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The Promote Podcast
Mailbag: CRE Casting Couch, Return-Immune Investing & Best Dumb-Guy Sectors
00:20:06
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- [00:04]
A
Sometimes you gotta say, what the fuck, make your move.
- [00:08]
That's a line from the great film Risky Business. And that's precisely what we're talking about here. Risky Business. I was gonna be out wine tasting over Thanksgiving and co host Krasny, he couldn't bear the thought of being away from the mic, so he asked me if he could host a mailbag pod solo. Now, Will is brilliant and handsome, but he's also dangerous. These are qualities that make him a great co host. But if he were to fly solo, would he successfully land the plane or would he take out the whole operation?
- [00:36]
B
You be the judge.
- [00:42]
Let's see if this ever sees the light of day. Letting me in on my own scary, scary stuff. This could be pretty weird and unhinged, but that's okay. We're going to try it, see what happens.
- [00:58]
Those who know me know that one of my most deeply held beliefs is that I don't trust the mail. And I think it doesn't work. How does it get there? It seems so haphazard. How do they get it sorted at all of these various facilities? I just don't trust it. Welcome to the promote podcast. I'm Will Krasny here without my better half, Hiten Samtani. Much to the chagrin of all our listeners. It's me, Solo this week and we will be doing a mailbag. We want to thank you guys so much for all of your support. It's been a true pleasure getting to do this podcast over the past nine or so months and we look forward to it continuing to grow with big things coming. Thank you the listeners, it's truly a pleasure. We are doing a mailbag and fortunately these were sent in electronically and not through actual mail. So we did indeed receive them in a timely fashion. We asked for questions with the most unhinged getting priority and some of you truly understood the assignment. Let's get into it. The first question, anything about Stefan Soloviev. He enthralls me. That's from gossipy 71 airs. He enthralls me too. What a guy. Tough relationship with his dad. His dad, legendarily tough nosed New York real estate guy, driving around in a chauffeured black car, putting together big office deals, suing people for trying to buy the GM building out from under him. What a guy. He died though, without a great estate plan and the taxes were apparently astronomical. What I thought was interesting though is when you think about what do you want to sell off? You've got a legacy aging office building in Nine west, not super highly occupied because he was very particular about who would go in there. But you just lost a couple of big tenants over to Hudson Yards. Like KKR moved over there and the building was old and then you owned all of this multi ended up being part of the sale to the Go Partners guys. And apparently that was just really like, pay the estate taxes. So then you're paying cap gains tax to then pay the estate tax, which doesn't seem super efficient. But what I really like about Stefan is isn't he like the largest landowner in Wichita? He's got like a huge amount of farmland across the country. He's like a grain trader. He's got cheaper by the dozen amount of kids. Also like pretty handsome, dashing, very charming in person. So really excited to see what he continues to do over the next coming decades. I might go try to find his, like, North Fork Winery because he owns a ton of land out there. It's just funny to see, like, what the next gen looks like in a lot of these cases. You've got some of these old families and they're trying to live up to what dad did. And Stefan seems to be like, I'm going to do exactly the opposite of what my dad did in every way possible. Glad he's forging his own path and give him a ton of credit. All right, the next question. If you were tasked with creating a million dollar listing for commercial real estate, who would you cast as the main characters? Feel free to cast whoever you see fit. Outstanding question. Will Cooper. This is exactly what we're looking for. Okay, so I've got a couple ideas. I think you want to make it. Folks who have some reason to overlap. I don't think you want to keep it necessarily all guys who do the same thing, but people who are like flying in the same circles. Honestly, the first name that comes to mind for me is Abe Rosen.
- [04:02]
A
What the fuck did he just say? Abi? I want to tear my eyes out, but we'll forgive our boy. He's not active in the coastal elite markets where AB Rosen holds sway.
