Larry's White Whale & Jamestown Puckers Up

Summary

The Promote Podcast — Episode Summary
Larry’s White Whale & Jamestown Puckers Up
March 4, 2026

Main Theme & Purpose
This milestone 50th episode of The Promote Podcast delivers a dynamic, insider’s look at three headline-making stories in commercial real estate (CRE):

• The saga of Larry Silverstein finally completing the World Trade Center complex, thanks to a major Amex deal
• Jamestown’s high-octane, speculative push to bring NHL hockey—and attendant real estate development—to Atlanta
• Blackstone’s latest maneuver to bring data center investing directly to retail investors

As always, hosts Hiten Samtani and Will Krasne bring sharp wit, unfiltered commentary, and behind-the-scenes knowledge for CRE industry insiders.

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Episode Overview

1. CRE News Rundown — “The Punch List”
2. Feature: Larry Silverstein & Two World Trade Center’s Final Chapter
3. Spotlight: Jamestown’s Bid For Atlanta Hockey Glory
4. Trend Watch: Blackstone’s Data Center Play for Retail Investors

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1. CRE News Rundown — “The Punch List”
   (Timestamps: [02:30]–[11:38])

a. Geopolitics & CRE Collide: Iran’s Manhattan Skyscraper

• The ongoing Middle East situation drags familiar industry names—Steve Widkoff & Jared Kushner—into a swirl of geopolitics intersecting CRE, particularly around 650 Fifth Avenue.
• The Iranian government technically owns the office section; retail is held by SL Green & Jeff Sutton, now home to Nike Town ([03:28]).
• Broader note: New York real estate remains “a global sport,” with international politics and regime change potentially impacting landmark assets ([03:53]).
  • Quote: “It doesn’t seem to make sense that if there’s a regime change, that regime owns a pretty big chunk of Fifth Avenue.” — Will ([04:13])

b. Hudson Pacific’s Billion-Dollar Losses

• Hudson Pacific, led by Victor Coleman, posts a Q4 loss north of $250M, over $500M for the year, and $1B+ in three years ([04:24]).
• Office portfolio is 77% leased; studios only 67%—unusually low, given the sector’s traditional margin reliance ([05:01]).
• Industry analogies drawn with Hudson’s Bay; tough asset repurposing and executive overcompensation are skewered:
  • “Victor Coleman got paid $40 million in this past three-year period...right where they lost a billion dollars.” — Will ([07:00])
  • “It’s Chinatown, baby.” — Will ([07:07])

c. NY Political Theater: Zoran Mamdani & Federal Funding

• The power dynamic between New York’s mayor and the White House; Trump singles out Mamdani in the State of the Union ([07:16]).
• $20bn+ ask for Sunnyside Yard redevelopment, amid a changing NYC climate—socialist/YIMBY politics blend ([08:00]).
  • “It could pave the way for 12,000 housing units.” — Will ([08:17])

d. Brokerage Bias & the Great Ground Lease Reset

• The Koreans (major NY landlords) allege Vornado’s Steve Roth intimidates brokers, skewing ground lease resets ([09:03]).
• The challenge of “fair market value” resets and broker conflicts exposed as multibillionaires spar.
  • Quote: “If your bread's getting frequently buttered on one side, that's the side you're probably going to pay more attention to.” — Hiten ([10:44])

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2. Feature: Larry Silverstein’s World Trade Center Finale
   (Timestamps: [13:00]–[22:43])

The Long Road to 2 World Trade Center

• After 23 years, Larry Silverstein gets his “white whale”—the right to finally complete the World Trade Center with the help of a massive American Express leasehold acquisition.
• History: Silverstein took control of the WTC leasehold just 6 weeks before 9/11 ([14:11]), launching a decades-long struggle over insurance, financing, and public opinion.

Key Struggles & Triumphs

• The insurance saga: Silverstein successfully argued the attacks constituted two events, doubling potential payouts to $4.5B ([17:10]).
• Liberty Bonds: Essential, tax-free federal financing, but forfeiting the chance to use them for Two WTC, making the economics even tougher ([17:38]).
• False starts: Failed anchor tenants, including Murdoch’s empire, Skadden Arps, and Time Inc., kept the project in limbo ([13:39], [13:58]).

The Amex Solution—A Unique Deal

• American Express is not merely an anchor tenant; they are acquiring the leasehold and will be the sole owner and occupier ([19:14]).
• Critical: This is a fee development for Silverstein; he avoids capital risk, but forfeits GP economics ([19:44]).
• Why it works: Amex needs 2 million sq. ft. and is essentially swapping out high rent for long-term ownership, mirroring recent mega-projects by Citadel and JP Morgan ([21:12]).

Memorable Quotes & Insights:

• “It’s only been a 23-year effort.” — Larry Silverstein (via archive audio) ([14:44])
• “A graveyard for nearly 3,000 souls as well as a commercial real estate opportunity. Kind of says it all.” — Hiten quoting Saglan's book Power at Ground Zero ([15:08])
• “This is a nation-state in and of itself being built here.” — Will ([21:47])
• “This is the crowning achievement of his career.” — Will ([22:36])

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3. Spotlight: Jamestown’s Puckish Atlanta Play
   (Timestamps: [24:10]–[29:03])

Jamestown’s Big Bet on Hockey Development

• Jamestown, acclaimed “placemakers” behind Chelsea Market and Ponce City Market, tapped by New York Life to redevelop North Point Mall in Alpharetta, Atlanta ([24:38]).
• The twist: They’re pitching a hockey arena for an NHL team Atlanta doesn’t have—yet. The play is not on residential or offices, but landing a team to unlock redevelopment value ([24:43], [25:03]).
• A rival group is doing a parallel bid nearby, both without a confirmed franchise ([25:33]).

