Subscribe
Share
Share
Embed
Your Commercial Real Estate Insider guide. From profiles of the biggest dealmakers to skyline-shaping transactions, we bring you the deals, breakdowns and war stories that move the market — for insiders, by insiders. From bad-boy guarantees to CMBS tranche warfare to syndicator sins, we cover it all.
Each week, The Promote Podcast explores three of the most interesting and consequential stories in CRE, taking you well beyond the headlines and into the heart of the action. Hosted by the award-winning “Bard of CRE,” Hiten Samtani, founder of ten31 media and author of The Promote newsletter, along with no-BS institutional insider Will Krasne. Also check out our 3x/week newsletter for industry insiders at https://www.thepromote.com/
Hiten Samtani (00:05)
Why do we fall, Bruce?
Will Krasne (00:07)
so we can learn to pick ourselves up.
Hiten Samtani (00:09)
why do we pick ourselves up?
Will Krasne (00:11)
So we can generate fees for another quarter of a year.
Hiten Samtani (00:12)
too.
Welcome back to the Promote Podcast, your insider guide to the money and media of the CRE markets. I'm Hiten Samtani
Will Krasne (00:31)
and I'm Will Krasne.
Hiten Samtani (00:34)
A shout out to our sponsors, Pensford the only interest rate advisory that's focused exclusively on CRE.
Will Krasne (00:40)
and Bravo Capital, a leading HUD and Bridge lender that lives and breathes cap stacks.
Hiten Samtani (00:45)
This week we dive into a 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.
Will Krasne (01:06)
The legend. They don't make them like that anymore. 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.
Hiten Samtani (01:08)
I really don't.
Check out their platform at rpcaptive.com to tap into the same insurance framework used by the market's biggest players. Alright, first one. Holy shit.
Will Krasne (01:40)
I don't think anything has ever shown the efficacy of cold DMs on LinkedIn like this.
Hiten Samtani (01:46)
I think you gotta tell people because they're probably dying right now. So what happened?
Will Krasne (01:49)
So
Wes Edens, co-founder of Fortress, billionaire, owner of the Milwaukee Bucks, was sex-storied
Hiten Samtani (01:56)
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 got to pay me. If you don't, I'm going to go to your family. I'm going to go to your investors. It got pretty messy.
They came up with a settlement of about $6.5 million. He just wanted this thing to go away. She then claimed that he gave her an STI and upped the ask from $6.5 million to $1.2 billion.
Will Krasne (02:31)
Pretty big multiple. The details in here are kind of amazing. 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's did not respond.
Hiten Samtani (02:44)
We're making light of this, but I think the big takeaway here is that when you're a master of the universe and this Eden style, you kind of have a target on your back at all times. Just don't answer LinkedIn DMs.
Will Krasne (02:53)
No, this is for all the strivers out there. means you need to send more LinkedIn DMs.
Hiten Samtani (02:58)
Okay, next one. So Gary Barnett, he closed, he did the deal that we were talking about, the Park Avenue assemblage. That's just for one piece.
Will Krasne (03:05)
$500 million. I
know with Gary you talk about a closing and you're like, already closed on that, didn't he? And there's nine other different pieces here. So this has been going on for a while. 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 little bit.
Hiten Samtani (03:31)
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.
Will Krasne (03:44)
If you can raise the money and do the deal, you do the deal. Sharks gotta eat.
will it be? This was going to 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... So there was a recent refinancing there and some of the underlying losses that were perfected in this refinancing are startling.
Hiten Samtani (04:02)
There's been a dud. Yeah.
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 Lecais, Ivanhoe Cambridge, now known as Lecais, Quebec pension fund money, basically.
Yeah
Will Krasne (04:41)
Thing
one and thing two of NYC real estate torching money on fire. So in this refinancing, there was about $120 million haircut. Lacasse took, I'm going to pronounce it incorrectly. Lacasse. Lacasse took 50 million, EB5 investors took about 65 million. And that's tough because that was 65 million on 100 million of Mez debt. 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 lean on a separate property. You might think, gosh, like there's some high quality multi that JEM.
Hiten Samtani (05:19)
Comparable property next door you would think maybe
Will Krasne (05:22)
Yeah,
there's another office building that's fully leased, right? That's what you would think. Mm-hmm. It was not. It was a separate property in the Poconos. They got an IOU for $10 million from JEMB.
Hiten Samtani (05:35)
this property in the Poconos.
Will Krasne (05:37)
the best office building in Brooklyn and you end up in the Poconos. We got to come back to this in a year from now because if JEMB misses the $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.
