And the Winner is...

Blackstone, in a bid to spread it's real-estate hegemony to multiple continents and asset classes has made Jonathan Gray a busy man.  Going long and strong real-estate, whether residential or commercial, has been a no-brainer since 2009 but much credit needs to be given to Jon Gray and his crew.  Actually,  the media has been covering his situation pretty thoroughly for a while now so The CRE Review is going to do a synopsis covering Blackstone's dominance in this area.

 Before we get started, here are some overviews of JG that are worth familiarizing yourself with.

1. Jonathan Gray, Blackstone’s Real Estate Wizard Behind the Curtain - New York Observer
2. Jon Gray Skips Party, Afraid Record Buyout Will Fail - Bloomberg
3. Blackstone's Gray Joins Board as Real Estate Rises to 71% of Firm's Profit - Businessweek 

Whether it has been getting involved in GGP's bankruptcy, loaning money to and then owning  Eagle Hospitality (Apollo and preferred shareholders got spanked on this one; more on this story another time), buying Centro, or any other (Emeritus' health-care portfolio) of it's lucrative joint-ventures (Glimcher); Blackstone has acquired an empire that spans beyond commercial buildings.

Jon Gray has also been busy acquiring a massive portfolio of residential houses; often times he is buying them in bulk.  Look no further than the mortgage team at Bloomberg and you will frequently see BX named in a story that excessively celebrates the genius of buying resi when it has never made more sense to do so.

1. Blackstone Sees Two-Year Window to Buy Houses: Mortgages - Bloomberg
2. Phoenix Picked Clean, Private Equity Descends on Atlanta - Bloomberg 
3. Blackstone Makes Foray Into Houses for Rent: Mortgages - Bloomberg
4. Blackstone Rushes $2.5 Billion Purchase as Homes Rise - Bloomberg

See what I'm saying here?   While not every purchase has been a winner (see: EOP restructurings, Hilton buyout), their aptitude to see trends just a few months before anyone (lol) else tells me that leaving the keys in the mail is just the price of doing business on such a massive scale. 

In case you haven't learned enough already.  A couple more to drive the point home.

1. The Hotel Hegemony Continues
1. Blackstone Said to Seek $450 Million for Hotel Financing - Bloomberg
2. Blackstone Said to Plan Sale of Miami Beach Resort - Bloomberg
3. Blackstone/Apple REIT Merger Signals New Wave of Private Equity Hotel Investment - CoStar

Maybe in the future we'll do a similar story on CRE investors who recently got it all wrong.  Any ideas?  Maguire, Lightstone, Macklowe might work.  Let us know.

~Jingle Male

Linkage for the Lazy

Ladies and gents, enjoy the link-fest below:

1. Goldman Sells $750M in Junior Loans on Hawaiian Portfolio - Deal Journal
1. Abu Dhabi Inv., Canada Pension Plan Inv. Board, and Athene Annuity & Life (owned by Apollo) were the buyers.
2. Sony Selling U.S. Headquarters Building for $1.1B - Reuters 
1. Apparently, this is one of the rare times that Sony has been able to make money in the past few years. I really dig  The Brooklyn Investor's arguments as to why Sony is stuck.
3. BRE Properties Is Possibly In Play - WSJ Developments
4. Lennar Expanding into Apartments - Bloomberg
1. Lennar has been doing a lot of things right over the past few years.  
5. Toll Brothers Playing Follow the Leader - WSJ 
1. How cute. "Suburban Builder Sees Growth in City Living; 'Tired of Mowing the Lawn.'"
6. Tishman Speyer in the News, And It's Not Bad This Time - WSJ
1. Apparently they have learned their lesson.  Less leverage equals less pain in a downturn.
1. For the uneducated, The CRE Review has been chronicling the Stuy Town Saga for quite some time now.

Yes, the single-family rental rating drama is still playing out and I'll comment on that soon.  In addition to CBS spinning off it's billboards into a REIT and a write-up on RLJ Lodging.

Until then, enjoy the holiday.

*Hat-tip to reader 'Carte Tranche' for the link on Sony's US headquarters*

~Jingle Male

Savoy Park (CSMC 2007-C1) $210mm Seeks Refi

Another deal brought to you by a jv between Apollo (AREA) and Vantage Partners... Anyway, this is another rent control story in NY. Bought it for $175mm, leveraged it up to $367.5mm with $210mm in CSMC 2007-C1, and the $157.5 remainder in B-notes and mezz.

Without even looking, you can guess that this loan is with the special, but just so you know, it's not covering with a 0.49x DSCR (NCF; senior debt) at 97% occupancy. There is a healthy reserve, but even the Realpoint spokesperson quoted in the story in yesterday's WSJ notes that it should last "about another two months".

It's due 1/11/2014

The Golub Program

Cuomo has loaded his 50cal and has the sights squarely aimed at Vantage Properties for the whole kick out the pesky rent control tenants and replace them with market-paying tenants strategy.

Vantage & Apollo (aka AREA) Multifamily + CMBS Loan deals:
Esquire Portfolio (1.49%; CSMC 2007-C4)
Broadway Portfolio (2.13%, CSMC 2007-C2)
Savoy Park (6.25%, CSMC 2007-C1) (fka Delano Village)

"Vantage's business plans refer to this strategy of removing tenants from rent-regulated apartments to convert them to market rate apartments as the company's 'Golub program,'" the New York Attorney General's letter states. "Vantage's business plans highlight its Golub program as a means of generating tenant turnover. As reflected in Vantage's annual reports to investors and business plans, Vantage's business goals are to "generate unit turnover through active management of the Golub program and other legal efforts."

"The investigation revealed that Vantage often failed to exercise due diligence prior to serving tenants with Golub notices or other legal termination notices," the letter continued. "Vantage often commenced Housing Court proceedings seeking to evict tenants from homes in which they had lived for decades based on little more than database reports, which were often incorrect, or contradicted by other evidence in Vantage's possession."
..."Any experienced commercial real estate operator in New York would know better than to engage in the practices alleged in the AG's letter," said Charles Cecil, partner and CEO of Opin Partners, a CMBS and real estate investment advisor and investment management firm in New York.

The "Golub Program" is not a new movie in the Bourne series, but I liked it as a headline. It is just what Vantage termed it's strategy in reference to the "Golub Notice" that is required to be delivered to the tenant 90-150 days prior to eviction/removal from stabilized rent.

I'll update these as I discover more. Cuomo also took out a GBU-24 Paveway III and aimed it Ken Lewis and BOA this morning, and took off his white glove and smacked Moynihan across the face several times and challenged him to a pissing contest. Very busy over at the AG office today.