From BSDs to DSTs & a Lakewood Lad's SNF Summit

Summary

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The Promote Podcast – Episode Summary

Episode: "From BSDs to DSTs & a Lakewood Lad's SNF Summit"

Date: April 1, 2026
Host: Hiten Samtani (“Bard of CRE”), Will Krasny (institutional insider)
Show Theme: Deep dives into CRE (Commercial Real Estate) deals, key players, and trends, with a mix of insider knowledge, market gossip, and irreverent banter.

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Episode Overview

This week, The Promote Podcast delivers an "insider's guide" to three of the CRE world's hottest stories:

• Takeaways from March's PREA institutional real estate conference in Nashville ("March Madness")
• A megadeal in nursing homes: Khuni Herzka’s $1.7B acquisition of the Centers Healthcare portfolio
• The changing of the guard at Camden Property Trust and the broader trend of REITs/private capital shakeups

Along the way, Hiten and Will detail the Darwinian consolidation sweeping CRE, the rise of niche plays and private capital vehicles, and what these shifts mean for both real players and aspiring upstarts.

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Key Discussion Points & Insights

1. Punch List – CRE News Run-Down ([01:24]-[09:50])

Dubai Distress & GCC Allocators

• Gulf money is everywhere in U.S. CRE, but back home, Dubai's financial engineering is creating shakiness: developer bonds have become distressed, with yields over 1000bps.
  • “The fact that these guys, their bonds are in distress is going to be quite a bit of pressure on that market and obviously we'll see how this plays out…” (Hiten, [03:10])
  • “No one's immune from war... the uncertainty we are sending out from our shores is having ripple effects… globally.” (Will, [03:25])

Apollo's HQ2 Move

• Apollo, the AUM behemoth, is establishing a second HQ in Texas or S. Florida. Most future growth will be there, challenging New York’s primacy.

  • “Maybe it's because they've got all these distressed multi bridge loans and so they just want to be closer to the action in Texas.” (Will, [04:11])
  • “New York does not have a monopoly on talent and we expect most of our future growth will take place in our second hq. Yeah, it's a very deliberate statement…” (Hiten, [03:48])

• Discussion on why these moves are often tax-driven for senior execs (“a little kismet with the IRS”) and the symbolic power play with New York’s policymakers.

Capital Group's Office Buy in LA

• Capital Group, with $3T+ AUM, became its own landlord, buying 333 S. Hope St. (former Brookfield asset).
  • “We knew the best landlord we could possibly have would be ourselves. …this building was so cheaply priced because of the distress, that it just was a no brainer…” (CEO quote via Hiten, [08:11])
  • Shift: Tenant-owners are now stepping in where value is compelling, not just opportunistic investors.

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2. Institutional Real Estate’s ‘PREA’ Conference Debrief ([11:30]-[17:36])

Main Takeaways:

• Consolidation Everywhere: Especially tough for ‘vanilla’ multifamily operators; only giants or the hyper-specialized will survive.

  • “You either have to be so vertically integrated ... and then convey that to people… or get bought up.” (Will, [12:51])
  • “You're either getting gobbled up, which is a good scenario, or you're kind of withering away…” (Hiten, [14:03])

• AI Again… But When?: Everyone’s talking about AI, but no one knows when it’ll disrupt white collar jobs or how it fits institutional CRE.

  • “No one knew what they were talking about. No one had done the practice.” (Hiten, [14:43])
  • “At some point people are paying for investment acumen ... AI’s not there yet.” (Will, [15:13])

• Specialization Is Key: The middle is disappearing – you’re either a massive platform or a ‘sharpshooter’ with a defensible niche.

  • “If you're just like vanilla multi manager, it's hard. That's why Bridge got acquired by Apollo.” (Will, [16:19])
  • “You’ve got to be something very specific.” (Will, [16:31])

Global Perspective

• U.S. innovations are watched and copied by global players: “...I come here because I'm based in Europe and I get to see what Europe’s going to be doing in five years.” (Legendary investor, cited by Hiten, [17:46])

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3. Big Deal Deep Dive: Khuni Herzka’s $1.7B SNF Portfolio Buy ([19:31]-[29:00])

Deal Overview

• 35-building, $1.7B nursing home (“SNF” - skilled nursing facility) portfolio, NY-based.
• Seller: Daryl Hagler and Kenny Rosenberg (orthodox dealmakers, historic Brooklyn/NYC moguls)
• Buyer: Khuni Herzka, nephew of Meridian’s Ralph Herzka, using deep family/community networks

Why SNFs?

• “Sniffs are money printing machines. ...mostly Medicare and Medicaid funded. ...You're borrowing money from the government against old people, which generally works out just fine.” (Hiten, [20:00])
• Massive leverage via HUD, highly fragmented, under-covered in the press, and tightly held within insular Orthodox networks

The Dark Side

• Litigation is common: wrongful death suits, alleged Medicaid fraud, headline/reputational risk are high

  • “If you own nursing homes, there isn’t a player that’s been spared the political heat…” (Hiten, [24:12])

• OPCO/PROPCO Play: Financial engineering by separating building (“Propco”) from operations (“Opco”), maximizing leverage and minimizing liability if things go south. (Will, [23:52])

Sociology Insight

• “...being part of an insular community in which you mostly care about how that small group thinks about you is ideal for a space like this. ...it allows you to have these blinders on.” (Hiten, [22:48])

Broker Drama

• Top SNF deal brokers (Ari Adlerstein, Josh Simpson) were fired just as their bonuses were due, leading to arbitration over the deal’s huge commission pot. (Hiten, [26:09])
• “That’s the kind of chatter: who gets paid – Uncle Ralph or the lieutenants?” (Hiten, [26:09])

Why Institutions Opt Out

• Political and reputational risk keep Blackstones and Brookfields on the sidelines (Hiten, [27:54])
• “This is one of the few areas where a single guy or family can put together an empire that's institutional in scale...” (Will, [28:19])

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4. REITs and the Rise of Private Capital Juggernauts ([29:30]-[36:44])

