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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/
Will Krasne (00:03)
So, fun fact about me, I can list all of the books in the Old Testament. I learned it in Mr. Aronhaff's class in fifth grade, and it just sort of stuck with me.
Hiten Samtani (00:12)
How'd
you start to memorize that? It feels like a pretty tall order for an 11 year old.
Will Krasne (00:17)
See, it starts with Genesis.
Hiten Samtani (00:23)
again
Welcome back to the Promote Podcast, your insider guides, the money and mania of the CRE markets. I'm Hiten Samtani.
Will Krasne (00:37)
and I'm Will Krasne.
Hiten Samtani (00:41)
Shout out to our sponsors for this episode, Loan Boss, which is a best-in-class CRE debt management software.
Will Krasne (00:46)
and Bravo Capital, which is one of the markets leading HUD and bridge lenders.
Hiten Samtani (00:51)
This week, we discuss a redemption tour by GVA's Alan Stalcup Probably patient zero of the Sunbelt multifamily boom bust. He's battling PG's, LPs, and maybe even the SEC. But Stalcup's pretty unapologetic. He sat down with me for a pretty unplugged conversation, I gotta say.
Will Krasne (01:07)
Good on you for getting this, this was great.
Hiten Samtani (01:10)
Can I fall into my lap? talk about it. We then dive into the 24-6 world of dealmaking in skilled NERSCIC facilities. It's a totally undercover corner of CRE with big numbers and some batshit maneuvering.
Will Krasne (01:23)
Let's kick things off with the news bulletin because there's just been too much CRE drama since we last spoke.
Hiten Samtani (01:29)
It's just been nuts. This past week has been absolutely nuts. ⁓ Marty Burger let's start there. He was the CEO of Silverstein. He was a related guy and then he went to Silverstein.
Will Krasne (01:39)
helped expand the firm from, mom and pop is like the wrong word, but the book about Ground Zero that came out, Power at Ground Zero, I think it's called. Book? Yeah, when they talk about how Silverstein missed the initial bid deadline because their fax machine in the office was broken. Well now, Silverstein is as much a brand as any pure play real estate shop. Like they are an institutional fund manager and a lot of that is due to what Marty Berger did. Anyway, we're getting far afield.
Hiten Samtani (01:47)
Lynn Sagalans
Will Krasne (02:07)
He is launching or relaunching a of full starts a new venture, but this time with David Levinson.
Hiten Samtani (02:09)
pets.
David Levinson of LNL fame.
Will Krasne (02:15)
What's hilarious is that David Levinson tried this exact thing before.
Hiten Samtani (02:19)
Yes, exactly. Levinson, believe his partner Lapidus and MaryAnne Gilmartin tried something as well called L &L Mag, which is basically just an amalgamation of all their freaking initials. That didn't really go anywhere either. And Marty Berger had tried something, so he launched something called, I believe, Infinite or Infinity with Andrew Farkas of Island Capital. That fizzled out before launch, right? So then he was a man without a country. I think this is really interesting. It's like he wanted to play all over the cap stack.
But once he lost the Farkas relationship, he kind of became a man without an island. He was a glorified capital markets broker. He wanted to be a lender, but he didn't have a he didn't have a sheet. So he would tie up a deal and then he would have to go and find the debt fund to bankroll it. If you remember, he's doing the latest MacLat deal.
Will Krasne (02:55)
Don't you?
Amazing. Look, it's really hard. think a lot of people realize when you're in the machine and you think that you are the reason for the success and a lot of times the seat. And I'm not saying this about Marty, he's talented guy.
Hiten Samtani (03:17)
I'm
saying this about myself. When I was leaving the real deal, I'm like, fuck, am I something or am I the real deal? It's scary.
Will Krasne (03:22)
Yeah, as someone who's on their own, it's really hard. It's a whole different skill set. What did Bob Iger say about leaving Disney? He's like, you stop getting the emails. The emails stop coming in. To do a deal in New York off your own balance sheet is like a gargantuan task. And so you really need to have a partner with deep pockets or a partner with a firm that has deep pockets. And even if you are Marty Berger, unless you're Tyler Henrytzi, it's hard to go raise that money flat out without our track record. It's hard to say how much of like a Blackstone cup is them versus the machine.
Hiten Samtani (03:51)
One of the things that he, Marty, as many professional CEOs find at these family firms is like, if your name's on the door, that matters. There was some son-in-law situation, Tall Kerret There's Lisa Silverstein who's now CEO. As a professional CEO, you can only go so far in a company like this.
