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Your Commercial Real Estate Insider guide. From profiles of the biggest dealmakers to skyline-shaping transactions, we bring you the deals, breakdowns and war stories that move the market — for insiders, by insiders. From bad-boy guarantees to CMBS tranche warfare to syndicator sins, we cover it all.
Each week, The Promote Podcast explores three of the most interesting and consequential stories in CRE, taking you well beyond the headlines and into the heart of the action. Hosted by the award-winning “Bard of CRE,” Hiten Samtani, founder of ten31 media and author of The Promote newsletter, along with no-BS institutional insider Will Krasne. Also check out our 3x/week newsletter for industry insiders at https://www.thepromote.com/
Hiten Samtani (00:03)
I finally had my Goodfellas Copacabana moment. It just happened to be at a kosher steakhouse.
Will Krasne (00:08)
Did you also completely unnecessarily walk your guest through the kitchen? Because if you look in the clip, he just goes in and he goes right, right, right. Like you could have just avoided it.
Hiten Samtani (00:19)
There is no reason for that to be as long as it is, absolutely. But I was at Reserve Cut a few nights ago, and just hear this guy, Hitten? And I turn around, in this place of all places. Turns out it's this big agency deal maker. He was beyond chuffed. He took me over to his table. People started taking selfies. It was a cool moment. It's like, okay, we're building something here.
Will Krasne (00:38)
And that's without even having the podcast on video yet.
Hiten Samtani (00:42)
Anthony right in the front. Great, great, thanks. Anything you need, Anthony, just let me
Welcome back to the Promote Podcast, your insider guide to the money and many of the CRE markets. I'm Hiten Samtani
Will Krasne (00:56)
and I'm Will Krasne.
Hiten Samtani (00:59)
Speaking of steakhouses, we've got a pretty meaty lineup today. More multi-family reets are offering themselves up at the altar. Just doesn't seem to be a real path forward for many of these mid-sized players. We then look at Marriott's mercy killing of Sonder and the lessons to take away from yet another high-profile prop tech flameout. And finally, the Mooch's OZ fund is kind of like the Mooch's White House tenure, short and painful. Let me leak things and if I can block these people.
Will Krasne (01:26)
Hit us up at partnerships at thepromote.com for advertising. If you want to get in front of this growing array of rainmakers, backers, dealmakers, random guys at Reserve Cut, based on intense stardom and something similar that happened to me, we're a hot commodity. So don't write checks to Procter & Gamble anymore. Write them to us.
Hiten Samtani (01:45)
We are really hot, we're gonna get even hotter when we start video after Thanksgiving, so that's something to look forward to. Also, check out our premium offering at thepromote.com slash upgrade. Insiders pay 20 bucks a month for behind the scenes intel. You really can't find anywhere else. Let's get started. Well, I think we have to hit these. We're not gonna spend a segment on them, but they're pretty important.
Will Krasne (02:06)
factors in the Promote Cinematic Universe and we wouldn't be completionists if we didn't at least mention them.
Hiten Samtani (02:11)
Let's start with the Blackstone Cub. We have a talent for doing this, by the way. This has happened more than once.
Will Krasne (02:16)
I think we will it into existence, unfortunately, for Kathleen.
Hiten Samtani (02:19)
What are we talking about? A couple weeks ago, we did this podcast on Blackstone Cubs, and we were talking about how if you get high enough in a place like Blackstone, you either keep rising and then the air gets thinner and thinner, or you find your way out. And that's what's happened with Kathleen McCarthy, probably the top woman in institutional CRE. So what's going on?
Will Krasne (02:39)
We just discussed how she is the co-CEO, or was the co-CEO with the Deem earlier this month, and it's like having two quarterbacks. As Steve Sprayer said, if you have two quarterbacks, you got no quarterbacks. So, looks like they only have one now.
Hiten Samtani (02:52)
And this is funny, right? It rhymes very, very closely with what we talked about with Jon Gray and Chad Pike, maybe a decade and a half ago. There was only room for one.
Will Krasne (03:01)
It's like Highlander.
