Ziel Feldman built his name as an apex predator of New York real estate. His HFZ Capital Group took on some of the city’s headline-stealing projects: the conversions of the iconic Belnord, the Astor and the Chatsworth, and the ground-up moonshot: the twisting, travertine-clad towers in West Chelsea known as the XI. In the 2010s, he was one of the figures most associated with the Manhattan luxury condo development game, and all its trappings: acquisitions at ulcer-inducing bases, high-octane financing, foreign investors, media, art, celebrity, design and new development marketing that feels akin to an IPO. His was a maximal trade: At the sales launch of the project that became the stage for the firm’s undoing, HFZ served up Macallan 25 on tap.🚰🥃

But the firm imploded during the pandemic amid a wave of foreclosures and lawsuits from investors and lenders. Nir Meir, a former HFZ principal and Feldman’s protége, was charged as the mastermind of an $86M fraud scheme, the ripples of which are still being felt in the New York market. The development firm pleaded guilty to charges of grand larceny and tax fraud, Meir rode into Rikers, and Feldman, never implicated in any wrongdoing, rode into the sunset.

You can’t keep a bonafide real estate guy on the sidelines for too long, though, and Feldman has indeed been busy. It’s just that his new area of focus is so far afield, it would have been easy to miss. 👇

“You're borrowing money from the government against old people.” 👵
“You think you've got the golden touch and everything you ever wanted is right there. All you’ve got to do is click send on the sub docs.” 🍏

This week on the pod, we discuss a redemption tour by GVA’s Alan Stalcup, Patient Zero of the Sunbelt multifamily boom/bust. He’s battling PGs, LPs and maybe even the SEC, but Stalcup is unapologetic. He sat down w/ Hiten for a pretty unplugged conversation, and we chat through our key takeaways. We then dive into the 24-6 world of dealmaking in Skilled Nursing Facilities, an undercovered corner of CRE with big numbers and some batshit maneuvering – the Genesis bankruptcy case is all anyone can talk about. We also do a "Pardon the Interruption" rundown of the biggest industry happenings: Soho House Take II, Marty 🍔 redux, Summit's Pinnacle deal approval, and a nightmare condo buyout.

A shout-out to our sponsors:
1) Bravo Capital, a leading HUD and bridge lender. See how their precision underwriting means quicker approvals and higher proceeds for sponsors.
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Through interviews w/ sources in the mix, public records and snippets in regional press outlets, The Promote understands that Feldman is a silent player behind GoodHomes, a national development firm that focuses on Naturally Occurring Affordable/Workforce Housing. GoodHomes targets adaptive reuse of distressed/obsolete hotels, extended stays, and assisted-living facilities, converting them into multifamily catering to those making between 60-120% AMI. The firm says it has 2,700 units x 16 properties in 10 states (The spartan nature of its website is in stark contrast to HFZ’s glam materials.)

Ziel’s name is NOT on any of the website materials, property records or applications we reviewed. The billed co-founders are his daughter Leila Rosenberg (née Feldman), and David Mitchell, best known for his acquisition of the Herald Square Hotel. And the firm brings much of the HFZ band back together 🎸: There’s Ziel’s son Adam Feldman, who did a stint in acquisitions at HFZ. There’s Bill Dibenedetto, who was a construction super at the firm. And the head of construction, Akhilesh Hari, spent over a decade at HFZ in project management.

“What we find is these obsolete hospitality buildings, … they’re great places to start,” Mitchell told the Erie County Redevelopment Authority in ‘23. “They’re all built w/ substantial amenities that we renovate.” Mitchell noted that the firm targets cities and towns that are hubs for either medicine, education or manufacturing, are state capitols (like Springfield), or have a military presence (like Fayetteville).

Tax abatements are the name of the game in this space, as are other forms of public financing: A fall ‘24 presentation details a push for tax-exempt bonds. “By using adaptive reuse of distressed hotels, GoodHomes minimizes their basis AND effectively widens their buy box by REDUCING that achievable market rent metric, since the majority of units will typically be studios and mini/micro units,” said one AH player who reviewed the firm’s strategy. “Then, ride the coattails of the national housing crisis narrative to twist the arms of local jurisdictions to give up property-tax abatements in return for a commitment [i.e. a LURA] that you won’t raise rents beyond these generous AMIs.” (In this, there are slight echoes of the HFC/PFC game in Texas 🤠 )

“Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale.” - Zig Ziglar

In spring ‘24, Scott Everett’s S2 Capital, one of the Sunbelt’s largest multifamily syndicators, launched a private REIT, which became the escape hatch for a sizable chunk of its portfolio. It was seeded w/ 10K units that S2 valued (CRE’s most subjective word, fwiw) at $1.6B, and was pitched to its investors as a way to land agency debt (longer-term & cheaper compared to floating-rate bridge) and hold on to assets in an environment in which S2’s peers were hemorrhaging properties.

It was quite the high-wire act. As we wrote in late ‘24, “Everett will have to execute the reno and rent-raising plan to perfection, continue the aggressive acquisitions, hope rates keep falling and convince investors that he can lead them to the promised land.”

We’ve got a ways to go. The firm has now issued a capital call ☎ for the REIT, investor materials reviewed by The Promote show. “Failure to raise capital would necessitate asset sales at an estimated ~5.5% cap rate in today’s market,” S2 said in a recent investor webinar, “resulting in significant impairment to the common equity (60-75% loss).” S2 is asking for $70M of pref, which it intends to use thusly (Promote Insiders: read on at the end of this email 👇)