Will Krasne (04:08)
Totally, and it really depends on what your expectations are and what your goals are. You can do really well and it's a great risk adjusted seat in a lot of ways, but you're never shooting the moon. The Twitter thread from like four years ago when Del Curry got divorced where the guy was like, don't do it, it's hard out here.
Hiten Samtani (04:21)
down
Burger's been out of Silverstein a couple years, hovering around deals. I believe he got the PM contract for the Shvo portfolio from Deutsche Finance Amerika.
Will Krasne (04:33)
Pretty
good gig. We've talked a lot about how receivers can make a lot of money here. Like I think this is a good gig to unwind. can take a couple years, cover some overhead and lets you be around around the hoop so to speak. But I think what's interesting here is the media. Let's get into that really quick. What's the media spin here?
Hiten Samtani (04:47)
Well, there's a couple of fun things happening, right? One is the collective amnesia around the fact that he's tried this a couple of times. The other part is like, there was a, I think a very unfair article in Cranes, where the headline in Cranes says, an ousted CEO who helped redevelop the World Trade Center has found his next act. What tends to happen is this is newsworthy for a very specific subset of people that you and I care about.
the promote listeners, CRE insiders. But to make it palatable or interesting for a broader New York or business audience, they just like threw in the World Trade Center card.
Will Krasne (05:18)
fundraising is vibes almost as much as anything and having the media narrative here when you're out to fundraise it's the same as when you're launching a building you gotta get while getting is good you gotta
Hiten Samtani (05:30)
Get
it right. You gotta get it right the first time. So good luck to Marty. We'll see how it goes. All right. We talked, what, last week about this? Yes. Talamor's failure to launch on the take private of Soho House. They went back and figured it out. As you predicted, they would. There's a new entity involved here.
Will Krasne (05:46)
Morse Ventures.
Hiten Samtani (05:48)
Huh, I wonder what that is.
Will Krasne (05:50)
The question is, which morse is involved? it Tyler? Reading the doc, he's getting note financing for this. It doesn't seem like it's all his money.
Hiten Samtani (05:58)
That
would make sense, right? Because he said just earlier this month that he didn't have the money to close.
Will Krasne (06:03)
They're cutting it in half off the top. So it's a hundred million dollar commitment, 50 from the fund and then 50 from Morse Ventures. So instead of the 200 from the fund or from MCR, the combined, my guess is that Morse Ventures went to somebody who's like, I'll put up my stake in the company and my stake in Swansea. You want to loan me some money. There's more rollover. The rest is covered by more unsecured debt issuance, which I'm sure will price wide. But the deal gets done. Ron Burkle pays himself left-hand, right-hand.
Hiten Samtani (06:31)
All right. Next one. We also just talked about this. The Summit pinnacle stocking horse bid for five thousand plus rent stabilized units in New York City, arguably the country's most scrutinized bankruptcy auction. It's gone through. Summit is now the presumptive owner of this giant portfolio. Even though there was some last minute kind of finagling from the Mamdani administration, it didn't take.
Will Krasne (06:54)
can't keep a good man down.
Hiten Samtani (06:55)
if the man is backed once again by Flagstar. They're coming back in here.
Will Krasne (06:59)
In for a dime, in for 60 % of a dime.
Hiten Samtani (07:02)
Flagstar stepping up again with 330 million in financing. So their debt basis, I was trying to do the math, was 65,000 a door, give or take. Why do you think they come back for round two?
Will Krasne (07:12)
You reset the debt basis, you're taking a write off either way, and now at least you've got a hope note on this. And the basis again, as we said when we spoke about this, it's so cheap. These are super operationally intensive. You can't raise the rent. It's a political hot button, but 64K to our debt basis. Now the thing is, is some it's got to get to work.
Hiten Samtani (07:30)
I think they did this basically to placate the Mumdani administration, but there was a pretty extraordinary document in the filings where Summit maps out their curing violation schedule. It's got fancy graphics and all of that. So someone's earned their keep here. And it says, you within the first 60 days, we're going to address these immediately hazardous violations. And then I think in the next 180 days or so, we will get the majority of the rest. Quite a pledge to make.
