Rumble in the Bronx & Wernermania

Wernermania

He’s doing it again. David Werner swooped in and pre-empted bids at Durst’s 675 Third Ave, paying $100M-ish ($290s/foot) for the 32-story, 340K sf tower. Werner could orchestrate another office-resi conversion, and per TRD has already chatted w/ Nathan “The Alchemist” Berman, his partner on the Pfizer HQ job, about the possibility, though long-term leases at the building complicate matters.

This deal moved quick – Newmark had listed it in mid-Nov – but that is classic Werner, whose playbook is legendary among CRE insiders: he promises a fat cash deposit & quick closing & has been known to carry two T-shirts: one says “Free Aggravation” (i.e. dealing w other contenders) and the other “Aggravation Free 😀 ” (i.e. dealing w him). He then typically flips the contract to partners, and rolls in some of his profit for a small equity slice 🍕   

Rumble in the Bronx

A Blackstone-Rialto JV has filed a pre-foreclosure action (h/t PincusCo) at a Bronx megaproject. The JV took control of the debt as part of its late ‘23 purchase of a slice of Signature’s loan book, and is going after delinquent borrowers w/ gusto. At Bronx Landing, it alleges that the sponsors defaulted on a $55M loan on the 2.7M sf mixed-use development. Namdar & Gorjian bought into the project as 50% equity partners in ‘22, w/ Dynamic Star, a firm led by Gary Segal & former Paul Manafort fixer Brad Zackson, owning the rest. (Wait, Paul Manafort, what??? Indeed, I’ve got you covered w/ this marvelous read on Zackson.)

Talk About a 🦄 : Industrious/CBRE Deal a Happy Ending

Co-working firm Industrious, which struck profit-sharing operating agreements w/ landlords rather than attempting WeWork-esque lease arbitrage, is being absorbed in full by CBRE. The publicly traded CRE giant is buying the 60% of Industrious it didn’t already own, per WSJ, in a deal that values Industrious at $800M – that number’s a nice jump from when CBRE first got in the mix in late ‘20, purchasing a 35% stake at a $570M valuation. Since then, per WSJ, Industrious has doubled its locations and 3x’d its revenue. (We’re so used to seeing VC-backed proptech carnage – see here, here & here – that we had to read the announcement twice 😎 )

Industrious co-founder & CEO Jamie Hodari will remain in charge, but is taking on a further mandate @ CBRE, where he’ll oversee 7B sf of commercial space and manage a 95K person-strong biz unit. CBRE may use Industrious to buttress hub-and-spoke options for clients: An HQ w/ a tradlease supplemented w/ a couple of regional Industrious locations, for e.g. – CBRE’s long been experimenting w/ that concept; I had spoken during the pandemic w/ execs from its Hana (absorbed into Industrious after its initial CBRE deal) flex unit about it.

“What can sometimes happen to a company is thinking, ‘We want to be considered a subscription business so we move to subscription revenue,’” Hodari told The Information, explaining why he DGAF about revenue multiples (WeWork, in contrast, coveted them – its $47B peak valuation was at a 26x revenue multiple). “Even if it’s a lawnmower company and there’s no way to do that.”

We’re curious about the fate of CBRE’s other splashy proptech bet, VTS: Valued at a whopping $1.7B after a $125M CBRE-led round in ‘22, it’s been pretty quiet at the office-management platform firm since, besides news of layoffs. One (admittedly imperfect) gauge: Shares of VTS were being shopped on the secondary market platform Hiive, per an April offering reviewed by The Promote, for just $496M. 🫣 

FTC Set to Sue Greystar Over Hidden Fees

The country’s largest apartment landlord (100K+ units) is having a torrid time w/ Uncle Sam. Greystar was sued earlier this month by the DoJ in the RealPage antitrust action along w/ 5 other megalandlords, for alleged illegal collusion over rental prices. Now, per WSJ, the FTC is prepping a lawsuit that alleges Greystar engaged in deceptive pricing practices and failed to properly disclose certain fees ( 🪳 control, 🗑️ removal, background checks) to prospective tenants.

“The most effective path to achieving uniform and consistent fee disclosures across the industry is through clear regulatory guidelines which do not yet exist in the rental space,” Greystar told the publication. As these things go, it’s a hella spicy statement, one I doubt they’d put out if FTC chair Khan had more than a week to go on the job 🌶️

The FTC finalized its hidden-fees rule last month. Of note: the multifamily industry was left out of it, despite having been in the original proposal.

