Trophy Hunter Aby Becomes the Hunted & Ares' Boca Bang

Trophy Hunter Becomes the Hunted

“Midtown is where the action is. It’s got a kind of Blade Runner underground feeling,” Aby Rosen, the real estate tycoon with the signature white hair and billionaire belly, declared in 2018. The German emigré’s RFR had spent the last few years buying up architectural gems on the New York skyline, and was bringing luxury condos to Midtown with the backing of a Chinese partner. Rosen was also having more fun than all his fellow titans combined, a cocktail of commerce, art and Manhattan dolce vita that was irresistible to both newspapers and to his foreign partners.

Blade Runner, for those unfamiliar, is a dystopian film set in an apocalyptic city, in which most species are endangered or extinct. Which is why it was a puzzling analogy for Rosen to use back then.

Unfortunately for him, it is more apt now.

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Rosen (cont.)

A property empire that Rosen estimated to be worth $14B just 6Y ago is worth far less now. Rosen has lost control of several marquee properties, including the Manhattan condo project and Lever House. And for the stuff he does still own, there’s a fat bill due: $2.5B of debt on RFR’s portfolio is coming due in the next year or is already delinquent, per a new FT analysis: On 16 loans examined by the publication, the real estate backing them collectively generated just $26M in income after interest payments, compared to the $97M they were expected to when RFR took on the debt. 12 of those loans are distressed.

On his trophy Seagram Building (375 Park), RFR scored a 2Y extension on his CMBS debt last year, per CRED iQ. Per sources, it also took on some onerous preferred equity (press reports at the time had it as equity) from JVP (John Illuzzi, Van Nguyen, Anthony Shaskus) that paid off existing investor MSD Capital. On its marquee Brooklyn deal, a JV with Kushner on a complex known as Dumbo Heights, it defaulted on a $180M loan in September. After RFR’s Austrian capital partner had an empire-wide meltdown and went insolvent, the partner’s stake in the Chrysler Building went up for sale, even as the tower’s in a chokehold of a pricey ground lease. And last week, $470M in debt came due at RFR’s 285 Madison.

The sharks have been circling. A Blackstone/CPP/Rialto JV that bought a slice of the Signature loan book is after Rosen, as are Madison Realty Capital and Marvin Azrak’s Maguire at a Gowanus megaproject.

“No one invested in real estate is immune to the pressures from fluctuating capital markets or the changing trends in work and lifestyle that we are currently seeing,” RFR told the FT in a statement. “We’re confident in our ability to work through these obstacles as we have in the past.”

Ares’ Boca Bang

"You can't live down here! This is where people come to die." – Jerry Seinfeld 

Del Boca Vista this ain’t. Ares Management just bought a 284-unit rental in Boca Raton for $140M (just under $500K/unit). The seller, per TRD, was Mainstreet Capital Partners, which developed the building in ‘22. Rents go from $2,700 to just over $5K. To me, what’s interesting is that a $140M deal is South Florida’s largest multi deal of the year so far –that’s a far cry from the regular fatty transactions we got used to over the last couple years.

L.A.-based mega money manager Ares ($400B+ AUM, $49B in RE) is making a big push in the region, looking for office space in Miami Beach and upping its stake in soccer club Inter Miami. Zooming out, it cashed out of a big Chicago property in a $232M sale to Amancio Ortega’s Pontegadea last summer and is backing Scott Rechler’s RXR on a $1B NYC office distressed fund. (Rechler, it should be noted, is getting bodied on some of his own NYC office holdings – lender MassMutual just filed a pre-foreclosure action on his 340 Madison near Grand Central 🚉 )

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ICSC Dispatch

The news from ICSC so far is that there isn’t much news: Dealmakers who upped the Ozempic these past couple weeks to prep for raucous schmoozing at the Wynn poolside cabanas haven’t seen much action yet. Traditionally, it’s the Saturday and Sunday before the event officially kicks off that see a ton of action, but at least from an East Coast perspective things have been quiet. Meridian Capital Group, whose debt machers used to be all over the event, is less prominent, and a number of the Syrian retail titans (Sutton etc.) aren’t around. One guy making a splash is Shaya Prager, the Opal Holdings boss who made a giant pandemic-era bet on the national office market, and though a lot of those bets have gone hella south, he seems to be thriving in Sin City – and in general 😎 

Have any good tips/color from Vegas? Just reply to this email - will keep confidential obv.

How to Make a Market

Here’s a hypothetical: If there had been a vehicle – let’s call it Palm Beach Aspirational Management (PBAM) – whose sole holdings were all the best mansions and development sites in that luxury South Florida enclave, how much would it be up today?

Palm Beach has had more 9-figure luxury resi sales than anywhere else in the nation over the past 4Y, and just notched another whopper, with the $152M deal for Todd Glaser’s Tarpon Island. Glaser, to me, has constructed an asset class of sorts in this rarefied market – he buys ultra-prime lots and builds with a billionaire buyer in mind. That’s a high-wire act that can go horribly wrong, as it did for Nile Niami in L.A. But when it goes right…

I’m fascinated by those who try to make a new market in real estate, as David Walentas did with Dumbo, and Gary Barnett with Billionaires’ Row. Glaser, who I had an extended chat w/ in ‘22, has aspirations of doing the same with Miami Beach, remaking it as a luxury townhome enclave by buying and converting every single Art Deco building. Here’s Glaser

(Bonus: Listen to me on Bloomberg’s Odd Lots podcast discussing the billionaire-specific ultra-luxe market 👂️ )

Quickies

• 📽️ 90s on Starwood’s SREIT drama 👨‍🦲 

•  Donald R. Horton, who founded and ran the nation’s largest homebuilder, dies at 74 🫡 

• Cupertino adopts 4.5K unit housing plan, teases high density

• Florida’s assisted-living sector 👵 pummeled by property-insurance surge

• Insider-trading poster boy Ivan Boesky, inspiration for Gordon Gekko, dies (If you want to get deep into his story, “Den of Thieves” is a banger)

• “We are a step closer to taxing the super rich:” On a global billionaires’ tax being pitched to the G20 💸 

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