Live News: BGO Buys Bell Partners (Multifamily)

• Symbolizes endgame for mid-size multifamily REITs: “...big, but maybe not big enough to compete in this new reality.” (Hiten, [30:19])

Camden Property Trust CEO Transition

• Rick Campo steps down; end of an era for founder-CEOs who built public REITs from scratch.
  • “Rick Campo was the last, I think, of the founder CEOs in the public REITs space.” (Will, [31:00])
  • “The big swinging dicks in real estate used to be these local guys who could gobble up assets in their local markets.” (Will, [31:09])
• Now, control is with private equity – debt cost of capital dominates, legacy operators can’t keep up.
  • “Owning these assets on your balance sheet is really tricky. Having a fee stream from other people's capital is a much... better business.” (Will, [33:07])

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5. DSTs, 1031s, and the Spread of Retail Investor Vehicles ([34:28]-[36:44])

• Blackstone, Nuveen, Fortress all roll out DST (Delaware Statutory Trust) vehicles to “AUM gobble” dentist/doctor/retail dollars after a property sale.
  • “Their money's locked up for two years. At the end of that period, Birit has the right, but not the obligation, to uproot these properties into the fund in exchange for op units. The perfect AUM gubbling vehicle for our age.” (Hiten, [34:43])
  • “They're taking the random millionaire dollars into their hedge fund and they're going to take the random dentist dollars in their DST.” (Will, [35:00])
  • Distribution channels evolving—targeting investment sales brokers and transitioning NY multifamily owners into DSTs out of frustration/need for simplicity.

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Memorable Quotes & Moments

• “Part of all of this is that people move to Miami... really for the senior guys to have a little kismet with the IRS...” (Will, [05:08])
• “Modeling out the debt tab was really, really annoying. ...My spreadsheets were beautiful. But at what cost?” (Will, [10:11])
• “No one knew what they were talking about. No one had done the [AI] practice.” (Hiten, [14:43])
• “You're either getting gobbled up, which is a good scenario, or you're kind of withering away, which is the more scary scenario...” (Hiten, [14:03])
• “If you own nursing homes, there isn’t a player that’s been spared the political heat.” (Hiten, [24:12])
• “If you're Blackstone ...and you're taking retiree money and then you're going to be in these headlines for Tish James is right over you kind of crusading. It's not easy.” (Hiten, [27:54])
• “...a single guy or a family can put together an empire that’s institutional in scale and size... which you used to be able to do ...in multi or office or industrial and you really can't anymore.” (Will, [28:19])
• “The job now is don't do anything that stupid—and eventually get bought.” (Will, [33:40])
• “...1031, at 10:31am they announced DST, a Delaware statutory trust. Get some help.” (Hiten, [34:43])

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Timestamps for Key Segments

• Hot News/Punch List: [01:24]-[09:50]
• PREA Conference Recap: [11:30]-[17:36]
• SNF Megadeal Deep Dive: [19:31]-[29:00]
• Live: BGO Buys Bell Partners/REIT shakeup: [29:30]-[33:29]
• DSTs, 1031s, retail capital moves: [34:28]-[36:44]

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Tone & Style

• Witty, sharp, irreverent—full of inside jokes (“BDs,” “ass in the sand”)
• No-BS, smart, slightly gossipy—balancing hard CRE intelligence with banter and war stories
• Institutional expertise with an underground flavor—shining light on shadow deals, niche tactics, and personalities seldom highlighted in the mainstream press

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Takeaway

If you missed this episode, you're missing the pulse of CRE’s evolution: adaptation, “AUM gobbling,” and the moves that separate the survivors from the also-rans. The Promote Podcast continues to be THE pod that tells you not just what happened, but how and why it matters, straight from the belly of the beast.

Transcript

[Hitsan Samtani]

We spoke to an institutional crowd about the growing importance of storytelling in the GP toolkit. And that very night, at the 1 Hotel, no less, we got the perfect illustration of it in action.

[Will Krasny]

Oh, let me guess. Some allocator was with Barry and saw him do the like, fix this carpet right now bit.

[Hitsan Samtani]

Exactly right. And the takeaway was this man, he sweats the small details. Of course, he's going to be a great steward of capital.

[Will Krasny]

And of course, the capital spent replacing that carpet's below the line, so it doesn't exist.

[Hitsan Samtani]

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

[Will Krasny]

And I'm Will Krasny.

[Hitsan Samtani]

A shout out to our sponsors, Loan Boss, the Best in Class, CRE Debt

[Will Krasny]

Management software, and Bravo Capital, a leading HUD in bridgelender.

[Hitsan Samtani]

This week we're going to talk some takeaways from institutional real estate's March Madness, the Prea conference. We've got key nuggets from allocators and the fund managers wooing them. Then we sniff around that quirky asset class's latest megadeal. Khuni Herzger's $1.7 billion acquisition of the center's healthcare portfolio. You caught it. And finally, the changing of the guard at Camden Property Trust is a good excuse to discuss two of our favorite themes. Aum gobbling and the private leaning shift in the capital markets.

[Will Krasny]

If Tiger woods named his yacht now, it'd be called public. Let's start off with the punch list. Our signature rundown of the newsiest news in cre, Co host to 10, was on odd lots cheating on us. Unreal.

[Hitsan Samtani]

It's one of the few pods I cheat on. This pod with.

[Will Krasny]

They had you on talking about Dubai real estate. More in the news than ever for not necessarily the best reasons.

[Hitsan Samtani]

We've been talking on this year bot about the GCC allocators outsized influence in the US real estate market. In every vehicle you can imagine, there's probably some GCC money in there. But back home in the uae, things are getting a little bit dicey. A lot of the developers have, just like in the US have started financializing their capital markets quite a bit. They've been getting heavily into these bonds to raise funds for their developments.

[Will Krasny]

It's a tricky thing because, yeah, they're Shariah compliant, which means you can't make

[Hitsan Samtani]

interest because interest itself is not kosher. They have a workaround where you get these fixed payments or profit sharing payments.