See also: Biden Makes Real Estate his Piñata 

Nussbaum Fires Back

CRE attorney Mark Nussbaum, a go-to guy for now-embattled players such as Shaya Prager, Aron Puretz, Yoel Goldman & Moshe Silber, has responded to allegations leveled against him by nursing-home bigwig Jacob Sod. Alleging that Nussbaum failed to return $15M in escrow capital by an agreed-upon date, Sod sued him last week, a maneuver that Nussbaum says is a "confused mess of scandalous conspiracy theories."

In support of his response, Nussbaum's defense included a "shtar iska," which I understand as a doc that structures a loan in a manner permissible under Jewish jurisprudence. Collecting interest on mishpacha-mishpacha loans is generally forbidden, so this is a workaround – rather than receive interest on the super short-term loan, Sod would receive a flat fee of $750K for the four-day loan. (Now, if this were interest, it’s a cool 1.25 points/diem, a number that’d make Jimmy proud). Other religions have similar workarounds – I had a fascinating chat in ‘16 w/ Sharif El-Gamal on his $219M sharia-compliant financing deal at 45 Park Pl. that I recommend checking out.

Nussbaum’s main pt. to Sod: he’s going after the wrong parties. He notes that Sod didn’t even reference the end borrower in his suit, which he argues is grounds for dismissal. More is sure to come out – I will note that right after CRE investor Mendy Steiner’s death by suicide at the Aman last week, people started sending us this Sod-Nussbaum lawsuit, deeming it essential context. Steiner was closely connected to Nussbaum, sources said, and the attorney has worked on deals for him.  

Diplomacy, Witkoff Style

Israel & Hamas have agreed to a ceasefire deal, per President-elect Trump & Israeli officials, NYT reports. Again, one of those topics way beyond the scope of this publication, so we’ll just leave you with Steve Witkoff’s role in the matter: Witkoff, who Trump tapped as his Middle East envoy (a role played by J-Kush in Trump’s 1st term) had a “tense” meeting w/ Bibi in Israel & pushed him to accept necessary compromises to make the deal happen by Trump’s inauguration, per the Times of Israel. And a wonderful detail via Haaretz: When Witkoff told Bibi’s people he was coming to town Saturday, they asked if the meeting could be pushed back, citing Shabbat. Witkoff then “explained to them in salty English that Shabbat was of no interest to him.” Bibi took the meeting. 🫡 

CREFC Closing Bell

On Tuesday evening, walking along Collins Ave, I spotted these 2 knackered CRE hustlers 👆️ , talking about skipping the Polsinelli bash that was serving as the unofficial wrap party for CREFC. “My brain is shutting down,” the gentleman on the left (an ex-Lument guy I think) told his compatriot. “Been going since Sunday morning.” 🧠 It has indeed been a whirlwind few days in Miami Beach, w/ seemingly endless opportunities to carouse w/ the masses & classes of CRE’s capital markets. There’s the list above, which spread like contraband, and then there were some more intimate, strictly invite-only events: Tyko’s Sunday opening reception at the Setai; Kramer Levin’s Monday lunch at Rao’s 🧆 (spotted: Rob Lapidus, Leslie Himmel, Don Peebles); Madison Realty Capital’s Tuesday closer at ZZ’s. The weather’s been crisp and the talk of dealmaking thick – let’s see how much of it translates into action this year. #LongMiami

Quickies

• 🎞️ The mystery death of a Brooklyn CRE macher 

• Woof - Austin developer Nate Paul takes plea deal in federal fraud case (deep dive on Paul here)

• Chicago distressed sale could lead to 🌎️’s tallest teardown – Hines in the mix

• TF Cornerstone, RXR seek $4.8B in federal funds for 175 Park

• Someone put together this wild doc tracking “rental price gouging” in the wake of the LA 🔥

• Not sure how this’ll work… California Gov. Newsom signs exec order barring “unsolicited, undervalued offers” on wildfire-affected properties

• Flex terms, waived fees: How CA’s multifamily giants hope to assist w/ the crisis

• Copy😼 suits from lenders corner Tides’ Kia & Andrade (see also: Tides’ Principal Punishment)

Unquotable Quotes