Greystone Loses Fannie Favor

There are two types of visitors to Disneyland 🐭 : Those who queue up for hours with umbrellas & snacks and screaming kids outside Space Mountain and Big Thunder Mountain Railroad, and those who have the Lightning Lane Premier Pass – the latter group can just show up and ride.

In the agency-lending world, there’s a similar state of play: Lenders who get merely a cursory look from the GSEs on deals, and lenders who have to submit to a full cavity search. The latter obviously are less competitive in the market, because deals done through them take longer, and time kills deals ™️ . Fannie’s answer to the Lightning Lane pass is known as Performance Differentiation - it allows for deals that don’t meet certain guidelines to be pushed through by lenders, as long as they have certain metrics – lenders can submit waivers for stuff like pricing & credit quality. PD transactions account for a significant chunk of Fannie action, so a lender having that privilege is a big edge.

Greystone (Cont.)

In recent months, Greystone’s PD privileges have been revoked (or at the least severely curtailed), The Promote has learned. The kind of deals that were basically rubber-stamped in the past will now have to go through a full Fannie pre-review, which means subjecting them to bureaucratic hell and potentially lengthy delays. Fannie’s change of 💓 w/ Greystone comes after a pattern of problematic deals, according to agency insiders: property condition-assessments that didn’t reflect the facts on the ground, rent rolls that didn’t line up, mismatches between underwriting & appraisals. Many of the sponsors that Greystone worked w/ have also been subsequently dinged for mortgage-fraud concerns, sources said. TBD on the full impact of these Fannie changes at Greystone, which has also laid off junior staffers in recent weeks, per sources. The Promote couldn’t reach Greystone for comment. It has also been impossible to get Fannie to comment on anything – I guess understandable given the mayhem there.

In other Fannie news: Meridian Capital Group was cleared for business earlier this month, though the devil lies in the fine print – we discuss the saga on Wednesday’s upcoming pod, so make sure you’re subscribed.

After Tariffs Shellacking, CMBS Attempts Comeback

We riffed a few days ago on CMA’s good coverage of how the tariffs sucker-punched CMBS, with the market confused about how to price anything and sponsors pulling sureshot deals until there was more clarity. But it is human nature to keep agitating for deal flow, no matter the circumstances: Issuers are taking tentative steps to restart the pipeline, per CMA: Barclays started passing around paper on a $783M conduit offering; DB and Wells are prepping a $430M SASB on a PCCP/Veritas multi portfolio; more clarity on the offered spreads will help the market figure out how to proceed.

Still, “deals that are teed up to go, need to go,” one attorney told the publication. “This is not like fine wine that gets better w/ age” 🍷 A CMBS investor laid out the Jungian reasoning for the restart even under the fog of trade war: “The moment there is the slightest line of sight to clarity, originators will be out trying to lend again. They aren’t going to pack it up, call it a year, and accept a zero bonus.” 🦮 

The Other Donald

There are two Donalds in commercial real estate. The more famous one is currently in the White House. The other, far richer one lords over one of California’s wealthier cities w/ scarcely imaginable levels of multi-decade dominance. We’re talking, of course, of Donald Bren, the alpha dog at the Irvine Company. The firm has an astonishing hold over the city after which it’s named – per RealPage data cited by Bloomberg, Irvine Co. owns 75% 🥴 of the city’s multifamily stock (tho the firm says the true number is closer to half) in a city where avg. gross rents are $2,771. And that’s not all: it owns nearly every mall, a big chunk of the office space, a golf club, and even a community newspaper – a king, after all, must have his herald. This is not some rinky-dink town, either: Irvine is the OC’s 2nd-most populous city, and 5th-most in Greater LA. But Bren, whose net worth is estimated at $17.4B, operates it like his personal fiefdom, w/ Bloomberg characterizing him as a one-man HOA. Irvine Co. sets rigid design standards for new homes (windows all 4 sides, specific FARs, ceramic shingles), and Bren, a robust 92, is known to drive around and flag things that aren’t to his aesthetic liking.

A former employee says every presentation needs to be in his preferred format: 10-point Arial typeface, with consistent margins. According to another former employee, when Bren visited an apartment complex that Irvine Co. had opened in Santa Clara, California, he informed the leasing manager that he didn’t like the building’s exterior, and he wanted the cypress trees and birds of paradise plants lining the front walkway arranged in a different order. By the following morning, the person says, the hedges and pavers had been ripped out and completely remodeled.

With no clear designated successor, Bren’s still the guy at the firm, coming into the office daily (Marc Holliday & the rest would be proud) and signing off on construction docs & PnLs. An engrossing read here that I urge you to check out in full: son of a Hollywood producer starts building homes in the 50s w/ the help of a loan from his dad’s 2nd wife; buys 4K acres in what is now Mission Viejo; buys into Irvine Co. in the late 70s and eventually takes full control in the 80s.

Quickies

• Moshe Silber creditor seeks to auction off 6K+ units controlled by mortgage fraudster (full Silber catchup here) 🛩️ 

• Silverstein drops $3.7B federal funding bid for 2 WTC 🇺🇸 

• Capital of capital: Abu Dhabi feasting on US financial self-sabotage 🇦🇪 

• Fresh off some theatrical CEO enrichment, Paramount Group signs law firm to 90K sf deal 

• Interesting deal here w/ potential implications for pvt. credit, lifecos

• This is big for us: We have secured The Promote (dotcom) 😍 😍 😍 

Unquotable Quotes