Loading summary
Transcript207 lines
- [00:06]
A
Why do we fall, Bruce?
- [00:07]
B
So we can learn to pick ourselves up.
- [00:09]
A
And why do we pick ourselves up?
- [00:11]
B
So we can generate fees for another quarter or two.
- [00:26]
A
Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Hitan Samtani.
- [00:31]
B
And I'm Will Krasny.
- [00:35]
A
A shout out to our sponsors. Pensford, the only interest rate advisory that's focused exclusively on cre.
- [00:40]
B
And Bravo Capital, a leading HUD and bridge lender that lives and breathes capstacks.
- [00:45]
A
This week we dive into Sunbelt Multifamily kingpin's audacious attempt to save his empire from foreclosure. An attempt that looks to be coming apart in real time. It's then time to talk fathers and sons. A long stalled fight I set may finally see salvation after the lender kept the faith. And finally, the real estate legacy of a capital G. Great man, media mogul Ted Turner.
- [01:06]
B
It's a legend. They don't make them like that anymore.
- [01:08]
A
They really, really don't.
- [01:10]
B
Let's get started with the punch list. Our signature rundown of the newsiest news and cre. This week's punch list is brought to you by Real Property Captive, the first group captive for mid market owners. As a mid market owner, insurance is one of the most annoying things in the world. Fun fact, no one wants to insure anything that I own. Who knew? But I am going to be trying to do a captive. So Real Property Captive, check them out.
- [01:31]
A
Check out their platform@rpcaptive.com to tap into the same insurance framework used by the market's biggest players. All right, first one. Holy shit.
- [01:41]
B
I don't think anything has ever shown the efficacy of cold DMs on LinkedIn like this.
- [01:46]
A
I think you got to tell people because they're probably dying right now. So what happened?
- [01:49]
B
So Wes Edens, co founder of Fortress, billionaire owner of the Milwaukee Bucks, was sextorted.
- [01:57]
A
A femme fatale slid into his LinkedIn DMs and they started a conversation there. Apparently he was telling her about how cool it is to own a sports team. Typical billionaire stuff. These messages eventually blossomed into an affair. Shortly after, the woman, according to this federal indictment, basically said, you gotta pay me. If you don't, I'm gonna go to your family. I'm gonna go to your investors. It got pretty messy. They came up with a settlement of about six and a half million dollars. He just wanted this thing to go away. She then claimed that he gave her an STI and up the ask from six and a half million to $1.2 billion.
- [02:31]
B
Pretty big multiple.
- [02:32]
A
Yeah.
- [02:33]
B
The details in here are kind of amazing, how I think she sent, like, a very long message after one of their assignations saying that I love you with my whole heart. And then the Journal just goes west. Eden did not respond.
- [02:44]
A
We're making light of this, but I think the big takeaway here is that when you're a master of the universe in this Eden style, you kind of have a target on your back at all times. Just don't answer LinkedIn DMS.
- [02:53]
B
No, this is for all the strivers out there. It means you need to send more LinkedIn DMS.
- [02:59]
A
Okay, next one. So Gary Barnett, he closed. He did the deal that we were talking about, the Park Avenue assemblage.
- [03:05]
B
$500 million.
- [03:06]
A
That's just for one piece.
- [03:07]
B
I know with Gary, you talk about a closing, and you're like, he already closed on that, didn't he? And there's nine other different pieces here. So this has been going on for a while. But he was buying air rights from Central Synagogue. He was doing typical Gary things. But he is going large here, just in Midtown. He's got this. He's got IKEA down on Fifth Avenue. So Gary's putting up several billion dollars of towers here. He almost might be cannibalizing himself a
- [03:31]
A
little bit when he goes. He goes big. Billionaires Row essentially created that asset class. And now that the trophy office market is back, he's just been doing this absolutely astonishing flurry of deals in the heart of Midtown.
- [03:44]
B
If you can raise the money and do the deal, you do the deal. Sharks gotta eat.
- [03:50]
A
Okay, next one. One Willoughby.
- [03:53]
B
This was gonna be a trophy office, the best office building in Brooklyn, which isn't really saying that much, because every office building in Brooklyn that's been developed in the last 10 years is sort of like.
- [04:02]
A
Has been a dud.
