🗞️ Behind the multifamily syndicator machine | Inside the May 2024 Issue

Inside the latest issue of The Real Deal May 01, 2024 [View in Browser]( [Share](   [Magazine Cover Image]( It wasn’t everything real estate wanted, but it should do the trick. Last month, New York state’s budget was unveiled, with [a housing package]( that ended a long gridlock. The package revived a property tax break for development, encouraged office-to-residential conversions and changed renovation rules for rent-stabilized apartments. It also enacted good cause eviction, which the industry had fought. Taken together, the measures “promise to help thaw the environment for developers.” Things look a little more hopeful now. These days, thankfully, we seem to have come out of the urban doom loop spiral as well. Some office properties are being converted to residential. Towers are finding new owners after distress. And some investors are snapping up once-maligned Class B office buildings, including in Texas. “There are more buyers than there were six months ago, when I was the only guy,” noted Doug Agarwal, the founder of Capital Commercial, which has emerged as the top buyer of aging office properties in Texas. Check out our stories on this trend in the [Austin area]( and [Dallas-Fort Worth](. Maybe we can even start to think big about the future of our cities. That was [the message]( at The Real Deal’s Salon Series event last month with former New York City deputy mayor for economic development Dan Doctoroff. Doctoroff, who is now battling ALS, took the job despite scant experience in 2002, kicking off two-plus decades of redevelopment. Hudson Yards and the High Line in Manhattan, the Greenpoint-Williamsburg waterfront and the Barclays Center in Brooklyn, and Hunter’s Point South in Long Island City were all hatched under Doctoroff’s watch. “We had something like 289 projects, and about 280 of them got done,” Doctoroff told the crowd. In the spirit of red-tape busting we need more of today, he added: “We really did everything we could to reduce bureaucratic inertia.” In this parade of somewhat good news, it might even be (kind of) a [good time for co-ops](, which have gotten overshadowed for so long by the new condo towers rising in New York City. (Relative) bargains abound, and the expert buyers’ brokers who do deals in those buildings stand to benefit from the recent commission lawsuits that have rattled the industry. Things aren’t as bright in South Florida, which bucked the national trend during Covid but now seems to be on the precipice when it comes to development. The prospect of a bust seems real (remember, you heard it here first). South Florida saw record rent hikes from 2020 to 2022, but last year rent in the state dropped the most in the nation. There are more than 40,000 rental apartments under construction in South Florida, but only 11,000 units occupied in the latest 12-month period. [Read the story]( by reporter Lidia Dinkova. In our latest investigative piece, [a mortgage fraud scam is exposing broader cracks]( in the system. The widening net now involves the Department of Justice; Freddie Mac; Fannie Mae; two of the largest title insurers in the tri-state area, Madison Title and Riverside Abstract; and Meridian Capital Group. Neither Meridian, Madison nor Riverside has been charged with any wrongdoing, but everyone is paying attention. Finally, our cover story takes a look at the fallout from [multifamily syndication deals](, one of the hottest topics for our readers. There was a ton of investment in rental buildings during and after Covid — even if people didn’t go to the office, they still needed a place to live. Turns out a bunch of the money came from newbie investors — doctors, dentists, pilots, immigrants, engineers and even church groups. Senior reporters Isabella Farr and Suzannah Cavanaugh reveal how these investors got sucked into bad deals that you won’t want to miss. Let the good times roll! Enjoy the issue. Editor's Note Stuart Elliott Editor-in-Chief & CEO   If you’re interested in receiving future magazine issues in print, sign up for our [annual subscription](. Save $20 OFF with promo code: MAG20 [SUBSCRIBE NOW](   [Behind the syndicator machine targeting new investors for multifamily feeder funds]( Syndication, or pooling equity from investors to buy property, hit a fever pitch in 2020 and 2021. Multifamily investors, fueled by record-low interest rates and rising rents across the Sun Belt, bet big on the asset class. Their game plan: renovate, raise rents, disseminate returns and exit at a profit. Syndicators drew investors