Reubens on Rye and Apollo's Divine NNNtervention

0:00I was thinking recently that being in shipping is the most romantic source of wealth a CRU investor could have. Something about having major money on the high seas and then deploying it in luxury property. I mean, that's how you get Jackie O. But I disagree. To me, it's aluminum smelting and bonus points if you do it right in the wreckage of the Soviet Union. I guess after you've cracked some oligarch skulls, delinquent real estate borrowers are sheep in comparison. Welcome back to the Promote Podcast, you're inside a guide to the money and mania of the CRU markets. I'm the Tencent Tani, and I'm Will Crasney. A shout out to our sponsors, Bravo Capital, it's a leading hot in bridge lender, and lone

1:00boss, the best in class CRU debt management software. This week, we dive into the life and times of two quintessential men with deep pockets. Billionaire British Bros. David and Simon Rupin have become some of the most aggressive buyers of trophy hotel and retail assets across the country. Many of them in various states of undress and distress, and maybe friends with Ursula Andress. Looking for shells? No, I'm just looking. We then look at Apollo's new triple net partnership with Realty Income. It's an alliance that says much about how both AUM goblers and vanilla reeds are saying they've got what the other needs. And finally, Bill Ackman's Albatross, and yes, we need to be more specific about which one. We're talking about JC Penney, is now the scene of a bruising battle between the past through trust and a jilted would be buyer. Tasty docket, I gotta say, the billionaire British brother scene is pretty electric with the Rubens and the Barclays, Barclays subject of a great book. You may never see us again, highly recommend it. But the Rubens, I think might have them be.

2:01Oh, let's put it in the show notes. We really got to get this book list or book club thing going, because we've got a lot of requests and we've dropped the names of so many good reeds here. Yeah, that's on us. We apologize. We'll get to that. But first, let's get started with a punch list, our signature rundown of the Newsy's News in CRE. We should probably start with the loss of an industry legend, David Simon of Simon Property Group. A diet of cancer at just 64. Just this ad day, one of the absolute OGs and legends of the modern re industry. He was the son of Melvin Simon, who, Mel and his brother Herb Simon, founded what is now Simon Property Group. I think the largest read or one of largest, they are the largest retail owner in the world. They control over 200 million square feet. And just one of the most epic stories is to work for a Perella, the M&A legend, then went and saved this family business, set them up for an IPO, and then went on this incredible M&A tear, which created the modern Simon Property Group.

3:02And really had tremendous leadership throughout COVID. They bought some of their tenants, kept them alive forever 21, Brooks Brothers, all the redeveloped a bunch of areas into residential and mixed use, did a phenomenal job. So absolute legend, there's a great anecdote in his orbit where he was at Indiana University, his alma mater, and he donated a bunch of money to it. And he was on campus 10 or 15 years ago, and they saw top 50 graduates, or most powerful graduates. There's something in the history of Indiana University, and he wasn't on it. And he's like, I looked at 40 to 50, he's like, I got a bin there, come on. Keep shopping up there, David. Next one, Fanny and Freddie stalks her in free fall again. This time it seems to be over fears that this whole so-called privatization, the ending of conservatorship, is no longer imminent. The housing policy has kind of gotten put on the backburner a little bit, given that we're at war. That hasn't stopped Bill Pulty from printing out more and more unhinged announcements. I wonder if Stu Miller looks over him and is like, I'm such a better billionaire housing

4:06sion. I think he looks down at him, not over a great point. But yes, Trump administration has been focused on trying to make housing more affordable, and some of the plans included in this sort of privatization side of the Gestalt are actually good, producing friction for community banks to make more home mortgages, make resin mortgages easier to finance. But the reason that the US multi-family market is the envy of the world, the most liquid property market, is because Fanny and Freddie have a guarantee from the federal government, and they provide really attractive fixed and floating rate financing at incredible terms. Yes. That's what allows people to do construction loans is because you can take it out to Freddie or Fanny. That's who you have in mind when you're doing all this stuff. There's literally like bridge to Fanny, bridge to Freddie, and I'm doing it right now. And if that guarantee goes away or somehow it becomes implicit, what does that eventually mean? Because then if you think about this too hard, it's like one of those things where you look at a dollar bill and you're like, what does this mean? This is all made up.

