House of Brookfield, Wholesale Shopping and a Condo Buyout Coup

Summary

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The Promote Podcast – Detailed Summary

Episode Title: House of Brookfield, Wholesale Shopping and a Condo Buyout Coup
Date: February 11, 2026
Host: Hiten Samtani (A)
Co-host: Will Krasne (B)
Podcast Overview:
This episode of The Promote Podcast tackles three major commercial real estate (CRE) stories—the rise of Brookfield’s new CEO and its labyrinthine structure, the deluge of public-to-private REIT transactions, and a high-stakes, high-reward condo buyout in West Palm Beach. Hosts Hiten Samtani and Will Krasne deliver sharp, insider analysis peppered with industry war stories, punchy banter, and actionable insights for CRE pros.

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Main Theme & Purpose

The main thrust is a deep-dive into how major players are reshaping CRE:

• Brookfield’s new leadership and their ambitious plans
• The “wholesale shopping” spree as REITs are taken private in droves
• An on-the-ground tale of risk, reward, and outmaneuvering in the Florida condo market
  Tone: Insider, irreverent, and full of market wisdom.

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Key Discussion Points & Insights

1. The Punch List: CRE Market Rundown (01:16 – 09:22)

Fast-paced breakdown of current headlines and war stories in CRE.

• Worst Investment: Michael Shvo & the German Pension Fund BVK

  • Shvo received $2B from German pension fund BVK, backed by Deutsche Finance America; spent on trophy assets at frothy pricing and lavish perks (03:00).
  • Outcome: Projected $1B+ loss; returns are “the fun you have along the way” (01:59).
  • BVK’s due diligence system described as an “American telephone game” ripe for disaster.
  • Notable Quote:

    “You have a pension fund searching for steady returns investing with the single most all-over-the-place person in commercial real estate, who is a convicted felon.” – Will, (03:00)

  • Colorful story about Shvo billing BVK for a custom sheep garden (04:27).

• CMBS Tranche Losses: Black Diamond & the West Nyack Mall

  • Black Diamond bought West Nyack Mall debt for $175M; bondholders took big hits, including AAA tranches (05:24–06:56).
  • “The mighty have fallen…”—distress now hitting previously unassailable parts of market.
  • “If your low LTV is low only because V is high, remember the V is fungible!” – Will, (06:56)

• Big Win: Blackstone & DivcoWest Lease to Anthropic in SF

  • Rapid turnaround: Bought two SOMA buildings (April ‘25, $111M), promptly leased to AI firm Anthropic (07:33–09:10).
  • Blackstone/DivcoWest likely prepping a refi or sale already—testament to SF’s rebound.
  • “It’s as good a credit as you can get.” – Will, (08:33)

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2. The Brookfield Labyrinth: New CEO, Ancestry, and AUM Ambition (10:38 – 22:19)

Deep dive into Brookfield Asset Management’s (BAM) complex history and future direction.

• Leadership Transition:

  • Bruce Flatt steps aside as Brookfield AM CEO after 23 years, replaced by 38-year-old Conor Teske (10:49–11:29). Flatt remains CEO of the overarching parent.
  • Teske’s ascent is remarkable: “You need a couple of hall-of-fame deals under your belt at this level of the game.” – Hiten, (15:41)
  • Reinforces theme: Timing + profile = CRE leadership.

• Origin & Structure:

  • Origins tied to Reichman family’s World Financial Center, resurrected by Brookfield after their collapse (“Never go full Reichman,” referencing the perils of overleveraging and personal guarantees) (12:47–12:57).
  • BAM’s structure likened to “pyramiding,” with opaque layers of interlocking ownership and super-voting shares; only in 2020 did it become slightly more transparent (13:34–14:17).
  • Flat’s personal worth? “Could be $30B—we have no idea.” (14:03)

• Deal DNA:

  • Brookfield is notorious for affiliates trading assets among themselves and intricate internal transactions (14:25–14:35).
  • “The DNA of translucence permeates into their dealmaking.” – Hiten, (14:17)
  • Teske’s claim to fame: Pushed Brookfield’s Oaktree acquisition, widely seen as a coup (15:09).

• Performance vs. Fundraising:

  • Despite recent poor CRE performance (office debacles in LA and an 87% loss in Chicago), BAM raised $112B in the last 12 months (18:34–18:51).
  • “Scale is the direct enemy of returns.” – Will, (19:48)
  • “Brookfield’s heard the three worst words in office investing: cash-in refi.” – Will, (20:15)

• Megafirm Succession Battles

  • Comparison of succession at Brookfield (opaque), Blackstone (clear), KKR (split CEO structure) (20:42–21:29).
  • Private credit as the next regulatory target, “They are the banking system.” – Will, (22:09)

• Teske’s Ambition:

  • Goal: Double AUM from $1T to $2T, with focus on pouring money into credit and data centers (22:19).
  • “First trillion is the hardest.” – Will, (22:19)

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3. Wholesale Shopping: REITs Going Private (23:33 – 28:03)

Unpacking the recent blitz of public-to-private deals.

• Recent Deals:

  • Plymouth (industrial storage REIT), Peakstone (iOS REIT—“either shitty parking lots or institutional asset class”), Alexander & Baldwin (Hawaii retail REIT), Paramount Group (SF/NYC), Whitestone Realty, DigitalBridge (ex-REIT, now getting bought by SoftBank) (23:43–25:49).
  • Brookfield, Blackstone, DivcoWest, newcomers like MacAurora seen as “AUM Gobblers.”

• Why Go Private?

  • Public markets are undervaluing REITs, allowing giants to acquire assets “at a discount to NAV.” (25:51–26:20)
  • “Everything’s about narrative. The easiest way to talk about buying at a discount is to go get something trading on the public markets... and say, we’re getting a discount.” – Will, (25:56)
  • Private buyers can lever up more aggressively than REITs and cut corporate costs; sell the story of “right-sizing” for LPs (27:14).

