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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, the shopping, swankier. The glitz, the glamour, the scandal, the risk. Everything is magnified. So it stands to reason that the deals in both places are as high stakes as it gets.
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To paraphrase the inimitable Kevin Kisner, developing in these markets ain't no hobby.
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Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Hitan Simtani.
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And I'm Will Krasny.
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Today we're going Tupac and Biggie, CRE Edition. We dive into a deal on each coast that brings together all the things that we think make CRE the greatest show on earth. Rapacious lenders, billion dollar dreams, broken capital stacks.
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And of course, Russian developers who bear an uncanny resemblance to Ivan Drago.
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I totally see it. I totally see it. In New York, we're talking the saga of 172 Madison, how Yitzhak Teslar lost his trophy condo project. That was my pick. In Beverly Hills, we look at one Beverly Hills, the multi billion dollar megaproject. That's a who's who of finance, real estate, hospitality, and so much more. That was a Will Krasny pick. We want to shout out our sponsor for this episode, Bullpen, their recruitment shop dedicated to cre. You'll hear more on them in a bit.
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We going to start with some California love or Brooklyn's finest?
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You want to flip a coin on it?
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Let's do it.
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Tales it is, baby. Let's go New York. All right. There's a fascinating nexus between the diamond world and the real estate world that we've talked about before. Go check out our episode on Gary Barnett where we gush about this nexus in depth. But there are probably in the Venn diagram of Daimons in development, there's also a few less celebrated characters, characters that are equally larger than life, both literally and figuratively. I'm referring here obviously to Yitzhak Tesla.
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Like all great characters, the backstory here is amazing. He started off as a, you know, on the floor of like, the diamond exchange and ends up with at one point the most expensive listing in Manhattan, aspirational pricing be damned.
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Yeah, it's a pretty incredible story and I think it illustrates how things can go so wrong in ground up development. The rewards can be outsized, but things can go really, really off the rails.
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It's also a great example of the old wisdom that time kills all deals. Because it's very much true.
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Yeah, it really went through a bunch of cycles.
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Let's give a little bit of background because in New York there are these guys who show up often with great suits, often with great hair. I'm referring of course to Joseph Benonat and try to develop a crazy condo project. And you think, yeah, that was going to go badly the whole time. This guy was not that he had a bunch of successful projects under his belt before going to 172 Madison.
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He had a track record. Yeah. So Tesla is a very, very interesting character. He started his career as a diamond polisher in Israel.
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It's like starting off in real estate as the coffee boy.
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It kind of is. And at some point he graduates to become a real player. And he is traveling into war torn Angola to trade diamonds. And there's an amazing anecdote and he's talking about lying in his hotel room at night and just listening to gunfire because it was civil war, all kinds of coups going on. And this guy, you know, the guy rotund, really, really character.
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Rubenesque, beautiful Rubenesque.
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And he's sitting there and he's like, you know, in those countries, life is worth less than the ash in this ashtray. And he gestures at over.
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It's really like a mix of Lord of War and Blood Diamond. He was involved, I think as an LP in 66 Leonard, which was a real project and very successful in the early 2000s. He had a real office and he'd done several pretty large, relatively condo deals. So this again, this is a guy who has developed, he's got sharp elbows.
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I think it is probably useful to talk about how these two professions are kind of the same thing.
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If you think about it, especially condo development where you have something that throws off zero cash and it is completely reliant on what someone's going to pay for it. And you have to buy this raw thing and you fine tune it and you develop it.
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It's kind of like a development site. Right? Your rough gemstone's kind of like a development site.
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Yeah.
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You have to make an early decision about which path to take it. You're using leverage, you're using, brokers, you're using. And then you have to bring it to market and hope that someone's going to pay a ridiculous price for it. That's the game.
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And if you're working on it and you hit it a little bit too hard, it can just crack.
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Exactly. That's a little bit of context on Tesla let's start in 2007, the Go Go days pre Tesla at the site on 33rd in Madison. There is a Russian woman who comes in, Natalia Pirogova.
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Oh man. A riddle wrapped in an enigma if there ever was one.
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So Pyrgova comes in, she buys a site at 33rd and Madison for 33 million bucks and the idea is to create a 100 key boutique hotel and a 69 unit condo.