Will Krasne (07:53)
Yeah, and again, just to give some context for folks, if I'm out there just walking units on a new acquisition, let's say I'm buying 150 unit apartment complex, it's going to take me two days to walk every unit and see everything. Now imagine something 30 times bigger than that. It's going to take you three months just to walk everything and understand what you're dealing with. The asset management here to wrap your arms around is preposterous. Same on the property management side.
Hiten Samtani (08:18)
you might have some help from friends, might have some help from brothers, who knows.
Will Krasne (08:22)
Brother, where art thou? You know?
Hiten Samtani (08:25)
All right, next one, Hackman Capital, Los Angeles. Goldman Sachs was the lender. I think they gave him a billion and one on one of the studios. Is it called Radford? Seinfeld was shot at the studio, very iconic studio in LA. Hackman Capital, as we talked about a couple episodes ago, is one of the big players in this whole soundstay space, HBP, Hudson Pacific, the other. Both have had a pretty rough go of it recently. This was the thesis driven bet on the West Coast coming out of the pandemic. It's been a bit of a flop.
Will Krasne (08:54)
Very sad. Goes back to GS, Goldman Sachs. Although guess Steve Bannon also wasn't even near the Goldman Sachs. Didn't he also get a piece of Seinfeld so maybe he can come back?
Hiten Samtani (09:02)
walk into the staff meeting on Monday morning like it never happened?
Will Krasne (09:05)
Sure, you're an emotional person.
Hiten Samtani (09:08)
I'm curious what your thoughts are on REO in a space like this, which is quite specialized.
Will Krasne (09:12)
It's really hard. This is not something that just anybody can step into. You need to have a very specialized skill set. We talked about the asset management challenges of rent stabilized units. The asset management challenges of a giant sound stage is very difficult too, especially in this time of tumult in the entertainment industry. ⁓
Hiten Samtani (09:28)
nice
alliteration there I like it.
Will Krasne (09:30)
Thank you. I'm positive this is not something that Goldman Sachs wants to deal with operationally. Whether or not they're selling their position, my guess is they're probably going to go try to find an operator to come in here and try to turn it around and not sell off the nadir.
Hiten Samtani (09:44)
Do think there's a potential role for Hackman in this down the road? I guess my question is, will the kids stay in the picture? I think so.
Will Krasne (09:55)
God, Bobby Evans, what a beaut. I miss that guy. I know, me too. But it's actually a great point. you think about the Reichman's getting taken down by Canary Wharf, but they ended up staying in because it's sort of like, who the hell else can get you out of this thing other than the guys who got you in? That really would not shock me if he got some sort of consulting role or like, hey, we'll pay you X per month and some share of profits if you're able to stay in here and turn this around. Because yeah, it's an operational issue, but
Part of this is just timing and if you could reset the capital stack, which has just happened, and you buy some more time.
Hiten Samtani (10:31)
The final one, this one is crazy. We talked about this a couple months ago. This is the botched condo buyout in Miami with a company called Two Roads Development in Edgewater. The way I was thinking about it, there's the bear case in development, there's the nuclear scenario, and then there's something like this.
Will Krasne (10:48)
When you put this on the docket, I literally got a shiver. So Two Roads tried to do a condo buyout of a site, and basically they were going tear it down and then rebuild it.
Hiten Samtani (10:50)
What are we talking about?
As we've talked about, popular play in South Florida in last couple of years.
Will Krasne (11:01)
Right, so there were, I think, 10 holdouts. Those holdouts were pretty pissed.
Hiten Samtani (11:08)
Do you remember that insane quote one of them had? I'm not going to repeat it for now, but my God. Yeah. was bad. When we talked about this, the developer had lost the decisive case that would have allowed them to proceed with the buyout. I believe their lenders were hovering and everything. Now it gets worse. Now the judges said, not only do you not get to do your little schemes, you also have to repair the units and bring them back to habitable condition. Basically, you have to go out of pocket.
Will Krasne (11:35)
This is like when you sign up for an Ironman and they're like, actually, you need to run the other way first. It's just horrifying. I don't know how you underwrite it. I don't know what they're going to do. Your lenders aren't going to let you use some proceeds for that, I'm sure. And every day that goes by at a project like this, the IRR clock is ticking, the interest calc is ticking. So they already were kind of screwed. And this is just...
Hiten Samtani (11:55)
This is it.
Will Krasne (11:59)
you
Hiten Samtani (12:02)
So, Will, you violate any dead covenants recently?
Will Krasne (12:06)
So funny you should ask. I have been in technical default recently. I mean, who among us? But not since Q4. And that's not because I paid off the loans, because that's when I started using loan boss.
