Goodman's Time to Build & the Nontraded REIT Rush

Goodman’s Time to Build

When Yoni Goodman called time on his tenure at Meridian Capital Group this summer, the chatter was that he’d end up in the executive chambers at a top lender. Someone with his skillset, an operator fluent in the patois of both capital markets and brokerage, could make quite a role for himself at an Arbor, say, or another large finance shop wanting to expand its direct dealmaking capabilities. And indeed, Goodman spent the last few weeks taking all those types of meetings. The comp would have been rich, and the pace far less crushing than the 24-6 life he lived for a decade at Meridian.

But in the end, Goodman couldn’t resist the urge of building something from the ground up. As first reported by The Promote, he’s joining his former colleagues Ronnie Levine & Seth Grossman as a principal at CRE PE shop Green Pine, though he’s carving out some time for consulting gigs on the side.

Goodman (Cont.)

Green Pine’s plan is to do debt & equity investment deals nationally, including distress, partnering with local operators, according to sources familiar with the matter. Part of the mandate will be to get into deals where the bricks are solid but the capital structures are all messed up, and help recap those deals. Any note buys will be on deals that are set up for a deed-in-lieu, rather than a Maverick-type deal that might involve bruising litigation. Though the company is staying far away from brokerage, the principals feel that their years in that field gave them a well-honed BS detector: the ability to tell a shady sponsor from one that was simply unlucky is valuable.

Goodman also wants to set himself up as an M&A and PERE consultant, a move that immediately made me think of Michael Ovitz’s side hustle while at CAA: Even as he built and scaled Hollywood’s top talent powerhouse, Ovitz made a lucrative second living selling movie studios to the Japanese, among other deals. (Read “Powerhouse,” the amazing oral history of CAA if you haven’t.) I wonder if with the great disintermediation happening in CRE we’ll see more of this stuff – the right contacts and the war wounds put you in a position to do damage even as a boutique. More to come on Goodman soon.
 

The Nontraded REIT Rush

Fortress & Goldman Sachs are turning to the (accredited investor) masses in search of capital with which to make CRE loans. The firms have both filed paperwork to form nontraded REITs, per Bloomberg: Fortress is targeting multi, hospitality and industrial deals on which it will both originate and buy senior floating-rate debt. Goldman, meanwhile, aims to raise up to $1B for its vehicle, per an SEC filing, and will originate both senior & mezz debt.

CRE finance is expected to pick up steam this year, in part due to anticipated rate cuts (50 bps & counting), with the Mortgage Bankers Association est. total CRE borrowing & lending to hit $539B in ‘24, up 26% from last year. And with all the bank troubles, (see here and here and the impact of Basel III endgame mandates here) PE firms feel like it’s their time to shine: Fortress co-CEO Josh Pack said in Feb. that he saw distressed CRE debt as a “trillion-dollar opportunity.” The firm recently led a $228M investment into First Foundation, a Texas regional bank w/ big CA multifamily exposure, and is a founding investor in the new Texas Stock Exchange. Fortress has also already dabbled in nontraded REITs, raising $551M as of June from investors for a net-lease vehicle.

Nontraded REITs give players access to capital without the suit-and-tie headaches of being publicly traded, but they’ve got their own issues: Two of the biggest nontraded vehicles, Blackstone’s BREIT and Starwood’s SREIT, have spent the last couple years scrambling to meet investor redemption requests.

Chetrit’s Burnt Bridges

Sacre bleu: Joe Chetrit’s Chetrit Group has defaulted on its tiny mezz on its far-from-tiny project in NYC’s Two Bridges neighborhood, setting the stage for a UCC foreclosure auction. Madison Realty Capital (see our Quiet Kings 👑 feature on the lender here) had financed both the project’s $63M sr. loan and $8M mezz, and could now take control of the site, which is slated for 1,313 apartments across 1.1M sf. Meridian is running point on the UCC process, per marketing materials.

The project has really been through it: Chetrit bought the LES site at 265-275 Cherry St. for $78M from a CIM/L+M JV in ‘22, after political opposition had already led to lengthy delays for the project as well as others in the neighborhood.

With Chetrit fighting off demons on multiple fronts – a $481M default on a mammoth rental portfolio in ‘22; a Manhattan office tower sale at a $156M haircut 💇 to his lender; an $85M default on a Hudson Yards site – building high-rises in a politically charged area with the floating-rate reaper on his back might have seemed a bridge too far. 🌉 

Bonus: The Man from Morocco - the untold story of Joe Chetrit.  

Quickies

• 50 bps: CRE reacts to rate cut 

• Namdar & Empire plan office-resi conversion in Midtown East (see: Billionaire and the Great Neck Strivers)

• Bushburg pays Rudin $160M for half-empty 80 Pine; likely office-resi play

• JBG Smith DC office package heads to foreclosure 

• Waterton closes $1.7B multi distress fund; acquires SF multi complex from Brookfield 

• Skyline star: Georgia-Pacific plans partial resi conversion, mixed-use glow-up of Atlanta HQ

• “Homeless on his own land:” LA developer occupies own site to thwart tax auction

• Shalom Yosef Gottlieb, owner of iconic kosher cookery Gottlieb’s, dies 🧆 - DJT was meant to do a campaign stop there

Unquotable Quotes