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Nice.
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Grow up. Well and she's looking targeting a pricing of 2000 a foot here which is pretty ambitious for this area.
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What's funny is today that basically gets you a second floor walk up unit in Clinton Hill. At that point though, this was staggering pricing per foot. For those who aren't necessarily as familiar with New York, you might think Madison Avenue, that's a very big fancy place. Surely there must be tons of wonderful condo buildings in there. They're not it's office. It was called Mad Men because they had an office there like nobody lived there.
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And so Pyrgova gets a $29 million loan from UBS for the acquisition and gets started. Things go south pretty soon after the.
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Recession hits and development is stalled as development is want to do. And our good friends at ubs, they.
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Filed a foreclose on the property after Beregova defaults on the loan. And you'll love this. They go and sell the note to a distressed debt investor called Garrison. It's run by a guy called Joseph Tanzi and it's an offshoot off Fortress.
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Which I love because a Garrison is a fortress of sorts.
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This is a really dire situation for Bergova and she's looking to save the site. Somehow she's connected through this guy called Kashi of Platinum Properties Residential brokerage. She's connected to cim.
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They took advantage of my old, my old pal Harry Macklow. Cim, who are they have been involved in many of the most high profile New York developments. These guys are like literally paratroopers.
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432 Park Avenue. 737 Park. 100 Berkeley. Big, big, big time projects.
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They are very big structures. Alpha, they have done tremendously well on 432 park, unlike the aforementioned Harry Macklow. And they are also very sharp elbowed and also at some point I think they realized why do we need this riddle rather than an enigma.
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Exactly. So what Pyrigova was hoping for is to JV with CIM and basically get rid of her troubles with her npl. However, she later alleged that CIM used that inside track with her where she Submitted details of the plans and kind of gave them a secret sauce and they just basically pushed her out. And the way they did that was they bought the npl, the non performing loan from Garrison, which puts them in pole position to take the site out with or without you. They chose to go without her.
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Let me get this straight. The developer who is in foreclosure is like, I have a super secret plan that is going to solve this. And this multibillion dollar private equity firm that's developed way bigger projects, they are only going to be successful. They have my super secret knowledge that has led to this car crash.
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That is precisely right. They have a history of doing this. They're happy to take over projects because they actually know how to develop.
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Mess with the bull, you get the horns.
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She's kind of running out of options. And then comes in our boy Tesla.
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Riding in on his high horse with two cigarettes in each hand.
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He agrees to form a JV with Pyragova and he agrees to pay off CIM, make them go away. At this point, CIM says it's owed 55 million bucks. So there's already a nice return in there for them.
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Default interest is a hell of a thing.
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So Tesla becomes the front man of this project. He's now calling the shots. He is pegging this to be a $300 million project.
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So he takes over, starts doing his magic, shaping the diamond. Things are off to a good start. And I think you have some firsthand knowledge of how good the start was.
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We'll get to that in a second. But before that we should talk about the construction loan.
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Oh yeah.
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So in 2014, Tesla lands 140 million AUD in financing. What is notable here is that the LTC, which is loan to cost, is 85%.
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We used to be a country.
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We used to be a country. One little nugget on this. The debt broker on that transaction was a guy called Adi. Chug. Adi, obviously now is a big lender in his own right. He runs Tyco Capital and he got that sweet Elliot money to bankroll that thing.
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And he is doing every project left and right in Manhattan, Miami.
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I feel like he's building half of Miami. It's pretty nuts. So in 2016, the aforementioned party, I go in wide eyed reporter and I go up to this like beautiful building in the sky. The sunset is hitting just right, the booze is flowing. There's women, there's music, there's Tesla, this rotund man sitting with a couple of women smoking his cigar, living the good Life. And you're like this project, this feels right. This project is going to be something. I also spotted Ryan Serhant there and that's going to become relevant in a little while.
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Pre White hair.
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This is a party in that like go go Manhattan way. We're going to break records, we're going to have the best time ever, we're going to create a new neighborhood, etc. Etc. And at the time I think sales were going well. Let's talk a little bit about the condo sales velocity and how important it is to keep everything going.
