“The single most important factor for an alternative asset manager is origination capacity. That is the single biggest constraint on growth.” - Scott Kleinman, Apollo

The use of insurance capital as private-credit rocket fuel is arguably the biggest emerging story in CRE finance today. At the forefront of this trend is Apollo, which has pioneered structures that have turned its once-unglam subsidiary Athene into a heavyweight CRE lender, bankrolling everything from Manhattan skyscraper dreams to big-box industrial plays. But private credit has one pesky issue: it’s typically rated like junk bonds, which means it comes w/ girthy capital charges.

That doesn’t sit well w/ Apollo. So it’s figured out a workaround 👇

We’ve been cooking up something special for CRE pros who want to go deeper down the 🐰 hole, and we’re thrilled to share a bit about it: On Oct. 15, we’re launching The Promote Insider, our premium subscription tier w/ exclusive content that you can’t find anywhere else. What you’ll get:

Stay tuned for pricing and Founding Member benefits. If you’ve appreciated what The Promote has brought to the CRE conversation so far, this is the best way to support our work 🙏 - HS

Apollo is poised to use a new special purpose vehicle to raise $10B from insurers, per Bloomberg, a maneuver that would allow it to sell debt against stakes in its credit funds (incl. asset-backed funds). In contrast w/ the junk-y ratings private-credit loan portfolios would receive, sr. debt birthed out of these SPVs tied to stakes can avail of investment-grade ratings, per the publication. Risk for thee, but not for me…

And the stakes here are enormous: per Moody’s, 1/3 of US life insurers $6T cash & invested assets was already tied up w/ pvt. credit as of the end of ‘24. Given the explosive growth here, we’re far from meeting the final boss of creative structuring.

Also see: Who Gets to Rate Your Debt? & Private Credit’s 401 (k) Courtship

W/ sailing season coming to a close, Harry Macklowe is finding other ways to stay unfurled. The developer has tied up his latest Manhattan parcel for a luxury condo project, paying $49M for 809 Madison Ave, per TRD. The seller was Churchill Real Estate Holdings, the Justin Ehrlich & Sorabh Maheshwari joint that is backed/controlled by Madison Realty Capital.

“Limestone Jesus” Robert A.M. Stern’s RAMSA will design the project, which Macklowe is developing in partnership w/ SK Development (Abe & Scott Shnay). Expect full-floor pads in the 4K sf range, w/ pricing in the $5K / 🦶 range.

After the Qatari royal HBJ-backed One Wall Street sputtered and Fortress-funded Tower Fifth never took off, who’s stepping up to back Macklowe this time? The construction loan’s coming from Marty Burger’s Infinite Global Real Estate Partners & Related, per TRD, while Sculptor Capital Management & David Zobel’s Circle Property Partners are kicking in pref. Some FOs & UHNWs are also coming in as LPs. Carlton Group’s Michael Campbell put the $ together, while Avison Young’s James Nelson & Brandon Polakoff brokered the sale. Macklowe’s in his late 80s, but the man just won’t stop - gotta respect it. 🙏 ⛵

The Promote is singularly focused on CRE inside baseball – the blinders are part of what makes us so addictive for all of you. But this is the rare transaction from the resi world worth writing about b/c of its implications for CRE: Compass is buying Anywhere Real Estate for $1.6B in an all-stock deal, the firms announced today. That gets Compass closer to CEO Rob Reffkin’s vision of a “one brokerage to rule them all,” and gives it a serious chunk of new development sales and leasing action in prime markets. Anywhere is a grab bag of great and meh brands, but some notable ones developers care about include Corcoran (perennial topper of TRD’s NYC new dev rankings), Sotheby’s International Realty, and Coldwell Banker (huge in Miami w/ the Jills). Compass’ slate of brands already included Pacific Union (big in California) and @properties (heavyweight in Chicago, highly recommend checking out my interview w/ founder Thad Wong from ‘23 - the man had some thoughts about Compass at the time). We talk so much about AUM Gobbling ™ in CRE - here’s the resi brokerage world’s clearest manifestation of the same trend.

Not the biggest transaction but v interesting: Santander, which bought a 🍕 of the Signature Bank loan book from the FDIC in late’ 23, is moving to foreclose on a loan Signature made to one of New York’s biggest rental landlords. Santander filed a $43M pre-foreclosure action on debt tied to a Sutton Place rental tower owned by A&E Real Estate (co-founded by Douglas Eisenberg & John Arrillaga Jr.) “We were surprised to learn of Santander’s filing given that we had just spoken to the bank less than a week ago,” an A&E rep told PincusCo, adding that it was committed to working things out. A&E had bought the 126-unit property from SL Green in fall ‘20 for $62M. Now, of course we’ve seen this kind of hardball from other buyers of Signature debt, most notably a Blackstone/Rialto/CPP JV that’s going full Khabib on borrowers. But you might expect that from alt lenders – to see it from a mainstream int’l bank is jarring.

Programming Note: The Promote is off this Wednesday. We’ll see you back here Friday. Also, for fans of the pod 🎙 , we’re planning to drop it on Thursday. L’shana tova to those who celebrate! 🍎🍯