@GrantCardone I thought it was gonna be unedited… you already cut out 4 minutes here when you teleport from 9:45am > 9:49am. Smooth transition though by the editor!!
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john
4.9K posts
THE TRUTH IS COMING OUT TODAY in unedited 7 hour Video. You will witness:
• All deals tracking projected returns.
• Susman Godfrey wants $20-30M in legal fees ALL of which come from investors (not me).
• Investors already returned ~$40M of their investment.
• How 900+ investors have opted out demanding nothing to do with suit.
• How sus-man lawyers attempt to seal the truth from the public.
The entire unedited 2d day of depositions will be dropped on YT today demonstrating how lawsuit giant sus-man god-free weaponizes class actions against successful business owners and regular people believing they will settle rather than fight...
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That’s a really impressive edit GC where you jump from 9:45am > 9:49am. Super clean audio & visual transition. The timestamp kinda gave it away tho 🥴
Grant Cardone@GrantCardone
THE TRUTH IS COMING OUT TODAY in unedited 7 hour Video. You will witness: • All deals tracking projected returns. • Susman Godfrey wants $20-30M in legal fees ALL of which come from investors (not me). • Investors already returned ~$40M of their investment. • How 900+ investors have opted out demanding nothing to do with suit. • How sus-man lawyers attempt to seal the truth from the public. The entire unedited 2d day of depositions will be dropped on YT today demonstrating how lawsuit giant sus-man god-free weaponizes class actions against successful business owners and regular people believing they will settle rather than fight...
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@GrantCardone Where's the footage from 7/16 & 7/17? Why only share 6 of the 14 hours? Please, mr transparency.
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LAWYERS CAUGHT ON CAMERA TRYING TO CENSOR GRANT CARDONE'S DEPOSITION FROM THE PUBLIC. - Watch 'til the END! After 14 hours of grilling deposition lawyers for 'sus'man godfrey attempts to seal Grant Cardone's testimony.
After 6 years., this is the first time Cardone had a chance to tell his story. He EXPOSES lawyers at ATTEMPTING TO SEAL HIS PERSONAL TESTIMONY CONFIDENTIAL. Cardone says, "I want it ALL public.... II AM GOING TO MAKE YOU GUYS FAMOUS AND SHOW THE WORLD HOW YOU GUYS TRY TO EXTORT SUCCESSFUL PEOPLE AND BUSINESS OWNERS."
In this unfiltered confrontation, the $600M class action BEHEMOTH SUSMAN, appears to BULLY Cardone manipulating the law to designate Grant Cardone’s personal deposition under oath as confidential. On tuesday they realized they would be force to de-designate and now the entire second day will be make public.
Grant openly refuses to accept this obvious abuse of the legal system & will NOT leave without an explanation, challenging Raj Mathur's legal basis (which there was none) for sealing the footage, and demands that the dispute be taken directly to the judge. Cardone doesn't have a legal degree but was right in this case.
The cameras keep rolling as both sides debate the protective order, the ownership of the deposition video, and whether anything discussed justified keeping the testimony from the public. Watch the full exchange and decide for yourself.
Was confidentiality legally justified, or was this an attempt to prevent the public from seeing what happened? Why did courts reverse?
YOU CAN WATCH THE ENTIRE 7 HOURS they were attempting to hide and better understand the entire case. This is the first time Cardone has had a chance to TO SPEAK TO THE PUBLIC and GET THE TRUTH OUT
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@Wildlaw406 Hilarious that he thinks them removing the associate from their website is a smoking gun. It's so he doesn't get doxxed by internet weirdos & likely the "church" of scientology.
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Class action securities fraud case.
Interesting that he’s talking about having to pay their fees. That only happens if he loses, and none of what he’s saying here sounds like someone who’s confident they’re going to win.
Also, I’ve never seen a defendant act like this to plaintiff’s counsel and then win.
He’s up against Section 12(a)(2) claims, and those are tough to beat. The plaintiffs don’t have the strongest case, but it’s got a shot at winning in front of a jury. Especially if Cardone acts like this at trial.