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It's everything. So that construction loan, those things are priced wide because it's the riskiest piece of debt you're going to have in the project. And so every day that goes by you are burning interest again. There's no cash flow from this thing. So it's not like you've got a debt service coverage ratio. You pay it off by selling units.
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You can't even rent the porta potties to the Port Authority or anything on the side.
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You need to build it fast and you need to sell it fast. And generally speaking too, condo projects aren't huge multiples. They're about velocity. You want to be in and out and you know, make a 1, 8, whatever and call it a day. And all of that profit is generally in the last 10%, 15% of your units. They're generally your best units, your most expensive. And you've paid off your construction loans.
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Your penthouses, your top floor units. That's kind of where you make your nut.
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Exactly. So you want to get everything else.
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Through there, build velocity and then crescendo in that penthouse.
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Precisely. And so they seem to be on their way. They had a great start. Reportedly about a third of the building was under contract within four months.
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In 2017 we learned that they got a condo inventory loan. And the size of this condo inventory loan is maybe your first sign that things are a little bit, eh, here, $164 million. And the lenders on this are Deutsche bank and TPG.
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Yeah. So a condo inventory loan is essentially a slightly cheaper form of financing that you can use to take out your construction loan, finish the project and then, you know, sell your units. It's rare to have a condo inventory loan bigger than your construction loan.
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Exactly.
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Because it means you haven't paid down any or that your costs have ballooned out of control and you've got to, you know, you need the money to finish units, which seems to be the case here.
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It's probably a little bit of both here, who knows? Yeah.
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Little column A, little column B. What's funny too, is that you now have a lot of people on the record who both were involved in the building and weren't on the sales side, basically saying that this thing was a tire fire on the sales front.
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So Compass was handling sales at the time. In 2017, they said 60% of the units are in contract and the remaining listings were asking about 2,200 a foot. However, there was a lot of, let's put it charitably, mismanagement of a process that needs to be new.
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Development, sales, everything is orchestrated because there's a bunch of different phases, and you have to get them all, right? To have a successful project, you have to have market penetration. People have to know what the project is. They have to know sort of what the lifestyle it is that you're selling at this price point. And all of that comes from the brokers and the marketing staff. And those guys are machines. They are calling everybody. They are really setting the stage for what people are buying into. Think of the guys we've talked about previously on the show, like Michael Schboe. Like, that guy had nine phones. He was everywhere all the time.
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It's a 24. 7 job. I almost think of it like. I know it's a little bit nuts to say this, but I almost think of it almost like a I banking process. You're an investment banker underwriting a company. It's all hands on deck, 247 for that really, really intense period. And that's how I feel about new development sales. The best of them run that shit as a real process. The sales, the media generated the right kind of buyers, the right leaks to the press, creating more excitement. The showings, all of it has to happen. Boom, boom, boom.
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And you have to do it correctly. Like the showings themselves. Like, which units do you go to? What's the spiel? It has to be incredibly well choreographed. And I think it's a great point saying, it's like taking a company public. That's what you're doing here with a building. You're taking a building public and on a roadshow.
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One thing you should not do is mischaracterize the neighborhood.
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Oof. Yeah. There's a game people play where you.
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Can pick, especially in New York, go.
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To Street Easy and lobby to be in a different neighborhood. If you're in Chinatown, but you're like a street over, you can be like.
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Where's Tribeca Zeckendorf's 520 Park Avenue is not really on Park Avenue.
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Yeah.
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They did some jiu jitsu there.
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So here, like, this building is in Midtown south, which is not very desirable residential area. They should have tried to get it to Nomad.
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Yeah.
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Which is a very desirable area to live.
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Sure. But they didn't. They just called it Midtown south in the listing.
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Like, hey, it's Midtown South.
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Minor detail, but these kind of things do matter at that level. It's very, very high stakes sales. And every little thing has to be right.
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If you're searching by neighborhood and you want to live in Nomad, it doesn't show up. Like that's a problem.
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One of the issues here is that instead of using your go to new development brokers, there's a little bit of nepotism in the mix too.
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He hired his son to lead sales.
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FE Tesler. Yeah.
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And he's done a bunch of those over the course of time. So this is not anything out of the ordinary. But for a project like this, it's a different ball of wax.
