For the world’s wealthiest boxer, it’s been a whirlwind six weeks of real estate.
Floyd “Money” Mayweather, Jr., a 15-time world champion, spent $402 million on an Upper Manhattan apartment portfolio in mid-October, then about a month later embarked on a week-long trading spree.
He invested in a $10 billion office portfolio with trophy assets in Chicago and New York — his largest deal to date, according to a source familiar with the investment. He unloaded his island home in Miami’s Biscayne Bay for $22 million, then snapped up a hefty stake in the former Versace Mansion, now a Miami Beach luxury hotel. He recently listed his Las Vegas mansion for $12.5 million.
Then he was in New York, where he put $100 million into a $3 billion joint venture with Go Partners, itself a joint venture between Orbach Affordable Housing Solutions’ Meyer Orbach and Black Spruce Management’s Josh Gotlib. The JV’s sprawling rental portfolio, which includes luxury and market-rate housing, is one of the city’s biggest such deals in recent years.
That’s the bigger move for Mayweather — a literal move to New York and into the fore of the city’s dealmakers.
Mayweather, with total career earnings of $1.2 billion, seized on the Go deal to soft launch his real estate firm Vada Properties. He’s taken some temporary space in the family office of Tommy Hilfiger — “a friend” —while he negotiates for permanent space in Trump Tower, the source said.
He bought an “insane” apartment a few blocks from the New York City landmark; though, the source declined to name the address or say whether the deal had closed. Mayweather has already invested in nine SL Green skyscrapers to the tune of $100 million.
“He’s been spending a lot more time in New York,” the source offered.
Put some of Mayweather’s recent New York deals under the microscope and there are glints of an opportunistic strategy. The office investment will fund distressed assets and repositionings. The apartment portfolio is largely rent-regulated, a devalued asset class some believe will bounce back.
A contrarian take is an interesting move for an athlete ESPN once described as “risk averse, both in his fighting style and his contract negotiations,” and who retired undefeated in 2017 after 50 professional fights.
Mayweather is hedging his bets though, the source said, pointing to the boutique Miami Beach hotel and the investment in Go’s luxury rental holdings. Miami’s hotel market was ranked the best-performing in the country this year by CoStar. New York rents, meanwhile, rose last month to prices just shy of record highs while the price per square foot of luxury rentals surged for the third month straight, according to the appraiser Jonathan Miller.
“What he loves about the portfolio is it adds to the diversity,” the source said of the Go JV.
The office and rent-regulated deals have a line of sight to profitability. Both office and rent-regulated buildings are selling for peanuts as New York’s investment sales market stirs from a multi-year sleep.
But where others may see risk, Mayweather is eyeing a knockout.
“New York is the best city in the world,” the boxer said in a recent statement.
Office: The comeback kid?
The office deal Mayweather inked in late November is with Mark Karasick’s 601W Companies, an office landlord with a national portfolio and a corporate base in New York. The boxer partnered on 18 assets, including a handful in New York, Chicago and Jersey City, New Jersey.
The deal isn’t New York exclusive but office performance in other major metros has largely followed the city’s narrative. Class A buildings are drawing tenants, Class B buildings are struggling and maturities are causing problems for most owners.
When asked why Mayweather would bet on a troubled asset class, the source pointed to a “buy low, sell high” thesis and underscored 601W’s track record of restructuring deals.
Karasick’s 601W has had close calls with distress but hasn’t lost a deal this cycle. It’s currently battling the notoriously aggressive Rialto Capital Advisors over a foreclosure filing on Chicago’s Civic Opera House. 601W claimed the special servicer negotiated in “bad faith.”
“A wise person once told me if you buy real estate in New York and you hold on to it over the years you will always make money and win.”
Otherwise, it raised an additional $21 million last year to secure an extension on the $310 million loan tied to Chicago’s 1 South Wacker Drive and pushed out the maturity date on Aon Center, another Windy City office tower, by three years.
Extensions aren’t the end game for struggling office owners. More time is a chance to boost occupancy, revenue and ideally, turn a profit.
601W has room to improve. The average occupancy rate across nine of the firm’s office buildings is 69 percent, according to Morningstar. The average debt service coverage ratio is 1.21, meaning rents are covering mortgage payments, but not by much.
Some of Mayweather’s money will go to repositioning these assets, Karasick said, and some to sprucing up properties to attract tenants and boost performance.
Those buildings may include the Aon Center, the Old Chicago Post Office, two buildings in the Harborside office complex in Jersey City and 410 10th Avenue in New York City’s Hudson Yards, all of which Mayweather invested in, according to the source.
At properties like the Aon Center, the repositioning plan looks fairly clear. The 70s-era behemoth is about three-quarters occupied, and a reappraisal last year cut its value in half to $414 million, slightly above its debt.
With two more years on its loan, thanks to the recent extension, the landlord can conceivably tap Mayweather’s investment to continue its improvement plan.
The firm spent $6.5 million to redevelop the building’s plaza in 2021, and $25 million to update amenities to include a tenant lounge, fitness center and conference rooms. Now, it’s working on a top-floor observatory and restaurant, accessible by glass elevator à la Charlie and the Chocolate Factory, plus a ground-floor family-centered entertainment venue, according to the observatory’s site.