- [04:03]
B
Yeah. So there was a recent refinancing there, and some of the underlying losses that were perfected in this refinancing are startling.
- [04:13]
A
It seems to always be these two parties. One is the EB5 investors who come in the cash for green card program that has raised billions of dollars for the skyline. And now in the last few years, we've really seen the backlash to that, with a lot of EB5 investors taking a bath and not really having any recourse for their money. And then the second group that seems to take a lot of baths is Le Case Ivanhoe Cambridge, now known as Le Case Quebec. Pension fund money, basically,
- [04:42]
B
Thing one and thing two of NYC real estate torching money on fire. So. So in this refinancing, there was about $120 million. Haircut Lacasse took. I'm going to pronounce it incorrectly. Lacase LA case took 50 million. The EB5 investors took about 65 million. And that's tough because that was 65 million on 100 million of MEZ debt. So basically getting back 35 cents on the old dollar. However, they did get some recovery. And this is my favorite. They weren't completely wiped out because the group exchanged part of its position for a lien on a separate property. You might think, oh, gosh, like there's some high quality multi that JEM did
- [05:20]
A
like a comparable property next door.
- [05:21]
B
You would think maybe, yeah, there's another office building that's fully leased. Right, that's what you would think. It was not. It was a separate property in the Poconos. They got an IOU for $10 million from JEMB on this property in the Poconos. Yeah, the best office building in Brooklyn. And you end up in the Poconos. We gotta come back to this in a year from now. Cause if JEMB misses the a $10 million payment that they owe the investors, that interest accrues at 15%. So just tremendous recovery all around. I give the servicer a lot of credit for creativity.
- [05:57]
A
Okay, next one. You're a boy. One of your picks for the CRE version of million dollar listing was Stefan Soloviev. You have a pretty big crush on this guy.
- [06:07]
B
I do. Tremendous. He is walking around with a pretty fat wallet right now.
- [06:12]
A
You're talking $526 million fat. So what happened here? 9 West 57th street, which is one of the IT buildings and always has been in Manhattan, One of the trophy office towers in the city just pulled off a $1.8 billion CMBS refi. And it's a pretty hefty cash out here. 526 million.
- [06:29]
B
His dad famously kept it kind of not full all the time and didn't like a lot of people who would try to lease space.
- [06:37]
A
If you misidentified the artists on a certain painting, you could be cut off.
- [06:41]
B
When you owned a building with such low le. Such a low basis where rents were as high as anywhere in the city, they assembled the site for $12 million. And this building's now appraised at what, 3.9.
- [06:52]
A
That is what Stefan claims that the building will be worth when it's fully stabilized. I don't think the CMBS was given on that value necessarily.
- [07:00]
B
The CMBS also too, if you do the math on the rate, was like 4.95, something like that.
- [07:05]
A
That's right.
- [07:05]
B
It's like 90 million a year of death service. And I think the building does 105 million of NOI or something.
- [07:12]
A
Right.
- [07:13]
B
So it's a little bit toit, like Tiger, but again, just broke the record.
- [07:18]
A
$327 a foot. Yeah.
- [07:20]
B
And Stephane has spent a ton of money refurbishing it because one of the things about Nine west that it was in every 80s takeover battle and hadn't really been updated since those takeover battles.
- [07:29]
A
The central character in Barbarians of the Gate used to be the HQ of kkr.
- [07:33]
B
You might see, like, Bruce Wasserstein's pat patina on some wall still hadn't been cleaned. That is gone. He spent a ton of money on upgrading it, cleaning it, renovating it, bringing it specs and that location you can't beat. So he's landed some monster tenants. And the thing is a cash flow geyser and good on him. Massive refi. That's what it's all about.
- [07:52]
A
The kid made good. All right, next one.
- [07:55]
B
We had the Boston Tea Party and we really are fighting against the Brits. And now the Brits are just saying, you know what, you are a little.
- [08:02]
A
We're done with America.
- [08:04]
B
And what we're talking about is the Duke of Westminster is selling $700 million of U.S. real estate assets. So this is Grosvenor, which is one
- [08:11]
A
of the old, old, old money. Like, basically everyone in this family probably
- [08:15]
B
looks like Simon Baker, literally the oldest money. The UK assets apparently are doing pretty well and they own, like, all of Mayfair and Belgravia and all those things. And they had a big loss last year because of their North American assets, which is not something they really want to have. And they blame it on the Americans, the ugly Americans. And so they're saying, we're selling everything. And you know what I say? Get out. We don't want you. Why can't you go back where you came from?