• Notable Moment:

  • “You only need one to make life-changing money.” – Will, (35:08)

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4. Florida Condo Buyout Coup: Joey Colombo & Steve Ross (29:12 – 36:35)

From local hustle to life-changing windfall.

• Story of a Buyout:

  • Joey Colombo (aptly named for Miami lore) spent five years buying up units in an aging Flagler waterfront condo—risking being stuck with unmarketable assets if he couldn't reach majority control (30:33–31:58).
  • “If you do not get enough buyouts... you’re left with a bunch of shitty condo units.” – Hiten, (31:13)

• Enter Steve Ross:

  • Ross (Related Cos., ex-NY, now dominating West Palm) shows up, buys 10 units, wants the site. Colombo, now controlling a large chunk, sells all his 27 units for $25M (bought for $6M)—a 4x in 4–5 years (32:46–33:22).
  • “That’s astonishing. That’s a 4x in four or five years.” – Hiten, (33:22)

• Takeaways:

  • Massive reward for risk, execution, and patience—compared to meager take-home for many institutional GPs (33:22–34:09).
  • “It’s what sticks to you. A lot is sticking to Joey Colombo here.” – Will, (34:10)

• Broader Trends:

  • Surfside tragedy sparked stricter regulation and increased buyout activity: condo ownership became burdensome, setting up opportunities like this for enterprising investors (29:12–30:04).

• General Lesson:

  • You don’t need billion-dollar deals to make transformative money in CRE—creative, gutsy moves at any scale can deliver it (34:09–35:08).

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Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote / Moment | |-----------|---------------|-------------------------------------------------------------------------------| | 03:00 | Will (B) | “You have a pension fund searching for steady returns investing with the single most all-over-the-place person in commercial real estate, who is a convicted felon.” | | 04:27 | Will (B) | “He's famous for the sheep. He brought the sheep to the fucking Getty gas station… So they should have known the sheep were part of the deal.” | | 06:56 | Will (B) | “Always remember that the V is fungible. If your low LTV is low only because V is high, the V can change!” | | 08:33 | Will (B) | “It’s about as good a credit as you can get. Anthropic is valued... probably as a decacorn at this point.” | | 13:34 | Will (B) | “Pyramiding—these interlocking companies allowed you to basically get infinite leverage. It’s like the infinite money glitch on Robinhood.” | | 14:17 | Hiten (A) | “The DNA of translucence permeates into their dealmaking as well.” | | 15:41 | Hiten (A) | “You need to have a couple of hall-of-fame things under your belt at this level of the game. It’s not enough to just be an exceptional performer.” | | 19:48 | Will (B) | “Scale is sort of the direct enemy of returns. They are the market. You’re buying the beta essentially, by investing with them.” | | 20:15 | Will (B) | “Brookfield’s heard the three worst words in office investing: cash-in refi.” | | 25:56 | Will (B) | “Everything’s about the narrative, right?... The easiest way to talk about buying at a discount is to go get something trading on the public markets.” | | 33:22 | Hiten (A) | “That's astonishing. That's a 4x in four or five years.” | | 35:08 | Will (B) | “You only need one right to make life-changing money. Those opportunities are everywhere. You just gotta be bold enough—sometimes stupid enough—to go after them.” |

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Timestamps for Core Segments

| Segment | Start – End | |-------------------------------------------------|--------------| | Punch List: News Rundown | 01:16–09:22 | | Brookfield: Leadership, Structure, and Ambition | 10:38–22:19 | | Wholesale Shopping: REITs Going Private | 23:33–28:03 | | Florida Condo Buyout Coup | 29:12–36:35 |

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Closing Thoughts & Takeaways

• For CRE Insiders: Market volatility and institutional change are creating both pain and opportunity—the giants are growing, but solo hustlers can still land killer wins.
• For Listeners: You don’t need to work at Brookfield or Blackstone to make a mark. Sometimes the bold, creative, and a little bit crazy outperform the giants.
• Episode in a Sentence:
  A labyrinthine deep-dive into the CRE market’s power plays, from Brookfield’s throne shift and multi-billion-dollar shopping sprees to the everyman’s condo coup—smart risk and storytelling remain as valuable as ever.

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Transcript

[A]

When Daedalus created the labyrinth, it became the shorthand for something so complex and so confusing that anyone who entered would be hopelessly lost.

[B]

It used to be shorthand. Nowadays you simply say Brookfield.

[A]

Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. Hi, I'm Hatan Samtani.

[B]

And I'm Will Krasny.

[A]

A shout out to our sponsors for this episode. Bravo Capital, which is one of the market's leading HUD and bridge lenders, really ramping up their deals and loanboss, which.

[B]

Is a best in class CRE debt management software.

[A]

This week we discuss the house of Brookfield's new overlord. Connor Teske has a modest target, just double AUM to $2 trillion. We talk about the labyrinth that is Brookfield's corporate structure and what CRE's role in the ramp up might be. Then we look at the flurry of retake privates from Peakstone and Plymouth. And finally we slip into resort Casual and discuss a princely payoff in West Palm Beach. The goat Steve Ross makes an appearance.

[B]

Not in the position you'd think.

[A]

Yeah, exactly right. Should we get started with the punch list? That's what we're calling our signature rundown of the newsiest news in cre. Let's go.

[B]

I can't wait to fight over the punch list, which I always do. Oh, God, we gotta start with the worst investment. I really laughed when I saw this in the promote. W U R S T Michael Schuh.

