CRE Junkie Gift Guide & RealPage's Reprieve

CRE Junkie Gift Guide – No Need to Live Vicariously

A fun challenge for a publication is to do a cliche thing in a novel way. And so it is with the first installment of The Promote’s CRE Junkie Holiday Gift Guide™️ . We’ve done the research, across budget, theme & sensibility, to bring you 6 items certain to bring joy to a CRE-obsessed loved one. Enjoy, & obviously don’t take this too seriously - HS

• ⌚️Tell the time like Elie Schwartz: Say what you will about the Nightingale Properties founder – the man has exquisite horological taste. In fact, the $30K transfer that got Schwartz dinged for wire fraud in federal court this month stemmed from a payment (one of several) to a luxe dealer for a Grönefeld 1941 Remontoire, a handcrafted Dutch timepiece w/ a seriously mesmerizing movement. Could be yours on the secondary market for $110K.

• 📙 Dive into a dynasty: Before there was Brookfield w/ its $2T dreams, there was Olympia & York, controlled by one of the most secretive & fascinating dynasties in all business. The Reichmanns (h/t OG reader Shragi) tells the spectacular tale of their rise & fall, weaving history, religion, skyscrapers and family drama together into a tasty narrative that takes you from the currency markets of Tangier to the boardrooms of Manhattan. As a bonus, its heft and eye-catching cover make it a good bookshelf anchor.

CRE Junkie Gift Guide (Cont.)

•  🍷 Make merry like Nir Meir: Before the former HFZ principal was shipped to Rikers for his alleged masterminding of an $86M conspiracy, Meir allegedly spent “more money than God” – and much of it went toward building an “investment-grade” wine collection. Poring through case court records, The Promote ID’d a couple of Meir’s go-to wine stores, and then had a sommelier friend help pick out the perfect bottle: A ‘91 Gentaz-Dervieux from the Côte-Rôtie region – known for its purity and hand-bottled elegance, and yours for $3K.

• 🏆️ Paint the town RED w/ an award of your own: Are you an asbestos-removal specialist dominating Teaneck? Or a bridge lender exclusively focused on sub-$30M loans in Flatbush? Now there is (probably) an award for you! The RED Awards have the nichest categories I’ve ever seen, and though the stated judging criteria are “influence, ethics, projects and recommendations,” the pool of winners it has produced is as questionable as it is immense.

• 🚘️ Roll like Brandon Chasen: Conspicuous consumption is out, being “adjusted for longevity” is in. Chasen, a once high-flying Baltimore developer, has sold his supercars amid his battles w/ lenders, but couldn’t give up the family-friendly Smurf blue Rolls-Royce Cullinan. Starts @ $400K-ish 

• 🎵 Kvell w/ Sam Zell: The late real estate titan’s love for creative megadeals was only matched by his passion for crafting bespoke quirky gifts for his inner circle. He’d commission these music boxes, w/ a personal message from him about the financial markets followed by an artist’s musical rendition. The Theory of Relativity is our favorite: A man stands with a closed umbrella while extending his palm up looking for rain. Here’s the rub – you’ll have to track down the seller and persuade them to part w/ it. 🤷 ☄️ 

RealPage’s Reprieve

Multifamily manna from heaven: The DoJ has ended its criminal investigation into RealPage over its multifamily pricing practices, per an announcement from the software firm Friday. “We appreciate the DOJ’s recognition that its investigation merited closure,” the firm said. “RealPage will continue to aggressively defend itself in the remaining, previously filed civil lawsuits, which we believe are wholly without merit.” The DoJ had alleged that the software, used by many of the nation’s largest apartment landlords, is enabling a rent-fixing conspiracy; it commissioned data scientists to review RealPage’s code, and threw around some spicy rhetoric: “The modern machinery of algorithms and A.I. can be even more effective than the smoke-filled rooms of the past,” 🚬 DoJ’s antitrust head Jonathan Kanter said when it filed suit against Thoma Bravo-owned RealPage this summer. The DoJ’s civil action is ongoing.