[Will Krasny]

It's like how if You're a felon. You can't own a gun, but you can lease one.

[Hitsan Samtani]

A couple of the prominent developers, the bonds that they issued have fallen into distress. They're trading with a yield spread of over 1000 basis points.

[Will Krasny]

Yeah, that's pretty distressed. And I think what's interesting too is that some of the companies, I think Binghatti holding, especially the pioneers of the

[Hitsan Samtani]

branded condo game in Dubai, yeah, we've

[Will Krasny]

seen Mercedes Benz Tower, we've seen Aston Martin Tower, all these various other towers, the Equinox Hotel, and these guys are bringing that to Dubai.

[Hitsan Samtani]

The fact that these guys, their bonds are in distress is going to be quite a bit of pressure on that market and obviously we'll see how this plays out, whether the government will have to step in again, as they did after the gfc. If this continues, all bets are off.

[Will Krasny]

No one's immune from war. Even places that want to be the capital of capital and the uncertainty that we are sending out from our shores is having ripple effects throughout capital markets, global, globally, not just here.

[Hitsan Samtani]

Next one. Apollo, one of the foremost Aum Golpers of our time is looking to open an HQ2 and it's going to be in the American South.

[Will Krasny]

Hey, y'.

[Hitsan Samtani]

All. Responding to an FT report, Apollo said. We've shared with our teams across Apollo and Athene that we plan to establish a second headquarters in either Texas or South Florida alongside nyc. And then they had a little masala on top of that. New York does not have a monopoly on talent and we expect most of our future growth will take place in our second hq. Yeah, it's a very deliberate statement to make.

[Will Krasny]

Maybe it's because they've got all these distressed multi bridge loans and so they just want to be closer to the action in Texas. Look, we've heard this story on and on for the last decade, if not longer. We don't have our head in the sand here at the promote podcast or no toes in the water, ass in the sand, as Zach Bryan would say. And, and Miami, Dallas, all these places have become real global cities and all of those places get outposts of these types of firms. Now Apollo is so big, they have business all over the world. I don't think the fact that their European headquarters are probably in Luxembourg means that London is less important.

[Hitsan Samtani]

Correct. Look at the size. Apollo's 1700 people in 2020, they're now over 4000. So they've more than doubled their workforce since the pandemic. So they got to put these people somewhere. New York is obviously Cost prohibitive. And the question to me will becomes what kind of people? Are we talking about real market movers or are we talking about the support staff for these aum gobbling operations? That's the big question here.

[Will Krasny]

Part of all of this is that people move to Miami. It's really for the senior guys to have a little kismet with the irs, to basically say, look, we have a real office here. I live here. My kids are in school here, conveniently, until they're not. And then I'm renting $100,000 apartment a month in New York.

[Hitsan Samtani]

And there is a big shift here. JP Morgan now employs more people in Texas than in New York State. Apollo, the idea that they're putting a second headquarters and they're projecting that all their growth will happen there as opposed to New York is interesting.

[Will Krasny]

But hold on, I just want to like double click on this.

[Hitsan Samtani]

Did you say double click again? You did, you did, you did.

[Will Krasny]

When they say all their growth is coming there, what does that mean? They're going to raise more than $800 billion in this other area. You put out these arbitrary benchmarks and honestly, like let's call a spade a spade. It's because Mark Rowan doesn't like Mandani.

[Hitsan Samtani]

It's a struggle between logic and emotion. Where logically, they know the best tal. They were minted in New York. They understand that Manhattan isn't going anywhere. But at the same time, all these other chambers of commerce are pulling out all the stops for them. Come here. We will treat you like the royalty that you are. Whereas New York, with our mayor saying,

[Will Krasny]

I don't think that we should have

[Hitsan Samtani]

billionaires, the kind of thing that sticks in the craw.

[Will Krasny]

Yeah, it sticks in the craw. Grinds their gears all the above. But look like these guys have been arbing since the beginning of time. Good friend of the pod hunter, did a great episode of Business Breakdowns where he talks about how behind every great fortune a crime. Just Google executive life, like sort of tell you like about how Apollo was created. They're going to go find the arb.

[Hitsan Samtani]

The pointed statement that they put out is really to put NYC on blast a little bit. It's going to hopefully create a reckoning in the top ranks of leadership in New York.

[Will Krasny]

Absolutely. And it's just again asserting leverage wherever you can, which they're the best at.

[Hitsan Samtani]

Pun intended. I had another kind of wild card hypothesis here. When you think of Apollo in New York, the first person that comes to mind is Leon Black. Right. The disgraced co founder you're starting in Dallas or in friggin Miami or something. Apollo can be whatever you want it to be.

[Will Krasny]

Like Ryan Atwood when he saw Marissa Cooper outside at the pilot episode of the O.C. he's like, I'll be whatever you want me to be.

[Hitsan Samtani]

Okay, next one more Brookfield office fallout. But this is more interesting not for the Brookfield side, but for the other side, Capital Group. I didn't realize how big Capital Group is. They run over $3 trillion in AUM. Capital Group is becoming their own landlord in downtown LA. So Brookfield bought this portfolio through a 2013 acquisition of a REIT called MPG. And many of these towers, Gas Company Tower, Wells Fargo center north, et cetera, are no longer owned by Brookfield. Maybe not of their own volition, though.

[Will Krasny]

Yes, they've given quite a lot of them back. These are buildings which they had bought a long time ago, and they've taken their capital out probably several times over.

[Hitsan Samtani]

They're not significant to our overall business.

[Will Krasny]

Okay, but Capital Group was in this building, which is 333 S. Hope St. And they decided to make an opportunistic move and buy it.

[Hitsan Samtani]

It plans to bring together its workforce in a, quote, vertical campus. You've heard that before.

[Will Krasny]

Yeah, of course. I remember vertical farming too. That was great.