Hiten Samtani (05:56)
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. I do.
Will Krasne (06:07)
He is walking around with a pretty fat wallet right now.
Hiten Samtani (06:11)
You're talking $526 million fat. So what happened here? Nine 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 CNBS refi and it's a pretty hefty cash out here. $526 million.
Will Krasne (06:29)
his dad famously kept it kinda not full all the time and didn't like a lot of people who would try to lease space.
Hiten Samtani (06:37)
you
misidentify the artist on a certain painting, you could be cut off.
Will Krasne (06:41)
When you own a building with such low leverage at such a low basis where rents were as high as anywhere in the city, they assembled the site for $12 million and this building is now appraised at what, 3.9?
Hiten Samtani (06:51)
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.
Will Krasne (06:59)
The CNBS also too, if you do the math on the rate was like 4.95, something like that. It's like 90 million a year of death service. And I think the building does 105 million of NOI or something. So it's a little bit tight like Tiger, but again, just broke the record. And Stefan has spent a ton of money refurbishing it. Cause 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.
Hiten Samtani (07:18)
$327 a foot.
central character in Barbarians of the Gate used to be the HQ of KKR.
Will Krasne (07:32)
You might see like Bruce Wasserstein's Pat Patina on like 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 to modern specs and that location he can't beat. So he's landed some monster tenants and the thing is a cashflow geyser and good on him. Massive refi. That's what it's all about.
Hiten Samtani (07:52)
The kid made good. All right, next one.
Will Krasne (07:55)
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... And what we're talking about is the Duke of Westminster is selling $700 million of U.S. real estate assets. So this is Groesner, which is one of the...
Hiten Samtani (08:01)
We're done with America.
old, old, old money. Like basically everyone in this family probably looks like Simon Baker.
Will Krasne (08:16)
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
Hiten Samtani (08:40)
That's it for the punch list. We'll be back in a second with an escape patch.
Will Krasne (08:48)
you
Hiten Samtani (08:50)
Speaking of cap stacks, one of our anchor sponsors, Bravo Capital, lives in them. In just five years, they've become a leading hud in Bridgeland.
Will Krasne (08:57)
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.
Hiten Samtani (09:03)
and they're immersed in a space that we've been increasingly obsessed with, skilled nursing facilities, or SNFs.
Will Krasne (09:09)
Sniffs are a total labyrinth of policies and procedures that vary state by state, so it's easy for sponsors to go stray if a lender's not deep in the mix. Bravo is. And they put out good content about this as well.
Hiten Samtani (09:20)
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, think Aaron and his team are thoughtful and pretty sharp.
Will Krasne (09:29)
check out their platform at bravocapital.com.
Hiten Samtani (09:32)
and tell them the promo sent you.
Will Krasne (09:40)
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?
Hiten Samtani (09:53)
But only 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, I mean big, multifamily syndicators out there in the Sun Belt, I think at his pump, he had about 28,000 units, just like NetYah, 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 FANY debt, we can wait for things to write out, we can improve NOI, and we can make these unit economics work. Didn't work that
Will Krasne (10:41)
way
though. 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. And we talk about people who going through struggles. 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 We're not judging. You got to be creative to stay alive. I give Scott a ton of credit here for getting this private read done because he did buy himself more time. And the only thing you can really do in a situation like this is buy more time.
Hiten Samtani (10:57)
For everybody else.
Buy more time, hope the macro picture improves and then do as much as you can kind of on the operational backend, right? That's what you can
Will Krasne (11:16)
do.
Right. 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 and tell them that.
Hiten Samtani (11:33)
Survival is the most important thing.
Will Krasne (11:35)
Sam Zell made a quote one time, the same week I was on the Forbes 400 list on the cover, I was unsure whether we had enough cash to make payroll that from.
Hiten Samtani (11:43)
⁓
When we make it, we're just going to avoid the Forbes list altogether. It's a curse.
Will Krasne (11:48)
The real guys don't report, if you know, you Having said all that, this thing went south.
Hiten Samtani (11:52)
about a week or so ago, Trinity told their investors that you should probably expect a complete wipeout of equity because S2 is now focused on salvaging the mezzanine tranche of all this. the most part, you are going to walk away with nothing.
Will Krasne (12:05)
You're going to walk away with less than nothing because you're going to get an appreciation recapture bill. 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.
Hiten Samtani (12:19)
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?