by dangling the carrots of less time at the 9-to-5, tax benefits and returns that put the stock market to shame. But investing carries risk and trust can cloud judgment. Syndicators that produced stellar returns when rates were low have watched deals struggle or fail over the past year. Interest payments on floating-rate loans have soared, rent growth plateaued and value-add plans stalled. [READ MORE](   [Image]( [Meet NYC’s next generation of top office brokers]( Mary Ann Tighe. Bruce Mosler. Howard Fiddle. For decades, these power brokers and their competitors have reigned supreme over Manhattan’s office landscape. But as they enter their 60s and 70s, the old guard is being replaced by young, hungry dealmakers in their 30s and 40s who are doing it differently. The three-martini power lunches are out and data-driven pitch decks are in as this next generation sets the tone for the leasing business and changes the culture — all while navigating an anemic market.   [Image]( [The mortgage fraud scam exposing broader cracks in small-time commercial lending]( Norman Fuchs inked the deal of a lifetime. In Cincinnati in 2019, Fuchs bought a sprawling, nearly 1,000-unit rental complex for $70 million and flipped it for a 30 percent profit a week later. But Fuchs never saw the money. In fact, he had zero involvement in the deal. What actually happened was that three investors — Boruch Drillman, Fred Schulman and Mark Silber — had allegedly stolen Fuchs’ identity, forged his signature and bought the apartments for $70 million. Then the fake Fuchs flipped them to the real Drillman for $96 million. It wasn’t an isolated scam.   [Image]( [‘In a holding pattern’: South Florida apartment developers pause projects]( Developer Dan Kodsi isn’t rushing to build multifamily projects in South Florida. Two years ago, he jumped into the market with proposals for an apartment tower in Aventura and another in Miami. Now, he’s reevaluating the developments and tweaking both. South Florida multifamily developers are altering their projects or pausing plans altogether. It’s a turnaround from the past three years, when developers seized on unprecedented demand as the tri-county region became a magnet for out-of-state residents and record rent hikes ensued.   [Image]( [Builders plot comeback after brutal year]( In the last year, it’s been out of the frying pan of Covid-19 and into the fire of its aftermath for some of New York City’s largest general contractors. The state’s new housing policy is a ray of hope, as are plans at the city level that favor real estate development, but it has been a trying year for the blue-collar side of real estate. A familiar roster filled out this year’s ranking in The Real Deal’s general contractor rankings in the city, with megaprojects underway including the redevelopment of JFK Airport, the new Midtown headquarters for JPMorgan Chase and a film studio in Astoria, Queens, backed by Robert De Niro. What comes next is a trickier question.   [Image]( [Chris Cortazzo on how he became the biggest broker in Malibu]( Driving down the Pacific Coast Highway in Malibu, it’s hard to miss Chris Cortazzo’s name. The Compass broker has been working the Malibu market for nearly three decades, closing more than $8 billion in sales over the course of his career. TRD chatted with Cortazzo about growing up in Malibu, selling his first home (to Richard Gere) and the frenzy of the 2020-2021 market.   [The Closing: Jay Martin]( INTERVIEWS WITH REAL ESTATE TITANS [Image]( The executive director of CHIP talks about its merger with the Rent Stabilization Association, his family facing eviction when he was a child and why he once wanted to become a priest.   Jay Martin does not relish being the center of attention. That may seem counterintuitive or just wrong, given how prolific Martin is on social media and how often he is quoted speaking on behalf of owners of rent-stabilized buildings in New York. As executive director of the Community Housing Improvement Program, a landlord group that represents more than 4,000 rent-stabilized owners, he has had to be front and center. This is a pivotal moment for the group. It is in the process of merging with another landlord organization, the Rent Stabilization Association, and it is emerging, somewhat bruised, from a fierce state budget fight. [Read full story here →]( [FULL ISSUE HERE]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Share]( | [Manage Newsletters]( | [Unsubscribe](list=Subscribers + Engaged) | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2024 TheRealDeal. All rights reserved. [View Online](