- [08:41]
A
That's it for the punch list. We'll be back in a second with an escape hatch. 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.
- [08:57]
B
They've got a stacked HUD operation and also a bridge to HUD solution, so they can do balance sheet senior loans until the HUD takeout.
- [09:04]
A
And they're immersed in a space that we've been increasingly obsessed with skilled nursing facilities, or SNFs.
- [09:09]
B
SNFs. 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.
- [09:20]
A
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.
- [09:29]
B
Check out their platform@bravocapital.com and tell them
- [09:33]
A
the promote sent you.
- [09:40]
B
So the promotes kind of had the hammer on this one. We've been following this since the winter when Trinity, a feeder fund for S2, reached out about a capital call and told their investors to hold off on participating. So what's going on?
- [09:54]
A
Not only did they say hold off, they also said if you have sent the money, you can go ahead and ask for a refund. Just to set the context, Scott Everett, founder of S2, which is one of the big, and I mean big, multifamily syndicators out there in the Sun Belt, I think at his pump he had about 28,000 units. Just like Nitya Tides, et cetera, amassed these at a pretty breakneck pace. A lot of his peers were experiencing distress, hemorrhaging portfolios back to lenders. Scott found a pretty novel way to hang on to some of this stuff. He convinced a bunch of his investors to let him roll some of the holdings, about 10,000 units or so, into a private REIT. And the idea was permanent capital structure. We can get fanny debt. We can wait for things to ride out, we can improve noi and we can make these unit economics work. Didn't work that way, though.
- [10:42]
B
No, it didn't. And first, we don't come to bury Caesar. If you're investing through cycles like this, any of these guys who are eminent now had instances where they blew up. When we talk about people are going through troubles, it's really hard. We're not trying to judge anybody, like, except that guy in Atlanta with the fake project. That guy. We're judging for everybody else, we're not judging. You got to be creative to stay alive. I give give Scott a ton of credit here for getting this private redone because he did buy himself more time. And the only thing you can really do in a situation like this is buy more time.
- [11:10]
A
Yeah, buy more time, hope the macro picture improves, and then do as much as you can kind of on the operational back end. Right. That's what you can do, right?
- [11:17]
B
All of these great real estate fortunes had moments like this where you have to go through workouts, you have to figure out how to buy back your debt. You're staring at a huge mark to market loss. I saw a video of John Gray yesterday talking about the Hilton LBO. We marked it down 71% and we had to go talk to our investors
- [11:32]
A
and tell them that survival is the most important thing.
- [11:35]
B
Sam Zell made a quote one time the same week I was on the Forbes 400 list. On the COVID I was unsure whether we had enough cash to make payroll that Friday.
- [11:45]
A
When we make it, we're just going to avoid the Forbes list altogether. It's a curse.
- [11:48]
B
The real guys don't report. If you know, you know. Having said all that, this thing went
- [11:52]
A
south about a week or so ago. Trinity told our investors that you should probably expect a complete wipeout of equity because S2 is now focused on salvaging the mezzanine tranche of all this.
- [12:02]
B
Right.
- [12:02]
A
For the most part, you are going to walk away with nothing.
- [12:05]
B
You're going to walk away with less than nothing because you're going to get a depreciation recapture bill. So look, he did a lot. He bought another 18 months. And in some cases, if he bought another 18 months beyond that, it would have worked. But the short answer is it didn't.
- [12:19]
A
There's a couple of questions I had when I hear this. Were these deals too far gone to salvage? Was there any potential this could have actually worked? Or was this really him just saying ostrich in the sand? I'll deal with this shit later.
- [12:30]
B
I don't think it was ostrich in the sand, because if it was that, he probably just let it go 18 months ago whenever they did the private REIT. But they're counting on our Dear Leader initiating a tariff war and reducing the amount of cuts in the interest rate from the Fed.
- [12:44]
A
I think Scott went and rubbed the golden statue at the Trump Doral.
