Madison Title dealmakers will no longer have itche feet.. the prominent title insurance firm has been cleared by Fannie after well over a year on the sidelines. “With much shevach h’hodaah to the Ribono shel Olam [Rough translation: Gratitude to the Master of the Universe], I have good news to share,” Madison prez Itche Rosenbaum wrote in a company-wide memo Friday seen by The Promote, requesting his team to join him in the conference room. “Our company is BH in good standing w/ Fannie Mae, and they’ve made a decision to allow us to be able to work w/ them,” Rosenbaum announced, and the room full of Madison staffers (at least one sporting a questionable Twillory Air blazer) burst into applause.

Fannie put Madison & key rival Riverside Abstract in the penalty box last February, after the firms were found to have performed inflated closings on two deals for Barry Drillman & his partners (see also: Drillman’s Great Escape). Madison did 2 closings in March ‘19 on a Cincinnati deal financed by Fannie, one for the true $70M price and another for the fugazi $96M price that the lender saw. Madison was never charged w/ wrongdoing, and maintained its innocence throughout. (At some point, Madison scrubbed its About Us page, but you can find it here.) The firm is one of the biggest players in the title game, w/ a stacked roster of clients including Ruby Schron (Cammeby’s) and Jordan Slone (Harbor). Leadership is tremendously influential in the town of Lakewood, which has given rise to some of CRE’s most audacious plays and also some of its more sordid flameouts. Madison was founded in ‘98 and cornered the frum set; when Yoel Zagelbaum started Riverside in ‘07 and positioned it as a more aggressive maverick, the relatively straitlaced Madison was forced to adapt.

Given what title firms do, they have a unique lens into a deal, w/ insight on the equity, the pref, the debt, and everything in between – this is why title cos. have been a key area of interest for agency investigators in the mortgage-fraud crackdown.

Can Carlyle & Greenbrook succeed where the Aussies failed? After amassing a mini-empire of small Brooklyn market-rate buildings, the JV is in talks w/ lenders for a half-billion refi, per CMA. The Promote had kinda been waiting for this one, as we’re obsessed w/ players trying to create asset classes in formerly mom-and-pop domains. And this is a tasty one: 265 townhome-style buildings, 98% occupied, and little to no exposure to the radioactivity of NYC’s rent-stabilized laws (our pod on that topic is a must-listen). The JV had specifically targeted properties that met NYC’s 2A/2B tax designation, which caps property-tax increases. The new debt (Eastdil running point) may be used to retire a $500M mortgage from Invesco, per CMA.

It’s a bold bet, and one that caught heat from local pols (Lander, Schumer) as well as some unwanted attention in national media, which zeroed in on the Wall Street background of principal Fred LeCao (BlackRock) in its takedown. Greenbrook’s managing principal is Greg Fournier, who worked at East End Capital & bigwig Saudi investor Olayan (Sony Building owner!) before founding the firm.

We should say it’s not the first attempt to do this kind of thing: Aussie REIT Dixon Advisory vacuumed up heaps of BK townhomes before going under in ‘22 🦘

Fred: Open invite to join us on the pod to talk through this experiment once the $ comes through.

Comebacks or even full-on Lazarus acts are a common fixture in the careers of great developers. But when you’re kissing 90 and your empire is mostly office properties in a Covid-ravaged CBD, it’s hard to see a way back. Martin Selig is the most important name in modern Seattle CRE history – no Q. It’s strange there hasn’t been a movie on him yet: arrives in the US at age 3 as a refugee from Nazi Germany, buys his first deal while in college, since the mid-60s starts developing a building a year on avg., and eventually builds Seattle’s then-tallest building, the 76-story Columbia Seafirst Center.

But since last year, he’s lost control of 19 of his 30 downtown properties, defaulting on $850M+ in debt, per the Seattle Times (paper is general audience-focused so caveat emptor on how things are described in the piece). The latest hit came last week, when Selig lost 9 buildings spanning 1.6M sf to receivership. Seattle’s overall horrid office market – Q1 vacancy rate was 26% – doesn’t help matters. You might recall that UBS’ jinxed Trumbull Property Fund was getting bids of just $65/ 🦶 on its Century Square tower.

On top of that, Selig’s daughter & chosen heir Jordan Selig resigned in April. Lenders & investors like succession plans that stick the landing (See also: Run Rudin Run).

The FSB – not the Vladdy Putin-controlled one 🕵 , rather the global financial stability watchdog 🐶 – is pushing regulators to take a closer look at nonbank CRE investors, warning of “liquidity mismatches,” high leverage & lack of transparency in asset valuation. The report dives into the complex ties between banks & nonbank investors, an alliance accelerated by post-GFC regulation and the dramatic rise of pvt. credit (think private lender note-on-note deals w/ banks that allow them to maintain their LTC requirements)

“The CRE market is illiquid and, as a consequence, it may be difficult to price assets particularly in times of stress,” wrote the FSB, which has no enforcement power but is plugged in w/ central bankers, govts. and regulators. “Further, the delay in loss recognition due to infrequent valuations and lenders’ “extend and pretend” loan modification practices could act as an amplifier.”

Related: Check out The Promote’s series of conversations w/ a federal bank examiner, who gave us a regulator’s insider’s view on the CRE landing market and even walked us through a bank exam.