Sunday Review: $2 billion in funding remains!

The 1996 Jerry Maguire movie had some really good quotes: an emotional Tom Cruise declaring his love with "You complete me"; a charming Renée Zellweger with the line "You made me love you instantly"; and an intense (may I call him "skimpy"?) Cruise pleading with his client, "Help me ... help you!" But the most memorable will always be the phrase, "Show me the money."

It could be a catchphrase for all commercial real estate. And last week, the money was on display in a way we haven't seen in a long time. Cain International secured a whopping $2 billion in construction financing for One Beverly Hills, a 17.5-acre luxury development in Beverly Hills, California. The financing package included a $500 million long-term loan from JPMorgan Chase (JPM). The project includes the luxurious Aman Hotel, a 10-acre "garden oasis," two residential towers (which promise to be the tallest in Beverly Hills) and God knows what else.

We needed it. Not that there haven't been other impressive loans recently. For example, RXR got $118 million from Starwood to refinance its office property, The Hall, in downtown Brooklyn and its One Clinton Hill mixed-use project in New Rochelle. Or Dwight Mortgage received a nine-figure sum ($108.2 million to be exact) for its luxury building, The Shoreline, in Gravesend Bay, Brooklyn. Or T2 Hospitality reorganized two Marriott hotels in Silicon Valley using $102.9 million in bridge financing from Peachtree Group. But getting an amount in the 10 figures? Well, we haven't felt this good in a long time.

"Cushman" discussion We didn't notice when we first watched "Jerry Maguaya" in 1996 (perhaps because we weren't working in commercial real estate then), but the client of the illustrious Cruz was named Frank "Cush" Cushman. If Wikipedia and IMDB don't lie, yes, so did Cushman & Wakefield (CWK)! Cushman was a half-traitor quarterback who was selected first in the draft..... at the end of the day, while the Jerry Maguire thing was going on. (Well played with a smile and falseness by Jerry O'Connell. To be honest, we liked him better when he was Vern in "Stand With Me.") The Cushman Company (not the character) did occupy our minds last week after Commercial Observer met with its (relatively) new CEO Michelle McKay to discuss how this real estate giant is handling an extremely challenging market.

The bad news: just like virtually all real estate firms, C&W (CWK) experienced a decline last year: down 6 percent in revenue, down 10 percent in fees, down 12 percent in its rental and appraisal business, and down 41 percent in income from its capital markets business. (There were other things, too, like the loss of the Brookfield Property business and some high-profile exits.) But that doesn't mean McKay sat back. She first extended the refinancing of the $1.4 billion in debt the company is due in 2024. And last year's fourth quarter put C&W ahead of its competitors in the one asset class for which no one has yet earned bragging rights: office leases.

"We have some of the best people in the business," McKay CO said. "Our competitors think of brokers in terms of transactions, but we are consultants to clients in how they think and use space." And during their fourth quarter earnings report, they were able to report a cash inflow of $101.2 million.

Consistency is rewarded. Or, to quote the locker room sign at Jerry Maguire's, "Success is simple - go up one more time than you fall down." "If it's empty, it doesn't matter."

No, Dickie Foxx (Tom Cruise's mentor) wasn't talking about office space in the first part of that statement - he was pointing to his left pectoral. (The latter was his head.) But "emptiness" should concern us all about office space.

But whether it's conversion or new construction, more housing is needed. And the City of New York has agreed to a Building Division rezoning plan for 42 blocks of Midtown South that will pave the way for the creation of 4,000 new units. Did you know that the weight of a human head is 8 pounds? There's a lot to think about in American real estate right now.

But real estate is an important topic everywhere. Last week CO was on the ground at MIPIM in Cannes, France to get a more global perspective on commercial real estate. Of course, that meant in some cases meeting with people we see in New York (yes, we're talking about you, Dean Shapiro) as well as those we see less often, like Marino Giannopoulos, CEO of Enterprise Greece, that country's trade agency. There was some optimism, some political anxiety and some ambiguous thoughts about the future.

Which was characteristic of South Florida, where CO held its conference on mixed-use and mixed-use real estate in South Florida. "COVID has accelerated our growth," Daniel Schwimmer of Allen Morris Company said in his panel. But that could easily have been challenged by Terranova's Steven Buttel's remark, "Banks here are in danger of closing." That seems to be the ubiquitous story.

But if you want to hear mainly a joyful story, you should pay attention to the industry and logistics. Regardless of whether the future will be as wonderful as the recent past, this is an active sector that has been on an upward trajectory for many years. So, before you dive too deep into celebrating St. Patrick's Day, grab a mug of delicious Guinness and read our interview with Megan Crissy-Herman from Prologis (PLD). Erin go bragh!