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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 (00:03)
We spoke to an institutional crowd about the growing importance of storytelling in the GP toolkit. And that very night, at the one hotel no less, we got the perfect illustration of it in action.
Will Krasne (00:12)
Let me guess some allocator was with Barry and saw him do the like fix this carpet right now bit
Hiten Samtani (00:18)
Exactly right. And the takeaway was this man, he sweats the small details. Of course he's going to be a great steward of capital.
Will Krasne (00:24)
And of course, the capital spent replacing my carpets below the line, so it doesn't exist.
Hiten Samtani (00:38)
Welcome back to the Promote Podcast, your insider guide to the money and mania of the CRE markets. I'm Hiten Samtani
Will Krasne (00:44)
and I'm Will Krasne
Hiten Samtani (00:47)
Shout out to our sponsors, Loan Boss, the best in class CRE debt management software.
Will Krasne (00:52)
Bravo Capital, a leading HUD and Bridge lender.
Hiten Samtani (00:55)
This week, we're going to talk some takeaways from institutional real estate's March Madness, the PREA conference. We've got key nuggets from allocators and the fund managers wooing them. Then we sniff around that quirky asset class's latest mega deal, Chuny Herzka $1.7 billion acquisition of the center's health care portfolio. Chuny! Chuny, you got it. And finally, the changing of the guard at Camden Property Trust is a good excuse to discuss two of our favorite themes, AUM gobbling and the private leaning shift in the capital markets.
Will Krasne (01:24)
If Tiger Woods named his yacht now, it'd be called Public.
Let's start off with the punch list, our signature rundown of the newsiest news in CRE.
Co-host to 10 was on ODLOTS, cheating on us, unreal.
Hiten Samtani (01:51)
It's one of the few pods I cheat on this pod with.
Will Krasne (01:53)
They had you on talking about Dubai real estate more in the news than ever for not necessarily the best reasons.
Hiten Samtani (02:00)
We've been talking this year about the GCC allocators outsized influence in the US real estate market in every vehicle you can imagine. There's probably some GCC money in there. But back home in the UAE, things are getting a little bit dicey. A lot of the developers have, just like in the US, have started financializing their capital markets quite a bit. They've been getting heavily into these bonds to raise funds for their developments.
Will Krasne (02:24)
It's a tricky thing because they're Sharia compliant, which means you can't make interest.
Hiten Samtani (02:31)
Because interest itself is not kosher. They have a workaround where you get these fixed payments or profit sharing payments.
Will Krasne (02:37)
It's like how if you're a felon, you can't own a gun, but you can lease one.
Hiten Samtani (02:44)
A couple of the prominent developers, the bonds that they issued have fallen into distress. They're trading with a yield spread of over a thousand basis points.
Will Krasne (02:51)
Yeah, that's pretty distressed. And I think what's interesting too is that some of the companies, think Binghatti Holding especially,
Hiten Samtani (02:58)
the pioneers of the branded condo game in Dubai.
Will Krasne (03:01)
Yeah, we've seen Mercedes Benz Tower. We've seen Aston Martin Tower, all these various other towers, the Equinox Hotel, and these guys are bringing that to Dubai.
Hiten Samtani (03:10)
The fact that these guys, their bonds are in distress is going to be quite a bit of pressure on that market. And obviously we'll see how this plays out, whether the government will have to step in again as they did after the JFC. If this continues, all bets are off.
Will Krasne (03:25)
No one's immune from war, even places that want to be the capital of capital. And the uncertainty that we are sending out from our shores is having ripple effects throughout capital markets globally, not just here.
Hiten Samtani (03:37)
Next one. Apollo, one of the foremost AUM golfers of our time, is looking to open an HQ2 and it's going to be in the American South. Hey y'all. Responding to an FT report, Apollo said, we've shared with our teams across Apollo and Athene that we plan to establish a second headquarters in either Texas or South Florida alongside NYC. And then they had a little masala on top of that. New York does not have a monopoly on talent and we expect most of our future growth
will take place in our second HQ. It's a very deliberate statement to make.
Will Krasne (04:09)
Yeah.
Maybe it's because they've got all these distressed multi-bridge loans and so they just want to be closer to the action in Texas. Look, we've heard this story on and on for the last decade, if not longer. We don't have our head in the sand here at the Promote Podcast. don't know, toes in the water, ass in the sand, as Zach Bryan would say. And Miami, Dallas, all these places have become real global cities. And all of those places get outposts of these types of firms.
Now, Apollo is so big, they have business all over the world. I don't think the fact that their European headquarters are probably in Luxembourg means that London is less important.
