“I refuse to join any club that would have me as a member.” - Groucho Marx

The institutional investors – SWFs, pensions, endowments, insurers – that have traditionally bankrolled the vast majority of CRE bets are expressing their displeasure about PE’s full-court courtship of retail money. Some big LPs are worried that if everyday Americans crowd into their deals, they’d get less of an allocation and would lose their negotiating clout. Another fear is that flush w/ all this extra cash, fund managers may lower the bar on deal quality – that if they’ve got too much money to put to work, they might get sloppy.

On The Promote Podcast, we explored how some of the biggest REPE players have been tying up alliances w/ 401 (k) managers in anticipation of the Trump administration opening the floodgates on a $12T pool of capital. Listen on Spotify here, YouTube here or Apple Podcasts here. A shout-out to our sponsor, 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.

“We want to make sure retail growth doesn’t impact the things that matter to us — performance, transparency, alignment and access,” Anne-Marie Fink, who runs private-market investing for the State of Wisconsin Investment Board, told Bloomberg. Institutional investors are already seeing new verbiage in investor docs to allow PE funds to have more flexible caps on fundraising, fewer co-invest guarantees and such, Neal Prunier of trade group Institutional Limited Partners Association told the publication. Co-invests typically come sans fees, compared to the usual 2 and 20 structure. The hurdle rate for institutional LPS is usually at around 8%; but for retail evergreen funds it could be as low as 5%. And then there’s a whole basket of fees that fund managers can hit retail investors with, fees that institutional LPs would swat away. But if you have doctors, lawyers, car dealers and other well-heeled Avg. Joes eager to give you cash, you as a fund manager may not need to be as accommodating to your institutional partners.

The Trump administration this month signed an order that allows more alts investing via 401 (k) accounts, something private credit’s biggest players (incl. Blackstone, KKR and Blue Owl) had been pushing and hoping for – there’s $12T sitting in those accounts. With overall PE fundraising drying up – groups raised just $592B in the 12 months to June, per Preqin data, the lowest haul in 7Y – the need to find new megapools of capital became acute. We’ve seen it manifest x CRE – think of Greystar’s new private wealth division as but one example.

Fresh off a monstrously lucrative master-lease deal w/ NYU in Midtown South, Steve Roth is hungry for more. Vornado struck a deal to purchase a largely vacant office condo at 623 Fifth for $218M, for a far-from-cheap $570 / 🦶. The seller is Charles Cohen, who had dreamed of a luxe resi conversion, but those dreams and others have been complicated by Cohen’s portfolio-wide battles. VNO will look to turn the joint into a top-tier boutique office by ‘27, the kind of asset that could command rents in the high-$100s / 🦶.

There’s plenty of media out there that either toes the party line or indulges in hand-holding to capture the biggest possible audience. More power to them, but we have no interest in that. What we’re trying to do at ten31 is put together the definitive set of media properties that are built to speak directly to insiders, in their voice, on the stuff that gets their juices flowing. The Promote was the first property in this vision, and 18K obsessed readers later, we’ve become CRE’s water cooler. We’re now proud to announce a partnership with a bracing new publication that shares the same vision, in another hugely consequential industry.

Many years ago, I hired James Kleimann at The Real Deal to help manage the newsroom, and a few things immediately jumped out. He was whip-smart, cared about being in the mix, had a freakish work ethic, and loved his fedoras. After James left TRD to run the newsroom at industry behemoth HousingWire, those qualities continued to blossom. He quickly became the go-to guy for mortgage coverage – originators, vendors, brokers and investors relied on him not only for the latest news, but also for what it would mean for their business. So when he told me this summer that he was ready to do his own thing, you can bet I was ready.

ten31 will co-publish The Mortgage Scoop, which will do for residential mortgage pros what The Promote does for CRE. Three times a week, James will drop his newsletter packed w/ scoops, snippets and insights on the stories shaping mortgage. It’ll be fun, electric, and an essential read for those in that world. We will partner with James in a variety of ways, both online and IRL - stay tuned. There are many news reporters, but very few true insiders – and James is definitively an insider. I’m confident that you’ll immediately feel how different his coverage is. You can sign up here for the free Monday edition, and consider becoming a paid subscriber for exclusive news & insights in premium editions that drop Wednesdays and Fridays. - HS

“I've been a DJ for a while. I kind of like it.” - Lee Burridge

A chance of resurrection at one of New York’s most iconic music venues: Brooklyn Mirage owner Avant Gardner filed for bankruptcy earlier this month, leaving in the lurch New York’s raving set who regularly made the pilgrimage to the East Williamsburg haunt.

“The loss of The Brooklyn Mirage was catastrophic for the Company’s operations and liquidity,” Avant Gardner CEO Gary Richards (who spins as Destructo) said in Ch. 11 filings, blaming construction & permitting issues for the Mirage’s failure to open for the ‘25 season. Avant Gardner’s parent co., AGDP Holding, disclosed $155M in funded debt obligations at the time of the filing, which is seriously worth reading.

The filing revealed that the sr. lender, which is owed ≈ $142M, has agreed to make a • *stalking-horse bid 🏇 and will also provide $46M debtor-in-possession financing. The lender is not named, but per Bloomberg it is Axar Capital Management, which made a $110M credit bid for the opco this month.

So that’s the opco. Meanwhile, we’ve learned that the propco has landed a $27M refi from Genesis LLC, the scrappy up-and-coming lender run by Jake Gerber. (Genesis has been popping up in a flurry of mid-market BK deals, teaming up w/ healthcare heavy Daryl Hagler on a $50M bridge loan for Wolfe Landau & Sam Rubin in Sunset Park before S3 took them out.) The new Genesis loan takes out REIT Granite Point Mortgage Trust. How this all shakes out for the Mirage as a raving mecca is still TBD - stay tuned 🎛

Carolwood, the REPE shop led by Adam Rubin & Andrew Shanfeld, struck a $130M deal in May to snap up the distressed 41-story EY Plaza. Carolwood was set to come in via the heavily discounted underwater note – its purchase price came to just $140 / 🦶, which would leave the property’s CMBS bondholders w/ hefty losses. (The sponsor was, of course, Brookfield, which has taken a “nothing to see here” approach to its DTLA distress). However, the deal has now fallen apart, per TRD, which cited servicer commentary that it was “unable to negotiate acceptable documentation with the selected buyer.” On behalf of the court-appointed receiver, Eastdil is back to shopping the property. No deets yet on what exactly went wrong in the documentation process w/ Carolwood – the firm owns nearby Aon Center, which it bought for $134 / 🦶 in Dec. 23.

Some sad news from New York’s CRE community: Jesse Terry, CIO of prominent multifamily investor Hubb NYC, died earlier this month, per sources and an obit in Sail World. The cause of death was not disclosed.

A graduate of UPenn and NYU Stern, Terry cut his teeth at CRE finance shop GreenStreet Capital Partners and later was a principal at Spruce Street Capital before joining Johnny McCarthy’s Hubb in ‘14. As CIO, he led the company’s big-ticket acquisitions including a $190M UWS/UES portfolio from Air Communities in ‘21 and a $100M Harlem deal from Jay Group.

Terry was also a dedicated sailor and classic yacht enthusiast, racing his 1956 Alden ketch Abigail and teaching his twin daughters the ways of the sea. Terry contrasted his Manhattan “efficient, pedestrian, urban life” w/ his time on the water, where he said: “I feel like I’m surrounded by beauty.” Fair winds, Jesse ⛵