Deal of the Era

I was reading about JMB Realty and how they had the defining/biggest deal of the 1980's real estate boom (Cadillac Fairview for $2.6 billion). It got me thinking, what has been the biggest or lost defining deal (or development) of this real estate cycle?

The book mentioned how deals in the 90's were less flashy because the degree to which leverage could be used was constrained because of bank losses from the previous decade. Do you feel this is the case in this cycle as well? Do you think that there has not really been a defining deal because of this?

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Comments (26)

Jan 9, 2019 - 2:17pm

Stuy town was huge. It was brokered by Darcy Stacom of CBRE. The book "Other People's Money" by Charles Bagali is a great read. Not sure if you'd include it in the last cycle or this one though..

Edit: should've scrolled down to Ozymandia 's comment before posting lol

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Jan 9, 2019 - 9:01am

The most famous one of all time has to be stuyvesant town

I wouldn't say that is this era, though, and it certainly isn't the most famous deal of all time. If anything can be described as a clear demarcation point, it's the Great Recession. The way in which the landscape changed between 2007 and 2009 is enormous.

I think in NYC and maybe to a certain extent across the US, some of the Billionaire's Row towers might be good examples. Its tough to have one deal be emblematic of all markets and all asset classes, but one of the major trends from 2010-2017 was a ton of foreign money driving the pricing for ultra high end luxury condos through the roof.

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Jan 9, 2019 - 3:30pm

Homerun deal!

In life, you sometimes do what you have to in order to do what you want.
Jan 10, 2019 - 1:51am

They purchased 75% of the building in 2003 and the remaining 25% in 2011. The deal is still a home run anyway you slice, especially with well-timed financings, but if only that hold period would be

Robert Clayton Dean: What is happening?
Brill: I blew up the building.
Robert Clayton Dean: Why?
Brill: Because you made a phone call.

  • 1
Jan 9, 2019 - 3:53pm
Mark Queban:

Hudson Yards

Yeah that would be my vote.

Transbay Terminal and the adjacent properties (like Salesforce Tower) will be up there too

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Jan 9, 2019 - 4:11pm

Pretty much all of my family works outside of the high finance/commercial real estate sector, and the only deal mentioned here that I've heard any of them know about is Hudson Yards. It has people talking all across the East Coast.

Jan 9, 2019 - 3:29pm

That's where Barry Sternlicht got his start. They were the place to be in the 80's.

Agree with blank112 that Hilton has turned out to be a massive success. The BX/EOP deal was pretty solid as well.

Stuyvesant was massive but right after that Starwood bought a $5.3b multifamily portfolio as well so it wasn't completely out there by itself.

Biggest loser of this cycle was probably HNA Group.

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  • 3
Jan 9, 2019 - 3:44pm

I'd agree that Hudson Yards is probably the most iconic of this era. I'm a West Coast guy and I still think that's the case. There are probably 3-4 more that would be equally as important but that were lower profile since they were more M&A/portfolio deals. The KTR acquisition by Prologis comes to mind, that was massive. It wasn't as 'sexy' since it was industrial, but very big.

The stuy town deal was a single asset technically, which is the reason it's impressive. There are a lot of assemblages/portfolios that eclipse it $ wise, but more than one asset or entity level.

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Jan 11, 2019 - 12:46pm

I'll go with the deal that Barry Sternlicht, Jon Gray, Tom Barrack, and Wayne Hughes each poured billions into: the institutionalization of US single family housing. The final chapter hasn't been written on this trade/business, but I expect that 20 years from now, this is what people will be talking about when they discuss RE investment in the post-crisis era.

Jan 11, 2019 - 3:42pm

In total institutional owners owned about 1% of all single family rentals, and 0.2% of all single family homes. Initially, these guys were trying to flip homes for quick profit but got stuck and forced to transition their business model to hold-and-rent.

Inventory for SFR owners dried up long time ago and they basically stopped buying after 2012-2013. Another bad news came last year when FHFA told Fannie and Freddie not to lend any more money to SFR portfolios. Fannie did one deal with invitation homes and Freddie recently did one deal with front yard.

Good news is if another recession comes, taxpayers are not on the hook to bail out these SFR owners because Fannie/Freddie only have less than $2B of SFR portfolios

Jan 11, 2019 - 5:13pm

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