Brookfield is moving to buy a controlling stake in prefab home giant Yes! Communities at a $10B+ valuation, in what would be one of the biggest real estate M&A deals of the cycle. If a deal w/ the seller, Singapore SWF GIC, does go through, Brookfield would control tens of thousands of manufactured homes x 300 communities across the US, per the FT, w/ a focus on the Midwest & Southeast. It’s among the biggest-ever bets on lower-tier heartland housing.

Yes! was launched in ‘08 by Gary McDaniel & Steve Schaub, w/ backing from PE shop Stockbridge Capital, and began amassing properties from players such as Berkshire-backed Clayton Homes. By the time the Singaporeans came knocking in ‘16, Yes! had grown to 178 communities. GIC & another institutional investor acquired 71% of the firm at a $2B+ valuation, w/ Stockbridge holding on to its 29% stake. Right around the time of that deal, Yes! also landed $1B in financing from Fannie, representing the agency’s largest deal in manufactured housing at the time.

An exit for GIC at the reported $10B valuation would “be the largest ever commercial exit of a SWF,” said Diego Lopez of Global SWF, a data platform that tracks that space.

And as for Brookfield? Its new CRE boss Lowell Baron had channeled Stringer this summer, saying that a dry spell for megadeals was now over and fundraising momentum had also improved. In this, it’s struck a similar tone to Blackstone, which gave the industry air cover to spend again w/ its $10B deal for AIR Communities last April. While AIR was BX’s bet that higher-tier rental housing in A+ locations would get more valuable over time, the Yes! deal, in contrast, would be a bet on the lower end of the market: Its portfolio largely consists of single-story smaller homes that customers can either rent or buy while continuing to lease the land. In this, it has shades of Sam Zell’s major late 90s play through Manufactured Home Communities Inc.; its successor REIT, Equity LifeStyle Properties, today nearly has a $12B market cap.

Some other AUM Gobbling ™ The Promote’s been tracking:

The opera that is New York real estate has its latest Trojan Horse. RFR is suing the billionaire eyewear scion that just struck a deal to sell 346 Madison to SL Green, alleging that the seller stole RFR’s due diligence and used it to court competing buyers. RFR is suing the ownership entities, controlled by Luxottica heir Claudio del Vecchio, for unspecified damages.

Here’s the tale of the tape, per RFR’s suit: Since ‘19, Del Vecchio has been trying to unload 2 properties: the Brooks Brothers store at 346 Madison and a neighboring office building at 11 E 44th St. Though the properties were listed in ‘21 via JLL, the seller struggled to gain traction – the sites had a combination of “zoning, tenancy, and capitalization challenges,” and the seller – an industry outsider – didn’t have the chops to work through them. In rode RFR to save the day, described in the suit as an “interested buyer armed with the real estate industry depth to resolve the properties’ complex issues.” After extensive DD by RFR that took a great deal of time, money and 🧠 damage, the developer and the seller struck a binding exclusivity and confidentiality agreement at the end of this June, and RFR shared the goods w/ the seller. The 2 parties also drafted a detailed purchase and sale agreement. However, days after the 1-month exclusivity term lapsed, RFR alleges that the purchase and sale agreement was “duplicated into the name of another buyer and executed.” RFR does not name that buyer in the suit, but it’s widely been reported to be SL Green, which is paying $160M for the site on which it’s eyeing its next ground-up office tower. RFR is alleging that the seller uploaded RFR’s confidential DD to a third-party data room accessible to competitors, and it was this breach that allowed SLG to move at the breakneck pace it did. “Defendants’ breach was as shameless as it is obvious,” RFR states, alleging that the seller used the confidentiality agreement like a “Trojan Horse.” RFR’s ire extends to the listing broker, JLL’s David Giancola, who it alleges was aware of the confi breach and used RFR’s interest to “squeeze out value.” Giancola, however, is not named as a defendant.

RFR, run by Aby Rosen & Michael Fuchs, declined to comment. The loss of the deal has a bigger meaning for RFR than just 346 Madison; it owns the 400K sf 350 Madison next door, and combining the lots would’ve allowed it to build exactly the kind of single-malt tower ™ near Grand Central that is commanding premium rents in today’s market. RFR could still work some kind of deal w/ SLG to pool their properties together and make that happen, though we’re unsure if anything’s imminent on that front.

A prominent Texas multifamily syndicator senses opportunity lower in the capstack: Mitchell Voss’ WindMass, which controls ≈ 11K doors, announced the launch of a credit platform this summer, focusing on sr. participating mortgages (allows the lender to share in the upside/income). CMA now reports that WindMass has hired Greystone alum Lance Wright to lead the charge; WindMass plans to focus on Sunbelt & Midwest loans in the $5-$35M range, and would fund deals w/ a min. DSCR of 1.1, compared to the typical 1.25 for agency loans. That more aggressive leverage warrants higher origination fees of 2%, WindMass believes, as well as equity participation as Moss hinted at this summer. WindMass will look to pocket 5-25% of the profits on a look-back basis, per CMA, once the sponsor gets their equity back.

“I’ve got five live deals right now and I just started on Tuesday,” said Wright, exuding the kind of go-go macho energy that is expected of a lender ready to ramp up. WindMass declined to identify the capital partner funding its credit push, but our bet would be that it’s Fortress: the Mubadala-owned shop has been ramping up its presence in Dallas, upped its exposure to multifamily lending through its acquisition of Texas regional bank First Foundation, and has previously partnered w/ WindMass on the ‘22 acquisition of the Chronos portfolio. 👀

JBG Smith is saying “no mas” to a major multi redevelopment in Crystal City, citing skyrocketing construction costs and a tricky financing environment in its decision to shelve the project. The REIT scored approval to build two 30-story towers that would deliver 1,400+ units, but in a new filing reported by the Washington BJ cited a 40% jump in costs since ‘21 along w/ "macroeconomic uncertainty,” in its decision to abort. It called out the tariffs as well, saying they made it harder to ‘secure acceptable pricing on building materials.” As of now, part of the site’s being used as volleyball courts, certainly not its highest & best use. 🏐

Programming Note: The Promote won’t be publishing this Wednesday. We’ll see you back here Friday. If you happen to be in LA this week at Reconvene, reply to this email and we’ll find time to catch up!