The Rabbi and the Capital Stack, What About Bob, Meridian’s Minefield & Cushman's Quagmire

What About Bob?

“Bob Knakal is considered the top commercial sales broker in New York’s real estate market,” read the subtitle of the Sunday NYT spread on the veteran investment sales dealmaker, part-time cartographer 🗺️ , former indy brokerage founder and one of the most relentless self-marketers in the business. This should have been a moment of triumph for Knakal – it is extraordinarily rare for a CRE pro to get a wet kiss in the Times – but it ended up becoming the final straw for his firm, JLL. By Wednesday, Knakal was out, shown the door with no notice. When I got the call, I knew it was an involuntary exit based on how quickly things were moving. What I didn’t know until I saw what JLL leadership said was just how bitter things had gotten.

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Knakal (cont.)

 “At JLL the client comes first, JLL comes second and the individuals come third,” the firm’s New York prez Peter Riguardi said in a statement to TRD shortly after I broke the news. “That’s the true recipe for success.” By public company standards, that’s akin to flipping someone off.

As of Friday, Knakal’s next move is unclear – he did not wish to discuss his plans just yet. But his exit has created a fascinating schism in the world of CRE: if you first learned of Knakal through his undeniably impressive social media blitz of the past 14 months, you probably believe JLL made the biggest mistake in the history of brokerage, that it disrespected a legend of the game, and that the firm is an antiquated dinosaur that has no sense of the concept of personal brand. A #TeamBob was doing the rounds, as was a spirited meditation on the “no player is bigger than the club” ethos and how it clashes with the realities of modern personality-based marketing. Some folk even called for him to take Darcy Stacom’s soon-to-be vacant perch at CBRE, perhaps unaware that trophy skyscrapers are a totally different asset class.

New York real estate insiders, however, had a more mixed assessment of the situation at hand: to some of them, Knakal was no longer doing enough of what he needed to be doing above all else: selling real estate (PSA for the 🔱 crew: I’ve known Bob for years, like and respect him, and have always found him generous with his time and knowledge – I’m merely relaying the collected thoughts of some of his peers in the business.)

They noted that this was the second time he was axed from a big-box brokerage – Cushman & Wakefield fired him in ‘18, 3.5Y after acquiring his Massey Knakal for a top-ticked $100M. They noted a lack of recent marquee deals and pointed to a lower overall transaction volume in the past 3Y. And they took umbrage to the Times puff piece, particularly to Knakal’s billing as “the top” broker in New York, claiming that even within JLL (which is only mentioned once in the article), there are others who do more business.

Knakal will reveal his next act very soon. I suspect that if he does choose to fly another firm’s 🎏 , it will be that of a boutique, digital-native brokerage, one that not only understands but embraces branding gurus. (My top picks are Ryan Serhant’s CRE division and Kyle “Bloodlines” Matthews’ Matthews REIS). One thing to understand, though, is that such a move would probably restrict him to middle-market deals: unlike in residential, it takes a village to sell the really big stuff - you need a strong capital markets team behind you (look how hard Newmark is pushing on that front, for e.g.) and a hell of a lot of institutional support. This is something I think a lot of outsiders struggle to grasp so it bears stressing.

On Thursday, Knakal was in Atlanta for yet another CRE networking event (goal: 261/yr). Up on stage, he kicked off with: “Hey I’m Bob Knakal and I’m unemployed!” Class act.

The Rabbi and the Capital Stack

Rabbi Yoshiyahu Yosef Pinto, erstwhile consigliere to New York’s real estate stars (and LeBron 🏀 ), ex-con, and now chief rabbinical judge of Morocco, is back in the industry spotlight for the wrong reasons.

L.A. developer Ilan Kenig of FMB is accusing Pinto and 3 other partners of swindling him into relinquishing control of his company, blowing millions of firm dollars and making false promises wrt the capital stack, per this brilliant tick-tock from TRD’s Bella Farr. Kenig also alleges that Pinto funneled $2M+ from development entities into his nonprofit.

The tale allegedly begins, as a good caper should, in Marrakech 🇲🇦 . In ‘19, while Kenig was visiting the city, he met Pinto and was smitten 😍. The following year, at a Shabbat dinner hosted by Pinto, the rabbi dropped his plan:

Two Pinto associates would buy out Kenig’s existing investors and bankroll his expansion. (Pinto, per the suit, performed the Hamotzi - the blessing over bread – and broke the bread into 3 parts to symbolize the desired ownership structure 🐐 🐐 🐐 ) Then came the looting: Another investor, who also received a piece of the company, was enlisted to pump money into the partnership but his $100M-plus kept finding its way into other entities.

When all was said and done, Kenig alleges that he was left with a $240M loan bill, with PGs, and court filings analyzed by TRD show that he’s filed for bankruptcy on at least 6 multi projects in L.A.

I am a blabbermouth. It is rare that I am speechless. But I am speechless.

Meridian’s Minefield

It is official. On Wednesday evening, Fannie Mae put out a supplement in which it declared that effective 3/4, it will "not issue a Commitment or accept delivery of a brokered transaction if Meridian Capital Group is the mortgage loan broker or correspondent."

Remember that Ralph Herzka's Meridian, a BFD in the RE capital markets world, is already reportedly under investigation by Freddie Mac. Since all that came out, the agencies have already de facto shunned biz w Meridian, per sources, but this latest communiqué from Fannie formalizes it.

“This is worse than massive,” one lender said. “This is a death sentence.”

Wakey Wakey CushWake

An excellent read from TRD’s Rich Bockmann this am on Cushman & Wakefield’s move from a dealmaking-first ethos to balance-sheet babysitting 👶 . It chronicles the key pain points facing the brokerage, whose quest to match up to behemoths CBRE and JLL hasn’t quite gone as planned.

In brief: Biggest investor TPG has been load-shedding; stock is down to $10 (IPO’d at $17); rumbles of CEO Michelle MacKay ivory-towering and the firm becoming less of a welcoming spot for proper dealmakers; firm struggling under the weight of a $3B debt load; a disastrous $150M (now marked at $1.1M) investment in WeWork; a fuckup with major client Brookfield that led to Cushman being fired from all leasing assignments; and lots and lots of short-seller interest.

NIMBYs Can’t Sit With Us

Arguing against new development used to be a pretty surefire political strategy in New York. Now, thankfully, that is changing. It is no longer heretical to throw your weight behind market-rate and mixed-income projects, and a new group founded by Brooklyn borough prez Antonio Reynoso and City Councilman Erik Bottcher of Manhattan wants to take this even further: 

“What we want to do is have a show of force of people who are publicly supportive of housing development,” Reynoso told the NYT. “Historically, what lawmakers have said to constituents is, ‘If you elect me, I will help stop new housing from being built in our community,’” added Bottcher. “We need to turn that on its head.”

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