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The Last Tower & Blackstone's Lair Cake · The Promote Podcast

• Will Krasne (00:03) Imagine if Blackstone's statement on Nadeem's sudden exit was spun the same way they spin their losses in officer in private credit. Hiten Samtani (00:09) That's funny. Less than two percent of her success as a real estate juggernaut can be attributed to any one individual executive. Welcome back to the Promote Podcast, your insider guide to the money and mania the CRE markets. I'm Hiten Samtani. Will Krasne (00:30) And I'm Will Krasne Hiten Samtani (00:33) A shout out to our sponsors, Bravo Capital, a leading HUD in Bridge Lender. Will Krasne (00:36) and Lone Boss, your mission control center for your CRE debt. During this episode, you'll also hear from our friends at Gibson Dunn, top attorneys at the firm take us inside the cap stack in a series of conversations over the coming weeks. Hiten Samtani (00:48) This week we visit CRE's Alpha Lair Blackstone HQ, where one of the industry's top execs, the global head of real estate, Nadeem Meghji, is set to exit. Now, his perch was among the best, as Will likes to say, risk-adjusted seats in the business. But what does someone in that position do for their next act? And why is there so much churn atop the Blackstone Pyramid? Will Krasne (01:07) Blackstone, lest we all forget, is a real estate firm. They have all these other verticals, but they are a real estate firm. Hiten Samtani (01:14) Next, we take stock of the most scrutinized real estate project probably in modern American history, the World Trade Center Complex. Twenty-five years after 9-11, the final tower is set to rise, and the neighborhood it's about to serve is dramatically different from the one that existed at the time of the attacks. Will Krasne (01:30) Also because I live in it now. Hiten Samtani (01:32) It's true. Welcome back to New York, man. Here. Will Krasne (01:34) Great to be here. Hiten Samtani (01:35) How does it feel? Will Krasne (01:37) First of all, I wanna hear how you feel after your two weeks abroad. You were looking like a little bit of a Middle Eastern avocado. Hiten Samtani (01:47) Listen, Italy just does it for me. All the terrains are perfect. Just not much to say except Bravo Will Krasne (01:53) He is royalty. Hiten Samtani (01:56) Italy. Will Krasne (01:58) I have moved back to New York. live in Battery Park on the landfill that the Reichmans built. Come say hi, friends of the pod. Hiten Samtani (02:06) Should we spoil where we're gonna do an event soon, somewhere in that vicinity now? Will Krasne (02:11) Should we? Yeah, why not? Let's do it. Hiten Samtani (02:12) Don't really have all the details yet, but just safe to say fall New York City live pod coming up. Will Krasne (02:24) So two medie stories that we want to dive into, but before we do, let's get started with the punch list, our signature rundown of the Newsies News and C R E. This week's punch list is powered by H Equities. If you're a mid-market sponsor, stuck on either side of the cap stack, Elliot Horowitz's team can help. Yeah. Hiten Samtani (02:45) They do bridge loans of up to 50 million or they can come in as a co-GP with 10 to 20% of required capital to get you over the line. Will Krasne (02:53) And that is the hardest percentage of capital to find. Hiten Samtani (02:55) That is true. Will Krasne (02:57) Find them at hequities.com That's hequities.com Hiten Samtani (03:02) We gotta start with our goat. Will Krasne (03:04) Goats keep goating. So Steve Ross, it's incredible because so Joe Poznanski, I think wrote a wrote a piece about Roger Federer, I want to say in the early 2010s, when he was sort of just past peak of Federer, but still amazing. And Poznanski was saying that Roger Federer has had the longest still career of anyone where he's still really, really good. And Steve Ross, I mean, he's even beyond still. Hiten Samtani (03:29) Better. I think he's better now. He might because he's unshackled from all the corporate politics and the investor calls and all that nonsense. He's just going with his own balance sheet. Will Krasne (03:37) What's he done this week? Hiten Samtani (03:38) He's finalized a deal for the old IBM campus in Boca Raton. And this is not your father's Boca Raton. It's transformed completely. This is what, 125 acres thereabouts? Will Krasne (03:48) Yeah, and it has developer entitlements for a quote micro city. And I will say one thing is that Steve Ross has never done a thing micro in his life. Hiten Samtani (03:57) All right, next one. Something had to give here. This is one of the most scrutinized syndicator lenders, MF1. Limkin owned a 50% stake, which they have now said they're done with. Will Krasne (04:11) Yeah, so the other fifty percent was owned by Berkshire, one of the larger multifamily investment companies on the Eastern Seaboard. Berkshire