Meridian's Freddie Restart & Jon Gray's Capital Convictions

Meridian: Gentlemen, start your engines

Brian Brooks kicked ‘25 off w/ a juicy announcement: The chair and CEO of Meridian Capital Group informed brokers that Meridian is now back in business w/ Freddie, after a year-plus suspension that devastated the firm. In the Jan. 1 email, a copy of which was read to The Promote, Brooks paraphrased Mark Twain, saying that “rumors of our death have been greatly exaggerated.” 🖋️ He informed his brokers that Freddie quotes were now available through NewPoint, Meridian’s sister agency-lending platform. It’s unclear if the instruction to go via NewPoint means that other Optigo lenders are still off-limits to Meridian brokers – we’ll get a better sense of that in the next few weeks.

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Meridian (Cont.)

Brooks expressed frustration about the fact that individual brokers had been barred from doing business w/ the agencies, and urged patience as he continues to clear up the mess and works on resuming biz w/ Fannie, which had followed in Freddie’s footsteps and sidelined Meridian in March. He also alluded to the firm’s talent exodus (detailed rundown here), saying that his focus was on the dealmakers who’ve stayed rather than those who’ve left. And in an intriguing nugget, he made mention of some kind of rescue fund, which the firm would raise to invest in deals w/ upcoming maturities that are unable to land refis…

Keep in mind that the Freddie resumption comes w/ restrictions, incl. stringent loan repurchase requirements for lenders as well as “enhanced representations & warranties” & more DD - more deets on all that here. And this is all playing out as NewPoint ownership is prepping a sale of the lending platform, a deal that is muddied by the Meridian factor.

The Book of Eli

The son was spared the worst of the father’s fate. Eli Puretz, a key player in the mortgage-fraud scandal that has embroiled CRE, had his day in court yesterday, and the judge gave him 24 months – a far cry from the 60 months that the same judge had given his dad, Aron Puretz, in December, on the same charge. 👨‍⚖️ 

A “novice swimming in a shark’s pool,” is how Judge Robert Kirsch – a lyrical gangsta if I’ve ever seen one – described Eli, per TRD, making the case for him to be “treated very differently from his co-conspirator father.” Kirsch added that unlike Aron, he didn’t consider Eli to be a flight risk, and he has until July to turn himself in. He’s on the hook for $20M in restitution.

“I’ve committed an egregious criminal act,” Eli said at the sentencing. “I look in the mirror and I don’t recognize who I am today.” He adopted a similarly contrite tone in an appearance on David Lichtenstein’s Halacha Headlines pod in Nov., making a case for being intoxicated by the get-rich-quick promise of CRE, a “drug” that he said was reinforced by the yeshivish community he grew up in.

It’s about as arresting a father-son drama as you get 📺️ – the judge also considered what Eli’s attorney described as a childhood marked by abuse and neglect. What takes it a notch further, however, is the grandfather element: Aron’s father, Yehuda “Lieb (sometimes Leib)” Puretz, is another highly controversial character. Once described as “Staten Island’s Jewish Donald Trump,” the developer bet big on the borough only to leave behind a flurry of bankruptcies, and if you read the accounts of his career, it’s a v similar playbook: highly leveraged megadeals, murky ownership, accusations of being a slumlord. The investigation from the Philly Inquirer deserves special mention, particularly this bit: “Even the family home in Brooklyn was, on paper, owned by a defunct religious nonprofit — which, Lieb said in a deposition, had for years allowed his family to live there rent-free.” 🧿 

Roadmap Set for Freeing Fannie, Freddie

Bill Ackman’s had a good week. The FHFA and Treasury have laid out a roadmap for releasing Fannie and Freddie from govt. supervision, a move w/ major implications for multifamily finance and something that was seen as a possible consequence of a Trump election victory. Per guidelines released Thursday, the Treasury will still have the ability to approve any such plan, and the FHFA will request public comment on a detailed plan to end the conservatorship. Treasury will consult w/ POTUS - Trump takes office in <3 weeks – before giving its final approval. Industry trade groups such as the MBA have spoken out in favor of the plan.