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So in 2018, sales really haven't hit the marks that they were hoping for. And Tesla has to go back to Deutsche bank and scores a $95 million refinancing. By now, Compass has dumped him. You kind of get a sense that this is not going as well as you'd want. And another thing that we should talk about is velocity matters so much here because buyer tastes change over time. Market conditions change over time. You're going through a couple of mini cycles in this one sellout.
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That's a great point. You also face competition that you could be early, but if you take forever, then you're late. You're not just competing with product here. You're competing with all of the billionaires row product. You're competing with downtown becoming a hot area. And so a lot of boutique condos down there, which took buyers who might have otherwise looked at this. The longer you're in the market, obviously, the more time works against you from a financial returns perspective, but it also works against you just in terms of, as you said, tastes. You just give yourself more time for things to go wrong.
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You just don't want to be seen as a stale building or an unwanted building.
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Exactly.
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Everyone wants to get into the building that you can't get into a hundred percent. Same principle. So in 2019, the developer tries a Hail Mary and it is called Le Penthouse. What is Le Penthouse?
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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, which is maybe it works for office, but for $98 million condos less so it looks like a crime scene where Dexter is about to murder people.
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This is why you're the goat, dude. I'm going to read you the listing. If this is how you love to live, this is your call to action.
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That makes absolutely no sense.
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Clearly buyers didn't go for it, because by the next year, Tesla was forced to slash prices not only on Le Penthouse, but on a bunch of other units. And then things started getting really bad in 2022.
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The lender DB, still on their $95 million refinance, declares him in default. And then Tesla takes three years to try to get a refinance done and isn't able to do so.
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So in 2024, we have our NPL snipers come in a company called Arkpe. It's led by a couple of guys called John Olson and David Gordon. They snap up the note in January 2024, and then they're going to move to file foreclosure.
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It's also illustrative to look at the sort of sliding scale down the lender ladder over the course of this project. We started off with ubs, you know, an enormous money center bank, then we go over to tpg, TPG and Deutsche bank, then we go to Arkp, who, God love them, never heard of them before.
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Exactly. So in the summer of 2024, they're about to kick off a foreclosure sale. And minutes, I mean, minutes before the sale happens, Tesler plays the B card, files for bankruptcy on the project.
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He's a broken hero on a last chance power drive.
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Arkpe claims that this filing was done in bad faith and they intend to fight it vigorously. Tesla's people, however, insist that these units, they're too good to head down the fire sale route. We need time to figure this stuff out. Le Penthouse becomes Le Petit Penthouses. They chop it into five units. That's the plan.
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They've got what, 12 units left out of the original 72. They're like 80 odd percent sold. But again, that's the profit that we're still waiting on.
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When he files for bankruptcy, we kind of get a rare glimpse. It's really hard to figure out in New York, in development in general, who owns what until you file for chapter 11, because then you've got to lay all the cards out on the table. Tesla owns just 10% of this project. Pyrigova, the Russian developer we talked about in the beginning, owns 40%. And there's a couple of other entities. One of them is called Samagor and the principal of that had pled guilty in some healthcare fraud.
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Unrelated, I'm surprised that Steve Ballmer didn't have Kawai Leonard in his capsack.
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In August, Tesla files for bankruptcy again. This is pretty amazing. This time the entity that actually owns the unsold units filed for bankruptcy. The previous bankruptcy we talked about, which was just a couple months prior, was by an entity that owned a stake in this entity.
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Incredible. It's BK Squared. Phenomenal.
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It's Russian dolls all the way down. So Tesla says about his now lender, he says, a ruthless company, all they do is buy loans and foreclose. And he says that the outstanding debt on the property is just about 33 million bucks. But Arkpe says that it's nearly double that by now.
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Again, default interest is a hell of a thing.
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And Olson, the RP guy, says that Tesla, you know what? You've had three or four years to sell everything, you haven't done shit in response. What does Tesla say? He says they can go fuck themselves. This winner Tesla is in a pretty tight state of desperation. He says in court, I can't even pay my credit card. And he asks a judge to unfreeze his accounts.
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Not being able to pay your credit card bills like that's kind of par for the course in real estate.
