Multifamily lenders’ bleeding balance sheets; New York City nabs control of Red Hook waterfront for redevelopment … and more

THE RUNDOWN:

??Multifamily lenders are staring down delinquencies and paying billions to keep the problems off their balance sheets. Just days after Arbor Realty Trust reported that it had modified almost $1.9 billion in loans, Ready Capital — lender to GVA and Tides Equities, among others — followed suit, telling investors that 10 percent of its $6.6 billion bridge loan book was over 60 days delinquent.

?? Residents of a co-op on New York’s Billionaires’ Row are worried that the owner of their land will hike its ground lease by 600 percent when it renews next year. They have hired lobbyists to support a state bill that would limit annual rent increases, though the legislation faces an uphill battle.

? New York City cut a deal with the Port Authority of New York and New Jersey to take control of 120 acres from the southern edge of Brooklyn Bridge Park to Red Hook and is planning redevelop the land into housing, retail, green space and a modernized port.

?? The sale of Fort Worth’s tallest building may mark the bottom for the city’s office market. Pinnacle Bank Texas bought back the 40-story Burnett Plaza for a credit bid worth less than 10 percent of the building’s previous sale price.

?? Anand Khubani, founder and CEO of Ideavillage, a consumer brands company, is probably the mysterious buyer behind a $100 million waterfront assemblage on La Gorce Circle in Miami Beach.

??After suddenly closing 33 shops in late April, high-end grocery and convenience chain Foxtrot is talking to Chicago landlords about potential deals to reopen —?especially in what it considers its better locations.

?? One of the most public advocates for California’s builder’s remedy provision has filed an application for a multifamily project in Beverly Hills. It is the sixth builder’s remedy case for the developer, Leo Pustilnikov.

THE DETAILS:

??? Not just Arbor: Syndicator lender Ready Capital chokes on past-due debt

Ready Capital reported a major upswing in delinquencies. The problem: multifamily syndicators.?

• In its first-quarter earnings release, Ready Capital said that 10 percent of its bridge loan book was over 60 days delinquent, a 284-percent increase from the same period last year.?
• CEO Thomas Capasse immediately pegged apartment properties as the problem asset in a Thursday earnings call, tying “credit impairment” to “late cycle stress in the multifamily sector.”
• Like Arbor Realty Trust, which reported a similar surge days earlier, Ready issues niche investment products known as commercial real estate collateralized loan obligations, or CRE CLOs. While some CLOs are easy to modify, the ones on Ready’s books can’t move out of loan pools until they are over 60 days delinquent, causing “additional lag time,” according to Capasse.

?? Billionaires don’t like rent hikes either?

Residents at Carnegie House at 100 West 57th Street have hired at least three lobbying firms to support legislation that would cap increases on ground leases.?

• In 2014, the Werner Group bought the land underneath Carnegie House, leaving some residents in a “perpetual state of fear” about what would happen when the lease expired. Shareholders in ground lease co-ops have to pay the landowner rent, a cost incorporated into monthly maintenance fees.
• One shareholder sued the landowners in 2022 but the case was dismissed in January.
• Now, residents have hired lobbying firms to push in favor of a state bill that would limit the increase to 3 percent or? the Consumer Price Index, whichever is greater. Shareholders would also get the right to renew the ground lease and right of first refusal if the landowner decides to sell. The bill faces an uphill battle..?

? New York City controls a new piece of waterfront Brooklyn

The city announced an agreement with the Port Authority to transform the Brooklyn Marine Terminal into a new development with housing, retail and an updated port. No cash will trade hands in the deal, the city’s largest real estate transaction in 20 years.

• The opportunity for the real estate industry lies in the spectacular views of New York Harbor and Lower Manhattan; condominium units next to Brooklyn Bridge Park have fetched ten-digit sums. The piers are not in great shape, and previous attempts to redevelop the area have failed.
• “The potential for this area is limitless,” Mayor Eric Adams said in a statement. The mayor said that the city would work with the local community, elected officials, and key stakeholders.

?? When the pinnacle is the bottom

Fort Worth’s office market may have seen its lowest point, as Pinnacle Bank Texas bought back a building from an affiliate of New York-based Opal Holdings for a credit bid of just $12.3 million, or $12.30 a foot.

• The Opal affiliate defaulted on a $13 million loans from Pinnacle, triggering foreclosure proceedings just three years after it bought the 1 million-square-foot Burnett Plaza, at 801 Cherry Street, for $137.5 million.
• Pinnacle, which was a mezzanine lender on the building, will still have to shoulder a $68 million senior loan from UMB Bank.
• Burnett Plaza’s staggering drop in value and foreclosure sale reflect the beleaguered state of Dallas-Fort Worth’s office market, where the vacancy rate is 22 percent. (Fort Worth is in better shape than the metro area as a whole, with an 11.5 percent vacancy rate.)

?? Brand mogul Anand Khubani is the likely buyer of a $100M waterfront Miami Beach assemblage

An assemblage that hit the market two years ago for $170 million went into contract in early April. Sources say Anand Khubani is the buyer of three properties, at 18, 22 and 24 La Gorce Circle.

• The sale will mark the most expensive residential deal to close since hedge fund billionaire Ken Griffin purchased Adrienne Arsht’s former waterfront Miami estate for $106.9 million in 2022.
• Another buyer —?identity unknown — is purchasing another property in the assemblage at 16 La Gorce Circle for between $20 and $25 million.
• The trust of the late Dr. M. Lee Pearce is selling the properties. Pearce paid more than $3.1 million in the 1980s to assemble the properties, which total nearly 3 acres with 600 feet of water frontage.?

??Foxtrot founder Mike LaVitola eyes brand revival in talks with Chicago landlords

The high-end grocery and convenience store chain is aiming to reopen multiple locations in Chicago and Texas after suddenly closing 33 shops in those markets as well as Washington, D.C. on April 23.

• Landlords are considering deals with the new ownership group of Foxtrot, which several people familiar with the matter have said involves the brand’s founder Mike LaVitola.?
• Not all landlords are ready to go back: At Foxtrot’s former Southport Corridor location, at 3334 North Southport Avenue, the landlord is among those moving on from the retail chain despite receiving an inquiry about reopening made by the former tenant.

?? Leo Pustilnikov proposes studio-only multifamily in Beverly Hills

The developer’s sixth builder’s remedy project in the city is near a future Metro line. The project would be an eight-story, 90-unit building right in the heart of Beverly Hills.

• The proposal for the building consists entirely of 90 studio apartments, including 18 affordable housing units and takes advantage of the legal loophole known as builder’s remedy, which is available if cities don’t have a state-approved plan to build more housing by their deadline.
• Beverly Hills muffed its deadline in October 2022, allowing Pustilnikov to file multiple builder’s remedy applications, which can be updated later.?
• While the city has expressed support for affordable housing in principle, the outcome of Pustilnikov’s project will be a good indicator of its commitment in practice. The city has 30 days to respond to the application.

THE CLOSE:?

Condos have been in an amenities arms race, as developers packaged brand new gyms, historical libraries and private restaurants into the price of new units. As new developers scale down in Manhattan, is the amenities craze coming to an end? Keep reading TheRealDeal.com to find out.