[Hitsan Samtani]

Oh my God, that was hot for a second. So the CEO of Capital Group said the following, said, we knew the best landlord we could possibly have would be ourselves. And he made reference to the idea that this building was so cheaply priced because of the distress, that it just was a no brainer for them to buy. And why I think this is interesting is we've seen opportunistic investors step into these broken cap stacks and take over these buildings for as little as 140, 150 a foot in prime areas in Chicago, Los Angeles, et cetera. But this is a interesting new trend where you're seeing the actual occupiers say, hey, I might as well step up and do this myself.

[Will Krasny]

Makes a ton of sense if you think about it. Because I don't know how many square feet Capital Group had in the building. Hundreds and hundreds of thousands of square feet. You can do the math. And the price per foot when it gets down.

[Hitsan Samtani]

Did you know that office rents in LA are quoted per month?

[Will Krasny]

Oh, God. They do it with industrial too.

[Hitsan Samtani]

Yeah, it throws everyone off. Our mutual friend Oprah was telling him about it and he just could not wrap his head around.

[Will Krasny]

Yeah, it's so crazy because they're talking about like $3 a square foot industrial rents. I'm like, what are you talking about? This is the Inland Empire. But once it gets down to 150 bucks a foot. Ish. If office rents are 50 bucks, you basically get the building in three years worth of rent payments. Capital group, they have an unbelievable fee stream and make so much money. And their investors like, why not do it? Because you control your own destiny forever. You can eventually expand and take more of the building, customize it however you want. It makes a lot of sense. And I think we're seeing it in New York too, where these buildings just get so cheap. Where you're going to be paying 100 bucks a foot in rent. If you can buy it for 300 bucks, why would you not?

[Hitsan Samtani]

That is it for the punch list. When we come back, we're going to be doing a little navel gazing.

[Will Krasny]

Yes, my favorite type of gazing.

[Hitsan Samtani]

Will, you've worn many hats in your glorious life so far. Pro baseball player, thespian, tornado remediation specialist. I want to ask which was your least favorite?

[Will Krasny]

The first two. Ugh, they were dreams. The third was a nightmare. Turning into a dream though. However, if you asked me a few months ago, I would have said Excel Monkey was my least favorite. Modeling out the debt tab was really, really annoying. Maturity dates, extension options, rate caps. Ugh. My spreadsheets were beautiful. But at what cost?

[Hitsan Samtani]

Sounds like you had good roi. But your roi BD return on invested brain damage, not so good. So what changed?

[Will Krasny]

I discovered Loan boss. All my loans live on one screen, no more. Let me just pull that up while I jazz hands a capital partner. And the extension option tracking with automatic notice reminders. I used to have a post it note on my monitor for that. A post it note?

[Hitsan Samtani]

A 10 in this day and age?

[Will Krasny]

Don't. I'm not proud of it, but the one click DSCR testing every lender adjustment, every unique requirement. Automated. Oh my God.

[Hitsan Samtani]

No more getting surprised by your own cap stack listeners. Check them out@ LoneBoss.com that's LoneBoss.com and tell them the promote sent you. It was really good to see you. Just no bullshit, no cap. It was nice to see you. It was nice to get together and we had a good time talking to the suits.

[Will Krasny]

The suits indeed. We were wearing suits though too. Game suits.

[Hitsan Samtani]

So what are we talking about? Last week we were at Prio, which is the Pension Real Estate Association. They have their annual spring shindig. This time it was in Nashville, Tennessee and Will and I went down there to chop it up and to talk specifically about the importance of GP storytelling and the overall toolkit.

[Will Krasny]

First of all, I just want to say thank you to MetLife and Stepstone for having us. It was a blast.

[Hitsan Samtani]

Yeah. Liz and Will, thank you so much.

[Will Krasny]

Yeah, really enjoyed it. Hope we didn't embarrass you too much.

[Hitsan Samtani]

Just the right amount.

[Will Krasny]

And I know what everyone's thinking. Did Will try to tell a bunch of research folks at very eminent firms that they need to be more like clavicular?

[Aaron Krewitz]

I'm looking pumped right now.

[Will Krasny]

And the answer is yes, of course

[Hitsan Samtani]

he did in fact do that. He absolutely did. Speaking to them was a great opportunity for us, great exposure for the promote. But I think we also learned a lot just by hanging out in that crowd for a couple of days. So what are some of the takeaways that you had from just the conversations with the Steve Defrances of the world and the David Schwartz's of the world and the Stepstones and all that?

[Will Krasny]

Those are just hypotheticals. It could be anyone that we talk to.

[Hitsan Samtani]

Could be any.

[Will Krasny]

For liability reasons. A couple things were on everyone's mind. The first was just consolidation, particularly in multifamily. And what we mean is that it's really going to be tough out there if you just were garden variety multi. And we've talked about this a lot, but it really was hit home that you have to have some sort of

[Hitsan Samtani]

real special super differentiated strategy.

[Will Krasny]

Yeah.

[Hitsan Samtani]

And actually differentiated.

[Will Krasny]

You either have to be like so vertically integrated PM in house, construction in house, sourcing in house, all that. And then you also need to be able to convey that to people that you have all that in house.

[Hitsan Samtani]

The most kind of vivid illustration of that was Steve DeFrancis, founder of Cortland Mega multifamily manager. But his map of the ships with all the materials coming in.

[Will Krasny]

Right. And it comes back to like storytelling. That's how you convey these types of things. Or you need to be able to have incredible data on costs, drive down, opex all of these different things. And if you don't, you're going to get bought up because there's a lot of groups out there with a ton of capital that don't have execution. And there's a lot of groups out there that have execution that don't really have the access to capital anymore. And. And so this is the kind of marriages we're going to see. And we're not talking about REITs necessarily, we're talking about a lot of these firms which used to be the alpha predators of the space where you could create a business big enough in a certain geography to be a national level player. And that just isn't it anymore. You have to have so much scale. And another thing that I think that hits too is that for these institutional allocators, you have to have so much back office that the cost structures just don't work unless you are massive.

