]

Shored up on investment grade wine and gold bullion. Threatened his father in law, hopscotched money between accounts to avoid creditors.

[B]

Camped out in a $150,000 a month Miami beach rental after losing the Hamptons crib.

[A]

Claimed he's got just $50 to his.

[B]

Name after all that. Bring on those distressed hotel con.

[A]

Welcome back to the Promote Podcast, your insider guide to the money and mania of the CRE markets. I'm Hitan Samtani.

[B]

And I'm Will Krasny.

[A]

A shout out to our sponsors for this episode. Bravo Capital, which was one of the market's leading Huddenbridge lenders and loan boss.

[B]

Which is a best in class CRE debt management software.

[A]

This week we discuss second acts zeal. Feldman has left the scandal ridden past of his glitzy New York condo development firm behind and he's reinvented himself as an affordable housing player. And PropTech's loudest voice is now yelling into the fundraising void. So we've been asked by a few listeners to give a little bit more context about us for those who came in late. I'm Hinten. I am the founder and publisher of 1031 Media and the publisher of the promote. I started this after a long, long stint at the Real Deal. Wanted to create something way more insider and way more nuanced for you guys.

[B]

And I'm Will Krasny. I'm a former professional baseball player, current actor you can find on season four of succession, the last season of Billions.

[A]

Which profile is it like? It's just the schnoz or side profile.

[B]

The left side. They got my good side. And I am a GP focused on multifamily and industrial acquisitions in the mid Atlantic and I previously worked at two large private equity firms.

[A]

Do you remember what you said in the very first episode when you introduced yourself? This is the promote podcast from 1031 Media. I'm Hitan Sumtani, founder of 1031.

[B]

And I'm Will Krasny, who you've never heard of.

[A]

Well that's gonna change very soon. And I promised the audience that that was gonna change very soon and it totally has.

[B]

Well, I guess we are number 52 in Israel. So there you go. They know me in Tel Aviv. Let's kick things off with the news bulletin. Before that, if you haven't already and you're a fan, hit pause and go write us a review on Apple or Spotify.

[A]

Seriously, it's time to deploy that dry powder of goodwill that we've built up. You gotta tell other people why you love us so more people.

[B]

We've actually returned capital, unlike most sponsors. So you have dry powder.

[A]

Let's start with the news. S2, the REIT. Do you remember this vehicle? It was very interesting when it came up. Scott Everett's S2 big syndicator in the space had created this private REIT to kind of absorb about 10,000 of his units in the Sun Belt. And the idea was you're essentially buying yourself time. You're able to create a structure that allows you to get more agency debt and hold onto these assets a little bit longer because you remember everyone. Allen Stalco. Tides rise. Everyone's losing assets left and right.

[B]

At this point, we've given Scott Kudos 1. They've been on the acquisition front. They've been able to raise more capital. They just bought a large acquisition in Chicago, which we talked about a couple of weeks ago. But this vehicle give him credit because they kept their assets. Some LPs may not have been thrilled. Sounds like they weren't. But at the same time, what did Bill Zeckendorf say? He'd rather be dead at 18% than alive at the prime rate. No, it's other way around.

[A]

It's the other way around. But it turns out the clock's ticking on this too. So S2 in comms that we saw very recently told investors that they basically need to raise about $70 million in pref.

[B]

And they're promising 18% on that pref. And they underwrote like a 30 something IRR on it if you invest. And basically they were walking you down the plank a little bit by saying that if they didn't get this, they're going to have to sell stuff at a 5.5 cap, which wipes 60 to 75% of their equity, which.

[A]

Oof. Everyone was losing assets left and right. He managed to create this vehicle. Very novel structure to keep him in the game a little longer, but let's see if he can pull it off.

[B]

This is not a great outcome, but you give him credit because he's alive and that's really hard. There's a lot of people who aren't. This is the hard decisions you have to make.

[A]

When Ray Liotta goes to prison, what.