Development Tools & Economics:

• Both proposals use special “tax allocation districts” to incentivize the redevelopment—a tactic seen in prior episodes with big sports deals ([26:03]).
• The price for an NHL expansion team is now $2B+, up a billion since the last franchise move ([26:39]).
• “They are both competing for this non-existent hockey team.” — Will ([26:21])

Retail, Malls, and the Sports “Hail Mary”

• The segment deftly traces North Point Mall’s history through Homart (Sears’ development arm), GGP, bankruptcy, turnaround by Bill Ackman, and Brookfield’s acquisition ([28:00]).
• Now, New York Life hopes to “Hail Mary” its way out of a declining mall with hockey speculation.

Memorable Quote:

• “If it were me, I’d just put a Cosm in there. Fuck the actual hockey team.” — Hiten ([29:03])

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4. Trend Watch: Blackstone’s Data Center Move for Retail Investors
   (Timestamps: [29:37]–[34:46])

Blackstone Opens Data Center Investing to the Masses

• Blackstone announces a new public vehicle for retail investors to gain exposure to data centers and the AI boom ([29:49]).
• Distinction: Rather than risky land/spec plays (à la CoreWeave), Blackstone focuses on acquiring existing cash-flowing data centers—though obsolescence risk is rising with rapid tech change ([31:10]).

Key Context & Strategic Motives:

• Blackstone pivots from institutional capital to capturing “sweet, sweet retail money”—a trend accelerating across Wall Street ([30:16]).
• The new vehicle is not just recycling Blackstone’s own QTS assets; they insist it’s a fresh offering ([31:30]).
  • “It's basically the two biggest AUM gobbling imperatives right now: exposure to AI and that sweet, sweet retail money.” — Will ([30:08])
• Astounding stat: Over 20% of Blackstone’s real estate funds for wealthy investors are now exposed to data centers ([32:52]).

Political & Market Long Game:

• Blackstone stands to gain not just financial returns but also political capital via democratizing ownership—a buffer against local opposition as data center expansion strains infrastructure ([33:58]).

Quotes & Moments:

• “This is the ultimate culmination of John Gray’s running videos...this is what it led to.” — Hiten ([29:37])
• “If the mom and pop classes are invested in data centers, does that give Blackstone more political juice?” — Hiten ([33:58])

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Notable Quotes (with Timestamps)

• “It’s Chinatown, baby.” – Will ([07:07])
• “A graveyard for nearly 3,000 souls as well as a commercial real estate opportunity.” – Hiten/Saglan ([15:08])
• “This is a nation-state in and of itself.” – Will ([21:47])
• “They are both competing for this non-existent hockey team.” – Will ([26:21])
• “It’s basically the two biggest AUM gobbling imperatives right now: exposure to AI and that sweet, sweet retail money.” – Will ([30:08])

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Final Thoughts

The episode closes with a celebratory look back on 50 episodes, pledges to keep pushing boundaries, and a preview of the CRE stories shaping the future. The hosts maintain their playful, insider tone—part war story, part sharp industry analysis, rich in analogies and context.

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For full context, listen for extended takes on each headline, and keep an ear out for the hosts’ recurring themes: executive excess, the evolution of retail, the mechanics of ground leases, and how CRE adapts to global and technological shifts.

Transcript

[A]

Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Haten Samtani, and that is the 50th time I've said that.

[B]

50. Ain't it wild?

[A]

Yeah, it's crazy.

[B]

The pod's practically a preteen.

[A]

Cue the braces and mood swings. Ugh.

[B]

Cringe.

[A]

John was just three weeks old when we started this, and I understandably, so, got some heat from the missus for kicking it off at that time.

[B]

I don't know how you pulled that one off.

[A]

I had a competition in me, as they say, and I knew that the industry needed this. I knew it was the right time and you were the right person to do it with. It had to happen. And it was against all good judgment, but it had to happen.

[B]

When you went to the missus and you're like, we're going to build a podcast studio. And she said, is it going to go to the nursery room? And you're like, well, that'll be the

[A]

first place that it leads. That's exactly right. And we just celebrated his first birthday, so mazel tov. Almost a year of doing this. A shout out to our sponsors, loan boss, a best in class CRE debt

[B]

management software, and Bravo Capital, a leading HUD and bridge lender. I see you, hud, adding in BTR to your portfolio. Well done, hud.

[A]

We should start off by thanking our listeners. You guys have really been more than we could have asked for.

[B]

Yes, you have. Many, many of you. Haten is forbidding me from saying the number out loud, but it's a lot. Way more than I thought and I'm pretty egotistical.

[A]

It's become a thing and we just hope to keep going. One promise we're going to make is we're going to keep pushing the boundaries. We're always going to try new things because that's what we do here at the promote.