In Sept., WSJ reported on a move by Trump insiders to figure out how to end govt. control of Fannie & Freddie, which together owned/guaranteed 40% of the $2.2T multifamily mortgage market as of fall ‘23. Any offering of the govt.’s Fannie & Freddie stakes could be valued at 100s of billions of dollars, so you’d need the world’s biggest investors to get involved.

Gray Matter

Jon Gray just sat down w/ Nicolai Tangen, CEO of mega-allocator Norges Bank Investment Management (manages Norways’s mega SWF 💰️ ), to riff on Blackstone’s favorite things: megadeals, investment theses and secular tailwinds ™️

Couple of interesting bits: Gray described Blackstone’s status as a “full-service capital solution provider” as a major edge. “If you come to us and say ‘I want senior investment grade debt,’ we can give you that from our insurance companies,” he said. “We can do mezz, we can do preferred equity, we can do minority stakes… and so it allows us to have much more robust discussions w/ corporates and other alternative firms.” BREIT’s recent 6.5% pref seller-financing for KKR on a $1.6B student dorm portfolio likely falls into this bucket. 🛏️ 

The two spent lots of time on data centers, a sector that’s shaping up to be one of Blackstone’s biggest bets – Schwarzman has voiced his ambition to become the world’s largest AI infra investor. When asked about concerns of overbuilding, Gray turned to history, acknowledging that “we saw it with railroads back in the 19th century, we saw it with the buildout of cellular.” 🛤️ Data centers, however, have 2 mitigating factors, he said: One, the lack of spec projects – “nobody can make those economics work so you actually need a long-term lease in place to do this.” And two, the power constraints are so extreme that if you are able to score sufficient access to it (see Blackstone’s Gigawatt Game), the bluest of blue-chip tech tenants can be yours. Gray also mentioned betting on the space sideways, by financing others’ data-center projects and even funding hyperscalers - the CoreWeave bet in particular is structured in a fascinating way.

And, of course, he was asked about his running 🏃‍♂️ It has become his equivalent of Sam Zell’s motorcyle riding 🏍️, a media totem - what’s funny is that way back in ‘07, when Gray had made his signature $39B deal for Zell’s Equity Office, the mogul had advised him to get one.

“I ride motorcycles, so they start every story with me riding a motorcycle,” Zell told the 37-y-o-Gray. “You need to find a hook.”

Brookfield’s Citadel Boost

Ken Griffin’s Citadel, which is building out its own New York tower at 350 Park, is growing too quickly to wait for that 8Y job to get done. It’s now signed for a half-million sf spread at 660 Fifth (fka the Kushner Cos.’ 666 Fifth), per Colliers. Citadel’s been eyeing space at the 1.4M sf tower since at least this summer, per BI, and will use the space to house the employees currently working out of 350 Park while it tears down that tower and redevelops it in partnership w/ Vornado & Rudin – Citadel & market-maker Citadel Securities will eventually occupy at least 850K sf at the redevelopment, on top of its upcoming mega-HQ in Miami. Money’s not an issue – Citadel was up 15% in ‘24, besting its hedgie rivals.

Quickies

• 🎥 CRE fraud and the aftermath 

• Spruce juice: Manhattan office owners rush to get M-CORE tax break 

• Blend & Extend: Lyft renews for 10Y in downsized SF digs 🚗 🥤 

• Note-on-note: Mamrout takeover of Savanna’s 1375 B’way financed through Sail Harbor, Baupost

• Mormon church pays $100M+ for Palm Beach apts (more on the church’s divine dry powder here) 📿 

• Throwback since 🎿 szn’s here: How Gary Barnett conquered Deer Valley 

Unquotable Quotes