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There's a trope in old Bollywood movies. The patriarch of a dynasty is on their deathbed. A city slicker comes to visit. And through false pretenses, charm or threats,
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or a combination of all three, or
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a combination of all three, he convinces them to sign away their most valuable holdings to him.
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Well, it sounds like old Bollywood has found new life in Miami Beach.
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Welcome back to the Promote podcast, your insighted guide to the money and mania of the CRE markets. I'm Hitan Zamtani.
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And I'm Will Krasny.
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A shout out to our sponsors, Penceford, the only interest rate advisory firm focused exclusively on cre.
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Bravo Capital, a leading HUD and bridge lender that lives and breathes capstacks and
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cohorts, a private vetted peer group of GPS that are going through the same challenges as you. This week we discuss multifamily's mega marriage of convenience. After getting no love from the street for being merely huge, multifamily, REITs, equity residential and Avalon Bay are considering a merger now. Will overuses the word tectonic on this pod, but I think it really does apply here.
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The first time I really saw the word tectonic used in a news story was when Eric Schneiderman got me too'd. He was the former New York Attorney General.
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I think that qualifies. So we're gonna dive in as deep as we can. We then leave the public markets behind for a telenovela playing out at an old school Miami real estate family. Major developer Terra Group's David Martin is being accused of playing the part of a Bollywood villain. This is the exact kind of story lineup we love at the Promote. A little meat, a little masala.
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It's gonna be a hoot. And we have a big announcement. Huge. Our swag store is now live. I'm using swag colloquially because the quality is much higher. It's not swag. I love them, but it's not Daniel Ricardo's merch, which when you wear it once, it, like, disintegrates. It's very high quality. Look at this.
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It's pretty good. We're calling it CRE's Merchant bank because we're nerds like that. It's live now through the promote.com or directly at the Promote store. That's the promote store. Hats, hoodies, T shirts, and more. The perfect gift for the CRE junkie in your life.
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Let's get started with the punch list, our signature rundown of the newsiest news in CRE.
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This week's punch list is brought to you by DealNav, a map for a CRM and deal tracking tool built by
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acquisition fiends for acquisition fiends, DealNav helps dealmakers keep their pipeline tidy without the bloat or price tag of legacy SaaS.
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Our listeners get 50% off their first year. Go to deal-nav.com and use code thepromote at checkout. All right, let's go.
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The hotel Cabe Fournier. I wrote this one for anyone wondering
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what's going on at 11 Howard.
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So we had a court case. Commers bank or Commerce Real Estate?
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A, it's a subsidiary of the German lender.
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Subsidiary of the German lender and abe Dammit AB Now I don't know if it's a bidder.
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It's what, it's just what you believe.
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That one was completely on accident. So ab, who is known for having a lot of German equity and as well as German debt, is in risk of losing 11 Howard, which is Anna Delvey's favorite hotel.
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What's her claim to fame again?
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For those unfamiliar, she was a famous grifter who story went viral.
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Kind of ran amok on the New York high scene for for a couple years before she got caught.
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Tried to buy 281 Park Avenue South. So this was her where she stayed and ran up a gigantic bill that she couldn't pay. I think it was a Holiday Inn. Oh, okay. When AB bought it in 2014 and spent a ton of money converted it to this boutique super high end. When I think of this hotel, I think of Frederick eklunden like circa 2017 million dollar listing. New York being like SoHo. The deal that they struck after delivering this hotel is really interesting. They sold the hotel to Commerzbank but leased it back for 10 years with an option for both a further 10 year extension and the option to buy it back over time. So basically they locked in a certain profit but then got like schmuck insurance in the form of being able to still operate the hotel. So they blew it out of the water.
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And what is Commerce alleging now?
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So one of the things is when you're leasing something, you generally have to pay rent. Yes, they sort of stopped doing that.
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There's a great quote and you normally don't hear this from a lawyer for a German bank. It's DLA Piper's Anthony Coles said something like they stiffed us and it's time for that to end. One of the big takeaways for me from this case, a lot of local players are able to strike these Unusually creative deals with the dumb blender sitting somewhere in Europe. Right. And it's interesting when they unravel.
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What I keep thinking of is waterboy.