[B]

Did he say this is the bad time. Yeah. Hopefully he didn't flush the operating count down the toilet and say that was all that we had. Karen.

[A]

All right, the next one. Billionaire. And I'm massive air quotes here. And so as will Charles Cohen had a pretty rough week again. 750 Lex. One of his legacy office hours went back to the lender where his office is. Oh, is that right?

[B]

Yeah. Damn.

[A]

Shout out to our guys at traded who had one of my favorite. It's so brutal. They had a photo of Charles Cohen. 750 Lex. And the price tag was $1,000, which is what US bank ticket back.

[B]

Was it Charlie Murphy or Dave Chappelle? He's like, that was cold blooded.

[A]

So this is not all that Charles Cohn is facing right now.

[B]

No. He's got 100 what, 87.

[A]

187, which is I believe the police code for you know what, $187 million in personal guarantees.

[B]

He's been trying to sell off assets. He's been asking for more time. Fortress is not having it. They're basically saying you're not fit to sell your own assets because you're not getting the prices that you should be. He had one to Vornada which was like 40 million less than being promised. Fortress, what the hell is going on here? And gives this back to the lender. So this is not great.

[A]

Next one, Sears Tower, which is what I always call it, but it's now known as Willis Tower.

[B]

So Blackstone paid $1.3 billion for this tower 12 years ago. Sunk $600 million in the renovations. It now has $1.3 billion worth of debt. And I will tell you that that is the best debt that money can buy because Blackstone has worked their ass off on this to make no money. And they have approached a few buyers about this to see if there's anyone willing to assume it. Even the best fall down sometimes. Like this is one where 12, 13 years ago when this got done. This is one of the iconic assets in North America. And right now it's just another beleaguered office tower, albeit it does have the sky deck. And part of the issue with getting the assumption done here is is that there's a lot of differences in opinions of value. The bov's to that sky deck. It's the same thing. Yeah, it's the same thing with Empire State Realty Trust where you're seeing the Empire State Building. How do you cap the office noi versus the observatory noi? And I think there's some issues Here with that as well, because it's a big chunk of the building's value.

[A]

A couple things I want to note here. So Blackstone bought it whenever. They bought it a dozen years ago from a pretty interesting seller trio. Some of our guys.

[B]

Oh, boy. The girthy lads.

[A]

The girthy lads. The brothers to treat. Joseph Moynian of the Moynian Group out in New York, and Yisroel Gluck. So pretty interesting triumvirate who sold it to Blackstone. They did pretty well on it.

[B]

They did quite well. Can you imagine those partnership meetings?

[A]

Oh, incredible. Absolutely amazing. Has Blackstone made any of their standard Office is less than 2% of our portfolio.

[B]

Did not see that in the article highlighting this, but again, just so everyone knows, office is 2% of Blackstone's portfolio.

[A]

That's right. All right, last one. This is why this guy is one of the goats. I read the headline on Friday. I didn't read the story yet. I said good on Michael. Today while preparing for this, I saw the size of the deal. So what the hell are we talking about here?

[B]

So $300 per square foot is rarefied error for office leases. We're talking like Mark Holiday, top of.

[A]

One, Vanderbilt top, top, premium, New York City.

[B]

There's another landlord who chiseled his name in stone in that club, and it's Michael Schwo.

[A]

Listeners will remember our special episode where we looked at our guy. We were wearing black Vs at the time. Schwo's had a lot of trouble. His biggest investor, bvk, which is a German pension fund, made a big bet on him through Deutsche Finance America. A lot of that. I'd say it's gone sideways at best. But he had a nice win here. It was a $300 a foot lease at the Transamerica Pyramid, one of SF's most iconic towers.

[B]

The only bad thing about this lease is it was for 4,000 square feet in Haten. How big is the building?

[A]

1.6 million square feet.

[B]

So how much is left? And to be fair, Morgan Lewis signed a big lease at a huge number. They're having good leases at this building. We like to have fun here, but it is just tremendous that this is leading everything. When it's 4,000 square feet in a 1.6 million square foot building.