- [12:47]
B
I adjust a little bit, but had we gotten five or six cuts this year, which could have happened had inflation not ticked back up because of tariffs, have we not gone to war with Iran? Maybe this all plays out differently. The supply picture is clearing up. That's a real thing. But you just need Runway. Once something like this happens, you need everything to go perfectly and it just didn't. The original sin was buying all this stuff in 21 and 22. That's over. You can't unbuy it. Is there anything out there besides rising interest rates? That scare you?
- [13:13]
A
I'm less actually fearful of rising interest rates and more fearful of what the
- [13:19]
B
Fed's going to do.
- [13:20]
A
You can't do anything about that and
- [13:21]
B
we couldn't do nothing about it. All you can do is fight your ass off right now. And that's what he did.
- [13:26]
A
Unlike Alan Stalco, who we've talked with, who claim claims he's out of the game, Scott Everett is very much active in the market. He raised a 370 million-odd fund to target distressed cap stacks in multifamily. He's still got a bunch of holdings outside of this REIT too. So I wonder some of these things. Are you just trying to keep the headline risk away for long enough to do this other stuff too?
- [13:45]
B
Well, it's really becoming an institution versus becoming a syndicator. Because how many times do we see offices, 2% of our portfolio, or Starwood retail partners, which they never talk about anymore.
- [13:55]
A
Did you peak Barry's quote today in the earnings?
- [13:57]
B
What did Barry say?
- [13:59]
A
Wow, interesting world. We've never been so excited and so terrified at the same time. This is after Starwood missed out earnings.
- [14:07]
B
Scott has this and this is not the majority of his business and that's really impressive. He's been able to raise money and as we said at the top, why do we fall? So we can get up again? He's been able to raise capital in multifamily. He's been able to raise capital, go after his stress. Honestly, it's a lot like another Scott. Scott Rechler with Project Kodak. This is Project Kodak of the Sun Belt. Basically.
- [14:26]
A
Scott Rechler has been so interesting because his original equity has been wiped on multiple projects. Now 61 Broadway at one investment management came in, but the original partners are gone. And then he's recapping it and generating new fees on the new capstack.
- [14:39]
B
And that's what Scott's doing here too. And again, it's a shift from being a syndicator to building a real business. Put all this stuff together, but what it really did is cordon it off from the rest of his portfolio. It was like a firewall so it couldn't take down the whole ship. It was like on the Titanic.
- [14:51]
A
She can stay afloat with the first
- [14:53]
B
four compartments breached, but not five, not five.
- [14:57]
A
In the capital call, there's this interesting table. They were raising about 70 million of pref. They had these projections in there.
- [15:03]
B
Now this is the one thing where you could go, huh? They were offering a pretty big projected IRR here. If you participated in this pref. And they were promising you a pretty big multiple and you were getting equity warrants as well. I would not say, hey, if you put your money in, you're going to get a 34.2% IRR. I would be like, hey, put your money in. You're buying us time, maybe we can recover more of this. You fight really hard to make a 1 1. I don't think you try to promise a 34 because that 34.2 is a 0. Yeah.
- [15:31]
A
Do you think these kind of projections are made because you just need the money right away? You need to entice this kind of investor base to do this and then you go for it?
- [15:39]
B
Oh, yeah, for sure. Because this is a really dangerous piece of capital. You have no security, you're the first to take a loss. And that's exactly what happened. I hear people say, oh, I love this deal, it's a 19 IRR. That's bullshit. This being a 34 IRR. 34, 28, 39, doesn't matter.
- [15:52]
A
96, whatever.
- [15:53]
B
Doesn't matter. What this shows you is that this is a terrifying piece of paper. And if everything works out, maybe you get paid. The question is, do you get paid enough for taking this insane risk? I would argue no. This makes it look like the new capital is going to earn a return. This new capital is not. It's just the paper mache on the top of the structure. The fire hits it, it's just going to all get taken down.
- [16:11]
A
If Everett did this, it's obviously a pretty public effort to get it done, and it's pretty public when it goes down. Think about all the other looming distress in vehicles that are not this private reit. Oh, my God. There's going to be tens of. This is about 9,000 units or so left in this private REIT. But there must be a lot out there.
