Tired: Gobble properties
Wired: Gobble portfolios
Inspired: Gobble each other ᗧ···ᗣ···ᗣ··

We eventually had to get here: AvalonBay & Equity Residential, two of the country’s largest multifamily owners, are in talks to combine 🤝 , a move that would create a behemoth w/ ≈ 173,000 apartments owned. This is a marriage of convenience between somewhat equals (AVB is #4 on the NMHC 50, EQR #6) who’ve grown increasingly frustrated about the lack of 💌 from the Street for REITs. A deal, if it came to pass, would be AUM Gobbling ™ at its finest, but getting there would likely require some antitrust and political parkour. 👇

“Rent-stabilized housing, you're looking down a shotgun. Summit will regret this.”
"‘The wound is where the light enters’ is a really important lesson.”

Last week, subscribers to The Promote Insider joined us for our first installment of “In Conversation,” a series of candid talks w/ market leaders. Our guest was Lightstone boss David Lichtenstein, who brought his signature mix of bold market claims, hard-won dealmaking lessons and Borscht Belt humor. An extended transcript of our chat is now available for Insiders. Join us there and permanently ditch the FOMO. Next conversation is on 5/20.

Discussions are in early days, per Bloomberg, and may fall apart. But the sentiment – that only the biggest of the big will successfully navigate this capital-markets environment – is one being keenly felt in institutional multifamily. As a Promote Insider contributor wrote last month in an industry manifesto 🔒

Scale at this level isn't a vanity metric. It's the difference between controlling your cost structure and being at the mercy of it. Procurement, centralized leasing, staffing ratios, tech deployment: none of it works at 25K units. It starts to work at 50K. At 150K, it becomes a genuine moat.

REITs all across the space are sunsetting (Aimco) or being absorbed in PE take-privates (Blackstone-AIR, Apollo-Bridge), and the same dynamic can be seen among private firms (BGO-Bell being the most recent). I-bankers in the space speak of the most M&A appetite since the GFC. The size fetish is best captured in Jonathan Morgan’s recent LI post, when his Morgan Properties become the #2 owner nationally - “1 spot to go!” he cried.

A deal of this scale is likely to get regulatory attention: Both EQR and AVB * have chunky holdings in the Boston area, and both firms were also caught up in the RealPage antitrust saga that was the biggest story in multi in ‘24.

*EQR was founded by 🐐 Sam Zell 🏍 and went public in ‘93. Mark Parrell has been in charge since ‘19. AVB was formed in ‘98 by the merger of Avalon Properties & Bay Communities, and has been led by Vornado alum Benjamin Schall since ‘22.

In the Mexican standoff between NYC Mayor Zohran Mamdani and Citadel chief Ken Griffin over the proposed pied-à-terre tax, it is Mamdani who tried to retreat first. But the edgy hedgie is not quite done spanking him: "The willingness of [Mamdani] to make this policy debate a personal attack just demonstrated a profound lack of judgement, just a profound lack of judgement,” Griffin said at a Norges conference in Oslo, in which he also revealed that he’d be meeting w/ Gov. Hochul Thursday to discuss the city’s future direction. Though asked by D-Rub, he didn’t directly address the status of 350 Park, Citadel’s JV skyscraper w/ Vornado/Rudin – note that Citadel has already exercised its option to take a 60% stake in the JV for the 2M sf project. Meanwhile, the NYC Comptroller’s office crunched the numbers on the PAT proposal, and concluded that 2nd homes would need to be taxed a “significant” amt. to hit the $500M estimate put out by Hochul & Mamdani.

And the final sprinkle of masala: A Citadel spox told CO that it’d be upsizing the office component at its planned 1.7M sf tower in Brickell – “Miami is open for business,” the rep said. 🤌

Couple new nuggets on the Genesis healthcare bankruptcy - basically the telenovela of the SNF world 📡
1. The Promote first revealed in Jan. that the man behind the 11th-hour winner was Avrohom (Abe) Tress, who came off the top rope to best the likes of Yoeli Landau 🚁 & Jacob Sod 🧞. We should’ve mentioned that Tress’ partner on the bid, and also in SNF chain NewGen, is a cat called Aaron Robin. Robin is the public face of NewGen, and among industry insiders has a rep as a good operator (it’s all relative of c in SNFs). Not 💯 on this, but believe that Aaron is the brother to multi investor Reuben Robin, principal at LA-based Concord Cos.
2. Genesis & its creditors committee sued entities controlled by Yoeli Landau & David Gefner, alleging the lads bought up debt that landlord Welltower had twice considered forgiving purely to manufacture a future claim. Landau & Gefner insist that their maneuver actually spared Genesis a tax hit on cancellation-of-debt income.
3. Separately, NewGen (not ID’d in the announcement, but sources confirmed to us) struck a $380M sale-leaseback deal w/ healthcare REIT CareTrust. (That deal was brokered by the Adlerstein/Simpson duo, fmr. healthcare heavies at Meridian who then founded brokerage T7 (and are waiting for their Meridian check)

This week on the pod, we have the this-is-too-weird-to-be-real tale of Forge Atlanta, a $3.8B megaproject with the most bizarro team we’ve ever come across at this scale. We know ground-up is 🚬 and mirrors even on a good day, but this is NEXT LEVEL. We then slip into linens and head to the embattled sun-kissed shores of hospitality giant Aman, where the involvement of a mysterious international fugitive 🦹 has caused all sorts of drama between Aman & key partners Cain International and PIF. And finally, a quick wardrobe change into earnings-call attire, as CBRE crushes the AI boom.

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Don’t let the 350 Park hijinks distract you from the v real action in Manhattan office tho. A couple of illustrative big deals, wish we had the room to unpack them further

• Vornado is stepping up to buy Zhang Xin’s 49% stake in Park Ave Plaza. at a $1.1B ($915/ 🦶 ) valuation. Fisher Bros. will retain its 51% stake and manage the tower, tho it’ll need VNO’s OK for major decisions. Newmark was shopping the stake for Zhang, who was hoping to score a $1.3B ($1,080/ 🦶 ) valuation – so this is ≈ 15% under guidance. Still, the exit gives Zhang’s FO Closer Properties – the artist fka Seven Valleys – more room to focus on its ground-up condo aspirations. (We had heard that LA-based Preylock was in negotiations to buy the stake; the firm has been jonesing to make its mark in NYC after a big exit to Nvidia in Santa Clara.)
• Anthropic – the Claude folks – are leasing the ENTIRE 465K sf joint at AEW’s 330 Hudson, per 🔫 pistolera Lois. This is the fmr. Pearson HQ, which AEW bought for $385M ($470 / 🦶 ) in ‘18 from Ivanhoé Cambridge & Callahan. The move is on-brand for Anthropic, which did the same in SF at the Blackstone/DivcoWest joint. BTW: Anthropic is a JLL client, c/o the firm’s ‘24 acquisition of tech whisperer brokerage Raise. Lots of brokerage M&A does not work out; this one seems to be crushing it – look at Anthropic’s bonkers revenue chart to get a sense of future expansion capacity. In hindsight, a far better move by JLL than all its silly proptech plays.

👑 Chatter: Even more buzz re. King St.’s CRE “pencils down.” Wouldn’t be surprised to see more high-profile exits from that shop. Hearing of a ≈ tension being felt at other multi-strats (hilariously described by one capital-markets pro as shops where “people say fih-NANCE instead of FI-nance”), with CRE dealmakers having to compete w/ the outsized returns other asset classes can provide. Watch this space… 👀