Tariffs Body Check CMBS

This was supposed to be the year that CMBS got its pre-GFC groove back, and indeed, the Q1 numbers bore this out: Collectively, private-label CMBS, CRE CLO lenders and agency floated just shy of $60B in US offerings in the quarter, nearly doubling last year’s tally, per CMA. Nonagency CMBS drove the action, and there was a sense that this was just the beginning – the air was heavy with anticipation and Drakkar Noir.

But then came the tariffs.

CMBS (Cont.)

The new-issue market has been discombobulated since the tariff announcements hit, per CMA. Brookfield pulled a $2.4B SASB it had hoped to price on a Hawaii mall b/c of too much uncertainty on the spreads, and GS/JPM had to restart marketing on a $300M Dallas hotel SASB (sponsor: Elliott/Chartres) after the stock-market carnage – the deal eventually got done at spreads that were 75 bps wide of the initial quote. New deals haven’t been hitting the market.

“This has thrown a wet blanket on the enthusiasm and euphoria about the new-issue pipeline,” a rating-agency exec told CMA. He then hit at the 💗 of the matter: “The problem is no one knows how to price anything in this market.” 😰 

Zooming out of CMBS, the overall vibes in CRE finance are similarly spooked. One CREFC board member channeled Rumsfeld in his attempt to frame the situation, telling CMA that these are “the most astonishing set of unknown unknowns … in my professional life.”

Blackstone Joins Dallas Buyers Club

The lads have impeccable timing: Blackstone has struck a deal to pay $718M for a 95% stake in a 6M sf industrial portfolio developed by Crow Holdings, valuing the package at about $126/ 🦶 . That seems like a pretty cheap price for solid assets in primo (Dallas, Houston) markets, and we would imagine that if talks had begun after the tariff announcements, the price of the brick may have gone up – any domestic manufacturing drive set off by the tariffs could make inland logistics (Dallas) more prized, and significant trade w/ Mexico (less of a casualty in this trade war) flows through Houston. A good comp here is Starwood’s recent $685M acquisition of a 5M sf GS/Dalfen industrial portfolio, priced at $137/🦶, or the Perot family’s shopping of a 16.8M sf portfolio for $179/ 🦶 

Rumble in the Jungle: Fairstead’s Split Decision

“I rope-a-doped you, Will. I fucking rope-a-doped you.” - Fairstead’s Stuart Feldman, as told by fmr. partner Will Blodgett

One of the ugliest legal feuds in New York real estate has been playing out at affordable-housing macher Fairstead Capital. The 3Y+ battle has gone to some strange places: first, ex-partner Will Blodgett (now running Tredway) alleged that his former comrades, Jeff Goldberg & Stuart Feldman, held back tens of millions of dollars of his promote 😍; Fairstead hit back w/ allegations that Blodgett masterminded a mutiny. The matter went to arbitration, and now both sides are claiming victory, per TRD: Fairstead says the April 2 ruling shows that it was right all along – the arbitrator found that Blodgett was “determined if not obsessed” to take over the company, either by minimizing Feldman & Goldberg’s roles or by forming a new entity bankrolled by “the family offices of his billionaire in-laws” – Blodgett married a scion of both the Tisch & Sussman families.

Blodgett’s team, however, is taking solace in the part of the ruling that deals w/ the promote. “The core issue in this case is straightforward: Did Fairstead have the right to take Mr. Blodgett’s equity? The legal system has answered with a resounding no,” his attorney said. More to come for sure 🍿 

BTW: Did you know that Feldman once made a run on the Nets? 🏀 

REIT Etch a Sketch

When your boss is turning the public company you work for into his personal Richie Rich funhouse, it seems an odd time to hold forth on corporate governance. Or, perhaps, it’s the perfect time. Context: Paramount Group is getting torched upon revelations that the struggling office REIT made $4M in previously undisclosed payments to CEO Albert Behler($900K for his accounting services, $1.6M to his consulting firm, $3M to his ✈️ co., $200K to his wife’s design firm, $12K for 🍷 from his vineyard). Now, any upcoming MSM story on Paramount would likely hit on this inconvenient truth, but specialty media is a parallel universe – even in the thick of all the hoopla, Paramount general counsel Gage Johnson sat down w/ Nareit to discuss the “shifting landscape of corporate governance and stakeholder management.”

To quote Succession (h/t Pink): “What’s next? The Jack The Ripper Women’s Health Clinic?” 

This is an (extreme) example of how players can use the increasingly fragmented media landscape to their advantage. One can don a different cloak (concerned citizen, rapacious capitalist hellbent on crushing for investors, etc.) depending on which outlet and which audience you’re talking to. You can even mitigate bad press in one 🌎️ ^ w/ good press in another 🌏️ , and hope that never the twain shall meet.

Bonus: The Promote Pod’s discussion on Behlergate at 15:50 here
Even more: We shared a specialty-media playbook on The Fort pod earlier this week. Catch that bit at the 45m mark here.

Quickies

• 👂️ How Gary Barnett became NYC’s most audacious developer 💎

• Tyko, man… Elliott-backed debt fund lends $392M for Grand Hyatt Miami Beach project (Sponsors:Terra & Turnberry) 🎇 

• 🎥 Allegations of theft add new twist to Newmark-Eastdil rivalry

•  Terra, DeFortuna pay $53M/acre for luxury dirt in Key Biscayne 🪱 

• Kroenke pegs $10B price tag for Rams HQ megaproject 🐏 

• Gurney’s Montauk lands its $235M rescue refi from Smith Hill, Bain 🛟 

• 9-fig badboys: Investors blacklisted by Fannie bet big on Chicago multi

• Saks out of NYC casino race 🎲 - while Related gets City Planning love for its bid ♠️ 

• This Fifth Wall-sponsored proptech SPAC has been a catastrophe - another CEO out, stock in the 🚽 

• If High Finance whisperers are self-censoring, imagine the scenes in CRE

• High-key obsessed w/ these RED Awards red-carpet interviews – each one feels like a mini Mel Brooks movie 🌠 🎤 

Unquotable Quotes

Programming note: The Promote is off on Monday – we’ll see y’all back here on Wednesday. And for our peeps who observe it, Chag Sameach! 🥚