If you’re the poster child of a certain asset class, the go-to guy for investor money and landlords’ unloved buildings, maintaining an aura of invincibility 🛡 matters. A deal gone bad isn’t just a deal gone bad – it could impact conversations around other deals of its ilk. And that’s the situation Nathan Berman found himself in at 180 Water St. The Metro Loft principal, New York’s most renowned proponent of the office-resi conversion, was staring down foreclosure at the 573-unit tower, having defaulted on the $265M debt in the winter. Berman, who’s currently finalizing what is expected to be the largest office-resi financing in NYC history at his Pfizer HQ conversion project, needed to figure out a face-saving solution at 180 Water – the terms mattered less than staying in the game. Which is what he did: a new recap deal w/ notorious bargain-hunters sees the building’s valuation take a steep haircut 💇

“ The internal joke is that relationships are good probably for 50 bps. And then if somebody comes in at 50 bps inside, they go with them and that's fine. That's healthy.” 🍞
“We actually earned 24.7% IRR. We actually made $33.8M of profit, 1.5 multiple on a 27 month duration at $970/foot.” 🪙
“My dad once said that good looks and charm are not marketable skills and I just completely disagree because that's literally all Adam [Neumann] has and it's taken him a long way.” 🤴

Ep. 9 of The Promote Podcast is now live! It’s our first with a guest, Northwind Group’s Ran Eliasaf, one of the most prolific alt lenders in New York real estate. Northwind is all over some of the city’s most high-profile deals, from the Pfizer HQ conversion to 125 Greenwich St., and he gave us a rare insider look into how the capstack sausage is made. (Seriously, where but The Promote can you find this stuff?) Will & Hiten also chop it on Adam Neumann’s latest real estate adventure, Flow - though many of the properties are seeking rescue pref, Neumann has once again managed to convince VCs to give him more money – touched by G*d, as one source put it. A big shout-out to our episode sponsor, AirGarage.  

Listen on Spotify here or tune in via Apple Podcasts here. If you’re interested in advertising, hit us up here. And show us 💌 via ratings & reviews wherever you get your pods. 🙏

Coming into the building are the Brothers Mamrout (Alen & Joe) as well as Kevin Chisholm’s 60 Guilders, per CO. They’re taking a 50% stake at a $335M valuation, compared to the $450M valuation at which Berman took full control of the building from Vanbarton in ‘17. Berman blamed the floating-rate reaper ™ for the building’s distress, saying in April that its troubles and those at another distressed holding, 20 Broad, had “nothing to do with the performance of the building itself.”

A quick note on Berman’s new partners: the Mamrouts, who control both American Exchange Group & Sentry Realty, have been making quite a name for themselves coming into broken capstacks on the cheap. They took over Savanna’s 1375 Broadway at the top of this year, after buying the note from Aareal over the summer; that note deal (David Rubenstein’s Declaration Partners, Brookfield wiped 😭 )tho, per sources, was initially tied up by Chisholm, a Savanna alum. Chisholm and the Mamrouts have also collaborated on deals such as 292 Madison, bought at a 50% 💇 from Vanbarton late last year, and 1370 Broadway. Chisholm has gained as a rep as a David Werner-y type character, stitching up deals before bringing in the real money partners; his previous adventures as a retail investor had decidedly mixed results.

Berman’s ability to navigate these office-resi storms is being closely watched. In partnership w/ Silverstein Properties, he announced plans in ‘23 for a $1.5B office-resi fund. “People say this is very complicated and it’s more costly, but the reason why it makes sense to us is because we have our partner Metro Loft,” Silverstein’s then-CEO Marty Burger said at the time. “Not just anyone can do them.” Other major landlords w/ heaps of now-unglam buildings are also looking to Berman, both as a guide and as a solution: you’ll recall that the Rudin family, which sold 55 Broad to Silverstein/Metro Loft in a $173M deal in ‘23, opted to retain a small stake, in part so they could have a ringside seat for the conversion process and get a sense of the books on such jobs. Berman & Silverstein said they had ID’d over 200 properties ripe for such conversions, and striking deals on even 10% of them could add 15K units to Manhattan’s resi stock. “There is an avalanche of deals coming,” Berman said at the time, in hindsight a tough choice of words 🌨 And this is all happening as he finalizes a $700M+ loan from Madison for the city’s largest office-resi conversion, as The Promote reported last week.

Brookfield has raised just shy of $6B in Q1 for a new fund targeting distressed CRE, giving the vehicle $16B to pump into broken capital stacks globally. “The world needs more great real estate, but there is a very significant lack of new supply in major markets and high-quality assets around the world that is creating a very robust supply demand dynamic in those who can bring capital to the market,” Connor Teskey, BAM prez and heir-apparent to Bruce Flatt, said on an earnings call Tuesday. What’s notable is how dramatically fundraising ramped up – the quarterly haul is among the biggest in CRE history, and tracks w/ the overall leap in activity: Overall Q1 fundraising hit $57.1B, compared to the $32.5B raised during the same period last year, per PERE.

About ¼ of the Brookfield fund’s war chest has already been invested, per WSJ, w/ notable deals including the play for the Veritas portfolio in SF, a game of multifamily monopoly – Lembi family, Seth Klarman’s Baupost, Ballast, special servicer holdbacks & more – the likes of which the city hadn’t seen in a long time.

This is among the most interesting buildings in the Vornado portfolio, just based on all the lives it’s lived. When Meta (then Facebook) was first hankerin’ for Midtown South digs in ‘13, Vornado had 160K sf at 770 Broadway to offer them, having just taken that spread back from Nielsen 📺️ . But Zuck’s crew only wanted 100K sf immediately, with the flexibility of upsizing down the road. So Glen Weiss, Vornado’s leasing czar and someone held in the highest regard by the city’s space peddlers, stitched together a short-term 2Y deal with online gambling company High 5 Games for the remaining 60K sf. Then Facebook wanted more space, so Weiss did more tenant buyouts and reshuffling. Its total footprint swelled to nearly 800K sf. In ‘22, Meta bailed on another expansion, and then decided to downsize by 275K sf. So Weiss got busy again, and by last summer had struck a master-lease deal w/ NYU 👩‍🎓 for the entire 1.1M sf property. That deal, which just closed, is the largest new lease since ‘19, and here’s how it’s structured: NYU prepaid $935M to VNO, will make annual lease payments of $9.3M over the 70Y term, and has the option to buy the property outright in 30Y or at the end of the lease. VNO holds on to the Wegmans-anchored 92K sf retail. 🛒 NYU is the largest university landlord in New York, per a ‘22 TRD analysis, controlling over 14M sf across over 100 buildings.