Hiten Samtani (04:47)
Look at the size. Apollo's 1,700 people in 2020. They're now over 4,000. So they've more than doubled their workforce since the pandemic. So they've got to put these people somewhere. New York is obviously cost prohibitive. And the question to me will becomes, what kind of people, are we talking about real market movers? Are we talking about the support staff for these AUM gobbling operations? That's the big question here.
Will Krasne (05:08)
all of this is that people who move to Miami, it's really for the senior guys to have a little bit kismet with the IRS to basically say, look, like we have a real office here. I live here. My kids are in school here conveniently until they're not. And then I'm renting a hundred thousand dollar apartment a month in New York.
Hiten Samtani (05:24)
There is a big shift here. JP Morgan now employs more people in Texas than in New York state. Apollo, the idea that they're putting a second headquarters and they're projecting that all their growth will happen there as opposed to New York is interesting. what, hold on.
Will Krasne (05:36)
hold
on, just wanna like double click on-
Hiten Samtani (05:38)
Did
you say double click again? did.
Will Krasne (05:41)
When they say all their growth is coming there, what does that mean? They're going to raise more than $800 billion in this other area? You put out these arbitrary benchmarks and honestly, let's call a spade a spade. It's because Mark Rowan doesn't like Mom Donnie.
Hiten Samtani (05:52)
It's a struggle between logic and emotion where they know the best talents in New York. They were minted in New York. They understand that Manhattan isn't going anywhere. But at the same time, all these other chambers of commerce are pulling out all the stops for them. Come here. We will treat you like the royalty that you are. Whereas New York, with our mayor saying, don't. The kind of thing that sticks in the craw.
Will Krasne (06:10)
think that we should have billionaires.
Yeah, it sticks in the craw, grinds their gears, all the above. these guys have been arbing since the beginning of time. A good friend of the podhunter did a great episode of Business Breakdowns where he talks about how behind every great fortune a crime, just Google executive life and it'll tell you about how Apollo was created. They're going to go find the arb.
Hiten Samtani (06:32)
pointed statement that they put out is really to put NYC on blast a little bit. It's going to hopefully create a reckoning in the top ranks of leadership in New York.
Will Krasne (06:40)
Absolutely.
it's just, again, asserting leverage wherever you can, which they're the best at.
Hiten Samtani (06:44)
Pun intended. had another wild card hypothesis here. When you think of Apollo in New York, the first person that comes to mind is Leon Black, the disgraced co-founder. You're starting in Dallas or in friggin' Miami or something, Apollo can be whatever you want it to be.
Will Krasne (07:03)
Like Ryan Atwood when he saw Marissa Cooper outside at the pilot of the OCs. Like I'll be whatever you want me to be.
Hiten Samtani (07:10)
Okay.
Next one. More Brookfield office fallout. But this is more interesting not for the Brookfield side, but for the other side. Capital Group, I didn't realize how big Capital Group is. They run over $3 trillion in AUM. Capital Group is becoming their own landlord in downtown LA. So Brookfield bought this portfolio through a 2013 acquisition of a REIT called MPG. And many of these towers, Gas Company Tower, Wells Fargo Center North, etc., are no longer owned by Brookfield.
maybe not of their own volition though.
Will Krasne (07:40)
Yes, they've given quite a lot of them back. These are buildings which they had bought a long time ago and they've taken their capital out probably several times over. But Capital Group was in this building, which is 333 South Hope Street, and they decided to make an opportunistic move and buy it.
Hiten Samtani (07:51)
They're not significant to our overall.
It plans to bring together its workforce in a quote, vertical campus. You've heard that before.
Will Krasne (08:08)
Yeah,
of course. I remember vertical farming too. That was great.
Hiten Samtani (08:11)
Oh
my God, that was hot for a second. So the CEO of Capital Group said the following, said, we knew the best landlord we could possibly have would be ourselves. And he made reference to the idea that this building was so cheaply priced because of the distress that it just was a no-brainer for them to buy. And why I think this is interesting is we've seen opportunistic investors step into these broken cap stacks and take over these buildings for as little as 140, 150 a foot.
in prime areas in Chicago, Los Angeles, et cetera. But this is an interesting new trend where you're seeing the actual occupier say, hey, I might as well step up and do this myself.
Will Krasne (08:49)
It makes a ton of sense if you think about it because I don't know how many square feet Capital Group had in the building. Hundreds and hundreds of thousands of square feet. You can do the math and the price per foot when it gets down.
