S3’s Sizzle

“Gradually, then suddenly.” - Ernest Hemingway

Astoria Cove, the Queens megaproject that has been a stop-start for over a decade, just got a massive capital infusion to bring it one step closer to reality: S3 Capital is kicking in a construction loan of $300M for the first phase of the KS Group project, The Promote has learned, in what is likely the lender’s biggest check yet.

The Promote Pod: New Drop

• “It's from one of the Reichmann biographies. They just call them ‘men with deep pockets.’” 👖 

• “If you knew the right code, you could skip past Chun Li and go straight to M. Bison. This is what they're trying to do – they're going straight final boss with this development.” 🥷 

• “In Gossip Girl, when Nate's dad gets arrested and his wife's like, ‘all you had to do was not get arrested.’ All you had to do is not get super levered and blow up and give a giant PG to Fortress.” 🏯 

Ep. 2 of The Promote Podcast is live, and it’s a doozy: Listen on Spotify here or Apple Podcasts here. If you’re interested in advertising, hit us up here. And please, smash that subscribe 🖋️ button and leave us a rating ⭐️⭐️⭐️⭐️⭐️ – we need the ten31 community to champion this thing to help it get discovered 🙏  

S3 (Cont.)

Foundation work is already underway at the 732-unit (485-X compliant) first phase of the project in Hallets Point, and KS (Yehuda Kotkes, Daniel Spiegel) intend to pay down the construction loan during the development process using brownfield credits, according to internal communications reviewed by The Promote. It’s projecting a stabilized annual NOI of just under $30M and a stabilized value of just under $600M for Phase 1, and will eventually seek a $400M+ construction loan for Phase 2 (expected groundbreaking Q1 ‘26). Astoria Cove was initially spearheaded by Efstathios “Steve” Valiotis' Alma Realty before KS became the lead developer; per sources Alma still has a piece of the action.

The S3 financing, brokered by Galaxy Capital, is expected to close this week. It would be the biggest deal yet for S3, which was born as a JV between Spruce Capital Partners & Manny Stern’s Tall Pines 🌵 in ‘15; Stern is not listed on the website, which has Joshua Crane & Robert Schwartz running the show, so I’m fuzzy on whether he’s still involved. What’s unfuzzy, however, is that S3 has recently turned the volume WAY up on its ambitions: It just announced a $210M construction loan for a huge Sunset Park project being developed by Wolfe Landau and David Tabak’s Watermark & Sam Rubin. That project has a hella juicy backstory: Watermark partnered w/ Maguire Capital (Marvin Azrak) to take over the site in ‘23, and scored a loan from Signature Bank 😍, who Landau had a long r’ship w/. When Signature folded, the loan was assumed by Rialto 😱 , which is less into r’ships and moved to foreclose. To save the deal, Watermark & its new partner Sam Rubin turned to healthcare heavy Daryl Hagler, who came in via his close associate Isaac Hager, per sources. Hagler’s involvement also pulled in Genesis (Jake Gerber), and the 2 teamed up to give the sponsors a bridge loan of $50M+. The S3 loan pays them off, and word is that an unnamed Chinese buyer is moving to buy the retail portion upon completion.
 

Bettin’ on Betesh

All this S3 excitement made us think to check in on how things are going for the debt broker on the Sunset Park megadeal, Morris Betesh, who left Meridian Capital in October w/ a dozen of his guys to start his own shop, Arrow. Unlike some ex-Meridian dealmakers (Judah Hammer, Drew Anderman) who faced a lengthy period on the bench before being able to get back to work b/c of Meridian’s stringent contracts, Betesh had cannily pre-negotiated a breakup before agreeing to stick around for a bit longer, per Meridian insiders. He continued to be a top producer and mascot, but like others was disillusioned by the brokerage’s ongoing turmoil and failure to fully integrate agency-lender NewPoint (now a Benefit Street joint) into the mix.

When he did decide to make the leap in the fall, the pre-breakup arrangement meant he could rev up right away, closing deals such as the whopping $402M purchase by HoF pugilist Floyd Mayweather of Black Spruce’s Upper Manhattan portfolio - Arrow’s name is on the deal tombstone posted by Pretty Boy. Betesh has another unorthodox connection to the boxer: he signed for the buyer entity on Mayweather’s Miami Beach mansion sale, though sources tell The Promote he has no actual tie to the buyer. Betesh declined to comment. Arrow has $8B-ish in the pipeline, per company insiders, and has closed deals w/ lenders such as Starwood & New York Life. It’s now a 21-person shop w/ offices in NYC and Boca, and the journey of a boutique capital-markets shop going up against increasingly consolidated heavyweights will be one to watch. 🥊 

The People Vs. Silber

Moshe “if there is no price anywhere it’s good” Silber, one of the central characters in the mortgage-fraud scandal that has rocked the CRE universe, finally had his day in court yesterday, and all things considered it was a good one for him: Silber got 30 months, and immediately after lyrical gangsta 👨‍⚖️ Robert Kirsch handed down the verdict, the Whatsapps started flying in (“very lucky,” “feel that’s nothing?”). We have a couple of benchmarks here: Eli Puretz’s babe-in-the-woods sentencing of 24 months on one end, and Aron Puretz’s 60 months on the other. Not sure what Silber’s defense did to convince Kirsch to go easy, but it made for an emotional hearing. Remember this was a guy who once controlled a $1B+ portfolio (big chunk of which is now controlled by David Lynd on behalf of bondholders) and had his own Gulfstream G550. All 👀 are now on Silber’s co-conspirator, Barry Drillman 🚬 - stockpile those Snapples while you can.

The Crowd Comes for CrowdStreet

CrowdStreet, the CRE crowdfunding platform at the 💘 of the Elie Schwartz scam, is learning that deal investing is not the only thing that can be democratized: The firm’s just been hit w/ a $1B class-action suit in which 3 LPs in Schwartz’s deals are demanding a return of their funds b/c the company played fast & loose w/ securities laws. The suit, per Bisnow, also names former CEO Tore Steen (bounced shortly after scandal 🌋 )& former CIO Ian Formigle (bounced recently). “CrowdStreet, as a fintech startup, decided that it would go on this adventure without following the law,” said one of the plaintiffs’ attorneys. Steen’s successor John Imbriglia alerted CrowdStreet’s customers to the suit Friday, saying it was “misguided.” This is a separate action from the one recently filed by investors wanting to be made whole by CrowdStreet over a Schwartz Chicago deal.

See also: 7 Highlights from CRE’s Biggest Crowdfunding Scam 

Quickies

• 🎥 Postgame analysis: Why did Benefit Street buy NewPoint?

• Y’all Street marches on: Dallas lands NASDAQ HQ2 🐄 

• CRE firms are done with DEI

• Cuomo gets heavy financial 😍 from CRE power players 🗽

• Fannie secures receiver for Mendy Steiner properties (More on Mendy here)

• How TD became the money launderers’ favorite bank

• VC General Catalyst takes 43K sf at Epic’s Soho office building

• B&H 📸 buys Brookfield building for steeply discounted $150M (btw if you’re ever wondering when your frum contacts may be unavailable, its calendar is a handy guide)

Unquotable Quotes

Happy Nowruz! To my Persians in Great Neck, Tehrangeles & beyond, here’s to the new year bringing you health, prosperity, and an abundance of koobideh. It’s my half-Persian son’s first one, so it’s extra special for me. If you’ve got a sweet haftsin set up, reply to this email w/ pics. 🪻 🐡 🥒 🪞