Sunday Summary: What the Heck Is Going On at B6?


A very important name in New York real estate is Paul Massey.

Massey and his old partner Robert Knakal, who now runs the private capital group at JLL, founded Massey Knakal in the 1980s. The firm established a legendary territory system of investment sales throughout New York, and was eventually sold to Cushman & Wakefield (CWK) for many, many millions of dollars on New Year’s Eve 2014.

SEE ALSO: As ICSC Las Vegas Wraps, Attendees Lament Too Many Deals and Not Enough Space

After that, Massey mounted a serious (if ultimately unsuccessful) campaign for mayor of New York, and in 2018 founded yet another investment sales and capital advisory firm called B6 Real Estate Advisors.

So, we have to ask: What in the heck is going on at B6?

In the last few weeks there has been an alarming exodus of talent from the 5-year-old firm.

Adrian Mercado, the COO since its founding, left abruptly (Mercado didn’t say where he’s going). Brian Whelan and Mitchel Flaherty have jumped ship for Ripco Real Estate. Alix Curtin departed for Ariel Property Advisors. IPRG hired B6 brokers Jared Friedman and Robert Rappa. Thomas Donovan left for Meridian Capital Group.

Finally, according to The Real Deal, ​​DJ Johnston, who joined B6 as a partner in 2018, as well as Corey Rosenthal and Brock Emmetsberger, are all headed to Matthews Real Estate Investment Services.

“There is no way we are closing,” Massey assured Commercial Observer when we asked about the departures. “We’re open for business focusing on moving ahead.” 

Be that as it may, insiders told CO they don’t see B6 surviving, with one saying “the writing is on the wall” and another saying “there will be one broker remaining next week.” 

That’s a story CRE professionals would be wise to keep an eye on.

Let’s talk about politics

That’s right, the thing your mother warned you not to discuss at the dinner table along with religion.

Good thing you’re not at the dinner table. (And, if you are, please meet us in the other room.)

There was a swirl of political bombshells that went off last week. Some of which had nothing to do with real estate like the impeachment hearings of President Biden that began in the House Oversight Committee. Some of which will certainly have a peripheral effect on real estate such as the likely shutdown of the U.S. government, which will probably have taken effect by the time you read this.

But there was one very big political/real estate crossover when New York State Supreme Court Judge Arthur Engoron ruled that the Trump Organization had committed fraud by inflating the value of former President Donald Trump’s properties by as much as $2.2 billion.

The properties in question include some of Trump’s most high-profile ones, like 40 Wall Street, which has been struggling with tenant retention and plummeting rents since 2020.

With the ruling, the properties will be put in the hands of a receiver who will be charged with liquidating them.

However, this is almost certainly not the end of the matter. “In the history of New York, there’s never been a more likely chance that a party was going to appeal a decision,” Paul Golden, a partner at Coffey Modica, told CO. “I believe you can call this a historical decision, and the appeal is likely to be historical as well. There’s no other choice — unless they want to settle, which seems unlikely.”

Moreover, there are sticky what-happens-next questions with a liquidation and sale.

“If you cancel the LLC of a property — let’s say 40 Wall Street or Trump Plaza — you then make the property unsellable, and if you can’t sell the property, then you’re violating the U.S. Constitution and the Fifth Amendment,” said attorney Adam Leitman Bailey. “It just doesn’t provide a remedy that can work under New York law. So what’s going to have to happen is the judge is going to have to reform this order, or, more likely, the defendants should apply for a stay and appeal a decision.”

Also at the national level, the Federal Trade Commission dropped a major antitrust lawsuit on Amazon (AMZN). It’s unclear how much the suit — and other problems besetting the e-commerce colossus — will actually affect Amazon’s bottom line. Stay tuned. 

National political debates and considerations are beginning to make their appearance on a state level, too — with real estate implications.

Last spring, Republican presidential hopeful Ron DeSantis signed a Florida bill into law that prohibits people and companies from Iran, North Korea, Syria, Russia, Venezuela and Cuba from purchasing property within 10 miles of a military installation or critical infrastructure — and companies or people from China may not purchase any property in the state at all. 

“I’m proud to sign this legislation to stop the purchase of our farmland and land near our military bases and critical infrastructure by Chinese agents,” DeSantis said when he signed the bill. “We are following through on our commitment to crack down on Communist China.”

But the law, which recalls the now-unconstitutional Alien Land Laws of a century ago, is being challenged by the American Civil Liberties Union on behalf of a political asylum seeker who fled China and a real estate agency that primarily represents Chinese clients.

