🗞️ Meet the real estate players building in the wreckage | Inside the December 2023 Issue

Inside the latest issue of The Real Deal Dec 04, 2023 [View in Browser]( [Share](   [Magazine Cover Image]( The headwinds were immense this past year. Things didn’t completely run off the rails. But it was close. Pithy rhymes were coined to capture the market, as always — “Stay Alive Until ‘25,” “Take Your Licks Until ‘26” and “T-Bill and Chill” (alluding to the attractiveness of bonds versus real estate) were prominent among them. “From the Federal Reserve’s interest rate hikes to the surge in UCC foreclosures and the persistent bad news for the office market — it was a tough year for real estate,” senior reporter Rich Bockmann writes in the [intro]( to our cover package. That package looks at some of the figures at the center of the maelstrom, from Compass CEO Robert Reffkin (who actually came out pretty well) to developer Fortis (which didn’t, as its luxury high-rise [turned into]( the leaning tower of FiDi). In another story, “[The Auction Junkies](,” senior reporter Keith Larsen hangs with the small-time investors who gather on the courthouse steps in New York City to bid on co-ops they’ve never seen, as a part of a judicial process that is becoming increasingly common. “If real estate dealmaking in New York is like cocaine,” Larsen writes, “this is crack.” We also [profile Jeff Krasnoff](, the forefather of commercial mortgage-backed security servicing, who handles “an ever-growing pile of distressed loans with an iron grip.” As Bockmann writes, Krasnoff has spent four decades flexing what one colleague called “down-cycle skills” to develop an $11 billion business in distress. (Now you know “down-cycle skills” is something you can put on your résumé.) Elsewhere in the issue, multifamily investors [got hit hard]( by floating-rate debt this year — and rookie mistakes are putting some firms in a deeper hole, senior reporters Suzannah Cavanaugh and Isabella Farr found. Some fledgling investors seem frozen by their inexperience and unable to communicate with lenders — a necessity when things go wrong, insiders say. “A lot of people who are in trouble on multifamily syndicated deals, they were in high school in 2008,” said one observer. “They didn’t think this could happen.” Fast-growing Texas in particular seemed like one bright spot for multifamily investors. But vacancies are rising, among other issues. “For the past few years, [Texas multifamily]( was one of the hottest real estate investments in the country,” writes senior reporter Joe Lovinger. “Not anymore.” Of course we haven’t even mentioned the verdict against the National Association of Realtors in a landmark case over broker commissions. In a [story]( by reporter Sheridan Wall, we size up the state of play after the bombshell ruling. The jury says the defendants violated antitrust laws by conspiring to drive up buyer’s agent fees charged to homesellers. But the immediacy of any widespread changes to brokers’ commissions is far from clear. “Just know that this is one chapter in a longer process,” NAR President Tracy Kasper said, perhaps hopefully, at a recent 12,000-person NAR conference attended by Wall. Finally, there are some bright spots out there. Retail was one real estate sector that was in the doghouse several years ago. (“[Retail is f*ucked,](” read the cover of The Real Deal in May 2017.) But how things have changed — luxury brick-and-mortar retail is flourishing, as [our story about the storefronts]( of Fifth Avenue shows. “I’ve never seen vacancies so low on Fifth Avenue,” one broker said of the country’s priciest shopping strip. And it was a bright year too for the players at the top of the heap when it comes to [New York City property managers](, and [Palm Beach]( and [Houston residential brokers](. 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 $50 OFF all our subscriptions with promo code: REAL50 [SUBSCRIBE NOW](   [Time bomb: Meet the real estate players building in the wreckage, navigating a tough year and trying to stay afloat]( “This was a shit show from start to finish.” That scathing observation comes from an industry source getting candid on Fortis’ infamous leaning Seaport condo tower in Manhattan. But it could have been a review of 2023, which from January on has been a debacle. From the Federal Reserve’s interest rate hikes to the surge in UCC foreclosures and the persistent bad news for the office market — it was a tough year for real estate. Nothing encapsulates 2023 like the people who shaped their personal stories through the chaos, for better or worse. [READ MORE](   [Image]( [Syndicators are sinking. Who’ll make it out alive?]