The Promote Podcast – "Tupac vs Biggie, CRE Edition"

Host: Hiten Samtani (A) & Will Krasne (B) | Date: September 10, 2025

Episode Overview

This episode of The Promote Podcast, titled "Tupac vs Biggie, CRE Edition," delivers an insider’s look at two of the most dramatic, ambitious, and instructive commercial real estate (CRE) sagas on opposite coasts: the troubled journey of 172 Madison in Manhattan and the sprawling, star-studded odyssey of One Beverly Hills in Los Angeles. Using the rivalry of Tupac and Biggie as a framing device, hosts Hiten Samtani and Will Krasne dissect both stories, highlighting high-stakes deals, broken capital stacks, colorful players, and the unique challenges that define CRE’s most exclusive markets.

Key Discussion Points & Insights

I. CRE as East Coast vs. West Coast Showdown

• Manhattan and Beverly Hills:
  “There are two places in America that embody the lifestyles of the rich and famous above all others. One's obviously Manhattan. The other is Beverly Hills. The deals are bigger…Everything is magnified.” (A, 00:03)

• What’s at Stake:
  The hosts compare CRE dealmaking in NYC and LA, noting that developing in these environments is “ain't no hobby,” paraphrasing golfer Kevin Kisner. (B, 00:22)

II. 172 Madison, NYC: The Rise and Fall of Yitzhak Tesler

a. The Diamond-to-Development Pipeline

• Yitzhak Tesler's Backstory:
  Tesler started as a diamond polisher in Israel and traded gems in war-torn Angola, illustrating the ‘outsized rewards and risks’ in both worlds.
  “He is traveling into war torn Angola…lying in his hotel room at night and just listening to gunfire…” (A, 03:09)

• Real Estate as Rough Gems:
  The analogy between condo development and diamonds:
  “If you're working on it and you hit it a little bit too hard, it can just crack.” (B, 04:40)

b. The Trouble Begins: 2007–2010

• Natalia Pyrgova’s Ambitions:
  Russian developer buys site for $33M, aims for boutique hotel plus high-end condos.
  “Oh man. A riddle wrapped in an enigma if there ever was one.” (B, 04:59)

• The Great Recession Derails the Project:
  Pyrgova defaults; the site passes through a series of distressed debt buyers, ending with CIM Group—known for aggressive takeovers of troubled assets.

c. Tesler Takes Control

• Making CIM Go Away:
  Tesler forms a JV with Pyrgova, paying off CIM’s now $55M stake.
  “Default interest is a hell of a thing.” (B, 08:15)

• A High-Leverage Construction Loan:
  2014: $140M loan at 85% LTC, facilitated by broker Adi Chugh.
  “We used to be a country.” (A & B, 08:48–08:49)

• Glamorous Launch:
  “You go up to this beautiful building in the sky…the booze is flowing, there’s women, there’s music, there’s Tesler, this rotund man…living the good life.” (A, 09:07)

d. Sales and the Collapse

• The Critical Importance of Sales Velocity:
  “All of that profit is generally in the last 10%, 15% of your units...your penthouses, your top floor units.” (A & B, 10:45)

• Warning Signs:
  An unusually large $164M condo inventory loan, sales missteps, and mischaracterization of the neighborhood (“Midtown South” v. more desirable “NoMad”).
  “Minor detail, but these kind of things do matter at that level.” (A, 14:08)

• Management Decisions:
  Nepotism surfaces, with Tesler’s son taking on sales leadership; underwhelming results prompt Compass to drop the project.

e. Downward Spiral

• Repeated Refinancings & Stale Inventory:
  Failure to maintain momentum leads to price cuts, sluggish market cycles, and “Le Penthouse”—a failed $98M, unfinished mega-unit.
  “It looks like a crime scene where Dexter is about to murder people.” (B, 15:53)

• Foreclosure and Bankruptcy Machinery:
  Distressed lenders (Arkpe) acquire the note, Tesler delays foreclosure by filing for bankruptcy—not once but twice (a rare, layered legal move: “BK squared” (B, 18:58)).

• Revealing Ownership Structure:
  Bankruptcy filings reveal Tesler owns just 10%; Pyrgova, 40%; other interests include a party convicted of healthcare fraud.

f. Final Curtain

• Desperation and Defiance:
  In court, Tesler pleads poverty but argues his “special sauce” is vital.
  “To get into my office, it takes a key…to get into my head, it takes two years.” (A quoting Tesler, 20:36)

• Lender Relations at Rock Bottom:
  “What does Tesler say? He says they can go fuck themselves.” (A, 19:19)

• Endgame:
  Judge affirms reorg; Tesler loses the remaining units.
  “I've built many buildings in Manhattan. It's not the first one, it's unfortunately the last one.” (Tesler, 22:25)

III. One Beverly Hills: CRE Royalty Meets Hollywood

a. Fabled Dirt, Generational Deals

• Prime Location, Cheap Price (in Retrospect):
  The site (former Robinsons-May store) was bought for $33.5M; leased for decades at low rent.