owned fifty percent of MF1 with Limkilm. I'm gonna be Hiten Samtani (04:23) Doesn't matter anymore, they're out, you know, it doesn't matter. Yeah. Will Krasne (04:26) So the reason we we're highlighting this is that they were the lender of choice for, as you said, a lot of the syndicator types. Tides in particular did a ton of them. Yeah. And they were doing almost exclusively floating rate loans to Hiten Samtani (04:39) Floating raid bridge loans, which was the fuel of this multifamily boom, and then eventual bust. Will Krasne (04:45) Indeed. And I think at one point I read a stat and please don't don't aggregate me, as Bill Simmons would say, if this is wrong. But something like twenty-three percent of their loans were in modifications, which is not what you're looking for as a lender. So Berkshire is taking over a hundred percent of it. And I think what they're gonna do is look to do stuff more beyond just multifamily. Credit, of course, has been the golden child of the alternative investment space over the last couple of years. Yep. There's Lots of groups that are now trying to branch into credit in a real way. I saw Morgan Properties did their first bridge loan as a group. So interesting to see Berkshire, which is sort of more famous for its equity side, really ramping up the credit side as well. Hiten Samtani (05:26) I would imagine that they bought the stake at a decent haircut. Pretty cheap. Yeah. All right, next one. Our main man, Gary Barnett, he's done it. He just keeps doing it. But this time we're talking about him scoring $1.3 billion in financing for the torch. The Tell Will Krasne (05:43) Or ch tremendous. What the Hiten Samtani (05:45) us the Torch. Will Krasne (05:47) Torch is his project, mixed use. It's gonna be one of the largest hotels in New York. They just upsized it to 1800 keys. Hiten Samtani (05:55) The financing here itself is very interesting. So they got a senior from the JP Morgan-led consortium, and then there's a slug of Mes too, but the pricing here is quite curious. Will Krasne (06:04) This is one of the craziest things I've ever seen. If you know what happened here, please write us at podcast at the promote.com because I don't think I've ever seen this before. And maybe this is just a you know a scrivetner's error in the article. But the senior loan from JP is apparently at Sofa plus four. Sure, Hiten Samtani (06:20) Kind of in line, no? Will Krasne (06:22) it's expensive, like on 1.3 billion, it's you know, eighty something million of interest a year. but it's so far is is three six, three six five. So We're talking like mid sevens on the interest. Somehow the Mes is six point seven nine percent. Like how how does that work? I've never seen that before. So very interesting. And honestly, only Gary. Hiten Samtani (06:46) Only Gary, well, in general he's got a couple of things going. We've talked about his giant slug of one point two billion dollars in pref that was spread spread out across several projects. My speculation at the time was that was JVP coming in. I believe it's JVP and the Cutheries and a couple more big investors that are behind that. Will Krasne (07:03) I don't know anyone who's got the stones to throw one point two billion of prep into these things. Good Hiten Samtani (07:09) Lord picking to eternity. Will Krasne (07:11) Yeah. When you get the monthly statement you gotta just throw up, you know, 'cause it's Hiten Samtani (07:16) Full of cruel. Okay, next one. More read MA. This Will Krasne (07:22) Is independence realty trust merging with Centerspace. Centerspace has been on the market for a while. I think what's interesting is that this wasn't a take private. The portfolio wasn't super institutional. Hiten Samtani (07:34) about ten K doors, right? Nationally, six states or something like that. Will Krasne (07:38) Yeah, the Northwest good markets, don't get me wrong, but not ones that get the boardrooms at three forty five park fired up necessarily. Hiten Samtani (07:46) Not one that's like an auto sign off from a credit committee, is what you're saying. Will Krasne (07:49) Exactly. So these REITs merged. And so the result is that independence is growing their portfolio by thirty percent. So they're getting a little bit bigger. They're gonna have forty five thousand odd units. Gives the REIT eight billion plus enterprise value. So scaling up for sure. I like center space's portfolio. If I had this much money, I would have tried to buy it. It's I think undersupplied markets that are gonna do well. So interesting to see what happens here with IRT, but also interesting that it's a merger sort of at the lower scale, because we've only seen it really either take privates. Hiten Samtani (08:18) EQR and AVB with the blue pill named what is it what is it called? Vivmark? That Will Krasne (08:24) Viv Mark. Hiten Samtani (08:24) is a terrible name, guys. You could