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I'm thinking of Kent Swig. I'm also thinking of my brother, Will Krasny. It's happened to all of us. At some point, hey, what are you going to do? But this frozen bank account situation stems from a separate dispute on the same project. Terzi. Jack Terzi. Do you remember that name?
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23 wall. The real heads know.
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Exactly. So at some point, Jack Terzi was going to buy a slice of the Deutsche bank debt. Tesla, however, convinced him not to do this and said, hey, you know what? That deposit you made to Deutsche Bank, I'm going to cover you on that. I'm going to refund you that money, which was 3 million odd.
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That is psychotic.
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Pressure to repay Terzi would kind of mess up the bankruptcy reorganization is what Tesla argues in court. And then he also says that he is the project's special sauce. If he is removed from the project, the entire thing's going to suffer. To get into my office, it takes a key. He says, to get into my head, it takes two years.
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What does that even mean?
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The bankruptcy judge was similarly confused. He said that when Tesla was being grilled about the project, he demonstrated that his grasp of specifics was quite limited. I love the put downs in the cloak. They're just at another level. In the spring, Tesla and Arkpe kind of meet somewhere in the middle. He agrees to turn over some of the resi condos and two commercial units. And Ryan Serhat, remember him? He's going to be selling them for arcbe expansion.
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Always in all ways.
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In all ways. And Tesla, though he isn't done. He's trying to figure out this. He has one last trick up his sleeve.
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He says he's got a co developer who will guarantee. Hard to understand exactly what the mechanism here was going to be, but they were basically going to guarantee the loan and that would buy him time to finish the penthouses. And then he was, they were going to have a sort of money back. It was basically like a liquidation preference and a VC deal.
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This did not take unsurprisingly.
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Shockingly, the last ditch insane plan didn't work for a guy who's had 10 years to finish this thing.
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And so Tesla goes and tells Arkpe, I'm out of options. I couldn't get this done. And in August a federal judge affirms the bankruptcy reorg. Tesla loses all the remaining units Arkpe is going to sell them. Apparently there was a party for this project that Tesla was not invited to. That's pretty dark.
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Speaking of dark, we talk a lot about successful developers and folks who knock it out of the park, reimagine the skyline, all these things. This is a real situation. If you're playing this high wire act of NYC development, like sometimes you fall and you know, Tesla said something that really stuck with me in court. He said, I've built many buildings in Manhattan. It's not the first one, it's unfortunately the last one. Because of this situation.
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You feel for the guy, man, you do. Not so lekker, not so much. So we talk a lot on the show about how CRE is such a specific weird world unto itself. So when you're talent hunting in the space, it makes sense to partner with a recruiter who lives and breeds it. That's where Bullpen comes in. They're a talent shop solely dedicated to the commercial real estate industry. They can hook you up at all levels from analyst to C suite and they can fill both fractional and full time positions. Check them out@bpenre.com to get started. That's bullpenre.com and please tell our friends there that the promote sent you.
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Regular listeners will know that a couple things really get our juices flowing. Creative capital stacks when developers score money for their big bets in unorthodox ways. And when we have great characters to introduce to the promote cinematic universe. And man, does this story. Check all those boxes. Very, very hard.
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It has everything. I mean, when we started reading on the backstory of this, it's amazing how many names came up not only from real estate, but from like celebrity, Hollywood, finance, everything. It's just a beautiful narrative.
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This site has an incredible backstory which was detailed in incredible style by behind the Deals.
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Shout out to behind the Deal. Listen. If by any chance you're listening to this podcast or someone send it to you and you want to come on and be with us and pod with us, we would be honored. We're big fans.
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This originally was the Robinson May department store in its phenomenal location right off of Santa Monica and Wilshire.
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Yeah, Prime, prime, prime, prime Beverly Hills.
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Yeah. Next to the Beverly Hilton, which we will talk about in a minute. It was owned by Equitable Life Insurance. They wanted to sell it and it was bought by two enterprising young bucks.
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So New Pacific Realty, it's run by a bloke called David Margulis, who used to be Apollo's guy out west, by the way, and his partner, Arnold Rosenstein.
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Which is just the most Beverly Hills name of all time completely.