Hiten Samtani (12:18)
I can't believe how old-school some of our listeners are. They're still crunching DSERs in Excel and all that.
Will Krasne (12:24)
Total waste of time, risky business to boot. Loan Boss runs the entire process for me. One click covenant testing, incredible. Instant cash flow forecasting, impeccable. And my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve and then it's always vertical and you gotta alt HVT to have it go horizontal. Make sure the index match works, like ridiculous.
Hiten Samtani (12:47)
It just got it sorted here for-
Will Krasne (12:49)
Much better. So thank you, Lone Boss.
Hiten Samtani (12:52)
Listeners, check them out at loneboss.com. That's loneboss.com. And tell them the promo sent you.
All right. This is one of my favorite spaces, man. I love this. We're talking obviously about skilled nursing facilities, known in the business as SNFs. And they are an incredibly opaque, fascinating corner of commercial real estate dominated by a small crew of Orthodox players, pretty surprising amount of like centime millionaires that came out of this space. My favorite is our guy Joel Landau.
Will Krasne (13:25)
takes a real certain type of person to get into this space and succeed in this space.
Hiten Samtani (13:30)
You need to have incredibly thick skin because there's the emotional toll of dealing with old people and sick people and all the media scrutiny that comes with that is pretty immense.
Will Krasne (13:39)
Yeah, and I think one of ways to avoid that is to not have technology.
Hiten Samtani (13:43)
That's tough.
Let's do a little bit of a lay of the land. There's about 15,000 SNFs in the US. They serve roughly 1.3 million people. The vast majority of them are both Medicare and Medicaid funded. And you can get really, and this is the very important part of this, you can get incredibly high leverage HUD financing for these kind of properties. One source put it to me thusly, you're borrowing money from the government against old people. That's the way you put it.
Will Krasne (14:12)
my god. Yeah, the thesis behind this is what you see on every LinkedIn post when someone's talking about buying an HVAC repair company. It's like the silver tsunami. They're coming. Yes. And the demographics here. People have lost their shirts here. This is a very politically charged sector. You need to know like every nook and cranny of the rule book, every nook and cranny of the tax code, every nook and cranny of your HUD financing, because that's really what makes these whole things is like this HUD financing.
Hiten Samtani (14:40)
broader themes that we talk about quite a bit on this pod is like, what is financeable essentially dictates all the moves in the market, right? And this HUD financing is Cape Hatch is incredibly crucial for this. Shout out to a publication I've been reading recently called the sniff schmooze, retired sniff operator, and just has these incredibly illustrated cartoons about the space and these are, I think, an orthodox guy too. So he speaks in that lingo. I've been learning a lot from that. It's like a very intricate playbook.
Will Krasne (15:07)
It's almost like this playbook is passed down. you end up with... Mary... Yeah, well, like... Yeah, exactly.
Hiten Samtani (15:11)
bye.
Will Krasne (15:15)
I was gonna say the Bill Walsh ⁓
Hiten Samtani (15:23)
So it's somehow it's become kind of concentrated in the Orthodox Jewish community, really big players. We mentioned Joel Landau, there's Darrell Hagler, Kenneth Rosenberg. These guys also own an airline, so you kind of get a sense of the scale of some of these guys.
Will Krasne (15:38)
And these are the guys who also come out of nowhere and they're like, they bought this condo site in Red Hook for $370 million.
Hiten Samtani (15:45)
What? Yeah, it's incredible. ⁓ This practice spits out cash. So a lot of the sniff operators have parlayed their winnings from that business into the development business, the conventional CRE business.
Will Krasne (15:58)
The reason we're talking about this now is that there was a, one of the big names in the, formerly big name in the space just had a bankruptcy auction, not the first bankruptcy, that is Genesis.
Hiten Samtani (16:13)
That is Genesis Healthcare, we're talking about now it's whittled down, but it's still a portfolio of about 175 sniffs. This was one of the big, big names in the space. There bankruptcies, restructurings.
Will Krasne (16:24)
Genesis Healthcare is sort of indicative of the entire space. was founded in the mid-80s in Kennet Square, of all places, by Michael Walker. And it has this, there's the Michael Walker Building on State Street in the heart of Kennet Square, which is like this beautiful bedroom community for Philly and Wilmington. I've been in this office. The mahogany is like this thick. It's like, and it's like you're walking into the office in Dallas, JR sitting behind the desk. It's of a time.
