Tis the season for major upheaval in the multifamily market, w/ PE on an AUM-gobbling ™️ frenzy and some of the largest landlords in the country seeking access to retail capital. The last year-and-a-half has been chock-full of blockbuster deals, from Blackstone’s $10B take-private of AIR Communities to KKR’s Quarterra buy from Lennar to EQR’s Sunbelt purchase from Blackstone and Apollo’s $1.5B deal for Bridge Investment Group. So you’d expect to see more major firms get their summer bods ready w/ an eye toward a takeout or cash infusion. 🩲

The latest: Bell Partners, an NC-based landlord that owns north of 20K units nationally, has begun an exploratory process in recent months, The Promote has learned.

“The founding father of Dubai, Sheikh Rashid, said something like: ‘My father rode a camel, I drive a Land Rover, my son will drive a Mercedes, but his son will ride a camel.’ And that’s the constant fear in these families.” 🐫 🚘 🐫
“SL Green was sort of the snake eating itself – they own the leasehold, but they also own the mezz.” 🐍

Scions of some of real estate’s most storied families are taking the reins and doing their best to position themselves as serious people. CEQA, the California environmental law that became a NIMBY arch-weapon, has been gutted – what will this mean for builders? And finally, we discuss one of the most audacious Manhattan skyscraper heists in recent years – the taking of 625 Madison.

Listen on Spotify here, YouTube here or Apple Podcasts here. A shout-out to our sponsor for this episode, Vesto - learn more about how it gives CRE players a single, clear point of access for all their bank accounts by going to vesto.com

The Greensboro-HQ’d firm was founded in ‘76 as Steven D. Bell & Company, and is now run by chairman Jon D. Bell and CEO Lili Dunn. Per NMHC’s most recent ranking, it manages nearly 90K units across the country, and per sources owns between 20-25K units, w/ DFW, Atlanta, Washington and Boulder its 4 biggest markets. Bell has engaged an outside firm to run the process, per sources, though we don’t yet know which one. It’s unclear where pricing would fall, too – in its Q2 earnings call last year, KKR teased the market w/ its cap rate on the Quarterra buy, saying it was in the low 4% range (enjoyed this commentary from CRE Analyst). But we’ve heard of recent portfolios deals being negotiated at higher cap rates – here’s the latest CBRE data.

Immigration agents have approached landlords and demanded that they hand over leases, rental applications, ID cards and other personal info on tenants, signaling a new front in the Trump administration’s push to deport people who are here illegally. ICE agents have hit landlords w/ a doc known as an “information enforcement subpoena,” per the AP, which also reported that CRE attorneys have heard from their clients about requests for information from ICE. Landlords now have a choice: Do they ignore the non-judicial order and potentially incur the legal wrath of the administration, or do they comply w/ it and potentially violate the Fair Housing Act?

“Just because a landlord gets a subpoena, doesn’t mean it’s a legitimate request,” housing law prof Stacy Seicshnaydre told the AP. A Homeland Security spox countered by saying that “it is false to say that subpoenas from ICE can simply be ignored.” Let’s see if the use of such subpoenas escalates to the point that the big landlord groups, such as the NMHC and NAA, have to figure out their strategy – they’ve only just healed from their Biden administration bruises.

Things are getting spicy in SF multifamily. After lenders took back a massive chunk of properties that Ballast Investments ( Ryan Brewer, Greg MacDonald) had acquired in the city’s pricing heyday (a $1.1B spree in partnership w/ Goldman Sachs), the market had been waiting for the assets to come back into play, ideally at a nice discount. RBC, one of Ballast’s biggest lenders, has been shopping a 20-property, 300+-unit portfolio via Eastdil/Colliers, sources told The Promote, w/ bids due later this month. No official pricing is out there, but sources said the number being thrown around is $130M ($430K / 🚪 ) for the package, which is spread across many of SF’s nicer neighborhoods. And now there’s an NPL portfolio backed by 23 buildings (Tenderloin-heavy 🤒 )and nearly 900 units, which Eastdil sent out a teaser on yesterday (we took a peek). The O/S debt on the package is $312M, per Eastdil, i.e. a loan basis of about $350K / 🚪. We’re not 💯 on who the lender is on this one, but sources active in the market said it’s Deutsche Bank.

There’s a LOT more to say about this whole Ballast saga, and it requires a deeper dive in the future here & perhaps on the pod. You’ll recall that Ballast (with Brookfield’s war chest) took control of a mammoth Veritas distressed apartment portfolio in late ‘23, a move which had telenovela elements given that Brewer used to be a key acquisitions guy for Veritas principal Yat-Pang Au. The deal made Ballast one of SF’s largest multi landlords, though it’s unclear where they stand now after the recent deeds-in-lieu. All this is going down as institutional investors rediscover their appetite for SF apartments, so expect a lot more action.

This is all beginning to feel like a bad summer TV rerun. Lender Berkadia is suing (h/t TRD) title firms Cross Bridge and Old Republic, alleging they aided & abetted a fraudulent deal by multifamily investor Mordechai Weiss by creating a fugazi paper trail for the purchase that tricked Berkadia into issuing a larger loan. Though the sales price for the 326-unit Houston apartment complex known as Virtuo was in reality $67M, the title firms documented a “sham transaction” at a $98M sales price, thereby deceiving Berkadia into making a $68.5M loan (eventually bought by Freddie).

Cross Bridge allegedly sent Berkadia multiple conflicting settlement statements, one of which accidentally showed the true (far lower) purchase price – a snafu which Cross Bridge’s Asher Rendler tried to explain away by saying: “Please sorry I am crossing my files, please disregard will send shortly.” 👏 🫡

Freddie foreclosed on the complex in March ‘24, leaving Berkadia on the hook to pay off the loan plus Weiss’ unpaid interest. All told, Berkadia is staring at $24M+ in losses, it alleges. Berkadia sued Old Republic for refusing to indemnify it in violation of their agreement. Per TRD, federal agencies have been looking into Weiss’ dealings more broadly. (For more on all this broader mortgage fraud mess, see here, here, here, here, or listen to our pod on the Chetrit case here.)