The Promote Podcast — Episode Summary
Episode: Ross Takes His Talents to [West Palm] Beach & Barnett Prefs Up
Release Date: September 17, 2025
Hosts: Hiten Samtani (“Bard of CRE”) & Will Krasne

Overview: Main Theme and Purpose

This episode dives into three top stories shaking up commercial real estate (CRE):

1. Steve Ross’ Big Bet on West Palm Beach: The legendary developer shifts his energy and vast resources from New York to South Florida, aiming to single-handedly transform West Palm into a global hub.
2. Gary Barnett’s Billion-Dollar Preferred Equity Play: Exploring how Barnett (of Extell) secured a massive pref (preferred equity) commitment for a risky portfolio of projects across multiple asset classes and locations.
3. Backlash Against the Backlash: Texas Property Tax Incentive Repeal Faces Legal Heat: The fallout and legal challenges after Texas killed a lucrative property tax abatement scheme, with implications for affordable housing and capital markets.

Key Discussion Points and Insights

1. Steve Ross Moves to West Palm Beach — Not Just Retirement (00:59–15:59)

Ross’ New Chapter and Ambitions

• Not a Retirement Move: Despite his age (84), Ross is not slowing down but starting “the most fun” phase of his career in West Palm, after stepping down from Related (the New York real estate giant).
• Magnitude of Play: Ross’ plan is almost “off the charts” for West Palm:
  • 6 million sq ft of office
  • 1.5 million sq ft of condos
  • ~700,000 sq ft retail
  • Nearly 900 hotel keys across 70 acres
  • "[It’s] a project half the size of Hudson Yards in a city 1/8th the size of New York" (B, 04:16)

Funding and Structure

• Unusually Direct Investment: Ross is plowing in his own cash from major asset sales (incl. a 10% Miami Dolphins stake).
  • “Ross, glaring exception. This is all his equity. Straight cash, homie.” (A & B, 05:52)
• Leverage and Relationships: Significant debt comes from Ares (over $1 billion in loans and refinancing), leveraging Ross’ longstanding business ties.

Building a City from Scratch

• Not Plug-and-Play: Unlike NY, Ross is building the “infrastructure of a global city” out of near whole cloth—schools, sports, and social infrastructure included. - “You have to build all of that infrastructure before the tenants will come…Steve Ross just took it upon himself to do that. Absolutely crazy.” (A, 08:52)

• Education Moves:

  • Building a private K-12 school in Wellington, adjacent to West Palm.
  • Key role in bringing Vanderbilt University’s $500M campus to West Palm—an enormous coup for a city of its size. (A, 10:37–10:44)

• Culture and Talent Pool:

  • “The alpha kings of capital need more than just nice offices.” (A, 08:52)
  • If you want to bring in finance/tech elite with families, you need top schools and universities.

Attracting Major Tenants

• Bypassing Miami: Instead of following the Miami hype, Ross courts major blue-chip finance tenants directly to West Palm—Point72, Goldman Sachs, etc.
  • “He's creating a second Wall Street, but it ain't in Miami. It's maybe in West Palm Beach.” (A, 11:40)

Legacy Play and “Cowboy” Mentality

• Ross’ approach is less spreadsheet-driven and more about “shooting from the hip,” legacy, and “city shaping.”
  • “Who in their right mind, if you have to make an IRR, is going to build a school...to bring Vanderbilt here? Like, this is a legacy thing.” (B, 12:50)
• Relies on his reputation, connections, and fresh start after decades of major institutional deal-making.

Memorable Quotes

• “This is the most fun I've ever had in my life.” — Steve Ross to Bloomberg (A paraphrased, 04:21)
• “He's a cowboy who has kind of walked in the institutional hallways and is like, you know what? I kind of want to be a cowboy again.” (A, 13:37)
• [On Ross’ autonomy] “He says it's the most fun you've ever had when you have no boss...The quarterly investor updates are pretty short: Hey, am I kicking ass? Yes. Awesome.” (B, 06:23)

2. Gary Barnett and Extell’s Pref Stack Power Move (15:59–23:58)

The $1.2B Pref Commitment

• The News: Extell (Barnett) landed a $1.2B preferred equity commitment from (likely) hedge fund JVP, for nine ambitious (and some distressed) projects.

  • “XTEL has landed a $1.2 billion pref commitment from an unnamed hedge fund…” (A, 15:59)

• Why Pref, Not Common Equity?