[A]

When it's time to shv. Mitra Shvo. That's you. Don't ask questions.

[B]

Hold on. I have to answer one of my nine cell phones right now.

[A]

All right, I'm here with Aaron Krovitz from Bravo Capital. Aaron, let's get right to it. What's the story behind this mythical 100% HUD approval record?

[C]

It's pretty straightforward. We have an amazing team. We're a pure play hud. We're focused on bridge to HUD all day. We're both fully HUD licensed and we also offer balance sheet bridge financing. We where we could finance deals over $100 million, just like we did in Miami, Brooklyn, and Jersey City.

[A]

And what's the secret sauce? How do you put it all together?

[C]

It's our underwriting. We don't rush deals to market and hope they stick. We know what HUD wants before we submit, so there are no surprises. And we have a real balance sheet. So when we go, we go.

[A]

You were telling me when we were chatting offline that you closed a HUD Express lane deal in four days. That's absurdly fast for HUD.

[B]

Hey, 10.

[C]

That's why we get up in the morning at Bravo. We're here to break records. We're here to innovate. And when you have tight documentation, the underwriting, that means speedy approvals and speed.

[A]

Means a sponsor can close quick. Thanks, Aaron. Good to have you on.

[C]

Thanks. Attend and you can find [e-mail].

[A]

We both love a comeback story. We both love a story of someone getting knocked down but not knocked out and coming back to fight again.

[B]

I mean, you're a better person than me. I like a story of someone getting knocked down in spectacular fashion.

[A]

So we're talking about former New York City alpha dog Zeal Feldman, formerly of HFC Capital Group. They took on some of the most ambitious projects in New York. They paid a pretty penny for them, and things went pretty damn south during COVID So we thought we should talk about this because Zeal's back, baby.

[B]

So Zeal famously was partnered with Kevin Maloney from PMG and Gary Barnett back in the early 90s, running around trying to do deals.

[A]

There's a famous little line about them, like, sitting in a, like with plastic tables, cobbling stuff together. They made a run at the Bel Nord even back then. And it's funny because Zeel picked it up 20 years later.

[B]

Again, they paid like 18 million for it, and then 20 years later, he paid 500 million for it or something crazy amazing. But Zeal was really one of those guys. The mid 2010s, when it was Asian capital flowing into New York like there was no tomorrow. Across hotels, condos, everything. Everyone was going bigger, taller. 57th street became its own market. Billionaires row Zeal is like one of the guys. It was like him, Gary Barnett, Michael Stern, and he was really the guy who would pay insane prices.

[A]

High octane leverage, nebulous capital, EB5 financing, foreign investors. With a bit of a checkered past, Zeal encapsulated that part of the Manhattan Development game.

[B]

I remember reading the Real Deal article. When he closed on the land for what is now one high line, didn't he pay like $1,000 a foot or something? Insane.

[A]

Did you watch my interview with Zeal at the time? There's so much tension in the air, my floppy hair all over the place and I'm in a shiny blue suit and I say, you know, that's a pretty ballsy purchase because he paid close to 1100 a foot. This is the far west side, Far West Chelsea. This was not glamorous at the time. And he paid $870 million to Edison Properties. It's a high price per foot, but it's just a fucking high price overall.

[B]

So Zeal, mid 2010s can do no wrong.

[A]

Unlike Gary and stuff, who were basically building roundup 57th street, defining new markets. What Zeal was doing, you could see why it was a pretty good play, was taking iconic New York properties, the Bel Nord, the Chatsworth, the Astor, creme de la creme, co ops in New York, converting them to condos. That was one of his big plays, along with ground up condo development.

[B]

And then what happened is the firm imploded. His second in command went to prison. Not quietly, and we are going to have a lot more to say about that in a second. But sure, Zeal had to sell his beautiful mansion in Englewood Cliffs. And presumably, as Bill Simmons would say, he was in a different phase of his career.