do better. Will Krasne (08:28) Yeah. But the smaller ones sort of been getting rifle shot at left and right, and the bigger ones merge. So interesting to see a smaller merger here. But yeah, I like the center square portfolio quite a bit. So center score Hiten Samtani (08:38) Center space, say that again. I guess the name doesn't matter anymore now that it's being absorbed, right? Will Krasne (08:44) Not gonna not gonna not gonna Yeah not gonna work here anymore. Hiten Samtani (08:46) Or anyway. Next one. Will Krasne (08:51) Stan Cronkey, you know, the first rule of being an incredible real estate investor is be born into a real estate dynasty. Stan Cronkey unfortunately didn't do that. Second second rule is Mary Walton. Hiten Samtani (09:04) That he certainly did, yes. So he's buying the Angels, but it it seems more like a real estate play than anything else, right? Will Krasne (09:11) So yeah, he's one of the larger landowners in the United States. He owns several sports teams. Hiten Samtani (09:16) Doesn't he own the gunner? Will Krasne (09:17) Yeah, he also owns Arsenal. So he's pursued mixed use developments around all of his sports holdings. He's done it in Los Angeles with the Rams. And now people are speculating that he's gonna do it in Anaheim with the Angels. So the Angels sit in Orange County. Obviously, we've talked about Orange County quite a bit. The Ziggurat. The Ziggurat. And this is actually a more valuable development site than the Ziggurat. It's 150 acres around the stadium. So Part of Anaheim owned by the city. The previous owner of the team was Guy Artie Moreno. Yeah. And there was a deal for him to buy it and the stadium. Yes, they're kind Hiten Samtani (09:57) Certainly what. Will Krasne (09:58) of went off the rails. People ended up in jail. Hiten Samtani (10:00) Mayor went to prison, right? Will Krasne (10:02) The mayor of Anaheim. Pretty good. So it seems like Cronkey's buying the team and he's paying a healthy number. He's paid four billion for it. If you do a little sum of the parts math, back out 150 acres. Yeah. You know, get some. Hiten Samtani (10:16) little cheaper. Well, I think also the the idea of sports anchored development is the smorgasboard of tax breaks that you can tap into, right? It's how the juice is worth the squeeze. Will Krasne (10:25) Well, that and then also just the throughput because you have captive audience eighty-one days a year. What do you do the remaining two hundred and eighty four days a year? And if you can get more people through it, you're paying fixed costs, you're paying property tax for the whole year, you're paying insurance for the whole year. So if you can get people through there and then you can get them to spend more money when they go to the games, that's how you create a cash machine. And that's how, you know, Golden State Warriors didn't care about the salary cap until the second April. Hiten Samtani (10:53) That's it for the punch list. When we come back, it's time to visit Lore Manhattan. Okay, let's go inside the cap stack with Gibson's Harry Silvera. Harry Silvera of Gibson Dunn, thank you so much for being with the promote. Thank you for having me. So much of what you do is source equity for a lot of these high-end, high profile projects in Manhattan and beyond. What are the conversations like at the moment? For a number of years, you couldn't put together a normal capital stack for a straight up office product. And so the traditional capital stack of senior secured lender, maybe a subordinate lender, and then equity was very hard to put together. Sovereign wealth funds, large institutional investors, private equity funds, and so forth. These are players who wouldn't really put their toes in the water for a period of time, but they seem to be back. And each of those groups that you just described has pretty different considerations and priorities when it comes to how they structure the deal. So where does Gibson come into all that? The structuring of a deal on the front end is really sort of the most fun part of it. I'm working on a project now where thankfully we have what I think is a high class problem of lots of demand for the equity. Part of our task has been to make sure that we are helping the client think through the various potential investors structuring demands to make sure we put together a syndicate of investors who can actually live with each other. It would be very difficult to put together a capital stack where one investor must exit by share of REIT stock and another investor who cannot invest through REIT. Many foreign investors don't want to file income tax returns in the United States. And so there's a whole universe of structuring around avoiding that. All of these things go to the issue of how we structure the holding of the investment and how we structure ultimately the exit of the investment at a profit. Harry