Swedish PE giant EQT has gobbled up Stockbridge for $375M, the firms announced Thursday. Founded in ‘03 by Terry Fancher as a spinoff from UBS subsidiary PaineWebber, Stockbridge today has 90M+ sf of commercial and nearly 20K resi units. It will be folded into EQT Real Estate, which will also take control of the GP entities for Stockbridge funds. Stockbridge’s site claims an AUM of $27.5B, though the announcement emphasizes the firm’s $16.5B in fee-generating assets. The deal includes an option for $175M in performance-based bonuses in the coming years.

EQT Real Estate, led by Henry Steinberg, is just 5Y old but has grown like a weed. It kicked off w/ the acquisition of Exeter Property Group, and has since become one of the barons of big box. The “strategic rationale” jargon cited in the acquisition announcement is quite useful in understanding the broader AUM Gobbling ™ philosophy that defines today’s market: “Investors increasingly seek access to platforms that combine sector diversification, specialist operating capabilities, and the ability to deliver attractive risk-adjusted returns across market cycles. EQT Real Estate is well positioned to meet that demand, having more than doubled in size since 2021 to become a leading global sector-specialist manager.” 🥴

Still think Fortress main man Drew McKnight put it best: “For us to compete with larger firms like Ares, Apollo and Sixth Street, we need to continue to grow assets,” he said in ‘24. “Because if we don’t then we’ll be less relevant.”

The hardest dollars to raise in any deal are the last ones. Whether you're short on equity, a soft deposit, or a predevelopment loan, H Equities can fill the gap on either side of the capital stack, with bridge loans of up to $50M or co-GP investments of 10-20% of the required equity. Close the gap, then close the deal. 

When One Beverly Hills was in the midst of soliciting $5B+ to fund the megaproject, we had described it as a “capstack for the ages.” But hoo boy, that was just a taste. The development team, led by Cain International, has been offering up “Founder Bonds” to would-be buyers at the Aman-branded luxury condos at the project, per WSJ. The promised return is 5% – currently under the yield on Treasurys, mind you – and the bonds would be jr. to the $2.8B JPM-led sr. and the $1.5B mezz from Vici. Those loans come w/ certain performance guarantees vis a vis condo sales, so if the project were to fall short, “bondholders could be left not only without the penthouse they were expecting, but also without the extra money lent to the developers,” writes WSJ.

It’s a novel workaround to California’s regulations against developers using buyer deposits to fund construction, in stark contrast to places like South Florida. Founder bonds, however, have no such shackles – Cain can put them toward development, and may also pull out its own equity *. Despite what seems like a not super-compelling proposition, Cain has already raised $350M through the vehicle, and hopes to raise another $1.3B, per the publication. All condo buyers – and $1B+ of product is already spoken for – have so far agreed to kick in for the Founder Bonds, which are usually ≈30% of sales price. A condo which was seeking a record-smashing $200M is also in contract. This project should be studied not only as a luxury-market outlier, but as an exercise in creative financing. The developers already scored approval for a special taxing district last summer, in a step toward raising muni bonds.

* Side note: How much actual skin in the game do you reckon Cain (which is backed by private-credit kingpin Todd Boehly) has in the project?

PS: The site’s ownership history – from Merv Griffin to the Candy lads – is among the most colorful we’ve ever come across. We did a deep dive on the pod last fall.

This week on the pod, we get into the potential homecoming of a big agency lender: Lument is on the block, and sources point to a round-trip to its original home, the billionaire Hunt family outta Texas. We then head further west to the golden state, where the welfare exemption, a spiritual cousin of the Traveling HFC, has created a lucrative loophole for “affordable housing” players. It's a fabulous case study in gaming the system. Plus, our Punch List rundown of the newsiest industry happenings: GO REIT hiccups; Tishman Speyer at the Chrysler; DST fundraising up; David Martin; BDT & MSD x Sunrise sr. living. Listen: Spotify, YouTube, Apple.

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Over the summer, soon after Scott Everett announced a doughnut on S2 Capital’s $400M multifamily fund and went into spin-doctor mode, we wrote that rather than adding to the myriad of pitchforks, we were most interested in seeing if he could transcend that loss. “All the biggest dogs – from Brookfield to BX and beyond – are masters of spin,” we wrote, “finding ways to turn an LP incineration event into the next fundraising opportunity.” And you have to hand it to Everett – he’s certainly showing signs of being able to do that.

Earlier this week, he announced that S2 had completed loan mods/refis across an 8K+ unit portfolio on which the fmr. loan balance was $1.2B. He also said the firm held an initial close on its continuation vehicle (no specific amt. raised was given, though it had been targeting $115M), put to bed foreclosure proceedings on those properties, and most crucially, resolved litigation w/ Capital One over a Dallas property that had seen the lender pursue him over $11.5M in PGs. “None of this happens unless our lenders and partners believe we’re the right stewards for these assets,” he added. A long way to go, and many battles to fight. But survival is the first step. 🪳 🪳

Meanwhile: Getting word via CMA that fellow syndicator Rise48 (Zach Haptonstall, Bikran Sandhu) is nearing a $600M+ refi from Nomura on a ≈ 4,800-unit portfolio. About $550M of it will be securitized. It’s 2Y ⏳ debt, so the lads have their work cut out for them. Recall that over the summer, they began prepping investors for pain, saying, “Even the largest institutions have taken losses in this cycle.” Prior to that, they had claimed that they had never lost a dollar of LP capital.

One of the most contentious and character-heavy bankruptcy sagas in the SNF world has cleared its final hurdle: 101 West, the NewGen affiliate that sources confirmed to The Promote is controlled by Abe Tress & Aaron Robin, was greenlit to acquire the assets (≈ 170 SNFs) of Genesis Healthcare out of bankruptcy for ≈$1B. “About as complicated as a chapter 11 case can be,” bankruptcy judge Stacey Jernigan said during the final hearing Wednesday. The sale was approved in Jan., but had an 11th-hour scare after Tress & Robin sought to slash $100M off their PP and took issue w/ a $97M promissory-note agreement. There was also the matter of Satmar pezzonovante ™ Yoeli Landau 🚁
Promote Insiders: Read on for the full rundown 👇