The strategy: turn Aon Center into a tourist destination to rake in the revenue it needs.
At properties like New York’s 410 10th Avenue, the problem is purely occupancy.
Before the pandemic, SL Green spearheaded a $145 million gut renovation of the 91-year-old building that helped it court Amazon as an anchor tenant. Renovations wrapped in 2021 and SL Green unloaded the property to 601W 100 percent leased. First Republic Bank held one-third of the net rentable area.
Fast forward to 2024: First Republic is no more, and occupancy as of June hovered around 65 percent. Standing between 601W and a healthy asset are 211,521 square feet of vacant office space — nothing to sneeze at.
But Hudson Yards boasts one of the lower vacancy rates in the city and the highest rents, and 601W has over seven years until its loan comes due.
For Mayweather, that’s not a bad bet.
Dipping into distress
The other part of the 601W play is distressed investing. Karasick said the firm is searching for bargain-bin office in major cities, including New York and Chicago.
As the hairline fractures in New York’s office market deepened into full-on breaks, the bid-ask gap and extend-and-pretend strategies made it tough to sniff out devalued deals.
Now, the tide is turning, and firms with money to spend are wading in.
In April, Issac Hera’s Yellowstone Real Estate snapped up Blackstone’s defaulted debt on 1740 Broadway for about $200 million, a sweet deal for the $308 million loan made sweeter by the $605 million Blackstone paid for the asset ten years ago.
A combination of renovations and leasing would shore up performance at the mid-century tower last renovated in 1987, the same attack plan 601W has for its assets.
In June, Empire Capital Holdings and Namdar Realty Group nabbed 321 West 44th Street in Hell’s Kitchen for $40 million or 73 percent below what Related Fund Management paid in 2018.
Then in November Savanna bought 799 Broadway in Greenwich Village from Columbia Property Trust for $255 million — a step below the building’s $270 million loan.
That building is a little over two years old and features all of the post-pandemic perks tenants demand and landlords of older buildings have scrambled to deliver: private terraces, “superior air quality,” and ample outdoor space, according to Savanna’s release.
Savanna’s plan is to plug the 29 percent vacancy, which spans retail and office space, and hunt for other deals, “acquiring some of the very best real estate in New York City at extraordinarily discounted prices given the current turbulence in the market,” the landlord said in a statement.
The pendulum swings …
Mayweather’s shopping spree started with rental buildings when the retired boxer closed on part of a $402 million portfolio owned by Black Spruce Management.
The deal comprises more than 60 properties and 1,000 units concentrated in Upper Manhattan. Many buildings are rent-stabilized and some have received Article XI, a 40-year tax cut for properties that have been renovated.
On the heels of the 2019 rent law, Article XI is one of the few routes rent-stabilized owners can take to improve operations. The legislation effectively capped revenue in rent-regulated properties, apart from the inflation-lagging annual adjustments the city’s Rent Guidelines Board typically approves.
Distress has rocked the market as rising expenses have outpaced revenue growth, and owners with interest rates resetting to market rates have defaulted on their debt.
Some landlords have tapped Article XI to counteract the law’s unintended consequences. Securing the tax break requires sweat equity. The program is city-led and has a web of requirements owners must meet.
Much of the Black Spruce deal is rent-regulated, public records show, and two of the three portfolios that comprise it have received Article XI. Properties that did nab the tax break are more likely to be profit-making, which Mayweather seems to know well.
“Floyd looks forward to working with the city on the remaining units in the portfolio,” the source said.
Whether those rent-regulated properties make money comes down to basis, investors say.
As with office, some owners are letting buildings go for cents on the dollar if it means they can evade foreclosure. The few that are investing in the asset class believe if they buy low enough and hold for long enough, the state legislature will roll back the laws and let them raise rents.
“Sentiment may be negative toward buildings like these,” PH Realty’s Peter Hungerford told The Real Deal after spending $180 million on a 1,300-unit rent-stabilized portfolio this fall. “I think at some point, in some way, that it is going to change.”
Mayweather, to be sure, hasn’t said anything about reaping returns; rather, he characterized the deal as an investment in affordable housing, a cause close to home. The boxer has said that he lived “seven deep” in a one-bedroom in New Brunswick, New Jersey, as a child.
When asked about his blockbuster stretch of deals, Mayweather said he was “truly just thankful.”
But investors are in the business of making money, and Mayweather last month cemented himself among the city’s biggest. Plus, that’s why the boxer got into real estate, at least, as Wharton Properties’ Jeff Sutton tells it.
Sutton, in an interview with TRD, said he ran into Mayweather at a New York Knicks game after the boxer had signed a $300 million contract for six fights. After learning who Mayweather was, Sutton likened him to a dentist.
“A dentist only makes money when he’s drilling a tooth,” Sutton recalled. “You only make money when you’re boxing.”
Mayweather asked for advice on diversifying, and Sutton explained what he’d rake in on a 20-year lease. The two became friends. Sometime later in Las Vegas, Mayweather told the New York-based Sutton: “I’m not a dentist! I’m gonna make money in my sleep! I’m gonna buy real estate with this guy right here!”
Mayweather, just as bullish late last month, seemed to hat tip the billionaire.
“A wise person once told me if you buy real estate in New York and you hold on to it over the years you will always make money and win,” Mayweather said recently in a statement.