- [04:11]
B
He's got everything. Nebulous amounts of money. He's on Instagram all the time. Doesn't seem to actually be doing any real estate, but owns a lot of stuff. Definitely going to bring the drama. His business partner is in the news a lot for marital stuff and financial stuff, which again, I think is very befitting, like million dollar listing. Also Abe Rosen, I think, you know, first ballot, he's got to be on there. I think we need somebody from The West Coast, I think the mayor, Rick Caruso. Well, it's not the mayor, but the man who would be mayor would be a great addition. He's got the hospitality. So you could film a lot of episodes at the Grove when they're, you know, at lunch getting sloshed, throwing wine at each other. Go out for a retreat to his. To the hotel in Montecito. I realize I'm kind of conflating Million Dollar listing and housewives with, like, lunches and throwing wine at each other and stuff, but I think it's all of a piece. So we've got the west coast covered. We've got the east coast covered. This one's going to be a little bit under the radar, but I think really good. I have Ray Washburn in there, Dallas restaurateur. He's got some position in the administration, I think now, but he owns the village in Highland Park. He's been on TikTok recently. It's. I've seen a bunch of the videos talking about how he bought this in the teeth of the Great Recession. And he's like, I called up Harlan Crow and Jerry Jones, and I got, you know, mez loan at 15%, and I got him negotiated down to 12, bought the thing, and it's doing great. I think Ray would be a great stealth character who maybe, like, steals the show. He's got personality, big Texas guy. I think he'd be really good. So those are three. I think the cast, when it gets too big, is an issue, honestly. I'm gonna do one more. This one guy, Gil Deezer.
- [05:48]
A
What caught your eye so far?
- [05:49]
B
Well, the architecture, the buildings, you know, of course, being in the real estate business, you know, you see everything around you. It's just amazing. Really amazing. It's hard to find a more entertaining guy than Gil. I watched a video of him on Instagram talking about a concrete pour, and it was riveting. So imagine when we're going through, like, the Bentley Residences, all of these other things he's building. He went to a hotel in some random island and was just, like, ordering whiskey by himself for, like, two weeks. And he's like, hospitality is great. So, again, Abbe Rosen, New York. A lot of flash really ties it into Europe as well. Rick Caruso, West Coast. Probably the most successful out of all these guys. Ray Washburn, under the radar guy who might steal the show. And then Gil Deezer's just the wild card. Wild card, bitches. Yeah. If you had to invest in one New York, Penn League town, which would you Pick and it can't be Brooklyn.
- [06:47]
Okay, so I played in the New York PEN league. This was asked by Will Roberts, who's one of my former teammates on the Mahoning Valley Scrappers. Also I think Will Roberts is probably the only guy in Cincinnati area industrial who has thrown a perfect game. So kudos to Will. All right, so for those who don't know, New York Pen league has three divisions. I'll just list the teams real quick so you know where we're pulling from. Staten Island Yankees, Brooklyn Cyclones, Hudson Valley Renegades, Aberdeen Iron Birds, Auburn Doubledays, Williamsport Crosscutters, Monte Valley Scrappers. My guys, Batavia Mukdogs, Jamestown Jammers, State College Spikes, Vermont Lake Monsters, Connecticut Tigers, Tri City Valleycats. That's upstate New York. And then the Lowell Spinners. So honestly the most successful project is probably the. I think it was the Wang Laboratories building in Lowell which someone bought for like $500,000 and sold it for $100 million three years later. That's a true story. Look it up. But that's sort of a one off. I don't think that's going to happen now. I think there are a couple of good options here. You could have some really nice industrial and Aberdeen. MCB Real Estate did really well on a big industrial project down there right on the 83 corridor close to 95 Williamsport, same thing. You could do a lot worse. State College could probably buy some nice retail there. But my answer is going to be Hudson Valley. I think you could do. There probably isn't Aubers or something up there, but like some, you know, Nature Valley Forward experiential hotel for 2k a night. It's a little sexier. Even though I think you probably do make the best risk adjusted returns in Aberdeen. But sometimes you gotta really go for it. And so I'm gonna say Hudson Valley five star hotel. And Will, thank you so much for the question. All right, so this is a good one. In your opinion, who is the biggest piece of shit in the industry and what are some of the worst things he's done? That's from Perry Solem. First of all, Perry women can do bad things too. But we'll leave that to the side. So there's a lot to choose from. There's been a lot of really nefarious characters who've stolen money, committed fraud. That's really come out over the last couple of years. We've talked about a bunch of them on the pod, but those are sort of like garden variety. Everyone knows what those guys are. It's not great. And I think people. People really understand that. So I think to me, to really be like a giant piece of shit in real estate, you have to harm people in residential. It's a huge responsibility providing homes for people, and you need to take that very seriously. Yes, you have investors. Yes. You have a fiduciary interest to them. Yes, yes. You have to try to make as much money as possible. And there's a push and pull between providing service, providing safe homes. You might say, hey, you know that H VAC unit, it's got a couple more years. We don't need to replace it right now. There's things like that. But especially in New York, before the rent laws, people were really aggressive with getting folks out. They would turn off the heat, not do repairs, really try to, like, drive them out so that you could do vacancy decontrol and increase the rent with individual apartment improvements. I iais. And there's one guy who was really the worst piece of garbage. He's just like a real piece of shit. So that's my answer.