Hiten Samtani (08:58)
Did you know
that office rents in LA are quoted per month? Yeah, it throws everyone off. Our mutual friend, Opera, was telling him about it. He just could not wrap his head around
Will Krasne (09:02)
How they do it with industrial-
Yeah,
it's so crazy because they're talking about like $3 square foot industrial rents. What are you talking about? This is the Inland Empire. But once it gets down to 150 bucks a foot-ish, the office rents are 50 bucks. You basically get the building in three years worth of rent payments. Capital Group, they have an unbelievable fee stream and make so much money.
And they're investors like, why not do it? Because you control your own destiny forever. You can eventually expand and take more of the building, customize it however you want. It makes a lot of sense. And I think we're seeing it in New York, too, where these buildings just get so cheap where you're going to be paying a hundred bucks a foot in rent if you can buy it for 300 bucks. But why would you not?
Hiten Samtani (09:50)
That is it for the punch list. When we come back, we're going to be doing a little navel gazing.
Will Krasne (09:54)
Yes!
My favourite type of geese.
Hiten Samtani (10:02)
Well, you've worn many hats in your glorious life so far. Pro baseball player, thespian, tornado remediation specialist. I want to ask, which was your least favorite?
Will Krasne (10:11)
First two, ugh, they were dreams. The third was a nightmare. Turning into a dream though. However, if you asked me a few months ago, I would have said Excel Monkey was my least favorite. Modeling out the debt tab was really, really annoying. Maturity dates, extension options, rate caps, ugh. My spreadsheets were beautiful, but at what cost?
Hiten Samtani (10:31)
Sounds like you had good ROI, but your ROIBD, return on invested brain damage, not so good. So what changed?
Will Krasne (10:38)
I discovered Loan Boss. All my loans, live on one screen. No more, let me just pull that up while I jazz hands a capital partner. And the extension option tracking with automatic notice reminders. I used to have a Post-It note on my monitor for that. A Post-It note, a 10. Don't, I'm not proud of it. But the one-click DSCR testing, every lender adjustment, every unique requirement, automated, ⁓ my God.
Hiten Samtani (10:52)
this day and age.
No more getting surprised by your own cap stack. Listeners, check them out at loneboss.com, that's loneboss.com, and tell them the promo sent you.
It was really good to see you. Just no bullshit, no cap. It was nice to see you. was nice to get together. And we had a good time talking to the suits.
Will Krasne (11:24)
The
suits indeed. We were wearing suits though too. We became suits.
Hiten Samtani (11:30)
So what are we talking about? Last week we were at Prio, which is the Pension Real Estate Association. They have their annual Spring Shindig. This time it was in Nashville, Tennessee. And Will and I went down there to chop it up and to talk specifically about the importance of GP storytelling in the overall toolkit.
Will Krasne (11:45)
First of all, just want to say thank you to MetLife and StepStone for having us. was... Yeah, I really enjoyed it. Hope we didn't embarrass you too much. And I know what everyone's thinking. Did Will try to tell a bunch of research folks at very eminent firms that they need to be more like clavicular? I'm looking pumped right now. And the answer is yes, of course.
Hiten Samtani (11:49)
Yeah, Liz and Will, thank you so much.
just the right amount.
about
He
did in fact do that. He absolutely did. Speaking to them was a great opportunity for us, great exposure for the promote, but I think we also learned a lot just by hanging out in that crowd for a couple of days. So what are some of the takeaways that you had from just the conversations with the Steve DeFrancis of the world and the David Schwartz's of the world and the Stepstones and all that?
Will Krasne (12:26)
Those are just hypotheticals. could be anyone that we talk to. anyone. For liability reasons. A couple things were on everyone's mind. The first was just consolidation, particularly in multifamily. And what we mean is that it's really going to be tough out there if you just were a garden variety multi. And we've talked about this a lot, but it really was hit home that you have to have some sort of real
Hiten Samtani (12:48)
Super
differentiated strategy. And actually differentiated.
Will Krasne (12:52)
You either have to be like so vertically integrated, PM in-house, construction in-house, sourcing in-house, all that. And then you also need to be able to convey that to people that you have all that in-house.
Hiten Samtani (13:03)
most kind of vivid illustration of that was Steve DeFrancis, founder of Cortland, mega multifamily manager, but his map of the ships with all the materials coming in.
Will Krasne (13:12)
And it comes back to storytelling. That's how you convey these types of things. Or you need to be able to have incredible data on costs, drive down OpEx, all of these different things. And if you don't, you're going to get bought up because there's a lot of groups out there with a ton of capital that don't have execution. And there's a lot of groups out there that have execution that don't really have the access to capital anymore. And so this is the kind of marriages we're going to see. And we're not talking about REITs necessarily.
We're talking about a lot of these firms, which used to be the alpha predators of the space where you could create a business big enough in a certain geography to be a national level player. And that just isn't it anymore. You have to have so much scale. And another thing that think that hits too is that for these institutional allocators, you have to have so much back office that the cost structures just don't work unless you are massive.