[B]

Absolutely. And again, real estate changes if you don't change with it. We could be having the Fifth Avenue office of podcasts, and all of a sudden the ground's out from under us. We could be the Charles Cohen of

[A]

podcasting or the Iranian government of podcasting. We got a bumper docket today which befits this bumper episode. Larry Silverstein had his Anne Hathaway moment. It came true. AMEX has a deal that will let two World Trade center rise and complete the complex about 25 years after 9 11. The details here, though, are worth chewing on. Next, we jump on our Zambonis and check out Jamestown's push for a hockey team in Atlanta.

[B]

Pitch.

[A]

You ready?

[B]

Let's get on the go, boys. Good, you're going.

[A]

And finally, Blackstone has a data center offering that it wants to share with the universe.

[B]

Not that one, the other one.

[A]

Exactly.

[B]

Let's get started. The punch list, our signature rundown of the newsiest news and cre.

[A]

We got to start with Iran. Geopolitics really isn't the promote's thing, but when it intersects with our little universe, we got to talk about it. So two characters here that are very much in the thick of the promote universe are playing a pretty instrumental role here in whatever madness is going on in the Middle East. Steve Widkoff and Jared Kushner were Trump's basically appointees to go and figure out Iran. And the amazing thing the Wall Street Journal story had this past Thursday, they called Trump and they said it doesn't look good. That was the clincher before the strikes on the weekend.

[B]

Jared Kushner, who's probably no stranger to calling his father in law and saying things don't look good,

[A]

obviously hoping that everything kind of settles down there a little bit. But back in New York, there is one asset that's really worth thinking about. 650 Fifth Avenue, which is the Manhattan skyscraper that is owned by the government

[B]

of Iran, but the office portion, only the retail, is owned by the savviest

[A]

of savvy guys, SL Green and Jeff Sutton. That was an amazing move. So when the court essentially ruled in favor of forfeiture, these guys came in like a month later and had the deal sewed up, and now it's, I believe it's Nike town.

[B]

That's exactly right. They moved from Trump Tower to here, right?

[A]

That's right.

[B]

Another example of how New York City real estate in particular is a global

[A]

sport, especially with this administration being pretty brazen about inserting itself into real estate deals. The Roosevelt Hotel with the government of Pakistan, the government of the US Is in the mix there. So I wouldn't be surprised, given that the stated goal of the broader Iran thing is regime change this time, that there might be some action here as well.

[B]

Yeah, it doesn't seem to make sense that if there's a regime change, that regime owns a pretty big chunk of Fifth Avenue.

[A]

All right, next one, kick us off, because this is beyond my understanding as a civilian.

[B]

Hudson Pacific announced Q4 earnings. They were less than stellar, unless you hear Victor Coleman spin it, in which case it was a transformative year for our capstack. But they lost more than a Quarter billion dollars in Q4. They lost more than half a billion dollars in a year.

[A]

Unless you think this was a blip. I believe that in the last three years they've lost north of a billion dollars.

[B]

Celebrity desks, they come in threes.

[A]

It's kind of impressive. How do you lose this much money running a real estate company? What about rents?

[B]

I genuinely don't know. It's really tricky. They blamed their studio and soundstage rental business. But again, I have a hard time. Like, you bought it a couple of years ago.

[A]

That's right.

[B]

Are you like transitive property blaming yourself? That was like the guy on Saturday morning being like, that guy at the bar last night was a jackass. And like, that was you, man, just like 10 drinks deep.

[A]

Right before COVID the thesis that content was king. And all these stre streamers are going to need more and more space. These massive bets on soundstages. We talked about Blackstone with Hackman, for example, and this HPP is the other massive player in this thing. And they're getting eviscerated.

[B]

Right. So their office portfolio is 77% leased, which is not good. But the studios are 67% leased, which is just really bad because that business in particular really relies on the marginal dollars. We're sitting here and it's been announced that Netflix is not matching Paramount's bid. And so Paramount's taking this thing over. Yes, and I've heard that Larry Ellison views this takeover of Warner Brothers Discovery as a real estate play. Because you've got the Warner lot, which is just massive, iconic, and you've got the Paramount lot. You don't need both. And so there's all these billions of real estate that you can get rid of. And it's not dissimilar to another fallen icon, the Hudson's Bay Company, where Richard Baker in particular thought that, oh, wow, I'm buying this company for free because the value of the real estate is so great. But what you sort of forget is that these are very specific assets. They're hard to repurpose, very expensive to repurpose.

[A]

Which is why a Ben Ashkenazi can step in and buy the Neiman Marcus for what, $50 million.

[B]

I would also like to shout out the New York Times interview with Richard Baker of Hudson's Bay. That came out, I think, a week or two ago. One of the most tone deaf things I've ever seen in my entire life.

[A]

About his art collection or something. It does.

[B]

It talks about his art collection, talks about the guy who designed his pool, talked about how he commuted to work by boat.

[A]

Phenomenal.

[B]

Tremendous stuff. We'll link to it in the show. Notes.

[A]

We didn't say that. The main thing, you would think that in the face of such staggering losses, everyone's getting hurt, right? The shareholders, obviously, the executives, maybe.

[B]

Oh, yeah, they're getting hurt because they're getting scoliosis from having their wallets be too full and they lood to one side. Victor Coleman got paid $40 million in

[A]

this past three year period.

[B]

Essentially right where they lost a billion dollars.

[A]

Make it make sense, man. What is this?

[B]

It's Chinatown, baby.

[A]

Forget it, Jake. It's Chinatown. Next one. Zoran Mamdani goes to Washington.

[B]

Everyone's favorite bromance.

