Seagram Scores Mega Refi & A Fannie/Freddie Privatization Push

Seagram Scores Mega Refi

“If you can meet with Triumph and Disaster. And treat those two impostors just the same.” - Rudyard Kipling, IF

A major bit of good news in what’s been a rough year and change for RFR: Morgan Stanley, Citi & JPMorgan are prepping a $1.2B refi of RFR’s Seagram Building, a single-malt building ™️ if there ever was one. Per CMA, MS is leading the fixed-rate refi, w/ Eastdil running point, and the 4Y, interest-only loan is destined for SASB status (they lost their rizz for a time, but are they back?).

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Seagram (Cont.)

RFR (Aby Rosen, Michael Fuchs) are poised to use the bulk of the proceeds to retire their existing debt, incl. a $738M CMBS loan that got a 2Y extension after a ‘23 loan mod- the deal of a refi reported in late ‘23 never came to fruition, per a KBRA report cited by CMA. (There’s also the Q of some MSD Partners pref/mezz that’s fuzzy)

Though RFR’s been having a torrid time on much of its trophy portfolio – it just lost the Chrysler and is fighting off the Koreans at 285 Madison – the Seagram at 375 Park Ave has been its happy place: Asking rents are up to $275 psf, and RFR faced the welcome challenge of having to shuffle tenants around when private-credit behemoth Blue Owl upsized to nearly 240K sf at the tower in Oct.
 

HUD Sec: Privatizing Fannie & Freddie is #1 Priority

Newly confirmed HUD Sec Scott Turner says the privatization of Fannie & Freddie – a move w/ far-reaching implications for multifamily finance – is a priority for him. “There are partners that will be at the table and obviously we’ll be one of them,” he told WSJ, adding, in a nod to his 🏈 days, that “when you’re a quarterback, you’ve got to work with the entire huddle.” Deets of such an undertaking still have to be worked out. A proposal circulated in Trumpworld seen by the Journal estimates that the privatized entities would be valued at $330B+: $250B+ of that would come from converting warrants to common shares, and a mega-IPO of $20-30B would follow.

Last Jan., Fannie CEO Priscilla Almodovar had hinted that the time had come to begin unwinding the conservatorship. “What I worry about is you do lose some commercial muscle when you are in this sort of state,” she said. “You’re not government, you’re not the private sector.” Fannie & Freddie owned/guaranteed 40% of the $2.2T multifamily mortgage market as of Sept. ‘23, so this is a BFD: if somehow a privatization deal retains some level of govt. guarantees, agency lending would roar 🦁

Meanwhile, DOGE setting its crosshairs on the CFPB & Treasury Sec. Scott Bessent’s stop-work order have discombobulated that agency. The shakeup has capital-markets pros wondering if the agency’s qualified-mortgage standards are up for rejigging, per CMA. “They’re hitting the ⏸️ button on every single regulation and action..to eventually analyze the implication of every single rulemaking,” the Structured Finance Association’s Michael Bright told the publication. “And they are going to take their sweet time analyzing it from top to bottom.” 🐕️ 

Syndicator Etch-a-Sketch

Buying your own distressed debt at a fat discount and taking another shot at a deal is an increasingly popular game, played by everyone from SL Green & Vornado at 280 Park to Savanna in Downtown Brooklyn (this one is TBD; w/ BH3 now in the mix Savanna’s role is unclear). It’s also playing out in more exotic locales in multifamily syndicatorland: Take Meadows at Ferguson, a 264-unit Dallas complex bought in summer ‘22 by KeyCity Capital (Tie & Boone Lasater, real characters) for $30M, and in a touch of magical realism, pegged by them last year at a “market value” of $40M+. The deal was soon underwater, and the Lasaters’ former partner, “wealth architect” Charlie Dombek, is gunning to buy the $21M note on it for $16M. Dombek was also a PG on the note, and in a remarkable Spaces session on X subjected himself to a grilling on the move. HIGHLY recommend listening to the full conversation, expertly led by @investingcre and containing gems such as: "I've never been able to pick up a turd by the clean end."