Hiten Samtani (14:03)
You're either getting gobbled up, which is a good scenario, or you're kind of withering away, which is the more scary scenario. You're not going back to such, but no one's giving you more capital to do anything. So you're just kind of dying by status.
Will Krasne (14:15)
Yeah,
and the thing is you have to keep raising more and more money because this is a human capital game and if you can't raise more and more money, it doesn't let you pay people more, it's harder to hire, it's harder to reinvest in the systems that you need. Especially if you're hiring out to third-party property managers, it makes it really difficult because there's just a lot of leakage in your costs at the property level and then in your fee streams.
Hiten Samtani (14:37)
What else do hear about? We heard a lot about AI.
Will Krasne (14:40)
AI Allen Iverson y'all hear it.
Hiten Samtani (14:42)
then that's that. No one knew what they were talking about. No one had done the practice. Not a game. We talking about.
Will Krasne (14:46)
⁓
practice. It's just crazy because it's one of these things where it's like you have to talk about it so everyone talks about it. Everyone agrees like there's gonna be a lot of disruption. We did see some charts but no one really knows the time frame when it's gonna come for the white-collar jobs really at s-
Hiten Samtani (14:56)
We saw some charts. We saw some charts.
I still haven't heard of a viable high-level job in CRE that AI is supposed to promulgate.
Will Krasne (15:13)
I honestly don't know. think at some point people are paying for investment acumen and pattern recognition and that's a real thing and the AI is not there yet.
Hiten Samtani (15:24)
Running
the Blackstone there, AI is almost there.
Will Krasne (15:26)
Okay, cool guys. But I don't know, but it's just the potential disruption to the job market's on everyone's mind. It's not even so much what's the impact to this industry. It's how are you going to invest? We talked about meds and eds a couple of episodes ago and how colleges are having slower enrollment. What does that mean? Like, do you go to places now where this is where all of the only fans models are and like they're looking for rentals? Like that is that like the job driver?
Hiten Samtani (15:52)
That's
going to be a great market in Miami for sure. Absolutely. I mean, you should leave this pot right now and start raising for that because that's a great strategy.
Will Krasne (15:59)
I'll partner with Sophie Ray and be like, Rain Capital.
Hiten Samtani (16:02)
Which brings us to our next takeaway, which is specialization is gonna be the name of the game, right? You're either the biggest and getting bigger because you have created that momentum around your capital raising strategy, or you're so, so specialized and so niche that you have some defensible strategies.
Will Krasne (16:19)
If you're just like vanilla multi-manager, it's hard. That's why Bridge got acquired by Apollo. And you've got to be something very specific. No, it was not.
Hiten Samtani (16:28)
The bridge was not doing well, I don't think. They
sold for a big number, but they were not doing well.
Will Krasne (16:33)
No, but they had distribution, they had a brand, allowed Apollo to basically buy that business versus having to build it internally. And you've got to be a sharpshooter into various asset classes or geographies that are super specific. All these groups are basically saying, we want this exposure, that exposure, this other exposure, and then we're just going to get it through somebody.
Hiten Samtani (16:53)
We want affordable housing exposure in New York City. Okay, Ron Mollis, will you take a meeting? Et cetera, et cetera.
Will Krasne (16:58)
We want small bay industrial in Florida. Can we get this guy? We want non-correlated good income streams. Can we find a Marina guy? They're really looking to focus on is those types of partnerships and being able to get exposure that way. And then you're either that or you're the supermarket where you're trying to just be all things to everybody and be like, come here for your private credit. Come here for your real estate. Come here for all your various food groups.
Hiten Samtani (17:19)
The Everything Store.
Mere for your hedge fund strategy for Mere Millionaires, which is the new one for Blackstone, I think just announced. Not even the multi-multi-millionaires, but the run-and-mill millionaires.
Will Krasne (17:32)
There's
gonna be no 401k's left for anybody when they're done.
Hiten Samtani (17:36)
One thing you can take solace from is that the rest of the world is still a little bit behind America. We were having drinks with this really interesting guy.
Will Krasne (17:44)
Total
legend, unbelievable. And he was saying, I mean, he doesn't really invest in the US. And he goes, oh yeah, I come here because I'm based in Europe and I get to see what Europe's going to be doing in five years.
Hiten Samtani (18:06)
I'm here with Aaron Krawitz of Bravo Capital. Aaron, $2 billion in deals, 100 % HUD approval rate, five years since launching. How do you keep that streak going?
really go. ⁓
Will Krasne (18:32)
HUDs at Proable
and it goes back to knowing the ins and outs of the program so that there is no guesswork.
