“What I do have are a very particular set of skills.” - Bryan Mills, Taken

Every market has a particular dirty job for which you need to know a guy. In South Florida, the dirty job du jour is condo terminations, and the guy everyone seems to need to know is Mario Borda. If you look at his deals piecemeal – $300K here, $1.2M there – you wouldn’t pay him any mind. But taken together, his body of work becomes a priceless asset for any developer eyeing a redevelopment play. Clients include Related Group & Two Roads, which used him on the buyout of Carlton Terrace in Bal Harbour; Mast Capital, which used him on the buyout of La Costa in Miami Beach (now the tony Perigon); and most recently, KG himself: When the billionaire edgy hedgie sought to take control of the Solaris condo within his planned Citadel mega-campus in Brickell, his team tapped Borda, who over a number of years cajoled/coaxed/FOMO’d unit owners into selling their pads – $125M in all, across 138 separate transactions.

The campaign, per Bloomberg, “featured repeated rounds of higher offers, personalized pitches to reluctant sellers and below-market leasebacks to people who wanted to stay temporarily.” As with rent-stabilized buyouts, the longest holdouts tend to receive the biggest checks – early sellers here pocketed ≈$500K; the last ones $1.5M+.

The way Borda’s work is described in the piece reminded us of the way NYC CRE ace Dov Hertz spoke of assemblage, likening the practice in New Kings of New York to “getting a cat to come out from under the bed and drink from the bowl.” And if things don’t quite come together, it could be a financial and reputational disaster for a developer – Two Roads’ Biscayne 21 in Edgewater is the stuff of nightmares. 👇

A 🖋️ from Pensford’s JP Conklin: The only thing that matters from Thursday’s job report was that over 700k people gave up looking for work. Had those 700k people kept looking for work, the unemployment rate would have been 4.6%, not 4.2%. Why is no one talking about this?! Can you imagine the market reaction if the only data released on Thursday was “The unemployment rate surged from 4.3% to 4.6%”?

If those 700k people were a country playing in the World Cup, they’d be bigger than two other actual countries playing in the WC (Curaçao and Cabo Verde).  And they’d whine less. Read on…

Much of South Florida’s coveted waterfront land is occupied by aging condo buildings, buildings where maintenance costs have skyrocketed in the wake of special assessments levied after the Surfside tragedy. If you’re a retiree suddenly facing an assessment that can be as high as your original unit purchase price, you might be down to sell. Developers have pounced on that shift, running the condo-buyout playbook throughout the region. And enterprising broker/investors who are willing to take on the risk and put in the time to do a buyout can realize a handsome profit once a developer comes knocking – think of Joey Columbo’s windfall in his recent bulk sale to Steve Ross.

Each completed transaction raises the stakes on the next one – developers typically need an 80% supermajority to force the remaining holdouts to sell. Getting to a sale, moreover, isn’t just about the money: One seller at Solaris was reluctant to leave b/c his unit was feng shui compliant; Borda went out and came back w/ 5 nearby condos that met this criteria. Controlling the messaging is also key – it is important that holdouts believe that the developer will prevail with or without them. And you’re constantly racing against the IRR clock: a long, messy buyout can gut your return projections. A previous Borda-executed buyout, at another Mast Capital Miami Beach undertaking, shows how hairy these things can get: To hit its supermajority, Mast initially bought contracts on 28 units from a firm called Canero Group, contracts that were contingent on each other closing. Other sellers, however, sued the developer, and David Martin’s Terra Group initiated a separate buyout attempt, per TRD. At the time, Borda said Terra’s muscling in “delayed our negotiations with other owners and confused owners who are under contract with Mast Capital.” In ‘23, Mast made another buyout attempt, but the project remains mired in litigation. ⏳

Lenders are looking to sell off RXR’s troubled Helmsley Building, as we reported last month. They’re hoping to make bondholders whole by scoring at least the mortgage value of $670M ($480/ 🦶 ). The building’s latest appraisal, as of this April, values it at $785M ($560/ 🦶), per bond docs we peeked at. Meanwhile, there’s also ≈$125M of mezz on the property. Where will it trade? Take your best guess 👇

Also: If you know anyone fiddling around in prediction markets for CRE, get in touch.

We knew this was coming based on the private REIT misadventures from May, but it still lands with a thump: Scott Everett’s S2 Capital, one of the multifamily market’s biggest syndicators and floating-rate debt enthusiasts, is dissolving its first value-add $400M fund, and told investors – both common and pref – to expect “no return of capital.” In a letter to LPs seen by TRD, Everett blamed the macro environment, citing everything from rising cost of debt to a supply glut. He outlined a plan to snap up the debt on the assets in the fund that have some upside, and seed a new investment vehicle w/ those assets after a restructuring. S2 is seeking $100M in fresh capital to fund the attempt.

The S2 news triggered mass schadenfreude in the GP world (you get a sense from the comments & QTs here & here), where after the collapses of Tides Equities (Sean Kia, Ryan Andrade) and GVA Management (Alan Stalcup), people had been prewriting S2 obits. (Insiders: Read the full story at the end of this email 👇 🔒 )