Silvera of Gibson Dunn, thank you so much for being with the promote. Well, from your apartment, tell us what you see. I've been following your Instagram over the last couple of days and I've been seeing the the the silhouettes. Will Krasne (13:10) Yeah, I moved to Lower Manhattan, Battery Park, and we are just down West Street from the site of the Twin Towers. And so I was here, on the twenty fifth anniversary of nine eleven, this past week. obviously incredibly moving, amazing to see the spirit of resilience in New York. This neighborhood that I live in has changed quite a bit. And we wanted to highlight a couple things about it, partly because the state comp troller, again, if anyone knows what a comp controller is, Hiten Samtani (13:39) Lot of snow, yeah. Will Krasne (13:40) Yeah. No clue. And he released a report showing just how Lower Manhattan has evolved over the past twenty five years. And there's been a lot of great stories, real estate stories about there too. So we're gonna dig into a couple of those. But first let's just hit some of these highlights. If you watch like 25th hour, one of the most important and best movies sort of about this period in in Manhattan, 35,000 people lived in Lower Manhattan. And since 2000, the population has doubled down here. Over 70,000 people live in Lower Manhattan. Its share of Manhattan residents, which is sort of showing the penetration, like the RevPAR index of population growth, has doubled. So four percent of residents in Manhattan live here. And housing stock has doubled as well. So you sort of sense the theme. They've had twenty-five thousand residential units since two thousand. Hiten Samtani (14:33) Including some of the worst residential units in the city, such as the Woolworth Building, right? Will Krasne (14:39) There are some that are that are challenged, let's say. Yes. But I also would comment that this is the rare area in Manhattan where they have built. Yes. Guess what? People, it has grown the most. Hiten Samtani (14:50) They have built because the city and state really incentivized the rebuilding and it turned into what I believe was considered a nine to five purely work territory into a twenty four seven live work place. The other part that was interesting was it's pretty high earning people that are living downtown now. Median income was north of two hundred thousand. Will Krasne (15:09) There is somebody who street parks a green MyBach in front of my building. so there you go. But to your point though, there's a ton of public and private investment in this area. Hiten Samtani (15:20) Book that we reference quite a bit on this pod is Power of Ground Zero, which is Lynn Saglin's book about the politics of the development. She had put it yes as poetically as can be, which she said Ground Zero became a graveyard for nearly three thousand souls, as well as a commercial real estate opportunity. Will Krasne (15:36) It's awful that this type of event had to catalyze it, but out of these horrible things, great things can happen. And so let's maybe try to build more units elsewhere in New York, not just here. We've gotten the Fulton Transit Center, which I think is billion and a half dollars, four billion dollars went into the World Trade Center Transportation Hub, and the Oculus, which is Hiten Samtani (16:00) A leaky masterpiece. Will Krasne (16:02) Don't totally understand it, but that's not for me to under Hiten Samtani (16:05) I think that's Kalatrava's career in a nutshell. Yeah. Will Krasne (16:07) Yeah. and then of course we've gotten the nine eleven Memorial Museum, which has honored the two thousand nine hundred and seventy-seven folks who lost their lives. And staggering numbers here. A hundred million people have visited the Memorial Museum since it opened. And of course, as we talked about, Larry Stilversine has been hard at work over the past twenty-five years as well. Hiten Samtani (16:29) Yeah, I'll say also the mix of jobs. We've gone from being a purely finance hub to being really a Tammy market. Will Krasne (16:36) As well. It's not just Goldman Sachs, though they are there at Two North West, it is very imposing. Financial Center jobs, it was half of the district. Yes. And now it's about a third. Yeah. So it has fallen quite a bit. Part of that is due to our good friend Larry Silverstein. So Hiten Samtani (16:49) What's Larry been up to? They've had seven World Trade Center, four World Trade Center, three World Trade Center, and this is roughly added up Will Krasne (16:57) Six point five million square feet and yeah, about five billion dollars. Hiten Samtani (17:01) And that second part of the phrase is kind of where we're focused. And so Silverstein, who I believe took over this lease what, six weeks prior to the attacks, has spent the rest of his career essentially. Will Krasne (17:14) The rest of his life. And I'd say for the first