Hiten Samtani (18:37)
Sniff's assisted living, feels like such an arcane world full of very complicated regulations and such a specific cast of characters that you really need to know Cole to make this work. Exactly.
Will Krasne (18:48)
We're
steeped in state by state regulations and distinctions, but we're not just about HUD. We all have a very strong balance sheet bridge affiliate, Bravo Property Trust, and we just financed over 170 million out in Miami and 125 million in Dumbo, Brooklyn.
Hiten Samtani (18:54)
So
Will Krasne (19:11)
We're at Vovcapital.com.
Hiten Samtani (19:22)
Okay, we're gonna do a little pronunciation exercise. There you go, excellent.
Will Krasne (19:27)
Honey
So avid readers of the promote will notice that Hiten is remarkably sourced in one very specific niche, which is the sniff space and one of the most hotly anticipated deals in that vertical has finally closed. Chuny, Chuny Herzka takeover of the center. Chuny, Chuny Herzka takeover of the center's healthcare portfolio in a $1.7 billion deal. 35 buildings, seven banks. That's a lot of banks.
Hiten Samtani (19:48)
went over this hunny hunny hunny why are you getting there
This is the thing about the sniff space that makes it such great fodder for us at the promote is that's a massive fricking deal. And sniffs are money printing machines. You're able to get very high leverage HUD financing on these kinds of properties as well. And they're mostly Medicare and Medicaid funded. Someone described it to me very memorably as you're borrowing money from the government against old people, which generally works out just fine. But these are massive deals. They're incredibly under covered, I think, in the broader press. And this deal especially is very interesting. So.
Chuny Herzka who coincidentally is Ralph Herzka of Meridian fame, his nephew, he just closed on a $1.7 billion 35 building portfolio, primarily in New York, New York state. The sellers are interesting, the buyer is interesting, the way it came together is fascinating. Let's get into it.
Will Krasne (20:46)
Sellers are Darryl Hagler and Kenny Rosenberg. Darryl Hagler, one of the big magnates in the space. Oh yeah. And also one of those guys where you sneakily see like, Borough Park building trades for $120 million with no mortgage. And it's like Darryl Hagler bought it. Like what the?
Hiten Samtani (21:03)
He also came up a lot with the heyday of the Brooklyn real estate investor. was backing a lot of these guys. Hagler was the money behind a lot of the moves that were made in the market in that 2010 Williamsburg-y super hot era.
Will Krasne (21:18)
He has a variety of different interests. He owns an airline.
Hiten Samtani (21:21)
yeah, Israeli airline El Al. Like that's the kind of business you can have. You can have an airline on the side when you're in the sniff space. They also own powered kosher dinner hotspot Tabernacle, which competes with my other spot, Reserve Cut. This is basically the pool room and the grill room of the kosher world. Your boy Mayweather was seen dining at I believe Tabernacle or Reserve Cut.
Will Krasne (21:41)
I hope someone else picked up the tab.
Hiten Samtani (21:44)
So there are about 15,000 facilities, SNFs, in the US. Over 70 % of them are for-profit. And for some reason, it's attracted this like very insular crowd of mostly orthodox deal makers. Most of them concentrated in the tri-state, but they own all over the place. We were talking about the Genesis portfolio a few episodes back. That's another major distressed portfolio in this space. Yoli Landau is making a play for it. But kind of want to get into the sociology of this a little bit, if you permit me. Of course. This space...
Litigation comes with the territory and the litigation here can get very, very painful, right? Because you're talking about old people, you're talking about wrongful deaths, you're talking about Medicare, Medicaid scams. So my thesis is that you have to have not only very thick skin to be in this business, but you also have to have a certain degree of removal. You almost have to feel like the people are separate from you in some way. And which is why being part of an insular community in which you mostly care about how that
small group thinks about you is ideal for a space like this. It allows you to have these blenders on.
Will Krasne (22:48)
I never really considered that, but I can kind of see it. And yeah, it's tough. You talk about how when you're a hedge fund and you're like making these big trades, you can't think about it as money because you'll just freak out. And it's just ammo. I am the sun that warms you and the air that you fucking breathe. It's kind of the same here. Like you can't think about the human cost sometimes. I remember even on the hotel side, when we were buying extended stay hotels.
Oh yeah, our value creation here is going to be we're just going to stop cleaning them like every week and
Hiten Samtani (23:21)
You have to basically widgetize what you're doing to make it work, is what you're saying.
Will Krasne (23:26)
Absolutely. And again, because so much of this is financialized and deals with the government, there's been a lot of political heat that has been in this space. I think New Jersey had previously sued Hagler and Rosenberg over the misuse of Medicaid funds. Though there was a bigger scheme afoot there, I think, too. They were taking out mortgages and rent payments because they were legally separating the nursing home operation.
