Debt, Disasters and Disgust

Chaos, panic, disorder, and every random incident are the signal.

For us, what is happening in private credit, CRE, consumer credit, and the behavior of the 99% and the 1% is not random. It follows hidden patterns and tells a story. That has been our signal.

On July 7, columns buckled on the 21st floor at 219/235 East 42nd Street, the former Pfizer headquarters. The project is slated to become the largest office-to-residential conversion in New York City history when it finishes in 2027. Nine surrounding buildings were evacuated. East 43rd Street between Second and Third Avenues is still closed.

According to Gothamist’s review of hundreds of structural drawings, city-approved plans required steel reinforcement on the columns that buckled. Department of Buildings officials declined to say whether that work was completed.

The developer is Nathan Berman of MetroLoft. The lender is Madison Realty Capital (a PE firm, anyone surprised at this point?), which provided the loan in a financing arranged by IPA Capital Markets. Within seven days of the columns buckling, MetroLoft closed on its next conversion in the Financial District, with Apollo lending $72M toward the $104M purchase price.

A structural failure at the flagship. A new acquisition closing the same week. A lender with $24B under management writing some of the biggest construction loans in the country. What the heck is this mess?

Behind the paywall: the 467-m tax program that can cut property taxes by up to 90% for as long as 35 years, Madison’s $630M loan for the Bentley Residences in Sunny Isles Beach, the litigation at the Aston Martin tower, a Texas state court finding that Madison engaged in manipulation and fraud on a $585M construction loan, and why Miami had the largest share of de-listings of all 86 markets we track in June, at over 29%.

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