And this tracks the industry because it was founded in 85. think Michael Walker and he had a co-founder whose name is escaping me, but they bought seven, eight, something like that, sniffs. And then I think by 1998, then went public and were worth like $4 billion. It's one these things where because of the leverage profile and the cash profile, and things are going well, you generate cash, which allows you to borrow more, which allows you to generate more cash. And so you just sort of go up and up and up and up and up. But of course, this files for bankruptcy like huggers ago.
Hiten Samtani (17:20)
Until the bedpan is taken away. there's been through a couple of bankruptcies. The most recent one we want to touch on, happened in 2021, there was a restructuring. And in came our guy, Yoli Landau, also known as Joel Landau, the promote calls him the Sutmar Peasant Avante. Big, big, big player in both nursing homes and development. I think New York heads will know him best from the Allure Group, Rivington House scandal, the Lower East Side deed restriction removal, that's him, that's the same guy.
Will Krasne (17:46)
real heads now that's all you need to know about the guy.
Hiten Samtani (17:52)
So in 2021, Yoli Lando comes in via the debt. And this is important because now when this goes bankrupt again, he makes a...
Will Krasne (18:01)
I your favorite.
Hiten Samtani (18:04)
It's really up there for listeners who are coming in late. A stocking horse bid sets the floor price at the auction. There are certain incentives for a stocking horse bidder. Basically, you can get a deal. You can also get a termination fee if things don't go your way, etc.
Will Krasne (18:17)
And importantly, you can structure these things to get rid of some liabilities if you win.
Hiten Samtani (18:22)
That is exactly right. So the reason this one was so controversial is that Yoli Landau's talking horse bid crucially would have essentially absolved them from $1.6 billion in liabilities over various negligence things, including wrongful debts, et cetera, which is par for the course, unfortunately, in Sniffs.
Will Krasne (18:41)
That's the game when you're dealing with the elderly. One of his rivals saw this bit and was none too pleased and really trying to torpedo it. And he won. He did.
Hiten Samtani (18:51)
There's
a guy called Jacob Sod. Jacob Sod is a very well-known nursing home operator as well. Other people will know him because he was one of the main characters in the whole Mark Nussbaum-esque romance. He is one of the guys who provided $15 million in show capital. Anyway, I'm just giving you a sense of the universe because it is quite complicated. So Jacob Sod is working in the background. He's blowing up everyone's WhatsApps because I was getting screenshots of all of this stuff. Because again, it's egregious that Landau essentially wanted to walk away from all of this stuff.
Will Krasne (19:19)
The reason people work the raft is because it works.
Hiten Samtani (19:22)
The judge ordered a do-over of the auction and set a new stocking horse bidder.
Will Krasne (19:29)
And guess who that was?
Hiten Samtani (19:31)
I was sawed. What were the odds? So at this point, everyone thinks the jig is up, it's gonna be done. However, when it came to the final moment...
Will Krasne (19:42)
A LLC called 101 West Street ended up winning the bid. And 101 West Street is actually the address of the aforementioned Michael Walker building.
Hiten Samtani (19:52)
⁓
this I didn't realize, but 101 West Street won the auction. I think their bid was about a billion dollars, which is essentially a cash purse of 350 million, IOU note of a hundred, and then assuming about 600 million in liabilities. Everyone's like, who the hell is 101 West Street? Which is why you're lucky you have the promoter, because we find out through our network of Heimish sources that 101 West is controlled by a guy called Abe Tress.
Will Krasne (20:18)
This isn't his first rodeo with Genesis.
Hiten Samtani (20:20)
No, amazingly, Abe Tress, through Nugen, which was the company that came in in the 21 restructuring, already has a connection through his California healthcare centers to the Genesis portfolio. So, I mean, it's as incestuous as you can ask for, really.
Will Krasne (20:34)
This isn't the end though, he's not home free yet. He's got to go in front of the US bankruptcy judge.
Hiten Samtani (20:40)
But by the time this pod comes out, will know what happened with that. But what we're hearing from sources is that Landau may not be done. He may still find a way into this whole business.
Will Krasne (20:51)
See David Ellison, take note, if you want to win something you improve the bid.
Hiten Samtani (21:05)
Alright, I'm here with Aaron Krawitz from Bravo Capital. Aaron, let's get right to it. What's the story behind this mythical 100 % HUD approval record? It's pretty straightforward. We have a team where
So.