year it was a dog fest. Hiten Samtani (17:17) Fifteen years. He's well into his mid nineties trying to build this thing back, and it's been a cocktail of politicking, insurance battles, legal fights, and your standard blocking and tackling in real estate. It's fascinating because it has all the complexities of a standard mega development, which is already eleven out of ten complex. And then you add to it all the emotional and media pressure that comes with being. The side of nine eleven. Larry was able to argue successfully that the World Trade Center attacks were not one attack, but in fact two attacks. And as a result, he should be eligible to get double payouts. And was it Wachtel himself who crafted the strategy? I think Will Krasne (17:59) Yeah it was. Hiten Samtani (18:00) it was. Pretty phenomenal. The White Whale for Larry was always two World Trade Center. And the reason for that is that was the only tower that was not able to avail of public financing. It wasn't able to avail of these liberty bonds that became a whole thing. We've talked about it previously, and we'll leave some resources in the show notes. But Two World Trade Center was the bridesmaid on a couple of occasions. Will Krasne (18:21) Of folks who got really close and then backed out for whatever reasons, including the GSC. So Scadden, I think, was first, the very eminent law firm. They were talking about taking the majority of the tower, ended up not working out. And then this was actually gonna be can't imagine Rupert Murdoch is a downtown guy, but he was gonna be. Hiten Samtani (18:41) News Corp signed an L O I, yeah. Will Krasne (18:43) Yeah, they did. I can't remember if Rupert had to call Larry and back out or he made Chase Carey do it. But there's some famous article where they had to call Larry and be like, hey, about that LOI. Guess we're not gonna do it. Hiten Samtani (18:57) That was about ten years ago. So for the last 10 years, it's really been like, is this ever gonna happen? He's gotten close with a couple of people. American Express don't steal home without it. Showed up, new surface that they were again in talks. And it happened. American Express is going to be at Two World Trade Center, but they are not a tenant. Will Krasne (19:18) They're not a tenant. Hiten Samtani (19:19) They're in fact gonna be owning the tower. And Larry is just a developer for hire essentially. Will Krasne (19:23) Yes. So Amex, as we talked about on our three part series about the Reichmans, which you should go check out, they were the folks who got World Financial Center built because they were the lead main tenant there. They took the leap, yeah. And so now they're leaping back across the street to lead this. They are going to own this thing. Hiten Samtani (19:45) Most of the news reports don't really talk about that very much. Amex owns this tower. Larry is just just there. Will Krasne (19:51) New York's hottest club is owning your own office tower. Hiten Samtani (19:55) Very true. So the reason that it makes a lot of sense here is that a developer in Midtown that wants to put something up can get the requisite rents, which are now, God, you know, General Atlantic, I believe, is paying $250 a foot for their 625 Madison mid stack space. It's Will Krasne (20:12) Did yeah. Hiten Samtani (20:13) just quite astonishing. But those kind of rents you can justify kind of going all out in the build. In lower Manhattan, though, rent's not quite at that level. So you can't really build a single malt kind of tower you need to. So you need to come up with a different solution, which is why ownership happened. And this was like a complicated dance. They had to they sold the ground lease and they did. Yeah, exactly. Will Krasne (20:34) If you're Amex, you get to put your name on something right here. You get to own it, you build it out to your own specs. And Amex is not a firm that's moving every five years for the cheapest rent deal. Yeah. Here. Hiten Samtani (20:44) The statement is the important thing. Will Krasne (20:45) And for Larry, it's a way to get it done. I'm sure the fee economics are good. Hiten Samtani (20:51) I would go further, Will I I think this is the dream deal for him. He gets paid and doesn't have to worry about performance as such. Well Will Krasne (20:57) You also don't have to put up any money, which is always helpful when someone else is someone else is signing on that loan. I will say signing does make you feel alive. So but I don't think Larry needs that at this point. Hiten Samtani (21:08) Just like JP Morgan emphasized their belief in New York City by building two hundred seventy park, as a symbolic move, this is just as powerful from Amex saying, Hey, we believe in New York City so much that this site that will forever be associated with tragedy can also be associated with renewal. Will Krasne (21:25) Totally. The fact that it's