- [16:28]
B
There's a lot out there and it's starting to get transacted on. We're coming up on five years from 2021. A lot of the debt has five year terms and we've been talking about it for years, like, when's the distress going to hit? And I think it's starting to. The highway is jammed with broken heroes on a sofa fueled last chance power drive.
- [16:52]
A
Everybody's looking for protection and pensford's the place to hide in a world full
- [16:56]
B
of macro hot takes and LinkedIn fed gurus. Pensford cuts the noise. So you know what actually matters when it comes to interest rates.
- [17:03]
A
Whether you're crunching the numbers on a single deal or you've got a portfolio to figure out.
- [17:07]
B
Pensford's got over 10,000 rate caps under their belt. They know their stuff cold.
- [17:10]
A
And their forward curve is the slickest rate tool in the business. Interactive, updated daily. And the thing your capital markets team probably has open on 10 tabs.
- [17:18]
B
Check out the good stuff@pensford.com that's pensford.com and tell them the promote sent you. All right, so let's go from the Sunbelt to Lower Manhattan, which is basically the Sun Belt. It's the Sunbelt of New York.
- [17:38]
A
Amazing story here. It's this development site that I think you were walking by last week, right?
- [17:42]
B
Indeed. We're doing boots on the ground research here at the Promote podcast.
- [17:47]
A
This is a site that used to be known as 111 Washington St. Now known as 8 Carlisle. Odyssey doesn't quite begin to describe what the site has been through. Should we start with the news or should we start with the history?
- [17:58]
B
It's like Anne Hathaway's face in the Odyssey trailer. That's really what we're talking about. There's a bunch of things here. One is like the ownership structure over the last better part of a decade.
- [18:10]
A
Close to 20 years.
- [18:11]
B
Jeez. Yeah. Oh, God. Yeah. We're getting old. So why don't we go back to the beginning and start when this site had a different name, 111 Washington Street.
- [18:20]
A
A lot of fortunes in Manhattan have been made by just owning the right parking space. A mogul called Gerald Browser, who had the site at 111 Washington, and there was a parking lot on the site. He borrowed about 50 million from our friends at NYCB, the artist now known as Flagstar. And he wanted to redevelop the site. His broker pitched it as the first major ground up east of West street since 9 11. So there's a lot of hoopla around this project. He demolished the garage but never actually ended up building anything. So that alone became an npl.
- [18:52]
B
One of the bigger players in Manhattan came in, but then he also had a son.
- [18:57]
A
He also did have a son. Fred and Richard Ohab Shalom came in and bought the NPL, I want to say, in around 2011.
- [19:03]
B
Pinkstone takes title via Deedon Lou Pinkstone is Richard's company. Empire Management is his Dad's. They own 2,000 units, tons of office and retail. So Richard left to found Pinkstone Capital, which apparently his father did not like.
- [19:20]
A
They had a lot of, let's call it, discord between them. Richard actually sued his father multiple times, claiming that his father botched his inheritance and basically mismanaged the portfolio. And this site 111 Washington was kind of in the crux of that debate.
- [19:36]
B
Richard claimed that he worked at empire management for 10 years or something. And he said he was woefully undercompensated, but he had the opportunity to buy 10% of the management company. At Empire Management, the son is basically
- [19:49]
A
griping that he is not being paid adequately at his family firm.
- [19:52]
B
He said, yeah, I'm getting 10% of the residual, which is going to be a ton of money. So okay, fine, whatever. At some point he went to go see how much was there. A million bucks, which there should have
- [20:02]
A
been a lot more than that bucks. Right? Right.
- [20:05]
B
Family businesses are difficult. He ended up leaving, sued his father several times. And so this site, which at one point was worth significantly more than they paid for it, they were way in the money.
- [20:16]
A
Apparently at one point he had a deal to sell it. Fred had a deal to sell it for $148 million.
- [20:21]
B
The adjective I would use to describe that would be tremendously big.
- [20:26]
A
I might choose something else. I might call it woefully deficient as Richard.
- [20:30]
B
That's what Richard called it. And sued his dad to block the sale.
- [20:35]
A
He basically said his father created a low ball price to pressure him on concessions on their other dispute. He's like, yeah, not only was the price crap, it was a malicious effort to get me to do something I didn't want to do.
- [20:48]
B
Right?