Will Krasne (12:30)
I don't think it was Oscars in the Sand because if it was that, you'd probably just let it go 18 months ago whenever they did the private read. But they're counting on our dear leader initiating a terror war and reducing the amount of cuts in the interest rate from the
Hiten Samtani (12:43)
You
Scott went and rubbed the golden statue at the Trump Doral?
Will Krasne (12:47)
I adjust a little bit, but like had we gotten five or six cuts this year, which could happen, had inflation not ticked back up because of tariffs, have we not gone to war with the wrong? 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 un-buy it. there anything out there besides rising interest rates that scare you? ⁓ I'm less actually.
Hiten Samtani (13:14)
fear for.
Will Krasne (13:14)
full
of rising interest rates and more fearful of what the fed's gonna do.
All you can do is fight your ass off right now and that's what he did.
Hiten Samtani (13:26)
Unlike Al in Style Cup who we've talked with who 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 and multifamily. He's still got a bunch of holdings outside of this read 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?
Will Krasne (13:45)
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.
Hiten Samtani (13:54)
Did you peek Barry's quote today in the earnings? Wow. Interesting world. We've never been so excited and so terrified at the same time. This is after Starwood missed on earnings.
Will Krasne (13:57)
What did Barry say?
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 trust. Honestly, it's a lot like another Scott, Scott Reckler with Project Kodak. This is Project Kodak of the Sunbelt basically.
Hiten Samtani (14:26)
Scott Reckler has been so interesting because his original equity has been wiped on multiple projects now. 61 Broadway, one investment management came in, but the original partners are gone. And then he's recapping it and generating new fees on the new cap stack.
Will Krasne (14:39)
And that's what Scott's doing here too. And again, it's a shift from being a syndicator to building a real business and put all this stuff together. But what it really did is coordinate off from the rest of his portfolio. was like a firewall. So it couldn't take down the whole ship. was like on the Titanic. She can stay afloat with the first four commitments.
Hiten Samtani (14:57)
In the Capitol call, there's this interesting table. They were raising about 70 million of PrEP. They had these projections in there.
Will Krasne (15:03)
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 prep and they were promising you a pretty big multiple and you were getting equity warrants as well. 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 one-one. I don't think you try to promise a 34 because that 34.2 is a zero. Yeah. Yeah.
Hiten Samtani (15:31)
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?
Will Krasne (15:38)
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. doesn't matter. What this shows you is that this is 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.
Hiten Samtani (15:52)
Whatever.
Will Krasne (16:04)
This new Capitol 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.
Hiten Samtani (16:11)
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 read. my God, there's going to be tens of, this is about 9,000 units or so left in this private read, but there must be a lot out there.
Will Krasne (16:28)
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. We've been talking about it for years, like when is the distress gonna hit? And I think it's starting to. ⁓
Highways jammed with broken heroes on a sofa-fueled last-chance power drive.
Hiten Samtani (16:52)
Everybody's looking for protection and Pensford's the place to hide.
Will Krasne (16:55)
In a world full of macro hot takes and LinkedIn fed gurus, Pensford cuts the noise so you know what actually matters when it comes to interest rates.
Hiten Samtani (17:03)
Whether you're crunching the numbers on a single deal or you've got a portfolio to figure out.
Will Krasne (17:06)
Pentsford's got over 10,000 rate caps under their belt. They know their stuff cold.
Hiten Samtani (17:10)
And their forward curve is the slickest rate tool in the business. Interactive, updated daily, and the finger capital markets team probably has open on 10 tabs.
Will Krasne (17:18)
Check out the good stuff at 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.
Hiten Samtani (17:31)
which is basically the Sun Belt.
Will Krasne (17:33)
It's the Sunbeats of New York.
Hiten Samtani (17:35)
Amazing story here. It's this development side that I think you were walking by last week, right?
Will Krasne (17:42)
Indeed. We're doing boots on the ground research here at the promote podcast.
Hiten Samtani (17:47)
This is a site that used to be known as 111 Washington Street, 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 history?
Will Krasne (17:58)
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 decade. She's yeah, okay. Yeah, we're getting old. So why don't we go back to the beginning and start when the site had a different name. 111 Washington Street.
Hiten Samtani (18:09)
close to 20 years.
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.
that alone became an NPL.
Will Krasne (18:51)
One of the bigger players in Manhattan came in, but then he also had a son.
Hiten Samtani (18:56)
also did have a son. Fred and Richard Ohyp-Shalom came in and bought the NPL, I want to say around 2011. Pinkstone takes title via Deedin Lueb.
