David Werner's Unorthodox Dealmaking, Newmark Debt Shuffle & Macklowe's Fortress of Solitude

David Werner: 1/1

There are real estate investors the business world is obsessed with: big names, megadeals, monster fundraising, flashy lifestyles, TRT 💪 : The Sternlichts, the Grays, the Flatts etc.

And then there are real estate investors that real estate investors are obsessed with. Somewhere at the top of that list has to be David Werner.

Werner (cont.)

Over three decades, Werner (pushing 70) has found himself in the middle of some of New York’s defining real estate deals: $1.5B for 5 Times Square; $900M for the Socony-Mobil Building; $481M for One Court Square; a stake in 237 Park Avenue. In 2014, Werner was the city’s biggest buyer of real estate, besting institutional players with a whole army behind them. It’s hard to think of a lone-wolf operator with as voracious an appetite for trophy properties, especially one that’s been able to successfully stay in the game this long.

His methods are, to put it mildly, unorthodox: he promises a fat cash deposit and quick closing, carrying with him a red accordion folder containing two T-shirts: one says “Free Aggravation” (i.e. dealing w other contenders) and the other “Aggravation Free 😀 ” (i.e. dealing w him). As I understand it, in exchange for that speed and certainty, he scores a killer price from the seller. He then flips the contract to his deep-pocketed partners for a nice profit. However, instead of walking away with his winnings, he rolls in some of that flip profit as equity in the deal. A masterclass in de-risking, with a playbook that blends investing and brokering - a la Harry Helmsley 🐐 .

Unlike the flamboyant Helmsley, however, the Borough Park-based Werner never gives interviews (citing the “ayin hara,” Hebrew for “evil eye” 🧿 ), and AFAIK, there hasn’t been a photograph of him published in the media before today. Yet behind the scenes he’s as bold as they come: He’s JVing with Nathan Berman on a mega office-resi conversion at the former Pfizer HQ in Midtown (Werner bought into the property 5Y ago) and is in the midst of a complex undertaking to sell the Row Hotel (fka Milford Plaza) in Times Square. TRD reports that he’s now buying 100 Wall Street for $115M-ish from Barings – a huge discount from the $270M Barings paid in ‘15 – for another potential office-resi play.

Real Gs…lasagna.

Newmark’s Debt Rainmaker Benched

There had been chatter about this for a while: Dustin Stolly, Newmark’s co-head of debt and a longtime rainmaker at the firm, has been on an extended leave of absence - and where he would fit into the organization if he does make a comeback is uncertain. Stolly, who along with Jordan Roeschlaub oversaw one of the top debt teams in the country, has been out of the mix since the start of the year, sources told The Promote, and Newmark has restructured its debt team around Roeschlaub and Jonathan Firestone, who joined from Eastdil in Jan. (It was telling that when Firestone’s hire was announced, Roeschlaub was mentioned in the first graf, but Stolly only got a nod halfway through the release – these things do not happen by accident 🤷‍♀️ )

Newmark is positioning itself as all systems go - Firestone’s arrival unlocked a deeper tier of institutional relationships, sources said, and the firm has been at the center of some of the industry’s recent marquee debt assignments – most prominent being the $60B loan book of failed Signature Bank.

Stolly’s sidelining was for personal reasons, as I understand it - but I don’t want to get into all that here. It is worth noting for the record that he wasn’t a bit player: he was a regular entrant on CO’s Power Lists, and along w Roeschlaub placed billions of dollars of debt for everyone from Blackstone to Witkoff to Invesco. To get a sense of how he was positioned both within and outside Newmark, check out the CO wet kisses here and here.   

Macklowe’s Fortress of Solitude

“History never repeats itself, but it does often rhyme.”- Mark Twain

The final scene in our New Kings of New York (if you somehow haven’t read it, call in sick and order now) features Harry Macklowe preparing his next great gamble: a million sf Midtown skyscraper dubbed Tower Fifth. To help bring it to life, Macklowe had turned again to Fortress Investment Group. Remember that Fortress had been his primary lender on his madcap $7B quest for Blackstone’s EOP portfolio, a deal that took him to the cleaners and saw him lose his prized GM Building. But like Sharon Stone’s character in Casino was to Ace Rothstein, Fortress became the drug that Macklowe just couldn’t quit.

So, here we are: Fortress is now pursuing foreclosures on two Macklowe joints: one of the properties that was part of the Tower Fifth assemblage, and a site near the Dadeland Mall in Miami, TRD reports. The Miami property is approved for a two-tower, 770-unit resi project. An auction is slated for 6/3.

(Bonus: Check out Fortress co-CEO Josh Pack’s take on a “trillion-dollar opportunity” in CRE distressed debt here.)

Quickies

• ten31’s Instagram is live: Spicy quicktakes on the latest in CRE

• Live/die by the hoodie: Big Tech is spanking landlords with big space cutbacks nationally:

• $1.8B debt on 1 of SF’s largest apt complexes heads to special servicing 

• Savanna’s 360 Lex near Grand Central listed for sale by lender 

• Lakers champ 🏀 Rick Fox’s latest shot: green concrete 

• Citadel’s NYC HQ – a JV between Ken Griffin, Vornado, Rudin – is moving ahead after $240M+ in air-rights deals. (Mayor Adams is v excited about it, but unclear if the city has any role to play here)

NYC in the House

We have a (tentative) deal. Gov. Hochul announced the “parameters of a conceptual agreement” this week that is being seen as one of the biggest overhauls of NY housing policy in decades. A great primer here from WSJ if you want the deets, and a more industry-focused one from TRD here, but here’s the juice:

• Replaces key tax break 421a w 485-x, and extends by 6Y the construction deadline for projects under 421a

• Includes good cause eviction 😨 : in essence, bringing some form of rent-regulated apt protections to the free market (lotsa loopholes here)

• Incentives for office-resi conversions; removal of FAR caps

• Some pro-landlord tweaks to policies around renovating vacant rent-stabilized units

We shall see how this all plays out. No one seems happy.

Unquotable Quotes