[Hitsan Samtani]

You're either getting gobbled up, which is a good scenario, or you're kind of withering away, which is the more scary scenario. You're not going bankrupt as such, but no one's giving you more capital to do anything, so you're just kind of dying by status.

[Will Krasny]

Yeah. And the thing is you have to keep raising more and more money because this is a human capital game. And if you can't raise more and more money, it doesn't let you pay people more. It's harder to hire, it's harder to reinvest in the systems that you need. Especially if you're hiring out to third party property managers. Makes it really difficult because there's just a lot of leakage in your costs at the property level and then in your fee streams.

[Hitsan Samtani]

What else do we hear about? We heard a lot about AI.

[Will Krasny]

AI, Allen Iverson. If y' all hear it, then that's that.

[Hitsan Samtani]

No one knew what they were talking about. No one had done the practice.

[Will Krasny]

Not a game, we talking about practice. It's just crazy because it's one of these things where it's like you have to talk about it. So everyone talks about it, everyone agrees. Like there's gonna be a lot of disruption.

[Hitsan Samtani]

We saw some charts. We saw some charts.

[Will Krasny]

We did see some charts, but no one really knows the timeframe when it's going to come for the white collar jobs really at scale.

[Hitsan Samtani]

I still haven't heard of a viable high level job in CRE that AI is supposed to promulgate.

[Will Krasny]

I honestly don't know. I think at some point people are paying for investment acumen and pattern recognition and that's a real thing. And the AI is not there yet. And it's a lot more.

[Hitsan Samtani]

Well, according to Blackstone, their AI is almost there.

[Will Krasny]

Okay, cool, guys. But I don't know. But it's just the potential disruption to the job markets on everyone's mind. It's not even so much what's the impact to this industry. It's how are you going to invest? We talked about meds and EDs a couple of episodes ago and how colleges are having slower enrollment. What does that mean? Like, do you go to places now where this is where all of the onlyfans models are and like they're looking for rentals like that. Is that like the job driver?

[Hitsan Samtani]

That's going to be a great market in Miami for sure. Absolutely. I mean you should leave this pod right now and start raising for that because that's a great strategy. Strategy.

[Will Krasny]

I'll partner with Sophie Rain, Be like Rain Capital.

[Hitsan Samtani]

Which brings us to our next takeaway, which is specialization is going to be the name of the game. Right. You're either the biggest in getting bigger because you have created that momentum around your capital raising strategy or you're so, so specialized and so niche that you have some defensible strategies.

[Will Krasny]

If you're just like vanilla multi manager, it's hard. That's why Bridge got acquired by Apollo. And you've got to be something very specific.

[Hitsan Samtani]

So Bridge was not doing well, I don't think.

[Will Krasny]

No, it was not.

[Hitsan Samtani]

They sold for a big number, but they were not doing well.

[Will Krasny]

No, but they had distribution, they had a brand. Allowed Apollo to basically buy that business versus having to build it internally. And you've got to be a sharpshooter into various asset classes or geographies that are super specific. All these groups are basically saying we want this exposure, that exposure, this other exposure. And then we're just going to go get it through somebody.

[Hitsan Samtani]

We want affordable housing exposure in New York City. Okay, Ron Molis, will you take a meeting? Et cetera, et cetera.

[Will Krasny]

We want small bay industrial in Florida. Can we get this guy? We want non correlated good income streams. Can we find a Marina guy? They're really looking to focus on is those types of partnerships and being able to get exposure that way. And then you're either that or you're the supermarket where you're trying to just be all things to everybody and be like, come here for your the everything store, private credit. Come here for your real estate. Come here for all your various food groups.

[Hitsan Samtani]

Come here for your hedge fund strategy for mere millionaires, which is the new one for Blackstone I think just announced not even the multi multi millionaires, but a run and mil millionaires.

[Will Krasny]

There's going to be no 401ks left for anybody when they're done.

[Hitsan Samtani]

One thing you can take solace from is that the rest of the world is still a little bit behind America. We were having drinks with this really interesting guy, total legend, unbelievable.

[Will Krasny]

And he was saying, I mean he doesn't really invest in the US and he goes, oh yeah, I come here because I'm based in Europe and I get to see what Europe's going to be doing in five years.

[Hitsan Samtani]

I'm here with Aaron Krewitz of Bravo Capital. Aaron, $2 billion in deals, 100% HUD approval rate, five years since launching. How do you keep that streak going?

[Aaron Krewitz]

Comes down to our team. Our underwriters know what HUD wants. We're a pure play HUD lender. Meaning everything we do is HUD and bridge to hud. No taking shots and just hoping when we go, we really go.

[Hitsan Samtani]

You closed a healthcare HUD Express Lane deal in four days. Four days?

[Aaron Krewitz]

Four days from our submission to HUD's approval. And it goes back to knowing the ins and outs of the program so that there is no guesswork.

[Hitsan Samtani]

Sniffs assisted living. It feels like such an arcane world full of very complicated regulations and such a specific cast of characters that you really need to know coal to make this work.

[Aaron Krewitz]

Exactly. We're steeped in state by state regulations and distinctions. But we're not just about hud. We also have a very strong balance sheet bridge affiliate, Bravo Property Trust, and we just financed over 170 million out in Miami and 125 million in Dumbo, Brooklyn. If we have conviction, we move fast.

[Hitsan Samtani]

Thanks, Aaron. And where can people find you?

[Aaron Krewitz]

We'[e-mail].

[Hitsan Samtani]

Okay, we're going to do a little pronunciation exercise. There you go. Excellent.

[Will Krasny]

So avid readers of the promote will notice that Haten is remarkably sourced in one very specific niche, which is the sniff space. And one of the most hotly anticipated deals in that vertical has finally closed. Huni. Huni Herzka's takeover of the center.

[Hitsan Samtani]

You just went over this. Khuni Khuni. Khuni Herzni Herzka. Why are you getting. There you go. Huni.

[Will Krasny]

Huni Herzka's takeover. The center's healthcare portfolio in a $1.7 billion deal. 35 buildings, seven banks. That's a lot of banks. Yeah.