  • Market is too tough for traditional common equity.
  • “Because you can't get common. I mean, I can't think of another way. It's almost as expensive as common and you're going to get eaten alive.” (B, 16:22)

• Risk and Tough Terrain:

  • Pref structure means high payments due regardless of cash flow—risky in this climate.
    • “Imagine this, it's 7% current...Even if it's 12, that's $140 million a year. That's just picking.” (B, 16:34)

Signature Projects

• Major deals covered by the pref stack include:
  • 1.8M sq ft Upper West Side ABC/Disney campus
  • “The Torch” — super-tall Theater District hotel (called “maybe the ugliest building in the world” by A, 17:32)
  • Harlem project (jumping into ABS’s deal)
  • Deer Valley ski resort in Utah — described as “the most audacious real estate play...in the modern era” (A, 17:53)

The JVP Connection

• Likely pref partner is JVP—well-known for “messy” development deals and deep experience with high-profile, challenging projects (Four Seasons/Deer Valley, 50 W 66th, Miami Beach Rally Hotel).
• “They really like messy development.” (A, 19:23)

Barnett’s Risk Appetite

• Barnett is famous for using every possible capital structure—office, hotels, condos—all stitched together with a wild mix of equity, pref, and debt.
  • “Gary just pulls rabbits out of hats with capital. There’s never been anyone like him.” (B, 22:51)
  • “Used every source…what's in the zeitgeist more than pref? Everyone wants to be pref. And here he comes getting the most prep of anybody, and that's Gary Barnett.” (B, 22:51)

De-risking and Leasing

• Barnett brings in anchor tenants (Simpson Thatcher at 570 Fifth Ave, Chanel pursuing a $450M retail condo at Madison Ave).
• Strategic partnerships like IKEA (committed $300M equity/pref at 570 Fifth).

Memorable Quotes

• “[On the pref stack] Gary, on the 21st of each month, when they email you the statement saying how much is accrued, how do you not have a cardiac event?” (A, 17:14)
• “Like Bruce Willis said…welcome to the party, pal.” (B, 22:51)

3. Texas’ Killer Property Tax Scheme Faces Lawsuit (23:58–30:28)

Background: The “Traveling HFC” Abatement Scheme

• Program allowed developers to erase property taxes for minimal affordable housing concessions, thanks to “portable” housing finance corp structures.

• Loophole: “Affordable” rents often exceeded market rent, meaning true sacrifice was zero—and billions were wiped from tax rolls.

  • “The trick shot here was that the affordable rent threshold was oftentimes higher than the market rent threshold, which means you had to agree to nothing. And in exchange, you got everything.” (A, 23:58)

• Program ended abruptly (the “nuclear option” law), retroactively clawing back abated taxes—causing major chaos.

Now: The Legal Pushback

• Lawsuit filed by Jason Post’s Post Investment Group (and the Workforce Housing Coalition)—argues that the retroactive clawback:
  • Violates contracts
  • Is unconstitutional
  • Undermines trust in capital markets
  • “Doing it this way retroactively will undermine the faith in our capital markets…disincentivizes people to bet on Texas.” (A, 26:19)
• Current goal: Let existing deals lie, fight retroactivity.

Wider Implications

• “This is an issue that's playing out nationwide…can be indicative of what broadly is going to happen in a lot of jurisdictions elsewhere…” (B, 28:09)
• Concern: Abuses of incentive programs risk causing overshooting reforms that kill useful projects.

Memorable Quotes & Moments

• [Industry candor] “Do I feel bad about taking money off the tax rolls? Not really. I'm just getting some of my money back that you misappropriate. Anyway.” — David Lilly (A, 27:40)
• “When incentives like this...are abused, it creates a severe backlash that can really hurt the cause.” (A, 29:08)
• “If you game the system, the system may change the game on you.” (A, 30:28)

Notable Quotes & Memorable Moments

• Ross on Autonomy: “He says it's the most fun you've ever had when you have no boss. Because even if you're Steve Ross...you've got a boss, it's your investors. And, and no boss here.” (B, 06:23)
• Legacy Play: “This is like what they would kind of do. Like, you do like a great thing because you are a great man.” (B, 13:32)
• Pref Nervousness: “Gary, on the 21st of each month, when they email you the statement saying how much is accrued, how do you not have a cardiac event?” (A, 17:14)
• Tax Scheme Candor: “Do I feel bad about taking money off the tax rolls? Not really. I'm just getting some of my money back that you misappropriate. Anyway.” — David Lilly LinkedIn, now deleted (A, 27:40)
• Cynicism on Grifting: “Unless you let us grift freely for nothing, no one will invest money here.” (B, 26:41)

Timestamps for Key Segments

• 00:59–15:59: Steve Ross’ West Palm Beach saga—vision, financing, strategy
• 15:59–23:58: Gary Barnett’s billion-dollar pref (preferred equity) stack; inside the deal
• 23:58–30:28: Texas property tax ‘scheme’ explodes; new legal battle, implications

Tone

• Sharp, informed, a bit irreverent (“land of gauche,” “shooting from the hip,” “grift freely”); deep inside-baseball for CRE insiders—warts and all honesty.
• Frequent use of dry humor and pointed, sometimes sardonic, asides.

Summary Takeaway

This episode peels back the curtain on modern “city-making” by power players like Steve Ross, the high-wire financial engineering of Gary Barnett, and the unintended consequences of real estate incentives gone awry. It’s required listening for anyone who cares about how big personalities, big money, and policy quirks actually shape the skylines and fortunes of American cities.