all getting done now, I think, is is poetic, but also there's real meaning and purpose behind it. Hiten Samtani (21:31) It's a real neighborhood. Will Krasne (21:33) It's a real neighborhood. Hiten Samtani (21:42) Aaron Crowitz from Bravo Capital, thanks for being with the promote. Do Will Krasne (21:44) Great being here. Hiten Samtani (21:45) you think in general HUD is understood well enough by the sponsors out there? Will Krasne (21:49) Definitely not. People call us every day with very outdated misconceptions and ask, is HUD only for affordable properties? The majority of what we finance is market rate. People don't understand how some of the rules work, how MIP works, how stat works. So our belief has always been if you're not pure play at HUD and bridge to HUD, you're not going to be good at navigating that particular process. Hiten Samtani (22:16) There's a HUD Healthcare Lane Express deal that you've been talking about quite a bit. My Will Krasne (22:20) My mortal enemy is combating timing to close. Anything I could do to shave off hours or days without jeopardizing quality or diligence, we will do. And in this case, HUD made it easy for us. HUD rolled out an express lane on the healthcare side where if you meet certain underwriting criteria, you're eligible to submit within the express lane. Bravo seized the opportunity and submitted an app. Hiten Samtani (22:48) And application Will Krasne (22:50) that in only four days was approved. Hiten Samtani (22:53) Aaron Crowitz from Bravo Capital, thanks for being with the promote. You ever try to book one in agency floater? Will Krasne (23:04) That's a task I haven't heard in a long time. You sit there, deep in the early hours of the morning, copying the model your associate gave you, because you don't totally know what the plumbing is. You pray that it's right, or that in 18 months, it's the next guy's problem because you've already taken another job. Hiten Samtani (23:19) Which is why Lone Boss re-amortizes it every month off the real reset, and it ties out to the penny with the agencies. Will Krasne (23:25) That's big. No more adjustments below the line. Hiten Samtani (23:29) The platform also runs real-time defeasance and yield maintenance. Every prepay convention, bake right into the loan. Will Krasne (23:34) So you can price a prepay two years out and know what it costs today. And the look back conventions are already in there. Hiten Samtani (23:40) Listeners, check them out at loneboss.com, that's loneboss.com, and tell them the promote sent you. Will Krasne (23:56) You're born. You take shit. You rise a little bit. Take less shit. Keep rising. And all of a sudden, you realize you forgot what shit tasted like. Welcome to the layer cake, son. Hiten Samtani (24:14) Does having to go and rescue a deal while you're on honeymoon in New Zealand count? Will Krasne (24:20) man. So the big news out of Alpha Private Equity Real Estate, Blackstone's head of real estate, Nadeem Medji, and I'm also gonna butcher that name. I'm so sorry. Nadem Hiten Samtani (24:29) Mag G. Will Krasne (24:31) Medgey is out. And less than a year after Kathleen McCarthy, the co-head of real estate departed, the reign was short. Hiten Samtani (24:39) It really was. Nadem was elevated to co head after Ken Kaplan was elevated up to, I believe he's co CIO of the firm. So Nadeem stepped in, had equal responsibilities with Kathleen. Kathleen left and she's still a free agent. And now Nadeem gone, which is just it's unusual. About a dozen or so senior managing directors who had a Blackstone, that means a lot. It's not like a random broker title. You're really up there, have departed in the last three years or so. So a lot of churn at one of the storied firms in the industry. Will Krasne (25:08) Talked about this a little bit. I think we get new left, but these firms, the air gets really thin. You need supplemental oxygen up there, particularly if you're somewhere where the guy isn't that old. John Gray is not that old. Hiten Samtani (25:22) He's young and vigorous as they say. I'm alive. Will Krasne (25:25) So practically, what are you gonna do? Each of their funds now are so big they have to buy a hundred billion dollars real estate over four or five years. Real estate's not gonna be the growth engine that takes them to the next phase of whatever they wanna be. Hiten Samtani (25:36) AI infrastructures have really become that in their telling for them. Will Krasne (25:39) Yes, but that's not real estate necessarily. Like Blackstone used to do hotels. Blackstone used to do all of these bricks and sticks, fix it real estate. Digital infrastructure is not buy it, fix it, sell it, which has been their motto for however long. It's a new ball game. That certainly has to be a part of it. I also think the performance of some of their vehicles probably warrants this. Hiten Samtani (25:59) They said that