THE PROMOTE PODCAST
Host: Hiten Samtani (“Bard of CRE”) & Will Krasne
Episode: Times Square Trainwreck, Royal Renters and Blue Owl Bytes the Dust
Date: February 25, 2026

Episode Overview

This week, Hiten and Will break down three seismic stories shaking up the commercial real estate (CRE) world:

• A deeply troubled Times Square megaproject and the wild world of EB-5 and global capital vaporized in Midtown Manhattan
• The unraveling of Blue Owl’s multi-billion-dollar data center ambitions, exposing cracks in the data center gold rush narrative
• The rise of “royal renters”—the ultra-wealthy who disrupt the logic of the high-end NYC condo market by choosing to rent and pay astronomical monthly rents

Full of sharp industry analysis, war stories, inside jokes, and memorable industry quotes, the episode journeys from shocking Times Square flops to the frothiest ends of the luxury rental sector, with stops in data center drama and CRE family intrigue.

Key Discussion Points & Insights

[00:23] - The “Extreme Docket”: What’s Coming

• CRE development as “an extreme sport” requiring a wild streak
• Today’s focus: Times Square megaproject failures, Blue Owl’s data center woes, and the “rich renter” reshaping multifamily/condo markets

[02:05] - Punch List: The Week’s CRE Headlines

SVO Selling the Transamerica Building

• SVO (Michael Shvo) and BBK's high-profile San Francisco office investment is being sold
• BVK invested ~$2B in portfolio, expected to lose half
• Prospective buyer: Out-of-left-field Yoda PLC, Cyprus-based, with founder Ioannis Papalekis ("Invests in shipping, healthcare, technology and real estate in Cyprus and Greece. Of course, people list their vehicles on the TSX... not really so much in Cyprus, that hotbed of capital markets activity." – Will, [04:12])
• Likely signals end of massive SVO/BVK/Deutsche Finance partnerships

Stone Peak Buys Marinas Portfolio from KSL

• $700M deal, part of a hot “exotic alts” asset class race (similar to self-storage, mobile home parks)
• Institutional interest driving up prices, as “mom and pop” assets get rolled up (see: Bain, Sun Communities, Blackstone)
• "It's just finding the new one that you can say the same buzzwords in investment committee and get people excited about it." – Will, [06:32])

Dept. of Homeland Security/ICE Warehouse Buy-Up

• DHS/ICE spending $38B buying warehouses for detention centers
• Private prison operators, forced sellers (like Blue Owl), and political/bureaucratic dynamics mean “exits can be multiples of what you expected” – Hiten, [08:05]
• “You want to buy from a forced seller, and then you want to sell to a forced buyer.” – Will, [08:38])

Roosevelt Hotel: Geopolitical/Real Estate Boondoggle

• Steve Witkoff, a key Trump ally, engineers a deal for Manhattan’s Roosevelt Hotel (owned by Pakistan, used as a migrant shelter)
• Now the federal government is in the mix—a “two-country, bureaucratic boondoggle” ([10:17])

Blackstone/Livecore Property Management Moves

• Large owner Livecore hinting at moving all multifamily PM in-house; Blackstone rumoured to follow after Air Communities acquisition ($10B deal)
• "One ring to rule them all" for PM via tech, scale ([11:00])
• “Third-party everything” is less sustainable; vertical integration is the winning model at real scale

Kushner Family Drama: Verus Residential

• Jonathan Kushner (Murray’s son, not Charlie’s) takes control of Verus Residential with Vista Holding & Affinius
• Verus’s renters have average incomes of $480,000; signals high-end of multifamily is a different animal ("This deserves its own podcast." – Will, [13:23])
• Sets up later analysis of what the rise of the “rich renter” means for multifamily and condo markets

“Bombs Over Broadway”: Times Square Trainwreck Deep Dive

[15:07] - The Boondoggle at 1540 Broadway (“TSX Broadway”)

• The vision: Not just hotel/retail, but vertical integration of the landmarked Palace Theater, raised 29 feet in the air (to build underneath)
• Funding: $800M in equity, $500M in EB-5 “cash for green card” funds, $1.3B Goldman construction loan, plus additional high-net-worth “club” money via UBS
• “Safe to say, that money did not return to UBS’s ultra high net worth clients.” – Hiten, [18:14])

Project Fallout

• Cost overruns, complications of landmarked buildings
• Parallel debacle at nearby 20 Times Square
• EB-5 investors (mostly Chinese) surface as mezzanine lenders—USIF tries to move funds between projects; investors sue ([19:31])
• Fortress and L+L negotiate a deed-in-lieu with Goldman Sachs, avoiding tens of millions in transfer taxes, but leaving EB-5 investors hanging
• Massive litigation over “bad boy guarantees”—developers potentially on the hook for $900M ($520M principal + at least $370M in interest)
• “Probably the largest bad boy carve out that I’ve seen.” – Will, [21:30])

Takeaways

• At every cycle top, untested developers “Icarus into the sun” with Manhattan megaprojects
• “Let's do the single most complicated, hard to deliver massive project that we humanly can in the middle of the most high profile location on earth.” - Hiten, [23:01]
• Retail investors, especially international, often bear the brunt of multi-level capital stack creative financing when the music stops
• “If you’re an orthodontist at UBS, you too can own a piece of the Tempo Times Square.” – Hiten, [23:44])