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It's like the chickens are coming home to roost.
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Bobby Boucher. That's kind of what I think is happening to AB Rosen right now.
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All right, next one. Newmark's leasing fees rose 20% to an all time first quarter high. And they attributed this to markedly higher office volumes. We talked recently about CBRE having a monster quarter as well in large part by the AI boom in their data center practice. But here Newmark is saying basically leasing has been on a tear.
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First of all, I'm following up on this because one thing about me is I will follow up until you die. And we're closing the loop and we said we would follow up with what Newmark did and God damn, we're doing it. So net absorption, everyone's been banning about New York, which essentially means that people are taking more office space than is being delivered.
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It's at a 25 year high at the moment.
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And so office is really tight. We've talked previously about the record price per foot New York being set twice in the first quarter as well. But this is not just a handful of 5,000 square foot family offices from Mexico coming in trying to impress Hermione Granger. It's like depth of demand across quite a lot of space. And there's one we're going to talk about right after this which isn't even factored into that statistic.
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All right, so this one, the biggie Anthropic is coming in and taking the entire building at 3:30 Hudson. That's an AEW Capital joint and this is a 465,000 square foot property. And they're like, we'll take it all. And they've done this before we just talked about in sf. They ran the same playbook at the property that is owned by Blackstone and divco West. Just a major shot in the ARM for the office market. When you have a tenant like this that has insatiable appetite for space and that kind of revenue run rate is just. Have you seen that chart?
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Yeah, it's ludicrous.
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Finance, insurance, real estate and legal, those have traditionally been the big drivers of the New York market.
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But now it's tech and within tech, specifically AI. This is a massive lease we used to hear about like, oh, it's Clearly Gottlieb taking 500,000 square feet at whatever.
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Funnily enough, they also just signed for,
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I think 475 that's why they were in my. I saw it somewhere. It just speaks to if you need space for anthropic, they need it yesterday. Because to that revenue chart you talked about what I loved is I think they had 16,000 square feet before this. Generally you sort of go up the escalator. The move here is that AEW as soon as that ink is dry this needs to be on the market.
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This is moving. One of my big takeaways is actually on the brokerage responsible for this. This is a JLL deal. JLL also wrapped Anthropic on the SF building that we just talked about. The reason JLL is in the mix here is that they bought a company called Raise Commercial Real Estate a couple years ago. Now JLL has played around LARPing and PropTech for a long time and done really pretty much nothing. But this M and A actually moved the needle because a couple of those guys at Raise have become the go to tech brokers for the AI Boom OpenAI and throughout Big companies like this. And so they're making it rain and JLL is benefiting as a result. Whereas JLL spark. Look at the investments. There's nothing much going on there.
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That's just proptech writ large. The stuff that matters is the old school bricks and sticks and having these folks out there because again the isales, that's the sexy part of this business. But it's the financing, it's the leasing. Those are really what drives revenues and drives earnings overall. Anthropic. Their growth rate remains exponential. So too do the tenant rep commissions paid to JL for this.
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They haven't yet gone into the construction of data centers. Which brings us to our next one. What's going on here with kkr?
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They say what the wise man does at the beginning, the fool does at the end. And we've just talked about Blackstone a couple weeks ago launching their public data center vehicle. Related has a data center vehicle. So KKR is getting on the action. They've raised already more than $10 billion to launch a company to develop and operate AI infrastructure. Because as you might have heard, this is somewhat of a hot topic.
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How do you not get into this when all your peers are raising billions of dollars and shoring up that aum, you kind of are compelled to do it. If you're left out and you're wrong, you'd rather lose a bit of money down the road and no one knows but you're getting left out right now. FOMO is such a powerful force in investing as we've talk, Right.
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And if you're publicly traded, the carry doesn't matter. Your balance sheet investments don't matter. What matters, what is your fre, what is the fee stream, how long is it locked in for and how full freight is it? When the ducks are quacking, you got to feed them. If you're going to raise this $10 billion and you don't do it, that's $10 billion. It's going to go to Blackstone's vehicle, it's going to go to related's vehicle, it's going to go to any number of other firms that are going to do this. Might as well figure it out next one.