[A]

The President of the United States and the Mayor of his favorite city. They're very warm with each other. Randomly impromptu. Trump brought him up in the State of the Union. He said something about, oh yeah, the socialist mayor of New York is a good guy.

[B]

I think it's game recognized game. Like politics aside, Trump has this almost preternatural ability to like, smell weakness.

[A]

Dude, okay, I was gonna use the same word. You took it out of my mouth. That's nuts. Go on.

[B]

If he has like a 1% advantage, he'll just absolutely try to dominate you. And I think he just recognizes that. Mamdani, whatever you want to say about him, the guy's got the juice.

[A]

He's got the juice and he's got almost a Trumpian level of media savvy and media awareness.

[B]

The thing where he brought the fake New York Daily News, of course, like, how has no one done that before?

[A]

Why does this matter? It matters because New York City is dependent on Washington for federal funding to make a lot of these plans. Mamdani wants to bring to fruition his most recent trip. He went to get 20 odd billion for Sunnyside Yards, which is the Hudson Yards type project that they're hoping to do in Queens.

[B]

You need to build a platform again very much like Hudson Yards. And it could pave the way for 12,000 housing units. What's interesting though, is that it's coming up amidst the sort of changing political climate. And a lot of people now are like, the YIMBYs are kind of winning.

[A]

A hybrid between socialist and YIMBY that has become quite a force in New York politics over the last four or five years. This one's really fun. Big guys acting like the little guys. So the Koreans, a very important family in the land owning history of New York. They're like the Sol Goldman family, et cetera. The Korrines is one of them. They famously beat up AB Rosen over Lever House back in the day.

[B]

Oh yeah, elbow's out for sure. But now the glove is on the other side. Hand, foot? No, something on the other foot.

[A]

So the Koreans are alleging that Steve Roth, who's the overlord of Vornado, has such an intimidating vibe about him that brokers are afraid to be objective about Vornado related business. And this stems from this dispute that they're having over a ground lease where the Koreans believe that the rent should reset to 45x what it is. Now, there's something called a fair market value reset. Depending on what the property's worth, you're supposed to be able to adjust the ground rent in a commensurate manner. So it all comes down to the appraisal. Right.

[B]

And so when you buy these ground leases, you sign 99 years. No one really knows what's going to happen, but the ground can appreciate at a much higher rate than you think. And so if you signed a deal in 1930 at $2,000 a year for the ground, you might have thought, oh my God, what a princely sum. And now it gets reset to 20 million or something like that. And these are sort of hidden time bombs in a lot of these deals. And so that's why Safehold exists, is to basically clean up these types of ground leases and give people predictable income moving forward. So on this one, there was a rent reset coming, and the question is, what is the site worth? And you might say, oh, you just go get a couple appraisals, call it a day. But the problem is it's really hard to do that. Yeah. When you've got like, is it a development site, is it mid construction? You can make a plausible argument for like negative value or no value. Mid construction, is it encumbered?

[A]

Exactly. Like all these things came up.

[B]

And the question is, who's doing the appraisals? Generally mechanism where it's like they can't agree, each side picks one, then you get a third neutral party. And on the third, if one of those groups might want to do business with one of the parties moving forward, and one of them is one of the largest office landlords in New York and retail landlords, and pays tens of millions of dollars of leasing commissions annually, and the other side pays nothing, maybe they're inclined to lean one way or the other.

[A]

This brings up one of the most fascinating conflicts. When you're a broker, who are you really a fiduciary for? You're hired For a certain assignment, you're supposed to do right by that assignment. But again, brokerage is a relationships game. It's decades of business. And if your bread's getting frequently buttered on one side, that's the side you're probably going to pay more attention to. There's some amazing details in this lawsuit. They bring up one of the top former top brokers in New York City, Darcy Stakeham. She was one of the alpha salespeople

[B]

once and future queen when Darcy left

[A]

CBRE to form her own company. There's a rare quote from Steve Roth who doesn't really talk to the press. And he gave a quote like, hey, we expect to funnel a lot of, a lot of business hurt in the coming years. And the Koreans are saying it's kind of like, yeah, nice thing you've got there.

[B]

They're not wrong. This is again, how this business works. It's just funny because normally it's not a group that's multibillionaires that are crying foul. The Korean net worth is probably like more than the Vornado market cap right now.

[A]

That is it for the punch list. When we come back, we will be talking to World Trade Center. Will, you've worn many hats in your glorious life so far. Pro baseball player, thespian, tornado remediation specialist. I want to ask which was your least favorite?

[B]

The first two. Ugh, they were dreams. The third was a nightmare. Turning into a dream, though. However, if you asked me a few months ago, I would have said Excel Monkey was my least favorite. Modeling out the debt tab was really, really annoying. Maturity dates, extension options, rate caps.

[A]

Ugh.

[B]

My spreadsheets were beautiful. But at what cost?

[A]

Sounds like you had good roi. But your roi BD return on invested brain damage, not so good. So what changed?

[B]

I discovered Loan Boss. All my loans live on one screen. No more. Let me just pull that up while I jazz hands a capital partner and the extension option tracking with automatic notice reminders. I used to have a post it note on my monitor for that. A post it note, a 10. But the one click DSCR testing every lender adjustment, every unique requirement. Automated. Oh my God.

[A]

No more getting surprised by your own capstack listeners. Check them [e-mail] that's loanboss.com and tell them the promote sent you.