Texas AG on Traveling HFCs: Y'all sort this out

“Now I gotta turn my back on you.” - Paulie Cicero 

In Oct., Rep. J.M. Lozano requested Texas’ powerful AG Ken Paxton to weigh in on perhaps the most controversial topic in state housing politics today, Traveling HFCs. (The Promote has been all over this stuff, and you can catch up here, here, & here) Lozano requested that Paxton opine on 2 things: 1) Should HFCs be allowed to travel – i.e. be able to operate outside of their local govt’s jurisdictional boundaries? 🐎 2) If YES, should the properties they work on outside their jurisdiction be eligible for a 100% tax exemption?

On Thursday, Paxton’s office finally replied… w/ a nothingburger. It was declining to issue an opinion b/c Lozano had made the request in his capacity as Chair of the House Committee on Urban Affairs, a committee that is now dissolved 🙊 With Paxton out, the fate of Traveling HFCs rests entirely w/ the state legislature, and that means deals can still get done in the interim – the frenzy is real. 🏇 🏇 

Worldwide Drama, NYC Style

Fascinating case here: New York REIT, the majority owner of the hulking Worldwide Plaza in Midtown, can claim a $90M sum that was in limbo during its long dispute w/ its partners, SL Green & RXR. The money, per TRD, had been held in a reserve acct. to sort out a massive gap in the 2M sf property left by departing tenant Cravath 💼 ; New York REIT had argued that the sum was only required to be held in the kitty until the end of ‘18; SLG & RXR had insisted it remain until a capital call to fund capex on the vacant space was completed. The judge has now sided w/ New York REIT: “You’re saying that these sophisticated parties put $90 million down a black hole 🕳️ that they could never get it out of,” he said last week. “That may be right, but that is unusual — that’s not a result most people would end up thinking is sensible.”

SLG & RXR came in as 49% partners in ‘17, w/ that $90M reserve stipulated as part of the deal. New York REIT sued them in late ‘22, and SLG & RXR’s attorney Mark Ressler questioned the timing of that action – coming, as he said it did, just after a Joe Moinian deal to buy New York REIT’s stake fell through. “The deal fell through. What do you know? They filed this lawsuit,” Ressler said. “That was their last attempt to unlock the $90 million that they knew they couldn’t willy-nilly distribute to investors.” But the judge stuck to the contract in his decision.

Meanwhile, the tower’s dealing w/ a $940M CMBS headache; the debt went into special servicing late last year. It has an enthralling deal history: New York REIT’s predecessor firm, a REIT sponsored by American Realty Capital, first bought a 49% stake in late ‘13 – ARC was, of course, the 💝 of the fallen Nick Schorsch empire. RXR had been battling to buy the tower back then too, and even went to war w/ Schorsch on it. 🍇 

One-Inch Punch

For want of a quarter-inch, a housing proposal was lost. Thankfully, the mayor of San Jose stepped up w/ an effective if inelegant solution: paper cutter ✂️ 

Quickies

• 🎥 Megalandlord’s woes illustrate the pain in NYC’s rent-stabilized market 

• He’s 🏃‍♂️ : Caruso goes on Rogan to talk California’s fundamental issues: housing, law & order, regulation, growth

• Judge says no 🎲 to Nir Meir bail reduction request – man’s looking ROUGH

• David Werner strikes again: 🐺 buying office on 42nd St. for $220/ft (more on the man here)

• Silber sentencing pushed back again – and he’s withdrawn his allegations of prosecutorial hanky-panky

• Multi mood check: A read-along of Equity Residential’s earnings call – honestly way better than press recaps (see also: Rev up for Higher Rents) 😡 🫢 😁 

• Ex-NewPoint, Freddie chief David Brickman to run resi at D2 

• Jared Kushner gets the FT treatment (pairs well 🍷 w/ this fluffier interview)

Unquotable Quotes