- [20:48]
A
And listen, man, I have a one year old, you have a one and a half year old. This stuff is the fucking stuff of nightmares.
- [20:53]
B
That's why it's just sell it all. The best real estate to pass on is no real estate.
- [20:58]
A
So anyway you can imagine, will any back and forth like this ain't good for ground up development.
- [21:03]
B
No, it is not. Because time kills all deals, especially ground up development, especially in lower Manhattan. They end up going into default. They sell the site to Grub Properties for an extremely woefully deficient 90 million
- [21:16]
A
ish, which is basically 60 million under that low water mark that he talked about. We'll talk about Grubb in a second. Who was on the debt stack at that time? There was Fortress.
- [21:26]
B
Yes, West Edens. I wonder if they sourced the deal on LinkedIn
- [21:33]
A
in 2021. Height of the pandemic. Grubb Properties, which comes out of North Carolina, run by a guy called Clay Grubb. I believe his father founded the firm. Comes in here. They're also doing a project in Lic which is another ground up diving in on the deep end here. The fortress debt on the thing gets right sized to about 60 million. A couple years later they land about 45 million or so from Naftali's credit
- [21:54]
B
division as a bridge loan and then they refi it again.
- [21:58]
A
Just keep in mind the time though. The rates are going absolutely haywire at this time.
- [22:02]
B
Peak rate hikes, inflation through the roof. Awful time for ground up development. And they just grin and bear it. They refi the site again.
- [22:09]
A
This is where Maxim comes in. We should say a little bit about Maxim here.
- [22:12]
B
It's founded what, by the Mercury Crew?
- [22:14]
A
Yeah, Brian Steiner and Adam Glick. The promote actually just featured them in their lenders to Watch list that we just dropped. They've been all over capstacks nationally. This one is really fascinating. So they kept upsizing the loan here.
- [22:27]
B
I think it was initially 67 and a half.
- [22:29]
A
67 and a half which went to about 90 million. What's the best way you would describe the way they did this? They essentially were functioning akin to a construction lender because the work was going
- [22:39]
B
on and a construction lender, you keep making draws. That's sort of what happened. I don't think it was intended that way. Yeah. And frankly if you're Maxim are probably like, well our last dollar is so covered by this that we're gonna be all right and if it doesn't get built we're really screwed. So let's keep the show on the road here.
- [22:53]
A
The fact that a lender stayed in for this long, Maxim is not necessarily a shop that does that. So what do you think was happening
- [23:01]
B
here when this thing's done? I mean it's gonna be what, 500 units, something like that?
- [23:05]
A
460 units and triple digit rent projections.
- [23:08]
B
New York rents right now are at all time highs. It's one of the best performing markets in the country despite all of the sturm and drang about being in New York. And when this thing's done it's going to be worth $400 million, $500 million, something like that. That's a big swing. That's 20%. I'm just throwing around what's a hundred million between friends. And so their last dollar here is probably pretty good. They're probably accruing default at a crazy rate. So they're actually accruing probably quite a bit of the value here because they're just going to keep getting paid off. You can't outrun the pick. As our friends at Blue. Ow. They were Able to get some creative financing here done too, because they had this fund structure and that was sort of giving them even more protection. Yeah.
- [23:43]
A
So basically what happened was Maxim's keeping the faith. Grubb's still got to find more money to get everything done. The way that Grubb is set up is its assets are held through these contained funds. And I believe this asset is held between fund six and seven, let's call it. So as a result of that, he could tap into something called net asset value financing, Nav financing and Axonic Skylight and Green Barn. Green Barn. Apparently they're the Normandy guys. So they provided a $40 million NAV loan. So the Maxim money and the Nav money essentially let Clay kind of keep pushing, pushing, pushing.
- [24:17]
B
NAV financing is something we've heard about with Vista and Clearlake. Not so much in real estate. They can't sell the portfolio companies, but there's value there. And so you can get a nav loan, net asset value loan, against the value portfolio companies. This is the first I've heard of it in real estate. So very, very creative.
- [24:31]
A
Someone in the capstack described it to me as because of the ownership structure and these were closed end funds, they could actually make this happen. Otherwise it doesn't quite work. In a fund you can cross collateralize.
- [24:42]
B
Is that correct? Exactly.
