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 (00:01)
Josh, need to figure out cash.
Will Krasne (00:03)
Where did the 600k from last week go? I'll be at the office shortly. We need that deal to close.
Hiten Samtani (00:09)
and I need to wire the 310 plus for Second Avenue in the AM. Where are we getting the money from and what am I telling them? They're gonna shoot me.
Will Krasne (00:18)
close tomorrow.
Hiten Samtani (00:21)
What you've just heard is Will and me recreating a conversation between former Golden Boy developer Josh Schuster and his financial controller. It was pulled from a just unsealed indictment brought by the US attorney against Schuster. The allegations? Wire fraud and securities fraud.
Will Krasne (00:36)
You add an elder fraud and you get a free coffee.
Hiten Samtani (00:43)
Welcome back to the Promote Podcast, your insider guide to the money and mania of the CRE markets. Hiten and Will here as usual. Will, how was your first Mother's Day?
Will Krasne (00:51)
Well, I think my dog would be a little offended that you say it was our first Mother's Day. that's fair. a lot of family time, a lot of flowers, a lot of cars.
Hiten Samtani (00:59)
There's so many cards. This week, we break down the sensational allegations made by the feds against Schuster and why they matter. We dive into a big judgment over PG's brought against the multifamily mad lads. Seriously, tides equities. And we kind of have a reprieve of sort on the tariffs, but will it be enough to restore normalcy to the CRA markets? Who knows?
Will Krasne (01:11)
maddest of lads.
Hiten Samtani (01:24)
A shout out to our sponsor for this episode, Air Garage. Air Garage is the modern parking solution for real estate owners. You'll hear more about them in a bit.
Will Krasne (01:34)
Just by the way, when you talk about the agenda being stacked, I had a friend who now works in public markets, used to work in real estate, say I was listening to the podcast, he goes, God, I miss real estate, people are nuts.
Hiten Samtani (01:43)
I say this all the time, I used to tell my reporters this, I really believe it, more characters per capita than any industry on the planet. Where do you wanna start? Josh Schuster, in the 2010s on the party circuit in New York real estate, this guy was a fixture. You would see him kind of planted in a corner of the room, poor man's, Keanu Reeves type looking guy. And he was just, he was the center of attention.
Will Krasne (01:51)
Go with Josh Schuster.
Yeah, and he's one of those guys who you see them every cycle and almost in every market. There's the same guys in Miami, LA. They have all these projects, tons of money, sensibly, and nothing really seems to get built or nothing seems to actually deliver. He had the patina of Hong Kong capital. He had the patina of Silver Peak, which is a real shop.
Yeah, what was this firm called? Silverback. Silverback, yeah. I mean, it's the same thing. It's like, if you're starting a firm and you call it like Rothschild. Yeah, and just people are like, yeah, the Rothschilds have to be in.
Hiten Samtani (02:40)
or Stratton Oakmont.
Well, I think he took it a step further though. So Josh Schuster's office was within the 57th Street building that also has Silver Peak. He actually borrowed an office from them. So he basically shared an address with like a real player.
Will Krasne (02:57)
A lot of this is fundraising. We talked about it too that all we talked about with Jonah last week. Jonah. Yeah, like talented guy. Like he's a savvy guy. And the problem is, is that the sexy part of the business, like going out, raising money and you're talking about big projects, having renderings and all that, that stuff's easy. That's the easy part. Actually building stuff, getting it done on budget above pro forma. That's the really hard part. And it just seems that a lot of people get seduced by that.
Hiten Samtani (03:03)
Reference
Will Krasne (03:27)
the first part and forget about the last one.
Hiten Samtani (03:29)
Well, you can kind of see why though, right? It's really intoxicating because when you're raising that kind of money, you're in those kinds of rooms, you're living that kind of life. There's a really telling quote from a TRD profile from 2021 on Shoester. I quote, he's sitting in their offices. Mark Walsh, who's the CEO or co-founder of Silver Peak, is right there in the office with all the artwork. Shoester's taking you downstairs for lunch at Nobu and charging up the Black AmEx.