[A]

He receded from the limelight and he kind of went away. He was never implicated in any wrongdoing.

[B]

But someone was implicated in a whole lot of wrongdoing. And that was near Mir.

[A]

So where do we start with Nirmare? I was trying to explain Nier to a non real estate guy and I said something to the effect of take Adam Sandler's character and Uncut gems, right? Dial up the sketch and maybe you get close to a guy like Nier Merrick. Incredible tenacity, incredible hustle. Is the Israeli kid, not too much education, thick accent, not the most pleasing to look at. Shows up and just in the span of five years, becomes kind of the most prolific fundraiser and becomes Zeal Feldman's right hand man. To the point where Zeal essentially took his Hand off the steering wheel. And Nir was driving that machine for a long time.

[B]

He was indeed raised a metric fuck ton of money, I think is the.

[A]

The technical term. Yeah.

[B]

But then when things went awry, basically had no moral compass and was not just like, there's gray areas for all of this stuff. There's firms, they pay distributions off the subline or overrate, like, whatever. Those are things that happen.

[A]

Pretty par for the course.

[B]

Yeah. People don't fake wire transfer codes. They don't hire people to, like, fake Korean accents.

[A]

My favorite one, as we've talked a lot on this podcast, is momentum. You've got to keep the flow of money going to create that illusion that everything is okay as long as the money's flowing. All sins are forgiven in commercial real estate, especially in ground up development, where that's really the name of the game is to kind of stay flush until you can actually sell your stuff. So at some point, the spigot was running dry, and mayor said that he had found a new investor or Korean investor. What he had found was an actor who could do a very nice impersonation of a Korean investor.

[B]

That is literally a plot in an episode of Party Down.

[A]

It's unbelievable stuff. The walls are closing in on this guy. One of the most bizarre things I've ever read. CIM was owed money by hfc, and they're going back and forth within the air and saying, where's the money? Where's the money? Where's the money?

[B]

Where's the money, Lebowski?

[A]

And he sends them the wire transfer confirmation code, which turned out to be fake kind of stuff you don't see at this level of the game typically.

[B]

No, this is the stuff that those little Ponzi schemes for, like, wealth building or passive income. Not for the 11.

[A]

Exactly.

[B]

Or the Bel Nord or the Chatsworth. Just crazy. And then when all this goes down, you might think, okay, let's like, bunker down. Really try to make sure we can fight our way through it. No.

[A]

Yeah.

[B]

Goes the other way.

[A]

I live my life a quarter mile at a time. He goes, YOLO. He camps out in a $150,000 a month Miami beach rental. He's going to ZZ's club. He's just living hard in Miami at.

[B]

This point, spending hundreds of thousands of dollars a month on wine, I believe.

[A]

Sorry, it's investment grade wine.

[B]

Investment grade wine. Sorry. Apologies.

[A]

And like any great alleged criminal, he was stacking up on gold bullion as well, which is like straight out of some James Bond movie. I love it he's awaiting trial. He spent about a year in Rikers and now he's. I think he's on conditional release. This is one of the largest development related fraud schemes in recent New York memory. There's been contractors that have been implicated. Gcs. It's pretty damaged.

[B]

Oh yeah, hfc. There was a huge kickback scheme where you know, people were getting like decks put on their house in exchange for approving contracts.

[A]

The firm actually pleaded guilty to grand larceny and tax fraud as well.

[B]

So the 11, which was their signature project, which as Hitan said he paid $870 million for, ended up going to Witkoff and Access Properties. They took it over mid construction and I think they've done really well.

[A]

One nugget I think to encapsulate just how go go Manhattan Development can be in the near mayor heyday. I went to the sales launch of this thing. I went to the 11 sales launch. I'm a whiskey guy. They had McAllen 25 on tap. Oh my God.

[B]

You know it's good when Hatten pulls out a. I went to the launch party for this. I think he's like done that twice. And it's both an excellent.

[A]

The reason we're painting this picture is because now Feldman has essentially gone the opposite end of the spectrum in CRE when it comes to glamour quotient.