Hiten Samtani (23:48)
⁓
the OpCoPropCo play. Yes. Yeah. Exactly. Go say more about that.
Will Krasne (23:52)
So one of the ways you could make a lot of money here was doing an op-co prop-co. So you would separate the nursing home real estate from the nursing home operations. the nursing home operations would pay rent to the prop-co and you could just basically lever the absolute piss out of the building. That's how you make your money. And if the thing goes sideways, well, we took all this cash out and there we go.
Hiten Samtani (24:12)
By the way, the New York AG Tish James also sued Hagler and Rosenberg alleging other kinds of fraud as well. So this is part of it. If you own nursing homes, there isn't a player that's been spared the political heat, let's say. It's an easy target as well, right? You're talking about old people, vulnerable people, and for-profit investors coming in and changing things around to make more money, which can often lead to worse outcomes for these patients.
Will Krasne (24:35)
That's what we've talked about in the multifamily space where if you're a landlord, have to take providing homes for people very, very seriously. And this is that to the nth degree, especially when you add in the financing that's available for these things, which again, it all comes from a good place to try to make this a better capitalized industry and more liquid, but it can have some downstream consequences. And speaking of consequences, this deal specifically is a little bit up in the air because hoonies.
Uncle is quite the mocker and I think there's a little bit of conflict on his side there the deal
Hiten Samtani (25:10)
The
is closed and it took apparently it took shout out to sniff schmooze, which is my new favorite publication. had an interesting play by play in the most recent issue where they're talking about having to wrangle together financing from seven different banks to pull off this closing. And you're seeing the properties had records now. But what is interesting here is that the deal was said to be brokered by these two healthcare rainmakers. In the last year or so I've realized how much money these sniff brokers can make. It's a shit ton of money.
But Ari Adlerstein and Josh Simpson, who were the two top healthcare brokers in the country, were at Meridian for the longest time. They were set to broker this deal. They got kicked out, they got fired for cause, right as their bonuses were set to be paid out. So it's messy. They're in binding arbitration now with Meridian. They've won a court verdict, but the damages are still TBD. So the deal is officially credited to Meridian, but it's these guys who did the deal. So that's the kind of chatter about who's gonna get paid.
Is it going to be Uncle Ralph or is it going to be the lieutenants?
money. Real money. $1.7 billion deal is going to be a lot of money.
Will Krasne (26:15)
sure who needs gonna be maybe spinning off some of these maybe those get sold by these guys too
Hiten Samtani (26:20)
Let's talk a little bit about honey. I don't know if you if you got a lump sum of cash from your folks or relatives when you got married will Okay. Well if you had and you were honey hurts go what you would have done is bought a nursing home with it So what happens with a lot of these? Yeshivish type of kids as they get a wedding present, which they then parlay into real estate right away. It's a super savvy thing I wish more of us did it but They can start essentially amassing a portfolio of real estate at a very tender age
because they use their wedding capital and many of them get married quite early. think Chuny's about our age, but probably has several kids and actually had a very star-studded brist for one of them recently. The who's who of real estate showed up. What's happened? It was covered by CBN, which is kind of this TMZ for the Orthodox world. I get some of the videos.
Will Krasne (27:12)
What does CBN stand for? must know.
Hiten Samtani (27:14)
God. I don't want to misspeak. It's not the Christian Broadcasting Network, I can tell you that. But man, these guys throw a party. But again, it's a very insular community and a lot of these nursing homes that we talk about trade within that community.
Will Krasne (27:30)
It's funny because these people rise out of nowhere and do massive deals at young age. This is not too different. It's nursing homes versus Williamsburg multi, but ⁓ infamously are. Yol Goldman, who sort of came out of nowhere and took over Brooklyn by storm. Why aren't the institutions doing this? If it's so financialized, is there any reason for that?
Hiten Samtani (27:41)
My guy, you old Goldman?
really need to know the right people and you need to be connected within this space. And that's part of it. I would imagine the other part of it is just the reputational, the headline risk from the space is so massive. If you're Blackstone or Brookfield or whatever, and you're taking a retiree money, and then you're going to be in these headlines for Tish James is right over you kind of crusading. It's not easy. And there's a reason people stay away from these spaces is because they're very messy by design.
Will Krasne (28:19)
This is one of the few areas where a single guy or a family can put together an empire that's institutional in scale and size, which used to be able to do this type of thing in multi or office or industrial, and you really can't anymore. And this is one of the ways you can still do it. And it's being done all throughout Borough Park and Deal, New Jersey. All right, well, it's summer. God damn it, sorry.