Will Krasne (03:54)
Seems pretty real, where do I send the wire? ⁓
Hiten Samtani (03:57)
there's this illusion that you're a successful person that is necessary. The fake it till, and we've talked about this quite a bit, fake it till you make it is really a thing, especially when you're starting out on your own. And these were really complicated projects, ground up development in New York City. That's 11 out of 10 difficulty right off the bat.
Will Krasne (04:14)
Yeah, and there's sort of two ways you can go about this. think, well, there's a million different ways to commit fraud, but there's two ways to go about being a successful developer, really, in New York. One is that you start with like a two family in, you know, prospect heights. You renovate it, you flip it, and you just do every project a little bit bigger, a little bit bigger. Your investor base gets a little bit bigger, a little bit bigger, a little bit bigger.
Hiten Samtani (04:36)
track record, learning on the job, of apprenticeship by fire.
Will Krasne (04:39)
Exactly. You know how to do all the stuff and then eventually at a project at scale, like you don't end up doing it, you have a GC, like all this. But you know what you're doing essentially and you've just written your projects to bigger and bigger scale. Maybe you bring in institutional capital, maybe you bring in high net worth capital.
Hiten Samtani (04:57)
Who's a good example of that kind of model of slow and steady or
Will Krasne (05:01)
Well, doesn't seem like it, like Michael Stern kind of was, you know, I mean, he was doing outer borough stuff, building homes, and then came in and took a huge swing, but he'd done a ton of projects.
Hiten Samtani (05:11)
Yeah, he's been around for longer than a lot of people think.
Will Krasne (05:13)
Yeah and he's actually I mean he didn't start off to in Walker Towers his first project like he'd actually done real stuff before I mean not that scale obviously but I he's a guy like that you do it that way and eventually you become big enough to where you find the capital because you've got a track record.
Hiten Samtani (05:29)
But even with these guys, mean, there is at any point in any of these moguls' lives, there is like a leap where they were definitely doing something they were not qualified to do. Right, there is that leap you gotta make if you really wanna be a player.
Will Krasne (05:41)
Yeah, but there's a difference between I've done a bunch of these and I'm doing one that's bigger than I've ever done before. then there's, know, who is that guy who, God, I loved him. Joe, what's his face? Yeah, like there's that guy who had a good site, good basis and just had never built anything to know what he's doing.
Hiten Samtani (05:52)
That's right. Ben and not even
talking about 58th Street, I think it was called Sutton Place. now these guys are doing it, Calico has taken it over and is building something.
Will Krasne (06:13)
Yeah, I think it's actually been like reasonably successful. but so that's one way to do it The second is you're at related you're at XTel you're at one of these big shops and then you leave With enough cash a to like have a bunch of money have a bunch of infrastructure and do it like the core
Hiten Samtani (06:29)
So ride the institutional code tails is what you're talking about.
Will Krasne (06:32)
But
yeah, like you look at what's his name. He just bought the gram.
Hiten Samtani (06:35)
okro guys are a yes an example of that right in miami they were
Will Krasne (06:39)
grow Miami. mean the guys who left Mickey and just bought up Gramercy. Yeah, Victor Sigour at Legion and like learned from like a really big place.
Hiten Samtani (06:43)
Yeah, Victor Segura.
So like a real developer, talked, Will has gushed quite a bit about Mickey in a previous episode, but like real developer builds real product, has a real track record. If you're like his number two, number three guy at the firm, then you can kind of, you can build off of that reputation when you go strike out a new.
Will Krasne (07:05)
You can spin out at scale, but if you're just starting off, I don't even know where like Josh, Josh is from at the Tulane, right? But was he at CIM? Like, I don't know. mean.