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We had Alan Stalkip of GVL on a couple weeks ago, pretty controversial interview. We got quite a bit of feedback on that one. What did he say to us?
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He said, I want to do interesting things with interesting people with no obligations.
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But guess what? Starwood has just stuck him with a pretty fat responsibility. They have won summary judgment in three cases against gva. One of our favorite phrases, bad boy carve outs, saying he personally, Alan Styleka personally, is on the hook for tens of millions of dollars.
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We almost got a baker's dozen worth of tens of millions of dollars since $110 million that they're asking. Multifamily financing is generally non. But for if you do bad stuff, which is the aforementioned bad boy carve outs. So these were non recourse loans that become recourse because of alleged behavior by the sponsor.
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With so many of these multifamily syndicator loans gone to shit, lenders are taking a very, very close look at their documents and seeing if there was any chance that sponsors have tripped up covenants and then going after them on these bad boy carve outs.
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Right? Because what happens is a lot of these properties have gotten capital starved. And so you can't just let it sit extending and pretending on something where the value is not just the value, but like the overall earnings power of the asset is declining. That's where you really get in trouble. And I want to differentiate between value and earnings power because the value is dependent on a lot of different factors. What's capital doing in that market? What are interest rates?
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Very much both macro and vibes driven.
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Right. And earnings power. Can you generate more NOI tomorrow than you can today? And that's really what you can control as a sponsor. And so what happens is if a property is struggling, you end up in this doom cycle where there's not a Lot of cash. You start not doing the R and M you need to do. You don't staff it the way you need to do it to try to prop up cash flow. More stuff breaks, occupancy goes down, bad debt goes up, you don't have much cash. You end up in a little bit of a spiral. And that's, I think, what a lot of these lenders at Starwood and benefitstrade are worried about. And those two groups are very capable of taking this over and running these things. That's always the issue. The old saying, if you owe the bank a million dollars, it's your problem, but if you owe the bank $100 million, you own the bank. Yeah, but these guys aren't banks. They're happy to take it over.
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They're happy to take it over and they're happy to squeeze as far as they need to squeeze.
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Indeed.
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That is it for the punch list. When we come back, we'll be discussing a marriage of equals in multifamily.
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Speaking of capstacks, one of our anchor sponsors, Bravo Capital, lives in them. In just five years, they've become a leading HUD and bridge lender.
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SNIFFs. SNFs are a total labyrinth of policies and procedures that vary state by state, so it's easy for sponsors to go astray if a lender's not deep in the mix. Bravo is. And they put out good content about this as well.
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Totally. Their white paper. We'll drop it in the show Notes is a clutch primer to understand the investment gap in healthcare, real estate and overall, I think Aaron and his team are thoughtful and pretty sharp.
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the promote sent you.
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We talk a lot on this podcast about Aum gobbling, but there's not really Aum here. This is more like renovated backsplash gobbling.
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I feel like this is the natural culmination of everything we've been talking about on this podcast for the last few months.
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I know. This is like when Bill Simmons threatens to end the rewatchables. This is where we are.
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This is it. So REITs aren't getting enough love. Multifamily's getting hammered for many reasons. Only the biggest of the big will survive this next phase, et cetera, et cetera, et cetera. It has all come to this. Avalon Bay and Equity Residential, the number four and number six multifamily owners in the country, are considering a merger, according to Bloomberg. That's huge news.
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It is. Each of their market caps are around 25 billion, so that obviously excludes debt. But they are the top apartment REITs in the US when measured by market cap. And so this is creating an absolute
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behemoth, or would combined we're talking about 174,000 units, give or take, and massive,
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massive amounts of units in New York and California, where EQR are huge. And then of course in sun belts and a lot of those in the markets.
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They have a pretty big concentration in Boston too. In fact, these two companies, when they combine, Boston might be a sticking point because they're going to control quite a bit of inventory, despite what Jay Parsons and some other people say.
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Let's get into that first. So J. Parsons brings up sort of the amount of apartments nationally and then in each of their target markets this combined pro forma company would own. I think it's telling that one of the first things that comes up here is antitrust.
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Yes.