Nadem is leaving to spend more time with his family and for personal reasons those are typically code for I wanted to leave or I was pushed out. It's not a classic planned exit. Will Krasne (26:10) This is also not a seat that you leave willingly. Hiten Samtani (26:13) Can we just estimate the comp? Will Krasne (26:15) I'm sure he's got nine figures of stock. Yeah. Easily. And I'm sure he made north of ten million a year easily. Yeah. They don't just hand these jobs out. These are really hard to get. Quote Alec Baldwin and Malice. Do you know the talent one has to have to lead a real estate team? Hiten Samtani (26:34) There is a certain kind of talent you need to rise to the top of a firm like Blackstone, but it is not the same kind of talent that necessarily makes a company. And I think that is the perpetual dilemma for Blackstone Cubs is is it the man or the machine? Taylor Henritsey left and he started Town Lane and seems to be on the war path there, but there's a lot of them who have never quite reached the heights of their Blackstone careers, never in terms of financial comp for sure, but also in terms of relevance and prominence. Will Krasne (27:03) There's a humongous difference between doing private equity real estate and founding a real estate firm. It's not better or worse. It's just different. And some people are set up to do one, some are set up to do the other. I was one of the worst private equity real estate employees ever, maybe. I'm doing okay on my own. It's different strokes, it's different types of talent. The other thing is there's so much pressure. If a narrative gets around, it's so hard to fight against it in a position like this. And I think what was his signature deal, which was this you see Hiten Samtani (27:33) Rescue from the University of California. Will Krasne (27:36) Remember when this happened, there was the full sort of media treatment about how it went down. He was on his honeymoon. Yes. You know, negotiating this. Hiten Samtani (27:43) Shore of New Zealand, the the more remote one, whichever it is, that's right. Will Krasne (27:46) And this is something which the cushion that Blackstone put into the deal is gone. They've well underperformed. So UC's gonna make whatever percentage Hiten Samtani (27:55) Weren't they guaranteed eleven percent or something like that? Will Krasne (27:58) That was the pref. They're gonna get less than that. Blackstone back stopped it with like a billion something of shares. They've already, based on the math, they owe more than that. So that's gone. A billion dollars for B read is not, you know, the end of the world. It's one and a half percent loss, something like that. But your signature deals. John Gray's signature deal is the greatest LBO in corporate real estate history. You know. Hiten Samtani (28:22) B Reed itself has been through not only a redemption request, they're through the worst of it. They also had a a very serious, horrific tragedy last year when Wes Le Patner, who had just taken over from Frank Cohen as head of B Reed, was killed in that shooting at Blackstone HQ at the Rudin building. So they've really been going through it in multiple different ways. Will Krasne (28:42) Just truly an awful tragedy. Leslie was universally beloved and a tremendous investor in person. Hiten Samtani (28:48) The other thing about it is the guy who is essentially, for all intents and purposes, running Blackstone made his bones in real estate, right? It's not like he came out of TacOps or another division or pure private equity or insurance or something. There's got to be some level of second guessing happening. I would be more likely to defer to the expertise of one of my most trusted henchmen if I hadn't sat in that exact seat. Will Krasne (29:13) Ten years from now, when a young pup is writing the daily newsletter, they're still gonna be getting edits at, you know, six o'clock in the morning bef after it goes out, from you. That's just how Hiten Samtani (29:24) works. Nadeem, I've met him. Very sweet, bookish kind of guy. He doesn't have a natural charisma. He was just like a smart, plugged-in executive. I believe he was number one on Commercial Observers Power List in 2026 and has been out there raising his profile, doing a lot more talks and public events since he he took sole charge. It is a strange void to have left behind. They instantly announced that they had two people that they've elevated to take on the role. But again, we're back to the co-captains now and we've talked about how That can be tricky in and of itself. Yeah. Will Krasne (29:56) You set up a horse race and see what happens another thing to just bear in mind too is that at some point as we age and you see your friends Hiten Samtani (30:07) Are you are is that a reference to my fortieth? Will Krasne (30:09) No, no, no, no. But what you realize is that especially when performance