What is the strangest deal you've ever worked on ?

1st-year Analyst here, MD just asked me to underwrite a mixed-use property with a cricket stadium as one of many income streams within the property. Definitely one of the strangest deals I've come across.

What's yours ?

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Comments (42)

Apr 30, 2019 - 4:40pm

Cannot say I've ever worked on a cricket stadium, so you win for the weirdest I think. I've done event centers, food production facilities, farms/ranches, swap meets, etc., but that one is bizarre.

"Who am I? I'm the guy that does his job. You must be the other guy."
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Apr 30, 2019 - 4:53pm

Strangest I've looked at was a Brothel in Vegas MSA while working for a family office. Looked at it through the lens of a hotel or resort, as some men or couples would stay overnight and you could equate the services provided to a spa. Operationally intensive real estate. Traded at very high cap rates because there's not much else the real estate could be used for.

Definitely some interesting metrics. Looked at "services provided" per day (essentially BJ per day) rather than occupancy, ADR fluctuated based on demand for higher cost services. Seller tried to justify that tax rates on their services would become more attractive over time, and that as American culture becomes more sexually liberal there would be higher demand for the kink services which charged a premium.

Also, strong economy ==> fewer women who want to work in sex work so they follow the same cycle as regular hotels


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Apr 30, 2019 - 4:54pm

Not weird in terms of product type but this deal blew up… Literally.

The night before closing day one of the tenants (an 83-year-old woman) went into the building and lit it on fire because the seller was forcing her to vacate upon the close of escrow.

Her business has been there for like 25 or 30 years and she was pissed. The whole thing was caught on camera from a neighbor's property and she was arrested.

I had a flair for languages. But I soon discovered that what talks best is dollars, dinars, drachmas, rubles, rupees and pounds fucking sterling.
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May 1, 2019 - 5:19am

There are some funny ones, but cannot say without the risk of being outed.

"Work ethic, work ethic" - Vince Vaughn

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May 1, 2019 - 11:29am

Worked as an analyst on a CMBS loan for an old wholesale Jewelry exchange building in the ghetto (used to be a nice suburb when it was built 50+ years ago) in a major city. Building was ~99% occupied for 10+ years to about 300 tenants most on MTM leases that escalated annually with CPI. The refinance cash-out was probably 15x owner's basis in the property. Building was built like a bunker with enormous cement structural columns to bear the weight of all the metals with a gigantic vault on the ground floor. Armed security guards and cameras everywhere.

May 1, 2019 - 11:58am

The one at the top of my list is not as hilarious or weird as the others, but a great example of sheer stupidity. I once worked on a condo deal...wait for it....ON A GROUND LEASE. WTF. In concept it's possible to make it work with a well-structured ground lease and there are (very few) successful examples, but this thing was terrible. To give you an idea of bad this thing was, the common charges (on top of you know, the actual common charges) for the ground lease payments averaged ~$10k per/unit/mo. Imagine caring so little or being dumb enough to actually buy one of those units. lol.

May 1, 2019 - 5:04pm

Yep. I actually see this pretty often. Not a rule of thumb or anything, but saw two nearly identical condo buildings being built in close proximity (same size/amenities/finishes), the ground lease one sold units about 15-20% below the fee ownership building.

May 2, 2019 - 1:24pm

Have had a handful of cases where I've had to update vacancy projections due to drug busts. Saw one go down once during a property tour and updated the pro forma when I got back to the office that afternoon. It actually works in your favor if it's a regulated apartment, as long as investors don't know the reason behind the vacancy or at least aren't skeeved by it.

May 5, 2019 - 10:58pm

We advised a biotech company that had run on limited funding for some time. We learned during the process that to avoid potential seizing of assets that the CEO had several commercial freezers containing biological materials moved to his garage and then had moved them back. During this time of course there was no temperature monitoring.

May 5, 2019 - 11:00pm

When I was a junior banker I sat next to the latin coverage group. The CEO of one of their clients shot someone during the IPO quiet period. As the senior banker said, we'd probably would have been OK if he used a silencer.

May 21, 2019 - 11:47am

I had a Tax Credit Rehab Project in the middle of SEC country. The property was a garden design and the weekend before work began on the 2nd building it burned down due to some geniuses trying to clean up a meth lab in their unit. The worst part at least for us was we lost money as the insurance proceeds paid for a new building and therefore we didn't earn the tax credits or our fees on that building. I don't miss affordable housing for a second.

“Capitalism: God’s way of determining who is smart and who is poor.” Ron Swanson

May 23, 2019 - 10:48pm

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

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