- [09:54]
A
Sorry, guys. Will was putting us on some legal minefields here, so I had to cut his mic off. But you can sort of guess who we're talking about.
- [10:03]
B
If returns didn't matter, and I know they don't, but you were given all the money you wanted for any deal, what would it be? That's from Eli Lever. Eli, first of all, congratulations. Your new addition to the family went viral. Well done. If I could do anything, like, it's going to be a hotel, like, I think you guys know this about me by now. I want to get back into the hotel business. If you ask me what my goal is, it is to become wealthy enough to be a hotel investor myself. So looking back over the past 10, 15 years, the transaction that I'm, like, the most jealous of is definitely LVMH buying Belmont. I love Belmont hotels. I love the fact that there were trains in there. I love Portofino. I love the Amalfi Coast. If I was given all the money, I would probably try to buy Belmond from lvmh. And because I think there's something to like the older kind of glamorous hotels, like you look at the Copacabana palace, for instance. To me, like, there's something about these, like, older, glamorous hotels. Eden Rock, something like that in Calfrat too. Would that be another one? But to me, Belmont. And if I had to pick one specific asset, it would have to be splendid. Omare, we did our honeymoon there. It is. Ludicrous Everything is done for you. Everything is perfect. Like, the sheets are incredible. God. What's the brand of sheet? The homegood brand. Fuck. Hold on. Yeah. Loro Piana bed sheets. It's incredible.
- [11:29]
One night we had dinner up at Splendido. So up. You have to take a little car up there, and it's got to view the harbor. And some guy was, like, smoking next to us. And it was like. Not like. The food was great. It was beautiful. We had a great time. We get back and they're like, how was dinner? And we're like, oh, it was great. But, you know, there was this, like, guy smoking next to us. It kind of just. It wasn't like one cigarette. It was like chain smoking, like, 15 constantly. It was like a minor thing, but just in passing mentioned it. Compton dinner. The restaurant at Splendido Mar was closed. They reopened it and made us dessert for free. And it was ludicrously good. I, I, I, I shudder to think of what they spent on this hotel. It's like 10 keys. 12 maybe. Wouldn't shock me. They spent like 4 million a key. And it's just the most beautiful. The Ava Gardner suite. It's on Instagram all the time, overlooking Portofino Harbor. When we stayed there, we were, like, the youngest people by, like, 25 years. Well, actually, that's not true. I was the youngest man by about 25 years. And everyone else, it was like me. And a lot of you can imagine the clientele, so I'll just leave it at that. But I would love to own Splendido Mare so. Would never make any financial sense. But again, that's why you ask the question. Great question.
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Gonna take a quick break to have more Celsius.
- [12:48]
All right, next question. Real estate is full of dumb guys who do well for themselves. Which sector? Geography, whatever is the easiest for dumb guys to be successful in. It's from Ben Typen. Great, great question. I love it. I love where we're going with this. Okay, so the short answer is that in any given cycle, there's something that is just super zeitgeisty and there's tons of liquidity and institutions have to get in there. Industrial. You know, five, six, seven years ago, you could talk about data center land. Now, because, you know, look at these, like, farmers in Ashburn, Virginia, who are like, oh, I sold my land for $600 million to Amazon. We could talk about brokers on the tenant rep side. Honestly, I think that's probably my answer. Because you could be a tenant rep and you could have, like, Three clients and it's just like the best annuity you could have. Like, let's just say you repped Aon Insurance or something. Not Aon, because they have their own buildings and whatnot. But like somebody like that and you're their tenant rep and you're just like every 10 years they're like, eh, let's go like find a new building. You're like, all right, like, let me just call up like the three nicest new buildings and be like, hey, who's going to give us the best deal? Sweet. Let me take that, that fee off the top for pay me out every year over 10 years. Just make like 2 million a year. No sweat. That was a great, great business. You did not have to be smart. You had to probably belong to a lot of golf clubs. Other ones though that I think are ripe for dumb people. Honestly, like, look, we're all dumb. That's why we got into real estate. Like we were smart, we'd be doing options or commodities or something more complicated. Get into real estate to avoid math. I think it's just anything like really relationship driven, where you don't have to be smart, you just gotta be a little bit commercial. I also wanna say, like, relationships are hard. You can look at some of those guys and be like, that guy's an idiot. So dumb. But go try to build these relationships. Go try to be likable. Like just being a person in the world, like that is really difficult. And to do it without coming off like a suck up, to do it without being obsequious. If you can thread that fine line, that's really, really hard. So I'm sort of saying this in