Elliott Backing RXR’s Billion-Dollar Buy

Skyscraper dreams live and die by the depth of pockets you can tap. To make the biggest plays, you have to have the pedigree & the wasta to call on everyone from captains of finance to Middle East sovereigns anxious to make a splash. One of the players most skilled at this particular game is Scott Rechler: His RXR has teamed up w/ everyone from Qatari SWFs to Canadian pensions to SoftBank bigwig Rajeev Misra. And now, on one of his biggest bets and Manhattan’s first billion-dollar office deal in years, he’s brought in another marquee name: Paul Singer’s Elliott Investment Management is RXR’s equity partner on the blockbuster deal for 590 Madison Ave, The Promote has learned.   

New Pod: A Tale of Two Asset Classes 🎙️ 

“As Logan Roy said, ‘there's this fancy new business theory. It's called, make more than you spend and you're king c*nt'.’” 👑 
“Jon Gray's gonna be filming his LinkedIn videos running in these data centers.” 🏃 

Ep 13 of The Promote Podcast is now live: We break down two asset classes on extreme ends of the investor-excitement spectrum. The first is NYC rent-stabilized multifamily – capital cannot seem to flee fast enough, and the dislocation has serious implications for the future of 🗽 . Meanwhile, every moneyman and fund in the world seems to have a hankerin’ for data centers – we break down the players & capstack on an $11.6B megadeal in Abilene, Texas and ask how long the party can last.

Listen on Spotify here or tune in via Apple Podcasts here. If you’re interested in advertising, hit us up here. And please, go tell Prof G to have us on to talk CRE – as co-host Krasne says, “Real estate is more than just houses in Delray Beach.” 🙏 

Elliott (Cont.)

RXR/Elliott are paying just north of $1B ($1K+/ 🦶) for the 41-story, 1M sf Plaza District skyscraper, known to the street as the IBM Building. News on RXR winning the deal broke last month; Elliott’s involvement, however, has not been previously reported. Reps for RXR declined to comment, as did Elliott; the partners have a signed LOI to acquire the property from Ohio’s STRS, though we’re not sure when they’re set to close. Eastdil, which is brokering the trade, declined to comment.

Elliott, best known in the broader biz world for amassing large stakes in megacorps like HPE and Southwest Airlines, has also become a serious force in real estate. It’s racked up a stake in Japanese developer Sumitomo Realty, and made a splash in Miami when it bought Nuveen’s 701 Brickell office tower for $443M ($650 / 🦶 ) – that deal was done in partnership w/ Mukong Cho’s Morning Calm. But it’s the debt-side deals that are the most consequential: Elliott is the capital behind Adi Chugh’s nascent fund Tyko, which burst onto the scene less than 2Y ago but has catapulted into the ranks of the largest construction lenders – $5B+ in deals over just the past year.

We’d be really curious to peek at the promote 😍 structure on 590 Madison – unlikely that Rechler gets as generous terms w/ a hard-charging hedgie as he would w/ the sovereigns.

Shvo Business in Miami Beach

A fascinating deal is underway on one of the toniest corridors in Miami Beach. Michael Shvo has been searching for a recap of the 17-story Raleigh since at least the start of this year, w/ one of his partners (undisclosed) wanting out of the project - the redevelopment’s slated to have a 60-key hotel (Rosewood is the current 🎏 ) and a 40-unit condo, where the blended pricing is $5,800 / 🦶. The fully permitted (not easy in Miami Beach) project on a 3-acre site has been dancing w/ suitors via a Newmark-run process, and now 3 finalists have emerged, according to sources familiar w/ the discussions.

• A Middle Eastern SWF – this kind of ultra-chic boutique is a classic QIA or ADIA play

• Reuben Brothers: Fresh off a $400M deal for the W South Beach, the billionaire Brit bros are hungry for more. The Reubens have been partnering w/ Jeffrey Soffer's Fontainebleau Development on a number of Miami-area hospitality deals

• A third group (unID’d)

  
  Valuations on the recap are coming in just south of $300M, per sources. The Shvo-led team has finished most of the underground work at the project, and some units have traded at north of $8K/ 🦶, per insiders. Shvo & Newmark couldn’t be reached for comment. The debt stack (per sources currently in the $170M range) here is worth paying attention to: BH3 holds the mezz, w/ Related in for a piece of it, while the sr. debt, sources confirmed, is held by JVP Management (on our Quiet Kings of Capital list). No construction loan yet, despite some published reports. It’ll be fun to watch this one shake out.

Mission Abort: Brookfield Backs Out of SF NPL

ING is scrambling to find a new buyer for the NPL on an SF office tower, after Brookfield pulled out of the deal. The mega-investor already had a mezz position in the 21-story tower, and was slated to take control of the $93M sr. debt at a discount, valuing the tower at $80M ($380 / 🦶 ). However, per the SF Business Times, Brookfield & ING could not come to terms w/ the other lenders involved, and seeing no clear path to takeover, Brookfield pulled out. Vanbarton, which bought the tower for $163M ($775/ 🦶) in ‘18, is expected to be wiped in any deal. ING might take solace in a recent deal it did to sell the NPL on Paramount’s Market Center to restaurateur Greg Flynn 🍔 / DRA Advisors for $177M, or $236 / 🦶.

Despite the retreat here, Brookfield is certainly on the prowl for troubled capstacks: It recently raised just shy of $16B for a distressed fund, some of which has already gone towards SF deals.

Run Rudin Run

Something rather curious afoot at the House of Rudin: The New York real estate dynasty is on a press blitz, engineering twin profiles in the city’s 2 big trade pubs that hit upon eerily similar themes: longevity 🗝️ , harmony 🤗 , civic engagement 🗽. In TRD, co-CEOs Samantha (goes by Sam) Earls Rudin & Michael Rudin were joined for the interview by their dad & former CEO Bill Rudin, who contrasted the clan’s smooth succession planning to that of some other prominent families (Bill didn’t name names, but cautionary tales abound, from the Goldmans to the Feils to the Macklowes). The profile emphasized the Rudins’ philanthropic chops, and contained this line: “[Rudin Management patriarch Samuel] had been an avid long-distance runner and when he died in 1975, the family became a sponsor of the New York City Marathon.”

An innocuous sentence in of itself. But much more interesting when read alongside one from CO’s cover profile of the Rudins, published just a few days prior: “Our great-grandfather was a long-distance runner,” Sam says in that piece, “which is why his two sons chose to sponsor the marathon in his honor.” 👬 As Rudin marks its centenary this year, it’s facing portfolio-wide changes – disposing, repositioning or converting some of its mainstay office buildings – that could involve bringing in outside capital. Spotlighting the 2 new leaders could be an important step in that plan, and these articles are part of a bigger publicity push the Rudins have made since the leadership transition – see here & here. Depending on the audience, they’ve toggled between heimishe vibes like 👆️ and trying to sound more coldly rational about their holdings, like in the financial paper of record here. We at The Promote have long been fascinated by the media massaging messaging that is core to the CRE game, and this is a fun example of it. 🏃‍♂️ 🏃‍♀️ 

Quickies

• Breaking down an $11.6B data-center megadeal: Who gets paid, and who gets made? 

• Benefit Street nixes LinkedIn REO experiment; announces loan mod deal w/ borrower instead 🤷 

• Barings pays Clarion $151M ($472 / 🦶 ) for Playa Vista office 

• House of Robins: Miami CRE blue blood clash over father’s estate 🐦️ 

• After win against Tides lads, Starwood now going after GVA’s Alan Stalcup (We break down the PG pursuit playbook in detail here)

Unquotable Quotes