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Because these companies have gotten waxed. There's real threat that this merger would go an antitrust review, even though both of them, the reason they're merging is
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because they're doing badly, getting rocked. So why is this happening? Housing, as we've talked about, is the most politically fraught issue in the country. Both the Biden administration and the Trump administration, funnily enough, have made big real estate their pinatas on the campaign trail. And otherwise they've talked about too much power concentrated in the hands of Wall street homeownership is the American dream. It's being threatened by these large behemoths, et cetera. We're also talking in the wake of the massive railpage antitrust lawsuit where a lot of these companies were hit with class action lawsuits, were actually named by the DOJ in the Crusade Against Rail page as well. Yeah.
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The reason this is happening is because the companies aren't working as public companies. And this has been one of the most challenging environments. It's funny because you look around and we don't have unemployment at nine and a half percent like you would in the Great Recession. You have this burgeoning industry in the US which like threatens to change how the entire global economy works. And you wouldn't think all of these apartments are just getting annihilated. These big companies, you think they're insulated. They're not. EQR stock is down 12% over five years. Avalon Bay down five. These guys own the best apartments, the
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best of the best. There's been an oversupply for a long time as well. Right. That's impacted rent growth quite a bit.
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That's been a big part of it. But it's also just been again, valuations. We talked about the difference between value and earnings power. What's happened is the value of these is just lower because if your cap rate goes from five to six, that's a lot of NOI growth you need to hit just to keep your head above water. There's a difference between private real estate and public real estate, which is not just that one is a public reporting vehicle and the other doesn't have to deliver daily liquidity or daily marks. The difference is the asset level financing. EQR and Avalon Bay. A publicly traded REIT cannot take the amount of leverage that a Blackstone can like a GVA could. They can't really use bridge debt. All of the ways that as the market has gotten more efficient, you have to finance your return and create it through financialization. They can't really participate in that. And if all they're trying to do is buy a good product in good markets, you just have eliminated this entire swath of return, which is a crucial part of the real estate business.
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And in the meantime, you have this incredibly massive overhead. Labor costs have gone up, raw materials costs have gone up. Your cost side of the equation keeps creeping up and you're not able to find the alpha in the capital markets.
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These guys are big enough to where being public from a cost standpoint makes sense. If you're $1 billion or whatever, you are below a certain threshold. The SG&A drag is just too the public reporting costs are too high. These guys are past that. But your point remains. Owning multifamily business has gotten worse and you have to do it with one hand tied behind your back. Camden just did a unsecured Note at like 4 8. I think. I'm like, I got a freaking Fannie quote at like 4:9.
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You would typically expect it at 3:5 or something. Is that what you said?
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Yeah. The cost of capital, having this massive balance sheet supposed to drive it down. It's just not there. There's no way that the co host of the Promote podcast should be able to finance his apartment acquisitions the same as Mid America.
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Don't sell yourself short. What is so stark here is that a lot of the AUM gobbling that we've been talking about on this podcast has been let's take that Nmade C50 list again, has been in the lore depths of that list. We talked about Bell Partners putting itself up for sale and then eventually being bought up by BGA Apollo with Bridge Investment Group. There's been so many of these, but now we're talking about the very, very top of this list. Besides the antitrust, which is going to be quite a significant hurdle for them to overcome, there's also the political heat that they're going to get at the local level because as we said, state senators, mayors, et cetera, have had no qualms bashing a lot of these landlords.
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I can't wait for some of the hearings where they talk about how private equity is going to control a huge chunk of the market, when of course neither of these are private nor are they equity. And that's a great point, because they're going to have a lot of really affluent tenants who vote and rents are going to be going up ideally, even though they haven't really been over the last couple of years.
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What is the alpha here? So let's say we have a company that's got 175,000 apartments, which is what the EQR AVB merger would look like. Where are we finding advantages? If you recall, our multifamily insider at one of these big institutions wrote a piece for the Promote Insider and he said it's the difference between controlling your cost structure and being at the mercy of it. Procurement, centralized leasing, staffing ratios, tech deployment, etc. None of it works at 25k units. It starts to work at 50k units and at 150k it becomes a genuine moat.
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Well, they would be the only company in the United States that owns more than 150,000 units.
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Yeah, yeah.