5:06I'm just going to start carrying around guns and carry actual gold, and that's the economy we're going to live in. We're going to hunt and gather. So you don't want to go down that route. What was their plan? The synthetic backstop they had? What did that look like? Willie Walker talked about this somewhere. Willie don't at me. It was like the implicit guarantee. He's like, it's just as good. And I'm like, is it? I don't know. And the other thing too is that Fanny and Freddie, they were put into conservative ship, and it's had to be bailed out by the taxpayers. It's been incredible investment for the taxpayers. Good job taxpayers. They've distributed tons of profits, a stimulated liquidity in the mortgage and home markets. What market do you ask for? But the stock went through the roof. I want to say eight or 10 months ago when this talk came up of privatization again, I know Bill Ackman made a killing. The momentum has died down. Is that why we're seeing this? Right now with multifamily or housing at all, we're so whipsed by rates moving back and forth by being impacted by everything else that's going on in the world that I think Freddie and Fanny are no different. So Fanny and Freddie raised their purchase caps, I think, to 88 billion each for this

6:09coming year. Right. In the anticipation that the slower transaction market of the last few years would be a thing of the past, given the economy taking off, rate cuts, and none of those things are happening. The world has shifted quite a bit. You look at the 10 year and the five year since the Fed meeting last week. And we were anticipating earlier in the year what, three cuts or two more cuts in addition to what we've already gotten. And now people are saying that we might hike Fanny and Freddie rely on volume. And we're at a point where you can basically just look at the 10 year and the five year and be like, here's where our volume's going to be. Next one. I think we got to ask this question at this point. It's been long enough. Is Brookfield bad at office investing? Yeah. We've talked a lot about their downtown LA portfolio, which they've kind of poo pooed is not really part of their core business, but it was part of their core business. Now they've just deeded and lewd. What's the verb deed and lewd? We've just deed and lewd another office tower in San Francisco, a market that has seen quite an upswing in recent months.

7:11This one kind of hurts because some of their big rivals, Blackstone, Diffco West, Diffco West, they have had enormous winds in San Francisco. And obviously, conversant just closed their massive hotel deal and Brookfield's over here, just like, hand in buildings back. A partnership has come in here. I hadn't really heard of these guys. One of them is from your neck of the woods, Meridian Group. They bought the debt and they're basically taking this property over. There's a whole sort of cottage industry of these kind of folks. They've been around early 90s, buying stuff, pretty imminent DC guys. This is a big swing for them. There's a bad real estate and then there's bad cap stacks and I would imagine that this is more of the latter. In a vacuum, this is like a nice asset. It's part of a huge mixed use project. It got a huge construction loan and it's just been vacant and they've at least delivered into the worst timing you could have, which was mid to late 22, I think. They are somewhat a victim of that. They got peak supply chain, they got peak rate hikes, they got peak San Francisco, bad

8:12juju, but what's crazy to me, though, is that they've only leased 20,000 square feet of this thing. It's the thumbtackable places, which is just kind of great because there's a lot of stuff going wrong. The pipes haven't been turned on. The water and the lights all need to be checked and thumbtacks there. They can always fix everything in the towers. So there are an M should be really, really light. All right, next one. This comes back to the Iran conflict. One of the things to consider as this conflict drags on is the role of the GCC countries, which are hostile to Iran and have been taking some hits, literally, what does GCC stand for? The Gulf Cooperative Council. Is it cooperation or cooperative? It's Saudi, the UAE, Qatar, Kuwait, et cetera. It's a bunch of these. Oh, it's a Qatar again, I love it. The Gulf Arab countries. They are very, very big allocators, major players in the global investment landscape through a variety of bets, venture capital, crypto, private credit, real estate, and there was an attack on a Qatari LNG facility last week.

9:15The energy minister said that this is going to wipe out 17% of our export capacity that's staggering. When you have something like that, you do have to think about if this goes on for a while, what does this mean for the allocator side of the universe? All the fund managers from Blackstone to Brookfield to whoever are courting the Middle Eastern investors hard. And the whole alternative asset management industry, we talked about AOM gobbling. It's basically a shark. It's like there's nothing on the mind of the shark, but eat. They have to keep moving forward and so they need more money, but they run out of pensions and diamonds, all of those things, and they need to go elsewhere to get money. Because again, the carry isn't really won the point, but too valued by Wall Street, and so you need consistent earnings and the way to get that is increased. So you're fee-paying assets under management, and they have tapped out, and so they got to go to 401K's, which is why this has been such a big push. They're going to retail, which is why John Gray is doing running videos, and by the way, comes CS and Nashville this week.