Hiten Samtani (03:06)
Nadeem had actually come into the job after Kathleen. Kathleen and think it was Ken Kaplan were doing the co-head job together. Ken Kaplan was kicked up to co-CIO of the entire Blackstone. And so then it became Nadeem and Kathleen. And Nadeem very quickly became the go-to guy on some of the hairier stuff. Do you remember the whole BeReed rescue capital infusion from University of California?
Will Krasne (03:28)
Yeah, which is a tremendous piece paper for University of California pensioners.
Hiten Samtani (03:32)
Nadeem was on Honeymoon in New Zealand somewhere, like, think it's the South Island.
Will Krasne (03:36)
Is that why they filmed the Avatar?
Hiten Samtani (03:38)
It looks exactly like that. So Nadine was on honeymoon there and then he had to step in and kind of work this deal. His profile has kind of been building up over the last couple of years. And I don't know what happened exactly. A few months ago, Kathleen said she was out. I don't know if she said she was out. She was told to leave TBD, but that's yet another high profile Blackstone Cub leaving the lair. It just comes back to like, does having two bosses ever work in the long run?
Will Krasne (03:59)
And just in time to hibernate for winter.
now.
Hiten Samtani (04:06)
So what's the next item? got World Wide Plaza. What's going on there?
Will Krasne (04:09)
Yeah, this was like our second or third episode, I think.
Hiten Samtani (04:12)
I think
we called it a skyscraper ransom.
Will Krasne (04:14)
Yes, yeah. And this is the ugly ass building that's like too far west to be good, but not far west enough to be good. You had SL Green and RXR on one side and then he had the liquidating New York greet on the other. They were fighting over a big old CapEx reserve that was held post-credits.
Hiten Samtani (04:30)
There's
like a 90 million pot that was to be held by New York Reet.
Will Krasne (04:34)
I think was one of the biggest tenants and they left and everyone knew they were leaving so you're like we're gonna have this massive hole in the front wall that we got to fill. Yeah. And they never did.
Hiten Samtani (04:43)
They never did, so now the skyscraper is heading to auction. So I think it was Goldman and Deutsche had the Mez. They've now foreclosed on the Mez and it's going to UCC foreclosure. Just for people who might not be aware of how it works, a UCC foreclosure is a non-judicial foreclosure. It allows you to bypass the courts and quickly take something to auction.
Will Krasne (05:01)
Right, because ⁓ this thing could get leased any minute.
Hiten Samtani (05:05)
It's so bad. All right, let's get into our first big story of the episode. So what's going on with the reets?
Will Krasne (05:12)
used
to be back in the day that everyone's goal if you had a big portfolio is to get to the public markets, you know, get the lower cost of capital, be able to grow the portfolio. can think of when the re industry really became mature in the late 80s, early 90s, Sam's L Simon property go in public, all of these groups, which are like very eminent real estate people. That's no longer the case. Now it's private equity, really. So just since 2020, this is a list of multifamily reads that have either
gone private or liquidated liquidating and process. Thank you, Jay Parsons for this list. I stole it from you. Thanks Jay. So appreciate it. Here we go.
Hiten Samtani (05:43)
liquidating.
Will Krasne (05:53)
ACC, Air Communities, Blue Rock, Dream Residential, Elm Communities, Front Yard, Preferred, Resource, Steadfast, Tri-Con.
Hiten Samtani (06:03)
So it's like billions and billions of dollars of enterprise value either gobbled up by a big private thing or just fade away into the night.
Will Krasne (06:11)
go back into the great beyond. So the reason we're talking about this today, though, is there's three real big stories. Center space is considering a sale. They owned 13,000 units, mostly non-core markets across the Western U.S. So places like Grand Forks, Rapid City. I actually like this strategy. I think these are good markets.
Hiten Samtani (06:29)
You want to own some hotel in the Badlands or something?
Will Krasne (06:31)
I mean, there's a guy named Gary Theroldson who was like the richest guy in North Dakota. He owned a gazillion hotels and sold them to Goldman for a couple billion dollars or something. think they got torched. Cortland and Elm just closed a $1.6 billion deal for most of Elm's portfolio.
Hiten Samtani (06:46)
Yeah, this is I think 19 or so properties. got some deets on the pricing. So cap rates were in the mid fives. So you're looking at a shade under 300,000 a door for the property.