Hiten Samtani (07:15)
No, like his grandfather was in the business in some way. A lot of the puffier pieces that came out in the mid 2010s allude to his grandfather having a legacy, but I don't think he was a real developer before he became a quote, real developer.
Will Krasne (07:30)
Yeah, but that's our point is that he did none of those things and just showed up and raised a bunch of money. And the thing that stuck out to me in this indictment is that this actually wasn't that much money.
Hiten Samtani (07:41)
Yeah, this is an overall ⁓ embezzlement of 10 million is what they're alleging and this is a US attorney. Near mayor would kind of scoff at those numbers.
Will Krasne (07:49)
I know. mean, you gotta get those numbers up, man. gotta pump those numbers up. Those are rookie numbers in this racket. So it's just endemic. I mean, we talked about this last week. I mean, we talked about a bunch of other guys now who have had their businesses kind of fall apart. It's actually a really sad thing, know, and Hiten, you've written very beautifully about it. Like, real estate developers, the poorest rich guy you know. Yeah. And in a lot of, like this is...
Hiten Samtani (07:52)
Does not present these are rookie
Will Krasne (08:16)
what happens because had rate stayed a little bit lower when he was able to raise a little bit more money and the market had turned and like all this stuff can work out. Yeah. But, when you don't have those tailwinds, that's when you actually have to know what you're doing. And even if you know what you're doing, you can still get wiped.
Hiten Samtani (08:29)
Right, some of the patterns that we identified in more tragic stories, Brandon Miller is the one that comes to mind, like lifestyle over here, I've got my hands all the way up, right, experience maybe way less than that, and actual money coming in from these development projects, close to nothing, right? Development projects are often money pits or are usually money pits until you can turn something into.
Will Krasne (08:52)
Let's assign some numbers to this. So let's say you're building a $10 million project, just round numbers, right? That's the total acquisition cost, hard cost, soft cost, everything. Like if you charge a 5 % CM fee, you're going to make half a million dollars on that project. But that's over the construction cycle of the project, which can be like three years. So you're $175,000 a year just off of Yeah, nevermind like an analyst, nevermind.
Hiten Samtani (09:17)
That's minimum wage in New York City,
Will Krasne (09:22)
paying yourself and I mean, you gotta come up with like a GP co-invest for part of this too. So if it's three million of equity in a $10 million project, you gotta come up with 300 grand. you just, that's 60 % of your CM fee right there. Like maybe you're getting some AM fee on the equity invested, but it's not like there's huge dollars coming in. Like all of these development shops, the way they work is you have to have so much scale. Like you are a production line to keep all the fees coming in or alternatively, like you have to do what the Zeckendorf.
Brothers did, they have a whole other business that spits off cash. They own the brokerage firm. ⁓
Hiten Samtani (09:55)
Yeah, yeah, so you're getting your brown arrow steepens obviously and terror
Will Krasne (09:59)
Yeah, so Related Hat is one of largest multi-family owners in New York. They have tons of cash coming in at all times. That's the problem. You can't just develop unless you have captive capital, long duration capital, it's paying you a ton of fees.
Hiten Samtani (10:11)
Or you've got just one LP who's just absolutely enamored by you and thinks you're going to do something great and just gives you a chunk of cash.
Will Krasne (10:19)
Sure, like if the Tooth Fairy comes and does that for you, you should definitely take advantage.
Hiten Samtani (10:25)
And I should say with Schuster, right, he's raising, so he's got these projects going, they're clearly on paper, very impressive projects, but he's constantly raising for the next project and the next project, the next project. So the reason I bring that up is he's got to constantly, as we said last week, put himself in the rooms that matter. And doing that takes money of its own, right? Like you can't be at Nobu charging up the Amex Black and not have a bill at the end of the month.
Will Krasne (10:51)
The is that you probably shouldn't be doing that if you can't afford it with your projects. His Amex bill was basically a year of CMVs on a small deal.