( Seasoned shops, having built relationships and know-how needed to prop up loans until interest rates retreat, may be able to weather the storm. But the crop of green investors who started syndicating when rates were low lack experience — both in years and deal volume — in negotiating workouts. “A lot of people who are in trouble on multifamily syndicated deals, they were in high school in 2008,” said Levi Benkert, who syndicates industrial deals as CEO of Harbor Capital and previously developed multifamily. “They didn’t think this could happen.” [Image]( [Timeline:How the broker commissions battle blew up]( On Oct. 31, a Kansas City, Missouri jury rocked the industry when it found the National Association of Realtors and two brokerages liable in the landmark Sitzer/Burnett antitrust lawsuit over broker commissions. The following month surfaced talking points, stock reactions and talk of industry technicalities that presented more questions than answers. [Image]( [How Fortis’ luxury high-rise became the leaning tower of FiDi]( The party set off from the Skyport Marina. Fortis Property Group CEO Jonathan Landau joined real estate brokers and reporters aboard a picnic boat from Hinckley Yachts, a brand favored by late billionaire David Rockefeller Sr. and home decor queen Martha Stewart. Celebrity broker Fredrik Eklund lounged at the boat’s stern, an American flag whipping behind him. It was 2016. The group was there to celebrate Fortis’ new condo tower at 161 Maiden Lane, which would soon join the glittering downtown Manhattan skyline across the river from the Michelin-starred restaurant, and to hear about the building’s nautical amenities. The industry titans had no inkling of the calamitous events to follow as they sipped wine on the outdoor patio and later dined on wild sea bass in a brown butter sauce and tiny chocolate marquise cakes shaped like the Brooklyn Bridge. [Image]( [“Tough decisions”: South Florida to feel sting as office debt matures]( In a suburb west of Miami International Airport, far from the glitz and bustle of the urban core, sits a collection of nine brick-red, beige and off-white office buildings from the 1980s. In October, the Florida Department of Revenue vacated its 41,000-square-foot space at the low-rise campus, called the Office Park at MICC. The debt on the property was soon placed on a watchlist, according to CMBS research firm Morningstar Credit. The status denotes a more intensive monitoring of the real estate’s financial performance stemming from the vacancy, which represents 10 percent of the office space at MICC, and possible issues with the landlord’s ability to meet obligations on the $38.3 million mortgage balance. [Image]( [Robert Reffkin steered Compass through 2023. Can he navigate rough waters ahead?]( Robert Reffkin was cool and collected when he took the stage for his keynote address at Compass’ annual retreat. The charismatic CEO has honed this line of people-first messaging while steering his company through the highs and lows of billion-dollar fundraising, rapid expansion, a disastrous public debut and a difficult stretch of downsizing. It’s not uncommon for executives and staffers to publicly cheer on their own firm — in many cases, it’s necessary. But there’s something about Reffkin as the ever-present narrator of the Compass story that makes the residential giant even more of a must-watch.   [The Closing: Jody Durst]( INTERVIEWS WITH REAL ESTATE TITANS   [Image]( Durst president on endurance training, muscle cars and sustainable buildings You’re one of New York’s biggest real estate owners and you’re staring down an office crisis. You can’t build rentals, and rising interest rates threaten billions of dollars worth of loans. You have to present your shareholders a plan for navigating all this. But instead of facing a dark-suited money manager or powerful pension head, you’re at the family gathering with dozens of cousins, nieces and nephews who are counting on you to keep the business growing. That’s the life of Jonathan “Jody” Durst — president of the Durst Organization and shepherd of one of real estate’s great [dynastic fortunes](. Does he feel the pressure to make sure the family business provides for the next generation and beyond? [Read full story here →]( [FULL ISSUE HERE]( [More Newsletters]( | [Unsubscribe]( | [Privacy Policy]( | [Subscribe]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2023 TheRealDeal. All rights reserved. [View Online](