- [24:43]
A
So Maxim is now upsizing its commitment to $300 million. All told, are going to be in for about 300 million. We're going to get another 75 million of mes coming in. I don't know who it is yet. And then there is apparently a bigger asset manager who's going to do another kind of portfolio, wide financing and take out the nav loan. So lots of moving parts in this one.
- [25:05]
B
This might be a deal where Grubb works a long time and works really hard and makes less money than the debt broker.
- [25:11]
A
That's astonishing. Apparently Richard is still involved in some capacity now. This could be some kind of back end promote. It could be something else.
- [25:19]
B
I think that promote's probably gone. I don't see how that's going to be factored in. Maybe he owns some legacy piece of it for tax purposes. But this is one too where the debt, all the value is going to accrue to the lenders. Talking about earlier in the podcast, survival, like this project survived. Grub may not make a ton of money here, but again, you can make companies, you can make firms on the back of unsuccessful deals that you fought your ass off for to salvage your investor capital. I Think Sequoia famously like didn't take management fees or carry for better part of 5 years post tech bubble. And that's really what made them. They fought their asses off to make like a 1:1 or a 1:2 on a fund where everyone else sort of walked away. So maybe the return on brand damage is awful, but it can really reputation make because all these allocators, all these institutions, they know how hard it's been the last three, four years.
- [26:06]
A
Look how many projects have got wiped in fidi. Absolutely eviscerated.
- [26:10]
B
Now they're delivering into a very fortunate time. It looked like cladding was up like halfway up the building. They'll probably deliver units next year. It's moving so right into the really strong rental market and maybe they salvaged some of the equity here.
- [26:21]
A
Good job by you.
- [26:37]
B
I do feel the world and life have been mighty good to me.
- [26:41]
A
I want to put something back. I feel like I don't know enough about Ted Turner. I could spend weeks just reading about Ted Turner.
- [26:48]
B
Fortunately, he's got a book called Call Me Ted. So easy enough. Ted Turner died, unfortunately, 87 years old, absolute legend. Married to Jane Fonda. His dad had a billboard company in Atlanta, turned it into a global media powerhouse. Founded cnn, owned the Atlanta.
- [27:02]
A
I mean, would you say along with Rupert Murdoch. He's one of the two most important men in media in America.
- [27:08]
B
He was liberal, Rupert Murdoch and unfortunately like the high wire act that played out around the tech bubble that Rupert expertly sidestepped, Ted didn't. The last 20 years have been quieter and he also has had health problems. But he was a capital G, great man, as he said. And he, he was rolling with the
- [27:25]
A
likes of Tom Cousins and stuff in Atlanta, who we'll get to in a second.
- [27:28]
B
So I would highly suggest going to read John Malone's book Born to Be Wired. He talks about Ted Turner all in his madness and grief.
- [27:35]
A
We'll put in the show notes where
- [27:36]
B
I think he met Ted when he was working at his cable company in Denver and Ted was trying to get on his network and he said he rolled on the floor during the meeting, was crying, screaming, put me on your network, put me on your network. Something like I'm butchering it, but it's amazing. But that was the kind of man Ted was. He was a showman. He made himself the manager of the Atlanta Braves before they said, you can't do that.
- [27:54]
A
He also owned a shit ton of land.
- [27:56]
B
He was the largest landowner in the United States at one point. Now I think he Was fourth. Stan Kroenke, the Emerson Bailey, and of course, John Malone, who.
- [28:02]
A
And our boy Stefan Soloviev's in the top 20 somewhere as well.
- [28:05]
B
He's coming up. Good for him. But the reason we're really talking about Ted related to this is because he did do some cre.
- [28:11]
A
He did. He basically shaped a good chunk of the Atlanta skyline.
- [28:15]
B
We talked about Tom Cousins last year, the man in full himself. And so he built the Omni International complex, which is 1.2 million square feet.
- [28:23]
A
Had offices, hotels, ice rink, movie theater,
- [28:26]
B
indoor amusement park, which I think was first of its kind or something. And then it was right next to the stadiums, I think for the Braves and for the Hawks. But in the early 80s, it was vacant. It was mostly vacant for like 15 years. So, of course, Ted buys this thing out of distress, essentially through TBS for like 42 million bucks.