Will Krasne (06:56)
Some of that stuff in Northern Virginia is old. Yeah. You could have some deferred there.
Hiten Samtani (07:01)
The ones that are big are looking to get bigger. Cortland's kind of hunting for a bigger war chest. They're out in the market now to raise capital. The ones in the middle are really struggling. So another one is AIMCO, which has had a couple of very big, very profitable sales. They're in the middle of selling something to Oak Row Equities, the house that Asbestos built. They're selling them like this giant, giant waterfront site in Brickle for half a billion.
Will Krasne (07:25)
dollars. now they're liquidating the rest of their assets. think they don't own that many, but they're very high end.
Hiten Samtani (07:30)
We
sold a bunch to Kushner as well recently in the Miami area.
Will Krasne (07:34)
Aimco used to be a member of a couple of different companies. split out
Hiten Samtani (07:37)
Didn't our communities kinda come out of AIMCO as well? Yeah.
Will Krasne (07:40)
So they're liquidating as well. I think it's just a tough market for multifamily REITs. You talk about mid-size, but the issue is just what's the value of being in the public markets right now if you're a REIT? I mean, think of it this way. You can't lever as aggressively on each individual asset. Ostensibly, you have a lower cost of capital, but if you're trading below your NIV, you don't. And then you have this huge GNA drag because, again, think of that.
CenterSpace portfolio is 13,000 units, right? Right. If that was in a private equity firm, that deal team would like four people, five people.
Hiten Samtani (08:13)
Here you've got an entire army of people just doing a thing, filling a job.
Will Krasne (08:17)
the scale you need to have to eliminate the G &A drag is just, it's a lot. And if your stock gets pummeled, you're just every day bleeding out. So that's why we see these things ⁓ either considering a sale, which is by the way, the right thing for the shareholders if you're trading below NAV.
Hiten Samtani (08:33)
Go
do it. And what about the tax benefits? think one of the things that people always say with REITs, yeah, it's structured in a way that's very tax beneficial to investors.
Will Krasne (08:41)
don't pay
corporate tax if you distribute a certain amount of your income out every year. Again, in the private markets, with the change in the tax bill, the ultimate taxable investors get huge depreciation benefits, which if I buy a share of MAA, I don't get.
Hiten Samtani (08:54)
Who else do we have? have Bell Partners as we talked about, 20,000 odd units. They have a huge property management business as well. They're going through a process right now. We're probably going to see more and more of these pop up in the next, call it six months.
Will Krasne (09:07)
People too are just sort of throwing in the towel on waiting for, you know, survive till 25. We're gonna get hitched in 26.
Hiten Samtani (09:15)
I need a moratorium on all this crap. Seven heaven all this.
Will Krasne (09:18)
Yeah,
but I think it's like we've been through a really tough period for the last three four years We're staring down the barrel of like a really tough period over the next three or four years potentially with the economy slowing Inflation comes back. There's a path to where this is pretty ugly and you're like, alright Do we really want to slog all the way through this for our stock to be down 30?
Hiten Samtani (09:35)
So the idea would be you take this private and then you kind of work your magic behind the scenes, whether it's restructuring dispositions, what have you, whatever you need to do.
Will Krasne (09:43)
If
you take CenterSpace private, you just eliminate the entire company. What is the VP of Acquisition at CenterSpace going to do for the acquirer? Nada. Right. See you later. All the corporate overhead is gone. It depends on who buys it. They probably have internal property management. That goes in.
Hiten Samtani (09:59)
be a side note, but I think worth noting, REIT executives are paid very well, perhaps too well.
Will Krasne (10:05)
How much comp has Mark Holliday taken relative to Esso Green's stock?
Hiten Samtani (10:09)
Well, are you saying with or without the casino license? you know,
Will Krasne (10:13)
⁓
I mean without like yeah, you get paid huge if you have a five hundred million dollar market cap or eat I mean there's CEOs and C-suite executives make like seven million dollars a year that they personally are making like a one and a half percent NAV fee
Hiten Samtani (10:28)
People who are looking to target these as acquisitions, are there good discounts to be had on the properties themselves or what?