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So they pay what, $33.5 million for this dirt?
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Yeah, that's really cheap. And it was, in a sense, because it was a big piece of land. And prime, prime, prime Beverly Hills, it was also a sub 2 cap because Robinson May had a 30 plus year lease for essentially no money. Now, at Robinson's May, it's the biggest Hoover sale of the season.
A
So you're buying it on a hope and a prayer, basically.
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That's what you're doing kind of. I mean, we talked about billionaire developer Ben Ashkenazi, massive air quotes. Yeah. What he did on Barney's where he did basically the same thing. He bought the ground lease before it reset at a very, very low cap rate and then ended up getting foreclosed on. That's an example of, you know, it's basically like when keeping it real goes wrong. And this is an example of when keeping it real goes extremely right. So Robinson May, their parent company, ended up getting bought by Federated Stores, which is like an 80s LBO target, like you read about it, and they took it over in a $17 billion transaction, which, like, again, like, imagine a retail deal for $17 billion today. It's kind of unfathomable, but they Had a competing department store chain to Robinson May, and they had two stores within walking distance of the Robinson May here.
A
So one had to go.
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They ended up terminating the lease. And so our good friends Arnold and David Margulis own this site now. Maybe the best development site in Beverly Hills.
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I don't even think you need to say maybe, because the price they got in 2007 makes it definitively the best site, at least the best deal of all time for them. So they sell this in 2007 to the brothers Candy for half a billion dollars. It's 60 million plus an acre. Just. It's an astonishing return.
B
Incredible.
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33.5 million in 2004. Sold for 500 million in 2007.
B
With just a couple of renderings from Richard Meyer.
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That's all it took. So the lads who are the Brothers Candy are behind. A lot of listeners will know them as the guys behind One Hyde park, which is basically London's Billionaires Row Alpha Development over there. It's famously the dark building where it's all absentee buyers and whatnot. Will, this seems like one of your obsessions. You probably know a lot about the Brothers Candy.
B
I love these guys. They were like, yeah, we started off, we renovated one house, a flat. Sorry. And we lived in it and did it ourselves and then sold it. And then three years later, we were billionaires. And they. I think. I can't remember whether it's Nick or Christian.
A
Owns property moguls.
B
Yeah, yeah. Owns like the most expensive house in Monaco. Like, we're just saying something. But, yeah, they were the Tiffany brand of New York real estate, as Laurie Lustig Bauer said when they purchased the site.
A
Candy. And Candy in the UK is what Tiffany is to jewelry here, says Laurie Lustig Bauer. Therefore, they believe they will achieve record prices for these condos. Amazing.
B
Just fantastic.
A
That didn't turn out that way. So they take on $300 million plus in debt from Banco in Bursa, which is a Mexican bank controlled by our.
B
Boy Carlos Slim, one of the richest men in the world and yet another fantastic character involved in this saga.
A
They default. And then who comes in?
B
Dalian Wanda, which again, the real psychos will know that name 100%.
A
So Dalian Wanda is one of those emblematic, they're called in China, gray rhinos. These companies that, fueled by corporate debt back in China, grew super fast, bought up all these trophy assets. This is in the same category as HNA, Anbang Insurance, etc. And a lot of people are like, oh, yeah, the Chinese are a bit different. From the Japanese in the 80s. The difference was the Japanese guys didn't go to prison and a lot of the people from Anbag, et cetera. You don't even know where they are anymore. Oh, poorly.
B
Won't see him no more. History doesn't repeat itself, but it sure does rhyme. So Dalian Rwanda paid about 400 million, I want to say, in like 2014ish.
A
Isn't it amazing that we haven't even talked about the deal yet? We're just talking about the dirt. It's just so fascinating. It's amazing.
B
So they bought it and then they turn around and sell it in 2018 to Caine International and Benny Alidjam. So this is where we want to get into the Go a little bit down the street.
A
Let's do it.
B
So Benny Allgem, what a character. Just like again, only in America, only in Los Angeles, only in Beverly Hills. So he was a co founder of one of the early semiconductor companies in the 70s, then started one of the largest computer manufacturers in the 80s. It was called Packard Bell, not to be confused with Hewlett Packard. Resigns in a dispute with one of his co founders, but has made, you know, gargantuan amount of money. When you may have a gargantuan amount of money and you're a young enterprising man about town and you want to build a profile, what do you do?