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So that should tell you something. It's the same thing as manufacturing. Where how Amazon turns all of their costs into revenue centers.
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Yes.
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Because they have such scale, they can do stuff for pennies that make sense for them that you just can't match as a smaller person. There's not a lot of people who can sell enough H Vacs to service all these people. It's hard to find enough ranges, enough stoves. If you're able to do full H Vac replacements at like 5,500 bucks and other people paying nine, it means you can buy more. The market has gotten so much more efficient. That's how you have to eke out these little edges. That stuff matters. I talked to a guy who bought a deal. They're like, yeah, we bought it like 70s vintage, low 5 cap, basically neutral leverage. But we know we're going to be able to do this one certain thing that we've been able to do at other properties that's going to increase top line regardless what happens to market rounds.
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What does Pacino say in any given Sunday? Inches.
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The inches we need are everywhere around us. I coached high school basketball in the off seasons when I played professional baseball.
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It would be okay to just say, you coached high school basketball?
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Oh, wow.
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Did you need that extra professional baseball thing?
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Always. And I gave the inches speech because I just assumed no one had ever heard it. And like afterwards one of the kids came up, he's like, that was the greatest speech I've ever heard in my life.
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Inch by inch. Okay. We clearly see the advantages or the perks of going and making this happen. What about from a Wall street investor standpoint? Why would a investor look at the combined company and say, this is a better prospect?
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It's the same reason you'd see in other industries where people do horizontal integration. Look at coal, not a similarly challenged business, because coal is like a depleting asset over time and multifamily apartments are not, but something that has sort of struggled and people are looking to get bigger, reduce costs, reduce overhead and generate returns that way. That's the same type of thing you're seeing here.
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The sentiment among REIT I bankers is that this is the biggest push towards getting bigger that they've seen since the gfc. Everyone is either looking to find growth capital or gobble up entire portfolios. The most telling quote is what Jonathan Morgan said when the NMHC came out. I think they were number two. Jonathan Morgan, who recently took over from dad Said one spot to go.
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Yeah.
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So we're seeing this fetishization, if you will, of size and just getting bigger and bigger and hitting those economies of scale. It's going to be super interesting. But then there's still room for, as we've talked about, hopefully the sharpshooters, the people with a very, very defined niche strategy who could figure this out.
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That's actually why this is such an interesting potential transaction, because that's how these companies started.
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Let's get right into it. So one of our obsessions on the the promote podcast is this transition of CRE from the cowboys to the suits. And man, the progenitors of these two companies are the ultimate cowboys. We're talking about Sam fucking Zell and Trammel fucking Crow. These are the two biggest GS in the industry.
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Two of the godfathers.
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Can you name the CEOs of EQR Navy B right now?
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Quick, I should. I don't.
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I didn't think so exactly. Because they're faceless people. I think this is the point we're trying to make. We went from Sam Zell, who for real rode motorbikes in the UAE at midnight with the now ruler of Abu Dhabi and Trammel Crow. Legend has it he would stand up from his desk, take his shoes off and say, I think better lying down. And he would just lie down and the meeting would continue around him. We lament for the loss of kings.
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Like we used to be a country.
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We used to be a country. It's that transition from a personality driven business to an institutional, suits driven, structured finance kind of business.
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Let's talk about how these companies have evolved over time. EQR was founded by Zell as part of Equity Group because he had Equity
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Office Properties, famously went to Blackstone and
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then he had the mobile home park company too. But this started with vintage garden apartments at scale. Famously, Barry at Starwood Capital Group's first fund was almost exclusively apartments post savings loan crisis.
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This is the one where the legend is going to the auctions with a bag of cash kind of thing, right?
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And then Ethan Penner financed him with a CMBS loan. One of the earliest CMBS loans, legend has it here too, is that when he went to sell to Zell, Zell tried to retrade the deal in the office. And Barry, with a young Bob Faith by his side, left.
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Bob Faith of Graystar.
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Yeah, and left the meeting, was like, no deal. And got a call that afternoon from Zell like, all right, we're good. And that was in an effort to Beef up. So I think Starr would own something like a third of eqr. When they went public and the shares
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were distributed, these are still the guys who are calling the shots in the industry. Bob Faith now runs the number one landlord in the country in Greystar, and by far the biggest property manager as well. It's amazing when we think about the PayPal mafia of real estate, it's these companies, Tramelcro, Starwood, they've spawned.