10:17Talking about the running videos and so much more, a media strategy for GPs. Yes. So they're going to those places, but the biggest fish are these sovereigns. There are billions of dollars that can be used, basically, as like a political cudgel, and you can invest behind things you want. You can learn about certain things. We've talked about Great Dalia setting up a family office. He's sitting in Abu Dhabi. He's got the Kondurani sitting with Sheikh Tahnu and who Bloomberg called the world's $1.5 trillion man, which is a great nickname, I wish I had someday. But if that goes away, a lot of these big plans in the US, what happens to data center build out? All of that money underpins so much of our economy. Like, what was the tweet the other day? The global economy is predicated on San Francisco, lying to New York about how good AI is, and then it's New York lying to the Middle East about how safe private credit is. That said, for the punch list, when we come back, we're going to talk the brothers are broken.

11:21I'm here with Aaron Crowitz of Bravo Capital, Aaron, $2 billion in deals, a hundred percent hot approval rate, five years since launching. How do you keep that street going? Comes down to our team. Our underwriters know what HUD wants, where a pure play, HUD lander, meaning everything we do is HUD and bridge to HUD. No taking shots and just hoping. When we go, we really go. We close the healthcare HUD express lane deal in four days, four days from our submission to HUD's approval, and it goes back to knowing the ins and outs of the program so that there is no guesswork. Sniffs assisted living, it feels like such an arcane world full of very complicated regulations and such a specific cast of characters that you really need to know coal to make this work. Exactly. We're steeped in state by state regulations and distinctions, but we're not just about HUD. We also have a very strong balance sheet bridge affiliate, Bravo property trust, and we just financed over 170 million out in Miami and 125 million in Dumbo, Brooklyn.

12:21If we have conviction, we move fast. Thanks, Aaron, and where can people find you? We're at bravocapital.com. I love doing the brothers, whatever. It sounds so much better than the other way around, right? There's something very fairytale about it. Did you ever read the Brothers Care Mots off? I did. Yeah. Too long. Okay, we're talking about the brothers Rubin, incredible tale here. Well, they just bought a luxury shopping center in Palm Beach, which is the excuse to talk about them here, but David and Simon Rubin, man, they're real characters, the kind of people that we live for here at the promote. We talk about men with deep pockets. Yeah, we do. Mother deepest. So they're born in Bombay, which is now Mumbai to a Baghdad, the Jewish family. The father had moved there to work in the booming textile industry during the days of the British Raj. And these guys just make money from a stone. They've done it all and they've done it everywhere. David, he started working in scrap metals.

13:22He worked at a couple of banks and scrap metal trading is some of the Wild West. Go read the world. Oh, yes. Mark Rich, who comes up later, Glancor, Vito, all of these commodity traders, just absolutely. You got to have balls, the size of coconuts. You got to have balls of aluminum. It's a combination of just bear knuckle business, the kind of things that you would see in many other professions with the highest echelons, but also all of these things are very, very politically connected to, oh, yeah, pretty psychotic entities, sometimes the most dangerous places in the world to deal with the craziest people in the world to get this stuff done. You know what it reminds me of when we did the Gary Barnett episode about diamond trading. This is way crazier. And yet shocked Tesla, yeah, yet shocked Tesla is saying, you know, life is worth less than the ash in this ash tray. It's kind of some similar dynamics here. Oh, except turned up to 11. A hundred percent. You're going to some of the places that these guys have been. And so you had David doing that and then you had Simon, the operations guy. So he turned around a carpet manufacturer, a solar for profit, gotten a real estate, was

