Pretty spectacular validation for Brookfield here on its wager on what was during Trump’s first term easily the most controversial office tower in America: The firm has lined up a $1.3B refi – that’s a girthy loan basis of $1,000 / 🦶 🫦 – for 660 Fifth Avenue, the artist fka 666 Fifth. The financing comes about 7Y after Brookfield stepped into the hella troubled tower, taking control of the office leasehold from the Kushner family in a $1.3B deal. Strap in for a lil’ history lesson 👇 📖

🚨 A couple of meaty changes coming to The Promote 10/15:

We’re putting a lot of ❤ into this product, and trust that it’ll be of tremendous value to you. Founding Members pay $240/Y - that’s $20/month – w/ a 2Y rate lock. If this sounds tasty, please sign up here.

A Citi-led consortium (incl. Barclays, ING, BofA, Santander) is providing the debt, per CMA, which consists of a $1.2B sr. loan headed for CMBS and about $90M in mezz. The funds (brokered by Eastdil) will retire about the same amt. of existing debt on the property, which was recently appraised at $1.95B (i.e. 67% LTV). Brookfield committed to a $400M reno shortly after acquiring the tower and has much leasing success. After it signed Scotiabank for 200K+ sf last month, Brookfield said the whole tower is spoken for. Citadel is in there at a nice number, but only temporarily as it builds its own digs at 350 Park (w/ Vornado, Rudin); per CMA, 660’s WALT is 9.5Y.

Whippersnappers who’ve joined the biz in the last few years won’t be able to fully appreciate what a clusterfuck this property was when Brookfield stepped in. In early ‘07, Kushner Cos., led at the time by Jared w/ Charlie recently released from prison (A++ profile here), paid Tishman Speyer a record-breaking price of $1.8B for the tower. (Jared sent over a 1-page offer to the broker Scott Latham w/ that figure, saying later that “we thought it was a number that would get the seller’s attention.”) This was peak froth, and the Kushners landed an appraisal that reflected this: 2 mos. after the acquisition, the office portion alone was valued at $2B ($1,379/ 🦶per a bond prospectus), allowing Kushner to plunk down just $50M in equity and land $1.75B in financing (UBS, Barclays) for the deal. The sr. $1.2B portion was securitized, and to pay off the $500M+ in mezz, Kushner sold a controlling stake in the retail condo to Carlyle and the Chera family’s Crown Acquisitions for $525M in summer ‘08.

Then came the GFC, and the office market got rocked. In ‘11, Kushner brought in Vornado as rescue capital for a 49.5% stake. Steve Roth extracted bandit rates – VNO was getting 11% interest on money it actually invested, plus a 3% return on any remaining money, per Trepp data cited by NYT 🐐 Charlie Bagli (I WISH the Times still actually covered CRE). Then came Trump’s outta-nowhere WH victory, and suddenly, the son-in-law had options. Along came the Chinese: Anbang boss Wu Xiaohui was eyeing a $400M infusion at the tower, where Anbang est. that a luxury condo redevelopment play could eventually value the tower at $7.2B 😂. That deal obv never came to pass, and the Chinese eventually put Wu away for other mishegas. Then Kushner courted the Qataris to step in. That didn’t happen either, but then came Brookfield (Qatari SWF QIA is a major investor in Brookfield, FWIW) in ‘18. Nowadays, potential conflicts of interest are swatted away like flies, but a few years ago they still mattered.

Speaking of Chinese investors who like US trophies… Remember Zhang Xin, the billionaire who swooped in alongside the Safras to buy a 40% stake in the GM Building in ‘13 at a $3.4B valuation? Xin and her husband and business partner Pan Shiyi are best known for their conglomerate Soho China, which was in talks to sell itself to Blackstone in ‘21 in a $3B deal, but Chinese regulators scuttled those talks. However, their trophy US holdings are held through a family office called Seven Valleys, where it’s been a snoozefest over the past few years. Seven Valleys is now going through a real estate revamp, sources told The Promote - CRE head Byron LaMotte left last year, and the rest of the team’s on the way out too. Expect some new hire announcements soon - hopefully they’ll lead to some action, because most of the Chinese who made big plays here in the 2010s are dormant. 🌋

Nice bit o’ business here from Drawbridge Realty (Charlie McEachron): Not only did it buy Costa Mesa boutique office campus The Hive from Invesco for $78M ($410 / 🦶), at a discount to Invesco’s $84M ‘18 purchase price, it did so w/ the knowledge that it had the 1/1 tenant in the bag: Anduril, probably the hottest defense tech startup in the country, is taking the entire 190K sf spread, which is next to its 640K sf HQ at the former LAT printing facility. Anduril (latest valuation $30.5B) has been growing like loco and has been rapidly expanding its HQ-adjacent digs. (They also have my favorite ad campaign since the Marlboro Man)

BTW anyone interested in understanding the scale of the deep-tech opportunity in SoCal HAS to read this terrific Sept. ‘24 report from Owen Fileti of Raise (now a JLL co.) 👇

We’ve been rather obsessed w/ the full-contact spar going on in SF’s multifamily market over the past couple years: Veritas/Baupost lose mega-portfolio to Ballast/Brookfield, even as Ballast/Goldman turn another one back to sorry lender RBC 😭; Ivanhoe Cambridge taps out and PCCP steps in, etc. etc. - catch up here & here. An avid listener who heard the pod this week offered up more color, and yet another character: When Ryan Brewer was leaving Veritas to start Ballast w/ fellow Carlyle alum Greg MacDonald, the money that seeded their first bets, incl. the acq. of a 30-building, 400-unit package, came from Nahla Capital. Nahla is the Genghis Hadi-led vehicle that’s tapped into Middle Eastern money, and Hadi knew the Ballast lads from his time at Carlyle. Nahla exited the 30-building package in ‘18 for $260M ($650K / 🚪 ) 👏 👏 👏 The buyer? Goldman Sachs. The circle of distressed life… 🦁 🐒

PS: New Yorkers may best know Nahla as the equity backer of prominent developers such as Miki Naftali & Victor Sigoura. Miamians will know that name from the in-progress play for Shvo’s Raleigh Miami Beach.

If these numbers are right, this is quite the coup for Lynd Group. Last year, the MF investor had won the coveted assignment to reposition a 11K unit portfolio formerly controlled by convicted mortgage fraudster Moshe Silber. “This is why we are in business,” the bombastic principal A. David Lynd said at the time. Now, Lynd is set to buy a chunk of that portfolio for 🥜 . He has a deal w/ bondholders on the portfolio to pay $26M for a 1,500-unit package in NoLa, per court filings spotted by TRD. That’s what, $17K/ 🚪 ? Even for AH units, that’s 👏 👏 👏 . Lynd’s deal will pay off $17M+ in DiP financing provided by none other than… Daryl Hagler, the nursing-home nabob who also owns El-Al 🛫 Lynd took to LinkedIn to herald his triumph, saying “you can sum this up by simply reading Humpty Dumpty—because it has truly taken ‘all the king’s horses and all the king’s men’ to put this portfolio back together again.” 🥚