[A]

We had talked a few episodes ago about the German pension fund who came in and bet about US$2 billion on him. Pretty astonishing bet. He went and took that money and went on those. One of those epic generational buying sprees of the trophies. Assets at the frothiest prices. Classic schwo stuff. Anyway, we now know the size of the loss that BBK is projecting and it's pretty staggering.

[B]

They gave him US$2 billion and they're going to get back roughly US$1 billion.

[A]

Right now, BBK is projecting losses of at least $1 billion. They've warned that it could be more than that. And I think we knew where this was going to go. When we talked about this thing, we said sometimes the returns are the fun you have along the way. But I think the details that just came out in this new Bloomberg story are pretty astonishing and I wanted to talk about them.

[B]

It's really fantastic. They knew some of the scale of the loss. They were hiding some costs that Chavot was charging. The deal his partners were blindsided. Our friend Serdar.

[A]

Yes. There was a Turk that he got in bed with. He was a friend and a partner. I think he actually introduced him to his wife as well at some point. Serdar claims that he signed about $400 million in PGS related to this flurry of purchases that Shvaud made. The reason we're so fascinated by this story is the intersection between a German bureaucratic machine, you know, probably wearing suits out of their version of Walmart or whatever. Aldi and Michael Schvo. Right. That that intersection is truly a one of one here. So how did this go down? What were some of the kind of the bureaucratic mismatches here?

[B]

The biggest mismatch is that you have a pension fund which is looking for sort of steady returns and you go to the single most all over the place person in commercial real estate who is a convicted felon.

[A]

Tax fraud, but yes.

[B]

And you do the most high profile, zero cash flow, hugely capital intensive types of deals.

[A]

Roundup condo development in top tier markets basically is part of it.

[B]

Or buying the Raleigh hotel, spending a gazillion dollars in the Transamerica tower to lease 4,000 square feet at your target rent, those types of things. And of course anyone could have seen this coming. But was Michael Schroed taking private jets back and forth to all these assets across the country? Of course he was. Was he paying for it? Absolutely not. Were the Germans? Yes.

[A]

Protection from what? The Germans. The structure of decision making is part of what he was able to exploit here. Right. There's an amazing anecdote in here. The due diligence was done by a guy in America called Jason Lucas who ran Deutsche Finance subsidiary Deutsche Finance America. And then Jason would do the dd, he would inform his bosses at Deutsche Finance Germany who would then inform BVK and say, hey, we're good to go.

[B]

That's a lot of then inform.

[A]

Then the way I was thinking about it, it's like the Kitty Genovese effect playing out in cre. It's pretty good. And then there was an amazing nugget. The Germans had kind of a split personality when it came to cost control. On office deals, for example, they were super diligent about cost and wanted to account for every dollar. But then on some other stuff. Do you see the thing about Leland and the sheep?

[B]

He's famous for the sheep. He brought the sheep to the fucking Getty gas station on the west side highway, you know, he did 10 years ago. So they should have known that the sheep were part of the deal.

[A]

The sheep were part of the deal. But here Shvo convinced BVK to pay for him to build a custom garden to house the sheep at the rally.

[B]

A little bit of pennywise pound foolish.

[A]

So Schwo maintains that everything's going dandy, we should say. There's talk of BBK looking to replace both CHVO and Deutsche Finance, which would make sense, but Schvo says everything's going just fine. You want to read a statement for us?

[B]

We are not privy to the details of BVK's internal accounting practices, but do know the CHVO property's ongoing financial performance cannot accurately be described as anything other than success. That's not even, like, really grammatically correct.

[A]

All right, next one. Black Diamond Capital. Really interesting CMBS trench warfare here. What's going on?

[B]

So this is a mall in West Nyack, and it used to appraise for north of about $900 million. And Black diamond won the deal via credit bid for 175 million. And what's interesting about this is that they bought the debt in October of 2025, and they left the holders of the bonds, which were once rated aaa, nursing losses at that point in October. It was the second time since the Great Recession that the AAA tranche got hit with losses. That has since happened a couple more times with I think a group that we're going to talk about later. And it's just an example of like, how the mighty have fallen. And we talk about distress. This is real distress. Buying the West Nyack Mall, which is super tanker, isn't probably even the right word to describe it. Battleship, you sunk my battleship.

[A]

We're going to see this happen with the American Dream Mall in New Jersey. All these kind of boondoggle malls that are just. No one knows what to do with them.

[B]

Well, this wasn't a boondoggle 25 years ago. This was as good an asset as you could own in real estate. And. And that's what I think is so interesting because what we're looking at now with data centers and all the capital pouring in there, like, are these the types of things that seven, eight, nine years from now promote episode 500.

[A]

Amen.

[B]

Inshallah, we're going to be talking about, wow, Black Diamond Capital bought Blue Owl's loan on the data center in Bumfuck, Texas.

[A]

If you own the triple A tranche of bonds, that was supposed to be debt that you could cuddle, right? That was supposed to be safe, secure returns for you. But more and more, as distress has been seeping through the system, we're seeing that that is not necessarily the case.

[B]

Absolutely. These things shift and they shift faster than you think. And if you are doing things and just underwriting based on, oh, well, this tranche has never been hurt before. Or this LTV is safe. Like the V can change. Always remember that the V is fungible. Yeah, the V is fungible. If you're low. LTV doesn't really mean anything if the V goes down.

[A]

Next one less people think this is just a doomer pod. We like to occasionally highlight some big wins. And Blackstone and divco west just had a really big one in SF that's.

[B]

About as big as you can get. So Blackstone and divco or divco west, which also. I love all the different naming conventions.

[A]

I love it.

[B]

Divco west is a divcore capital company. So divco west and Blackstone announced that Anthropic, the makers of Claude, our favorite LLM, I use it all the time. Sponsor us, please. They leased the entirety of two buildings on Howard street in San Francisco, and divco and Blackstone own them in a jv. And this is about as good an execution as you can get.