Will Krasne (19:05)
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.
Hiten Samtani (19:19)
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.
Will Krasne (19:36)
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.
Hiten Samtani (19:47)
son
is basically griping that he is not being paid adequately at his family firm.
Will Krasne (19:52)
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 been. Right, right. Family businesses are difficult. He ended up leaving, 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.
Hiten Samtani (20:03)
a lot more than that.
at
one point he had a deal to sell it. Fred had a deal to sell it for $148 million.
Will Krasne (20:21)
The adjective I would use to describe that would be tremendously big.
Hiten Samtani (20:25)
I might choose something else. might call it woefully deficient.
Will Krasne (20:29)
That's what Richard called it and sued his dad to block the sale.
Hiten Samtani (20:35)
He
basically said his father created a lowball price to pressure him on concessions on their other dispute. He's like, not only was the price crap, it was a malicious effort to get me to do something I didn't want to do. Right. And listen, man, I have a one-year-old, you have a what, one and a half year old. This stuff is the fucking stuff of nightmares.
Will Krasne (20:52)
That's why it's just sell it all. The best real estate to pass on is no real estate.
Hiten Samtani (20:58)
So anyway, you can imagine, Will, any back and forth like this ain't good for ground up development.
Will Krasne (21:03)
No, 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 ish.
Hiten Samtani (21:17)
which is basically 60 million under that low watermark that he talked about. We'll talk about Grub in a second. Who was on the debt stack at that time? There was Fortress.
Will Krasne (21:25)
Yes, the West Edens. I wonder if they sourced the deal on LinkedIn.
Hiten Samtani (21:33)
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 of years later, they land about 45 million or so from Naftali's credit division as a bridge loan.
Will Krasne (21:55)
and then they refi
Hiten Samtani (21:57)
Just
keep in mind the time though, the rates are going absolutely haywire at this time.
Will Krasne (22:01)
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.
Hiten Samtani (22:09)
This is where Maxim comes in, we should say a little bit about Maxim here. 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 cap stacks nationally. This one is really fascinating. So they kept upsizing the loan here.
Will Krasne (22:12)
It's founded by the Mercury crew.
think it was initially 67 and a half.
Hiten Samtani (22:29)
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 on.
Will Krasne (22:39)
in a construction when you keep making draws, that's sort of what happened. I don't think it was intended that way. frankly, if you're maximum, you're probably like, well, our last dollar is so covered by this that we're going to be all right. And if it doesn't get built, we're really screwed. So let's keep the show on the road here.
Hiten Samtani (22:53)
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 here?
Will Krasne (23:00)
When this thing's done, I mean, it's gonna be what, 500 units, something like that?
Hiten Samtani (23:04)
460 units and triple-digit rent projections.
Will Krasne (23:07)
New York rents right now at all time highs. It's one of the best performing markets in the country, despite all of the storm and wrong 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. 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 Owl have learned.
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.
Hiten Samtani (23:43)
Yeah. So basically what happened was the Maxim's keeping the faith, Grubb still got to find more money to get everything done. The way that Grubb is set up is it's assets are held through these contained funds. And I believe this asset was 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.
Will Krasne (24:16)
Nav financing is something we've heard about with Vista and Clear Lake, 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, Asset Value loan against the value portfolio companies. This is the first I've heard of it in real estate. So very, very creative.
Hiten Samtani (24:31)
Someone in the cap stack 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. Yeah. In a fund you can cross collateralize, is that correct? So Maxim is now upsizing its commitment to $300 million. All told they're going to be in for about 300 million. We're going to get another 75 million of Mez 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.
Will Krasne (25:04)
This might be a deal where Grubb works a long time and works really hard and makes less money than the debt broker.
Hiten Samtani (25:10)
That's astonishing. Apparently Richard is still involved in sub capacity. Now this could be some kind of backend promote. It could be something else.
Will Krasne (25:19)
I think that promotes 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. think Sequoia famously like didn't take management fees or carry for better part of
five years post tech bubble. And that's really what made them. They fought their asses off to make like a one one or one two on a fund where everyone else sort of walked away. So maybe the return on brain 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.
Hiten Samtani (26:05)
Look how many projects have got wiped in 5-day. Absolutely eviscerated.
Will Krasne (26:10)
Now they're delivering into a very fortunate time. It looks like cladding was up like halfway up the building. They'll probably deliver units next year. right into the really strong rental market and maybe they salvage some of the equity here. Good job by you.
I do feel that the world and life have been mighty good to me.