Hiten Samtani (11:01)
Yeah, and so the central allegations here are, again, patterns we've seen play out, which is that he was taking money from investors, that he had raised money for certain projects, and was rolling it into unauthorized into other projects to pay back other investors, to pay in many cases his own personal expenses, his credit card, his payroll for Silverback as well. So it's basically robbing Peter to pay Paul. The one that the Fed zeroed in on was his Gramercy Park project, 2nd Avenue and 21st Street.
And the SEC said on the Gramercy Park project, he took $6 million plus from investors and 2 million of it was used in shady ways that were definitely not authorized.
Will Krasne (11:40)
You
were governed by an operating agreement, like practically speaking, there's not a lot of oversight. mean, these guys wired money to, you know, 21st street LLC or whatever it was called. And like Josh is a signatory. Like you're just trusting that the dude's going to be a good guy. I mean, you can sue and you can end up with this, but like, is there going to be a recovery here? Like, it's not as if someone's watching this account. I mean, he's got his controller being like, he doesn't know what's going on. He's like, where's the money going?
Hiten Samtani (12:05)
You know, I suspect that this is happening all over the city, but people are able to pull it off so we don't hear about it in a federal indictment.
Will Krasne (12:12)
We have a thing too is that in a development project, no one expects to see money back for years and years. So you can kind of get away with it for a little bit longer. If you're buying a net lease McDonald's and you miss the first payment, like that's a little, well, a little bit different, but it happens to all over the place. Like there's not that big a difference between this and someone who buys a multifamily deal that, you know, he needs 6 million of equity to close. He raises seven.
and then makes distributions out of that extra million dollars. Like it's on grinding we see all the time. That happens all the time. People are open about it. mean, you'll see, you know, people will talk saying like, yeah, I always over raise, like make sure we have a buffer. Like that's not that different than this.
Hiten Samtani (12:54)
Yeah, you know what's interesting though? I mean, the guy was arrested. He was arrested in Florida last week. He's already out on bail. I think he posted $2 million bail. But you don't really see arrest too much. I remember near when he was arrested in Florida for his $86 million criminal conspiracy. At least his big money, half a million dollars on wine, ZZ's club, this and that, right? He's living
Will Krasne (13:08)
See that guy knew what he was doing.
Yeah, not like Novel 1573, come on.
Hiten Samtani (13:17)
If
you're gonna scam, go scam big. I know obviously disclaimer, these are all allegations. We know that nothing's proven out yet, but that's kind of, we're just going off the indictment.
This is ⁓ a media nerd tip. When you're writing about someone who is accused of serious wrongdoing, always do a clip check and don't check the main publications that know what they're talking about. Always look for publications where they can get away with a puff piece. Because sometimes within a puff piece, you will find this incredible nugget of insight into how these people ran their businesses. Did you know that Josh Shuster had a solar energy company called Solar Back?
Will Krasne (13:59)
I actually because I read the article about his comeback. Solar is another one where it's like that when I think of industry with folks of like, you know, great integrity, moral turpitude, honest as the day is long. think of the door to door solar salesman.
Hiten Samtani (14:15)
So in that article he talked about his use of equity. I hadn't heard the term before. Please enlighten us on what equity is.
Will Krasne (14:23)
no idea. It's a meetup.
Hiten Samtani (14:25)
The way it's described in the piece is it's short-term convertible debt. So that's what it is. And in the piece, there's a line, I'm gonna quote you the exact thing, which is, Schuster was hit with insurmountable debt obligations. He couldn't satisfy the way he was used to by raising new capital. Isn't that in of itself problematic?
Will Krasne (14:28)
so it's usury. Got it.
Yeah, it's like Jack the River being like, problem with him is he like ran out of throats to rip. Allegedly.
Hiten Samtani (14:49)
Yeah, so we're not we don't want to just dunk on yeah
Will Krasne (14:52)
I don't mean to, don't mean to, cause again, like- Yeah, yes.