14:25doing property deals in London in the 70s. These guys just had great timing. They saw opportunity, which I thought was the most interesting thing. A lot of people said, okay, yeah, this is like cash for shares thing. And Russia could be something and people made absolute fortunes being put, like connected buying stuff for no money. And these guys, they're not Russian. They're not Russian and they're Jewish and those things don't necessarily work very well in Russia. No, they do not. But they came in and invested something like a billion dollars capital in like four years. And we talked about Mark Rich, apparently Mark Rich might have been involved in staking them, which is a very Mark Rich thing to do. Mark Rich obviously of Glencore fame. Yeah. And then Clinton fame, correct? Same Mark Rich. And his wife Denise is still hanging out at life with Keith. Denise, I'll see you later this year. What they did was they brought in raw aluminum, delivered them to Russia and took out finished aluminum in exchange, which they then sold on the open market, presumably at a massive profit. Good generals. Think about strategy, great generals. Think about logistics.

15:26Like you'd have strategy and logistics and spades here to do this. They eventually exited Russia by selling their interests to one of the all-time characters Roman Abramovich, the owner of Chelsea FC. Do you really own Chelsea or do you just keep it for the next generation? Sold it to him for $300 million. And they knew everybody. They were involved with Oleg Daripaska, all of these major characters who the whole London grad era. That was these guys. They were in the midst. And they, again, they were not Russian. Just to add to the Olegar country here, they also bought themselves a Premier League team. They own Newcastle FC, who by the way, we just thrashed to the Champions League. He's got more stuff. They take their money out of Russia. Coming out of this, I think the most important thing is they are liquid. Their liquid is anybody out there. Their money is not tied up in a company. They're not tied up in property. Like, it is ready to go. Deploy. Yep.

16:27They go. They started doing property. They build up a really significant upscale portfolio in London in the UK. So they were also early players in the data center, frenzy. And they cashed out big time in 2016. They sold a stake in a company called Global Switch to the Chinese for $2.5 billion. They shut her to think what that's worth now, but never went broke, taken a profit. They made their first big move into the US, the most notable move, the mid-2010s, peak foreign capital coming into the US, but they did this the smart way, actually. They bought the debt for a couple of really tasty hotels in New York. World-famous Plaza Hotel, the dream downtown, and Grovner House. They paid 800 million for the combined debt, so they controlled the cap stack on these three notable properties in Manhattan. And they just kept going. The consistent theme is, tippy-tippy-top, they're buying for a big discount and they're bailing somebody out.

17:27Or not bailing somebody out connotates that they're paying like a high price. They're taking people off of the petard. That's the other thing. During COVID, when hospitality and retail were the assets, I think, hit some of the hardest, that's where these guys pounced. As you set up top, if you're dealing with aluminum smelting in Mermansk, like dealing with Todd Glasier, it's not a problem. No shots at Todd. The key again is it's high-end stuff, complicated, and somebody needs somebody with a lot of equipment. And again, haven't seen Lundox here. I would not imagine this is like, so for 400 money. Let's put some numbers on the scale here. I think between 2020 and 2022, they deployed at least $4 billion into U.S. real estate through a combination of debt and equity. And they do it with very little diligence, which is really a factor for a lot of these assets. There's no committees. There's no, we're going to take a while to go syndicate this out. They bought a bunch of the retail portfolio from Borneito at a big haircut.

18:29Big discount. But I think they closed in 30 days. They also bought something from SL Green, 609.5, they believe they bought the retail there. The sorry, Ben Ashkenazi had been booted out. The seller is insisted on a simultaneous contract and closing, which means you sign and you take title right away. That's what you do in M&A transaction, not like real estate necessarily. Or in real estate, it's like if you're buying a four unit and go on us. And then they kept going. I mean, some of the more recent high-profile deals they bought the W South Beach off of David Edelstein and AB Rosen. They have the loan on the JW Marriott Turnberry. They have a condo inventory loan with JP Morgan on your boy Gary Barnett's Central Park super tall. They might be waiting a while. They paid back there. We'll see. They're not also afraid of hair. They've got Century Plaza in LA, which was just this absolutely massive, multi-billion-dollar project. Ronnie Reagan used to hang out there back in the day. I think it was called the Western White House. Michael Rosenfeld's big boondoggle and billionaire to debt foreclosed.

