Sunday Summary: Did Somebody Just Say ‘a Trillion Dollars’?

That was the value Brookfield (BN) gave on its earnings report last Wednesday for the assets it had under management.

A lot of it was due to investments in artificial intelligence and renewable energy, according to Brookfiled’s 36-year-old wunderkind president Connor Teskey.

“We… continue to see unprecedented opportunities in our renewable power and transition business, as evidenced by the recent partnership with Microsoft and our agreement to acquire Neoen, one of the world’s leading renewable power operators,” said Teskey. “With one of the largest pipelines of over 230,000 megawatts of renewable power in operation and under development, and our rapidly growing data center platforms, which has seen its U.S. capacity grow fourfold over the last two years, we are the infrastructure leader behind the ongoing AI revolution.”

And, while the trillion dollar figure seemingly casts every smaller deal into silence, there were a few other big numbers we saw thrown around last week.

Cain International and Oko Group began the search for $5.25 billion to complete One Beverly Hills, their ultra-luxury development that will be the two tallest buildings in Beverly Hills when they’re completed. (Cain and OKO are hoping to finish by the 2028 Olympics in L.A.)

Michael Dell’s MSD Capital secured $1 billion from Citigroup to refinance the 1,047-unit Boca Raton Resort & Club (the deal technically closes on Aug. 22).

Equity Residential (EQR) plunked down nearly $1 billion ($964 million) for an 11-property portfolio in Atlanta, Denver and Dallas from Blackstone (BX).

Finally, we checked in with Michael Swerdlow about his new 8,000-unit affordable housing development in South Florida; price tag: $3 billion.

Good earners

We’ve got the first full week of August behind us and that means that the laggard earnings calls for the second quarter of 2024 are hereby in the can.

Some of the news was good, like with Brookfield, or DigitalBridge, which raised $14 billion mostly for data center development and saw net income of $77 million.

Some of the news was bad. Starwood (STWD) Property Trust saw its net income cut by half (49 percent) to $77.9 million from what it was the previous quarter. Plus, Starwood had to foreclose on properties and downgrade a number of their loans.

However, the company’s chairman and CEO was sunny on the call. “We strategically diversified Starwood Property Trust into investment cylinders other than commercial lending as we saw risk and reward shift,” said Barry Sternlicht. “We think the roughest patch for the property sector globally is behind us, and the U.S. and Europe will be moving into an easing cycle.”

Some of it was good and bad at the same company. Yes, we mentioned Brookfield’s dizzying “t” word, but they also saw their income dip 47 percent. Vornado Realty Trust (VNO) saw some good deals (they sold their Uniqlo space at 666 Fifth Avenue for $350 million) but, also, despite the fact that office leasing was generally healthy last quarter, Vornado lost some key tenants like Facebook.

And, while we didn’t learn about it on an earnings call, it came to our attention that Bill Ackman’s Pershing Square Capital Management, the largest shareholder in Howard Hughes Holdings, was pushing to take HHH private.

Shocks to the system

Of course, all of these earnings calls might look very different next quarter. Indeed, last week saw the most tumult in the markets in quite some time. Stocks zigged and zagged, and there were calls on the Fed to cut interest rates to head off a recession. (A cut will very likely happen in September if not sooner.)

Which would certainly be welcome in the real estate market, given its own share of tumult and crazy discounts.

Just last week Downtown Los Angeles’ 801 Tower, aka 801 South Figueroa Street, sold for $60 million, or about $129 per square feet, to an unnamed Chinese buyer. Just a decade ago the same building traded for $178.2 million.

Donald Trump’s former Washington, D.C., lodging, Trump International Hotel, (currently the Waldorf Astoria Washington D.C.) sold at a foreclosure auction for $100 million to merchant bank BDT & MSD Partners.

Finally, a Goldman Sachs (GS)-led consortium took the keys back on L&L Holding Group and Fortress Investment Group’s $2.5 billion TSX Broadway.

On the move

There have been a couple of interesting job switches so far this August.

Kevin Cullinan, who had spent a decade at Mack Real Estate Group as a partner and head of credit, has landed in the same role at Ohana Real Estate Investors. (You know Ohana — among their $4.5 billion in investments and $850 million in hotel loans, some of their greatest hits include the Four Seasons Hualalai in Hawaii and the Fontainebleau Miami Beach.)

“We are beyond excited to welcome Kevin to Ohana,” said the firm’s president and CIO, Franco Famularo, in an announcement about the hire. “As we continue to grow our credit and capital markets capabilities, Kevin’s deep expertise and experience will be invaluable in allowing us to provide a broader array of debt solutions to our investors and to owners of high-quality properties.”

Also, Ronnie Levine and Seth Grossman have left their perch at Meridian Capital Group to start a new equity firm called Green Pine Real Estate.

While Meridian wished Levine and Grossman well in a statement to CO, it was probably a blow to the firm, which has been bleeding talent like Adam Hakim, James Murad, Tal Savariego and Judah Hammer, and which announced the departure of their president, Yoni Goodman, last month.

Sunday reading

House hunting is a great Sunday tradition, and we wouldn’t want to intrude on whatever you have planned today, but, while we’re on the topic, may we recommend reading an interview with one of the best designers in the business: Thomas Juul-Hansen.

The man behind the designs at One57 and 720 West End Avenue sat down with CO to talk about Gary Barnett, big apartments, good materials and more as a part of our architecture and design issue last week.

And, while you’re on the topic of building as a verb, you should check out our look at construction in an ever hotter and hotter New York City (and by “hotter” we mean temperature-wise), the push to diversify the architecture field, and the proptech firms and fixes that architects are using.

See you next week!