Icahn Folds & Gosin Gets Goosed Up

Icahn Says “No Mas” on Big Mall Short

''I'm no Robin Hood. I'm out to make money.'' - Carl Icahn 🏹 

After a 5Y bloody battle against some of the world’s biggest asset managers, Carl Icahn has killed his short trade on U.S. malls: The financier has abandoned his CMBS short position, per CMA, collapsing $3B-ish of derivative trades over the past fortnight. His total losses/gains are hard to gauge – Icahn may have hedged his bets or cashed in some at the nadir of the mall market during Covid – but safe to say that the wager, which had been dubbed the “Big Short 2.0,” didn’t pan out as Icahn hoped.

Icahn (Cont.)

Starting in ‘19, Icahn used credit-default swaps tied to mall-backed CMBS, calling the short “one of the best I’ve ever seen.” The trade was pioneered by hedgie Eric Yip, a former Icahn analyst who went on to launch Alder Hill. In ‘17, Yip wrote a now-famous paper on the play, predicting that we’d see a wave of defaults among lower-quality malls. The mule in this case was CMBX 6, an index that tracks the value of 25 CMBS and had a fair bit of mall exposure.

"CMBX 6 is a toxic cocktail of correlation, concentration and rapidly deteriorating fundamentals," Yip wrote. 🍸️ 

Icahn’s wager had pitted him against major money managers like AllianceBernstein and Putnam Investments, and last year Icahn cried foul, telling WSJ that “in many instances, it’s just a rigged market for billions and billions of dollars.” CMBS special servicers 🧃 also felt his wrath, with Icahn alleging in ‘22 that Rialto slow-rolled the sale of a Nevada shopping center and juked appraisals to withhold profits from bondholders like him. Icahn placed his chips against the BBB tranche of the CMBX 6, but losses in that tranche occurred rarely. Lower tranches, however, did get rocked, and if Icahn had bet against them he could have made some serious hay.

Bonus read: The $2B Mall Rats (Esquire)

Gosin Gets Goosed Up

With Howie Lutnick’s full-throated backing, Barry Gosin has been playing offense at Newmark, guiding it to the top of the I-sales charts, growing its debt business by nearly 50% YoY and more than doubling its net income. The board has now rewarded Gosin w/ a contract extension through ‘26, per an SEC filing: the new contract guarantees him $17.5M in total annual comp for ‘24, ‘25 and ‘26, and a one-time cash bonus of $5M ASAP. It also gives Gosin more leeway to invest in RE in a personal capacity or as part of a fund, provided the fund isn’t controlled by a direct Newmark rival. Gosin will also have a 2Y noncompete.

Lutnick, who has Zuck-esque 10:1 voting shares and has filled the board w/ Friends of Lutnick ™️ , is giving Gosin a lot of leverage (both actual & philosophical) to go directly after rivals. Avison Young, fresh off a corporate debt default, and Cushman, in balance-sheet babysitting ™️ mode and recently dumped by TPG, seem like ripe targets. 🎯 

Ross’ Alpha Citizenry

No one combines big deals & loud philanthropy quite like Steve Ross: The Related Cos. founder stepped down from the megadeveloper last month to give all his love to South Florida, and has been courting Vanderbilt University to his new fiefdom of West Palm Beach. He’d been raising funds for a satellite campus there, and efforts look to have gone far enough for Vanderbilt to file plans for a $520M project. The campus would rise between the civic center and Dreyfoos School of the Arts downtown, per CO, and the city commission may donate some land parcels to the cause.

Being a higher ed. champion unlocks a different level of status in a town, as Ross knows well. UMich’s business school is already named after him, but this is even better: being the person who brought an elite university to an educational backwater = immortality. Not to mention the business opportunities: Ross’ new venture, Related Ross, is the largest institutional office landlord in West Palm Beach. The city has a lot of momentum at the moment, with machers sensing a big score: Steve Witkoff and Len Blavatnik’s Access (also partners on the XI takeover in Manhattan) just revealed plans for a 194-key luxe hotel and private golf club at the former Banyan Cay resort, per the Palm Beach Post. 🏌️‍♀️ 

“The time is ripe to be doing something,” Ross said in April. “And, you know, I can’t help myself.” 👩‍🎓 

Bonus: An overview of Ross’ NYC legacy here 

Shvo and Tell

Two nuggets on Michael Shvo (more detail on him here):
1) The ugly dispute w/ Core Club at his Transamerica Pyramid is a $180M headache: per new court filings reported by the SF Business Times, that’s the value of Core’s 20Y lease, a lease that the swanky private club is suing to break, accusing Shvo of “self-dealings” and spinning “tales of grand expansion” while being a glorified caretaker of the property.
2) The developer has slashed his staff in Miami, per Bisnow, even as he’s in the thick of 2 Miami Beach projects: the Raleigh hotel redevelopment and a nearby boutique office building.

Quickies

• 📽️  Fractional RE ownership = VC money pit 

• Tiny home co. implodes, leaving investors and customers in limbo

•  Beacon set to default at Chicago’s AMA Plaza 

• Good primer on landmark resi agent commission changes 

• Six figures, no college required: Data-center techs are in high demand

• Office-focused proptech co VTS, last valued at $1.7B after a CBRE-led funding round in ‘22, lays off a fifth of staff 

• Blackstone buys controlling stake in hotel software firm

• Slate lands $210M JPM refi on NYC homeless shelter portfolio

• RSVP for our Chicago Happy Hour w/ Iman Jalali on 9/10

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