TPG Dumps Cushman & Scandal in Wine Country

TPG to Cushman: No Más

“Sell it all. Today.” - Jared Cohen, Margin Call

TPG is ending its nearly decade-long marriage with Cushman & Wakefield, a heavily levered rollup bet that didn’t quite pan out. Through a series of transactions, TPG had envisioned a mega-brokerage that could do 12 rounds with CBRE and JLL, and tapped former CBRE boss Brett White to make it happen.

“This is a game-changing event in commercial real estate,” White said at the time of the $2B Cushman-DTZ deal in ‘15. Instead, it’s turned into a cautionary footnote about the limitations of private-equity muscle.

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Cushman (cont.)

TPG and fellow PE firm PAG Asia Capital plan to sell all their O/S shares in Cushman, per a prospectus Monday, representing just under 12% of total O/S shares and collectively valued at $311M.

TPG’s dreams of brokerage domination began in ‘14, with its $1.2B acquisition of DTZ from Aussie engineering firm UGL. Even before it closed on the deal, it was gunning for more, with DTZ engaged in talks to acquire Cassidy Turley. It then made its move for Cushman, picking it up for $2B from the storied Agnelli family of Italy 🇮🇹 - the Agnellis had bought 2/3 of Cushman in ‘07 for $565M. The combined megafirm retired all the meh brand names and flew the Cushman flag.

“The formation of the new Cushman & Wakefield is the next chapter in the most exciting growth story in the real estate industry,” TPG’s David Bonderman said at the time. It levered Cushman up to the gills, and White began prepping the firm for an IPO, which happened in ‘18 - the firm was bleeding cash for that 3Y period. But going public didn’t turn its fortunes around - the firm has been a clear laggard in the brokerage horse race, and the sentiment inside and outside its walls is that the emphasis has shifted to balance-sheet babysitting rather than dealmaking. TPG sold 10M shares in ‘23, signaling it had lost some love for this particular fight.

Monday’s announcement should provide further fodder for rivals’ poaching efforts: This is the stuff Lutnick and Barry Gosin live for.

Wild Wild Wine Country

Two guys who’ve been pals since before high school go into business together and amass a major portfolio in the country’s most sought-after wine region. Then things go bad between them, and one guy tells on the other to their investors, the SEC and the US Attorney. 🍷 

A made-for-HBO (when HBO was good) saga is playing out in Sonoma: A partnership between developers Ken Mattson and Tim LeFever, which had amassed a staggering 116+ properties for $240M+, has soured to such an extent that LeFever is going public with allegations of a fraud perpetrated by Mattson. Per the Press Democrat, LeFever wrote to investors this month about the “devastating actions” of Mattson, actions that included misappropriation of investor funds into his personal account and making unauthorized deals on behalf of the partnership.

“I have had the opportunity to speak with many of you directly, and each of your stories has been heartbreaking,” LeFever wrote 💔 . “Your finances and your lives have been turned upside down.” He added that he had escalated the matter to the SEC and the US Attorney. Meanwhile, the vibes in the community aren’t good – the duo’s spending spree has long caused consternation, and activist residents are asking for more regulation to stop such deals in the future.

Quickies

• More fallout from Freddie MF probe: Valuation & appraisal firm BBG under agency review, w/ NY rainmaker Jon DiPietra blacklisted 👀 

• 🎥 How to make a billionaire market 

• Joe Sitt takes nine-figure bath on Madison Avenue retail 🛀

• Pour one out for RE crowdfunding

• Newmark’s Jordy Roeschlaub and Jonathan Firestone are tasked with getting Gural & Brodsky their construction loan for the resi conversion of the Flatiron Building, per sources. (It’s been a little over a year since Jacob Garlick stole our hearts)

• JLL shopping NPL on Westbrook’s Four Seasons in SF - Waterfall holds the debt

• Newmark also shopping Ready Capital’s CLO book, much of which is distressed (catch up here)

AI Papi

“The shit this kid knows about computers…he set up his mother with a whole website for her ceramics business!” - Patsy Parisi

Blackstone’s megabet on data centers, and how it sees them as a portal into the Gen AI boom, is well known – the firm’s very happy to tell you all about it. But this being Blackstone, it’s going at its quest a couple different ways at once, flexing both its real estate and private equity muscle. The firm just led a $7.5B private-debt financing into AI chip startup CoreWeave, per WSJ. The money ($4.5B from Blackstone, plus Marc Ganzi’s DigitalBridge, BlackRock & others) will fund the startup’s investment in global data centers and help it buy more chips from Nvidia. The financing isn’t cheap – such deals typically carry low double-digit interest rates – and the way it’s structured is pretty interesting. Here’s WSJ:

The financing deals establish a metaphorical lockbox, housing all of CoreWeave’s AI chips. Any revenue the company generates from clients using those chips, the most advanced of which cost tens of thousands of dollars each, goes first toward paying its lenders. Any excess cash after making the loan payment flows to the company as net revenue.

“If they were leasing out fleets of Jeep Cherokees, they could go to a bank,” Blackstone’s Jasvinder Khaira said of the CoreWeave deal. “We were trying to do something that gave us an attractive investment and opened up the market.”

For Sale: 10 Acres on Superrich Island

“He who hesitates is poor.” - Max Bialystock, The Producers

Steve Ross, Jorge Pérez and Todd Glaser likely already have their war rooms set up to figure out how to tackle this, the mother of all luxury redevelopment plays: A 9.6-acre fuel depot ⛽️ on glitterati magnet Fisher Island is hitting the market, and for the right buyer (cavernous pockets, political juice, patience, vision) it’s the opportunity to build some of the world’s priciest homes in an enclave that has run out of land.

CBRE is marketing the site on behalf of energy company TransMontaigne, and is teasing a price of $200M, per TRD. The seller paid $156M in ‘03 for a 7-property package of energy storage facilities, and in the ensuing 2 decades Fisher Island pricing has skyrocketed. For context: Pérez’s Related Group (w/ the backing of Teddy Sagi and Larry Krueger’s Wanxiang) paid $123M in ‘22 for a 6.5-acre site ($19M/acre), and have plans for a 50-unit condo project with your average pad priced at $30M. Current and former residents of the island include the Vanderbilts, Mel Brooks 🐐, and Oprah.

This ain’t a straightforward project, though. A fuel depot comes with a fair amount of headache, something the listing acknowledges: “Bidders are responsible for evaluating any zoning, environmental, land use, regulatory, title or other constraints relating to the use or operation of the property.” However, if it works out 💰️ 💰️ 💰️ 

(Bonus: Fisher Island falls into what I’ve been thinking of as a “parallel universe” of ultra-luxury - check out my Odd Lots segment on it here.)

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