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It wasn't Starwood, it was jmb. JMB is the real one.
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Long form, yes. Oh, we should probably do an episode on this whole thing.
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Yeah, let's do a JMB episode. But the point being, he started with scrappy, entrepreneurial, kind of shitty garden apartments in Colorado Springs and now EQR are the most high end coastal markets. Super high barrier to entry. Avalon Bay, kind of the same thing. This is all an offshoot. Trammel Crow Residential, which is one of the most legendary multi family development shops you had. Lincoln, Hamilton, Avalon Bay, Transwestern Vantage, speaker, offshoots of Trammel Crow, the baby bells, like when they split and then they all kind of come back together. And we've saw this type of activity before. As you said in the great recess session. Layman took Archstone private, Blackstone took EOP private. Famously almost lost their shirts.
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Almost lost their shirts. But then turned it into the legendary deal of that cycle.
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So that's the last time we saw this type of activity. And this is kind of what it's going to take. We talked about the NBA being a make or miss league. Being a REIT's a make or miss league. You're above or below your nav. And if you're trading below your nav, it's not a great place to be. And you got to figure something out.
A
Ever been sued by an lp? Brought property management in house and instantly regretted it. Worked with a lender who then ghosted you.
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Not an lp. Yes. Also yes. So I've had all three.
A
You've written some great stuff for us about how lonely the life of a GP can be. You have questions and fears about stuff that you can't really post on LinkedIn. And that's where cohorts comes in.
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The pain points of being a GP are so specific. And it really helps to have a peer group of people going through the same thing. Imagine getting on a call tomorrow with six other people building real estate companies that have been through what you've been through and get help with the most pressing questions that you have. Hearing it from someone who's been in your shoes is always more impactful for sure.
A
And the messier personal stuff too. Like building a company while raising young kids. That one is too real.
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It's incredibly easy.
A
I don't know what you're talking about. Your son sleeps through the night, so it's different.
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Apply@joincohorts.com that's joincohorts.com and tell them the promote sent you.
A
How do you want to get into it?
B
Oh man.
A
Should we just start with the Abuela?
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Poor, poor Abuela.
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What is going on? So David Martin, who's the CEO of Terra Group, huge in Miami, 5 million odd square feet, $8 billion worth of product. One of the headline names on the Miami condo scene.
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A man of the moment. We're recording on the day of the Miami F1.
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Did it get going? I thought it was raining crazy.
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No, it did. It did. Kimmy won.
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What is happening here is that a lot of developers we've talked about more broadly are finding a lot of the classic land or sites for redevelopment are all spoken for. So there are a couple of things you can do. Go into a property that has fallen on harder times or you can go and do a condo buyout which we've seen all over Surfside, etc. As well. This one is particularly interesting. This is a massive resort property. The Deauville Beach Resort, former resort property.
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So it was owned by the Morello family. Unbelievable real estate. But it fallen on such disrepair that I think it had to be torn down. And this is as good a dev site.
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Miami Beach. Prime, prime, prime. It's pretty damn good. This is almost 4 acres. It's serious real estate.
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So Steve Ross apparently had tied it up and tried to buy it for $500 million.
A
Do you want to just run through the particulars of the lawsuit a little bit?
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The land was owned, I think 50, 50 by a couple Morello family members and underneath that 25% was owned by Abuela.
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Abuela. So Belinda Morello, 88 year old matriarch of the family, owned a 25% stake and apparently she sold her stake to David Martin for just $12.5 million. There are always these mispriced deals and striking one or two of them can change the destiny for your career.
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So Haten, I think we're like bearing the lead a little bit. Under what circumstances did she sign this deal? It was at her 88th birthday party.
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No way.
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Yeah. The lawsuit alleges that at her own 88th birthday party she was lured into a closed door meeting and then, quote, manipulated and tricked into signing away. An interesting in the oceanfront property, which the family has fought to keep in the family for years, that's always the question mark, is if you're 88 years old and you're signing a deal like this, are you compos mentis? That's a fair question. When you're selling something for 10x less than it's worth, potentially.