[24:46] - Blue Owl Data Center Drama: The AI Rush Hits Reality

Blue Owl’s $4B Lancaster Data Center (Pennsylvania)

• Blue Owl attempts a $4B data center; project facing funding roadblocks
• “They’re betting their reputation on this asset class.” – Hiten, [25:37])
• Public market and activist heat (Boaz Weinstein); founders possibly facing margin calls; troubles with BDCs
• Media counter-spin: Blue Owl disputes claims of funding woes, says exposure “less than 1% of the book,” echoes Blackstone’s office playbook (“If you’re really winning, do you respond at all?” – Will, [27:50])

CoreWeave & the Economics of Hyperscalers

• CoreWeave as “the WeWork for data centers”: huge obligations, asset-light, re-leasing
• Lenders increasingly wary of exposure to “AI-exposed” tenants who lack established cash flows
• "We saw it. We passed." (Senior specialty lender, passed on the deal – [27:49])

Stargate: OpenAI’s Flagship Data Center

• “Joint venture hasn't hired any staff, not actively developing any data centers... partners are arguing... and OpenAI couldn't get financing.” – Hiten, [30:16])
• Even OpenAI, SoftBank and Oracle can’t get billions for projects without proven revenue
• “Lenders want cash flows, security, guarantees. Not willing to back a multibillion-dollar construction loan with an unproven business model.” – Will, [30:20])
• Industry-wide risk: If narrative cracks, the music can stop abruptly ("Roadrunner running off the cliff...if you look down, you’re going to fall." – Will, [31:14])

Macro Implications

• Data centers became the new “digital railroad” where CRE capital could flood in big checks after the collapse of office and retail
• If the AI/data center thesis stumbles, fallout could echo the fiber-optic crash of 2000—eventual use, but catastrophic loss for investors
• “The shadow banking system is the new banking system given the new capital requirements.” – Will, [33:15])

[33:38] - Rich Renters: The Rental Market Has a New Royalty

Outrageous Manhattan Rents & the “Rich Renter”

• Vacancy rates up, rent growth myth busted—unless you look at the very top:
  • Example: David Weinreb’s West Chelsea apartment rented for $177,000/month ("A two and a half percent rental yield before factoring any expenses..." – Will, [34:37])
  • Bad Bunny: $150,000/month at The Jardin
  • Naftali’s unit: $95,000/month lease
  • “I've never seen prices where they're at...” [35:26]

Why So High?

• Little new product, 421a tax abatement rush is over, capex-constrained pipeline = historic shortage at high end
• Rents at $90/foot in some new builds
• Capital efficiency: “If you're spending $177,000 a month, what do you care? It takes you ten years to spend that much.” – Will, [37:45])
• Renting also serves as a tax-avoidance/tax-blurring strategy for footloose wealthy

Cultural/Demographic Shift

• Number of U.S. renter households earning $1M+ has tripled since 2019
• "If you buy, the IRS can track your days, but if you rent, no public filings — makes auditing/hunting for residency-based taxation much harder." ([36:27])

Market Impact

• Developers may increasingly target luxury rentals and skip condos (“Why build a condo then, right?” – Hiten, [38:23])
• Multifamily and condo market logic at the top totally upended

Notable Quotes & Memorable Moments

• “Big ticket development is an extreme sport. Its most avid practitioners have to be a little bit crazy.” – Hiten, [01:23]
• “If you’re an orthodontist at UBS Private Wealth Management, you too can own a piece of the Tempo Times Square.” – Hiten, [23:44]
• “Let's do the single most complicated, hard to deliver massive project that we humanly can in the middle of the most high profile location on earth.” – Hiten, [23:01]
• “If you're really winning, do you respond at all [to negative press] or do you just say nothing?” – Will, [27:50]
• “We saw it. We passed.” – Senior executive at a specialty lender, on Blue Owl’s data center deal ([27:49])
• “If you look down, you're going to fall. But if you keep looking ahead, you can make it to the other side. And that's sort of where we are.” – Will, about market psychology in CRE ([31:14])
• “I've never seen prices where they're at.” – Douglas Elliman broker, on luxury rental surge ([35:26])
• “Why build a fricking condo then, right?” – Hiten, [38:23]

Important Timestamps

• [02:05] Punch List segment starts
• [15:07] Times Square Trainwreck deep dive begins
• [24:46] Blue Owl Data Center segment
• [33:38] The Rich Renter segment

Summary

This episode showcases why “money and mania” are indeed inseparable in CRE:

• Times Square’s legendary megaprojects demonstrate international capital’s ability to chase complicated dreams—often with spectacular casualties
• The data center gold rush may already be hitting fundamental limits, as lenders balk even for AI poster children and shadow banking inches mainstream
• The high-end rental tidal wave in NYC hints at much deeper trends surrounding wealth management, taxes, and development strategy, with “royal renters” reshaping risk and reward at the very top

Stay tuned for more sharp, irreverent, and insider takes each week from The Promote.