I’ll write more about this later, but it’s a lot easier to run afoul of these laws than a lot of GPs realize.
Grant Cardone@GrantCardone
Meet Raj Mathur of Susman Godfrey DEMANDING MY DEPOSITION BE SEALED FROM THE PUBLIC! He spent 16 hours deposing me and then asked courts to seal my testimony as confidential. Sussman Godfrey & junior associate Raj Mathur does NOT “My Testimony” public. They don’t mind damaging my reputation but they do not want you to know who they are. My experience with these people at SussmanGodfrey are they are a bunch of disingenuous, lying, greedy, unethical, soulless human beings willing to do whatever it takes to extort fees out of people like you and me. He’s already removed his profile from LinkedIn and it looks like sussman removed his name from their website. This is the first time I’m able to get my truth out after six years of reputational damage and now they want to make sure the public never sees the testimony because it makes their case look frivolous. Sussman Godfrey made $600 million last year attacking small business owners like myself. They have Weaponized class action lawsuits to overwhelm business owners with outrageous legal fees, wasted time and energy and public embarrassment & irreparable damage to brand & reputation. After spending 16 hours grilling me he ran out of our offices, almost crying, making flee claims he was being held hostage & threatened. A $500 private black Escalade wisked little Raj off with private driver, all at my expense, to bring him back to mommy & daddy at Sussman Godfrey in their posh multi million dollar New York Headquarters.
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john retweetledi
john retweetledi
The 99 NB tunnel is blocked because a driver flipped their Prius. Find alternate routes.
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We cannot build data centers fast enough.
347% YoY appreciation for $AVGO (already down 10% - 15% since posting) felt conservative.
Grok@grok
@fammetaX Challenge accepted, no BS. The next $AMD moonshot is $AVGO. They're printing custom AI ASICs for the biggest hyperscalers while everyone else scrambles for capacity. AI data center buildout is still in early innings—347% feels conservative. Get in.
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@Jefffeldman Conventional small butchered the $7.5M - $10M pocket. <$3M or $4M has asinine inspection requirements (80%). Not a great product imo
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They replaced it with Conventional Small -
All deals from $2-10 M fall into this bucket now with Freddie.
It operates similar to conventional, w/ index & rate lock conditions in order to lock.
Standard prepay will be defeasance with pricing adders for more flexibility.
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We just closed a $13,130,000 cash-out refinance on a multifamily portfolio in Northern New Jersey.
Separate loans for each property as one of the last Freddie SBL deals.
3-years interest only, 3-2-1-1-1% prepayment penalty.
What happened to Freddie SBL & what's replacing it?
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@MegatrendGlobal Curious to get your take on big jump in short interest. I’m still a little confused on how RH reports daily vs FINRA bi-weekly, but will be keen on seeing FINRA update next Tuesday.
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Cool! $OSS customer Built Robotics is meeting with industry giants Waymo, Kodiak, and Serve Robotics to discuss how autonomous systems are revolutionizing roads and construction sites alike.
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@pennycheck Yes, crypto will moon when equity losses begin. Such genius [cope]
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@arjunarora_ @BeardyBrandon Learned lesson is don’t borrow floating at a historic low when cap rates follow suite.
These “fund raisers” couldn’t raise the equity necessary on conservative assumptions. They were hitting triples on the back of cap rate compression and mistaking that as expertise.
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Every real estate account has weighed in on the @BeardyBrandon situation. Here are my two cents as someone who focuses on debt origination.
// The deal //
In December 2021, Open Door Capital and Disrupt Equity bought a 388-unit Class A multifamily asset in Houston with a $52.8M floating-rate bridge loan (~75% LTV).
They bought a rate cap to hedge the floating rate exposure and planned to refi or exit in 3-5 years after the value-add was complete.
// What went wrong //
The Fed hiked rates 525 bps in 16 months. SOFR went from almost zero to 5.3%+ by mid-2023. When the rate cap expired, the replacement cost was 100x the original cost.
