Man of a Thousand Faces, CLOse Encounters & a Miami Megabet

Man of a Thousand Faces

“A riddle wrapped in a mystery inside an enigma,” is how Churchill described the position of the Soviet Union at the start of World War II. He might as well have been talking about Nir Meir. 

The former HFZ Capital principal is being held at Rikers while he awaits trial for allegedly orchestrating a sweeping $86M fraud, and his story has all the elements that one could want: ultra-luxury projects, big money, foreign investors, showmanship 🎭️ , subterfuge, threats, bullying 😡 , faked wires, faked Korean accents, a cartoonishly ostentatious existence. We know all this, and still, with Meir, there’s always more.

HFZ (cont.)

“We used to joke, a loan is due and Nir would jump on the next plane and come back with a bag full of money,” an ex-HFZ employee told TRD for a cover story that just dropped. He could pull in funds 💰️ right as they were needed – just enough to keep the whole thing from crashing down – and did it again and again. By design, no one but Meir knew the full picture: He isolated employees Paulie Cicero style (“he didn’t want anybody hearing what he said, and he didn’t want anybody listening to what he was being told”), often giving them conflicting accounts of what was going on. And somehow, he kept the masquerade going until the fall of 2020. Here’s TRD

He grew reckless. In September 2020, Meir took a $30 million loan from Wix co-founder Avi Abrahami, pledging a portfolio of industrial properties as collateral. But Meir failed to tell Abrahami that the same properties backed $43 million in debt from Monroe Capital, which had provided a $113 million corporate loan, according to depositions.

Monroe’s corporate loan was secured by interests in most of HFZ’s properties. It was debt that could end HFZ.

According to his deposition, Meir’s partner and mentor, HFZ founder Ziel Feldman, was in the dark about all of this. He said that when he found out about the Wix deal, “I called him up screaming and crying in front of my son, ‘What the fuck did you do?”

Feldman, it should be made clear, has NOT been charged with any wrongdoing. But it is worth asking the question: Why has he been given a total pass in this whole saga? There’s nothing out there to suggest he took part in any of the fraud. But he’s the top 🐕️ here: why did he check out while Meir ran rampant for so many years?

And it should be noted: Feldman is not a babe in the woods. He’s a sophisticated developer with 3+ decades in the business. He co-founded Property Markets Group in the 90s, partnered with the likes of Gary Barnett and Kevin Maloney, built some serious projects in New York and made a lot of money. While Meir’s tale gets the ink – hard to resist such an operatic narrative – the collapse of HFZ is also a failure of top leadership. The press accounts so far haven’t quite reflected that.

Probably worth dropping another Churchill: “The price of greatness is responsibility.”

CLOse Encounters

We’ve explored before how CRE CLOs (debt securities backed by shorter-term, floating-rate loans, key vehicle for the multi buying spree) are coming under significant strain. But there’s some new data and a good primer on where things stand currently, c/o CO’s Jeff Ostrowski (knows his stuff). Key nuggets

• CLO loan impairments surged to 2.9% in Q1, from 0.3% in Q2 ‘23, per Moody’s

• Nationally, over half of CLO-funded multi deals operate w negative cash flow, per Trepp’s Stephen Buschbom. Some markets are hurt baaaad: In Denver, 95% of such deals aren’t covering debt service, and even in Miami that dubious distinction applies to 60% of deals 🫢 

• Wild example of how the cost of interest-rate caps 🧢 has soared: One $100M loan had a 3Y, 3% cap that cost $98K in ‘19. That same cap in ‘23 cost nearly $3.5M

• Not all are predicting doom: Lauren Basmadjian, the head of Carlyle’s CLO arm, reckons that there will only be a “small increase in defaults this year.”

A Brutally Discounted Note

The news on this trade has been out there, but only some chatter re the price, which in this case is the news: PincusCo reported last month that InterVest (fka Wafra Capital Partners) bought the note on the leasehold interest on 30 Broad, a Fidi tower controlled by Tribeca Investment Group (Elliott Ingerman, Bill Brodsky). The note had an original principal of $125M, but I’m hearing that InterVest bought a 70% stake in it (the piece sold by M&T Bank) for just $8 million. Uff.        

Quickies

• Landlords in New York are saying “no mas” to property taxes - just simply refusing to pay them. They’ve run up an $880M tab. Part of the blame is being placed on the ‘22 expiration of a tax-lien sale program on unpaid taxes.

• Comeback of the olds: Occupancy rates in the sr. housing market 👴 are finally getting back to pre-pandemic levels. Still, values in the sector are down by 20-25% since late ‘21

•  Steve Witkoff is co-chair of an upcoming fundraiser for longtime pal DJT in Palm Beach

• Readers of The Promote had a first look Friday at highlights from a rare public appearance by retail 🐐Jeff Sutton. Today, Rich @ TRD has a more detailed writeup that I enjoyed

A Miami Megabet Downtown

Nitin Motwani and Art Falcone, with backing from CIM, have city-shaping aspirations for the $6B Miami Worldcenter. Their plan feels Hudson Yards-esque: stitch together a giant assemblage (27 acres), score generous tax subsidies, and then de-risk as much as possible by bringing in JV partners as well as selling parcels off to other developers. A new TRD analysis gives you a sense of the ambition: 17 towers, 500 🏨 🗝️ , nearly 8,500 condos and rentals (!) and nearly 800K sf of commercial space.

The cast of characters involved is rich: Jorge Pérez’s Related Group, Miki Naftali, Dan Kodsi, Lalezarian 🗽, Lynd Group (outta San Antonio), Steve Witkoff and even Adam Neumann’s Flow 👏 👏 👏 

Reminder- NYC Happy Hour 🗽 

One of the most rewarding things about building this from scratch is the bonds you develop with the early audience: those who’ve supported, shared and contributed to the work 🥰 . The Promote is a completely different kind of animal – no bluster here, just facts – and I’d like to toast the community that makes it so. First happy hour is in New York City.

When: Thursday, 4/4, 4:30-7pm Where: Old Town Bar, 45 E 18th St. What: Drinks, bites, good cheer, CRE chatter (Off the Record, no dox), OG reader appreciation speeches

Would love to see you. RSVP here. Yalla!

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