I wonder how much of a role the political winds played here. The Biden administration has been happy to make the real estate industry its piñata in a way that the incoming Trump administration looks unlikely to do 🪅. Now that the fog of criminal wrongdoing has lifted, megalandlords caught up in the RealPage mess are considering 1 of 2 options, according to one I spoke with:

1) settle on the civil charges now, which comes w/ headline risk
2) Tough it out until the new administration is in and let the issue die w/ a whimper

Meanwhile, RealPage and some of its biggest customers (Greystar, Lincoln Property Company, Equity Residential) are still dealing w/ class-action suits from tenants, and state & local lawmakers in many markets have moved to ban the practice of algorithmic rent-setting altogether – TBD on whether RealPage will be able to navigate that existential threat. The endgame here might be that landlords make a big push (already happening at some) to develop their own revenue-management software, driven by their own data, or license a software that doesn’t incorporate pvt. data from their rivals. In those scenarios, the govt.’s anticompetitive argument is moot.

EasyKnock: Sale, Leaseback, Shutter

This narrative – VC-backed proptech shoots for the moon and lands in the gutter – is getting so tired, but I feel like we have a duty to chronicle it. So here goes:

• '16: Founded by Jarred Kessler, Ben Black
• Pitch: Targeted middle-class homeowners w/ promise of "unlocking equity" 🔑 - you get cash for your home, but get to stay in it 🤑 Firm makes 💵 through rent + a 🧺 of fees • Summer '20: Raises $20M Series B: "From my bedroom, with Covid, I was able to raise $20 million," Kessler said. “If I can do that, I feel like I can do most things.” 👏🗻
• Feb '22: $57M Series C- “Rent is a function of inflation, and wages are not going up as much as pricing," Kessler says. Firm will expand into farmland deals 🐄
• May '23: Acquires power buyer/cash offers startup Ribbon 🎀 
• Investors include: Spencer Rascoff's 75 & Sunny, Moderne Ventures, QED
• March '24: Raises $28M Series D led by Northwestern Mutual’s VC arm 🤣 Says Kessler: “Our driving mission – empowering families with financial flexibility and control – is bolstered with this capital investment" 🧒👵 
• Summer '24: NPR investigation finds pattern of EasyKnock sellers who ended up worse off after their sale-leaseback deals: buybacks were uncommon, some even found themselves evicted; Michigan AG warns firm abt. misleading marketing.
• Dec. '24: EasyKnock shuts down - "We are deeply grateful for the trust placed in us to be part of the financial journey of so many."

Taking (Condo) Inventory

Condo-inventory loans can conjure up images of a developer sitting on piles of unloved units, but every now & then New York does things a little different. Take Francis Greenburger’s Time Equities, which just got a $84.5M floater secured by 44 unsold condos at 50 West St. The units, however, are being operated as rentals, and have thrived in that format, pulling in monthly avg. rents of $95/foot per the lender… “We priced the loan a bit wide of multifamily, but well inside traditional condo inventory loans,” Mike Comparato, whose Benefit Sreet Partners provided the financing, said on LI of the trade. The debt yield was ≈ 200 bps tighter than Benefit’s typical multi deals, he added, “however offset by the fact that as condominiums the loan was under $1,000psf. #onlyinNYC”

Quickies

• 🎥 Starwood gets PERSONAL w/ Tides’ founders 🤺 

• Fun breakdown here of 2 monster CMBS deals: Fontainebleau Miami Beach, Baha Mar 🌊 

• Chicago mayor wants to extend special taxing district on the West Side

• Westbrook’s distressed paper at 444 Madison up for grabs

• Sharia-compliant sizzle: Intervest on its capital-sourcing model (top of interview is fluff but it gets good later) 🤲 

• Does landing a big HQ still matter for a city? 

Unquotable Quotes