There’s a chestnut in this capital markets environment about how pref gives you “equity-like returns, with debt-like risk.” This is often nonsense, but once in a while, it really does work out that way. As it has for an RXR-led consortium that bet on a Manhattan residential high-wire act.

Why are we so obsessed w/ the twists & turns of Yitzchak Tessler’s 172 Madison Ave? Because it feels like the perfect case study of everything – and then some – that can go wrong in the high-stakes ground-up condo game. Our mini-doc on the project is now live on YouTube. We’ll be doing a LOT more of these video snapshots on projects and players across the country, so please write back to this email w/ suggestions of what you’d like to see. We’re also hitting this story in Wednesday’s pod as part of a “Tupac vs Biggie special,” so stay tuned for that.

In late ‘22, RXR, Macquarie and the Qataris had pumped in $261M on 3 UES properties owned by GO Partners, the JV between Meyer Orbach & Josh Gotlib. The properties were part of a huge bet that GO had made on the high-end Manhattan rental market, dropping $2B on a 2K+ unit portfolio and then levering it to the gills. Bogged down by such hefty pref, Orbach & Gotlib needed to find a creative exit, and they headed to the 6 to float their portfolio on the TSX. Against all odds, they pulled off the IPO this summer, and deets of the rewards are trickling in. Per a new TSX filing spotted by PincusCo, the RXR JV has cashed out of its pref for $340M – that’s a handsome 30% return.

Elsewhere on the portfolio, Orbach & Gotlib landed a $525M refi from Arbor Realty Trust on the American Copper Buildings last month– almost $700K/ 🚪 of fresh debt.

RXR & Macquarie also provided pref on 685 First Ave at the top of this year, so we’ll wait to see what the exit on that one looks like. But if it goes well as this one did, expect the Rechler whitepaper to drop ASAP. ✒

On the pod in April, we said the following: “No one fucks with complexity like Gary Barnett. No one stitches together global capital stacks like Gary Barnett. No one combines the light and dark arts of assemblage, litigation, capital raising, development and sales like Gary Barnett.” And he’s now gone & done it again.

Barnett has landed a $1.2B pref commitment from a (unnamed) hedge fund for 9 Extell development projects, incl. the 1.8M sf development of the former ABC/Disney campus on the UWS, the supertall Theater District hotel dubbed “The Torch,” and The Promote’s out-and-out favorite, the Deer Valley ski colossus in Utah. (PSA: If you haven’t read the deal machinations on that one, go do that now ⛷ ). We learn of this infusion c/o new filings on the TASE, where an Extell affiliate is incorporated and has raised bond market funds that require such disclosures. Per Bisnow, the filings also reveal Extell’s involvement in ABS Partners’ Upper Manhattan site at 231 W. 96th St./2560 Broadway; Extell’s planning a 800K sf resi project there, w/ both condos and rentals. It details Ikea’s 🛋 investment in its co-development w/ Extell at 576 Fifth - the furniture giant is putting in just shy of $300M of equity & pref. into the 1.1M sf project, where it’s slated to anchor the base w/ Manhattan’s first Ikea. The filings also support CRE scribe & pistolera Lois Weiss’ March reporting that Extell is negotiating w/ Chanel 💄 to buy the retail at 655 Madison for ≈ $450M.

Any guesses on who the hedge fund partner could be? We have one: JVP (John Illuzzi, Van Nguyen, Anthony Pizonnia Shaskus) Management, a no-brainer on our Quiet Kings of Capital list. This is just a hunch, but here’s why:

*not to be confused w/ Jerusalem Venture Partners, which uses the same acronym