“The winner takes it all,” ABBA remind us, and it’s the perfect maxim for New York real estate – particularly when Gary Barnett is involved. Today’s 🐐 farm is a sprawling Manhattan assemblage on 11th Avenue in the 40s, where the Extell boss & his equally canny partner have pulled off a show-stopping (in more ways than one) deal. This story is hella complex – would you expect anything else from Gary? – so the easiest way to do this is a timeline. Yalla, let’s break it down.

Early ‘13: CRE investor & jiggle-joint honcho Robert Gans (*Scores, Executive Club), who controls a massive assemblage in Hell’s Kitchen, signs a lease w/ a purchase option for 605 W 45th St.
Fall ‘18: Richard Mack’s firm provides Gans a $130M sr. loan secured by a sprawling portfolio that includes the 11th Ave assemblage. Eli Tabak’s Bluestone Group kicks in ≈ $18M in mezz (Remember that mezz is a portal to a UCC foreclosure, if things come to that. Spoiler: They do) At some point, Gans also took $5M in pref from a Tabak-associated entity.👇
* The inspiration for the 2019 film “Hustlers”

This week on the pod, we dive deep into the M&A deal that's all anyone in institutional CRE can talk about. Savills – Savills! – is buying Eastdil Secured for $1.1B. That gives the Brits some serious capital-markets 🔥power stateside, but the devil lies in the golden-handcuffs details. Next, we strap on our Lucchese boots and head to Dallas, where legendary dealmaker Ray Washburne has grand plans for a convention center. We discuss his HoF deal for Highland Park Village, and how he's part of a dying breed of cowboys we’re obsessed with. Plus, our "Punch List" rundown of the newsiest industry happenings: JPM marking down private-credit portfolios; BTR-neutering bill passes Senate; chaos at US Atty's office hampers mortgage-fraud investigations; and Ben Ashkenazy's big LA deal. 

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(Extell/Tabak didn’t respond to requests for comment. A big s/o to PincusCo, whose painstaking chronicling of this assemblage over the years was invaluable.)

Early ‘20: Gans defaults on both the sr. and the mezz 🦅
Spring ‘20: Bluestone extends the redemption date on the pref to that fall, in exchange for a supplemental guaranty. Gans eventually defaults.
Summer ‘21: Tabak’s Bluestone forces foreclosure on a Gans’ Chelsea property
Fall ‘21: Mack moves to foreclose on the sr. debt.
Early ‘22: Bluestone moves to buy the sr. NPL, invoking the inter-creditor agreement. Payoff at the time: $147M. The deal closes that April, and in May, the wizard behind the curtain is revealed: Gary Barnett partnered w/ Tabak on the note buy. This is completely on-brand for Barnett; NY CRE heads will know his penchant for entering deals from whichever door is half-open: See also: Worldwide Plaza & Ring portfolio. The O/S balance on the loan has jumped to $178M

By now, there’s another macher in the mix: Joseph Tabak, boss of Princeton Real Estate Partners and hermano to Eli. An Extell/Princeton JV takes over the capstack from Bluestone, court docs show.

(* My ‘20 interview w/ Joe Tabak about his approach to dealmaking is among my all-time favorites. Worth reading in full, preferably while chain-smoking 🚬 )

Spring/Summer ‘22: Gans to the abbattoir 🥩: The JV seeks to force him to exercise the purchase option at the 45th St. parcel 👆It informs him a UCC foreclosure is coming, and also spanks him w/ a fraudulent transfer suit re. his transfer of a vacay home to his daughter. Gans throws the parcels into Ch. 11 bankruptcy, and fires back w/ a $100M suit alleging a Tabak family conspiracy.
Fall ‘22: The parties reach détente. Gans must cough up $200M by that Dec. (Or else: $237M that accrues at 20% default interest) Gans exercises the aforementioned purchase option; w/ funding assistance from Barnett/Tabak; the property is added to the sr. loan collateral 🛞 🛞
‘23/24: Dress for the job you want. Barnett is making moves as if he is in full control of the property, according to sources familiar w/ the discussions. He’s engaging w/ the usual suspects: last-mile industrial giants (believe he tapped the lads at Newmark), and even a major financial institution to which Extell pitches a ground-up trophy office HQ. The parcels are M-zoned (relatively rare in prime Manhattan), so one can get pretty creative. “The man just knows good real estate,” one NYC dealmaker privy to the talks said of Barnett. “He doesn’t really care what he’s going to build on it; he’s going to wait to figure out what that is.” He prunes down some of the assemblage, selling a parcel to Chesky Schwimmer ♟ for $33M. (A defining Barnett quality is a total lack of sentimentality; he will sell whatever he needs to when expedient. Case in point: He recently put a large (800K sf buildable) Two Bridges resi waterfront site on the market)

Here’s what it looks like they’re playing w/ now - just over 300K sf buildable

Fall ‘25: Mamma mia! The JV files a tax-break application w/ the city’s Industrial Development Agency. The application (Extell’s Eli Kopciel running point) reveals that it has a signed LOI for a 30Y lease w/ Isagel LLC, better known to the world as ABBA Voyage, the wildly popular London-based hologram show featuring the Swedish sensations in their pomp.

(Henceforth when you think of Abba & Extell, who’ll come to mind first? The pop superstars or Extell exec and Gary nephew Abba Barnett? 🙃 )

The application (total projected cost: $512M) gives you a sense of what’s to come: a 175K sf, 3K person concert venue that will be ABBA Voyage’s first stateside location. The city approves a ≈ $50M tax break in Nov. Gotta shout-out that the filing puts a lil’ competitive fear into the hearts of 🗽 pols, stating that the developers hope to “recruit a European-based tenant to New York City, instead of Las Vegas.”

Now, let’s get into the real wildcard: the state RFP for the Intrepid parking lot site next door, which might see Barnett do the two-step flare-swish. Promote Insiders: Read on at the end of this newsletter 👇 🔒

Iranian attacks knocked out 17% of Qatar’s LNG export capacity, Qatar’s state minister for energy affairs told Reuters Thursday, a stunning admission of just how financially disastrous this conflict has already been for one of the world’s major CRE allocators. "Never in my wildest dreams would have thought that Qatar would be ⁠in such an attack, especially from a brotherly Muslim country in the month of Ramadan," said Saad al-Kaabi, noting that state-owned QatarEnergy would have to invoke force majeure on long-term contracts for certain exports.

To bring it back to our niche: Petrodollars are a big source of the capital fueling institutional CRE. The major Gulf energy exporters – Qatar, Saudi Arabia, Kuwait, the UAE – are major LPs in prime CRE markets across asset classes – and increasingly, GP stake investors too, via a smattering of state vehicles (QIA, KIA, ADIA, Mubadala, G42, PIF, etc.). They are courted hard by fund managers on both the equity & debt sides of the table, and it’s going to be very hard to have those conversations while all this is going on. As we said on our Wartime Allocators pod earlier this month: “Investors like certainty, and this ain’t it.” 🛢

Bonus: Read Hiten’s Bloomberg column on Abu Dhabi’s private-credit ambitions

On Wednesday, Promote Insiders dove into the chatter around one of the reportedly advanced bidders for the Chrysler Building, Jeff Gural’s GFP. Gural and seller (and ground landlord) Cooper Union go wayyyy back, a connection some rivals have problems with. Plus, we dive into some of the add’l scuttlebutt around the property, and who else might be interested. Sign up for Insider now and check it out here.