Hiten Samtani (14:54)
So
I don't wanna just dunk on this guy, but the reason we brought it up, the reason we think it's important we're talking about is what? It's because these kind of things happen at the margins all the time in real estate.
Will Krasne (15:04)
Right, and something that is sort of a little bit of a hobby horse of mine is that these people, they're not raising money always from people who can afford to lose it. Real people get hurt by this stuff, and you need to understand the risks you're taking, and ⁓ you can't rely on a sponsor to explain those risks to you or for you.
Hiten Samtani (15:24)
I think the overall, once you're an accredited investor, basically the law is like, well, you're smart enough and rich enough to know what you're doing and that's it.
Will Krasne (15:32)
Right. It's caveat emptor. Was that Latin? Because again, like when you send that wire, like the way to get back is through this, you know, it's through a lawsuit and the legal fees alone are going to eat into what you get if there's a recovery, which there probably isn't. as I said, the line between this and common practice isn't that big, but there is a line. And if you're looking to invest in a deal like this, you need to be aware of it.
Hiten Samtani (15:57)
The lawsuits have been coming since at least 2020, 2021. Curious why it rose to the level of a criminal indictment with the US attorney wing in.
Will Krasne (16:06)
I mean, my guess is that someone who was wrong had juice and was pissed. Yeah. So Warren Buffett said when the tide goes out, you see he was swimming naked and our podcast has been littered with lot of bare asses the last couple of
Hiten Samtani (16:20)
It's unfortunate, but it's true.
This episode is brought to you by Air Garage. Air Garage is a full-service parking management solution with brains. You buy gate arms and ticket dispensers, hello QR code based payments, and license plate reading cameras. For drivers, that means ease. For owners, it means an NOI boost. And unlike other parking operators, Air Garage's tech is all built in-house, so it actually works. Go to airgarage.com slash promote to learn more. That's airgarage.com slash promote.
I don't know if you brought up tides for a specific reason, but I think it was cute and clever. Our next story is gonna be about tides equities, specifically about the principles of tides equities. So this isn't like you're suing an LLC to get your money back or other people's money's impacted. This is Starwood, which was a lender into these projects, going personally after the principles of tides equities. So Sean Kea and Ryan Andrade, two of your favorite guys.
Will Krasne (17:24)
So these guys actually made a lot of people a lot of money for a long time. So before we dive into this, because again, like I don't want to come off as too negative because they put out huge amounts of money.
Hiten Samtani (17:36)
You're talking
$6 billion of acquisitions in what, three years?
Will Krasne (17:39)
Yeah, and they made a ton of money for a lot of people. I think their execution, at least at the beginning, was really strong. mean, the idea of having same renovations on everything, to get scale makes sense. ⁓
Hiten Samtani (17:56)
The interesting thing here to me as an outsider was like templatizing what used to not be a templatized product, right? Same kind of name structure, same kind of fix and flip model, same kind of CapEx, et cetera, in each property they bought.
Will Krasne (18:11)
Yeah, and look, I am a big proponent, it's like you gotta underwrite each individual asset. I'm also a proponent of if someone makes a decision to give you money to buy real estate, they're not giving it to you to make a decision to buy or not buy. That decision was made. is your job to go do the best deal that you can and to do it at scale with the amount of money that people gave them, it's impossible to do bespoke projects left and right. You have to standardize it. So again, I give them quite a bit of credit.
Hiten Samtani (18:39)
To standardize, mean, you have to have a buy box and you have to execute within that buy box.
Will Krasne (18:43)
Right, mean you can't just be sitting here and buying a deal every three weeks for two years or whatever it was they were doing and say, how are we gonna do this backsplash at this property in Chandler, Arizona relative to this property that we're buying in North Dallas? No, you do the same thing everywhere.
Hiten Samtani (19:01)
going to say this is our backsplash template and this is how we're going to execute it. This is our backsplash gap.
