Hush Money

CRE now has its very own Stormy Daniels-esque case – and the details are, in their own way, equally sordid.

The plaintiff is nursing-home bigwig Jacob Sod, whose Jan. Rockland County suit filed against CRE attorney Mark Nussbaum came just days before Mendy Steiner, a longtime client & friend of Nussbaum, took his own life – that case was crucial context in Steiner’s tangled 🕸️ of debts, sources said at the time. In this new case, filed in Brooklyn, Nussbaum is once again a central character, though not named as a defendant – that distinction belongs to Wolf “Volvi” Wercberger, a Boro Park-based contact of both Nussbaum and Steiner.

Sod alleges that $15M of his funds, held in escrow by Nussbaum, were taken by the attorney w/o his knowledge or consent and wired to Wercberger. When Sod tracked Wercberger down and demanded his money back, Wercberger claimed that Nussbaum owed him the monies “for a deal.” Sod alleges that the deal was actually hush money, i.e. a payment Nussbaum made to Wercberger to dissuade him from going to the authorities about Nussbaum’s “financial improprieties.” 🙊 

Coming Soon: The Promote Podcast

There is a real need for a sharp, short (25m) weekly pod that captures the CRE zeitgeist à la what The Town does for Hollywood. Think of The Promote’s signature 🌶️ , but w/ even more behind-the-scenes action, co-hosted by Hiten & a CRE insider and featuring cameos from top players. We’re putting together the bones for Season 1 now. If you’re interested in being an anchor sponsor of what’s sure to be the most avidly listened-to pod in the space, reach out here. 📻️ 

Nussbaum (Cont.)

Nussbaum “concocted a purported deal so he could get Plaintiff’s money and pay/transfer Plaintiff’s funds to Defendant,” Sod claims in his lawsuit. He’s suing to recover his funds, and his attorney, Israel Goldberg, is asking the judge to ASAP approve a restraining order that would block Wercberger from moving the funds. “If the emergency request is delayed, success in this case will be a pyrrhic victory,” Goldberg wrote. Wercberger’s attorneys on the case didn’t respond to requests for comment; Nussbaum’s attorney, Ethan Kobre, sent The Promote the following statement after publication: "Plaintiff’s allegations are fiction, and we believe Plaintiff knows they’re fiction. There was no “hush money” payment.”  

It’s all pretty damn confusing. Recall that in response to Sod’s other case suing Nussbaum directly, Nussbaum’s attorney had called Sod’s claim that Nussbaum misappropriated $15M in escrow money a "confused mess of scandalous conspiracy theories." That suit brought up the thorny and not-uncommon practice of show capital, which is when funds are deposited, short-term, in a dealmaker’s account to serve as proof of purchasing power for lenders and sellers; Nussbaum was known to facilitate show capital – for a fee, of course – for a wide swath of Brooklyn, Lakewood and Five Towns dealmakers, and wealthy investors like Sod stepped up to provide the short-term funds for a handsome return (see: shtar iska)

Nussbaum is also facing a flurry of weird lawsuits from hard-money lenders, pulled, in some cases, soon after they are filed - see this one from Yehuda Lasry & this from Midwood-based Cashable. Meanwhile, men of means in Nussbaum’s community are putting funds together to help him pay back some of his creditors, sources said. This feels like just the beginning.

Correction: A previous version of this post misidentified an individual in the photograph of Nussbaum above.  

Baby Did a Bad Bad Thing

Ever since multifamily-focused debt funds went from an uneasy stalemate w/ delinquent sponsors to going scorched-earth on them, the nitty-gritty of loan agreements has become a 🔥 topic: What exactly did sponsors agree to when scoring their nothing-can-go-wrong debt, and how badly are they personally on the hook? Tides Equities’ principals are in the thick of finding out just how onerous their various guaranties (Carry, Springing Recourse, Equity Funding) are, and now it’s Alan Stalcup’s turn: The founder of GVA is being pursued by Benefit Street Partners for a whopping $285M tied to a $346M debt package it issued over 4 deals, per a suit Benefit St. filed (h/t TRD) in New York in Jan.; Stalcup’s behavior – which Benefit Street alleges included unauthorized transfers, commingling of funds and “forgery and fraud that would make even brazen criminals blush” 😊 – triggers his bad boy carveout, allowing the lender to personally come after him for the funds.