jest, but don't underestimate how talented those types of guys are. We're having a good time here, but let's just say that I would also probably though say like land. It's gotta be land sales. It's a hope and a dream. I live in Delaware now and I've heard of one of these guys who's doing land sales. Like 3% commission. Like massive land deals. Cause it's like, eh, why not? Because you're, you're dealing with just like non real estate people, sellers. The buyers need years to close. You do a couple of those that are big, you can have a pretty nice living. And again, we're having fun painting with a broad brush. But I've seen some land brokers who aren't winning any MENSA awards. But you know what? At the end of the day, that money spends just as Green, as if you made it structuring stuff at Blackstone. All right, so I think this is probably going to end up being our last question with the news of UTEP allegedly using NIL money as a way to launder money. Can you opine if you think nil or condo projects are a better format for washing questionable funds? Okay, great question. Did not know about this. Phenomenal. Not super surprised that it's utep, just given the proximity to the border. I admire the creativity. Anytime there's a new way to launder money, the fact that people figure it out, it's why it's so hard being in law enforcement, because you gotta be right all the time. They've only gotta be right once. I think condo projects are just a much better deal because, one, there's way less scrutiny. Nil. Everyone's kind of thinking about it. It's probably going to get reformed because it's so nuts. But condos, especially in big markets, like, one you can put in a huge amount of equity, you lose 20, $30 million in a project, like, no one's going to notice.
- [16:29]
A
Of course, we'll mention a specific new dev here, but without proof, I had to cut his mic again.
- [16:35]
B
I think it's just a little more tangible as well, Nil. You know, how are you getting it back? You know, whereas with condos, like, okay, you go in, he gets a little vague, like, comes back out down the line. So I'd probably have to say condo projects. As much as I admire the creativity and the chutzpah, I'm so proud he.
- [16:55]
A
Finally learned how to say that.
- [16:57]
B
The guys who are laundering money through nil, that's just tremendous. Great stuff. Okay, fine. A bonus question also from Josh. Could you rank your top five favorite projects that likely only got done as a way for someone to move cash they otherwise would not have been able to? We're probably going to have to just like, keep this Manhattan, because that's sort of like the king of this. It's probably got to be the money coming from Asia to buy hotels back in the day. I think the baccarat, the North American record price per key baccarat is probably number one. Like, there was economic basis for owning that, but, like, really it was a way to just sort of think get cash into the United States system. Not criminally, just from a logistics perspective. I think that's probably going to be number one for me. I don't want to cast any aspersions on anybody, but I think we can all sort of look up and down 57th street and you can kind of see like none of these really made economic sense, you know, maybe 157early on. Beyond that, I think all of those are sort of an excuse for folks to move cash that they otherwise not might not have been able to. And then you look at a project like the Equinox Hotel just getting bought for a number that makes absolutely no sense. Every which way but loose is that. That's a movie, right? Burt Reynolds. Do I have that right? Every which way but loose.
- [18:12]
A
Sorry, Armano, it's Clint Eastwood, not Burt Reynolds.
- [18:14]
B
Why don't you get the check and then I'll go outside and thank him properly.
- [18:20]
Yeah, that's not even a saying, but we're gonna go with it. That makes no sense either. They have like a ton of office space. There's some retail like that. Starbucks is busy, I know in Hudson Yards, but I mean that's gotta be even fully leased. That's gotta be like a one cap, one and a half cap, Just ludicrous price. And again done for probably non economic reasons. There's like always the currency hedge and exchange too, which can add juice to a deal. But I think those have gotta be it. I didn't even give you five. Mostly because I didn't want to name people specifically. But again, great question.
- [18:56]
So that's it for the mailbag. Thank you guys so much for writing in. Really appreciate it. Hatena and I really enjoy doing this every week. It's so fun and the community that we've built, or I should say that you guys have built around this podcast and around the newsletter are just. It's wonderful to see and it warms my cold dead heart. So thank you guys so much. Brands if you want to get in front of our growing audience, the tastemakers, deal makers, the really thoughtful folks in commercial real estate partnerships@thepromote.com that's partnershipsthepromote.com and please consider becoming a promoted insider. Hiten's doing amazing stuff there. We've got great insiders. We've got additional stuff you won't find anywhere else. I'm going to be writing again soon I think. Please check that out and thank you guys so much. I won't say the way Haten ends every podcast because that's just for him. But we will catch you guys next week.
- [19:52]
A
Ciao.