MF Syndicator Bingo

Originally posted this earlier this year in the Tides Equities thread and made some quick edits based on comments.  Happened upon the earlier version tonight making the rounds online and had a good laugh.  Thought with GVA's current implosion it was as good a time as any to make an official thread on this.

Will let the community decide when to officially call a firm's BINGO ball as it were, but expect GVA is on its last legs based on the news making the rounds online.  Will also share links to articles / news as it occurs as a means to track the pending implosion of many of these firms in one, centralized location.

With that said, doubt we see any distress out of S2 anytime soon - if at all.  So don't expect BINGO to be that easy.  My best guess for now is we see something along the lines of column I fall first, but imagine column G is also a contender.  Actually, looking at this again - lots of real possibilities.

Call your shot.  Will stick with Column I for now on my end.

MF Syndicator Bingo Card

 

Are rockstar’s other deals toast?

How can they still owe money on the foreclosure? Did you lend them the money personally instead of taking a lien on the property?

I am genuinely curious. I recently saw a group take out millions above the loan amount on personal loans not tied to the property. Now the property is headed for foreclosure and the borrower is still going to be liable for the personal loans.

 

They "why" is that Pat Carroll is a fucking psycho, and institutions would not give the firm any more money while he was involved.  Their equity is a lot less retail than you think (mostly Investcorp, AIG, and Pru).  He cashed out and took his money and is now an instagram personality.  The firm itself is still very much in existence and still has a very capable asset management, operations, and back office team... hence why RMR bought them.  They're also actively hiring for investment roles.   

 

Was there new news on gva this week?
I heard they stopped paying on most of their deals but I have only see a few of them hit the articles in the past few weeks.

 

Okay - so same info that has been out there for a while.
It is interesting that they claim they bought it for a 3.4 cap. I think that deal was bought for a 2 cap on trailing numbers.
It is a decent property and location but management is terrible and they were way over levered. Is this one of the ones they turned over to rpm?

 

Did anyone see the clo payment data for December?
Does it show what is happening with these loans?

 
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They are backed by Berkshire Residential, and have been on a lending spree since 2019. They have issued 11 (I think)  CLOs between 2019-2023, with mostly bottom tier sponsor ship, younger inexperience guys looking for high leverage, with the assumption they can just pull these loans out of the trusts, take them back and lean on Berkshire to operate them.

I don't think they realized how many of their loans are actually in jeopardy, and how overvalued they got these things to. They are the epitome of extend and pretend, and have modified a ton of their loans to help them get through maturities in 2024 forcing paydowns and additional guarantees from sponsors. Those guarantees are essentially useless, since MF1 is expecting them to be credit enhancements to the loans, but the sponsor guaranteeing them will go BK before anything comes to fruition. MF1 could be noted as one of the catalysts who spurred the sunbelt craze, giving all these inexperienced and shady sponsors billions to buy at top of market prices. I would say that the average DYs on most of MF1s loans are 4 (or sub 4) and at the 80+ (90+ really) leverage points, with a lot of sneaky money behind them.

They are by far the most in trouble IMO, and will be one of the pandemic darlings not making it out of this.  

 

rumor has it that MF1 has started selling the notes on its worst deals below par. Has anyone heard the same?

 

The million dollar question followed by my cynical conspiracy theory. How much capacity does really Berkshire have to take all this over? MF1 talks a biiiig game. 
 

MF1 issued many loans that shouldn’t have been made. Were they greedy? Or was this all a plan to wipe out the equity of inexperienced syndicator buyers when they take all their collateral back at their bases and make a gd killing?

 

Yet they just reported fourth quarter earnings this morning and there's no reaction before the market opens.  The disconnect between fundamentals and the story here should be a case study in the future.  Have to laugh at management highlighting their 3.5M share buyback yet failing to mention their 13.8M share issuance during the year.  How does math work again?  Pretty sure (3.5) + 13.8 = 13.3M more shares outstanding.

 

Their delinquencies are through the roof!


From the wsj article

( On average, buildings with Arbor CLO loans only made enough money to cover around 60% of debt payments as of the latest reporting date in 2023, absent hedges, according to CRED iQ data.

The spokesman for Arbor said hedges, interest rate reserves and guarantees are a “critical part of Arbor’s lending practices.” )

.6x coverage! It doesn’t take long to blow through those reserves. Why isn’t the market hammering them? They are clearly going under.

 

Charybdis Alignak

Zavala Capital, anyone?

By all accounts, doing well. They also tend to use their own money and don’t often syndicate.