What Yardi wants with WeWork; Lutnick, Sternlicht predict small regional bank pain ... and more

The best national real estate stories from The Real Deal. May 11, 2024 [View in Browser]( | [$1 for 1 Month]( [The Real Deal Logo](   [The National Logo](   In today’s newsletter, we ask whether [Yardi’s plan for WeWork]( will work. Plus, some hot takes from top executives – including [Sternlicht]( at the Milken Institute and [Lutnick]( at TRD’s own New York Forum, both of whom predicted major pain for regional banks. There's an office [leasing slump in Miami’s Brickell]( and the story of how New York’s [hottest resi market]( became the off market. These stories and more below.   The WeWork deal: What was Yardi thinking? What does a tech company want with an office firm? When the office company is the [once-great](, [now-bankrupt]( coworking firm WeWork and the tech company is property management firm Yardi, there are a couple possibilities. Some have suggested that the acquisition would finally allow WeWork to become the tech company it always claimed to be. Which – given its spectacular fall from a $49 billion private valuation to bankruptcy – would be quite a feat. But that magic trick probably isn’t in the cards here. As TRD’s Keith Larsen wrote in his analysis earlier this week, Yardi was already “in for a penny, in for a pound” with WeWork – it was the third-largest shareholder last year and a senior secured lender during the bankruptcy. So sources suggest that while the deal looks like doubling down, it really allows Yardi to recoup its investment by buying in while the price is low and, in a year or two, getting out by selling what’s left of it to another co-working firm or someone with office operating experience. And given what WeWork will look like on the other side of its bankruptcy, it might not be a bad plan. The firm has dropped about a third of its locations, gotten rid of $8 billion in future liabilities, and will have no debt after bondholders’ buy-ins are converted to equity. So Yardi will have a company that’s much lighter than the one that went into this restructuring. That doesn’t mean the path forward is all upside – there are questions about occupancy and profitability. Plus [Adam Neumann]( still wants back in, and has claimed the Yardi deal is an inside job. Yardi hasn’t said much about its strategy here. But WeWork claims its net income will reach $343 million by 2028. Which sounds nice, except that even minus a good chunk of leases, it’s still a company with 24 million square feet of office exposure and a tricky business model in a bad office market. So we’ll have to wait and see if Yardi has another trick up its sleeve.   Together with Entrata Automation: The key to AP process efficiency [Entrata]( The opportunities to automate AP processes and operate more efficiently are massive. Discover some of those opportunities and several nuggets of wisdom, like: - Which payment types are most vulnerable to fraud and what you can do about it - How your organization could save around $18,000 annually by switching to this one payment type - What process you can automate to reduce its cost by about 80% And many more! Download your free copy today.   [I'm an image]( [Howard Lutnick talks bank failures, Newmark’s competitors and RoboCop brokers]( “The business of services of real estate are going to be fire! FIRE!” Lutnick claimed at TRD's annual New York Forum. He predicted that between 500 and 1,000 banks will fail in the near future. [I'm an image]( [“Multifamily is in the crosshairs”: Execs talk distress, opportunities at Milken conference]( Real estate executives are admitting that multifamily borrowers are starting to see trouble — and that presents opportunity for some. Sternlicht is projecting a “huge distress cycle,” thanks to pressures facing regional banks, he said on a panel. [I'm an image]( [Brickell office slump? Nearly 3M sf planned, zero preleased]( The influx of out-of-state companies signing major leases for big blocks of space in South Florida has ended, data shows. The dearth of leases from new-to-market firms puts projects’ viability into question, including whether three towers planned in Brickell will lease up or be built at all.   Advertisement   [I'm an image]( [Chicago sellers try removing buyer's agent commission]( A listing in Chicago's Roscoe Village is the first in the region to eliminate the buyer’s agent commission offer. A top resi broker, Leigh Marcus, changed the buyer broker's commission offering on a $2.2 million listing to $1, turning heads on the luxury real estate scene. [I'm an image]( [Pinnacle Bank buys back Fort Worth office tower for $12 per sfÂ]( Fort Worth’s office market may have just bottomed out. Pinnacle Bank Texas bought back the 40-story Burnett Plaza, Fort Worth’s tallest building, for $12.3 million at a foreclosure auction, just $12.30 per square foot and less than 1 percent of its previous sale price. [I'm an image]( [New York’s hottest home market is the off market]( Trophy properties tend to trade for huge sums out of sight of the general public. But off-market negotiations are now also helping sellers in lower price tiers score higher offers than they otherwise would, agents and analysts say. [I'm an image]( [Meet NYC’s next generation of top office brokers]( As New York City's long-time power brokers enter their 60s and 70s, the old guard is being joined by young, hungry dealmakers in their 30s and 40s. The three-martini power lunches of yesteryear 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. [I'm an image]( [The mortgage fraud scam exposing broader cracks in small-time commercial lending]( In Cincinnati in 2019, Norman Fuchs bought a sprawling 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. The [fast, profitable flip]( was evidence of a bigger scheme, a crack in the system quickly expanding into a giant loophole.     [The Real Deal Logo]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Manage Newsletters]( | [Unsubscribe]( | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2024 TheRealDeal. All rights reserved. [View Online](