[A]

Yeah. So April 2025, purchase price was about 111 million, which is 265 a foot in SOMA, which is a prime, prime, prime market in SF. And boom, it's already leased. I would assume that we'll see a refi coming up, right? What do you think the game is right after this?

[B]

It depends because we don't know what the lease rate is. We can assume it's very high. We don't know what the TI work is. We can also assume that's very high. And we don't know what the leasing commissions are, which we can safely assume are pretty high. So my guess is that they probably bought this very relatively low leverage, bought it vacant. So you don't want to carry it too much. But yeah, they're going to be in the market. This is as good a credit as you can get. Anthropic is valued. I don't even know. It probably has increased since I started.

[A]

Deca Corn at some point.

[B]

So, yeah, about as good an execution as you can get. They will probably be in the market, as you said, for a refi or a sale imminently.

[A]

Damn quick. What Is this about? 9 months from purchase to fully leased out. And again, these are the kind of bets you can make in a city like sf, which is improving rapidly. Divco west is betting on this market. Big time. And many other ways. They just went into contract for 101. California.

[B]

They bought into it. Yeah. They had a big valuation.

[A]

Yeah, $975 million valuation, which is about 770 a foot. So they're pretty big on SF again, which is nice to see with the.

[B]

Super bowl going on. It was very hilarious to see that the folks who thought SF was a hellscape and California is the worst place in the world show up and realize SF is kind of awesome. The San Francisco treat.

[A]

All right, that's the punch list. Right after this, we're headed into the Brookfield labyrinth. All right, I'm here with Aaron Krovitz from Bravo Capital. Aaron, let's get right to it. What's the story behind this mythical 100% HUD approval record?

[C]

It's pretty straightforward. We have an amazing team. We're a pure play hud. We're focused on bridge to HUD all day. We're both fully HUD licensed, and we also offer balance sheet bridge financing, where we could finance deals over $100 million, just like we did in Miami, Brooklyn, and Jersey City.

[A]

And what's the secret sauce? How do you put it all together?

[C]

It's our underwriting. We don't rush deals to market and hope they stick.

[B]

We.

[C]

We know what HUD wants before we submit, so there are no surprises. And we have a real balance sheet. So when we go, we go.

[A]

You were telling me when we were chatting offline that you closed a HUD Express lane deal in four days. That's absurdly fast for HUD.

[B]

Hey, 10.

[C]

That's why we get up in the morning. At Bravo. We're here to break records. We're here to innovate. And when you have tight documentation, the right underwriting, that means speedy approvals and.

[A]

Speed, means the sponsor can close quick. Thanks, Aaron. Good to have you on.

[C]

Thanks. Attend. And you can find [e-mail].

[A]

Okay. We knew this was coming. When we saw the news, we both rubbed our palms because this is a company we love to talk about for a variety of reasons. Brookfield has a new overlord. It is 30 something year old Connor.

[B]

Teske, 38 years old.

[A]

And as two 30 something year olds feel a little inadequate right now, I.

[B]

Think Connor Tesky is almost exactly the same age as me, like within a month.

[A]

So current dark Sith boy Bruce Flatt will step into the Brookfield netherworld, which is this fascinating realm we're going to talk about in a second. And Connor has been the golden child. He's the hero parent for a long time. And he's formally taking the position now, which is a little faster than we expected, honestly.

[B]

Bruce is still not that old because, if you remember, Bruce took over in his early 30s, so he's had quite a long run. But he's still a relatively Young Multi billionaire.

[A]

23 years at the top, right? Ish.

[B]

Yeah, absolutely. So this is also again, talking about the labyrinth. Brookfield Asset Management has named Conor Teske the CEO.

[A]

Yes.

[B]

Bruce Flatt will remain the CEO of the parent Brookfield.

[A]

Yes. In some cases, that doesn't necessarily mean very much, but Brookfield has one of the most bizarre corporate structures, not just in real estate, but I think in all corporate America.

[B]

You would say it's kind of crazy. The origin story of Brookfield is fascinating. Rose like a phoenix from the ashes of the Reichman family. Yeah. So Brookfield Place, of course, was built by the Reichman family as World Financial Center. I believe the story behind it is incredible because they had to fill in. It used to be part of the river.

[A]

Got to give a shout out here to the book the Reichmans by, I believe it's Anthony Bianco.

[B]

Yeah, Anthony Bianco's book is great.

[A]

Fantastic book. We'll drop it in the show. Notes. Incredible, incredible.

[B]

Towers of Debt is also fantastic.

[A]

Will always likes to show me up. I've only read one of them, but obviously he's read both. This is how he is.

[B]

Yeah, you got to read both. Part of what's so interesting. And again, this is a quick aside here about the Reichmans. Everyone bit on this site because the city owned it and they put out an rfp who wants to develop it. Everyone's worried about price. The story is that the Reichmans came in and they just go, so if we were to personally guarantee the debt for however many years, would that be interesting to you? And they were like, yes, that's what we're looking for, because you can default on a purchase price.

[A]

There's a mantra that's come out of this whole wreckage, which is never go full Reichman. You never want to cross, collateralize, and PG the hell out of everything. It can go very well until it doesn't.

[B]

So the Brookfield structure is very convoluted, but it's really the brainchild of this guy, Jack Cockwell, who used to run Legend, the Edper conglomerate for the Bromfin family.

[A]

Yes. The Bronfin family of Seagram fame.

[B]

They owned Universal at one point, tried to get into media. Edgar, who's still around, I think, made A sort of harebrained bid for Paramount at one point. That structure, they called it pyramiding, where it was like you had these interlocking companies that each owned shares of each other and that allowed you to basically get infinite leverage. It's like the, if you remember, the infinite money glitch on Robinhood, which is basically just check fraud, was sort of like how I would describe the Ed per conglomerate.