Will Krasne (19:06)
This is exactly what we're going to do. And again, I'm not saying it's right. I'm not saying it's the way to generate returns, but I'm saying if you're running a real estate investment business, those decisions all make sense. That said, they paid way too much for a ton of things. They made incredibly unrealistic assumptions. Everything with floating rate debt, you you have, you think that these loans are non-recourse if you're the principal, because effectively they are. What I mean is,
Hiten Samtani (19:24)
financed everything with floatering rate debt.
What do mean by that?
Will Krasne (19:34)
If you get a loan from ReadyCap or Freddy or any one of these terms, MF1, what have you, those multi-gaming loans are non-recourse, except for the bad boy Carver.
Hiten Samtani (19:45)
Yes, and this is something we talked about in our pilot episode. There are certain bad boy car vats that trigger you being personally on the hook when the bill's due. And in this case, the bill was due. So Starwood takes these properties back in a credit bid and then goes personally after Sean Keeah and Ryan Andrade for the
Will Krasne (20:01)
Right, because what they're saying is that they triggered those bad boy carve-outs which made the loan that was non-recourse recourse. So essentially Starwood could come after them personally, their personal assets everywhere, their stake in tides, their promote and other deals to the extent that it existed, their fees, whatever, to make themselves whole. And what's really interesting here is that you kind of have like maybe a rush for the exits because if they did this on a lot of deals,
all these other lenders, if you're staring the same deal, we just talked about they did the same thing through property, if you're staring down that and you're another one of these lenders, if you're a ready cap, if you're a Rialto, if you're Acres,
Hiten Samtani (20:42)
Yeah, I think all the debt funds are watching this very closely. The reason we're talking about it now, the action was, know, Starwood kicked this action off ⁓ late last year, ⁓ but the judge recently ruled, I want to say in last couple of weeks, that ⁓ Andrade and Kia are on the hook for at least $27 million in PGs over these two deals. And there's one more deal pending, exact same legal argument laid out by Starwood, and there there's a $24 million recourse guarantee. I think we should talk.
a bit about what a recourse guarantee is. think our listeners would probably benefit from that. what is a recourse guarantee?
Will Krasne (21:17)
So if you borrow money, you sign a guarantee. And it can be a non-recourse guarantee or a recourse guarantee. And essentially, the guarantee just means that there's a warm body at the end of the tunnel for the lender to come after.
Hiten Samtani (21:33)
This isn't a Delaware LLC or et cetera. This is someone who could be living in a Brentwood mansion.
Will Krasne (21:37)
I
mean, the guarantee, the guarantee can be an entity, like, but there has to be like warm bodies behind it. So if it's non recourse, like pretty easy. If you follow the rules of the doc, pay everything back, then they, know, and if you just, the deal doesn't work and they can't come after you personally, they can't come after your house. They can't come after other assets you own. They can just come after the property, but a recourse guarantee means you put up all your assets against it. So whatever the lender needs to liquidate of yours to get paid off in full, like that's what they can do.
Hiten Samtani (22:06)
Liquidate is such an ominous term, I think it's apt.
the kind of things that can can trigger a PG.
Will Krasne (22:26)
failing to escrow property taxes appropriately failing to escrow insurance appropriately
Hiten Samtani (22:31)
Failure to maintain an interest rate cap is one thing that came up in these lawsuits.
Will Krasne (22:34)
Yeah,
failing to maintain proper financial reporting, failure to... There's a whole host of things that aren't necessarily property-related.
Hiten Samtani (22:42)
I think we talked about this when things do get to this level and for a long time the debt funds kind of did not act and suddenly you're seeing this like mimetic rush to act. Then there's a cavity search of every line in that contract, in that guarantee. Then it gets serious. And so we have, know, Starwood's won two of these. They've got one more pending, at least one more pending. But then you've got the likes of Rialto who, you know, as you say, you love to say major character in the Promote Cinematic Universe. They've got another
case pending against the principles of tides. We've got Acres Capital, which is Mark Fogel, and then we've got other lenders too. And obviously this isn't restricted to tides. The reason we're talking about the story, the reason we find it interesting is that other syndicators are in a similar position with their debt fund.
