Meet the real estate players staying afloat in the wreckage

“This was a shit show from start to finish.”

That scathing observation comes from an industry source getting candid on Fortis’ infamous leaning Seaport condo tower in Manhattan. But it could have been a review of 2023, which from January on has been a debacle.

From the Federal Reserve’s interest rate hikes to the surge in UCC foreclosures and the persistent bad news for the office market — it was a tough year for real estate. Nothing encapsulates 2023 like the people who shaped theirpersonal stories through the chaos, for better or worse.

Take Adam Plotch, a former theater major and would-be “American Idol” contestant who spends his days hunting for deals on distressed co-ops at foreclosure auctions.

Reporter Keith Larsen takes us outside the Queens County Courthouse, where a cast of characters including Plotch go wildcatting in a shady corner of the market known for hardline co-op boards and conspiracy theories.

“I’ve seen a number of auctions get chaotic, at which point [auctioneer Matthew Mannion] steps in as the grownup in the room,” broker Greg Corbin told our reporter.

Or check out the story of Jeff Krasnoff, the forefather of commercial mortgage-backed security servicing, who handles an ever-growing pile of distressed loans with an iron grip. Krasnoff’s Rialto Capital is the country’s fifth-largest special servicer, overseeing some $100 billion of troubled debt.

But down-on-their-luck borrowers who find themselves sitting across the table from Krasnoff’s company say that once in special servicing, Rialto squeezes them to the breaking point — driving up fees and default interest until they can’t bear any more.

“Rialto’s scheme broadly affected CRE loan borrowers — many of them small businesses that lacked the resources to fight back against Rialto, a multi-billion-dollar special servicing company,” one of those borrowers, a Southern California-based developer called the Kam Sang Company, wrote in a lawsuit.

In Chicago, CA Ventures CEO Tim Scott is in a slugfest with investors and former employees at his $10 billion multifamily giant, reports Sam Lounsberry. But despite the hit to CA Ventures’ reputation from disappointing results, multiple lawsuits and a revolving door of executives, Scott isn’t simply taking it on the chin.

“I’m actually pretty invigorated by the challenge of fixing stuff,” he said. “We’ll get through this reputational damage that has been done.”

And over at Compass, founder and CEO Robert Reffkin is busy rallying his troops, who follow him with fervent loyalty.

Reffkin has had to navigate a historically bad market by cutting costs and hand-holding agents, many of whom have seen their savings accounts shrink because of poor stock performance and stringent clawbacks.

But as reporter Harrison Connery writes, the Compass faithful go to the mat for their company, especially when the brokerage’s competitors delight in its struggles.

“Love living rent free in the haters’ heads,” Houston-based Realtor Alexandra Loyd wrote on Instagram. “Must be a slow news day because when that happens … let’s bring up Compass!” 

Which brings us back to New York and Fortis’ “leaning tower of FiDi.”

Reporter Kathryn Brenzel takes us back to a bacchanalian launch party that could have only existed in a particular place and time for Manhattan’s condo market — then drops us into Fortis’ current mess like a dive into a cold pool.

A state judge recently ruled that the project’s lender can foreclose on the tower, which leans 3 inches to the north. 

Despite the tilt, the Buildings Department has found that there is no evidence the building is structurally unstable, so the project can move forward with a willing team.

It’s not a bad metaphor for the industry’s 2023: slanted but not knocked over.

SOURCES: NEWMARK U.S. CAPITAL MARKETS 3RD QUARTER REPORT, TREPP SPECIAL SERVICING REPORT OCTOBER 2023, PROPERTY SHARK