Will Krasne (10:35)
You're basically buying these things wholesale and then you can spin off retail. Like that's the whole thing of like buying stuff below NAV.
Hiten Samtani (10:41)
Talk
office for a second, even though it's been a pretty blockbuster year in New York office as we've talked about before, if you look at the kind of New York focused office reads and you look at their share price, it hasn't really been reflected in that, it?
Will Krasne (10:54)
That's what I'm saying. Your job as a CEO of a public company is to make the stock price go up. It's not like lease space, especially in today's market. You have to build a narrative around your company. Aura is the lowest cost of capital. It's the motto of this podcast. That it is. If you're doing all of this great stuff and you can't get your stock up, what a huge black eye on the management team of that company.
Hiten Samtani (11:17)
Private players like RXR were able to spin narratives like Project Kodak and Gemini Office Ventures and Dislocation and seem to be able to move and make things happen.
Will Krasne (11:26)
because again, you have to recycle properties. You can't just own stuff forever in the public markets because you want to show growing in a way. If you're reinvesting in the properties, it's going to be lumpy. If you're just going to be in and out of everything, you can't leverage stuff enough to really get the deal level of returns that private equity can. So they're just going to pay more than you.
Hiten Samtani (11:44)
In a years are we talking about the return of reits?
Will Krasne (11:47)
These are all epochs. At certain time, everyone wants to have a public read. At certain markets, no one wants to have a public read. Things will turn and eventually that will come back to this. For now, don't be public.
Hiten Samtani (12:05)
Well, my friend, not all who saunter are lost. But saunter was lost.
Will Krasne (12:09)
Just to clarify, this is Sonder, the vacation hotel apartment thing, not Wander.
So Sonder this week liquidated, very abruptly.
Hiten Samtani (12:24)
Very, very, very abruptly. So Sunday, Marriott comes out with something that says, hey, you know that partnership with Sonder that suddenly juiced the stock price, the license agreement we had? That's over.
Will Krasne (12:34)
Right. apparently what happened is that Sonder went to Marriott and said, Hey, we're about to go to chapter seven. And maybe they're thinking, Oh, well, this has gone well for Marriott. Maybe they'll give us some money or do that. Marriott's like, all right. Deuces.
Hiten Samtani (12:46)
Good
job. So they came out with a release on Sunday and I think by Monday mid-morning, Sonder was gone.
Will Krasne (12:55)
You can read the articles on Bloomberg and people are in the lobby of these Saunders being like, hey, like what's going on? And the employees are sitting there being like, we don't know. I don't work for Saunders anymore. I just got laid off.
Hiten Samtani (13:07)
It's incredibly abrupt. And this is something that when we talk about tech adoption in real estate writ large, one of the things that people ask is like, how do I know your company is going to be around next year? And honestly, pretty warranted question given how quickly and how the carcasses of these things are just like thrown out. It's really rough. I think one thing when this deal happened, which is about it, I think about a year ago, we had our hotel insider write a really fun piece for the promote the kind of piece you'd see on the promote insider, by the way. He wrote the following.
Marriott very very cheaply bought themselves an option on Sonder getting their shit together. The 15 million in key money it came with can probably be scrounged from the couch cushions in Bethesda. If I'm the Marriott CEO, a true blue deal guy, I do this deal 10 times out of 10.
Will Krasne (13:53)
hit the nail on the head, 15 million bucks of key money. And by the way, key money is just money to like improve the property. It's a no-brainer. Because if it works, great. If it doesn't, now that said, like the PR hit for Marriott is like, they could have done better.
Hiten Samtani (14:08)
I think they should have been a little more graceful in the last couple of days and just said like, hey, we will process your refunds not contact Sonder, which is now dead.
Will Krasne (14:16)
Yeah, and then go contact your credit card company to dispute the charges.
Hiten Samtani (14:20)
hospitality above any other asset class really needs to think about customer perception. And I Marriott had a bit of an L here with that.
Will Krasne (14:27)
part. Agreed. But Sonder herself, think is a pretty interesting story. Like you said, very emblematic of this boom and now bust that we've seen. So they raised $600 million.