isn't there. And again, I'm not saying Nadeem's a bad investor or not. That's irrelevant. But performance in the industry and performance for B-Reads specifically, which it was meh at best. And all of a sudden you start thinking about these cost line items a little bit more. A dozen senior managing directors plus Nadeem, that is a hundred million of annual comp. Hiten Samtani (30:34) just to that point on a much smaller scale. If you notice what happened at SL Green, they had Andrew Matthias, they had Isaac Zion, they had Sean Braun, all gone, replaced by the one whiz kid Cidamer, even after all the generous packages that he would get, it's definitely a much slimmer payroll. Will Krasne (30:51) That's exactly right. And so I'm sure that the guys that they're hiring combined probably make less than the Dean did. Yeah. And that's just sort of the nature of the beast. As you get more expensive, you have to be better and better. Like you see it in law firms all the time. The rainmakers of ten years ago who are still getting partner shares. That does not make the young rainmakers happy. Hiten Samtani (31:11) What do you do after this? Do you do you go be a Tyler Henritz C? The thing is if you walk out of Blackstone and you wanna go raise a fund or you wanna start a shop, I'm assuming a ten figure check is almost is just gonna happen. Will Krasne (31:23) I don't think it's that easy anymore. I think it's really, really hard. It's hard out there for anybody. Hiten Samtani (31:28) Tyler raised it in what like nine months? He raised his frickin' haul of billion plus. Will Krasne (31:32) That was a different time. Yeah. Now he's got a track record on his own. I'm not saying for Nadine, but like it's gonna be a lot harder than it was five years ago, ten years ago. Absolutely. Launches three, four billion dollar vehicle, like no problem. Hiten Samtani (31:44) But you're the guy who's sitting in the seat that has been talking to all the pension funds and the international investors and the sovereigns and all that. At his level, you're the guy Will Krasne (31:52) You just underperformed for UC for six years. Mm-hmm. It's not him. It's any of these guys leaving these seats. It's really, really hard. People are taking it on the chin and it is really hard to raise capital for real estate right now. Like, period, full stop. Specifically, if you're gonna do sort of a blind pool, the model of doing everything, I think, is just right now really tough. And it's the same in the REAT market. Now, people want you to be pure play. The problem with that is that if you're the thing that you're pure play on Is out of favor, you can't really do anything else. Hiten Samtani (32:23) What do you do next then? Do you take on another big position like Jay Paul at Starwood? Will Krasne (32:27) That's out there too. You know, there's always firms that are looking to take that next step. They're either gonna get taken out to the woodshed and shot and not raise another fund. They're gonna get bought or they need to raise a lot more money. And so bringing in a guy like this, you give away a bunch of the firm to do it. Hiten Samtani (32:43) assume you automatically create quite a bit of resentment internally. I don't know how Jay Paul's doing at Starwood, but I'd imagine there's at least some questions asked about how things are going with him at the number two. See? I don't know. Will Krasne (32:54) It's just anywhere if you don't hire from within. Hiten Samtani (33:02) That's it for the promote pod this week. Today's Lower Manhattan is a different universe than the Lower Manhattan of 9-11, though the journey to rebuild the towers has forced us to confront the tragedies of the past. And yet another shakeup at the top of Blackstone's real estate unit highlights the limits of succession planning. Will Krasne (33:19) Really good to be back. Hiten Samtani (33:20) yeah, I feel so nice. Sorry guys, I had to take a vacation. Will Krasne (33:23) You look tremendously well rested. It's fantastic to see. So much to look forward to this fall though, including our first live event. Hiten Samtani (33:31) It's gonna be a fab time. New York, obviously, fall, but we'll have more for you. Thanks again to our sponsors, Bravo Capital. You can find them at bravocapital.com. Will Krasne (33:39) LoneBoss and you can find them at loneboss.com. Hiten Samtani (33:42) And H equities, you can find them at hachequities dot com. Will Krasne (33:46) And while you're at it, how about giving us some more reviews? The numbers keep creeping up at the written ones, the ones that at the end of the day I look my kid in the face and say, Your dad got a five star review to Hiten Samtani (33:57) Please go on Apple, write us some good stuff. I'm seeing you in a week in change. I'm excited. wonderful. It's gonna be a good time. All right, bud. Thank you. Ciao. Will Krasne (34:04) Thank you.