[B]

Yeah. This is like when a heroin addict like finds religion and becomes a priest. Exactly.

[A]

So what is he doing the promote recently learned that Zeal Feldman is a silent partner in a company called Good Homes, which is an affordable housing developer, National Focus. Their buy box is essentially extended stays, distressed hotels and medical facilities.

[B]

They're focused on converting those into multifamily which are targeted at folks making 60 to 120% of AMI.

[A]

So you've got the capital a affordable housing, which is section 8 LIHTC, et cetera. And then you've got what is known as noaa, which is naturally occurring affordable housing or workforce housing. This is the latter strategy here.

[B]

Right. And so when we talk about 60 to 120% of AMI, that's important for permanent financing because through Freddie and Fannie they focus on mission driven housing, which means is it affordable to folks making 80% of AMI or less? And so you can get significant breaks in your rate if you're catering to those types of tenants. So that's a very, very crucial designation.

[A]

The reason a lot of these stay in the pocket is that the units that you convert here you look at the unit mix of good homes which has now close to 3,000 units in its portfolio. They're primarily studios and one beds.

[B]

It's important because those units are cheaper. When you qualify for being affordable for ami. It doesn't factor in square footage, it's just what's the street rent. So the smaller the unit, the more affordable it is.

[A]

The other part of this game that's really important is as we've talked about, one of our pet topics is tax breaks and other kinds of public financing.

[B]

There's some schemes involved here too.

[A]

Totally. So Good homes applied for tax exempt bonds. Rhymes a little bit. Remember our coverage on the traveling HFC PFC game in Texas? It rhymes a little bit with that. You team up with the public authority, which are these nebulous state and local bodies, you basically create a JV structure and then you're able to apply for this tax exempt financing.

[B]

Though this is a little bit different because again, they are providing, albeit very small units that are affordable to folks making 60 to 120% of AMI. So it isn't not having to do anything. They do have to self restrict a little bit to qualify for these.

[A]

There's a little interesting wrinkle here. Not in Good Home's case, but in many cases. Do you know what Allura is? Yeah, in many cases you can self attest. You can basically. I saw one from a Good Homes competitor which is basically saying, I pledge to keep this affordable. And you're just pledging to yourself. You're talking to yourself in a room. That's it.

[B]

I do that all the time. So right up my alley.

[A]

Just to be clear, Zeal Feldman's name is not on any of the public documents, is not on any of the deeds.

[B]

The Feldman name is on many of the documents.

[A]

So one of the build co founders is Leila Rosenberg. Leila Rosenberg, Nay Feldman is Zeal's daughter. Adam Feldman, Zeal's son. His name's on all the docs, et cetera. And then they've also put a lot of the HFC band back together. Their head of construction was a long time, I think a decade plus at hfc and they have another construction super who was also an HFC guy.

[B]

They had a lot of success. You know, you got a couple bad apples, you throw them out there in Rikers and you don't have to worry about it. Local governments are just dying for affordable housing. And this is really a topical strategy because it allows you to ride the coattails of the national housing crisis and go and say, look, we're going to provide these things. And we're actually going to like self restrict or commit to self restricting or test to it in a room by ourselves in exchange for these property tax abatements. And that's going to help us make our return. And you're going to get affordable units. So it is something that is of the moment in the zeitgeist and it is the exact opposite of how Zeal Feldman made his name in real estate.

[A]

Isn't it amazing? When Zeal Feldman was playing his game at the highest level, he was like a central character in this universe. Right? Press all over the place, from the big mainstream dailies to all over the trade publications. He was a celebrity. You go from that to being. Have you seen the Good Homes website? It looks like it was designed on geocities or something. It's like old school fun.

[B]

That's perfect. You don't want any of this here. If you're an affordable housing developer, you don't want anyone to know who you are. You don't want any of the smoke.

[A]

So will you violate any debt covenants recently?