Hiten Samtani (14:37)
More than six, like well over $600 million in venture capital. So this is, let's be clear, a combination of venture capital, venture debt, and a bunch of other instruments to raise their money. SPAC. Yeah. They went public via SPAC IPO in January, 2022. I figured you'd get a kick out of the sponsors of the SPAC. ⁓ yeah. Let's go. Let's go Will.
Will Krasne (14:56)
So we've
got Alec Gore's and then Dean Metropolis. Dean Metropolis, the family, they bought Twinkies. Correct. Our own Twinkies. One of the sons bought the Playboy Mansion and let Hugh Hefner stay there. And then Alec Gore's, the Gore's family is just fascinating because you've got Alec and Tom, one of them owns the Detroit Pistons.
Hiten Samtani (15:17)
You know that Gorz then bought the Twinkies thing from Metropolis? Yes.
Will Krasne (15:21)
Yeah, yeah, yeah. So they took a publicized back $1.9 billion valuation just under three years ago. And the market cap was, what was it in 20, 20.
Hiten Samtani (15:29)
In
2024, the market cap had dropped down to $41 million.
Will Krasne (15:33)
So about the value of the house that the CEO of Sonder bought.
Hiten Samtani (15:38)
That's unfair. It's about four of those houses. Let's be accurate on this podcast. should we back up a little bit and talk about kind of the ethos of Sonder, what it was, what it set out to do? One thing that people look to the promote for is a postmortem, post game on some of these companies, because they're very, very poorly understood when the ramp up is happening. And momentum is such a drug.
that when someone's raising money like this, everyone's throwing money at them. They keep reinventing the definition of what the fuck they are. WeWork was a classic example of this too. And then when they die, people are like, hold on, what was this company? All right, so what was Sonder?
Will Krasne (16:12)
Sonder was basically WeWork for apartments and hotels. Like it was the same thing. You'd sign a master lease and then they would sublease everything out, which is, know, ingenious. Who's ever thought of that before?
Hiten Samtani (16:26)
Everyone I've spoken to who views Sonder as a consumer has liked the experience until maybe last week.
Will Krasne (16:31)
So there's this unfortunate thing called the market where the consumer doesn't really matter and doesn't really impact your feasibility as a business. You know what else other businesses consumers like? When you get a dollar for 90 cents, that's visibly subsidized. They like that. Can we make a business around that? Can we take that public vice?
Hiten Samtani (16:50)
But again, this was a very compelling story and it came at just the right time. This was founded by a couple guys. think one was out of Montreal. His name is Francis Davidson. during the peak of the PropTech bubble, he went on a podcast called Invest Like the Best and he said the following.
Will Krasne (17:06)
fully
built out the technology, think we're going to be able to be at roughly 30%, what we call property level profit margins, but without owning the underlying real estate. is absolute fucking nonsense. He's basically saying that the real good business is not owning the hotel. Yeah, best business is fucking Marriott, where you don't have to do anything. You have national branding, property management.
Hiten Samtani (17:22)
the asset light model and all that.
Will Krasne (17:34)
It's not actually operating. You're doing the worst parts of it. This is ludicrous. Operating the things really hard. We're gonna operate it, but not own it. Yeah. So we get the worst of every world.
Hiten Samtani (17:44)
You get all the headache, but none of the sauce.
Will Krasne (17:47)
Even if
you're the property management firm, you're not taking any operational risk, you're getting paid no matter what. These guys had to eat cash if they couldn't meet their obligations.
Hiten Samtani (17:56)
And we kind of saw this with another company in an adjacent space called Coaliving. We saw this in Common, raised a shit ton of money. Same thing. And then same kind of thing. basically build themselves as an operating system for multifamily. I think that was the most recent characterization, raised a ton of money and then went sort of belly up maybe about a year ago.
Will Krasne (18:14)
Property management's a really hard business when you layer on the fact that you have huge obligations to pay rent and you're still running a property management company. If you think of it intuitively, it makes no sense.
Hiten Samtani (18:24)
This is the broader question. We agree that technology in real estate is a good thing, correct? We agree that layering technology atop antiquated processes is a good thing.
Will Krasne (18:30)
Absolutely.
Absolutely.
Hiten Samtani (18:38)
But most of these companies have just been disasters. What's up with that?