Hiten Samtani (28:41)
And Lakewood, New Jersey, not Deal, New Jersey. ⁓ these are the wrong crew.
When we're doing this pod three years from now, when Blackstone or Brookfield or one of the institutions has their prospectus on this space and the way they frame it is gonna be so fun.
Will Krasne (28:57)
Yeah, that'll be here because it's gonna come
Hiten Samtani (28:59)
Want to
take a shot off the cuff how it's going to read?
Will Krasne (29:03)
We are adding value to the seniors lives through value enhancement strategies focused on resident experience, better amenities, and of course, financing the ever loving piss out of these buildings as fast as we can.
Hiten Samtani (29:30)
BG-OBOT BELL
Apparently. I knew this was on the way. was just probably announced. so Sun Life consolidated its ownership. And then BGO bought Bell. We're excited to announce that Bell Partners has entered into an agreement with BGO to combine our businesses, bringing together two highly complimentary platforms with deep expertise across US multifamily and commercial real estate.
Will Krasne (29:40)
I wouldn't have bet that.
Yeah, I just saw it.
Bye bye, Belle.
So this is live podcasting. We just got news that Sun Life consolidated its ownership in BGO and they bought Bell Partners who you've been talking about being on the market for some time now.
Hiten Samtani (30:19)
Yeah, a few months now they've been soul searching. Bell Partners is one of those classic firms that was big, but maybe not big enough to compete in this new reality. And so they had been shopping themselves and BGO picked them up. Giant Fund Manager, formerly run by Sonny Calci, who is now I think at Sun Life and Sun Life just picked up BGO.
Will Krasne (30:37)
And spins into what we wanted to talk to in our final story, which was Camden Property Trust, naming a new CEO as Rick Campo, who was the co-founder and longtime CEO since they'd been public. I think they were in public in 1993 and been CEO the entire time, founded the predecessor companies or co-founded them in the early.
Hiten Samtani (30:56)
That's
a lot of earnings calls, Yeah. That's a lot. Jeez.
Will Krasne (31:00)
But
to me, you're like, okay, they promoted their president big deal. But Rick Campo was the last, I think, of the founder CEOs in the public read space. Yeah, right. Of these big reads. He co-founded this company in 1982. Had been CEO since 1993. And it's really the end of an era. And the Bell Partners news is like spot on here. The big swinging dicks in real estate used to be these local guys who could gobble up assets in their local markets.
Hiten Samtani (31:08)
Those large reeds.
through the SNL crisis.
Will Krasne (31:28)
Yeah, and were able to make it to the early 90s and took their companies public. Again, this Ethan Penner long form interview from maybe like 10 years ago. Yeah, pre him kind of going off the deep end a little bit is one of the best things I've read about the real estate finance industry. Talks about a lot of these guys, they were entrepreneurs. They took real risk with their personal balance sheets and created these companies out of nothing.
Hiten Samtani (31:37)
Pre his governor delusions.
We'll put in the show notes.
Will Krasne (31:53)
They weren't operators necessarily. They weren't really financial engineers. They were just guys with charisma and guts who could put things together.
Hiten Samtani (32:01)
and a sense for a deal and the ability to just grid it out right when they needed to.
Will Krasne (32:04)
And you had folks like this who built massive companies. John Williams at Post Properties, George Cates at MAA, Edward Lauder at Colonial. And all of these companies, they weren't founded in New York. They weren't founded in LA. MAA is in Memphis. Can you imagine that? The largest or second largest department owner in the country is in Memphis. And that stuff just like doesn't happen today. I'm looking at this portfolio in like a non-real market.
Hiten Samtani (32:18)
Where's MA again? They're-
Will Krasne (32:34)
It is a real market, but like a non-gateway market in the mid-Atlantic. And I'm going through like title and UDR owned these things like 25 years ago. would never happen today.
Hiten Samtani (32:43)
It all starts from cost of capital, right? That is the original sin here.
Will Krasne (32:47)
MAA can't lever an asset at the asset level as much as Blackstone can. We don't care about equity cost of capital as much anymore. care about debt cost of capital. And the private guys just can do it in spades.
Hiten Samtani (33:00)
Right. As we've talked about with our friends at Apollo, they're able to create this perpetual stream of capital through their insurance armatheem.
Will Krasne (33:07)
But I think what's interesting too is that we talked about you got to be a sharpshooter, you got to be the other end of the stick. And if you're a big reat, you're kind of neither. And you're subject to the vicissitudes of the public markets and you don't have the flexibility. Owning these businesses or these assets on your balance sheet is really tricky. And having a fee stream from other people's capitals of much, much better business.