And what's the secret sauce? How do you put it all together?
Will Krasne (21:32)
Underwriting
we don't rush deals to market and hope they stick we know There are no surprises and we have a real balance sheet. So when we go we go
Hiten Samtani (21:36)
but had once before we submit so that.
You were telling me when we were chatting offline that you closed a HUD express lane deal in four days? That's absurdly fast for HUD.
Will Krasne (21:49)
that's why we get up in the morning. We're
here to break records, we're here to innovate, and when you have tight duct, that means
Hiten Samtani (21:55)
documentation, the right underwriting, and
speedy approvals. And speed means the sponsor can close quick. Thanks Aaron, good to have you on. Thanks Hiten and you can
Will Krasne (22:02)
find
us at bravocapital.com.
So we spent a lot of time on the promote talking about the syndicator bust and the sunbelt. We've talked to Michael Comparato, who's lent to some of those guys. Right. Talked to other various sources about what's going on there. And you decided to go hear it from the horse's mouth himself. Mr. Alan Stalcup of GVA, one of the absolute poster boys of the last two years of syndicator madness.
Hiten Samtani (22:33)
Sometimes you just put yourself in a position and things fall in your lap. This is absolutely I cannot take credit for this They reached out to us and they said hey, do you want to chat with Alan? I Didn't know what to expect. I initially thought it was a spoof account Friday sometime after dropping the promote. was like, alright I'm gonna have a phone call with these guys We'll see what they say Alan pops up on camera in the standard What are those blazers called like the peaked blazer and I'm like, ⁓ okay. We're doing this and
What followed was what I thought was pretty extraordinary conversation. He did not shy away from anything and it was all on the-
Will Krasne (23:07)
So Alan is in a little bit of legal hot water right now. He's facing about $400 million in lawsuits where lenders are coming after his personal guarantee on bad boy Carvalho.
Hiten Samtani (23:17)
Specifically, Benefit Street Partners, Starwood Capital.
Will Krasne (23:20)
He's got two investor lawsuits, one of which was settled or dismissed. Another one is pending. There's rumored to be an SEC investigation that he simultaneously didn't know about, but also welcomed if it was coming. He really let it all hang out there. He wasn't going gentle into that good night. He talked about his performance. He talked about how he's the biggest investor in these things and really was coming back on the offensive.
Hiten Samtani (23:45)
Alan Stalcup, GVM, at its peak, Alan controlled about $30,000 across the Sun Belt. So, multi-billion dollar portfolio, he was an NMHC top 50 landlord at one point. The majority of the purchases were, as they are, floating rate debt, bought absolute top, top, top, top, top. And things turned and he got rocked. That's kind of what happened. He's basically putting all the blame on the Fed. He said, hey, they were not going to raise rates, then they raised rates.
11 times. None of the syndicators that we've talked to have really talked about supply-demand dynamics. Like that seems to be not something that they think about.
Will Krasne (24:18)
They haven't talked about that and they haven't talked about the fact that occupancy went from 96 % and rent growth went from double digits to negative double digits. That seems to be a slightly important piece of this puzzle as well. An old real estate guy once told me, like, I don't really care about recessions because my net worth goes down by half of my cashflow stays the same. And that's because you had long-term fixed rate debt and these guys had none of And they were also really banking on, as we've talked about, huge renovations to pop rents.
They were paying really tight cap rates that gave them no margin for error. And I think the big thing here, it would suck out to me is that stock up, you say 30,000 units, that is a ton. And people can build that on their own. There's a bunch of family businesses, regional businesses, which gets to 10, 20,000 units, if not a little more, over 30 years. He bought 80 % of his units in two years. 2021, 2022.
Hiten Samtani (25:07)
This comes back to a point that I Comparato made on the pod. Like, how do you do diligence on this stuff? If you're buying thousands of units every six months, the diligence process has to be compromised a little bit. The ability to put these together relies on you just moving, right? You don't have time to think, you're just acting.
Will Krasne (25:24)
We talked about it with Summit. It's the same thing. If you're buying this many units, how do you run these things? mean, even little stuff. I've talked about setting up bank accounts. I how do you switch over utilities?