[C]

People told us, hey, you'll never succeed, you'll never lease it. No one's going to want the space. You'll never rent it, you'll never finance it, don't build it. Everybody told us Absolutely insane to do what I was doing, right? But I didn't listen to that. And the important thing today, instead of looking back, we're looking forward because of what's happening.

[A]

This is happening. Larry Silverstein's getting the damn thing built to World Trade Center. It's set to rise.

[B]

Several false starts, but the great man comes through in the end with one final triumph.

[A]

Rupert Murdoch was supposed to move the entire empire to two World Trade. Bjarke Ingalls was gonna come into the mix here and design some radically different tower. They pulled out last minute.

[B]

I remember reading somewhere that like it was so bad that Rupert had to call Larry. It wasn't even like Chace Carey or anybody. It was like Rupert being like, yeah

[A]

mate, can't do it mate, sorry. They've had multiple stop starts. Skadden Arp was in talks to anchor this building. At one point Time Inc. Was supposed to anchor this as well. Larry's been fighting and fighting and fighting.

[B]

Before we even talk about the redeveloped complex, let's talk about the old ones. So summer of 2001, Larry Silberstein is faxing in his best and final offer and wins the right to own the complex.

[A]

Six weeks before 911 he officially takes it over. This is the leasehold, obviously the Port Authority owns the ground. Tornado actually had a higher bid, but they pulled out last minute. So Silverstein essentially became the winner. He brought in equity from some pretty old school big name families in New York, including the Kerrys.

[B]

Lloyd Goldman was in there too.

[A]

Correct. So six weeks before 9 11, Larry Silverstein has the most important project in America. And then 911 happens. And then he spent the last 20 plus years of his life essentially just trying to figure out how to get this thing rebuilt.

[C]

It's only been a 23 year effort.

[B]

Yeoman's effort doesn't even begin to describe it. There was a better part of a decade battle just over the insurance proceeds. Because obviously how do you rebuild what's here? And not only how do you rebuild it. It's one thing to have an apartment complex like with a fire, but you've got these incredibly important buildings in lower Manhattan which are crucial like national security. The wonderful book Power Ground Zero.

[A]

Yep, we'll put it in the show. Notes one quote from Saglan's book that is pretty damn powerful. She described the World Trade center complex as quote, a graveyard for nearly 3,000 souls as well as a commercial real estate opportunity. Kind of says it all.

[B]

Think about like where we were post 9 11.

[A]

Downtown was a ghost town. Like there's no one wanted to touch that place.

[B]

Think about the security you needed, the amount of extra fiber. Goldman wanted to be set away from the street. This wasn't what we think of today. It wasn't just rebuilding an office tower.

[A]

And the other thing I think we can appreciate as promote heads is a lot of development action is generally quite clandestine, done behind the scenes. Right. That's just how ground up development works. If you are the proprietor of the single most scrutinized project in the world, you're getting beaten up in the media all the time. Silverstein famously railed against the New York Times for years after all this because they were pretty hard on him.

[B]

According to his memoir, it's not only railing against it. I don't know what Larry Silverstein's net worth was in 2001. I would guess $150 million, something like that. Liquid.

[A]

He was prominent, but he wasn't a titan.

[B]

And all of a sudden you're sitting here having to redevelop, as you said, the most scrutinized project in the entire world. And you're doing it when you don't have the money. That's what's crazy to me is like this whole time, I don't know what deals he worked out with his lenders, but he's got debt service the whole time. Obviously you're appealing the property tax, you've

[A]

got the ground run support authority and all of that.

[B]

Yeah, I can't even fathom. And the organization they had was not the machine that is there today.

[A]

Silverstein was, as we've talked about in real estate, what makes it so fascinating to people like us is it's mostly mom and pop operations.

[B]

They really were at this point. And it's really complicated to do this and then negotiate with all these insurance companies over billions and billions and billions of dollars. I mean, you've barely paid the premium when this happened.

[A]

We should say that the exact nature of the legal wrangling is beyond our scope here. The main point we want to make here about this is that Silverstein was able to argue that 911 was not one, but two incidents. So you're essentially entitled to double payoff.

[B]

Right? Because it was two separate attacks.

[A]

And so they split the difference. They ended up paying out $4.5 billion or so to Silverstein. That was the Clinton. That argument which was crafted by Wachtel and Lipton masseurs themselves, like the names in that company.

[B]

When you see Harvey's gonna replace all the legal work, I'm like, you Know what? Harvey's not gonna do that.

[A]

Pretty extraordinary. So he's going through this. He's got his insurance money, then he needs to build as many towers as he can build. He gets something called Liberty Bonds. Do you know anything about those?

[B]

Not really.

[A]

It's essentially tax free federal funding that you can get for projects like these. And he gets Liberty Bond financing. Billions of dollars worth, I think two and a half billion or so for a bunch of the towers. As part of that he had to relinquish the use of them for two World Trade Center. So you're taking the subsidies off the

[B]

table there and so much harder economically to make work. And so you're always on the hunt for an anchor. You can't spec build this thing. There was talks I think at one point of like trying to get it to go resi. And now though, you got a tenant who's you talk about like folks coming into the area and then there's really just a reshuffling.

[A]

Yes. World Trade center is looking for that anchor tenant. And we start hearing talks in the early 2000 and twenties about Amex, American Express. Don't leave home without it.

