Grant Cardone, the entrepreneurship guru and OG syndicator, acquired a large Boca multifamily property out of bankruptcy last month. Cardone struck a JV w/ the distressed owner, Penn-Florida Companies, to make the $235M deal for 101 Via Mizner happen, and CRE insiders were eager to know the deets of ownership’s plans for the 366-unit property – they knew it was going to be condos, but how exactly would Cardone play this one out?

The beauty of bankruptcy filings is they really do tell you a lot. 👇

If Michael Shvo did not exist, it would be necessary to invent him. His maverick career brings together all the elements – money, power, celebrity, glamor, design, drama – that make CRE so irresistible as a business. Listen on Spotify here, YouTube here or Apple Podcasts here. Brands – to get in front of our devoted audience of CRE insiders, reach out here.

In an excellent new analysis, NPL investor and friend of The Promote Ed Bond goes deep, deep down the 🐰 hole, pulling the purchase and operating agreements, BOV, and reporting packages on the deal. He details Penn-Florida’s (Mark Gensheimer) dances w/ distress on 2 deals rescued by another Boca bigwig, James Batmasian, as well as at other troubled properties. Amid all this, Penn-Florida attempted to refi the $195M (mostly Blackstone-held) debt on 101 Via Mizner, but a hefty required paydown made this challenging, Bond writes. When the debt matured in Dec., BX pushed for a UCC foreclosure. Penn-Florida responded by filing for bankruptcy, buying itself a bit of time, and then came Cardone w/ a $230M stalking-horse (sets a floor price on a bankrupcy sale) bid. The only other suitor was Crescent Heights, led by Russell “The Relentless” Galbut 🛳 , which teed up a $237M offer. Crescent Heights pushed for a longer DD period, emails from its attorney included in the bankruptcy filings show, and offered a $2M sweetener to get it. It eventually pulled its bid, and Cardone got his over the finish line by upping to $235M. He decided to JV (Mizner 366 JV LLC) w/ Penn-Florida on the project, though Cardone has the 🦁 ‘s share (92.6%) of the equity, which he will presumably syndicate out to his flock. Penn-Florida owns just 7.4% after the reorg. Cardone’s initial capital contribution was $190M, and Arbor Realty Trust stepped up w/ a $155M 3Y bridge loan.

So far, so fascinating, but now add some Bitcoin to the cholent 🍲 . The JV disclosed it also holds $100M worth of Bitcoin, bringing its total assets to $335M. Penn-Florida has a 12-month purchase option to buy the property from Cardone outright for $300M. However: If it does this, writes Bond, “Cardone has a call option to purchase Penn Florida’s entire interest in the JV’s remaining assets (i.e., its Bitcoin) for an amount equal to Penn Florida’s cost basis.” What this means: “Cardone essentially takes all the upside if BTC appreciates. Penn Florida (and Cardone’s investors) takes the downside if BTC depreciates.” 🪙 We’re going to stop now, b/c this thing is full of wonky delights, and you should go read it.

A Taconic/Nuveen JV will see its equity wiped in the short sale of a Hudson Yards-area office tower. David Werner 🐐 is buying the building for ≈ $100M in cash, per Bloomberg, equating to about $240/ 🦶, less than half the $269M ($650/ 🦶) the JV paid for the property in ‘18. Lender MetLife, which had financed the Taconic/Nuveen acquisition to the tune of $137M (loan basis = $333/ 🦶), played ball here, and CBRE brokered the Werner purchase. It’s another tough beat for Taconic, which recently lost the office & retail condos at its Essex Crossing megaproject to lender Deutsche Bank in what looks to be a classic deed-in-lieu.

Given who the buyer is, expect to see more players added to the mix. The classic Werner playbook, as The Promote details here, is to swoop in Maverick-style on a deal, promising a fat cash deposit and rapid closing in exchange for a hefty discount. He then tends to flip the contract to a majority partner, but rolls in some of that flip profit to maintain an equity 🍕 in the project. A recent deal he did for the Brothers Smeke, a bigwig Mexican multifamily player (CSC), illustrates this well.

This is not the biggest deal, but what it lacks in dollar volume it more than makes up for in chutzpah. In late ‘23, Harvey Hernandez’s Newgard Development paid Kushner Cos. & Aimco $31.2M for a 1-acre site at 200 West Broward Boulevard near Fort Lauderdale’s Brightline station. Hernandez landed $21.2M in seller financing from Kushner, hoping to build a 40-story mixed-use tower with 384 short-term-rental friendly resi units. Newgard launched sales at the project, dubbed Natiivo Fort Lauderdale, in Feb. ‘24, but last month, Kushner moved to foreclose, alleging that Newgard hasn’t made good on the debt and now owes it $22.9M.

Through it all, Newgard has continued to hustle, sending out marketing mailers on the project. But this week, it upped the ante and began promoting its new debt vehicle, according to materials reviewed by The Promote. “Collect passive income,” reads the Newgard memo for the offering, dubbed NGD Capital Power Yield I. The annual returns being offered for your min $100K investment? 18%. 🫡 Coincidentally, that figure exactly matches what Kushner alleges is owed by Newgard in default interest on the Natiivo loan.

Jesse Hamilton, who as NYC’s top RE official oversaw the city’s sprawling 22M sf footprint at private properties, has resigned after being indicted on a conspiracy charge. Hamilton and Ingrid Lewis-Martin, a former top aide to Mayor Eric Adams, are alleged to have steered city contracts to developers (Tian Ji Li, Yechiel Landau) and expedited their projects, in exchange for perks. Read the City’s coverage of the indictments – It still stuns me that top city officials in the temple of capitalism – a perch guaranteed to lead to cushy private sector and nonprofit jobs down the road – would throw it all away for stuff like personal home renovations, free catering and TV show cameos 📺

“I need those done…whatever site TJ wants, I need him to get them,” Lewis-Martin allegedly told Hamilton, strong-arming him to award a Li associate a contract for a migrant shelter. “Because that’s our fucking people.” 🗽

See also: Hizzoner’s Turkish Delight AND Blaze of Inglory AND Cushman Bigwig Caught up in Mayoral Scandal

More tranche warfare ™ in Manhattan skyscrapers: Bondholders of the hulking Worldwide Plaza are staring down heavy losses on their $705M CMBS. The debt was issued in ‘17, when the building was appraised at $1.74B, but a new appraisal has come in at just $345M. It’s a given that holders of the $435M lower-rated debt will get wiped, but even AAA bondholders are likely to eat losses of 20%, or $53M, per Bloomberg. Those w/ large exposure include Pimco and Northwestern Mutual.

The 2M sf property is owned in an uneasy alliance between an RXR-SL Green JV (49%) and New York REIT Liquidating; ownership has been battling it out in court over a $90M capex reserve. (See: Worldwide Drama, NYC Style or listen to our discussion on the pod here). Overall, the property had $940M in CMBS sr. debt and $425M in mezz as of Oct.; in March, the owners landed a mod on the sr. debt.

AAA is supposed to be the kind of debt you can cuddle at night. Until last year, bondholders in that category had not experienced losses since the GFC, but then came the case of Blackstone’s 1740 Broadway (See: Tranche Warfare)

See also: Our Bloomberg Odd Lots chat on SASB defaults