Hiten Samtani (25:34)
funny you talk about setting up bank accounts. One of the primary allegations in one of the LP lawsuits is that Stalcup was cooking the books on an account that was supposed to be a risk fee account. It's basically a fancy security deposit work around. But the allegation is that the risk fee was a sham account where they were just like throwing the losses in. It was sort of a black hole for all the losses. Stalcup addressed all this. He did not shy away from anything I asked him when I said the losses have been pretty gargantuan. He said, listen, these are all accredited investors.
they knew what they were signing up for. He claims that he has personally lost $400 million since the thing went south.
Will Krasne (26:11)
He said he was the biggest individual investor, I guess, I don't know. Maybe he was, like, we'll never know. Who knows if there's back leveraging, he syndicated his pieces out. what was interesting to me is that he tried to basically come off as the anti-syndicator. He's saying that I'm the owner. I'm the guy who suffers the most. I've got skin in the game.
Hiten Samtani (26:27)
in the game,
One extraordinary quote is like, I tell my investors, I care about your 100,000, but I also care about my $5 million.
Will Krasne (26:36)
Which is why I did no diligence and bought, you know, a three cap ⁓ piece of crap in San Antonio. Yeah.
Hiten Samtani (26:42)
As I said, there's chatter of an SEC fraud investigation. The Austin American Statesman had talked about it. And Stalcup's point, the zen coneness of this whole thing, which is like, if there is an SEC investigation, you're not allowed to talk about it. But I welcome it if there is one. So I said, has the SEC reached out to you? And I said, I don't know what you're allowed to say. He said, they have not specified anything. It's a little early to know.
Will Krasne (27:06)
He's not really too big to fail. He's already down to, what, 5,000 units today?
Hiten Samtani (27:10)
A
one sixth of his portfolio, pretty massive.
Will Krasne (27:13)
employee count is down huge and the stuff he still has is appraising. And he admits it's appraising below the debt on 65 % LTV loans from three years ago.
Hiten Samtani (27:24)
Kander there was quite amazing. He's like, these are not worth the debt right now.
Will Krasne (27:28)
I honestly admire that and I think more people should be like that. Investing is really hard. People go through tough times. No one bats a thousand. The great thing about America is that you can declare bankruptcy and come back. You can fail and come back and like that's okay. So I admire them for that. But I don't know, it's hard to really tell the difference between in some cases just a company outgrowing itself and outgrowing its systems and outright fraud. There may not really be a difference. It's a hard line to tow.
And if you're buying that many units and the money's there, it's hard to not do it.
Hiten Samtani (27:59)
What happens with the personal guarantees in the case of bankruptcy? We talked about Benefit Street. One of the most extraordinary allegations in that suit is that there was an actual fire at one of the properties and GVA never disclosed it. Again, we do not know. We're both outside parties to this whole thing. It's a he said, he said situation right now. he, Buckup's claim is that, listen, it's a really, I would do the same thing. Spent a couple hundred thousand on legal.
splash this headline of a 300 million PG suit. He's like, look, if I settle for 2 million, they 10x their money. It's great. It makes sense. I would do the same thing.
Will Krasne (28:35)
He's not, not wrong, but at same time, like the bigger issue is not selling for $2 million. It's a $28 million loan on the property that's underwater that the lender is really concerned about.
Hiten Samtani (28:45)
I had asked him about the excessive fees, which is one of the kind of the broader complaints that a lot of people have coming out of this Sunbelt boom bust. The fees are potentially egregious. There's an equity fee, there's a risk fee, there's a success fee, et cetera, but they are laid out now. So you are signing up for them. You're Indian doctor who put 85K in, it's there.
Will Krasne (29:07)
Yeah, it's caveat emptor, but at same time doesn't make it right. Seeing somebody's market for a certain sector doesn't mean it's right. Because people are charging worse than this. People were charging much better than this. And to basically say, hey, you were signing up for this. You knew what you were getting into. The thing that really stands out is he goes, we disclosed everything. We had 300 page financials that we sent out. That's how you not, don't disclose things. It's like, what do you do? You bury them in paperwork.
Hiten Samtani (29:28)
Death by complexity? Yeah.
There's a scene in Wolf of Wall Street where they stack the auditors up in a room, they turn the AC to sub-zero temperatures, and they just keep smashing them with folders. $26,000 worth of sides?
Will Krasne (29:43)
What are these sides? They cure cancer? And that's basically what you're doing. If you're out 300, you don't need 300 page financials for these. He's like, I was on the general ledger. Like you're expecting a guy who put a 50K LP check into this thing to go through your GL and like tie it out. Saying that that's their fault that they didn't catch you is ludicrous.