[B]

So funny you should ask. I have been in technical default recently. I mean, who among us, right? But not since Q4.

[A]

Ooh.

[B]

And that's not because I paid off the loan. It's because that's when I started using Loan Boss.

[A]

I can't believe how old school some of our listeners are. They're still crunching DSCRs in Excel and all that.

[B]

Total waste of time. Risky business to boot. LoanBoss runs the entire process for me. One click covenant testing. Incredible Instant cash flow forecasting. Impeccable. And my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve and then it's always vertical and you got to alt HV to have it go horizontal. Make sure the index match works like ridiculous.

[A]

They've just got it sorted here for you.

[B]

Much better. So thank you Loan Boss listeners.

[A]

Check them [e-mail] that's loanboss.com and tell them the promote sent you. What is proptech, Will?

[B]

Oh man. That's a question that a lot of people have been asking.

[A]

A lot of LPs have been asking.

[B]

So proptech is of course property technology, which is a little bit anachronistic because properties often are really not receptive to technology. And technology can actually be a direct roadblock in you generating returns.

[A]

What are we talking about here? So Fifth Wall Ventures, which is one of the largest and definitely most vocal VCs in the proptech game, has Halted fundraising, which is a big deal. Incredibly prolific fundraiser. They had about $3 billion in AUM. They have raised the largest proptech fund in history, which is $866 million. They were in the midst of raising another $500 million fund and boom, they hit a wall.

[B]

They really did. It's important to just talk a little bit about how we got here with the wall and really like the proptech sector. So real estate, again, it's the largest asset class in the world. And technology and VCs have been coming to tell real estate how to do its job and how they can do it better for a long time. Yeah, for a long, long time.

[A]

You and I could probably recite the pitch from memory, right? Largest asset class in the world, biggest potential TAM in the world. Historically a laggard in technology. You'll hear all these phrases kind of recycled.

[B]

Exactly. And here come the technique bros who are going to help you generate more returns in real estate.

[A]

They're going to speak of thesis driven bets, they're going to speak of innovation in the space, they're going to speak of omnichannel. They're going to say all that stuff.

[B]

Improving the customer experience, helping the landlord.

[A]

Get higher satisfaction scores and improving the planet.

[B]

Of course. Yes, you have to improve the planet. I don't want to live in a world where someone makes the world a better place than we make it.

[A]

Yeah, God forbid.

[B]

Captain Planet, he's our hero. Gonna take take pollution down to zero. Fifth Wall was founded by Brendan Wallace and Brad Greiry. Brad was like one of the junior guys like in the founding of Invitation.

[A]

Homes, which today is the largest SFR operator in the country.

[B]

And Brandon had been at a couple startups, incredibly well credentialed. And these are like young, good looking guys who had a really compelling pitch which is basically we are going to find the best prop bets. We are going to have our LPs be the biggest real estate firms in the country. So we're pitching you the founder, we can help you with distribution because all the guys you're going to sell through are our LPs. And on the LP side they're basically saying, hey, we're going to go find all the best people who are going to help you generate returns. So give us a bunch of money and then in return you're going to help us.

[A]

It's a very innovative, like we are the middlemen. Back to our office space example. We can talk to both the bricks and the bytes. I have people skills, right? That's basically what they were saying. And they stacked the deck in their favor by having you're a property management startup, you want to talk to Cushman Wakefield, they're an lp. That was the pitch.

[B]

They raised a ton of money over a bunch of funds and at one point had like pretty serious mark to market. They were huge in the spac.

[A]

Oh my God, they were all over it. They sponsored the Smart Rent spac.

[B]

They sponsored a parking spac, correct?

[A]

Yes.

[B]

They were the investor in doma, Hippo Blend, Opendoor, Industrious, lot of stuff.

[A]

Not only were they the investor, Brandon's kind of special sauce was, was they were the most vocal investor. They were everywhere. They were creating this media buzz. The run of press they got from let's say 2018 to 2022 is hall of fame worthy. Like every major outlet, just sitting down with everyone working, reporters, just incredible momentum built around the narrative thing that says.

