Sunday Summary: Channeling Our Inner-Inigo Montoya
Remember in the movie “The Princess Bride” when the evil Vizzini (Wallace Shawn) fails in his repeated attempts to kill the Man in Black, a.k.a., Dread Pirate Roberts, a.k.a., Westley (Cary Elwes) and in frustration keeps thundering: “Inconceivable!”
“You keep using that word,” says his henchman Inigo Montoya (Mandy Patinkin) with unshakable calm. “I do not think it means what you think it means.”
Let’s just say that we were channeling our inner-Inigo Montoya when Adam Neumann, in his first public interview this week since his exit from WeWork (WE), disputed the claim that he had left the coworking giant with a golden parachute.
“Everyone thought it was a golden parachute,” Neumann said. “It wasn’t.”
The billions in stock and other funds that Neumann pulled out of the company he co-founded might make us lose our Montoya-like cool as we explain to him what, precisely, a golden parachute is. (It should be noted: Neumann certainly didn’t seem too humbled by the experience of watching a company go from a $47 billion valuation to less than $3 billion under his watch when he was partying at the Standard Hotel in celebration of last month’s IPO, which brought the value back up to about $9 billion.)
Leases, loans, partnerships and buys
But enough of Neumann. There were big leases, big loans, big partnerships and big buys this week.
The big retail lease is still alive and kicking; in this case it was Primark, the Irish clothing retailer, which is taking a whopping 70,000 square feet at Acadia’s City Point in Brooklyn. That was the big lease of the week, but there were also slightly more modest but still significant retail moves: F.P. Journe, the Swiss watchmaker, is ditching its 900-square-foot Upper East Side storefront at 721 Madison Avenue for an almost seven times bigger 6,210-square-foot lease at 53 Mercer Street. And the Los Angeles-based David Kordansky Gallery and the New York- and Mexico City-based art gallery Kurimanzutto each took leases totaling some 12,000 square feet of space at 520 West 20th Street in West Chelsea.
Of course, there were office leases too. Edward J. Minskoff’s 1166 Avenue of the Americas saw not one but two big leases: the investment bank William Blair took 80,000 square feet and the international specialty insurance organization Ryan Specialty Group took 40,000 square feet. Downtown, the multi-line reinsurer, SiriusPoint, is taking 26,558 square feet at 1 World Trade Center. And the General Services Administration inked 60,000 square feet for an undisclosed government agency that will be moving into the Falchi Building at 31-00 47th Avenue in Long Island City, Queens. (Oh, and while we’re talking about the Falchi Building, Savana, the landlord, also signed a pretty sweet 6,500-square-foot retail lease there: Maman, the French bakery and cafe, which has numerous locations throughout the city, will open its first Queens outpost in the ground-floor cafe space.)
Back across the river, GFP, Jeff Gural’s real estate company, left its offices at SL Green’s 515 Madison Avenue for the comforts of an office in its own building: the firm moved into 12,500 square feet at 125 Park Avenue, and, a few blocks north, Northleaf Capital added 7,200 square feet to its lease at Fisher Brothers’ 299 Park Avenue.
And it seems like nobody wants to be left out of the big buying spree going on in the market.
Back in 2019 there had been a brief push by Jeffrey Soffer’s Fontainebleau Development to purchase the 1,000-room Diplomat Beach Resort in Hollywood, Fla., from Brookfield (BN), but the effort fizzled with the pandemic. Well, we have it on good authority that the deal is back on for $850 million and that Soffer is teaming up with Koch Real Estate on the purchase. (It should be noted this deal is $50 million more than the price Soffer had floated in 2019.)
Indeed, there was a lot of hotel activity. The hotel chain La Quinta’s owner, CorePoint, is being sold for $1.5 billion to a joint venture of Highgate and Cerberus Capital Management. And the Dutch hotel chain, citizenM, raised $1 billion from investors to open new hotels in the wake of the pandemic.
But hospitality wasn’t the only real estate bucket that saw deals being inked. In South Florida, AvalonBay Communities is plunking down $133 million in cash for a 380-unit, garden-style multifamily complex called LUMA at Miramar, in Miramar, Fla.
In New York City, California’s state pension fund — CommonWealth Partners — is in contract to buy the Hudson Commons, a.k.a. 441 Ninth Avenue in Midtown West, for more than a billion dollars from Cove Property Group and The Baupost Group, making it the biggest office sale since Google exercised its option at St. John’s Terminal in September.
Tishman Speyer and the National Pension Service of Korea announced a new $1.5 billion investment platform in real estate, which they’re calling the NPS-Tishman Speyer Thematic Platform. The idea will be to invest in real estate innovation and technology as well as acquire and develop life sciences assets through a Tishman joint venture with Bellco Capital called Breakthrough Properties.
And, while the price is not known yet, the Kaufman Organization reeled in a pretty penny for the Kaufman Astoria Studios in Queens from Hackman Capital Partners and Square Mile Capital. (Bids were starting around $600 million in March, and Hackman and Square Mile had to swat off another bid from Hudson Pacific Properties.)
There were some very big commercial mortgage backed securities financings too — Starwood (STWD) grabbed a $380 million CMBS loan for a dozen of its affordable rental properties in Florida; Vornado refinanced 1290 Avenue of the Americas with $950 million in CMBS funding; and Blackstone (BX) got a $1.1 billion CMBS loan on 13 properties in nine different markets around the country.
But, if we’re going strictly by dollar amount, the big kahuna of the week by far was Greystar’s jaw-dropping $3.6 billion sale of a 30-property multifamily portfolio to Ivanhoé Cambridge. ($3.6 billion? For 30 properties? Sheesh!)
Of course all this activity is indicative of pretty sturdy confidence in the market. But it’s worth going straight to the horse’s mouth.
Commercial Observer this week unveiled its third annual Lenders Magazine, which included Q&As with 21 of the top names in finance who opined on everything from what they wish they had known in March 2020 to “Ted Lasso.” Perfect thing to leaf through on a Sunday morning.
See you next week!