Hiten Samtani (26:41)
I feel like I don't know enough about Ted Turner. I could spend weeks just reading about Ted Turner.
Will Krasne (26:47)
Fortunately, he's got a book called Call Me Ted, so easy enough. Ted Turner died, unfortunately, 87 years old, absolute legend, period of Jane Fonda. His dad had a billboard company in Atlanta, turned it into a global media powerhouse, founded CNN, the Atlanta Brave.
Hiten Samtani (27:03)
Along with Rupert Murdoch, he's one of the two most important men in media in America.
Will Krasne (27:08)
liberal
Rupert Murdoch. And unfortunately, like the high wire act that played out around the tech bubble that Rupert expertly sidestepped had didn't. The last 20 years have been quieter and he also had health problems, but he was a capital G great man, as he said, and he
Hiten Samtani (27:24)
He was
rolling with the likes of Tom Cousins and stuff in Atlanta, who we'll get to in a sec.
Will Krasne (27:28)
So I highly suggest going to read John Malone's book, Born to be Wired. He talks about Ted Turner all in his madness. Where 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 that. I'm butchering it, but it's amazing. But that was the kind of man Ted was. was a showman. He made himself the manager of the Atlanta Braves before they said, can't do that.
Hiten Samtani (27:34)
We'll put in the shout outs.
also own a shit ton of land.
Will Krasne (27:56)
He was
the largest landowner in the United States at one point. And now I think he was fourth. Stan Cronke, Emerson Bailey, and of course, John Malone, who...
Hiten Samtani (28:02)
And our boy Stefan Soloviev is in the top 20 somewhere as well.
Will Krasne (28:05)
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. He did.
Hiten Samtani (28:11)
He
basically shaped a good chunk of the Atlanta skyline.
Will Krasne (28:15)
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. had offices on the 10th floor. 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 and brings CNN there. And so it became known as the CNN Center.
Hiten Samtani (28:23)
Ice rink, everything.
I'm gonna 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.
Will Krasne (29:15)
What a beaut. And so he ends up taking over the CNN Center. It becomes sort of the beacon of downtown. He lived above it.
Hiten Samtani (29:21)
man, I just love these kind of guys who live about their holdings. Steve Ross did this at Columbus Circle.
Will Krasne (29:25)
see him walking around downtown Atlanta, which is kind 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 also Ted's Montana Grill, which has 37 locations nationwide.
Hiten Samtani (29:51)
He
bought a massive plantation close to 9,000 acres from our guy Tom Cousins. It's called Nanami Is that where the quail hunt goes down in the book?
Will Krasne (30:00)
Yeah. I think it was also the inspiration for turpentine and a man in full. That's amazing. Anyway, so when he bought this building, this is again, after being losing 80 % of his net worth, he had an incredible quote because it had views of the CNN center, which he no longer owned where he used to live. He goes, 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.
Hiten Samtani (30:30)
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.
Will Krasne (30:57)
Right. 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.
Hiten Samtani (31:06)
Yeah, nowadays they kind of cordon themselves off from the cities. They're just building bunkers and bunkers and whatnot.
Will Krasne (31:12)
time in a better time. May all our billionaires be like Ted Turner.
Hiten Samtani (31:19)
That's it for the Promote Podcast this week. Media moguls, Zerpi multifamily moguls, and of course, fathers and sons.
Will Krasne (31:26)
will
see you next week with more tales of CRE Insider goodness and thank you again to our sponsors who make all this happen.
Hiten Samtani (31:33)
Absolutely. Thank you guys. Bravo Capital, leading HUD and bridge lender. You can find them at bravocapital.com.
Will Krasne (31:38)
and Pensford, the interest rate people who you can find at penceford.com.
Hiten Samtani (31:42)
and real property captive, find out how you can get dividends back on unused premiums by going to rpcaptive.com.
Will Krasne (31:48)
Excited for our special episode next week, part one of Real Estate's PayPal Mafia?
Hiten Samtani (31:51)
Do want to reveal who it is? What company we're looking at?
Will Krasne (31:54)
We are looking at JMB Realty out of Chicago, Neil Bloom, the millionaire and billionaire factory. It'll be a rollicking good time.
Hiten Samtani (32:02)
It's gonna be so fun. The chart is gonna be sprawling.
Will Krasne (32:05)
We're
gonna look like the Charlie from Sonny ⁓
Hiten Samtani (32:11)
It'll be an amazing time. look forward to it next week. Thank you, Will. Ciao.
Will Krasne (32:14)
Thank you.