• 2007: The Brothers Candy Cash Out:
  UK luxury developers pay $500M for the site—“just a couple of renderings from Richard Meier” (A, 26:25)—but overleverage and eventually default.

b. The Global Capital Merry-Go-Round

• Dalian Wanda Buys In:
  “Emblematic ‘gray rhino’”—a Chinese conglomerate fueled by cheap debt—picks up the site, then sells it (post-China crackdown) in 2018.

c. The All-Star Build Team Assembles

• Beny Alagem’s Beverly Hills Empire:
  Buys Beverly Hilton in 2003, adds adjacent land, partners with Guggenheim and later Caine International (Jonathan Goldstein).

• Colorful Personalities:
  Todd Boehly, “I don’t give a fuck about owning this. I only care about making money.” (A quoting Boehly, 30:46)
  Vladislav Doronin of Aman hotels, described as “Ivan Drago’s body double” (A, 32:41)

d. Capital Stack Olympics

• Eye-Popping Project Value:
  “They need over $5 billion. What are we putting a data center in here?” (A, 33:15 & 33:19)

• Piecing Together Funding:

  • $300M mezzanine from Vici (casino REIT)
  • $550M in municipal bonds via newly approved tax district
  • Blend of public and private incentives, banks, non-banks “You've got to form a syndicate. You think we need one more?…We'll get one more.” (B, 33:58)

• Civic Impact:
  City claims $140M of concessions from developers to fund local improvements—but impact uncertain.

e. The Beverly Hills Power Grid

• Three-Chapter Luxury: Waldorf Astoria, Beverly Hilton, Aman
  The vision is to tie together multiple sites into the ultimate hospitality destination, targeting every luxury segment.

• Beny Alagem’s Legacy:
  Block to be renamed “Alagem Way”—a capstone on his two-decade local journey.

Notable Quotes & Memorable Moments

• “Like all great characters, the backstory here is amazing…at one point the most expensive listing in Manhattan, aspirational pricing be damned.” (B, 02:05)
• “If you're working on it and you hit it a little bit too hard, it can just crack.” (B, 04:40, on condo projects as diamonds)
• “In 2014, Tesler lands $140 million in financing. What is notable here is that the LTC…is 85%.” (A, 08:38)
• “Le Penthouse: It was white box space, which essentially means you pay an absurd amount of money for the privilege of then paying more money to finish it out according to your taste…It looks like a crime scene.” (B, 15:53)
• “Mess with the bull, you get the horns.” (B, 07:55, on CIM’s deal style)
• "To get into my office, it takes a key. To get into my head, it takes two years.” (A quoting Tesler, 20:36)

Important Segment Timestamps

• NYC Story Begins: 01:39

• Tesler’s Backstory & Analogy: 02:30 – 04:40

• Foreclosure and New Lenders: 05:45 – 08:15

• Construction Lending & Launch Party: 08:38 – 09:39

• Sales Process Challenges: 10:17 – 13:45

• Neighborhood Labeling & Nepotism: 13:29 – 14:39

• Inventory Loan & Market Cycles: 14:45 – 15:41

• Le Penthouse, Price Cuts: 15:41 – 16:25

• Default & Bankruptcy Shenanigans: 16:36 – 18:58

• Insults, Special Sauce: 19:19 – 20:36

• Courtroom Fallout & Final Loss: 21:01 – 22:25

• Beverly Hills Story Kicks Off: 23:14

• Robinsons-May Deal History: 24:03 – 26:23

• Global Investors In/Out: 27:28 – 28:30

• Alagem, Boehly, Goldstein Profiles: 28:41 – 31:46

• Waldorf & Waldorf Lawsuit Anecdote: 32:08 – 32:17

• One Beverly Hills Mega-Stack: 33:09 – 35:43

• Beverly Hills Civic Politics: 35:00 – 35:43

• Alagem's Legacy (Alagem Way): 36:11 – 36:42

Tone & Language

• Language: Witty, jargon-laden, with frequent analogies to pop culture, Wall Street, and (of course) hip-hop beefs.
• Mood: Informal, insider-y, mixing serious cautionary tales with irreverent banter ("It looks like a crime scene where Dexter is about to murder people." (B, 15:53))
• Speaker Dynamic: Samtani brings storytelling flair; Krasne cuts through the BS with industry realism and dry humor.

For Further Listening/Reading

• Check out the hosts’ episode on Gary Barnett for more on the diamond/real estate crossover.
• "Behind the Deal" for deep dives on One Beverly Hills.

Summary Takeaways

• NYC Constraint: Building in Manhattan is a knife-edge act; fortunes turn quickly, sales velocity is everything, and complex capital stacks can spell trouble for even the most experienced hands.
• LA Opportunity: Prime land changes hands through a succession of global high-flyers, each leaving a signature; Beverly Hills' biggest megaproject reflects CRE's lean into the world of high finance, municipal incentives, and headline personalities.
• Across Both: CRE "wars" are as much about personalities, timing, and market cycles as about brick and mortar—making for stories as compelling as any rap beef.

Closing Prompt

“Write us and let us know which segment you like more, Tupac or Biggie? Honestly, I'm more of a Dr. Dre guy.” (B, 37:01–37:03)

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