[B]

It all is that they're $3 billion AUM firm, not nothing. But you know, it's not Citadel friggin Axios reported that they stopped fundraising. What's crazy is like I'm on the fifth wall distribution list and I got an email on Friday when this got announced, highlighting a bunch of good stuff that had happened and I was like, did anything else happen this week? But I think it's important to also talk about the investments haven't necessarily turned out that great. But I think Brendan especially is the emblematic person for a certain type of real estate adjacent investor operator, what have you. Incredibly charismatic.

[A]

Honestly, one of the best salesmen I've ever met.

[B]

The problem though is that again, like real estate at the end of the day is like a very, very simple business and it's really hard to disrupt because of how simple it is. And so all of these things that get added on the top, they're costs.

[A]

Yes.

[B]

The landlord has to pay for it. And I think the thing that's gotten missed with PropTech is that real estate's a shitty business. It is super capital intensive. Margins are not great, really low return on equity. And so every dollar that you're spending on Domo, whatever that is, or Hippo.

[A]

Smart locks, whatever, or any of these.

[B]

Things that you have to get significant dollars back. And in a lot of cases you don't like even think about something like Latch. Right. That's a great idea. As a consumer, it makes a ton of sense. I lost my keys all the time. Yeah.

[A]

You know what else Latch lost? Their financial statements.

[B]

Yeah. But that's exactly my point. If you're a Renter, not in a gateway market. I remember talking to a large property manager about this and like, what do you think of stuff like latch? And like, oh, latch is great, I would love to use it personally. I'm like, are you going to roll it out? He goes, latch. And he's like, hell no. Are you serious? Like, you think anyone's going to pay for that? 1980s garden complex cost me five bucks a month. Am I going to get five bucks a month in rent because of that? No, of course not. And that's the case with a lot of these products. It isn't about flash, isn't about huge rounds, it's about getting Joey Bag of Donuts to buy your product. And the way to do that isn't an amazing customer UI colors, a fucking exploding thing when you turn your key in the door. It's to make Joey Bag of Donuts more money. And none of these things.

[A]

So either increase his income or shave his cost. That's it. That's all that matters.

[B]

More than what it costs to buy the thing. What did Logan Roy say? There's this fancy new business theory. It's called make more than you spend.

[A]

And your king cunt.

[B]

A lot of these things couldn't do that.

[A]

The problem is that the reality of the real estate business, which you've just so eloquently fleshed out, is meeting the reality of the VC game and the fundraising business, which is all about the hype, creating the mirage, creating the momentum, all of that. Fifth Wallet is the poster child of this. They popularized proptech. Obviously it had been around for a while, but they got to give them a bit of credit for creating it as a broad category. They were very much in the thick of that when climate investing became hot. Because remember the whole thing about stranded assets and you know, your tenants, your investors, everyone's going to ask for this, blah, blah, blah, blah, blah. They were right in front of that. I remember Brendan very tellingly changed his bio on Twitter at one point when the climate thing was at its apogee. Investing in climate optimism was his bio. Yeah, and they raised a $500 million fund off of that. Think of the management fees on that. Pretty good.

[B]

Definitely pretty good. And he really tried to build this into a one stop shop. They were trying to be a broker, dealer. They hired a very fancy senior guy, Jeremy Fox, to come in and lead that. And they're all over the metaverse in.

[A]

That they have a lot of shades of A16Z, right, the One Stop Shop for Tech, which is A16Z's whole cradle to grave thing with every suite of services you could ask for. Fifth Wall was trying to create that.

[B]

It's a great comparison, but it's just much more difficult because you can't have sort of these super right tail outcomes on the proptex side. Like Industrious sold for what, 800 million? And that's like. Yeah. And like that's one of the biggest outcomes in proptech history. Brecht sold for 5 billion. And people are like bitching about it on Twitter. And the other thing, speaking of like, momentum, is that Industrious, when they sold in early 25 and fifth wall was like, we were the first big believers. They were actually in the series C. They tried to raise this new fund around that momentum from Industrious. And again, like CBRE already owned.