[Hitsan Samtani]

This is the thing about the sniff space that makes it such great fodder for us at the promote is that's a massive fricking deal. And sniffs are money printing machines. You're able to get very high leverage HUD financing on these kind of properties as well. And they're mostly Medicare and Medicaid funded. Someone described it to me very memorably as you're borrowing money from the government against old people, which generally works out just fine. But these are massive deals. They're incredibly undercovered, I think, in the broader press. And this deal especially is very interesting. So Khuni Hertzke, who coincidentally is Ralph Herzke of Meridian fame, his nephew. He just closed on a $1.7 billion, 35 building portfolio, primarily in New York, New York State. The sellers are interesting. The buyer is interesting. The way it came together is fascinating. Let's get into it.

[Will Krasny]

So the sellers are Daryl Hagler and Kenny Rosenberg. Daryl Hagler, one of the big magnates in the space. Oh, yeah, and also one of those guys where you'd sneakily see, like, Burrow park building trades for $120 million with no mortgage. And it's like Daryl Hagler bought it. You're like, what the.

[Hitsan Samtani]

And he also came up a lot when the heyday of the Brooklyn real estate investor. He was backing a lot of these guys. Hagler was the money behind a lot of the moves that were made in the market in the. In that 2010 Williamsburg super hot era.

[Will Krasny]

He has a variety of different interests. He owns an airline.

[Hitsan Samtani]

Oh yeah, Israeli airline, El Al. Like, that's the kind of business you can have. You can have an airline on the side when you're in the sniff space. They also own Power Kosher Dinner Hotspot Tabernacle, which competes with my other spot, Reserve Cut. This is basically the pool room and the grill room of the kosher world. Your boy Mayweather was seen dining at, I believe, tabernacle or Reserve Cut.

[Will Krasny]

I forget. I hope someone else picked up the tab.

[Hitsan Samtani]

So There are about 15,000 facilities sniffs in the U.S. over 70% of them are for profit. And for some reason, it's attracted this, like, very insular crowd of mostly orthodox dealmakers. Most of them concentrated in the Tri State, but they own all over the place. We were talking about the Genesis portfolio a few episodes back. That's another major distress portfolio in the space. Yoli Landau is making a play for it, but kind of want to get into the sociology of this a little bit, if you permit me. Of course, this space litigation comes with the territory. And the litigation here can get very, very dark. Painful, right? Because you're talking about old people, you're talking about wrongful deaths, you're talking about Medicare, Medicaid scams. So my thesis is that you have to have not only very thick skin to be in this business, but you also have to have a certain degree of removal. You almost have to feel like the people are separate from you in some way. And which is why being part of an insular community in which you mostly care about how that small group thinks about you is ideal for a space like this. It allows you to have these blinders on.

[Will Krasny]

I've never really considered that, but I can kind of see it. And yeah, it's tough. You talk about how when you're a hedge fund and you're like making these big trades, you can't think about it as money because you'll just freak out and it's just ammo.

[Aaron Krewitz]

I am the sun that warms you

[Will Krasny]

and the air that you fucking breathe. It's kind of the same here. Like you can't think about the human cost sometimes. I remember even on the hotel side when we were buying extended stay hotels. Oh yeah. Our value creation here is going to be we're just going to stop cleaning them every week.

[Hitsan Samtani]

And so you have to basically widgetize what you're doing to make it work is what you're saying.

[Will Krasny]

Absolutely. And again, because so much of this is financialized and deals with the government, there's been a lot of political heat that has been in this space. So I think New Jersey had previously sued Hagler and Rosenberg over the misuse of Medicaid funds, though there was a bigger scheme afoot there, I think too. They were taking out mortgages and rent payments because they were legally separating the nursing home operations.

[Hitsan Samtani]

Oh, the OPCO Propco play. Yes. Yeah, yeah, yeah, exactly. Go say more about that.

[Will Krasny]

So one of the ways you could make a lot of money here was doing an OPCO propco. So you would separate the nursing home real estate from the nursing home operations. So the nursing home operations would pay rent to the propco and you could just basically lever the absolute piss out of the building. That's how you make your money. And if the thing goes sideways, well, we took all this cash out and there we go.

[Hitsan Samtani]

By the way, the New York AG Tish James also sued Hagler and Rosenberg alleging other kinds of fraud as well. So this is part of it. If you own nursing homes, there isn't a player that's been spared the political heat. Let's say it's an easy target as well. Right. You're talking about old people, vulnerable people, and for profit investors coming in and changing things around to make more money, which can often lead to worse outcomes for these patients.

[Will Krasny]

It's what we've talked about in the multifamily space where if you're a landlord, you have to take providing homes for people very, very seriously. And this is that to the nth degree, especially when you add in the financing that's available for these things, which again is it all comes from a good place to Try to, like, make this a better capitalized industry and more liquid. But it can have some downstream consequences. And speaking of consequences, this deal specifically is a little bit up in the air because Huni's uncle is quite the macher and I think there's a little bit of conflict on his side there.

[Hitsan Samtani]

The deal is closed. And it took, apparently it took Shout out to sniff Schmooze, which is my new favorite publication. They had an interesting play by play in the most recent issue where they're talking about having to wrangle together financing from seven different banks to pull off this closing. And you're seeing the properties hit records now. But what is interesting here is that the deal was set to be brokered by these two healthcare rainmakers. In the last year or so, I've realized how much money these SNF brokers can make. It's a shit ton of money. But Ari Adlerstein and Josh Simpson, who were the two top healthcare brokers in the country, were at Meridian for the longest time. Okay? They were set to broker this deal. They got kicked out, they got fired for cause, right, as their bonuses were set to be paid out. So it's messy. They're in binding arbitration now with Meridian. They've won a court verdict, but the damages are still tbd. So the deal is officially credited to Meridian, but it's these guys who did the deal. So that's the kind of chatter about who's going to get paid. Is it going to be Uncle Ralph or is it going to be the lieutenants?