The suit is filled w/ fiery examples, incl. one of an actual fire that Stalcup allegedly failed to disclose, w/ the lender finding out about it only 18 mos. later during foreclosure. It’s also a visual safari through a syndicator deal gone bad, chock-full of photos of moldy ceilings 🤮 & swampy swimming pools. 🏊️ 

“Every single loan referenced in the complaint has been paid back in full or is currently performing,” Stalcup told TRD, describing Benefit Street’s bad boy claims as “farcical and utterly outrageous.” Interesting nugget: Benefit’s lawyer on the case is Ethan Kobre of Schwartz Sladkus – the same guy handling the wind-down of Mark Nussbaum’s law firm. 🤺 💼 

Fear & Loathing in Las Vegas

“We were somewhere around Barstow on the edge of the desert when the drugs began to take hold.” - Hunter S. Thompson 

An epic saga of a builder denied their right to build is coming to a close, and it’s culminating in a massive legal tab for the city of Las Vegas – one that could add up to $285M+ (coincidentally, right about what Benefit Street says Stalcup’s on the hook for 👆️ ) The tale, per this epic Review-Journal timeline, begins in late ‘15, when Yohan Lowie (EHB Cos.) bought the Badlands golf course and filed a rezoning application & site development plan. Nearby homeowners in a tony development stepped up to oppose the project, and though the city council granted Lowie land entitlements, it waffled on whether or not he could build housing there. A year later, it rejected his revised plans, and in ‘18, Lowie sued, alleging the city’s actions amounted to a “taking.” The courts agreed w/ him - “It’s pretty clear we had a taking.”

There was a $64M settlement that almost happened, and the city kept fighting, despite warnings it would make things a lot worse. This past Dec., it finally folded, striking a deal w/ Lowie in which it would buy the golf course for $636M and turn around and sell it to Lennar – which will build a 1,480-unit resi project btw 👏 – for $350M. That leaves Lowie w/ $286M for his considerable troubles – even factoring in the 9Ys of 🧠 damage that is one helluva return. And it leaves Sin City licking its self-inflicted wounds.

Multi Sales Ranking: JLL in Hot Pursuit of CBRE

Sales of multi properties valued at $25M+ jumped 32% in ‘24 to $117B, per Green Street data cited by REA. CBRE, which missed out on a podium finish in the office category, took the 👑 w/ $18.7B in multi sales – it has topped this ranking for 2 decades straight. Runner-up JLL, though, had a banner year, more than doubling its own deal volume to $17.4B. Newmark, Marcus & Millichap & Eastdil rounded out the top 5, while balance-sheet babysitter Cushman fell to 8th place – it was the only firm in the top 15 to see a drop in volume, mirroring its worrying performance in office.

Star-Studded Bris

This bris was a cut above the rest. An ostentatious ceremony for the son of investor Chuny Herzka drew the who’s who of healthcare CRE to Lakewood’s Eagle Ridge: Daryl Hagler, in the midst of selling his Centers Health Care portfolio to Herzka for $1.5-$2B, was there, as were Peace Capital’s Sam Stein & Meridian Capital’s Ralph Herzka (Chuny’s uncle). Sam Lowinger, Nussbaum’s partner at the now-shuttered firm, played the sax 🎷 Quite a crowd, esp. given that it came in the thick of eCap, healthcare CRE’s biggest shindig, happening at Miami’s Trump National Doral.   

Quickies

• 🎥 The $90M ransom caught inside a New York skyscraper 🗽 

• Hedgie heaven: Amazing read here on the MASSIVE sums funds pocket in no-limit passthrough fees 👏 ✈️ 💆 

• Meet the new boss of the gutted CFPB (More on DOGE’s agency crusades here)

• Wish I could buy Zero Bond stock: Here’s the DoJ memo ordering Manhattan prosecutors to drop the Eric Adams corruption case 

• PSA for LA landlords on Sec 8 tenants 

• Judge orders Landa to turn 119 properties over to lender (more on the VC-backed startup’s fractional fuckery here)

• Goldman family feud: Nephew loses key appeal in multibillion-dollar dynastic war 

• Elie Schwartz hearing scheduled for today - keep an 👀 out

Unquotable Quotes