[B]

Don't steal home without it. To my major league fans out there, we're contenders. Now American Express famously had been at Brookfield Place for 30 years, since the 80s. They had one of the great deals with the Reichmans where the Reichmans bought their building so they could move them over to Brookfield Place.

[A]

The Reichmans bought their building because as we've talked about with the Reichmans and I think we need to do a special episode with the Reichmans at some point.

[B]

Absolutely.

[A]

They're all about just moving, keeping the machine going, cross collateralizing this to that, all of that. So they bought them and then Amex bought the leasehold at World Financial Place, which is now known as Brookfield Place.

[B]

Right. And they've been there ever since. And Brookfield Place has been struggling. Hudson's Bay Company, Saks is not paying rent. They went bankrupt. They're huge tenant. Amex had been one of the anchor tenants. They are going to be moving over across the street to World Trade. But what's interesting is that they are not going to be a tenant.

[A]

They are not the anchor tenant. I think it's been reported inaccurately in some outlets. Larry finally got his prize, blah, blah, blah. But no, Amex is going to be the sole owner and occupier, which means that they purchased the leasehold. The only thing we're fuzzy about is who they bought it. From? Is it from Silverstein or is it from the Port Authority? Too intricate and complex for us to know at this time.

[B]

Someday it's going to come out and I'm sure that Larry's pretty happy about it. But at the very least he's going to get to build his tower and he's going to get to do it with the rare instance where he doesn't have very much capital risk.

[A]

Yeah. So it's a four fee development job. Right. But the other side is you don't get to participate in the GP economics, which I guess here isn't a bad thing. Probably.

[B]

Okay, we talk about construction costs right now.

[A]

Boston Properties, 2100 a foot is what they penciled at.

[B]

I've said this before, they're always Boston Properties. I don't know what BXP is. I refuse to know.

[A]

Oh yeah, fuck BXP.

[B]

Yeah, Boston properties, yeah, 2100 a foot. So we're talking four, $4.5 billion to build this tower.

[A]

Someone inside the deal explained it in a very interesting way to me. They're like, the cost is the cost. If you want to build like tippy top office towers in Manhattan, essentially pencil high 1000s to low 2000s of foot is kind of where you're going to end up. In Hudson Yards in Midtown, you can actually capture the rents that make that whole thing worthwhile. You can get rents of in the high one hundreds, low two hundreds even. Right. In some cases, for a few thousand square feet, you could even get 300 bucks. So with those kind of exit rents in mind, it kind of justifies going shovels in. Right. But in downtown, there's still too much of a delta between what you can make and what it costs to build. So the standard model of a tenant in mind doesn't quite work without either a subsidy of some kind or this model, which is the owner occupier model.

[B]

Well, if you look at Amex, where are they going to go? They're going to go somewhere and pay that aforementioned high one hundreds of foot for 2 million square feet. So they're going to spend $200 million a year on rent, which like, okay, let's just go build a tower. We're going to be here for 40 years.

[A]

The trend we're seeing mirrored throughout the country. Right. Citadel with their Park Avenue project and Brickell JP Morgan's giant and growing empire in Midtown, they're spending this kind of money on statement spaces that they own.

[B]

This quarter century saga is now really in the end game. And I think it's emblematic of commercial real estate writ large. You had the most important assets being bought by ragtag group of people with fax machines. And 25 years later, they're building the last piece of this as a massive fee developer on an institutional basis and institutional scale.

[A]

A project like this isn't just a real estate project.

[B]

This is a nation state in and of itself being built here.

[A]

The legal cost, the insurance wrangling, all that, that's the soul of something like this.

[B]

Too often we sort of dismiss real estate as financial engineering or spreadsheet jockeying or even on the other side, the guys who are like, I'm a dirt dog. I'm looking at all these things. No, what it takes, really. Like the real last level of this is the mastery of not just the political angle, but all the service providers, the insurance guys, getting the best lawyer, not paying him for months at a time to so you can float it, and getting the best crafted thing you can to maximize your proceeds. Win the PR battle in the court of public opinion, which can be as important as anything else. That's really what it takes. And that's like what a guy like Larry Silverstein can do. And honestly, fee development or a master lease, it doesn't really matter. This is the crowning achievement of his career.

[A]

This tower is going up.

[B]

This tower's going up.

[A]

This tower is going up. Which is great for lower Manhattan and is great for New York.

[C]

The buildings came down. My obligation now was to put it back foreign.

[A]

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?

[D]

It's pretty straightforward. We have an amazing team. We're 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?

[D]

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

[D]

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.

[D]

Thanks, Haten. And you can find [e-mail].

[B]

For those of you who say that we only focus on the coasts.

[A]

We've shown you enough counter examples by now, so quit whining.

[B]

Fascinating stuff going on here in Atlanta. So Jamestown. Who? Developers of Google's Chelsea Market. What's the big mall in Atlanta?

[A]

They've got Ponce something.

[B]

Yeah, Ponce de Leon, maybe.

[A]

Ponce de Leon only makes me think of Seinfeld because I don't have any other content for it.

[B]

You know what?

[A]

Ponce de Leon is sold out.

[C]

It is.

[A]

Oh, yeah, you're right. Just set the context on Jamestown.

[B]

They're placemakers.

[A]

Placemakers is exactly the thing. They actually just took over Camp North End.

