Mammoth Financing for Largest Office-Resi Project

The office-resi alchemist is close to landing his pot of gold. Metro Loft’s Nathan Berman, in partnership w/ David Werner, is finalizing a $700M+ construction financing package for the conversion of the former Pfizer HQ in Midtown Manhattan, The Promote has learned 💉 The debt package from Madison Realty Capital is poised to be the biggest-ever loan for this kind of project, as well as the biggest single loan in Madison’s history.

New Pod: Icahn’s Rialto Vendetta & 125’s Skyscraper Dreams 🎙️ 

“These aren't guys who go buy Hilton Garden Inns in Wichita and run it with two-and-a half people at a 38 % NOI margin and call it a day.” 🛎️ 
“Police Commissioner Burrell would be proud of juking the stats like that.” 👮‍♂️ 
“Marvel's got the Avengers, DC has the dark forces, and Lower Manhattan real estate has 125 Greenwich.” 🦸‍♂️ 

Ep. 8 of The Promote Podcast is now live! We dive into Newbond’s audacious hospitality play in SF – and why they just might be the right guys to pull it off. We break down Carl Icahn’s crusade against Rialto, and the growing backlash against special servicers. We then chop it up on 125 Greenwich’s operatic capital stack – how New York’s most famous & infamous names got caught up in its skyscraper dreams. 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. 🙏 A big shout-out to our episode sponsor, AirGarage.  

Pfizer (Cont.)

The financing for 219-235 East 42nd St., which deal insiders pegged at just north of $700M, consists of both a sr. loan & mezz, and would beat the previous $536M record set by a Berman/Gural/Rockwood JV for the 1,300-unit conversion of 25 Water St. The mammoth 1,600-unit Pfizer conversion – the biggest in US history – will be tapping into the 467-m program, which provides tax abatements for office-resi conversions where a quarter of the units are designated affordable.

“We go where there is opportunity to convert what we believe to be undervalued assets, and we can do that anywhere in Manhattan,” Berman told the Times in a feature this week on the project. “Right now, Midtown seems to be presenting the most opportunities for us.” Berman’s running point (as he does) on the conversion job, but the site was secured by Werner, who swooped in (as he does) when Pfizer decamped to Tishman Speyer’s Spiral in Hudson Yards a few years ago. Ran Eliasaf’s Northwind Group provided Berman & Werner the financing to tie up the properties in a series of transactions last year and earlier this year.

This is the biggest single check in Madison’s 20Y+ history. But it’s not exactly a shock – the $20B+ AUM lender has shown an ever-increasing appetite to compete x the capstack and x regions/project types – $555M for a Rabsky rental in Brooklyn; $400M to Related Group for a luxe condo on Fisher Island; $220M in a note-on-note financing for Northwind’s loan on the supertall 125 Greenwich (our latest pod gets into that one); and, in another transaction that hasn’t been previously reported as a note-on-note deal, $280M for Starwood’s latest $350M refi of that same project, insiders confirmed.

Healthcare Rainmaker Feud w/ Meridian Goes Nuclear

“In my humble opinion, in the nuclear world, the true enemy is war itself.” - XO. Hunter, Crimson Tide 

It has come to this. After attempts to negotiate a graceful exit, followed by a failed intervention by a nursing-home bigwig, we’re now in the fully public phase of the battle between Meridian Capital Group & its biggest healthcare CRE ❤️‍🩹 rainmakers: Ari Adlerstein & Josh Simpson took to Delaware chancery court, alleging that they’ve been left in the dark re. Meridian’s sale of agency-lender NewPoint to Benefit Street Partners; as investors ($1.7M between the 2 of them) in the Meridian entity (Bravo) that bought NewPoint, Adlerstein & Simpson are pushing the courts (h/t TRD) to force Meridian to open the books on the $425M pending deal, which they characterized as a “fire sale.” Here’s the suit, which in a twist includes some artwork from The Promote 

Of course, this action isn’t really about the NewPoint sale price – $425M is a damn good outcome, given that Meridian’s total bet on buying & beefing up NewPoint was in the low $200 millions, insiders told The Promote in March. Rather, it is a chance for Adlerstein & Simpson to serve up a little cholent 🍲 and get their allegations against their former firm into the public eye, even as the parties go through binding arbitration over their termination – they were fired for cause shortly before their year-end payments would’ve been due.

“This lawsuit is entirely without merit, notably filed by two disgruntled former employees who were fired and are now in arbitration over their dismissals,” Meridian said in a statement to The Promote. “The arbitrator has preliminarily found that Meridian is reasonably likely to prevail on the merits.” On the NewPoint sale, Meridian added that Benefit Street emerged as the buyer after a “robust marketing process led by a top Wall Street investment bank.”

Still, the commentary in the suit represents some of the most direct allegations that Meridian’s top management created a culture that allowed for fraud to run rampant. We’ve annotated the highlights in the image above 👆️ The suit calls out – without naming – Abe Hirsch, a key Ralph Herzka point man who Fannie put on its blacklist in April. It also alludes to a broker who, despite allegedly having submitted fake financials to Capital One, was allowed to continue doing his thing. We’re not naming that broker yet, but will say that apart from Herzka, Hirsch ran point for a rainmaker called Jacob (Yanki) Katz. And, zooming out, there is general anxiety amongst Meridian dealmakers who invested in NewPoint about how their upside from the sale will be distributed, as we noted earlier – the Bravo alum group chats are fairly tense at the moment. All this is happening even as Meridian’s celebrating its clearance by both Freddie & Fannie: the release by the former came w/ major caveats, and we’re still waiting for the dust to settle on the latter.

Deloitte Touching Down at Hudson Yards

Big 4 firm Deloitte 🧾 has agreed to anchor Related’s planned office skyscraper at 70 Hudson Yards, committing to take 800K sf at the 60-story, 1.1M sf tower, per WSJ. Groundbreaking at the tower, the largest ground-up office development in the nation since the pandemic, is expected to kick off in June. Deloitte’s current HQ is 30 Rock, but in an era of shiny & new, iconic addresses can sometimes lose out. The Plaza District remains the epicenter of single-malt buildings ™️, but Related, Brookfield & Tishman Speyer have had a lot of success in scoring premium tenants on the Far West Side. Overall office leasing in Manhattan is roaring - 7.9M sf in Q1, per CBRE, compared to the 5Y quarterly avg. of 5M sf.

Quickies

• Inter Miami ⚽️ scores $450M construction loan from JPMorgan (which also wins naming rights)

• Black edge: Steve Cohen clears key state hurdle in New York casino bid ♠️ 

• Bragging rights & bruised egos: CO drops its finance vanity list 🦚 🦎 

• Savills CFO Simon Shaw moves into top job (good reminder of Savills’ existence)

• Last week, we alluded to another looming Eastdil departure - now confirmed: Industrial bigwig Adam Pastor jumps to Cushman

Unquotable Quotes