Will Krasne (18:42)
What
is technology about basically like borrowing long and lending short? Like that's what they're doing. Like that's not technology. They were saying, hey, we figured out a way to turn units with robots in an hour. That's technology. know, just me being like, I took on a bunch of lease obligations and I'm going to sublet like that's not fucking technology.
Hiten Samtani (19:04)
One of the things about what Adam Newman did is he just kind of, I almost think of it like escape velocity. You're bleeding, bleeding, bleeding. Can you raise enough money to just distract for long enough and just exit?
Will Krasne (19:14)
And I'm painting a little bit with broad brush and being a little bit reductive. Like these businesses can work and they can be run quite well. So what's the Regus Group, IWG? That's a really well-run company that makes money, but they are also not a prop tech company. They're not going to get a venture capital valuation. They're going to be valued off of EBITDA because they generate EBITDA. And all of these businesses, they work at small scale and you can grow them slowly over time responsibly.
But the idea that if you raise a ton of money and you can scale with the just economic reality of this business model is just ludicrous.
Hiten Samtani (19:47)
brute force.
The problem is the narrative that you need to tell the tech people is very different from the narrative you need to tell the real estate people. But the narrative that needs to be true is the real estate narrative because that's where you're earning your keep.
Will Krasne (20:03)
Well, I'd like to note that Sonder is a major player in another real estate disaster that we've sort of been tracking.
Hiten Samtani (20:11)
yeah, the one we've talked about on this podcast. Nathan Berman at 20 Broad, what happened?
Will Krasne (20:15)
So Sonder mass released eight floors of that building.
Hiten Samtani (20:19)
Huge boon for Berman at the time, by the way. He got his takeout financing from, I believe it was Apollo at the time.
Will Krasne (20:24)
Yeah, Athene. ⁓ But then Sonder kept trying to break its lease. You get this loan financing based on this valuation from Sonder and this master lease from Sonder. And then they're like, ⁓ yeah, we the money, we don't have it.
Hiten Samtani (20:42)
We don't have and we don't need to pay it because
Will Krasne (20:45)
There's an outbreak of Legionnaires disease here. It's everyone.
Hiten Samtani (20:50)
So Sonder attempted to use reports of a legionnaire's outbreak at 20 Broad to get out of paying rent. A long bitter court battle. The courts did not go with Sonder on this one. Sonder was found liable to pay Nathan Berman the rents. However, by this time, know, 20 Broad had its own problems that we've talked about before. that was a return to lender story anyway.
Will Krasne (21:08)
too little too late.
I think PropTech is, we've seen this with what, I mean, you can go through the list of companies that went public in title insurance, regular property insurance, Sonder, WeWork, Latch, know, delisted.
Hiten Samtani (21:27)
Hold on, a latch? Financial chicanery of some kind. Let's put that in a separate category.
Will Krasne (21:32)
But again, like PropTech is tough because you have to increase in a Y for somebody for the property owner. And a lot of these things are like good for the consumer. Like Latch, I think is a good product. Like it's helpful for me as a renter. Like that would be that is nice. How does it help me charge more rent? I don't think it does. I think that's the problem with a lot of these things is that they ultimately don't help you improve in a while, which is like what you have to do for this to work. The VCs and the market can say.
This is such a great product, such good product market fit. Consumers love it. The consumer is not the client. The client is the guy who owns the building who's like, why am I paying $10 a month per door for these fucking locks?
Hiten Samtani (22:14)
Where is the value in hospitality? You're a hotel investor or former hotel investor who wants to be a hotel investor. Where does it lie?
Will Krasne (22:21)
Hotels, at the end of the day, they are a trade. They are flat out a trade. They are nothing more than that. You rent it out by the day. That's the good thing and the bad thing. So we just saw Blackstone buy with the Four Seasons in San Francisco, and someone said that it's a great way to play the San Francisco revival. It's not just that. It's just that hotels are the highest convexity way to do it, because you can reset your rents the fastest.
You don't have to wait for all of your office tenants to roll their leases in three, four, five, six, seven years. You don't have to wait for your multifamily tenants to empty the building. You can do it right away.