Hiten Samtani (33:29)
What is Alex Jessett's job going to be in the next decade or so with Camden? How does his role or his mandate differ from what Campo had for the last 30 odd years?
Will Krasne (33:40)
Well, Campo and his co-founder like made something out of nothing and the job now is don't do anything that stupid and eventually get bought.
Hiten Samtani (33:46)
Remember when we talked about Tom Cousins and what that company used to be and now...
Will Krasne (33:51)
Ugh, a romance of it all.
Hiten Samtani (33:52)
They're now buying freaking boring buildings in Austin and whatnot.
Will Krasne (33:56)
There's another story recently that hits this perfectly is that Blackstone had this 5,000 unit multi-portfolio, several states.
Hiten Samtani (34:04)
all the eight hundred fifty million refi
Will Krasne (34:06)
Yeah,
the $850 million dollar refi, they kicked in $95 million cash in refi to do it. They bought it in 21. This would have been a public company 30 years ago. And it's now Blackstone just being like, 95 million bucks, like no problem. It would have been an existential crisis for the founders being like, how do we come up with this money? We're so rich, we have no liquidity. How do we get this refi done and get public? And now it's just Blackstone being like, it's fine.
Hiten Samtani (34:28)
Let's
talk about the freaking 1031 DSTs, which is the whole new wave. So Blackstone recently, this is so corny, but on 1031 at 1031 a.m., they announced a DST, a Delaware Statutory Trust. A 1031 investor invests into the DST, their money's locked up for two years. At the end of that period, Beard has the right, but not the obligation, to uproot these properties into the fund in exchange for operating partnership units.
Will Krasne (34:43)
Get some help.
Hiten Samtani (34:57)
the perfect AUM gobbling vehicle for our age.
Will Krasne (35:00)
It's been retail focused forever. If you're a dentist and you owned your own building and you sold it when you retired and you're like, Oh my God, what am I going to do? You don't want to pay the taxes. You wire houses, RAs, your financial advisor could all put you into these types of DSTs, Pasco, Cap Square. There's a bunch of these and Blackstone now wants to take that money too. They're taking the random millionaire dollars into their hedge fund and they're going to take the random dentist dollars in their DST.
Hiten Samtani (35:28)
They're also targeting investment sales brokers. Their distribution channels are now changing a little bit because they want to, they don't just want that Indian doctor. They want the action everywhere.
Will Krasne (35:38)
couple of groups that have done a really great job of this. The New York multifamily group at Marcus and Millichap has made a cottage industry of transitioning people out of New York multifamily.
Hiten Samtani (35:46)
It's
funny as the Blackstone announced this thing at a Marcus and Millichap conference.
Will Krasne (35:51)
It makes sense. You get sick of owning in Bushwick, you can go own a Taco Bell and Chattanooga.
Hiten Samtani (35:56)
Naveen recently announced a 1031 DST. Fortress also recently announced one of these vehicles.
Will Krasne (36:02)
It's a way to get retail money into your system. I think if you do it once, the idea being like, this is a way that you can get someone's whole financial life onto your platform. If you do the trickiest, hardest transactions for them, they'll invest in your hedge fund. They'll invest in your private credit entity as well.
Hiten Samtani (36:20)
You just gotta get them on that treadmill.
Will Krasne (36:21)
You
got to get him on that treadmill. I'll tell you what, in 1983 when Rick Campo got on that treadmill, if he fast forwarded 40 years, he would not be putting together all those multi-deals. He would be figuring out a way to get his DST move in and take all that fee load up front.
Hiten Samtani (36:44)
That's it for the Promote Pod this week. AUM Gobling's unstoppable rise means you either have to get really good at one thing or catch a ride on a juggernaut. A mega deal in the sniff space sheds a little light on how that in-the-shadows asset class operates. And the capital markets are going private, which gives rise to a whole host of exotic vehicles.
Will Krasne (37:03)
We'll be back next week with more CRE insider goodness. Thank you again to our sponsors, Bravo Capital and Lone.
Hiten Samtani (37:09)
You can find them at BravoCapital.com and LoanBoss.com.
Will Krasne (37:13)
And if you are a commercial real estate organization that's looking for someone to come spice up your conference.
Hiten Samtani (37:20)
We're available. Should be fun, but please have good snacks, because Priya had some really good snacks. I really snacked out this last couple days.
Will Krasne (37:26)
They
the phone chargers they passed out were incredible.
Hiten Samtani (37:31)
You stole one, did you? No. You stole one. I saw it in your bag when you were out. I'll see you next week, Matt. Thanks. Thank you. Ciao.
Will Krasne (37:36)
What are you