Hiten Samtani (30:00)
The SEC investigation is smoke right now. We don't know that for a fact. The lawsuits are factual. They are out there. Besides the kind of the mountain from heaven for me as a media guy, what do you think about his strategy of just doing this? And apparently he's going to the papers. He's doing the rounds.
Will Krasne (30:14)
We talked about how this wasn't a death knell for some other guys like S2s raised more money. They were facing a lot of the same issues. Yeah, they're in acquisition mode. A lot of these other groups, even like Rise 48 keeps buying stuff in there.
Hiten Samtani (30:19)
They're in acquisition mode.
is raising money right now to buy one of GVA's portfolio.
Will Krasne (30:29)
They keep moving forward and I don't know of the way to go about like rebuilding your business is to be out loud saying it was everybody's fault but mine. I lost a bunch of money so therefore it's okay.
Hiten Samtani (30:39)
What I thought was surprising here is this is one of the first times that I've heard someone across CRE really say like, I'm pretty much done. Because I asked him, do you plan to stay in the game? He's like, I want to see this portfolio out. I want to work through these problems and then I want to go help some of my guys.
Will Krasne (30:55)
Does he have a choice? Everyone talks about the macro point. There are billions of defaults or a trillion of defaults through here. OK, does that make it better for your investors? No. And to say that no one saw this coming, people did see it coming. You don't have to buy deals. Part of the thing here, which is so fascinating and why it's captured the public interest so much, is that it's just human nature. Human nature is as old as the hills, as Jesse Livermore would say. And you have this guy who's run a nice business. He's owned 5,000 units. He's made real returns.
And the problem is, is that in the period when he was making those returns, you just had to be able to be in the game. And don't get me wrong, it takes talent to raise money to buy a multifamily real estate. It takes a lot of talent.
Hiten Samtani (31:34)
He raised about $1.5 billion of LP capital, that's no joke.
Will Krasne (31:37)
But I'm talking about the point before 2021. What he did 2010 to 2020 is the most impressive part to me because it was impossible to raise money to buy multifamily in that period. And he did it. And yeah, he made great returns. Not anyone could have gotten people to give them capital to go do it. So give him a lot of credit for that. And if you've done that for that long and you think you've got the golden touch and then all of a sudden everything you ever wanted is right there. All you got to do is click send.
on those sub docs to the whole email list. Yeah. It's a human story. It's as human story as anything.
Hiten Samtani (32:12)
One of the themes we talk about a lot is FOMO investing. You don't want to be the guy who built the 5,000 unit portfolio while in these random rise and Nitya and all these guys, these young people come in and just go on an absolute rampage with floating rate debt and build portfolios that are 2X, 3X the size of yours, right? Like it's hard to resist the call of the wild in that sense.
Will Krasne (32:36)
It is because think of it this way, if you raise a billion dollars of LP equity and you buy three billion dollars with the debt, that's a lot of fees. And it's really hard to say no to that. I like to think that if someone had given me a billion dollars in 2021, I would have ah, like, I don't know. But at the same time, if they're going to give you the money, that decision, one of the main themes of this pod, that decision's been made. You got to go do the best deal you can. A little bit different when it's a retail fundraise versus a fund or someone allocating to your dedicated blind pool. But at the same time, would anyone have done anything different?
Hiten Samtani (33:06)
Alan, if you're listening to this, I appreciate you sitting down with me. Your candor is very much appreciated by me. So thanks, Alan, for that.
Will Krasne (33:13)
I think it's appreciated by everybody and I think a lot of people would appreciate other folks who are in similar situations who are continuing to say that they don't have problems in their portfolio when they clearly do, if they had the candor that you had Alan.
Hiten Samtani (33:33)
That's it for the Promote Podcast this week. We've got hobbled stalking horses in the sniff space. And a Satmar Peasant Avante potentially taking another shot at his Genesis Prize. And one of the Syndicator World's most scrutinized figures is out there in the wild trying to clear his name. Let's see if he can dodge lenders and LPs for long enough to do so. We'll be back next week with more CRE Insider goodness. A shout out again to our sponsors, Bravo Capital and Lone Boss.
Will Krasne (33:58)
You can find them at bravocapital.com and loanboss.com.
Hiten Samtani (34:03)
Well that was so fun. The format's a little wild, but I think our listeners will like it.
cover our draw. All right, I'll see you next week, dude. Thanks. Ciao.