[B]

Yes, they did. Charlotte from the Heimerdingers. And they've been tapped by Newark Life, who owns the North Point Mall in Alpharetta, to redevelop it. And for housing, you might say no. For office, no. For a hockey arena. For an NHL team.

[A]

We've talked so much about this on this pod, about this race to get a big sports team into your hometown and how in the final equation, it can be very profitable for a developer. All the real estate plays around that actual thing.

[B]

They can make more money than the team itself. However, there's one small problem here.

[A]

I'm not a hockey guy, but does Atlanta have hockey?

[B]

They don't. Okay, but surely they've been awarded a hockey team. They also have not.

[A]

So this is a spec. This is just a speculative bet.

[B]

So New York Life took over this mall in Deedon.

[A]

Lieu.

[B]

And we'll get into the history in a minute because it's really emblematic of retail, but they are getting Jamestown to do a spec hockey development for an NHL team. And what's even better is that you might think to yourself, okay, one guy is crazy. Like that happens. What are you going to do? There's two. They're competing.

[A]

There's another. There's a rival play also in Alpharetto. I think they created one of our favorite things, a special tattoo tax allocation district. Remember we talked about this with the Beverly Hills project?

[B]

Yes, they did.

[A]

They created a special district just for that one Beverly Hills Vladdy project. They've got something similar here, right?

[B]

It's to help incentivize building, like a sports facility. And so you've got Kraus auto Group the CEO of that is pitching a $3 billion in mixed use development and it's seven miles away from this one. So they're both competing for this non existent hockey team.

[A]

Oh boy.

[B]

And the best part is that the NHL deputy commissioner Bill Daly told ESPN last year that the league views both bids as, quote, aspir,

[A]

harsh burn. So the idea is that the NHL is looking to expand the roster of teams. Where are they at?

[B]

They're at 32.

[A]

Okay.

[B]

And they've informed this is Per Sportico, which by the way, great publication. So the NHL informed franchise owners that expanding beyond 32 teams. So it's going to cost at least $2 billion to create a new team. Almost a billion dollars more than was paid to relocate a franchise from Arizona to Salt Lake City in 2024. But PE ownership, as we've talked about, is coming for all of these things.

[A]

And so it's become a big thing, obviously in the NFL, which is open the floodgates to money for the likes of Steve Ross, who just sold a stake in the Dolphins at a massive valuation.

[B]

We've seen it in the NBA as well too. The Lakers sold at a $10 billion valuation. The Celtics sold at 6 billion without owning any of the real estate. So yeah, this is coming for all over the place. So there's more money. The NBA is talking about expansion, but let's get back to the deal itself.

[A]

The characters here are again my favorites. I love the smell of commerce in the morning.

[B]

So the mall was apex predator of real estate from the 60s, 70s and beyond because you had all these big massive anchor tenants expanding, which allowed for groups like Simon Properties and all these other mall developers who made hundreds and hundreds of millions of dollars. Because if you could show up with a big lease for an anchor tenant, you can go get the whole thing financed. Then the game was you basically give the space to the anchor tenant and then make your money on all the inline because the anchor tenant drove all this traffic. And so if you had the relationship with one big group, you could rinse and repeat all over the place on

[A]

the popcorn and the soda, which is all the other retail.

[B]

Yeah. If you had the eye for the interchange, you picked the right corner. The sky was the limit. This was sort of like the dying gasps of this industry. So North Point Mall was developed by Homart development. So like, who cares what home art is?

[A]

Isn't that the Sears? Is that Sears Offshore?

[B]

Yeah, Sears. So Sears really used to do it all. You could buy a house out of a catalog.

[A]

Yep.

[B]

So they sold it to ggp.

[A]

Oh, boy.

[B]

I love it. Yeah. So GGP sort of managed it into decline, obviously. Famously went bankrupt in the gfc. Bill Ackman made a fortune buying the bonds and turning it around. One of the big equity stories, the early mid-2010s. And then GGP sold to Brookfield. Great timing on GGP. GGP's part.

[A]

You would never know it from Brookfield's books that it was a bad deal.

[B]

Yeah, you never would. So then Brookfield hands it over to New York Life and Dean Liu because there was a competing center that got built.

[A]

Listen, Will, it's not significant to our business.

[B]

It's 2% of our portfolio. So really though, what's New York Life to do? They can't redo the retail because there's competing center on the better side of the highway. Maybe a Hail Mary hockey team. Take advantage of some of the heated rivalry buzz.

[A]

Okay.

[B]

Connor story hosting snl. You know, maybe there's a way.

[A]

If it were me, I just put a cosm in there. Fuck the actual hockey team. This is the ultimate culmination of John Gray's running videos. All the stuff you see on LinkedIn with all the sweat pouring down his face, meditating on the markets, this is what it led to.

[B]

It led to Blackstone launching a public company to buy data centers.

[A]

Wait, I thought they had.

[B]

Not that one.

[A]

They had one of those. Okay.

[B]

Yep. A new one. A better one.

[A]

Okay. So not qts. We've got a new vehicle which is aimed to retail investors specifically.

[B]

You think when they write the story of this time. I think the epitaph is going to be Blackstone is giving millions of mom and pop investors a chance to bet on the artificial intelligence boom that is

[A]

the headline in five publications already.

[B]

It's basically the two biggest AUM gobbling imperatives right now. Getting exposure to AI and then getting that sweet, sweet retail money.