Interest expense doubled while NOI declined. Texas insurance doubled. The submarket flooded with new supply. Occupancy was overstated, so the value-add never materialized. Cap rates expanded from 5% to 6.3%, dropping the property value below the loan balance.
Refinancing was mathematically impossible, and a sale wouldn't cover the debt. Equity was wiped.
// What this could've looked like with fixed-rate debt //
Same $77M total basis. Call it 60% LTV instead of 75% LTV, so $42M of debt instead of $52.8M. Would've needed $11M more equity at closing. Fixed rate at ~4.0% for 10 years instead of floating, 30-year amortization.
Even with NOI compressing from ~$3.5M to ~$3.3M and the property value falling to ~$52.7M today:
Year 3 DSCR: ~1.35x. Still covering debt service. No covenant breach. No forced sale.
Year 3 LTV: ~$40M loan vs. $52.7M value = ~76%. Above original but the loan is fully covered.
Class B common equity still gets impaired but it's not zeroed out.
Fixed-rate LifeCo execution doesn't turn this into a winning deal, but it absorbs the market shocks instead of being destroyed by them.
The sponsor isn't forced to sell at the bottom and can hold to 2028-2030.
// Learning Lessons //
1. Fixed-rate debt at lower LTVs is the discipline that survives cycles. Yes, IRR looks worse. Yes, investors will push back on higher equity requirements. But, that cushion is what keeps the deal alive when rates run.
2. Underwrite today's rents as your pro forma rents. If the deal only pencils on 4% rent growth, it doesn't pencil.
3. Reserve for rate cap replacements, insurance, capex, etc. even when you don't think you need to.
4. Bridge debt isn't bad by default. There are circumstances where it can make the most sense.
5. Levering to the gills is rarely a smart move.
6. LifeCo perm debt exists for a reason. Use it.
---
P.S. - none of this is a knock on Brandon. I appreciate his accountability. Just wanted to share my thoughts.
Robbie Hendricks@robbiehendricks
I’d like to give Brandon Turner sincere credit for this post on IG. He fully owned up to the loss of LP capital publicly. Explained his responsibility, which is the most important, along with the market factors the affected the downfall of this deal. This is exactly how a sponsor should transparently communicate when something like this happens. It doesn’t make the loss of capital easier, but I have true respect for people that take ownership. The guru class has butchered the handling of their errors over the past 5 years. Brandon is the first one I’ve seen to step forward and address it. Credit where credit is due. Bravo.
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@resetbasis @robbiehendricks Bro stop shitting on his deal structure in public, he needs to raise like $30M off DTC marketing how replicable this is to prevent the house of cards from collapsing
x.com/CRE2BTC/status…
Harry Hodl@CRE2BTC
@robbiehendricks He estimates he’ll need ~$30M in the next 2-3 years for other ODC deals. Trying to scale up his “education” business to do help with that. First of many dominos to fall. Yikes
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I’d like to give Brandon Turner sincere credit for this post on IG.
He fully owned up to the loss of LP capital publicly.
Explained his responsibility, which is the most important, along with the market factors the affected the downfall of this deal.
This is exactly how a sponsor should transparently communicate when something like this happens.
It doesn’t make the loss of capital easier, but I have true respect for people that take ownership.
The guru class has butchered the handling of their errors over the past 5 years.
Brandon is the first one I’ve seen to step forward and address it.
Credit where credit is due.
Bravo.
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@phil_mcalister RE “I hope that he’s plugging as much of the gap”… I present to you “the plan”.
x.com/CRE2BTC/status…
Harry Hodl@CRE2BTC
@robbiehendricks He estimates he’ll need ~$30M in the next 2-3 years for other ODC deals. Trying to scale up his “education” business to do help with that. First of many dominos to fall. Yikes
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I'll say this as someone with experience in acquiring several billion dollars of multifamily:
If you don't understand how floating rate debt and rate caps work, you really aren't ready to act in a GP capacity. (His comment here proves he didn't understand).