[Will Krasny]

And we're talking serious, serious money here.

[Hitsan Samtani]

Real money. Yeah, real money. $1.7 billion deal is going to be a lot of money.

[Will Krasny]

And I'm sure Khuni's going to be maybe spinning off some of these. Maybe those get sold by these guys too.

[Hitsan Samtani]

Let's talk a little bit about Khuni. I don't know if you got a lump sum of cash from your folks or relatives when you got married, Will.

[Will Krasny]

No.

[Hitsan Samtani]

Okay, well, if you had and you were Khuni Herzoga, what you would have done is bought a nursing home with it. So what happens with a lot of these yeshivish type of kids is they get a wedding present, which they then parlay into real estate right away. It's a super savvy thing. I wish more of us did it. But they can start essentially amassing a portfolio of real estate at a very tender age because they use their wedding capital and many of them get married quite early. I think Khuni's about Our age, but probably has several kids and actually had a very star studded bris for one of them. Recently, the who's who of real estate showed up.

[Will Krasny]

WhatsApp was popping.

[Hitsan Samtani]

It was covered by. It was. It was covered by cbn, which is kind of this TMZ for the orthodox world. I get some of the videos.

[Will Krasny]

Wait, what does CBN stand for? I must know.

[Hitsan Samtani]

Oh God. I don't want to misspeak. It's not the Christian Broadcasting Network, I can tell you that. But man, these guys throw a party. But again, it's a very insular community and a lot of these nursing homes that we talk about trade within that community.

[Will Krasny]

It's funny because these people rise out of nowhere and do massive deals at young age. This is not too different. It's nursing homes versus Williamsburg multi. But infamously, our guy, my guy, Yoel Goldman. Yoel Goldman, who sort of came out of nowhere and took over Brooklyn by storm. Why aren't the institutions doing this if it's so financialized? Is there any reason for that?

[Hitsan Samtani]

You really need to know the right people and you need to be connected within this space. And that's part of it, I would imagine. The other part of it is just the reputational. The headline risk from this space is so massive. If you're Blackstone or Brookfield or whatever and you're taking retiree money and then you're going to be in these headlines for Tish James is right over you kind of crusading. It's not easy. And there's a reason people stay away from these spaces is because they're very messy by design.

[Will Krasny]

This is one of the few areas where a single guy or a family can put together an empire that's institutional in scale and size, which you used to be able to do this type of thing in multi or office or industrial and you really can't anymore. And this is one of the ways you can still do it. And it's being done all throughout Borough park in Deal, New Jersey and Lakewood,

[Hitsan Samtani]

New Jersey, not Deal, New Jersey, sorry,

[Will Krasny]

Lakewood for the summer.

[Hitsan Samtani]

No, these are the wrong crew.

[Will Krasny]

God damn it. Sorry.

[Hitsan Samtani]

When we're doing this pod three years from now, when Blackstone or Brookfield or one of the institutions has their prospectus on this space and the way they frame it is going to be so fun.

[Will Krasny]

Oh yeah, that'll be great. Because it's going to come.

[Hitsan Samtani]

You want to take a shot off the cuff how it's going to read.

[Will Krasny]

We are adding value to the seniors lives through value enhancement strategies. Focused on resident experience, better amenities, and of course financing the ever loving piss out of these buildings as fast as we can.

[Hitsan Samtani]

BGO bought Bell.

[Will Krasny]

Oh yeah. Just now just got a tech. Apparently.

[Hitsan Samtani]

I knew this was on the way. It was just probably announced.

[Will Krasny]

I wouldn't have bet that.

[Hitsan Samtani]

Oh, so Sun Life bought Sun Life, consolidated its ownership.

[Will Krasny]

Oh yeah.

[Hitsan Samtani]

And then BGO bought Bell. We're excited to announce that Bell Partners has entered into an agreement with BGO to combine our businesses, bringing together two highly complementary platforms with deep expertise across us. Multifamily and commercial real estate.

[Will Krasny]

Bye bye Bell. So this is live podcasting. We just got news that Sun Life consolidated its ownership in BGO and they bought Bell Partners, who you've been talking about being on the board market for some time now.

[Hitsan Samtani]

Yeah, a few months now. They've been soul searching. Bell Partners is one of those classic firms that was big, but maybe not big enough to compete in this new reality. And so they had been shopping themselves and BGO picked him up. Giant fund manager formerly run by Sunny Calce, who is now, I think it's Sun Life. And Sun Life just picked up bgo, so.

[Will Krasny]

And spins into what we wanted to talk to in our final story, which was Camden Property Trust naming a new CEO as Rick Campo, who was the co founder and longtime CEO. Since they'd been public, I think they went public in 1993 and been CEO the entire time. Founded the predecessor companies or co founded them in the early.

[Hitsan Samtani]

That's a lot of earnings calls, man. That's a lot. Geez.

[Will Krasny]

But to me you're like, okay, they promoted their president, big deal. But Rick Campo was the last, I think, of the founder CEOs in the public REITs space.

[Hitsan Samtani]

Of those large REITs.

[Will Krasny]

Yeah, right. Of these big REITs. He co founded this company in 1982, had been CEO since 1993. And it's really the end of an era. And the Bell Partners news is spot on here. The big swinging dicks in real estate used to be these local guys who could gobble up assets in their local markets.

[Hitsan Samtani]

They made it through the SNL crisis.

[Will Krasny]

Yeah. And were able to make it to the early 90s and took their companies public. Again. This Ethan Penner long form interview from maybe like 10 years ago.

[Hitsan Samtani]

Pre his governor delusions.

[Will Krasny]

Yeah. Pre him kind of going off the deep end a little bit is one of the best things I've read about the real estate finance industry.

[Hitsan Samtani]

We'll put it in the show notes.

[Will Krasny]

He talks about a lot of these guys. They were entrepreneurs. They Took real risk with their personal balance sheets and created these companies out of nothing. And they weren't operators necessarily, they weren't really financial engineers. They were just guys with charisma and guts who could put things together and

[Hitsan Samtani]

a sense for a deal and the ability to just grid it out right when they needed to.

