🗞️ Blockbuster foreclosure | Inside the June 2024 Issue

Inside the latest issue of The Real Deal Jun 03, 2024 [View in Browser]( [Share](   [Magazine Cover Image]( “It’s a sad day when a duke of bombast tumbles to the reality that at day’s end, he's nothing but an empty sack.” That’s a character’s verdict on smooth-talking Atlanta real estate mogul Charlie Croker, who is in the midst of defending his empire from those wanting to capitalize on his sudden bankruptcy and fall from grace. Lenders who have shelled out millions are ready to pounce to take back his properties, after many years of being appalled by Croker’s hubris and ego — and a little jealous of his wealth and larger-than-life image, too. This is the premise of “A Man in Full,” a new Netflix series starring Jeff Daniels, based on the Tom Wolfe book from the 1990s. While fictional, it could be ripped from today’s headlines, given the amount of distress happening in commercial real estate. It’s worth a watch for that reason alone. Our cover story this month could almost be an episode. The story involves billionaire developer and film producer Charles Cohen, who [could see the largest debt auction yet]( for the troubled office sector. Cohen, a New York real estate scion who channeled his wealth into an indie film empire, is being pursued by his lender Fortress after an alleged $534 million default in late March. It’s a battle between a rich aesthete stretched too thin and a cutthroat firm seen as a “lender of last resort.” As senior reporters Suzannah Cavanaugh and Keith Larsen [write](, the commercial real estate market “has been waiting for a fallout like this. It was anyone's guess it would play out so publicly.” With banks finally clamping down on properties hammered by low occupancy, remote work and the pandemic, more fallout is expected soon, and some commercial brokerages are expecting a surge in properties trading hands in the coming years. Billionaire Howard Lutnick, chairman of Newmark, is spending aggressively to lure top broker talent from around the country, with a bid to try to surpass CBRE and Cushman & Wakefield, the biggest firms. In his [latest profile,]( senior reporter Rich Bockmann sketches out those ambitions. Lutnick, who took the stage last month at TRD’s annual New York forum, amazingly expects that another 500 to 1,000 banks — about a quarter of the country’s banking institutions — could go under. There are $2 trillion of commercial real estate loans maturing over the next three years, many of which will be in trouble. Not a good time to own real estate, but a good time to be a broker (and a buyer). “The business of services of real estate are going to be FIRE!” Lutnick declared onstage. “This is the opportunity: ‘25 to ‘26! The greatest opportunity to buy real estate correctly that you will get in your generation.” It’s not much better on the other side of the aisle, in the residential market. Our special Hamptons section (which will also run in July and August) details [the lull that the market has seen]( and the [challenges brokers face there today]( — including agents from places like Palm Beach and Aspen swooping in and trying to steal their lunch. Not that it excuses bad behavior. In a [stellar investigative piece](, senior reporter Katherine Kallergis lays out how brokers’ misdeeds rarely get punished by state licensing agencies or trade groups, part of a monthslong project. In Florida, more than 18,000 real estate complaints were submitted to the state in the past three years. Around 9,700 were found to be legally sufficient — meaning that the alleged problems would violate state law. From this group, just 47 agents had their licenses suspended and 407 had them revoked. This creates a black box: Agents may have been convicted in court of wrongdoing, but you would never know that by looking at the state licensing database. “Buyers and sellers, some making the most important financial decisions of their lives, lack crucial information, [and] agents outside the whisper network are also left vulnerable,” Kallergis writes. The important story — which left me feeling outraged and feeling that reform is necessary — is [here]( for you to read. Finally, if you’ve finished with the issue and are looking for some beach reading, check out my wife, Julie Satow’s, new book, “[When Women Ran Fifth Avenue](.” It’s a look back at the heyday of department stores and the women who ran them. Think “Mad Men,” but if women ran Don Draper’s firm. The Wall Street Journal [said]( it’s nonfiction that reads “like a novel.” Enjoy the summer! 