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David Martin, who was his Trojan horse here?
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It was Richard Morello. It's always those closest to you.
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Martin is accused of enlisting Richard to get access to the family's inner circle a couple years ago. And then Martin learned about Richard's efforts to take over this property and said, I want in.
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And wise broker once told me that I'm as good as it gets. I can never make anybody sell, but I can make him sell with me. And David Martin can't go convince these guys to sell, but he can find someone who wants to sell or want something different and ally himself. That's what you do and that's what the best do.
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You find the little leverage point in any negotiation and you press there.
B
And that's what he did. He found somebody who wanted to take more control. And he's like, you're right that your family's been not listening to you. You need to do this. I think you're totally smart and are going to have like Logan Roy said about Matson to Kendall and Roman, he rates you. And David Martin, who is a guy who's dealt with really tricky things. He just got two huge amendments done in north beach and a dev agreement and a settlement agreement that resolved litigation between the city and the property owners. This is a guy who can roll up his shirt sleeves and in there, that's what he's done here.
A
Did you read the texts in this lawsuit? We should read it out for the tape. Can you see my screen?
B
Yep. Can you talk? Can you talk? Can you talk? Hope you're well. Let me know if you want to connect. Just try Giselle cell. Call me when you can. Can you talk?
A
We have to convince Abuela to go to her memory doctor. She has repeated herself a hundred times to this broker.
B
Repeating does not mean her memory is bad.
A
Short term, yes, because she forgets she just said it.
B
Stop telling her
A
pretty intense stuff.
B
It's like when you go to the doctor and you're like, doctor, my shoulder hurts when I do this. And they just say, don't do that.
A
It illustrates this broader thing of family feuds can rest on these things that Happened behind closed doors. One family member said to another, do you remember the massive lawsuit that has taken over New York, Sol Goldman's empire?
B
It's not dissimilar because you have holding companies onto holding companies and who controls what and who's the manager and who's the member.
A
One of the linchpins of that lawsuit, the Sol Goldman lawsuit, is apparently way back in the day when sold Goldman wanted his wife back, she was threatening to divorce him. You're not going to get a divorce.
B
We're not on the Marley.
A
To win her back, he took a yellow notepad and he just scribbled, you're entitled to one third of my fortune when I die. And apparently this contradicted his official will. So a lot of the battle, which is billions of dollars at stake, is over this note that was on this yellow legal notepad. That's how thin the line can be.
B
It's hard too, because this is a site where yes, it's ostensibly worse, worth tons and tons of money, but for the Morello family to develop it themselves, they're going to need billions of dollars.
A
It's impossible for them to do it. No one's going to give them the financing. They don't have the know how to turn it into what it needs to be.
B
So someone like this has to get brought in because the other thing about a landslide is that it ain't generating any money. These guys are really wealthy, they're really house rich.
A
The other twist about this is this might be a rogue lawsuit. One of the attorneys who claims to represent Belinda and the Deauville Associates that filed this lawsuit said that it was filed, but two granddaughters who went rogue. And this has shades of the incredible Donald Brent statement. This is what the lawyer said. She was very disappointed in her granddaughters.
B
She's not mad, she's just disappointed. We just talked about how the cowboys have turned into the suits over at Avalon Bay and Equity Residential. David Martin, still a bit of a cowboy because this is how it's done.
A
Remember when we talked about Ray Washburn and how he heard that this potentially life changing transaction would happen at the restaurant? How does someone like David Martin get the intel that there is some dissension within the family ranks? You've got to put yourself in position to be able to act on these kind of things. So how do you suppose he heard about this in the first place? Did he have molds in the Deauville resort or something?
B
Real estate again. What's great about it is you can do anything. You can get the other guy to agree to it and you can insider trade. If you're really trying to be successful, especially in this, because he's competing against Steve Ross, he's competing against, against the biggest guy. You have to be ruthless. You have as big a network as possible. You get as much information as possible because you never know what one piece of information can mean if it clicks into place with the rest of the mosaic. You've created all of these guys too. They know the sites. It's like, how and when are they going to become available? And so when it's on, it's a feeding frenzy. You try, always try to be first by having more information than the next guy as distasteful potentially may be taking advantage of an old lady who may or may not be able to remember things. This is how high stakes development goes. Especially when you've got legacy sites with families that have owned them forever and that have real potential skeletons in those closets.