19:30Oh my God. I didn't make this. So the plan was to take this hotel, revamp it as a hotel plus two condo towers, tippy-top condos. LA is a tough market for condominium living. This was like a $1.8 billion project. He took some pretty high-octane financing from the Rubens. Back and forth for a long time, they finally took control of this property and booted them out. The Ruben Brothers are now in their 80s. One of the brothers, his middle son David, is now running point on this project. So for two brothers who really shun publicity and in fact sued Fortune for libel, they did one on the record interview and then probably sued Fortune for it. Somehow the real deal got David Ruben on the record. Double-fisting a die coke and a vape. This is a fascinating interview and it sheds a lot of light on what it's like being the son of great men, capital G, capital N. It's a curse. But I think it's especially so when it's not like the guys made their money in the candy factory. Good day, sir. Talking about being the son of a buccaneer, the son of a, amount of action.

20:35David Ruben over here is dealing with this thing that he probably isn't that equipped to handle. These are incredibly complicated. This is like a related job. You need Steve Ross. I don't know if you need David Ruben doing this, even though he's moved over there. It's just interesting that they chose this time to come out in public and maybe part of it is saying, hey, our condos are 36 percent sold and maybe we need to do a little bit of marketing. The good thing here is that they don't have to worry about the lenders. Yeah. When you own it all equity, it makes life so much easier. Todd Glasier, best known as Palm Beach ultra ultra ultra luxury spec home developers. He was involved in a project called 1000 Museum and the Rubens really beat up the developers over there and I chatted with Todd at some point. The Rubens came up and he said they knew we were taking an inventory loan. They just want to be assholes. But the best thing in the world is everybody now knows the Ruben brothers that are coming to town to lend money are hard ass sons of bitches.

21:39So Will, you violate any debt covenants recently? So funny you should ask. I haven't been in technical default recently. I mean, who among us, right? But not since Q4, and that's not because I paid off the loans because that's when I started using loan boss. I can't believe how old school some of our listeners are. They're still crunching DSDRs and Excel and all that. Total waste of time, risky business to boot, loan boss runs the entire process for me. One click covenant testing, incredible instant cash flow forecasting, impeccable in my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve and then it's always vertical and you got an all HVT to have a go horizontal, make sure that index match works like ridiculous. They just got us sorted here for you much better. So thank you loan boss. Listeners, check them out at loanboss.com. It's loanboss.com and tell them to promote sent you.

22:48You've got the nerdy girl and you've got the hot guy over here being like, I can make her the prom queen. And that in this case is Apollo going to Realty Income and saying, let's team up, which one is this example? Which one's the hot guy? Freddie Prince Jr. and she's all that is Apollo. And then what's it, Rachel Lee Cook is Realty Income and then she takes off her glasses and you're like, oh my god, look at that cash flow. What are you doing? I'm getting ready to play some sake. Who you're not? What is happening here? So Apollo is investing about a billion dollars in 500 of Realty Incomes single tenant properties, which are triple net least, which means the tenant is responsible for basically everything mailbox money here, right, or the closest thing to it. Pretty much. The triple nets are taxes, insurance and maintenance and that's pretty much everything associated with property outside of roof, structure, parking lot sometimes. Those are the types of properties that Realty Income owns. And what's attractive about them is that they have very hard margins because there's no

23:52cost. You're not making a home run. These are more like stay rich than get rich. But these companies and there's Realty Income, there's NNN, triple net properties. The one that just sold was fundamental. Yeah, fundamental income was kind of that. These things have actually like, if you look at stock price over time with dividends reinvested, the returns are quite good. And I think that qualifier is really important, quite good. Minsterals wouldn't sing about these, but they make money. I think like low to mid teens over like 30 years since IPO, not nothing. So why is Apollo doing this? And first of all, like why is Realty Income doing this? The reeds in general are facing the Rodney Danger Field problem, right? Not going to respect for anyone. Right. Because with the public markets are sort of realizing, we've talked about this all the time that all these things are getting bought because they're trading below NAV. And if you're trading below NAV, what is the Don Draper's that you don't like what's being said? Change the conversation. I like the fact that you own real estate, which is a very capital intensive low margin business, stop owning real estate, stop owning real estate and get into a little bit of a better story, which in this case is fee generating vehicles.