A
You buy the swankiest hotel you can in Beverly Hills.
B
Absolutely. So in 2003, Benny bought the Beverly Hilton from Merv Griffin. Who? Another character. Google Merv Griffin. The Wikipedia page is like 15 pages long.
A
I mean, deservedly. This guy's a freaking legend. And so was the hotel. This hotel is so deeply enmeshed in LA culture and entertainment culture at large.
B
That's where they have the Golden Globes every year. It's in James ellroy novels about LA. It's like a major scene. So he pays 130 for it. It was a little tired. He spends 90 million ren. It's really like one of the iconic west coast hotels. And what he got with it too, though, is he got some land next to it, which is again, prime, prime, prime, prime, prime, prime, prime. And what he ends up doing is he gets in with the Guggenheim boys, the goog.
A
Let's talk a little bit about them. So Todd Boley is the former president of Guggenheim. He actually created the credit division there. And then he's since gone on to run Eldridge, which is his giant, I don't know, Aum Goblin company.
B
Let's just call it, I think it's a box of sorts. I will say, like Todd is investing everything all over the place. Chelsea Football Club, Hollywood Reporter, Dick Clark Productions, this, you name it. One quick story is a friend of mine was on a call about some transaction with Todd Boli like years and years ago. And apparently they're talking about this deal and everyone's like, well, what about the growth? What about the strategic positioning, whatever. And apparently Billy just gets on this conference call and goes like, I don't give a fuck about owning this. I only care about making money.
A
I love the single mindedness. I kind of feel like it's a common thread amongst these moguls. And moguls, right, so Bulli's there, but he's not the guy who runs point on these real estate bets. The guy who runs point on these real estate bets is a lad called Jonathan Goldstein.
B
He runs Kane International, which is affiliated with Guggenheim. He was a very prominent real estate solicitor. Barrister.
A
I've never heard of the.
B
That's what they call solicitor, okay? Not the barrister. Okay. They wear the wigs.
A
So he became, he became kind of the go to CRE lawyer. As if, you know, Jonathan Mechanic and Jeff Lenoble had a love child in England that would be Jonathan Goldstein. So he was the, he was the go to guy. He was putting together structuring all these big time CRE deals. Then he went in house and worked for a mogul, property mogul called Gerald Ronson. So he goes from being a solicitor to a principal or right hand man to a principal. Then he does a brief stint at Guggenheim and then he forms Canton International to kind of do his own deals. And they've become big man, they're big players now.
B
They're doing huge projects in Boston. This one obviously.
A
Did you see that they bought the Trump Soho from our boy cim?
B
Yeah, I did. So Benny Aljam, he's got the Beverly Hilton, it's been a success. He's got the parcel next door. Gets in with the goog and they build the Waldorf Astoria which has just epic roof. Absolutely epic roof.
A
There's a spicy lawsuit that I'll throw into the show. Notes that the Peninsula basically accused them of spying and basically stealing the playbook for guests. It's pretty interesting.
B
That's very funny. I love it. So now they decide after two successful projects they want to triple down. And so they buy this other site on the other side of the Beverly Hilton for 445 million in 2018.
A
They're dreaming. No Small dreams here, right? This is not just a standard hospitality project. They're going to stitch these together into this one hospitality mecca, right? You've got the Waldorf, you've got the.
B
Beverly Hilton and you've got the Amman. So you basically got your like four star, five star and six star or five, six and seven, depending on how you, how you view things. And so oko, led by Ivan Drago's body double, Vlad Doironin comes on in.
A
What a character. Nfmc. He runs the Aman hospitality empire. He's also a very big player in real estate, like super prime real estate in multiple markets, New York, South Florida, et cetera.
B
And so the cap stack here is nuts because they're saying they need what, over $5 billion?
A
$5.25 billion. What are we putting a data center in here?
B
Oh my God. Yeah, right. How many gigawatts is this online going to have?
A
It's a little bit of a modest project for that cap stack. So we're talking 300 luxury condos, 37 condo hotel units and an Amman. So I'm struggling to see where that money goes and how it's spent.
