Nursing Home Power Roster & An Embezzlement Autopsy

The Nursing Home Power Roster

“Time beat him. Time, you know, takes everybody out. It's undefeated.” - Rocky Balboa

Some asset classes have a longstanding star quality: Take condos in Miami, or Class A office towers of power in Manhattan. They’ve long attracted outsized press, their marquee projects take on personalities of their own – you’re either a 432 Park or a 220 CPS stan – and you have a sense of who the biggest players & lenders are.

Then there are the ones that went from darling to disaster in record time – think of Class B/C Sunbelt multifamily – or the ones suddenly attracting mouth-watering sums of capital, such as data centers.

And then there are asset classes that feel relegated to the shadows, defined by drab buildings and government paperwork. They attract few headlines and are dominated by little-known characters – the only things glamorous about them are the sheer sums of money to be made. Skilled nursing facilities are one such space. They’ve minted well more than their share of billionaires & centimillionaires, and we thought it’d be fun to put together a who’s who.

Nursing Homes (Cont.)

There are about 15K skilled nursing facilities (SNFs) in the US catering to 1.3M residents, according to a ‘22 ASPE study. The vast majority of them are both Medicare and Medicaid certified, w/ the latter accounting for over half of total revenue. Over 70% of SNFs are for-profit, and ownership of them is getting increasingly consolidated – it’s a space in which players have been able to score v high leverage HUD financing for deals (“you’re borrowing money from the govt. against old people,” is how one source poetically described it), and the biggest players routinely partner w/ each other – I’ve been told the eCap summit (organized by lads hailing from Lakewood) is a real vibe.

The Promote’s been asking around about who the movers & shakers in the space are – here are some of the names that keep popping up. Keep in mind this is an unscientific first pass at the space – we’ll be getting into more specifics in future eds.

Daryl Hagler & Kenny Rozenberg: The founders of Centers Health Care are among the biggest players in the space, and were part of the ownership group that took control of Israeli national airline El Al in ‘20. Last year, Hagler & Rosenberg also came under fire from New York AG Tish James over an alleged $83M Medicaid/Medicare fraud. Hagler may also be known to NY real estate insiders as the quiet backer of Brooklyn dealmaker Isaac Hager. Meanwhile, word on the street is that Rozenberg is in discussions to sell his SNF portfolio to Chuny Herzka (nephew to Meridian Capital’s Ralph Herzka) - that deal, if consummated, will be a whopper.

Bent & Avi Philipson: Bent is or was a partner in Benjamin Landa’s SentosaCare and is the founder of SNF consultancy Philosophy Care. Meanwhile, Avi’s the head of Graph Group, which grabbed headlines when it struck a deal in ‘22 to acquire All Year’s Brooklyn portfolio - amassed and then kamikaze’d by a certain Yoel Goldman. Both father & son have also been a Tish James target.

Lou Scheiner: The founder of TL Management is a major DJT donor and was the subject of a NYT article in ‘20 that looked into SNF industry lobbying.

Joel Landau & Lipa (Leo) Friedman: Landau, the founder of Allure Group, partnered w/ Friedman on Aurora Health Network, which paid $3.2B in ‘22 for DigitalBridge’s wellness infrastructure business. The previous year, Landau had taken control of major SNF chain Genesis. He is prob best known in NYC CRE as the face of the Rivington House scandal: the de Blasio administration quietly lifted a deed restriction on an Allure-owned LES nursing home, a move which allowed Landau to flip the property to Slate for $116M in a luxe condo play.

This is just a snapshot – we’ll get more into the space – including who’s bankrolling & brokering it – in upcoming eds. 👩‍⚕️ 

Down the Rabsky Rabbit Hole (Again)

Most industries have a version of this guy, the hypersuccessful dealmaker whose talent is only surpassed by their fetish for anonymity. In Brooklyn real estate, the guy is Simon Dushinsky, one half of prolific developer Rabsky Group: every couple years, a reporter w/ a dream will set out on a quest to crack the Rabsky riddle, only to report back mostly on how hard it is to learn anything about the man and his firm. The latest attempt comes via TRD, which after comparing Dushinsky to Alexander the Great (??), tells us how busy the guy is (“I’m a very, very busy guy” 🎠 ) how driven he is (“he’s going daily to almost all of his projects”) and how joined at the hip he is to partner Isaac Rabinowitz despite persistent rumors of a split (“I’m seeing them working every day together.”) Here’s what else we learn:

• W/ Isaac Schlesinger, he’s developing 2 major projects in Ft. Lauderdale

• He’s got 1.7M sf in the NYC pipeline

• Rabsky began in Kiryas Joel 🌴, building homes w/ wood & stucco before graduating to condo development in South Williamsburg

• He’s got a thing for Marley Slims 🚬 

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An Embezzlement Autopsy

“You never actually own a Patek Philippe. You merely look after it for the next generation,” goes the legendary slogan. An investor in a Nightingale deal might add the following caveat: “or until you have to sell it to pay back my money you absconded with.”

We have an update on the $50M+ embezzlement allegedly perpetrated by Nightingale CEO Elie Schwartz through the RE crowdfunding platform CrowdStreet (if you’re somehow new to the drama, I implore you to catch up here & here & here): Schwartz has bailed on a settlement deal he struck w/ irate investors in 2 botched deals – it’s been 6 mos since he last made a payment, per a trustee overseeing the recovery process. “A couple of you have asked, ‘Why the hell isn’t he in jail yet?’” said the trustee, Anna Phillips, in an Oct. 18 webinar reviewed by Bisnow. She couldn’t provide any specifics on the DoJ and SEC investigations into Schwartz, though she gave assurances that “his file is on their desk.”

Phillips did have more concrete updates on the state of recouped funds, though they weren’t rosy: Investors who were in the deal to purchase Atlanta Financial Center have got back 14¢/$, while those in the Miami Beach office reno deal have recouped 17¢/$. She warned that future distributions were suspended bc the IRS had imposed a $1.5M bill on the ownership entities after Schwartz failed to file tax extensions last year – until the trust hashes things out w/ Uncle Sam, no funds would be forthcoming. The trust is also trying to force an asset sale on some of Nightingale’s commercial holdings, though sr. lenders would get first crack at any funds reaped from those. She then got to Schwartz’s assets: his Manhattan PH and Englewood mansion are still on the market. And then there are his watches ⌚️: since he bought them at the height of the market (remember this is the guy who bought First Republic options right before that bank went under), they’ve lost much of their value, but are “being sold slowly but surely.” One jilted investor made a good point to Bisnow, saying that the fact that the discussion has turned to timepieces tells you how hopeless the whole cause is.

Quickies

• Running w/ the alpha dogs of trading: How Citadel, Susquehanna & Jane Street ate big banks’ lunch 🐕️ 🐕️ 

• Cohen & Steers’ Rich Hill breaks down the Listed REIT landscape

• Midtown South buildings could get a lot, lot bigger 

• BlackRock wants more juice in the private markets - incl. CRE  

• LVMH left holding the bag at Beijing flagship – what does it say about the state of luxe retail? 👜 

• CLO market gets boost from wave of refis

• Fannie hasn’t done a floater in a Y - and new guidelines make it even less likely to do so

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