[Will Krasny]

And yet folks like this who built massive companies, John Williams at Post Properties, George Cates at maa, Edward Louder at Colonial, and all of these companies, they weren't founded in New York, they weren't founded in la.

[Hitsan Samtani]

Where is MAA again is in Memphis.

[Will Krasny]

Can you imagine that? The largest or second largest apartment owner in the country is in Memphis. And that stuff just like doesn't happen today. I'm looking at this portfolio in like a non real market. It is a real market, but like a non gateway market in the mid Atlantic. And I'm going through like title, UDR owned these things like 25 years ago that would never happen today.

[Hitsan Samtani]

It all starts from cost of capital, right? That is the original sin here.

[Will Krasny]

MAA can't lever an asset at the asset level as much as Blackstone can. We don't care about equity cost of capital as much anymore. We care about debt cost of capital. And the private guys just can do it in spades.

[Hitsan Samtani]

Right? As we've talked about with with our friends at Apollo, they're able to create this perpetual stream of capital through their insurance arm, Athene.

[Will Krasny]

But I think what's interesting too is that we talked about you got to be a sharpshooter, you got to be the other end of the stick. And if you're a big reit, you're kind of neither. And you're subject to the vicissitudes of the public markets and you don't have the flexibility. Owning these businesses or these assets on your balance sheet is really tricky. And having a fee stream from other people's capital is a much, much better business.

[Hitsan Samtani]

What is Alex Jesset's job going to be in the next decade or so with Camden? How does his role or his mandate differ from what Campo had for the last 30 odd years?

[Will Krasny]

Well, Campo and his co founder made something out of nothing. And the job now is don't do anything that stupid and eventually get bought.

[Hitsan Samtani]

Remember when we talked about Tom Cousins and what that company used to be

[Will Krasny]

and now a romance of it all.

[Hitsan Samtani]

They're now buying frickin boring buildings in Austin and whatnot.

[Will Krasny]

There's another story recently that hits this perfectly is that Blackstone had this 5,000 unit multi portfolio several states oh, the 850 million refi. Yeah, yeah, yeah. $850 million refi. They kicked in a $95 million cash in refi to do it. They bought it in 21. This would have been a public company 30 years ago and it's now Blackstone just being like 95 million bucks, like, no problem. It would have been an existential crisis for the founders being like, how do we come up with this money? We're so rich, we have no liquidity. How do we get this refi done and get public? And now it's just Blackstone being like, eh, it's fine.

[Hitsan Samtani]

Let's talk about the freaking 1031 DSTs, which is the whole new wave. So Blackstone recently, this is so corny, but on 1031, at 10:31am they announced DST, a Delaware statutory trust.

[Will Krasny]

Get some help.

[Hitsan Samtani]

At 1031, investor invests into the DST. Their money's locked up for two years. At the end of that period, Birit has the right, but not the obligation to uproot these properties into the fund in exchange for operating partnership units. The perfect AUM gubbling vehicle for our age.

[Will Krasny]

It's been retail focused forever. If you're a dentist and you owned your own building and you sold it when you retired and you're like, oh my God, what am I going to do? You don't want to pay the taxes, you could wirehouses, RAs, your financial advisor could all put you into these types of DSTs. Pasco, Capsquare, there's a bunch of these and, and Blackstone now wants to take that money too. They're taking the random millionaire dollars into their hedge fund and they're going to take the random dentist dollars in their dst.

[Hitsan Samtani]

They're also targeting investment sales brokers. Their distribution channels are now changing a little bit because they want to. They don't just want that Indian doctor, they want the action everywhere.

[Will Krasny]

A couple of groups that have done a really great job of this, the New York Multifamily group at Marcus and Millichap has made a cottage industry of transitioning people out of New York multifamily.

[Hitsan Samtani]

What's funny is that Blackstone announced this thing at a Marcus and Millichap conference.

[Will Krasny]

Funnily enough, makes sense. You get sick of owning in Bushwick, you can go own a Taco Bell in Chattanooga.

[Hitsan Samtani]

Nuveen recently announced a 1031 DST. Fortress also recently announced one of these vehicles.

[Will Krasny]

It's a way to get retail money into your system and I think if you do it once the idea being like this is a way that you can get someone's whole financial life onto your platform is if you do the trickiest, hardest transactions for them, they'll invest in your hedge fund. They'll invest in your private credit entity as well.

[Hitsan Samtani]

You just got to get them on that treadmill.

[Will Krasny]

You got to get them on that treadmill. I'll tell you what, in 1983, when Rick Campo got on that treadmill, if he fast forwarded 40 years, he would not be putting together all those multi deals. He would be figuring out a way to get his DST moving and take all that feeload up front.

[Hitsan Samtani]

That's it for the promote pod this week. Aum Gobbling's unstoppable rise means you either have to get really good at one thing or catch a ride on a juggernaut. A megadeal in the sniff space sheds a little light on how that in the shadows asset class operates. And the capital markets are going private, which gives rise to a whole host of exotic vehicles.

[Will Krasny]

We'll be back next week with more cre insider goodness. Thank you again to our sponsors, Bravo Capital and loan boss.

[Hitsan Samtani]

You can find them at bravocapital.com and loanboss.com and if you are a commercial

[Will Krasny]

real estate organization that's looking for someone to come spice up your conference, we're available.

[Hitsan Samtani]

Should be fun. But please have good snacks because Priya had some really good snacks.

[Will Krasny]

They did.

[Hitsan Samtani]

I really snacked out this last couple days.

[Will Krasny]

Yeah, the phone chargers they passed out were incredible.

[Hitsan Samtani]

So you stole one, did you? No. You stole one. I saw it in your bag when you left. No, what are you talking about? I don't have it. I'll see you next week, man. Thanks.

[Will Krasny]

Thank you.

[Hitsan Samtani]

Ciao.