Poaching the trophy hunters: New Yorkers aren’t in the habit of looking to Boston for anything. But it might be worth making an exception to understand Cushman & Wakefield.
Last September, Cushman’s New England division took a body blow when Rob Griffin, Boston’s top real estate rainmaker, decamped for Newmark Grubb Knight Frank. Seventy other Cushman brokers and employees joined him there, leaving Cushman decimated. Joe Fallon, who leads Cushman’s New England division, assured the Boston Business Journal he’d pick up the pieces. In March, he delivered, poaching the top broker at a firm that’s built a reputation for being a trophy magnet: Eastdil Secured.
As in Boston, Eastdil is known in New York for the serious stuff: You see a 10-figure sale in Manhattan, and chances are it’s got Eastdil’s paws all over it. In 2014, nine of the 10 priciest deals were Eastdil’s. The bulk of them were brokered by Doug Harmon and Adam Spies, the charmer and the quant.
Their move to Cushman last week, then, is bound to shake things up.
With the hires, Cushman, now backed by private equity giant TPG (other bets: Uber, Airbnb, CAA), showed it’s willing to pay big bucks to once again become a contender in New York investment sales, a division where it’s underperformed in recent years. Though their new pay packages remain a mystery, Spies and Harmon were likely wooed by a chance to make traditional commissions rather than live off a salary-and-bonus structure as they did at Eastdil.
How will Eastdil cope? Sources said the firm will lean more heavily on CEO Roy March, who’s brokered some of the biggest deals of the past two decades including the $39 billion Equity Office Properties’ sale in 2007. Insiders said he also led the $2.2 billion sale of 3 Bryant Park, though Harmon and Spies received the official credit.
“The interesting thing is, for the last 20 years, the top brokers in the city haven’t changed much,” one insider told TRD. “Only their business cards have.” It’ll be interesting to see the duo go up against their old boss.
Dirty money in real estate: One of Harmon’s biggest clients is Joseph Chetrit of the Chetrit Group. The Moroccan investor bought the Sony Building through Harmon, who also played peacenik in an explosive battle Chetrit had with Joe Tabak over the Ring portfolio. (An excerpt from an email Harmon sent titled “Ring a ding ding boys:” ‘Whatever happens Doug we both love and thank you once again for steering us profitably thru the storm.’)
Chetrit is one of the industry’s most mysterious developers, and he’s had his share of drama over the past year. He was embroiled in an international money laundering scandal at His West 52nd Street Flatotel condo conversion project that involved characters such as the disgraced former mayor of Kazakhstan’s largest city, Almaty. The case, as TRD’s Kathy Clarke illustrates in a terrific investigative story, sheds light on how illicit money is increasingly being stashed in U.S. commercial real estate. Do check it out here.
Gary’s great gamble: Chetrit lost out on the Ring portfolio, which became one of the most lucrative commercial real estate deals of the past few years. Guess who won instead?
Gary Barnett’s machinations to seize and then cash out on the portfolio earned him a huge payoff — as of last October, he had already sold off 10 buildings for about $700 million. It also brought upon him a $400 million lawsuit courtesy of Chetrit, but that’s par for the course at this level.
Now, Barnett is engaged in an even more ballsy play. He’s looking to source more than $1 billion in funds for two new condo projects, including what would be the largest construction loan of this cycle. And the deadlines his lenders and partners have imposed on him mean everything needs to come together with Talmudic specificity.
“Gary’s an entrepreneur, but like a crazy one,” said Shahar Keinan, an Extell bondholder and executive at hedge fund Brosh Capital. “Everyone told us, ‘If there is someone who can pull it off, it will be Gary.’ But even for him, it’s a stretch.”
(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.)