[A]

One of the biggest shifts, and Blackstone's really been at the forefront of it, is rejigging your firm to make it more attractive and palpable to retail investors. Is. Is kind of the game now. Everyone's doing it right. That's the reason for all these running videos, the swimming videos, the personal posts. All of it is to create a human face for these giant opaque fortresses.

[B]

It's really savvy because what they're. What they're not doing is what is going on with coreweave and Lancaster that we talked about the other week blew out, where it's all this spec, this landev. We got to get the power.

[A]

They're getting hammered there.

[B]

No one really understands that the dentist from Olathe, Kansas isn't going to get that. But what they're going to get is like hey, I've heard about this AI thing, I'd like some exposure. And Blackstone is basically saying we're not going to be financing raw land, doing spec, we're going to be buying existing data centers. Which you might think, okay, that's less risky. It actually might be more risky given the obsolescence risk.

[A]

I was just going to say how state of the art are existing data centers when the technology is changing?

[B]

It's a great question because people have been talking about digital Realty and Equinix. What's the actual cash flows if you account for like proper capex at these things? It's a good question. We don't really know.

[A]

The other question I have is when they talk about buying existing data centers, how many of these are coming out of Blackstone's existing portfolio of data centers?

[B]

Again, a great question which they definitely got asked and they said this is not meant to actually just buy QTS data centers that they've developed which would be like a natural continuation vehicle by another name.

[A]

Yeah, I mean think of. I don't know if we talked about it on the pod, but Blackstone started a 1031 DST.

[B]

They did.

[A]

And a lot of their acquisitions were basically from B reit. They just bought a bunch of B REIT Sunbelt and folded it into this

[B]

DST with a huge feeload up front. That goes without saying, but Blackstone has actually had quite a lot of success in this space. QTS which they took over in 2021 has been hugely successful.

[A]

$10 billion take private. I don't know if you read that piece about the culture clash between the QTS founder, who hardcore Christian guy and obviously Blackstone's whole very suited up approach to this. He had a minister bless the sites of his data centers before breaking ground.

[B]

That's as good a risk mitigation as anything else in data centers.

[A]

But I think there were some fundamental conflicts between them about like how they could, when you could realize profits, how the promotes would be paid, all of that. There was a lot of interesting friction between the old guard and the new guard on those things.

[B]

There is a couple other interesting things that came out of this because they announced it, it was a big Bloomberg article and they talk about how in a year end stockholder letter more than 20% of Blackstone's real estate funds are exposed to Data centers. Crazy.

[A]

Wait, a fifth of their fund, A fifth is data center exposure?

[B]

Depends on how you define this. But they said the quote was, more than 20% of Blackstone's real estate funds for wealthy investors are exposed to data centers.

[A]

That's quite astonishing.

[B]

It really is. Because as they get bigger and bigger, there's only like a limited pool of folks who can buy this. You can't sell this to a syndicator

[A]

with data centers. The problem is a lot of the hyperscalers have essentially created off balance sheet vehicles to invest in these things. So there's quite a bit of opacity. Massive capex, very, very long development cycles too. So not for the faint hearted. This would generally be final boss investor level. But now you're taking it all the way down to retail.

[B]

Well, they are and I. The secondary purpose too is to try to create like a tracker to basically say like, what is the data center industry doing? And they hope that I think this will trade well, which then makes all the other stuff they're doing more financeable down the road. Again, that's like final boss level jujitsu to make it work and basically take the retail money, pawn it off on them, but use that as a data point to help get the stuff you really care about.

[A]

I don't know if this is a consideration yet, is if the mom and pop classes are invested in data centers, does that give Blackstone more political juice to then go and build more data centers? Because this has been a massive logjam too, right?

[B]

It has. There's talks of power all over the place, like global infrastructure partners. Somebody else announced the big power utility takeover in Virginia just for this. Because basically this is the secondary trade off of data centers, is that power is going to become more and more hard to come by.

[A]

You could see Loudoun county or Abilene or any of those coming after big bad private equity. But are they willing to go up against everyday Americans?

[B]

It's in all their pension funds already they're fighting themselves.

[A]

That's it for the Promode podcast this week. John Gray has run himself into Blackstone's retail Xanadu. And you too will could soon own a piece of the world's hottest, most levered and most complicated asset class.

[B]

Take my money.

[A]

Jamestown joins a sports team party in Atlanta in a move that says much about where retail is headed. And Larry Silverstein will finally get to complete his World Trade center puzzle. But the final piece will belong to someone else.

[B]

But he gets the best part, which

[A]

is the fees and the bragging rights.

[B]

We'll be back next week with more CRE Insider goodness. Thanks again to our sponsors, Loan Boss and Bravo Capital.

[A]

You can find [e-mail] and bravocapital.com Aaron and JP if you're listening. Really appreciate your support in these early days. Means a lot.

[B]

And our listeners 50 episodes in. Really excited for this next 50 to keep delivering for you guys. And they're going to be logarithmically better.

[A]

Absolutely. And if we get to 100, which I think we will, I might allow will to start calling you psychos. We'll see.

[B]

Hell yeah. Love it, dude.

[A]

It's been a pleasure, man. Here's to the next 50.

[B]

Here's to the next 50. And I promised at 10 I wouldn't do this, but 50 it's from Along Came Polly. Yeah, 50.

[A]

I'll see you next week, dude. Thanks.

[B]

Ciao. Shit.

[A]

Hey, ciao.