Hiten Samtani (22:55)
You're basically locking into the sentiment off the present day as opposed to off the next three years, five years, et cetera.
Will Krasne (23:01)
Exactly. And so what that means is if you time it right, you can make a ton of money. You can make a ton of money very fast. The other thing is they're super operationally intensive. So if you know what you're doing and you buy from people who don't, there's a lot more operational alpha than there is in a lot of cases in office or multi or industrial. The problem is because you can rent it by the day. If you time it wrong, you can operate the hell out of it and still get torched.
Hiten Samtani (23:24)
To that point, VC money gets you a lot, it gets you great status, it gives you firepower, it lets you hire great talent. One thing it doesn't do necessarily, or historically doesn't do, is make you discipline about cost.
Will Krasne (23:40)
You're
probably, unfortunately, you be super disciplined about cost because you're not gonna make a lot of NOI if you're charging all your meals to San Vicente bungalows.
Hiten Samtani (23:48)
or buying Pharrell's house.
Will Krasne (23:50)
or mine for all's health.
Hiten Samtani (23:52)
Should we end with the definition of Sonder? It's the profound awareness that every person you encounter has experienced a lifetime of hopes, fears, loves, and heartaches that you'll never know.
Will Krasne (23:55)
I actually don't know this.
Is that for real?
Hiten Samtani (24:06)
That's for real.
Will Krasne (24:08)
Lord glad this thing went bust.
I'm making intent talk about this because I just got a lot of enjoyment out of it this week. So Anthony Scaramucci, the mooch, the president of the Hunt and Fish Club. don't know, he's the actual president, but he's there a lot. Former White House Communications Director, former investee of Sam Bankman Freed.
Hiten Samtani (24:24)
The Mooch. ⁓
Salt Conference, a very, very high profile guy. What does a high profile guy with a massive presence do? What's the zeitgeisty thing to do a couple years ago?
Will Krasne (24:52)
Well, I tend to raise an OZ fund. The question though you might have is, have you invested in real estate before? Nope. Do you have real estate experience? Nope.
Hiten Samtani (24:55)
That's exactly right.
But it doesn't matter.
Will Krasne (25:06)
Did you hire people who have real estate experience?
Hiten Samtani (25:08)
Listen, if you do things the conventional way, you're gonna get conventional results, Will.
Will Krasne (25:14)
Great, great point. Nothing ventured, nothing gained. But I will say this, that if you've not done a lot of real estate investing, you should not buy a off-brand hotel in New Orleans, of all places.
Hiten Samtani (25:26)
So
OZ Fund, this is 2018, this is hot, like everyone's talking about it. Sean Parker's all over the airwaves talking about OZ Funds, all the big investors. So how much?
Will Krasne (25:36)
How does
he funds OZ? It's cleaner.
Hiten Samtani (25:39)
Well done. So how much was the mooch looking to raise?
Will Krasne (25:43)
Looking to raise 3 billion smackaroos.
Hiten Samtani (25:47)
That's a pretty ambitious target. How much did he end up raising? That's pretty good.
Will Krasne (25:50)
50.
million.
Hiten Samtani (25:54)
my ⁓ god. You have limited sort of ballast with that kind of sum, so what are you going to do?
Will Krasne (26:01)
You might say, let's spread this across a lot of really diversified beds, disciplined, like backstop by cashflow, not operationally intensive, not in really hard to understand markets. So of course you go buy the Virgin Hotel in New Orleans.
Hiten Samtani (26:05)
Discipline investing.
my God. You can see the calculus in the Mooches head. right, Richard Branson, big brand, the big easy. Let's go.
Will Krasne (26:25)
Virgin
Galactic has gone public via SPAC. It's doing great. So Hiten, since this property was purchased, how much in distributions have the investors gotten?
Hiten Samtani (26:35)
Zero?
Will Krasne (26:37)
Zero. That's correct.
Hiten Samtani (26:38)
And I think that is going to be the case going forward as well.
Will Krasne (26:41)
That
is indeed the case. So SkyBridge sent a letter to their investors recently that said that they're getting wiped. However, SkyBridge did okay. They got paid 1.75 % of NAV every year, despite the investors never getting any distributions. Surely after a result like this, SkyBridge is really sorry. They show contrition and like they said, they're going to do better, right?