24:53Right. This is going to asset manage all the windies. But what it means is that they're generating fee related income. And it allows them to diversify their earnings and that multiple applied to that earnings stream is much higher than what you're going to apply to Arby's with seven years of Walt left and Topeka. They're taking external capital from Apollo. And then this new JV will own these properties. Is that right? I'm not exactly sure whether it's like a recapitalization technically or like a new purchase. But yeah, essentially, that's the case where they are not using their entire balance sheet to go buy these things. They're freeing up their own balance sheet and they're creating a fee stream, which wasn't there before. And what's also interesting too is that there's a right to buy back steak from Apollo from a 6.75 IRR like a preff kind of a chance. It's fascinating from real to incomes perspective, but it's really fascinating from Apollo's perspective. Because last episode, we've been talked about how they're like to the t-shirt cannon shooting people into the stands of debt.

25:54There's just not enough debt. They got to go find other things to do. And so what they do is they find the most debt-like product in real estate equity, which is triple net consistent boring returns that you can basically project out for 20 years. Let's say. Yeah, because that's what they need. They don't want a lot of like zero coupon, heavy value add, no cash flow for four years, and then the residual value of 17 IRR. They want that every quarter, every month. Yeah. I'm going to read you a quote from Realty Income CEO, Sumit Roy, which I think speaks to this. Our size, scale, and longstanding commitment to providing dependable monthly dividends to investors, make this a natural fit with the Apollo's insurance capital. There you go. It says it all. The first exploration into the space that Realty Income is done. And they have a JV with GIC where Singapore's sovereign wealth fund, which backs everything, I call them the everything LP, but only 49%, only 49%. They're focused on built-to-suit logistics properties with long-term net leases, same type of profile that dependable cash flow in the financialized world is incredibly valuable

26:59because all of this capital underpinning the real estate space and a lot of a global financial system is a newbie based where you have certain obligations that you have to hit every year. And so if you can deliver that cash flow profile, it's really, really valuable. I'm going to read this quote from Apollo's co-president Scott Kleinman. The game quote really is built around, can you originate enough attractive assets to meet your needs? That's why we've been so focused, some might say maniacally focused, on really making sure we're building the right type of origination in the right volumes. That's exactly what this is. And it's origination, not just for debt sets, I think, where people think about it. It's a origination of equity investments too. And so you have to find stuff that meets the profile of the capital that they have. Investing in something else can create higher returns, but that does not matter. We are making widgets in the commercial real estate space. And the widget that is really expensive right now is the very consistent cash flow deal. And so people are looking to find those widgets wherever they can.

28:00In real to income, it was just sitting on a widget factory. Silver foxes in henhouses. How do we get into this? Bill Ackman back in the day before he was on the Twitter Scraits. He was really big on these SPVs into retail names. He did it with Target and he did it with JC Penny, where he hired Ron Johnson, an Apple store fame. Of course, didn't work completely buckle. Apple store luxury premium design, forward product, JC Penny value shopper, best price. That's kind of what matters more than the X factor of design and whatnot. Pretty much. That's beyond my pay grade. But yeah, sounds good. I think that's probably right. But everyone really looked at real estate value for all these retail names. And that includes tax with Avenue, Hudson's Bay Company, Target, even with stuff like

29:04Coals, I think today, there's like, oh, we can unlock the value of the real estate. And there was this continued thesis that that was going to be the case that this was going to be so valuable. So JC Penny goes in a bankruptcy and they spin up this new trust. The copper pass through it's called a pass through trust setup to liquidate the real estate over time, exists just for that purpose. Yeah. To pay off the lenders. So they're not reinvesting in the source or redeveloping anything. And so they have, it's 135,000 square feet on average across 35 states for all these stores and a sense will be as well as value. And so they're leased to the sort of remain code of JC Penny, which is paying some sort of rent. Okay. And they go to package this for sale. And they sell it for a billion dollars for 119 stores or do they? They had a deal to sell this to a company called Onyx Partners, huh? I never heard of these guys. I had neither the website phenomenal.