“There is an argument that the law went too far, and is already creating adverse effects that are discriminating against Chinese Americans, or even Asian Americans,” Joe Hernandez, a real estate lawyer and partner at Bilzin Sumberg, told CO.

That’s another case we’ll be keeping an eye on as it unfolds.

But amid the sturm und drang in Washington, Florida and New York there was one piece of legislation that CRE pros no doubt were happy to learn was wending its way through Congress.

HR 5580, a bipartisan (such a thing still exists?) bill that makes it easier to defer tax payments on properties with loan modifications or workouts, was introduced on Sept. 19 and is being boosted by Real Estate Roundtable head honcho Jeffrey DeBoer.

“From the tax law to banking regulation, housing policy and other areas, public policy has always encouraged the restructuring of unsustainable loans to help businesses turn around and help taxpayers get back on their feet,” DeBoer said. He added: “Debt workouts between lenders and borrowers are a critical part of the solution. Workouts can ensure that these properties continue supporting jobs and economic activity.” 

Let’s talk about housing instead

OK, you can go back to the dining table.

Multifamily was the topic for the day at CO’s Multifamily Forum on Sept. 21 in Midtown Manhattan. And the optimism was generally there — if a little more circumspect than in years past.

“We’re moving ahead with buying a portfolio in Florida, but we’re being cautious,” said David Hochfelder, the chief investment officer at Naftali Group. “There’s more price discovery in multifamily. It’s just much better relative value to finance something at 65 percent LTV [loan to value ratio on a mortgage] — which, on the equity side with today’s financing and equity costs, I don’t think those deals underwrite that way.”

“There are not many people who feel comfortable breaking into the market right now,” said Cushman & Wakefield’s Lauren Kaufman when the subject turned to Gotham. “I think anything that’s subject to rent regulation here in New York is considered distressed.”

Regardless of the problems of financing housing, demand is still there. And demand doesn’t seem to be easing, given how many barriers there are to development in a lot of markets.

And the money is there for the right kind of housing project in the heart of an underserved city — like the $56 million Mosaic Investment Partners secured to build student housing near the University of Southern California campus. And Standard Communities is laying down $106.4 million for six Section 8 properties in Los Angeles from Goldrich Kest.

Just don’t expect those big kinds of sales with office.


Let’s take that back. There was a massive office-related (and Related office) piece of news last week when word came down that Wells Fargo is in talks with Related Companies and Oxford Property Group to purchase the old Neiman Marcus flagship at Hudson Yards for a whopping $550 million. The buyer plans to convert the abandoned department store into office space.

And, after many years of anxious waiting and wrangling, we were treated this week to the sweet new opening of Brooklyn’s Domino Sugar Refinery, which has been remade as offices. (And they have aggressive asking rents from the high $70s to the high $90s per square foot. Brooklyn, you’re beautiful.)

One of the big office questions, however, is going to be what the federal government decides to do with its office footprint. (Ha ha — we’re going back to politics!)

More than half of all federal leases (4,108 out of 7,685) are set to expire in the next five years. That’s 83 million square feet of space!

Robin Carnahan, head of the General Services Administration, did not exactly assure us that the appetite for space would remain constant.

“As we think about rightsizing and optimizing the federal portfolio, we need to think about our leased buildings as well as which buildings we keep in our federal inventory that are owned buildings and which ones we dispose of,” Carnahan told CO. “All of this is really driven by our agency partners and customers and what their needs are. And, it’s no secret, everybody’s sort of rethinking what the basic needs are.” 

Words of congratulations — and sorrow

We learned last week that John Kessler, the chief operating officer at Mitsui Fudosan America, will be stepping into the role of CEO after John Westerfield announced his retirement.

Kessler came to Mitsui from Empire State Realty Trust in April and before that he served stints at Fortress Investment Group and Morgan Stanley Real Estate.

We also learned the sad news that Wayne Ratkovich, the developer behind the Ratkovich Company, which owned such L.A. landmarks as the Oviatt Building, the Pellissier Building, and The Alhambra, died at age 82.

Sunday reading

Well, you could do some Sunday perusing through the photos from CO’s Power Gala, to which  some of the biggest boldface names in real estate showed up to meet, greet, toast and possibly do business with their fellow honorees. (Is that chef Daniel Boulud in one of the photos? Uh, yeah, it is.)

And rather than have a Sunday read, we invite you to enjoy a Sunday listen. Power honoree, developer and all-around real estate powerhouse MaryAnne Gilmartin dropped in for CO’s Back Story podcast to talk about MAG Partners, how much of a pain in the neck it is to borrow money now, the Barclays Center and more.

See you next week!