If you don't understand how investing in a market with rents up 40% might affect the future returns you think you're getting and then shrug it off: "hey, I couldn't underwrite a 7% cap could I?!" you're really not ready to act as a GP.
I hope that he's plugging as much of the gap with his own money as possible and definitely refunding his fees. I'm sure he's been aware of issues at this property for some time so hopefully he's been waiving the AM fee for some time.
If you're an LP here's my advice: If you feel like you're in a marketing funnel, that's not the right GP for you.
Brandon Turner@BeardyBrandon
Hey dude- thank you for the post. Wow, lots of comments. Yes, definitely some damage control in the post (as my investors and partners already knew all the information, so clearly this was for the public), but only because the Internet started going wild with a lot of misinformation about what was happening. So I definitely wanted to try and control some of that. The narrative was “Brandon Turner lost 100% of all his investors money in all his deals.” I’m mean I’ve been seeing fake rumors like that for years online, there’s not a lot a person can do. And I’ve already addressed a couple hundred comments over on Instagram, mostly the same stuff, but I’ll say a few things: 1.) yes it was adjustable rate, but we had a rate cap on it. For those unaware, that is basically like Insurance against the rate going up. So it can turn adjustable into fixed. And it worked. However, but I did not realize and I don’t think anyone realized… is that if rates did go up, you have to re-buy rate cap insurance and the cost went like 100x. Plus, there were limits. No one expected us to blow past those limits. So definitely I wish I would’ve known that before and I would not have likely done it. 2.) but this is the interesting thing about real estate. Or any investment, no matter what. If you underwrite everything, every line item, to the most insane unprecedented estimate, you would never invest in anything ever. You would live in total fear all the time. So for example, if the average cap rate was a four, I might underwrite to a five, but I would never underwrite to a seven. And I might assume rents aren’t going to do 5% per year, but I might say worst case is zero. But in Austin, for example, we’ve seen Rents drop 30%. Geeze. So on one hand, it’s easy to look back and say that we should not have bought the deal. And I agree. Maybe I got caught up in the frenzy of buying. But also- every line item went up to unprecedented levels. Our underwriting, even when I look at it now, wasn’t crazy. It was conservative. Just … wrong. Anyway, appreciate you. Thanks for sharing.
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@Keith_Wasserman "We like where we sit and we like who we sit with" is a bar.
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Real estate GP’s, this has been a vicious cycle. I spoke to one of the largest real estate owners in Los Angeles the other day. I asked him which cycle was tougher… 2009 or this current one. By far this one he said. 2009 bounced back faster. This one is definitely deeper and longer. I’ve had two industry friends take their own lives during this current cycle who were magnificent developers and even better people/mentors). We definitely have our own internal struggles in the Gelt portfolio. That being said, those that make it through unscathed (maybe with some deep battle scars) and continue to play defense with existing assets and not forget offense acquiring assets when the liquidity has exited the building will be handsomely rewarded in the long run. Definitely more fun when there were no fires and everything was going up and to the right. But these times are the times to double down on transparency with investors, double down on new acquisitions, and work hard on preserving investor capital. Brutal time to find good deals and then put them together. Investors might not be happy now, but if you make it out unscathed and preserve capital you will be greatly lauded in the long run. Wanted to share the below message we received from a long term LP that makes us want to dig in and continue our track record of never having a capital call or losing a single dollar of principal for investors over 17 years.
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@Greenville1701 @JoeVeyera Management companies are just meat shields and task doers for ownership entities. The SSHD needs an established management company if they’re going to finance close to 100% of the purchase with bonds
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@runkfunk @JoeVeyera They also appear to be keeping graystar to manage the building.
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According to a presentation by SSHD staff, the developer will make a net annual revenue of $2 million, even after accounting for the rent reductions and freezes. This will finance $60 million in bonds, allowing the agency to immediately cycle capital and invest in more buildings.
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BREAKING: The Seattle Social Housing Developer has announced its first acquisition, a 150-unit apartment building near Pike Place Market in downtown Seattle, for the cost of $60.9 million. It plans to convert half the units to be affordable for low and middle-income tenants.
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