A
This is the business we've chosen.
B
This is the business we've chosen.
A
That's it for the promote podcast this week, two mighty multifamily REITs are weighing a marriage for the ages. Will the antitrust folks and politicians speak now or forever hold their silence? And an explosive lawsuit in Miami beach highlights how family feuds can shape the fate of real estate empires.
B
We'll be back next week with more CRE insider goodness. Thank you again to our sponsors, Penceford.
A
The interest rate people who you can
B
find@pensford.com Bravo Capital, a leading HUD and bridge lender. Find them at bravocapital.com cohorts your go
A
to peer group group of GPS. You can check them out at joincohorts.com
B
and deal nav a map first CRM and deal tracking tool deal-nav.com our swag store is at thepromote.store hoodies, hats tees up for grabs. We're selling pictures of my feet.
A
You never know with extra CRE street credit guaranteed.
B
Honestly, when we started this podcast, I couldn't imagine us having one sponsor and then having to read off that many, including our own merch store. Dream come true.
A
Pretty great. I'll see you next week, Will. Thank you.
B
Thank you.
A
Ciao.
Episode: Mega-Marriage of Convenience and Miami’s Abuelagate
Date: May 6, 2026
Hosts: Hiten Samtani (A), Will Krasne (B)
Main Themes: Landmark merger in multifamily REITs, explosive Miami Beach legal drama, and the evolving power dynamics in Commercial Real Estate.
This episode zeroes in on two blockbuster stories shaking up commercial real estate (CRE):
With their trademark insider banter, Hiten and Will breakdown not just the business mechanics, but also the personalities, politics, and behind-the-scenes intrigue driving these CRE sagas.
(Starts 02:24)
11 Howard Hotel Drama in NYC (03:12)
“There’s a great quote, and you normally don’t hear this from a lawyer for a German bank… 'they stiffed us and it’s time for that to end.'”
Newmark Office Leasing Surge and the AI Effect (05:03)
"Anthropic is coming in and taking the entire building… They need it yesterday."
KKR Gets Into Data Centers (08:24)
"They say what the wise man does at the beginning, the fool does at the end… FOMO is such a powerful force in investing."
Starwood vs. Allen Stalkip/GVA’s Bad Boy Carve-Outs (09:28)
"We almost got a baker’s dozen worth of tens of millions of dollars… The old saying: if you owe the bank a million, it’s your problem; if you owe the bank $100 million, you own the bank. But these guys aren’t banks—they’re happy to take it over.”
(Starts 13:21)
The News:
“AvalonBay and Equity Residential… are considering a merger, according to Bloomberg. That’s huge news.”
Why Merge? Broken Business Model & Political Headwinds
“Both of them, the reason they’re merging is because they’re doing badly, getting rocked.”
The Search for Alpha: Where’s the Advantage?
“…None of it works at 25k units. It starts to work at 50k units, and at 150k it becomes a genuine moat.”
From Cowboys to Suits: Loss of CRE’s Wild West
“We lament for the loss of kings.”
Historical Parallels
(Starts 26:39)
Backdrop:
“Abuela. So Belinda Morello, 88-year-old matriarch, owned a 25% stake, and apparently sold her stake to David Martin for just $12.5 million.”
Allegations & Intrigue
“At her own 88th birthday party she was lured into a closed-door meeting and then, quote, manipulated and tricked into signing away…”
“A wise broker once told me… I can never make anybody sell, but I can make him sell with me.”
The Family Dynamics & Wider Implications
“This might be a rogue lawsuit… She was very disappointed in her granddaughters.”
Big Picture Takeaway:
Direct, insider-focused, and often irreverent—acerbic humor, candid assessments (“getting rocked,” “smuck insurance”), vivid storytelling, and a sense of historic sweep. The discussion is sharply analytical but grounded in real-world backstories and market gossip.
For all the insider drama, technical nuance, and human intrigue, this episode of The Promote delivers a masterclass in reading between CRE’s headlines.