Life After SVB's Death, Related's Miami Supertall Struggles, Texas Multi Freezes Up

Life After Death: The Shadow of SVB

It’s been one year since Patient Zero. Silicon Valley Bank went under March 10, 2023, and its demise reverb’d across the regional banking landscape: Signature Bank collapsed (watch breakdown here), then First Republic, and NYCB just received a lifeline. These days, it seems like the health ❤️‍🩹 of the regional banking sector is all anyone in CRE can talk about.

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Regionals (cont.)

Last month, Valley National Bank’s Ira Robbins lunched 🥪 bank investors and analysts and riffed on the overall health of his institution and its exposure to CRE. Valley plans to cut back on multifamily lending, per WSJ, and Robbins alluded to just how painful the optics of New York real estate had become.

“Where you’re seeing the losses is on the big buildings that I’m not financing,” Robbins said, gesturing out over Midtown. “But I’m still once again being linked in with NYCB.” Valley’s stock is down by more than a quarter this year, and Robbins asked his investors for patience.

At NYCB, a Steven Mnuchin-led investor group pumped $1B into the lender last week (catch up here) and the new CEO aims to rejig the bank’s book to be less CRE-heavy.

M&T Bank’s CEO René Jones acknowledged that his industry needs to make amends. “While our banking system is unquestionably stronger than it was in the wake of the Great Recession, 2023 sent us a strong signal that we as an industry still have much work ahead to earn and re-earn public trust,” he wrote in his annual letter.

Meanwhile, over at Blackstone, Jon Gray’s positioning the whole situation as a potential windfall for his shop. Real estate debt, he said at a PEI conference last week, was 1 of the 2 fastest-growing lines of business. He directly referenced the collapse of First Republic in his comments.

“They failed because of the mismatch of assets and liabilities,” Gray said, per PERE. “They had 20-year loans and 20-second deposits.”

Read more: 

1) The Promote’s primer on where the CRE lending landscape stands

2) A conversation we published with a federal bank examiner on how regulators are thinking about loan mods 🐫 🐫 🐫 

Wanted: Anchor for Related’s Miami Supertall

A year after Related Cos. and Swire Properties broke ground on their 1,000-foot-tall tower, dubbed One Brickell City Centre, things are still up in the air: The tower is struggling to find an anchor tenant, WSJ reports, and Related is restructuring its agreement with Swire, which owns the dirt. Swire has explored disposing of the 1.55-acre site, per the Journal, though at the moment it’s saying it’s not for sale.

Related boss Steve Ross had chatted with (who else?) hedgie billionaire Ken Griffin about anchoring the 68-story, 1.5M sf tower, but Griffin is moving ahead with his own 2.5-acre project in the area – it’s less exciting to be a tenant than a city-shaper in your own right. The two had also discussed Griffin taking a piece of Ross’ Dolphins 🐬 🏈 , but that’s no longer on the table.

Brickell’s office market had a meteoric rise during the pandemic, but things have settled somewhat. The average effective rent (what a tenant actually pays) hit $115 per square foot in 2022 (Vlad Doronin’s 830 Brickell absolutely crushed it), more than double the average in 2019, per CompStak, but fell to $85 in 2023. Leasing activity was down 25% YoY in ‘23, per JLL.

Texas Multi Freezes Up

Texas multifamily developers are holding their horses. Apartment starts plunged starting in Q2 last year, and developers are finding few backers for their more ambitious plans, TRD reports. This is in part due to the upheaval in the capital markets, but also a response to a supply glut: The DFW* metro area, with a population of 8M, saw 20K units come online in ‘23, per John Burns data cited by the publication, with another 55K units under construction. Compare that to similarly populated New York, which delivered about half as many units last year. Austin’s another doozy: with a population of 1M, the city delivered 17K units in the past year.

While it’ll take a bit to absorb all that sweet supply, the lack of starts means that the market may once again be hankering for new apartments come ‘26, ‘27. Problem is, no one’s funding that strategy just yet.

“If someone can get a development off the ground now, targeting a 2026 delivery, I think that’s a huge opportunity,” Greysteel’s Jack Stone told TRD.

*Note: A previous version of this post cited the City of Dallas’ population, instead of DFW.

The People Have Spoken: RE I-Banking

I asked you on Friday what a “real estate investment bank” means to you. Here’s how you answered.

To the Victor Go the Spoils

Victor Sigoura is quickly staking a claim as one of NYC’s most ambitious independent developers. Earlier this year, he completed a $95M assemblage on the Upper East Side, where his Legion Investment Group is eyeing an 18-story condo. And now, he’s closed on 4 parcels near Gramercy Park 🌲 for another condo project, which could be among the area’s biggest in a decade, per TRD. He’s still got pieces of the puzzle to put together, including the purchase of a neighboring co-op.

His backers are worth noting: At Gramercy Park, it’s the Gindi family, Syrian real estate royalty. Meanwhile, on the UES, Sigoura’s being bankrolled by Nahla Capital, which invests Middle Eastern money in U.S. developments, often in starchitect-designed boutique condo projects. It’s a frequent backer of Miki Naftali’s Naftali Group, where Sigoura cut his teeth.

Quickies

• The mythical Joel Schreiber (Brooklyn developer, Waterbridge principal, WeWork first investor) makes a cameo in this deep dive on Ryan Breslow, embattled founder of 1-click checkout company Bolt.

• Barry’s SPACing: A couple of his 1 Hotels & some genteel country estates 🏇 in England are being rolled into a new public entity (h/t Hunter)

• Data center 💾 mogul Chuck Kuhn sold Microsoft land in Gainesville for $466M, or a whopping $3.75M/acre. Kuhn bought the parcels for about a tenth of that price ($378K/acre) in 2020. This is the same Kuhn who recently dropped $181M to buy Toll Brothers’ Ashburn data center spread.

• Can’t get enough of The Brothers Jogani: A jury added $3B in punitive damages to a 2-decade feud between SoCal megalandlords: Haresh now has to pay $3.3B to one brother (up from $1.8B) and $1.5B (up from $759M) to the other two. Rundown on the saga here.

• New TRD profile on Greenbrook contains an interesting PincusCo nugget on its frequent collaborator Carlyle: it has dropped nearly $1B on 174 Brooklyn small rentals over the past 2Y

More Market-Rate Apts Boost Affordability: Fed

New Fed study in Minneapolis showed that building market-rate rentals helped boost affordability across the income spectrum: 100 new market-rate units led to 70 new vacancies in lower-income neighborhoods, per the study, which found that a “chain of residential moves brought about by their construction benefits many more households.” None of this is surprising to anyone who understands supply/demand, but is still a major sticking point in the affordability debate and thus good to have out there.

Unquotable Quotes

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