Hiten Samtani (27:04)
typically expect that to be the case. That is correct. What happened here?
Will Krasne (27:07)
So we're gonna do a dramatic reading. I'm the client and to attend is coverage president Brett Messing.
Hiten Samtani (27:14)
Let's go.
Will Krasne (27:21)
I'd like to ask about the results of the share sale and how much it's going to dilute current holdings.
Hiten Samtani (27:26)
Given your intemperate and unprofessional communications and false and offensive accusations, we will not be responding to your inquiries, questions, or requests anymore.
Will Krasne (27:38)
Fantastic.
Hiten Samtani (27:40)
They also somehow missed that what, NOI was a million bucks less than they had reported in 2023 and 24?
Will Krasne (27:45)
In New Orleans, you got to pay property taxes and insurance, especially insurance, you because there was this like storm 20 years ago. I think it was pretty big. I can't remember. But yeah, so in 2023 and 2024, they didn't they didn't report property taxes or insurance in the PNL, which like no one caught.
Hiten Samtani (28:01)
When you're doing things differently, that could happen. So they got an appraisal. We've talked about this very broadly. The original sin in real estate is off an appraisal. So they got it appraised for $95 million. JLL is now taking it to market at quite a delta there.
Will Krasne (28:15)
The
Mooch called this surprising and disappointing.
If you're going to invest in an OZ, maybe don't do it in a off-brand hotel in New Orleans. Maybe just consider something else.
Hiten Samtani (28:31)
Do some diligence of your own, figure out who has a track record and maybe hit him up. There you go. Don't go for the mooch just because he's the mooch. But the mooch has no regrets,
Will Krasne (28:39)
Or go for the mooch just for the entertainment value. like, you know, it's like going to it's actually probably better for your relationship than going to New Orleans and burning a bunch of cash in the French Quarter. So if you want to go to New Orleans and have a good time, you know, save your marriage, give it to the mooch. Same result.
Hiten Samtani (28:55)
When these NBA Top Shot collectible things came out, I just wanted to, I almost wanted to follow the journey as an observer. So I said the best way to do it is just, I put a few hundred bucks and just watched how the thing was going and the valuation of that company went from like double digit billions to no one knows anymore kind of thing. It was just fun to go along on the ride.
Will Krasne (29:14)
When any of these things happen like that, I think of it's like late in parks in Iraq when the guy from Workaholics is at griddle and he's like, I was working at a taco truck nine months ago and now I am part of the Portland Trailblazers.
Hiten Samtani (29:32)
That's it for the Promote Podcast this week. Multifamily Reads are finding that the middle is truly mediocre. Sonder, look, it's yet another illustration of Will's favorite maxim in hospitality real estate.
Will Krasne (29:43)
Well, I have two. It's fucking hard in their trade.
Hiten Samtani (29:47)
And the Mooch's OZ bet was kind of a perfect illustration of the difference between fundraising and operating. A silver-tongued salesman like the Mooch, with a huge profile, can raise a couple bucks for anything. But what happens next is anyone's guess. We're off for Thanksgiving week, so you'll have to do without our dulcet tones for a week. But we'll be back the following week with more CRE Insider goodness.
Will Krasne (30:08)
I may find a way to take the airwaves with that Haten. I need this validation or else I might combust.
Hiten Samtani (30:13)
You have all the logins man, have at it. In the meantime, listeners, please write us a review on Apple. Make it simple, but significant.
Will Krasne (30:21)
Was that Hemingway?
Hiten Samtani (30:22)
striper sorry kids game called on a kind of win wow I did not expect that for you
Will Krasne (30:24)
god, it is.
Reach out at partnerships at thepromote.com to advertise and please consider becoming an insider at thepromote.com slash upgrade. Lots of good stuff there that you could only get by being an insider.
Hiten Samtani (30:40)
There's so much juice and there's so much more to come. We've got a pretty good pipeline. Happy Thanksgiving listeners. We really appreciate you more than you know, and I appreciate you well.
Will Krasne (30:48)
I appreciate you too. Look forward to giving you a big ol' hug soon.
Hiten Samtani (30:51)
As do I, ciao!