B
It's like $10 million a room of condos and hotels.
A
One of the promote's OG readers, Matty G. Matty Godsteiner saw the cap stack in the promote and was just for fun, he had one of his analysts crunch the numbers. He's like, I can't make it work. How are they putting these numbers together? How do you get to 5 billion? We don't know how they're going to spend it, but how are they going to raise it?
B
Well, a project like this, it's not like you can walk down the street to your local lender and be like, hello, I would like a five billion dollar loan, please. You've got to stitch any public incentives you can get in any public money debt fund, bank, non bank, everybody, like everyone's got to come to the party. It's got to be a million different people. You got to form a syndicate. You think we need one more? That's really what they did. You think we need one more? All right, we'll get one more.
A
They've got Vici, which is the casino player. They're providing them with 300 million slug of mes. I don't know how that happened, but. Amazing, I love it. There you go.
B
And then they just got approval from the city council for a special tax district which is going to let them raise like 550 million in municipal bonds and I love the press releases and the statements coming out of the city council about this. They said they got concessions From Kane of 140 million value nebulous as to what they are.
A
Is it just going to be a Thomas Heatherwick sculpture or something more concrete?
B
Yeah, maybe a Rodin or two. But they say that the money borrowed is going to help fund streets, parks, public infrastructure, but it's all going to be right there.
A
This is something I think is worth pointing out. Beverly Hills, even though the numbers are massive, is a small town and it's run like a small town. The mayors kind of all cycle through. If you're in the mix, you kind of know everyone who calls the shots in the city. They have to basically draw blood from every stone possible. So they've got this muni bond financing, which is nebulous and we don't really know the impact of these things until many years later. And sometimes it's too late to really figure out if it was good or bad for the taxpayer. But anyway, they've got that half billion dollar slice, they've got 300 million in Mez from Vichy and then they have a while to figure out the rest of it.
B
We've laid out a million characters, fascinating folks from all over the place, and we haven't even built it yet. The hardest part is still to come.
A
I would quibble with you. I feel like the hardest part is just putting the money together. Once you put the money together, you can kind of play around quite a bit.
B
I tell that to you. Talk Tesla.
A
So we have Jonathan Goldstein in the mix. We have Vlad Deronin, we have Todd Bolly. Like massive, massive tycoons.
B
What a crew. Murderer's Row.
A
What's up with Belly Algim?
B
He was the face of the project and he's now sort of seems to have receded to the background a little bit. Still says that Algem Capital Partners is a crucial player in this development. But, you know, he's seeing this block that he spent the last 20 years on really come to life in this incredible way. And I'd say a great capstone to his career in Beverly Hills is that as part of the project, the road between the residential towers and LA Country Club will be named Algem Way.
A
That's outstanding. It's absolutely outstanding.
B
Tremendous.
A
That's it for the promote podcast this week. We'll be back next Wednesday with more CRE Insider Goodness. Write us and let us know which segment you like more, Tupac or Biggie?
B
Honestly, I'm more of a Dr. Dre guy.
A
Same here, actually. Yeah.
B
Please write us for review on Apple or Spotify. A haiku, A limerick. Doesn't matter. Just tell people what you like.
A
Big thanks again to our sponsor for this episode, Bullpen. Check out their CRE dedicated recruitment offering@bullpenre.com and brands. We're CRE's water cooler. If you want to be in the mix with shot callers in this business, hit us up at partnerships@the promote.com. that's partnerships.com. will, if you had a road named after you, where would that be and what's the vibe?
B
It would be the service road leading from from the main clubhouse to the golf pro shop at Lyford Key Club in the Bahamas.
A
Amazing. I think I'm more humble. I just want the, you know, the alley behind the ifc. That's my job. That would be the Sumtani muse of sorts.
B
I love it. That's great.
A
I'll see you next week, man. Thank you.
B
Thank you.
A
Ciao.
Host: Hiten Samtani (A) & Will Krasne (B) | Date: September 10, 2025
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.
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)
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)
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.
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)
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.
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.
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)
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.
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)
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:
Civic Impact:
City claims $140M of concessions from developers to fund local improvements—but impact uncertain.
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.
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
“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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