- [28:42]
A
Yeah.
- [28:42]
B
And brings CNN there. And so it became known as the CNN Center.
- [28:45]
A
I'm going to read this for the tape because there used to be some great magazine writing about people like this. In the 40 years he has been in the public eye, Ted Turner has been called a genius, a jackass. By his father, among others. A visionary. Childlike. A compliment. Childish. Not a compliment. A pioneer, A young maverick, an old lion. A straight shooter. Egomaniacal, steadfast, restless, haunted, mercurial, brilliant, impatient, impetuous, insecure, generous, genuine, loyal. And cheap. And nuts. Definitely nuts.
- [29:15]
B
What a beautiful. And so he ends up taking over the CNN Center. It becomes sort of the beacon of downtown. He lived above it.
- [29:21]
A
Oh, man, I just love these kind of guys who live above their holdings. Steve Ross did this at Columbus Circle.
- [29:25]
B
You could see him walking around downtown Atlanta, which is kind of great because all the rich guys in Atlanta all live not there. Sold his cable empire to Time Warner and then lost control when AOL sort of blew up. I think he lost 80 or 90% of his net worth. And so he bought a building at the corner of Ted Turner Drive, which is amazing, it's still alive. And you buy a building on your own street, made it the home of Turner Enterprises. And then Ted's Montana grill, which has 37 locations nationwide, by the way, he
- [29:51]
A
bought a massive plantation, close to 9,000 acres from our guy Tom Cousins. It's called Nonami. Is that where the quail hunt goes down in the book?
- [30:01]
B
Yeah. I think it was also the inspiration for turpentine and a man in fall.
- [30:04]
A
Amazing.
- [30:05]
B
Anyway, so when he bought this building, this is again, after losing 80% of his net worth, he had this incredible quote because it had views of the CNN center, which he no longer owned, and where he used to live. I live on top of my office. I had to buy the building on Lucky street because after my disastrous merger with Time Warner, where I lost 80% of what I had, I needed some good luck. He said, I'm the only chain restaurant owner in the country who lives in the restaurant. That's the way they used to do it. What a man.
- [30:31]
A
A broader point that I think about when you look at people like Ted Turner is back in the day, if you were a man of certain means, like this echelon of wealth, you intersected with real estate no matter what. Nowadays you see wealthy people owning a bunch of homes, but they're not necessarily skyline tinkerers in the way that Ted Turner was. And some of these other moguls were. Wealth and real estate used to be simpatico, and now maybe not so much. Right.
- [30:58]
B
Ted loved downtown. He loved Atlanta and really was a champion of downtown Atlanta. You don't see Mark Zuckerberg living in a condo in downtown San Francisco.
- [31:07]
A
Yeah, nowadays they kind of cordon themselves off from the cities. They're just building bunkers and bunkers and whatnot.
- [31:12]
B
Simpler time and a better time. May all our billionaires be like Ted Turner.
- [31:20]
A
That's it for the promote podcast this week. Media moguls, Zurpi, multifamily moguls, and of course, fathers and sons.
- [31:26]
B
We will see you next week with more tales of CRE insider goodness. And thank you again to our sponsors who make all this possible.
- [31:33]
A
Absolutely. Thank you, guys. Bravo Capital, a leading HUD and bridge lender. You can find them at bravocapital.com and Pensford.
- [31:40]
B
The interest rate people who you can
- [31:41]
A
find@pensford.com and real property captive, find out how you can get dividends back on unused premiums by going to rpcaptive.com excited
- [31:48]
B
for our special episode next week, part one of Real Estate's PayPal mafia.
- [31:52]
A
Do you want to reveal who it is, what company we're looking at?
- [31:55]
B
We are looking at JMV Realty out of Chicago. Neil Bloom, the millionaire and billionaire factory. It'll be a rollicking good time.
- [32:02]
A
Oh, it's gonna be so fun. The chart is gonna be sprawling.
- [32:05]
B
We're gonna look like the Charlie from Sunny when he's doing Pepe.
- [32:08]
A
Silvia, will you settle down and have another cup of coffee? It'll be an amazing time. I look forward to it next week. Thank you, Will.
- [32:15]
B
Thank you.
- [32:16]
A
Ciao.