[A]

When the Silicon Valley titans have these super shares in companies like Mark Zuckerberg, et cetera, right. They have a 10 to 1 voting share situation. That's kind of what Brookfield had for a very long time with this board of governors. Now the problem was we didn't know necessarily who was in that mix for a very long time until 2020, where they simplified it just a little bit into turn it into a group of seven, like the Canadian Masters. They have a group of seven. Bruce Flatt's part of that mix, overseeing the corporate parent of Brookfield.

[B]

And there's sort of like this partners fund that has the super voting shares, which we know some of the people involved don't know. All of them don't know the structure. It's all nebulous. Bruce Flat could be worth like $30 billion. We have no idea.

[A]

The other thing that's important here is that this DNA of translucence permeates into their deal making as well. In real estate, right.

[B]

Brookfield affiliates are buying and selling buildings to themselves all the time. Like different funds, different drop down.

[A]

You ever think about the GGP mark to market for things, though?

[B]

Oh, of course. GGP is interesting too, because there's another guy who had been no inside baseball here, but just looking from the outside, who'd been seen as really the golden child prior to Conor, which is Ben Brown, who I think still runs US real estate, but he had been the wunderkind for a while. He was running back and forth from, from Carol Gardens to the Office every day in a profile. And I think he spearheaded the GGP deal, which has been, despite their internal marks, I don't think, very successful. And Connor Teske, the deal I think that really put him on the map was buying Oaktree.

[A]

Yes.

[B]

And the credit asset manager, he's a devoted Marxist. He is indeed. And I will say this, there's a anonymous Twitter account run by someone who I think may be a podcast host in his spare time, who, about eight months before Brookfield bought Oaktree, said Brookfield should buy Oaktree on Twitter. And, you know, so that deal really worked out. And so it's Whenever you're this vertical, I call it like if you go vertical in a career, it's again, it's about talent, right? But it's also about timing and right place, right time.

[A]

You need to have a couple of hall of Fame things under your belt at this level of the game. It's not enough to just be an exceptional performer, show up all the time, be super consistent. You need to have something that gets you the buzz within the walls or within the labyrinth, so to speak. You also need to have something that gives you a higher profile in the media, et cetera. So think of John Gray's Hilton lbo, right? Similar kind of thing.

[B]

You also have to make sure that the right deals happen at the right time. A lot of real estate leaders in particular, they're just in different vintages and they're always like a cycle and age apart. Because if you're just like in the wrong cycle, there's nothing really you can do.

[A]

What you mean is like, you'll have a 50 year old and then you'll have the 36 year old because everyone else in the 40s just couldn't. The timing, the market didn't work out.

[B]

When I first joined Carlisle, I remember looking around and being like, there are a lot of managing directors and directors and there's a lot of senior associates. There are no vp. And I'm like, what happened to those guys? I was like, oh, they all got laid off in 2008. Oh, yeah, fair enough. When you become a trigger puller, you really behold in the timing too. Because if you come up in 2022, 2023 and those are your first deals, you could be the best investor in the world and perform outperform relatively. But they're not great.

[A]

Imagine if you ran multifamily starting in 2021, you're toast or you're at least relegated.

[B]

Like I said, it's timing. So there's really talented guys at Brookfield and I'm sure Connor, I've never met him, don't know him. I'm sure he's as good as they get. But there are other great people. If this had been happening, if Bruce had been five years older, 10 years older, Ben Brown would have been the guy. Probably you either die a hero or you live long enough to become the villain with ggp.

[A]

I don't think it's just talent here with Conor Teske.

[B]

No, it's a politician.

[A]

He's also got some other very interesting qualities. It was a FT or Bloomberg piece. I read he's also Imitated his mentor's speaking style, which was described as, quote, persuasive humility. What do you think that sounds like?

[B]

I just. I'm not sure. It's not really in my talents to understand. But, you know, I think if I were to guess, I would say that it sounds something like that.

[A]

So Brookfield has been on a tear, fundraising tear.

[B]

So I'm glad that you said it's a fundraising tear and not a performance tear, because it is very certainly not that last thing I want to say too, about just timing and how all these things work is that, you know, Bruce, once you're the chair of Brookfield, there's only one place left to go.

[A]

Prime Minister of Canada. I actually never figured out if Carney ran all of Brookfield or just part of it.

[B]

I think he was there to look handsome and give great speeches.

[A]

As a Canadian head of state, there isn't really much else to the job. Sorry, Megan.

[B]

Sorry, my Canadian wife.

[A]

Before we get into the performance on cre, we gotta say bam. As a fundraising machine is one of the best out there. They raised $112 billion in the past 12 months. As we've talked about a bunch on this podcast, the biggest players are vacuuming up more and more of the aum. That's just the game right now.

[B]

It is. There was an article about the zombie PE firms that came out last week, and there's real names on there. Some of those guys are just might be toast. Test if your performance hasn't been good. Like, especially if you've had more than one below par fund in the last however many vintages, you might just be hung. No one got fired by an IBM. No one gets fired. Allocating to Brookfield. That's not right or wrong. You might argue it's wrong if you're looking at performance, but they have just built such a machine. It's so big. Blackstone talks about trying to become the one stop shop everything, store for everything. Yeah, and this is kind of the same thing.

[A]

Let's talk about CRE performance a little bit. It hasn't been stellar from Brookfield on many fronts. We've talked a bunch about the downtown LA Debacles they've had. They just sold a tower in Chicago to my guy Skydell at 601 west for an 87% haircut. So I think they bought it at 286 million. They just sold it for $41 million.

