We knew this was coming. A generational buying spree of trophy assets at peak pricing, which were then loaded up with high-octane debt and treated like show ponies rather than businesses. Even for a preternaturally talented salesman like Michael Shvo, that’s a supertall order. Some properties (Chicago’s Big Red) were soon underwater. Others (Raleigh Miami Beach, Mandarin Oriental Beverly Hills) were lost. Through it all, Shvo continued to maintain that things between him and his biggest backer, German pension fund BVK, were going to be ok. “It’s all noise, just drive,” he recently told the SF Chronicle, paraphrasing the movie F1. Meanwhile, BVK has been getting pummeled back home in Germany: Bavarian lawmakers (as terrifying a bureaucratic corps as one can imagine) are grilling the fund about how such splashy deals were deemed appropriate investments for retirees’ money. And the fund has for the first time revealed the staggering scale of potential total losses from its Shvo misadventures: $1 billion 👇

Programming Note: Wed. eds. are normally reserved for Promote Insiders. But since we’re off this Friday, we’re sending this out wide – we’ll see y’all here Monday ✌

The Genesis bankruptcy auction has turned into the SNF Royal Rumble, w/ a who’s who of heavyweights jumping in off the top rope to try and win the industry’s biggest prize. From Satmar pezzonovante ™ Joel Landau to buff challenger Jacob Sod to buzzer-beater Abe Tress, we break it all down on YouTube. We’ll be doing more of these videos on projects & players x the country, so smash that subscribe button and ✏ w/ suggestions.

In a Dec. statement reported in an electric tick-tock by Bloomberg, BVK revealed that its equity bet on Shvo, made via investment manager Deutsche Finance, totaled ≈ €1.6B, or about $1.9B at today’s rates. Just over half of that went to 3 “particularly high-risk” resi developments (Raleigh, Mandarin Oriental and Manhattan’s 685 Fifth) as well as the glam-up of SF’s most famous tower, the Transamerica Pyramid. More than half of that total equity commitment could be a wash, the fund now warns. BVK is looking to cut ties w/ Shvo and w/ Deutsche Finance, per Bloomberg, w/ the fund saying that “project partners” are not meeting expectations.

“We are not privy to the details of [BVK’s] internal accounting practices, but do know the SHVO properties' ongoing financial performance cannot accurately be described as anything other than success,” a Shvo rep told Bloomberg. As of the summer, the impresario and the fund were battling in court, w/ Shvo alleging it owes him $85M+ in fees (If you’re somehow new to this saga or the myth of Shvo, our recent pod is a must-listen). BVK’s US CRE stumbles, as well as those of German lender PBB, are drumming up talk of “stupid German money,” the kind of chatter we’ve heard re. Chinese investors in the mid 2010s and the Japanese before them.

Shvo was connected to Deutsche Finance in ‘18 by fmr. friend/business partner Serdar Bilgili. BVK had concerns about the generous fees and onerous partnership contracts that came w/ the Shvo alliance, but eventually got over them. Once Shvo had his money, he went on an epic buying spree, est. at ≈ $3B. He would source the deals, Deutsche Finance would structure them, and BVK’s then-head of CRE, Rainer Komenda, would sign off. By ‘20, Bilgili, who claimed he had signed $400M+ in PGs on loans tied to the projects, was crying foul, saying Shvo was overcharging and spending monies on stuff like private jet travel. Komenda kept the dispute off his bosses’ radar, per Bloomberg, and BVK kept funding the deals. Deutsche Finance’s US head Jason Lucas (now out) would reportedly draft DD memos for his parent co.’s exec Sven Neubauer, who’d in turn brief Komenda. The execs would meet at frou-frou spots in Miami and Manhattan, something BVK bosses only found out about when conducting an internal probe.

Easily the greatest detail in the piece concerns BVK’s split personality when it came to cost control: Though they’d scrutinize dollars spent on office projects and pore over underwriting and comps, they also signed off on lavish spends for Shvo-run dinners in Miami 🦀 as well as a garden at the Raleigh where Shvo showcased his beloved Lalanne sheep 🐑 🐑

“If one side of the house doesn't like what's being said, they change the conversation and sell it to the other side of the house.” 🚬 🍸
“ Who's better at OZ investing? Brookfield or the Mooch?”

This week on the pod, we discuss how the Chrysler Building has laid waste to the best-laid plans of so many global titans. With Tishman Speyer reportedly back for another go, we trace its rollicking deal history, from Jack Kent Cooke to Abu Dhabi. We then look at how the ICE immigration crackdown is putting another big ? on the multifamily market and leaving landlords in limbo. Finally, we chop it up on Apollo's sister act: REIT ARI is selling its $9B loan book to insurance arm Athene, and patting itself on the back for doing so. We also do a "Pardon the Interruption" style rundown of the biggest industry happenings: Carlyle's NYC self-storage mammoth sale; Brookfield's misplaced OZ fund; and Fed 🪑 nominee Kevin Warsh.

💗 to our sponsors:
1) Bravo Capital, a leading HUD and bridge lender. See how their precision underwriting means speedier approvals and higher proceeds for sponsors.
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Listen on Spotify here, YouTube here or Apple Podcasts here. Brands: To get in front of our obsessed audience of CRE insiders, reach out here.

A JV led by former Rudy G right-hand man Bruce Teitelbaum is set to lose control of a major LIC site. Lender BDT & MSD ( 🤫 👑 ) is moving to oust the sponsor after it defaulted on their debt. Newmark is prepping the site for foreclosure auction, per REA, w/ BDT & MSD expected to take it over in a credit bid. 🗝 📜

In ‘19, the sponsor JV, a motley crew that includes Teitelbaum (hubby to CRE power lobbyist Suri Kasirer) and 08701’s Harry Sussman, tapped MaryAnne Gilmartin – then principal at now-dissolved L&L MAG and now head of eponymous firm MAG Partners – to lead the development. Gilmartin exited the project in Fall ‘20, according to a rep for MAG, after a rezoning plan fell through. MAG has had no stake or say in the property since then, the rep added. In May ‘22, the Teitelbaum JV took full control of the site after buying out the Durst Org. for $97M, ending a decade-plus court battle. (“We wish them well,” a Durst rep said at the time.) The sponsors landed $165M from BDT & MSD soon after, though the mortgage looks to have been reassigned to Bank OZK that summer. The developers looked to build a 440K sf, 380-unit project on part of the 5-acre site, which is part of the larger OneLIC waterfront development. They commissioned SHoP Architects to design the thing; SHoP filed a $1M lawsuit last Oct. This past Dec., the mortgage was kicked back to BDT & MSD.

Editor’s Note: This story was updated 2/4 at 5pm ET to clarify MAG Partners’ involvement. The firm has been out of the project since fall ‘20.

We’re getting word that “DUSty” Dan Sacks, a perennial top Fannie originator, has been tapped to run a new multi lending unit at B’more-based lender CFG Bank.