30:06Their headline on the website is investment collaboration for generational solutions. It's just one of those sped out combination words. No idea what that means. They agreed to buy it for just under a billion dollars and they have this net operatingly. So you assume that these are financeable because there is some cash flow. But again, the credit is not great. Yeah. And these things probably have it trade pretty wide. But then the deal doesn't close. This sounds so basic to say, but there's two components to any real estate purchase, right? You sign the documents to buy it and then you actually close on it. But the second part did not happen here. And there's always a question about why? Does a seller want to sell it? Does the buyer want to buy? Does the buyer have the money? All of these are good questions. And the seller in this case is saying the buyer defaulted. The buyer saying the seller wouldn't let us close. The buyer's allegations are especially interesting. They're basically saying that Jay-C Penny or the pass-through copper got cold feet or didn't love the buyer and actually went and secret shopped the deal around to other suitors even when they had a deal with them.

31:07They mentioned, this is one of my favorite terms in real estate. So I'm so happy. Came up again. It says they delivered them. A dirty is stop. Oh, damn. Oh, damn. What? Oh, shit. Let's talk about what a dirty is stop. Two parks, Ruynard, one park, gin, a couple of bitters. No. So when you buy something and there's a tenant in place, you will have to get, in many cases, in a stop. And so the stop is essentially a document that says the tenant says there's no side deals. This is what the lease says. There's no other amendments. The landlord didn't lend you $2 million to pay the rent for the next suburb area in the lease. This is kosher certificate, basically, right? Pretty much. Yeah. Onyx is essentially saying that the stoppers they got back were like bullshit. It's a pretty big deal because part of their plan, ostensibly here, was borrow against the cash flows, sell off some of the, probably the choice assets to get their bases down and bring the yield up. And that's how they're going to make their returns. Basically, the John Gray, Blackstone EOP strategy, right?

32:09But to make that work, you need to make sure that the leases say what the leases say. They say like that they're enforced the rents, what it is, and all those things. And so they're saying that didn't happen. And they're also saying that the seller told them explicitly that there offers way above you guys. We don't care. Did any of the other buyers come to light? No. Of course not. No. Okay. And so I think essentially what happened is that Onyx didn't have money. I don't know that for a fact. It's just reading between lines. Onyx put up a $5 million deposit, which again feels kind of low for a transaction. A billion dollar deal. Yeah. Yeah, for transactions, magnitude. It came to light because coppers in your reports came out there trying to use two million worth of the deposit as their monthly cash payment to the shareholders. So that's what came out. Yeah. Because at stake here is like that deposit's ours. Wait. So they can take the money and deploy it as they were saying you default it. You were not refundable. So. Oh, yeah. That's our money now. And Onyx is filing suit against that. Where do you think stand now? These properties, are they maybe just less valuable than people thought?

33:12I think that's right. These things, triple in that in general is very susceptible to interest rates because you can't make it go up. And in this case, too, you have very hard to repurpose real estate. You talked about how retail saves by mix use development or adding residential, like get the Alamo on them all. Yeah, sure. Is that the giant, the one that got that monster CNBS recently? Yeah. And why? But not where like JCPenney is. The stores are so big. They're so expensive to reposition. You got a bunch of holes in the wall. It's free for windows if you're going to use any other use. So they're not like really not that valuable. It's one of those things where on a spreadsheet, you can talk yourself into it, but in reality, maybe it's just not worth that much. And so copper passed through trust for, or whatever it's called, is saying, why don't we just do a read? That's what we should do. Wait, they're going to create a new vehicle now, at this point? Sell it to the public markets. That's how we're going to pay off these. If it were me, you know who I'd be calling right now. The Rubens. Ben Ashkenazi. The retail real estate is littered with the carcass of many an enterprising investor.

34:16And I think it's just claimed potentially two new names in copper passed through trust in Onyx. That's it for the Promote Podcast this week. The British invasion might have started with the Beatles, but now it's firmly the domain of the Ruben Brothers. With the reeds being sold for parts, one has teamed up with Apollo to change the narrative. And JC Penney's carcass is staying in the meat locker for now, as the would-be buyer and seller go at it in court. We'll be back next week with more CRE Insider goodness. Thanks again to our sponsors, Bravo Capital and Lone Boss. You can find them at bravocapital.com and loneboss.com. I'm so excited to see you in a couple days. It's been too long. I know. I've actually gotten taller. All right. I'll see you on Wednesday. Yes. And come see us live Thursday somewhere in Nashville. Somewhere in Nashville. All right, dude. Thank you. Thank you.

35:16Ciao.