[B]

Scale is sort of the direct enemy of returns. And they're so big, like they have to do everything they are the market. They are in everything. They can't just avoid office. They can't just avoid retail. They can't just avoid any of these things. They have to be in everything. You're buying the beta essentially, by investing with them. And so whenever the beta is low, like, you're getting that. They've had all of these office debacles. Like, you know, we were sort of joking that, like Brookfield's, it's kind of.

[A]

Inconsequential, you know, 2%. Yeah.

[B]

But Brookfield, they've heard the three worst words in office investing, which was cash in refi.

[A]

Oh, yeah.

[B]

And they had the biggest one I think I've ever seen.

[A]

$173 million has got to be a record.

[B]

A staggering cash in refi. This is on Liberty Street Tower in lower Manhattan. They still believe in the building, of course, because otherwise you just give it back. Some might argue that there are three words that are worse than cash and refi, which Brookfield has also heard recently, which are deed and Lou.

[A]

That's true. We should talk a little bit about the succession at these megacorps. I think the one that's been the cleanest line for a long time is Blackstone. With Johnny Gray sitting in that seat, it's very clear who's in that seat. Everyone kind of just below him has been shuffled a little bit. We've talked about Chad pike, we've Talked about Kathleen McCarthy recently leaving the firm and Nadeem taking sole charge.

[B]

Guys who could have been contenders. Tyler Henrisi leave to start their own shop.

[A]

Correct. But Blackstone's pretty clean. KKR has been, to me, a little bit dodgy with the co CEO situation. Just I don't know how long that can last.

[B]

I mean, it works for Netflix, I guess. These businesses now are so big that, like, one guy maybe can't run it. Bruce is still around, but kkr, like, they're such a big company. Same with Blackstone. I mean, John is the CEO and he's also, again, young and capable, and he's built the big engine, which is real estate there.

[A]

You know what? John's not CEO though, right? He's CEO.

[B]

Oh, wow. I think things have to get split like we talked about the private credit canary and the coal mine. Right now, Blue Owl this week, they're talking about Mark Lipschitz and Doug Ostroover maybe getting margin called on their shares because Blue Owl's down 30%. If there's a really a private credit contagion, I think a lot of this stuff goes wrong. Maybe there's some sort of like good co, bad co or something gets split and at some point regulation is going to come for them. Because this is the banking system, private credit, and these types of companies, Blackstone, kkr, Blue Out, Apollo, they are the banking system. And so at some point, some enterprising young politician is going to be like, we're going to be regulating KKR credit.

[A]

As I said up top, Conor Teske has a modest goal of doubling AUM to 2 trillion. If you had to put a lot of money to work, guess where it's going? Credit, credit and data centers.

[B]

Or credit for data centers. To paraphrase T, Boo and Pickens, first trillion is the hardest.

[A]

So will you violate any debt covenants recently?

[B]

So funny you should ask. I have been in technical default recently. I mean, who among us, right? But not since Q4.

[A]

Ooh.

[B]

And that's not because I paid off a loan. It's because that's when I started using Loan Boss.

[A]

I can't believe how old school some of our listeners are. They're still crunching DSCRs in Excel and all that.

[B]

Ugh. Total waste of time. Risky business to boot. LoanBoss runs the entire process for me. One click covenant testing. Incredible. Instant cash flow forecasting. Impeccable. And my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve and then it's always vertical and you got to alt HVT to have it go horizontal. Make sure the index match works like ridiculous.

[A]

They've just got it sorted here for you.

[B]

Much better. So thank you, Loan Boss listeners.

[A]

Check them [e-mail] that's loanboss.com and tell them the promote sent you.

[B]

A nice sag into where are these companies going to put all their money? All these companies that are able to raise. And by all these companies, I mean five. The answer in a lot of cases is retake privates.

[A]

Oh, yeah, so many of these happening. We had Plymouth recently. Peakstone has just been a rush of companies being taken off the public markets and swallowed up by the biggest AUM Golplers there are.

[B]

Totally. And we have new AUM Gobblers coming into the scene as well. Because Mac Aurora, you know, led by the aforementioned Chad pike, flat fisherman, former Blackstone exec. They have taken that one up.

[A]

Plymouth was an Industrial Storage REIT, right?

[B]

Yes, it was. Peakstone, of course, is an iOS REIT. It is either shitty parking lots or institutional asset class. We report. You decide.

[A]

Brookfield's buying that one.

[B]

Yeah, Brookfield's buying that one for 1.2 billion. Blackstone, Divco west, these same guys coming up over again. And then M and W. Who? I. I don't know, but who is that?

[A]

Oh, you. An apology. I wasn't really familiar with your game.

[B]

They bought Alexander and Baldwin, a Hawaii based retail REIT for 1.5 billion in December. And there's been other activity, various residential. The artist formerly known as Matt Cali.

[A]

Oh my God. Charlie Kushner had been agitating for that company at some point recently.

[B]

He has. We're doing this again. They're facing a letter from a 5% shareholder called Ares Capital.

[A]

How much talk do you have to have in a company to send one of these letters and it be taken seriously? What's the threshold there?

[B]

I mean John Litt has sort of made a career doing it with land and buildings. Yeah, with like not a ton rhythm, obviously. Bob, wait. Sorry.

[A]

On this podcast we take the names very, very seriously. You mean little known investor Rhythm Capital.

[B]

Sorry. Little known investor Rhythm Capital took Paramount private.

[A]

Paramount had been going through this incredible run of conflicts of interest. And listeners, if you haven't heard our rendition of the text messages between the former Paramount CEO and his ex girlfriend, some of our best work, I'd say.

[B]

The first part of my epitaph.

[A]

So Rhythm took control of what, 13 million square feet recently, primarily in SF in Manhattan.

[B]

Everyone was bidding on that. That was Vornado, Brookfield, SL Green I.

