Oh, brother… it’s one thing to get pulled into court over disputes with lenders and partners – over time, that’s basically the cost of doing business. But for one of real estate’s most storied and tight-lipped families to be in the public spotlight b/c of infighting is a rough go. Months after Jacob Chetrit passed, his family is demanding that his brother Meyer Chetrit make good on personal loans Jacob made to him. And Meyer appears willing to do so.

Meyer signed a confession of judgment earlier this month, acknowledging he owes Jacob $21.7M (plus interest) that his brother stepped up w/ to fund various CRE deals and capital calls in Meyer’s stead. Jacob also loaned Meyer money to make good on debt service and construction bills, per the judgment (h/t Crain’s). The sites invoked in the judgment include the redevelopment of the notoriously filthy Hotel Carter in Times Square, the Collins Park Hotel in Miami Beach (where the Chetrits recently landed fresh debt & a new capital partner), and the Miami River megaproject (where Madison has loaned the developers $340M for construction).

The broader context on all this is crucial: As of March, the Chetrit family (Joseph & Meyer’s Chetrit Group, plus Jacob & Juda’s Chetrit Org.) had collectively defaulted on $1.6B in debt, w/ another $300M of loans in the red. It lost the Hotel Bossert in Brooklyn Heights to lender Beach Point, which then sold it to SomeraRoad’s Ian Ross for a resi play. And that’s not all… 2 of the nation’s biggest banks are duking it out over the girthy moguls’ multifamily $500M+ megabet, w/ Wells alleging that JPMorgan knowingly used fraudulent financials when originating a $481M loan on the CMBS debt. Wells is also suing Meyer personally on that deal, over his recourse guarantee. We dove deeper into the Chetrit situation and also the bank feud it set off on the pod recently.

If you’re a Related or a Tishman Speyer and ooze institutional charm, you’ve got your pick of lenders anxious to put capital to work w/ sponsors that their credit committees would barely give a once-over. But if you’re an up-and-coming striver looking to build, who you gonna call? 👻 Stephen Palmese wants it to be him: The former broker, an outer-borough hustler at Massey Knakal who carried over to JLL post the acquisition and made himself a mid-market rainmaker there, left last year to form credit fund Integritas Capital. He then went on a lending tear, putting out $700M for ground-up & conversion projects, per Bisnow, carving out a niche as the guy who’ll lend to the guys who aren’t quite blue-chip. “There's a perceived risk that independent developers don't have the credibility or the capabilities,” Palmese said of trad lenders’ outlook. Integritas’ debt is relatively pricier, he added, noting that he gets far more involved in the nitty-gritty of the stuff he lends on.

“If we don't like the floor plans of a project, we're not lending on it,” Palmese claims. Palmese has partnered w/ other lenders (Aaron Krawitz’s Bravo, Eric Scheffler’s Invictus) on some of his bigger loans. Borrowers include Wolfe Landau’s Watermark, which is doing an office-resi in Dumbo; and Adam Neumann’s Flow, which is building a 466-unit condo in Miami. Palmese has had a healthy swig of Neumann Kool-Aid (“You see a vision as he's speaking” 📿 ); we’re obligated to point out here that at least on the multi side, many of Flow’s deals are in trouble. The indie-band strategy here is an interesting one, and to explicitly seek to spell it out in the press is interesting, too. 🫳

Bonus: Check out our episode w/ Northwind’s Ran Eliasaf, who gives us an insider look into the business of lending – w/ all the good deets incl. returns.

Interesting contrasting approach here from 2 major allocators: While Quebec’s the Caisse is prioritizing scalable JVs over direct bets – new CRE head Rana Ghorayeb described it as a shift from investor-operator to “pure investor” – the Aussies are taking the opposite approach. Future Fund, which is Australia’s $157B SWF, has gained the govt.’s blessing to make direct domestic real estate investments sans the use of an external manager. The fund’s Greg Combet described the shift as a “noteworthy change,” per PERE, vanilla language but market-moving stuff in SWF world. He also noted that the fund has upped its use of co-investment sleeves to make bigger bets on certain assets while avoiding manager fee-juicing 🧃. The go-it-alone ability seems to be focused on domestic (i.e. Australian) investment, for now at least.

“We continue to recognize the benefits these partnerships bring in terms of insights & skills,” Combet said. Wonder if that’s enough reassurance for the bigwigs it normally bankrolls - everyone from Blackstone to Brookfield to Greystar and Lendlease.

At The Promote, we think a lot about allocator incentives and how they shape some of CRE’s most important plays. But our language is a tad spicier than Combet’s: Here’s WK on the Sixth Street/L+M deal “Reminded me of the great movie Kindergarten Cop, where he asked his class, ‘Who is your daddy and what does he do?’ In this case, it's: ‘Global fund allocators and aggregate fee streams.’”

Looks like we’re finally going to get some action at a Chelsea site once controlled by late developer Brandon Miller: Toll Brothers is in contract to buy the parcel for $53M, per TRD, w/ an eye on a resi play. This site has really been through it: Miller bought the leasehold in ‘17 for an office development, GDS & the Swedes took it over for a time and later transferred it back to Miller, who then defaulted on the ground lease payments. Fee holder Benny Barmapov took the property back and collapsed the ground lease, and has now sold it outright to Toll, whose City Living condo division has built projects such as the Rockwell on the UWS and Pierhouse in Dumbo.

PS: Miller took his own life last summer, leaving behind a mountain of personal and professional debts, incl. on the Chelsea site. Soon after, The Promote explored the extreme pressures development can bring, which you can check out in video here or read in essay form here.