[A]

They owned a chunk of it already. Yes. Yeah.

[B]

So it wasn't like they were just coming out of the blue. They're buying the rest of it now. I will say great name for this fund, Fifth Wall. React really like that.

[A]

Well, it's available now. They're not raising, so go for it.

[B]

Yeah. But they only raised 130 of a target of 500. And it's really telling that they weren't in the market for that long. So the reaction must have been really severe to not keep going.

[A]

Say a little bit more about that.

[B]

I think a lot of people are saying, like, where's the dpi? A lot of these things went public via SPAC at big valuations, but there's lockups. Yeah, that stuff goes down. Like if you're a FIGMA insider, you're living that in real time.

[A]

Just for the record, Doma Hippo Blend, Opendoor. Opendoor became a meme stock and kind of broke out of the that universe for a bit, but they were down 85, 85, 90, 95%. Smart rent was at risk of being delisted, but hemorrhaged money for investors.

[B]

LPs are probably saying, where's the DPI? We've been saying that across the real estate space for years and fundraising has been difficult. And a lot of big funds that people recognize are like, having trouble raising money. And so especially something like this where if you're so public, you live by the sword and die by the sword. In this case, they might have been foisted by his own petard.

[A]

Well, one of them was very public. The other one was very much in the background. So Brad left kind of without any fanfare. He went to run Quarterra, which was Lennar's property arm and now is part of tpg.

[B]

I believe TPG bought him. So good for Brad going back to his roots. What does Brendan do next?

[A]

What does it mean practically if you're not fundraising anymore?

[B]

I mean you got to work through your existing portfolio so it's helping the stuff that you've invested. There was a famous story, I think, about Sequoia, I want to say, in the tech bubble where they just decided to not raise another fund because their vintage into the tech bubble was in real trouble. And they worked for like five years.

[A]

Yeah, those partners just kind of hunkered down famously.

[B]

Like didn't take management fees, there was no carry, didn't have to worry about that. But they just like sat there, worked their asses off to make a 1:1 for people somehow.

[A]

I suspect that's not going to be the case here.

[B]

I probably not because I think those businesses were probably fundamentally better. The ones here are a little bit more trouble. But not fundraising right now is probably the right thing to do. Go out there, buckle down, like fight for every dollar. There's no shame in going out on your sword. Yeah, people will be mad if you lose that money. But if you fight your ass off and you get them back 75 cents on every dollar they put in, when it like easily could have been like 30 people build real firms around that type of thing because that shows character when you're really out there working for free. I remember when I was at Carlisle, one of our operating partners was way out of the promote on this huge portfolio and they were just working their asses off and that just like sticks with people. And that firm's enormous today. What you do when things are hard, it's really easy to be on LinkedIn, be on Instagram, flying all over, posting about your wins, all these things. When rates are getting cut and things are going to the moon, it is really hard to sit there and make no money and just work and stare at it for two years, three years, four years, five years. If you can do that though, and get people back more than they would have gotten with an average effort, people remember that and you can build a firm.

[A]

That's it for the promote podcast this week. Whatever you do in life, you've got to attack it with full zeal. Even if you move from sexy condos to to unsexy rundown hotels and Proptech is a category is in the crosshairs with its most recognized investor under the Koch.

[B]

A shout out again to our sponsors, Bravo Capital and Loan Boss.

[A]

You can find them at bravocapital.com and loanboss.com we'll be back next week with.

[B]

More CRE Insider goodness. And remember, write us a review on Apple or Spotify. We will shout out the tastiest ones on air.

[A]

Didn't you promise to do a dramatic reading as well?

[B]

Oh, yeah. I'm like Ron Burgundy. If you write it, I'll read it.

[A]

All right, dude. I'll see you next week. Thank you.

[B]

Thank you.

[A]

Ciao.