[A]

Think was in the mix.

[B]

All those guys were in on that. And then other smaller REITs too, like Whitestone Realty Trust, which is a retail REIT. MCB out of Baltimore, they've been trying to take them private for quite some time. Digital Bridge, which wasn't a REIT anymore, I think they were A C Corp.

[A]

SoftBank is buying them, right?

[B]

SoftBank's buying them.

[A]

What's the broader argument here? How are you getting your investors to sign off on these mega acquisitions?

[B]

Everything is about the narrative, right? And so the narrative is distress. And it's really hard to find distress, especially at scale. You can't really do it on the multi side. You can't really do it in office unless you're buying these sort of one off deals. You can't build a business around it. But the easiest way to talk about if not distress, but buying at a discount is let's go buy something that's trading in the public markets. Well wide of where it would trade in the private markets. And we can say we're getting a discount.

[A]

You take the nav you say, this is the discount to nav. Let's go in.

[B]

Yeah. And you're like, we're buying it cheap. It's a good narrative and you almost have like data to support it because you can say, hey, the implied cap rate for this office REIT is 6.7 and it trades at a low 5 or something like that.

[A]

Take the holdings of an SL green. Let's say you compare that cap rate to a recent purchase in the market of a similar asset and then you go do that writ large and you build your thesis. Is that right?

[B]

Pretty much. And then you can say, we're also stripping out all of the SG&A because we can run it with five people.

[A]

And the incredible compensation packages too, I.

[B]

Guess go run it high. Those are gone, so you can run it leaner. And again, the threshold to be public as a REIT is really high. You need to have 5 billion, 10 billion of assets to really like make it work.

[A]

I've been covering this industry for 10 years and if you go through the earnings calls, not once have I ever heard a REIT CEO say hey, were valued fairly in the public markets. Part of the shtick of the earnings calls is like, hey, we're getting a raw deal here.

[B]

What you can also do is part of this to your LPs. If you're private capital, say these guys can't optimize the asset level leverage just a REIT can't be 70% levered on a multi deal, but a private company can. So not only are we going to buy this at a discount, we're going to lever it up right size cap stack across all the portfolio and that's going to deliver the returns to us. And it's a good story because everyone gets that. They know roughly like where a cap rate is for whatever asset class. And you can just say, hey, it's wide. We're going to cut a bunch of the operating costs on the corporate side and we're going to right size the cap stacks. It's a pretty compelling narrative. And the other thing I would say too is that the debt markets are very, very, very liquid right now. Hella liquid that drives everything. So when the ducks are quacking, you got to feed them.

[A]

We want to tell you about the Promote Insider. That is our new premium tier that's now live and packed with exclusive content.

[B]

Think behind the Deals, Spotlights on the Money, behind the Money and bonus episodes of this year podcast.

[A]

You can go to promote.com upgrade to get started. That's thepromote.com upgrade and listen. If you're curious about the bizarro industry of residential mortgage, the Promote's sister publication, the Mortgage Scoop, is doing some really, really cool stuff. I learned about this guy Shant.

[B]

Did you?

[A]

Did you hear about Shant?

[B]

Well, I know Shant.

[A]

He's like Madonna, just needs a first name. It's amazing. He's closed 40,000 deals. It's madness. Imagine that level of productivity. It's crazy. Anyway, it's a super intriguing market. It has its whole cast of characters very similar to the Promote in that sense. And if you want to check it out and you're interested in that world, check out themorgetscoop.com. This next one brings together, I think, two of the defining themes in South Florida right now. Condo buyouts and Steve Ross. Great story. And another happy story to break up. Doom.

[B]

This is phenomenal. So as we've talked about a couple of times previously, folks have been buying condos and buying enough of them to basically deconvert them and then rebuild. So this has really come up since the Surfside disaster, what, four years ago, where the condo collapsed. It had not been properly maintained.

[A]

It was horrible. A really massive tragedy that led to a lot of regulation that has basically made owning a condo pretty unfeasible for a lot of owners because the assessments that you need to bring these condos up to the new code has left a lot of owners and many of them old and not very much money in situations where they can no longer afford to keep the condo going so they're more willing to sell. Developers have seen that as a wide space come in, buy enough condos, take over management of the board, and then tear down, build something new and shiny for the next Miami transplant that's coming.

[B]

So a lot of these are on amazing parcels of land, but are 30, 40, 50 years old. And so if you were to completely modernize them, you can make quite a pretty penny. So again, we talked about buying wholesale and selling retail in the previous segment. This is basically that in Florida on the water. So this story is again, tremendous. The incredibly named Joey Colombo.

[A]

Just if you tried to write a script about a Miami condo deal and you went, joey Colombo. Someone would say, nah, that's not real.

[B]

No, no, it's too unknown. So Joey Colombo was looking at an older building in Flagler called Southbridge Condominium, and it's right on the water. Phenomenal location, but it was older. And so he says he did it pre Surfside. Good for him. He's like, you know, maybe at Some point, somebody's going to want to tear this thing down and build up brand new condos and, like, why don't I try to front run it?

[A]

Yeah.

[B]

So he ended up buying 27 units for about 6 million bucks in a bunch of tranches over four or five years. And he bought a bunch himself. Bought a bunch with partners. But again, you can do the math. These are like $300,000 units.

[A]

Mr. Colombo took quite a bit of risk here, Right?

[B]

Yeah.

[A]

Problem with condo buyouts. And we've talked a couple episodes ago about the absolute nightmare scenario. But the problem with condo buyouts is that if you do not get enough buyouts to consummate the takeover of the building, you're left with a bunch of shitty condo units.

