Anatomy of a Syndicator & CMBS' Multi Lust

Anatomy of a Syndicator

“People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It's an innocent form of exaggeration, and a very effective form of promotion." - Donald Trump

The most influential book of all time is the Bible. The second most influential book, at least among multifamily syndicators, is “Trump: The Art of the Deal,” which two generations of aspiring moguls have mainlined as the playbook both for building a business and living a life. It evangelizes so many of the qualities that have contributed to the sorry state of the market today: carnival barking, exaggerated values, data’s subservience to vibes.

Let’s take Tie Lasater, boss of multifamily syndicator KeyCity Capital, “sought-after international speaker” and self-described “#1 in the world at connecting capital to wealth.”

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Syndicators (cont.)

A new foreclosure filing in Florida’s Lee County claims that an entity tied to Texas-based KeyCity is in default on a 3-property portfolio and owes $637K. The filing led @investingcre down a fascinating rabbit hole into the KeyCity portfolio, and he flagged several things from the company’s website.

• Even on acquisitions made during the go-go days of the multi syndication boom, KeyCity is projecting a girthy increase in values. Consider the Hive, a 386-unit complex in Dallas: KeyCity bought the joint in late ‘22 for $48M ($124K/door) and now claims it is worth $69M ($178K/door). Or another Dallas complex, the 264-unit Meadows at Ferguson, bought for $30M ($114K/door) in summer ‘22 and now valued by KeyCity at $41M ($155K/door).

• Never mind that so many comparable portfolios are underwater – these numbers are estimates of “Current Value.” Now you may ask wtf that is, and here’s the answer: “Current Value” is an estimate based on factors determined by KeyCity in its sole discretion,” 🤲 and is “not intended to represent the amount which the property would be sold for to an independent third party.” 🧴

Inspired by his digging, I did some of my own, coming across this ‘22 DBJ article about KeyCity titled “exotic cars, cryptocurrency & Hollywood:” In it, Lasater and his brother (and CFO) Boone Lasater discuss their side quests into currency trading, crypto investments, movie 🎥 financing and exotic-car repair 🏎️. Lasater said at the time that the company, which managed $450M, hoped to be at $2B AUM within 3-5Y. The Lasaters are also very much in the thick of that nebulous world of celeb-association marketing, wealth coaching (JT Foxx) and publishing – Lasater has himself on the cover of a magazine called “The Powerful” (tagline: “Nothing is more powerful than the truth.” 🙏 

(More on the state of big multi syndicators here, their feeder funds here, and their sorry lenders here.)

Adjusted for Longevity

“It’s Baltimore, gentlemen. The Gods will not save you.” - Ervin H. Burrell

Brandon Chasen, a Baltimore developer who announced a $100M national expansion in ‘22 by declaring that “the world is open,” has dialed back those plans. He’s now focused squarely on Charm City, still in acquisition mode but at a slower pace and “adjusted for longevity” 👏 👏 👏 👏 👏 👏 👏, Chasen told the Banner for what is among the most ROFL profiles you’ll read this year. Notorious for living a richboi lifestyle (yachts, supercars, designer digs), Chasen is reinventing himself as an everyman in his self-care, cold-plunge era, and says he has sold most of his cars – though he is keeping the Smurf blue Rolls, as it’s family-friendly 🙏 

Chasen, who runs his eponymous firm w/ prep school pal Paul Davis, exudes the kind of “dream no small dreams” energy that many developers possess, an energy that can drive outsized outcomes (2K rental units so far) but also push things over the edge. Consider the track record, as reported by the Banner:

• Settlement w/ Maryland AG over allegations of posing as a state agency by charging homeowners for property-tax assessment appeals

• Partnerning on a Boca Raton project w/ someone convicted of securities and mail fraud 💌 

• Investors include a guy who settled w/ the SEC over a microcap pump-and-dump scheme 😀 

Shvo’s Core Conflicts

The Shvo show 📽️ – buff Israeli aesthete reinvigorates some of America’s most iconic properties – is running into a host of production problems 🍿 . The frou-frou members-only CORE Club is accusing Shvo of “self-dealings” and spinning “tales of grand expansion,” alleging that he failed to deliver on projects, oversaw shoddy construction and jockeyed to seize a 50% stake in the club. CORE’s founders, the aptly named Jennie and Dangene Enterprise, are seeking $615M in damages. They allege that Shvo represented himself as an owner of the properties, when in reality, they claim, he’s merely a glorified property manager for German pension fund BVK (which may have its own concerns w/ Shvo’s playbook). Shvo’s attorney characterized the allegations as a “desperate attempt” by Core to bail on its lease.

That’s not all: Shvo’s former partner turned adversary Serdar Bilgili 🇹🇷 is alleging, per Crain’s, that Shvo diluted Bilgili’s interest in the Aman-branded condo project at the Crown Building by not making good on his funding commitments. As a result, Bilgili’s 10% stake in the project has been whittled down to <2% 🥹.

More: Shvo joins the ranks of developers who’ve cut ties with Official, the luxe brokerage co-founded by Tal and Oren Alexander, after the Alexanders were hit w/ allegations of rape & sexual assault. A primer on why the Alexander saga has become the talk of the new development world here.

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CMBS Muscles Into Multi

We’ve discussed how CMBS has become a silver lining for the ailing MF capital markets, w/ Newmark Q1 data showing that CMBS activity was up >5X YoY. A new CMA analysis provides more juice: multi loans accounted for $6.7B, or nearly 15%, of the collateral for nonagency CMBS offerings so far in ‘24 – that’s a nearly 3x jump from the $1.8B in all of ‘23. DSCRs determine how large an agency debt package can be, and they’ve been discombobulated by the rise in interest rates. CMBS lenders also take DSCRs into account when originating loans, but they have more wiggle room.

Quickies

• During debate🎙️, Trump lauds senator’s work on Opportunity Zones

• Baupost makes cuts to RE team- will focus more on distressed debt and special sits going fw ✂️ 

• RealPage to lay off 4% of team (Catch up w/ their troubles here)   

• Can an ex-Newmark CLO bigwig rescue a floaty MF empire? 🛟 

• Bruce Eichner makes $141M buyout play in Surfside - read our snapshot of the man w/ 9+ lives here)

• Nightingale’s Elie Schwartz 🐦️ lists Manhattan PH for $19M after bankruptcy ruling - remember that investors in his CrowdStreet-enabled deals are still short $50M-ish

• 🎞️ The dealmaker’s dealmaker: David Werner’s Unorthodox game 

Unquotable Quotes