Steiner's Bond Burden & Blackstone's Bottomless Brunch

Mendy Steiner’s Bond Burden

Brooklyn-based CRE investor Mendy Steiner took his own life earlier this month, leaving behind a family, a shellshocked community & a mountain of unpaid debts. One of his close connections, CRE attorney Mark Nussbaum, has since shuttered his law firm and is fighting off multi-front litigation, at least some of which ties back to Steiner. Meanwhile, CMBS bondholders are grappling w/ the aftermath of his death: In Dec., JPMorgan’s CMBS research desk noted that $214M of ‘23 vintage multi conduit CMBS loans were seriously delinquent, w/ 2/3 of those sponsored by Steiner and a ¼ by Fercan Kalkan (another controversial bloke). Those loans, JPM noted, appeared to be Steiner’s only CMBS action. “We are unaware of any specific hardships that these two sponsors may be facing,” JPM said in the note, which was reviewed by The Promote.

Powered by: Defease With Ease

With the CRE capital markets in flux, leverage the structured-finance expertise of Defease With Ease | Thirty Capital, a trusted partner for mid-market owners. We help you proactively navigate changing markets, manage interest-rate risk and optimize your debt. 

Reach out here for a free consultation with our expert advisers.  

Steiner (Cont.)

In a new note published today, JPM acknowledged our reporting on Steiner’s death. It warned that there could be more Steiner-sponsored loans masked by LLCs, but on his 4 largest loans that it did ID, underwritten LTVs were 64-72%, cap rates were 6.8-7.3% & debt yields 9.9-19.7%. Despite the properties having ample cash flow 🍶 to cover debt service, Steiner’s loans were in serious delinquency, wrote JPM, which also noted that the loans went sour soon after origination. “These observations naturally cause investors to question the underwriting and sponsorship.”

There’s also the matter of that pulled lawsuit brought against him by Blueberry Funding (Abraham Miller?) on 185 E 33rd St, which included an affirmation of confession of judgment by Steiner on a $60M judgment against him. The LLC there was also a joint borrower on a $15.7M CMBS loan (Arbor originated) that matures in ‘31.

The Promote had been hearing 🛀 of a last-ditch attempt by Steiner to get a portfolio-wide CMBS refi shortly before his death, a financing coup that would have helped him repay at least some of his creditors. That, of course, didn’t take.

Blackstone: Bottom’s Here – Let’s Go

"We tell ourselves stories in order to live.” - Joan Didion

In March ‘22, Blackstone bought into Brookfield/QIA’s One Manhattan West at a $2.9B valuation. “We are long-term believers in New York,” Blackstone’s Qahir Madhany (who’s just hopped over to Starwood) said at the time. It would be the last major 🗽 office deal Blackstone would do in NYC in nearly 3Y; in fact, the firm began hammering the narrative of how little exposure it had to U.S. office – from Schwarzman on down, every dealmaker repeated the same mantra: US office was now just <2% of its gargantuan portfolio, down from 60% in ‘07.

Blackstone has deemed it time for a vibe shift: Jon Gray just called the bottom for office, noting that valuations were down 50-70% and were now poised to recover. “We would be willing to buy properties out there,” Gray told Bloomberg. Of course, the chips were already in play.

Shortly before the interview ran, the outlet reported that Blackstone’s in advanced talks to buy 1345 Ave of the Americas, a 1.9M sf Midtown skyscraper owned by Fisher Bros. & JPMorgan Asset Management. It’s unclear what Blackstone is paying – the 50-story tower was once valued at $1.25B ($660/foot), but appraised by S&P at $896M ($470/foot) this past Nov. Tenants include 💼 Paul, Weiss, which took 765K sf there in ‘23’s biggest Manhattan lease deal. That lease hints at what Blackstone hopes for here: though this thing isn’t on Park, it has single-malt building ™️ potential, i.e. could become one of the properties that is spoiled for choice w/ premium tenants while less prized buildings gather dust: The Plaza District’s 5 hottest buildings scored rents 4x higher than the saddest ones, per Savills – the biggest spread in at least 6Y.

Meanwhile, Blackstone also reported that it pumped $25B into CRE in ‘24, up 70% YoY. It reported a Q4 net income of $1.3B, though per Bloomberg “real estate continued to drag on results.” (CO had a completely different framing: The Blackstone train continues to power through the highest reaches of American finance, and it’s being fueled by commercial real estate.” 🚂 😁 )

See also: No Promote for Blackstone REIT  

NMHC 🎞️ : Known Unknowns, Blustery Blazers

Multifamily’s ultimate shindig went down in Vegas this week, and though we just didn’t have it in us to make the pilgrimage, we’ve been checking in w/ sources in Sin City & keeping up w/ the chatter online. “A giant advertisement for Brooks Brothers,” is how Waterford’s John Drachman described the navy-blazered scenes. His colorful dispatch – John, an internship at The Promote is yours anytime you want it – notes that despite bullishness on occupancy & rental rates, the mood was dampened by the recent run up in Treasuries, which makes ppl feel there will be no return to the glory days of cheap debt. He also heard the following comment: "Los Angeles is no longer an institutional market” – obv. a bit of theater in that, but it does bring up serious Qs for lawmakers about how “M”oney is feeling about the regulatory environment there. Madera Residential’s Jay Parsons summed things up thus: “It feels like everyone wants to be a net buyer, but at prices that don’t exist and for asset types that aren’t on the market at any scale.” He too noted institutional investors shying away from tradcore markets: LA, SF, NYC & DC’s Maryland burbs. Mark Allen of I-sales shop GREA overheard someone remarking that the “the Tides guys just passed me in the hall wearing black suits looking like they were going to a funeral 🕴️” We’ll have more multi wonky stuff for you Monday c/o Odd Lots – stay tuned.

Curtains for Aby at Chrysler

That’s gotta be it for Aby Rosen at the Chrysler Building, no? Not sure how many moves he has left, after the courts granted (h/t TRD) ground lessor Cooper Union summary judgment and ruled that RFR’s gotta bounce. Rosen had argued that CU’s handling of Gaza conflict-related protests had driven away tenants and made it impossible for him to make good on his lease payments – the judge did NOT accept this reasoning. Meanwhile, RFR’s former partner on the building, Austrian magnate René Benko, was arrested last week by Austrian authorities over concerns of evidence tampering in his insolvency case and is expected to remain in custody for another month.

TBD what’s next for the Chrysler. It desperately needs some love and capital, but who’ll step up? Not enough room here to go into the decades of pain it’s inflicted on some of the world’s biggest investors, but if you want a refresher, check out our thread.

Quickies

• 🎥 Sheldon Solow’s land basis at 9 W 57th St: $8/buildable foot 😭

• Even Related’s like, “NOPE”: Megadeveloper backs out of plan to revive BK’s Pacific Park 

• Marquee Minneapolis skyscraper sells for $6.3M - but the story is so much more interesting than that 

• 🧑‍⚕️ merger: Welltower absorbs Northstar & its 40 senior-living communities in $900M deal 👵 👴 

• Rob Peter pay Paul: BXP-Moinian Hudson Yards JV defaults on BXP debt 🪙 

• NYC Council probing Taconic’s life-sci hub development deal 🧪 🔍️

• Interesting journey thru the capstack w/ Affinius’ Craig Solomon 

• Broker Hunger Games: A made-for-Bravo listing adventure 🌽

Unquotable Quotes