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](   Billionaire developer and film producer Charles Cohen could see the credits roll, with largest debt auction yet When Charles Cohen’s team asked his lender for one last chance to stave off the consequences of an [alleged $534 million]( default in late March, Fortress was already busy filing suit. The billionaire head of Cohen Brothers Realty, a New York real estate scion who channeled his wealth into an indie film empire, had failed to make a scheduled $24 million payment. Cohen thought the parties had drawn up new terms that would extend his loan and defer payments, he later alleged in legal filings. Fortress begged to differ. The lender had extended four modifications to keep Cohen afloat on a loan made in 2022, it claimed in court documents. The last was an interim measure designed to give the parties time to formulate a longer-term amendment. It would burn off Feb. 1, Fortress said, and absent a new agreement, Cohen’s payments would balloon. The commercial real estate market has been waiting for a fallout like this. It was anyone’s guess whether it would play out so publicly. [READ MORE](   [Image]( Newmark is playing for CRE’s No. 1 spot The country’s top two real estate brokers had barely settled into their new offices when they got the call to help prevent a national banking crisis. For Newmark, the Signature [deal]( suggested what the payoff for 12 years of building would look like.   [Image]( A tide of low inventory left brokers high and dry in the Hamptons For agents out east, life was good a decade ago. The residential market on Long Island’s East End had finally recovered from the 2008 financial crisis — the aftermath of which lingered for at least the following four years. But the 10 years since have brought rockier waters.   [Image]( How regulators fail to prevent resi brokers’ bad behavior The beachfront lot in Jupiter, Florida, was set to close for $4.9 million when Milla Russo went looking for a commission. Milla claimed she and Lori Schacter, another [Illustrated]( agent, represented the buyer and were thus entitled to a $122,500 [commission](, according to a lawsuit later filed by the closing agent. There was just one problem: The buyer never worked with, or was represented by, Milla or Schacter, he later testified. Two versions of the contract show the before and after. Andrew Russo’s name is on the first, replaced by those of his wife and Schacter in the second.   [Image]( Here are Dallas’ top-selling residential brokerages of 2023 From coast to coast, conversations about the housing market are dominated by speculation about interest rates. But in North Texas, complaints about the cost of debt often get drowned out by the clamor of bulldozers and the roar of traffic on the endless highways that criss-cross the Metroplex. The economy continues to hum in a region that’s home to the [fastest-growing]( cities in the country. And while the real estate frenzy that characterized 2021 may be over, Dallas-Fort Worth’s top residential brokerages appear to be doing just fine.   [Image]( Gucci and Prada now own their buildings. What’s their plan? Amid a [high-end retail rebound]( that would have been hard to predict a few years ago, brands are now competing to shore up their real estate assets. Just in the last six months, Kering, Gucci’s parent company, and Prada have snapped up properties along Fifth Avenue. With a limited number of premier properties along the avenue, brands are often vying for the same spaces in an effort to cement their flagships in one of the most sought-after shopping districts in the world. And once they find their deals, players are likely to continue an arms race of buildouts that do their best to redefine what luxury is, establishing permanent legacies on Fifth Avenue at a time when the corridor is one of the most expensive areas to rent.   [The Closing: Mike Reschke]( INTERVIEWS WITH REAL ESTATE TITANS [Image]( The head of Chicago’s Prime Group talks about getting his start laying tile, his support for Mayor Brandon Johnson and his project for Google that could help revitalize Chicago's Loop.   Mayor Brandon Johnson does not hype every Chicago developer, but he appeared to be a fan of Mike Reschke when the two appeared together at an early-May groundbreaking at the Thompson Center. There, in the middle of the Loop, the developer joined Google leadership and the state’s most powerful officials to celebrate the tech giant’s $300 million plan to redevelop the 1.2 million-square-foot property into its new flagship Chicago offices. Reschke’s Prime Group and its partner Quintin Primo are leading the charge. Not only did they recruit one of the world’s most famous companies as the taker for the dilapidated former state government building at perhaps the most precarious, distressing time for Chicago’s office market in history, but Reschke is also leading more conversions of major office buildings into hotels and apartments than just about anyone, anywhere. He currently has $2 billion worth of development projects in progress within a six-block radius in Chicago. [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](