[B]

Yeah, they don't really cash flows rentals, and you can't really finance them because you need to own a certain threshold to do a condo deconversion. Because Fannie Freddie. This is actually a strategy that quite a lot of people have done where you convert from condo to rental and then you can qualify for Fannie Freddie financing. You get an apartment cap rate and it really works. So if you don't buy enough, though, you're sort of in no man's land. Joey. I feel like calling him Joey Bag of Donuts. We can't do it because he's very successful. Yes. But he bought these units and essentially said he wanted to develop this himself. This is a great piece of property. I want to take control of this over time.

[A]

My basis is, like, fairly low.

[B]

He ran into a little bit of an immovable object in 2024.

[A]

An immovable object and an unstoppable force by the name of Steve Ross.

[B]

So Steve Ross bought 10 units in 2024. And Joey being the enterprising young man.

[A]

Before we get there, we should just set up the. Steve Ross, as we've talked about, has kind of decamped from New York where he built his name and his fortune and gone all in on South Florida, specifically West Palm Beach. He is shaping it and bending it to his own will. Incredible. Kind of job of solo gping this whole thing off his own balance sheet, I believe. Right?

[B]

Yeah. He's doing this off his own balance sheet.

[A]

It's like no investors, all the know how, all the capital connections and just go build a city from scratch, essentially. Fascinating. We'll put our episode in the show Notes about Steve Ross. All right, go.

[B]

Steve buys 10 units in the same condo because again, this is a good idea. Again, finding the good real estate or finding the good Idea isn't the hard part. The hard part's executing it. Our guy Joey did that in spades. He also had the wherewithal to realize if Steve Ross wants something, he's going to get it, he's going to get it anyway. But this is a unique situation because he has a ton of leverage. He owns a big chunk of this condo association. So Steve wants to go through him. He sets his price. So he spent 6 million bucks buying these 27 units and he just sold all 27 to related Ross for $25 million.

[A]

That's astonishing.

[B]

That's a 4x basically in four or.

[A]

Five years we should say something about this. The numbers in absolute terms are. Aren't much. Right. We talk a lot on this podcast about billion dollar deals. However, Will has written an amazing piece for the promote about. Thank you GP economics and what a GP actually takes home. In many cases you can run hundreds of millions of dollars in aum, you can go to all these conferences and keynote X and Y, you can do all that. But you actually take home a lot less than Joey Colombo will be taking home on this very trade.

[B]

I don't know how much you put up, don't know structure with those investors. But regardless, there's quite a lot to promote on. Not a lot of invested capital. And so good for Joey and his take home here is going to be massive. This is life changing money. You don't need to do billion dollar transactions to make life changing money. It's this concept, John McNellis wrote about it and making it in real estate. Great book, highly recommend it to everyone.

[A]

It is good.

[B]

It's what sticks to you a lot is sticking to Joey Colombo here. And it's just really interesting because we've talked about you got to be Brookfield or Blackstone or one of these firms.

[A]

Sure.

[B]

Or you can just front run and margin called. There are three ways to make a living in this business. Be first, be smarter or cheat. There's all of these opportunities out there and so if you're an enterprising young gp, go find stuff like this. It takes a lot of risk, it takes a lot of balls, takes a lot of execution, a lot of brain damage. But I love this story. As you can tell, I'm really fired up about it. And it's the type of thing that if I lived in Florida and it's that thing I wish I would. Yeah I would look at and try to find a new, more relatable.

[A]

Right. A big chunk of our listeners are solo GPS or working at Smaller firms and could see themselves perhaps being a Joey Colombo maybe a little bit easier than they could see themselves finding the exact mix of persuasive humility and giant deal making to be Connor Teski. This is an everyman in a way.

[B]

You only need one right to make life changing money. Those opportunities are everywhere. You just gotta be bold enough and in some cases stupid enough to go after him.

[A]

You had a couple of interesting notes about what the lever points were here. Why can Steve Ross not afford to wait on something like this?

[B]

So Joey in the article is basically saying that these guys are paying for speed and these guys being the condo developers who are going to rebuild these buildings, they're paying for speed and ease because they can't wait four or five years because as soon as and Steve's a little different because it's his money. But if you're a developer and you have LPs and you've got loans, the.

[A]

IRR math is just going.

[B]

Yeah, the clock starts ticking. You can't take four years to buy stuff out and then knock it down. Spend a year demolishing it, spend two years building it and you're in it for seven years. You can't do that. You need to go fast and the math can work in your favor to where you can pay a lot more than the other guy paid. And it's worth it to you because you're able to go fast. And so if you can figure out where these guys are going to go, get ahead of it and you can spend the time and you don't have the IRR dollars then do you think.

[A]

Joey Colombo stops here? Does he look for the next one? He could stop here. This is enough money to stop.

[B]

I don't know if you want to take this much risk or negotiations again. He said he did 30 separate negotiations for this thing. The brain damage is often not worth it like the first one. It's always worth it. But doing it again, maybe not. Hopefully he finds a little bit of an easier, less negotiation heavy way to make his next return. But Joey, we are rooting for you here at the promote.

[A]

That's it for the Promote podcast this week and Brookfield's race to $2 trillion in AUM. What will Conor Teske gobble up next? REITs are going the way of dinosaurs and a whippersnapper made a prescient bet that a goat would show up. We'll see you next week with more CRE Insider Goodness. Thanks again to our sponsors, Bravo Capital. Check out their lending [e-mail] and LoanBoss.

[B]

You can find their debt management [e-mail].

[A]

Well, what kind of Joey Colombo deals have you got going for 2026?

[B]

There's a lot in the hopper. Very excited about it. We're in the midst of a paradigm shift, just globally. There's a regime change in the stock market. There's a regime change in commercial real estate. And now is the time to be aggressive and make your move.

[A]

If will is positive, that's a very good sign. I'll see you next week, dude. Thank you.

[B]

Thank you.

[A]

Ciao.