Will Krasne (23:26)
Again, Tides may be the poster boy, but they're not the only one by a long stretch. And the other thing too I want to point out is like the amount of these PG's, you may think, oh gosh, $24 million, these guys, like that's a lot of money, but these guys made a ton of money, which they did. Just run through like a little bit of math. If you raise $200 million and you do a two and a half, three X over 10 years, and you have a 20 % promote over like a eight or 10 catch up, that's like $25 million of promote, you know?
Hiten Samtani (23:54)
Yeah.
Will Krasne (23:55)
The other thing that happens here too, which we haven't really talked about is GP loans. So essentially people take out loans against their stake in their partnership. Here's a great example, Bill Chisholm, the guy buying the Celtics. mean, he's just sold another stake of his firm to Peters Hill to fund his purchase in Celtics, but like, you can also take loans against that same equity, which UBS was like notorious for providing. And that stuff gets really dangerous.
So I don't know for sure, but I would wager that these guys had every ⁓ private wealth manager in America begging to lend them money against their stake in tides, against all their promote, all their fees, whatever. And that's where this stuff also gets really slippery too.
Hiten Samtani (24:42)
So if Starwood's coming after X, then you would imagine the next lender will and the next lender will. And judgments like this kind of create a bit more urgency too.
Will Krasne (24:52)
Right, and as we talked about previously, if you have a liquidity and net worth covenant for one loan, those aren't cumulative. So you can buy 50 deals with the same $20 million net worth if your loans are all under $20 million. And it can create a race for the exits.
Hiten Samtani (25:11)
I think we should close this one out by just framing the broader issue for multifamily syndicators. So to recap, a lot of them, debt-fueled purchases, massive leverage, a plan to see rents essentially on a perpetual growth machine. That stopped happening, rates turned as well. Most of their deals were underwater or many of their deals were underwater. And now lenders are saying, well, what else are we going to do? We have to come after you and we're going to come after you, not just your company or not just the entity.
Will Krasne (25:39)
That last point there is key. Everyone's talked about the Sun Belt. Everyone's talked about syndicators being underwater. That's really not what's important here. What's important here is these guys are coming out, they're lenders coming after them personally for these guarantees. And they're using the docs, all four walls of the doc against them. Because as we said, in real estate, you can do whatever you want if you get the other guy to agree to it. And the flip side of that is that the lender then can get whatever you agreed to to use against you. And so if you signed all these
you bad boy carve-outs and you agreed not to do all these various things and you did them. If this, you know, if we were in a different rate environment and different supply environment, like, no one would care. Wouldn't matter. But when the tide goes out.
Hiten Samtani (26:22)
Yeah
But listen, Will, we got to close up by talking about the tariffs again. We had this big thing happen between the US and China. They slashed reciprocal tariffs from 125 % to 10%. So there's something happening here.
Will Krasne (26:41)
We still don't fucking know. That's it. That's the whole segment.
Hiten Samtani (26:48)
That's it for the Promote Podcast this week. The story mix on this podcast has become quite ominous to me recently. There's been too many alleged scammers, too many macroheadwaters,
Will Krasne (26:56)
there's going to be some stuff for us to talk about next week that'll be more positive.
Hiten Samtani (26:59)
Yeah, how people actually make money. Thanks again to our sponsor Air Garage. You can see how their full service parking management solution benefits you by going to airgarage.com slash promote. That's airgarage.com slash promote. Thank you to our listeners. We really, really appreciate you and well.
Will Krasne (27:17)
Like, share, subscribe, spray paint your local building.
Hiten Samtani (27:22)
You know we're already in the top 85 % of podcasts. We're actually having a really good time. We appreciate your enthusiasm. Absolutely. We'll be back next week. Well, thanks so much, Ciao.
Will Krasne (27:31)
Alright, appreciate it, man.